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It's In His DNA

Barack Obama may represent the first President who understands personalized medicine at more than a conceptual level.

BY DANIEL S. LEVINE
The Journal of Life Sciences

Several years ago, a friend of Robert Wells told him about a scientist who was conducting cutting-edge genetics research in the heart of Amish country. At the time, Wells was vice president for corporate affairs and international markets for the genetics tools company Affymetrix, which became connected with the researcher D. Holmes Morton.

Wells related this story earlier this week at The Annual Burrill Personalized Medicine Meeting, which is put on each year by Burrill & Company, the owner of The Journal of Life Sciences. The work, notes Wells, caught the attention of a reporter at The New York Times, and when the article appeared in November 2005, it caught the attention of a young senator from Illinois, who approached his health policy advisor and told her he wanted to do something to foster such work.

The result of that was Senator Barack Obama’s proposed Genomics and Personalized Medicine Act of 2007. (The comments he made when he introduced the legislation can be read on TJOLS. Though the bill did not make its way through the legislative process, Wells, who is a co-founder of the Washington, D.C.-based government relations firm HealthFutures, expects the legislation will be reintroduced by another senator after Obama takes office as President.

Wells told the story to emphasize a point that has him and others involved in the area of personalized medicine excited about the in coming commander-in-chief. “We have elected, from our own parochial perspective, the first President who understands personalized medicine at more than just a conceptual level,” said Wells. “And we’ve elected probably the first president who had a parent pass away from cancer at a very young age. And we elected a president who’s bringing with him a team of people who know these issues well.”

Wells said under normal times, this would put the “wind at your back,” but he acknowledges these are not normal times. The new administration comes into office with a long list of problems to solve, many of which are both complex and demanding. But, he adds, the new administration is “predisposed to understanding that innovation and new technologies and new approaches are key to changing this healthcare system.”

The transformative role personalized medicine can play in reshaping healthcare and addressing the problems caused by our current practice of medicine has not been lost on some members of the Bush administration. Both U.S. Department of Health and Human Services Secretary Mike Leavitt and National Institutes of Health Director Elias Zerhouni have been big proponents of it, and the FDA has pushed along its Critical Path initiative.

“There’s become this near perfect storm of people of various touch points along the policy chain that have really understood that the future is about not your grandfather's concept of medicine, but something that is very new and very different and very oriented to where the future is,” said Wells. “There’s not one way to do it. You can’t just wave a magic wand and say there is one way of doing this. It goes across all of the agencies, across the Congress, across, as I have said, multiple touch points, but all along that chain we see it happening. The challenge for the new administration is going to be to try and harness that energy to some degree and try to coordinate it.”

Let’s hope that it’s not only a move away from your grandfather’s concept of medicine, but his concept of presidents as well.

Hits and Misses

An analysis of pharma deals shows certain types are better predictors of success than others.

DANIEL S. LEVINE
The Journal Of Life Sciences

Michael Lewis’ Moneyball showed that major league baseball teams often focus on the wrong stats or rely too much on subjective measures in deciding what ballplayers would be valuable to have on their team. A guy who can belt one out of the park may seem a lot sexier than a selective hitter who walks a lot, but is he a better value?

A new study from the consulting firm Accenture tries to bring a little Billy Beane wisdom to pharmaceutical deal making. It pores over pharmaceutical deals to see whether there are good indicators of what will boost shareholder value and the likelihood that a drug acquired, licensed, or collaborated upon results in U.S. Food and Drug Administration approval.

The information is of no small consequence. Pharmaceutical companies have been aggressively making deals to fill gaps in their pipelines and combat lost revenue from competition from generics. But few studies have looked at what kinds of deals actually increase shareholder value or lead to approved products.

Some consultants have in recent years produced reports that suggested that in a period where there is great pressure to do deals, the most successful companies would be the ones able to buy a particular asset or company and move quickly to absorb it. By contrast, collaborations were seen as less attractive because of the complexity of such arrangements and the high cost of managing the relationship through the entire life of the deal. But Accenture’s new report “Making the Right Bets” finds collaborative deals actually have greater success at raising shareholder value (the change in price from five days prior to the deal’s announcement to five days after) and a greater chance of leading to an FDA approval.

“If a company wants to hold on to an asset, that suggests they have confidence in the asset—sure, but that’s not the way deals have been playing out in the past,” said Elizabeth Coulton, partner with the products strategy practice of Accenture in Atlanta. “It’s the moneyball analogy.”

Coulton points out that baseball scouts used to think that players who get walks weren’t valuable, but now with moneyball, the baseball establishment is coming to realize that people who walk a lot are some of the most valuable in players in the league.

“That’s the same way we’re seeing deals play out in the study,” she said. “More collaborative deals are more successful with respect to shareholder value and FDA approval.”

Accenture began by looking at more than 18,000 deals between 1997 and 2006. It then pared that list down to 355 by eliminating deals where the phase of development was ambiguous, the compounds were destined for commercialization in non-U.S. markets, the drugs involved were already approved, or the deals were for manufacturing or contract research organization services.

There were other surprises. The study showed that while the market does reward shareholders for deals struck in phase III, the greater the market response to a deal, the less likely the drug involved will win FDA approval.

“The truth is that the market reaction for phase III deals is inconsistent with the probability of success with the FDA,” said Coulton. “With phase II, the greater shareholder return, the greater the probability of success with the FDA.”

Coulton thinks the reason for that is that phase II deals were more likely than phase III deals to be collaborations.

Overall, Accenture found that the market rewards buyers of phase I and phase III drug deals, collaborations, and small molecule deals. With in disease areas, the market rewards phase I blood and oncology deals, and phase II and III allergy, pain and infection drug deals. It penalizes the buyer for simple licensing deals.

For sellers, the market rewards deals involving biologic molecules. The market is penalizing companies for sales of phase I and phase II allergy, pain and infection drugs, as well as blood and oncology drugs. It also penalizes sellers of phase I kidney, liver, and metabolic disease drugs.

Other findings were not considered statistically significant.

“For pharmaceutical companies now looking to fill revenue gaps in the near-term and pipeline gaps perpetually,” Coulton said, “this study—an analytical approach—can inform the types of deals companies are looking to do rather than relying on their deal scouting teams and their due diligence.”

Dishonor Roll

U.S. health system’s grade knocked down to a D.

BY ERIC WAHLGREN
The Journal Of Life Sciences

Whether it’s John or Barack, we’ll have our work cut out for us when it comes to fixing healthcare.

A new study from The Commonwealth Fund, a foundation focused on improving healthcare access, quality, and efficiency, downgrades the U.S. health system to a score of 65 out of 100. That compares to a 67 in 2006. At the public high school I attended at least, such results would be akin to slipping from a “D+” to “D” student—not exactly the kind of performance we want from the odd medical conglomerate we’ve built over the years to keep us alive and healthy.

The study compares national averages in five dimensions—healthcare outcomes, quality, access, efficiency, and equity—with U.S. and international performance benchmarks. Of greatest concern, says The Commonwealth Fund, is that access to health care has “significantly declined” in the last few years. As of 2007, some 42 percent of American adults (75 million adults) were either uninsured or underinsured during the year, up from 35 percent in 2003. “Overall, [the study] finds the U.S. is losing ground in providing access to care and has uneven healthcare quality,” group says.

Indeed, the report really makes the system out to be a real loser. The U.S. now is last out of 19 countries, after France, Japan, Ireland, and Portugal, among others, in terms of mortality that could be prevented through timely and effective healthcare. Two years ago, it was 15 on the list. That’s of course despite the fact that the U.S. is the world’s drunken sailor when it comes to healthcare spending, forking out twice per capita what other major industrialized countries spend on healthcare, according to the report.

Part of the explanation for the spending paradox is that the U.S. system gets an “F” (53) for efficiency when evaluated for the number of avoidable hospitalizations, the low use of information technology, and other factors. In the U.S., patients were up to four times more likely to have duplicate tests or medical records than in other countries. “The U.S. currently under-invests in the capacity of the health system to innovate and improve,” The Commonwealth Fund says.

There are a few brighter spots. The rates of control of high blood pressure among American adults increased to 41 percent in 2003-2004 from 31 percent in 1999-2000, according to the report. Control rates for diabetes rose to 88 percent from 79 percent in the same period, the group said.

Despite all the study’s doom and gloom, the U.S. remains a remarkable place for medical talent and innovation. Even if the system as a whole is a mess, the individual institutions and medical professionals that make up the system are often the envy of the world. What the system urgently needs, The Commonwealth Fund says, is national leadership “to yield greater value for the resources devoted to healthcare.” But with a war, mortgage crisis, global warming, and creeping inflation among the other problems facing whoever is the next president, helping healthcare get its grades up will be no cinch.

Whether The Couric Effect Is Real, It’s Not Enough

CDC says despite improvements colorectal cancer screening rate remain too low.

DANIEL S. LEVINE
The Journal of Life Sciences

I am not a regular viewer of morning television, but circumstances were such that early one day in March 2000, I watched Katie Couric get a colonoscopy on the Today show. Perhaps it is chance viewings like this that explains why I am not a regular viewer of morning television.

Couric, who lost her 42-year-old husband Jay Monahan to colon cancer, was a woman with a cause. She apparently was so successful at raising awareness about the importance of getting screened for colon cancer that researchers dubbed the 20 percent increase in colonoscopy rates in the months that followed the broadcast “The Katie Couric effect.”

But that clearly has not been enough. Researchers at The Centers for Disease Control and Prevention report in the July 2008 issue of the journal Cancer Epidemiology, Biomarkers and Prevention that only about half of U.S. men and women 50 and older receive the recommended tests. The CDC conducted a National Health Interview Survey in 2005. Although this was an improvement over the 43 percent of screened individuals reported in 2000, it is still far from optimal, researchers said.

CDC epidemiologist Jean Shapiro believes a major problem is insurance coverage. Among people without health insurance, researchers found the rate of colorectal cancer screening was 24.1 percent, compared to more than 50 percent of insured Americans, depending on the type of insurance. Among patients without a usual source of health care, the screening rate was 24.7 percent compared to 51.9 percent of patients with a usual source of healthcare.

“If we can increase the number of people who have health care coverage, we should be able to increase colorectal cancer screening rates,” said Shapiro.

As for the Katie Couric effect, Shapiro says the increase in colorectal cancer screening rates observed from 2000 to 2005 may have been due in part to increased media coverage of the importance of colonoscopy. However, Shapiro adds, the increase was probably also due to the fact that in 2001, Medicare expanded its coverage for colonoscopy screenings to a wider range of patients.

Holy Heatstroke!

Study finds 80 percent of sunscreens don’t really work.

ERIC WAHLGREN
The Journal of Life Sciences

As a kid, I was always out in the sun a lot because I was on swim and water polo teams. Thanks to my Swedish and Irish genes, I never really tanned—I just burned. But in my crowd, putting sunscreen on was for wimps, so I usually went without the stuff and suffered the consequences.

I’ve wizened up in my old age. Nowadays, I don’t give a hoot if I look like a snowman on the beach after applying multiple layers of SPF 40. Even when I suit up to go to the office, I coat my face with a moisturizer containing SPF 15. So a recent study that finds the majority of sunscreens aren’t doing their job of protecting us from the sun had me shuddering under my beach towel.

The non-profit environmental research firm Environmental Working Group in Washington, D.C. investigated 952 name-brand sunscreens, finding four out of five don’t provide adequate protection from the sun. What’s more, these 80 percent contain ingredients with “significant” safety concerns, according to the group’s report.

On a recent vacation to Hawaii, I packed my bags filled with Coppertone SPORT. Turns out, none of the No. 1 sunscreen maker’s 41 sunscreens products meets Environmental Working Group’s criteria for safety and effectiveness. And the group recommends only one of 103 sunscreens made by No. 2 Banana Boat and No. 3 Neutrogena.

Environmental Working Group says its assessment is based on “detailed review of hundreds of scientific studies, industry models of sunscreen efficacy, and toxicity and regulation information housed in nearly 60 government, academic and industry databases.”

One of the main problems, according to the report? Many products lack protection against UVA radiation—the deeply penetrating sun rays linked to skin damage and aging, as well as, potentially, skin cancer. Most just shield us from UVB radiation, which causes sunburn, a well-known skin cancer precursor. The other main worry: the group says many sunscreens—especially spray and powder ones—contain nano-scale ingredients that raise concerns because of potentially harmful properties. Environmental Working Group says ones that contain nano-scale zinc oxide and titanium dioxide are safe.

With all this to fret about, I checked the list to see where my face goo—Kiehl’s Ultra Facial Moisturizer, SPF15—that I pay a pretty penny for stood in the rankings. Number 392. On a scale of one to 10 with 10 being the highest hazard, it got an overall score of five, classifying it as a “moderate hazard.”

Now for the good news: the report identified 143 products it says have good protection and ingredients with few health risks. Even better for cheapskates like me, some of the recommended common brands include CVS and Walgreens.

The group places a lot of the blame for the cloudy sunscreen situation on the U.S. Food and Drug Administration. The regulatory body needs to finalize its sunscreen safety standards—it hasn’t done so despite 30 years of debate, Environmental Working Group says. It also needs to approve new sunscreen chemicals—some of which have been under review for more than a decade, the group says. The FDA has approved 17 sunscreen chemicals in the U.S. vs. 29 approved by the European Union, according to the report. Yet more incentive to go to Sardinia for your next beach vacation.

From Information Superhighway to Mean Streets

Report finds anyone can obtain dangerous and addictive prescription drugs with the click of a mouse.

DANIEL S. LEVINE

If nothing else, the Internet is convenient. Whether it’s buying a book, booking a flight, or apparently scoring some OxyContin.

A new report from The National Center on Addiction and Substance Abuse at Columbia University reports that while the number of websites advertising or selling controlled prescription drugs in the past year dropped, 85 percent of websites selling drugs do not require a prescription.

The report "You've Got Drugs!" V: Prescription Drug Pushers on the Internet, is the fifth annual white paper on the subject from the center. It found a total of 365 Web sites advertising or selling controlled prescription drugs in the first quarter of 2008 compared to 581 sites during the same period in 2007. Only two of the 365 sites were certified by the National Association of Boards of Pharmacy as Verified Internet Pharmacy Practice Sites, the same number found certified in 2007.

The center speculated that the decline in the number of sites selling or advertising controlled prescription drugs may reflect efforts of federal and state agencies and financial institutions to crack down on Internet drug trafficking. But the decline offered little solace to the group.

“Anyone of any age can obtain dangerous and addictive prescription drugs with the click of a mouse,” said Joseph Califano, Jr., the center’s chairman and president. “This problem is not going away.”

The report identified an emerging practice of Internet sites selling prescriptions for controlled drugs that can be filled at local pharmacies. The report also found sites selling online medical consultations, which enable Internet users to get controlled drugs online without a proper prescription.

Of those sites not requiring prescriptions, 42 percent explicitly stated that no prescription was needed, 45 percent offered an online consultation, and 13 percent made no mention of a prescription. Of the few sites that require prescriptions, the center said half permit the prescription to be faxed, which allows significant opportunity for fraud because it could be faxed to multiple sites.

Benzodiazepines (like Xanax and Valium) continue to be the most frequently offered drugs for sale with 90 percent of sites selling them. That was followed by opioids (like Vicodin and OxyContin), which were available at 57 percent of sites, and stimulants (like Ritalin and Adderall) , which were sold at 27 percent of sites.

According to Drug Enforcement Agency estimates, in 2007 11 percent of prescriptions filled by traditional pharmacies were for controlled substances compared to 80 percent of prescriptions filled by Internet pharmacies.

In April, the U.S. Senate passed The Ryan Haight Online Pharmacy Consumer Protection Act of 2008 to control Internet trafficking of controlled prescription drugs. The legislation would prohibit delivery, distribution or dispensing of controlled substances over the Internet without a prescription issued by a practitioner who has conducted at least one in-person medical evaluation, and to require federal certification of online pharmacies.

The center is urging the House to follow suit. The Subcommittee on Crime, Terrorism and Homeland Security of the House Judiciary Committee held a hearing on the topic last month.

We’ve seen what the Internet has done to independent booksellers, travel agents and newspapers. Are neighborhood drug dealers next?

Attack of the (Alzheimer’s) Killer Tomatoes

Transgenic tomatoes expressing beta-amyloaid may serve as a vaccine against the dreaded neurodegenerative disease.

BY DANIEL S. LEVINE

The 1978 classic Attack of the Killer Tomatoes showed just how terrifying the marauding fruit could be, but can the little suckers be harnessed for good instead of evil?

That’s the plan from scientists in South Korea, who have created a genetically altered tomato in the hopes of eventually vaccinating people against Alzheimer’s disease. Though it may sound like a kitschy sci-fi plot, a study published in the journal Biotechnology Letters reports that researchers at the Korea Research Institute of Bioscience and Biotechnology, Digital Biotech, and Wonkwang University have taken the first steps toward finding an edible vaccine against the neurodegenerative disease.

Alzheimer’s is thought to be caused by the accumulation of human beta-amyloid, a toxic insoluble fibrous protein in the brain, which leads to the death of neurons. A primary therapeutic target for treating Alzheimer’s has been to target this telltale plaque that accumulates in the brain in the hopes of preventing or slowing the degeneration of neurons.

The South Korean researchers are hoping to stimulate the immune system to reduce beta-amyloid by producing a genetically altered tomato that contains the amyloid-beta gene and can induce amyloid-beta antigens. This may be more preferable than producing the amyloid-beta through yeast or bacteria because it is toxic to these organisms.

The researchers said the tomato-derived amyloid-beta antigen stimulated the production of serum antibodies in mice and showed it was feasible to produce amyloid-beta protein in transgenic tomatoes and to use the fruit as a delivery system for oral immunization.

They also found that mice fed extract from transgenic tomatoes exhibited a significant increase in serum against amyloid-beta after boosting them with a commercial vaccine, compared to the primary antibody response. However, they did not find a reduction in existing plaques in the brain of mice given the tomato-derived vaccine.

For now, the researchers are pursuing strategies for boosting the potency of the tomato-based vaccine because of the low level of protein in fresh tomatoes.

Are You Ready For Flintstone Chewable Statins?

New American Academy of Pediatrics guidelines call for kids as young as 8 to get cholesterol-lowering drugs.

DANIEL S. LEVINE

The other day, when I opened the top to our outdoor gas grill to throw on some burgers, I discovered bright blue bricks sitting on aluminum foil. I quickly shut it off and sought out my wife. “Did you put rat poison on the grill?” I asked. It turns out she had meant to mention it, but had forgotten, and assured me she wasn’t trying to kill me for the insurance money.

A few days before, I had discovered her obsessively scrubbing the grill. She had found a rat inside. This is the unpleasant part of California living for which Sunset magazine hadn't quite prepared us. To be honest, I wasn’t sure whether to be more disturbed by the problem of having a rat in my grill or the solution my wife had devised for dealing with the situation.

It was a similar response that I had today when I learned that the American Academy of Pediatrics had issued new cholesterol screening and treatment recommendations for children.

The pediatric group wants kids as young as 2 with a family history of high cholesterol or heart disease to be screened. Kids with an unknown family history or those with other risk factors for heart disease such as obesity, high blood pressure, or diabetes, should also be screened, according to the guidelines. The test should be repeated in three years for kids with levels of cholesterol within a normal range. The recommendations can be found in the current issue of the journal Pediatrics.

For kids at least 8 who have high concentrations of low-density lipoproteins or LDLs (the bad cholesterol), the guidelines recommend that doctors prescribing cholesterol-reducing medications to patients with cholesterol levels of at least 190 mg/dL (or at least 160 mg/dL and a family history of early heart disease).

This comes in addition to recommendations about diet and exercise, but I wasn’t sure whether to be mortified that the obesity epidemic has gotten so bad that pediatricians now have to worry about adolescents having coronaries on the playground or that kids now have to wash down their Ritalin with Statins.

I asked a pediatrician I know for a response to the new guidelines. In the past, she had complained to me about parents unwilling to vaccinate their kids, so I asked if she was prepared to deal with parents who were told their kids need to be on statins.

“When they die of heart attacks at 38,” she said, “maybe they will change their tune.”

Deep Yogurt

Technical innovation is important, but biopharma companies will need operational innovation to thrive in the current environment.

BY DANIEL S. LEVINE
The Journal of Life Sciences

The pharmaceutical industry, as my employer is want to say, is in deep yogurt. The boss is a polite guy, but suffice it to say he’s not talking about boysenberry here. Rather, he is referring to the type of yogurt you want to be sure you don’t step in.

Eroding margins, cost containments pressures, patent expirations, pipeline problems, and increasing challenges on the regulatory front are just some of the issues the industry is contending with these days.

Can innovation solve the industry’s problem? Well, that all depends in how broadly you think of innovation, according to Rob Franco.

Franco, lead director for the life sciences business group for PRTM Management Consultants, was part of a team that included the Tufts Center for the Continuing Study of Drug Development that looked at how biopharmaceutical companies can succeed in the current landscape. To find out, they surveyed 11 large pharma and ten small and medium biopharmaceutical companies. These companies represented 91 percent of 2006 revenues in the biopharmaceutical industry.

First they took quantifiable measures of innovation (percent of approvals, percent of priority FDA approvals, first cycle drug approvals) and then looked to see if they correlated with measures of financial success (revenue growth, margin growth). They found a strong correlation between the two.

Among the large pharmaceutical companies, the most innovative ones enjoyed three times faster revenue growth than their competitors. These companies also experienced a 17-month approval advantage from regulators for first-in-class drugs and drugs from these companies won approval 40 percent more often during their first regulatory review without any need for additional testing or information. These companies also received 15 percent more priority reviews than average companies.

But being technically innovative is not enough, according to the study, which is expected to be published in September.

“While most everyone will agree that the biopharmaceutical industry is driven by innovation, when you dig a little bit deeper you find that innovation is really a bit narrowly defined by this industry,” said Franco. “They really talk about technical innovation – the next monoclonal antibody, the next new drug, the next exciting new target.”

Outside of the industry, Franco said, innovation is viewed more broadly. Whether its design innovations at Apple, manufacturing innovations at Toyota, or supply chain innovations at Dell, companies have been able to take technical innovation and marry it to other sources of innovation to establish competitive advantages that gives them a new position in the marketplace.

“Pharmaceutical companies in the future are going to have to marry their technical innovation with some operational innovations to have some sustainable advantages,” he said.

This means a move away from vertically integrated business models where a pharmaceutical company tried to do everything itself, to a model characterized by flexibility to develop drugs across different areas and therapeutic categories with resources, ideas and capabilities drawn from sources outside a company’s four walls, collaboration of increasing sophistication, and standardized business practices that help fuel cost efficiency and make it easier to integrate partners, vendors and CROs into an operation.

Franco said the big surprise is that no one appears to be making radically changes to their operating models yet. He thinks there are plenty of opportunities to be more innovative as companies struggle to maintain their positions in the market and look at how to better incorporate such things as molecular diagnostics, patient services, and payer needs into their development practices.

He believes innovation solve the industry’s problem, but innovation broadly speaking.

“They are going to have to marry technical innovation with operational innovation to do so,” said Franco. “Technical innovation alone is not going to be the answer for the industry.”

Not All Weight Loss Is Created Equal

Study finds Weight Watchers participants lost more weight than fitness center users, but the wrong kind.

BY DANIEL S. LEVINE
The Journal of Life Sciences

Just in time for bikini season, new research out of the University of Missouri answers the question of whether Weight Watchers or a gym membership provides better health benefits.

To answer the question, Steve Ball, an assistant professor of exercise and physiology in the university’s College of Human Environmental Sciences used sophisticated methods to measure body composition. This included the use of a “BOD POD,” an egg-shaped chamber in which participants sit to measure body volume through air displacement, and CT scans to determine changes in abdominal fat, which is more predictive of cardiovascular disease.

The study, published online in the June edition of the Journal of Exercise Physiology is believed to be the first to use sophisticated methods to measure body composition to compare these two weight loss measures.

Ball found participants in the study who attended Weight Watchers for 12 weeks lost an average of 5 percent of their body weight, or about nine pounds. But a large percentage of the lost weight was lean tissue and not fat. He found that despite the weight loss, the participants’ body fat percentage didn’t improve.

"It is advantageous to keep lean tissue because it is correlated with higher metabolism,” he said. “Losing lean tissue often slows metabolism. What your body is made of is more important than what you weigh."

Most studies that have looked at Weight Watchers have focused on body weight and had not considered body fat percentage change, Ball said.

By comparison, the group of participants that were assigned to the fitness center lost very little weight, but Ball said they probably improved their health because they lost a significant amount of intraabdominal fat (the fat around vital organs). He said that implies that exercise may have positive influence on the metabolic syndrome despite the number on the scale.

One important difference between the too groups of participants Ball discovered was that the Weight Watchers participants stuck with the program during the duration of the study, while many of the fitness center participants quit. Nearly half of people who start an exercise program will quit within six months. Ball said women seeking to lose weight or change their body composition by joining a gym will likely fail without support and altering their diets.

"The outcome of the study speaks volumes about the necessity for a multi-pronged approach in order to lose weight, body fat and gain health benefits," he said.

Biotech Gets A Flat

The life sciences sectors fails to muster a single IPO in the second quarter.

BY DANIEL S. LEVINE
The Journal of Life Sciences

In the halls of the San Diego Convention Center during the BIO 2008 conference last month I ran into an investment banker I know who specializes in the life sciences. When I asked him about the outlook for IPOs this year, his brow bent downward, his eyes rolled skyward and his mouth blew an exasperated gush out of one corner that sounded a lot like air coming out of a tire.

It was an apt sound. If you haven’t noticed, the tire’s gone flat.

Burrill & Company, the parent of The Journal, noted earlier this week that there were no U.S.-based IPOs in the life sciences during the second quarter of 2008. That follows the rather grim first quarter in which only three deals raised a total of $138 million through IPOs. BioHeart, the one biotech in the bunch, raised a mere $6 million.

The IPO window – a notion that had been fading within the biotech arena – appears to be back and it’s closed. While there have been some drivers within the sector to weaken Wall Street’s appetite for biotech IPOs – such as the aftermarket performance of deals in recent years, risk-averse investors, and a cautious FDA – the housing meltdown, skyrocketing oil prices and the credit crunch are taking their toll in the IPO world well beyond the life sciences.

In fact, the National Venture Capital Association and Thomson Reuters reported this week that for the first time since 1978 there were no venture-backed IPO in the second quarter of 2008 according to their Exit Poll report.

But if you can’t exit through the window, there’s always the door. Biotech companies have long used alternative means of financing. The reality of expiring patents and the need to bolster pipelines continues to fuel robust partnering deals. M&A continues to provide an exit to investors whose portfolio companies are unable to avail themselves of the public market.

Though it’s nice to have choices, GlaxoSmtihKline’s $720 million acquisition of Sirtris Pharmaceuticals shows there are still alternatives to the IPO market for privately-held companies, the quarter was characterized by much bigger deals including Invitrogen’s plans to purchase Applied Biosystems for $6.7 billion, Daiichi’s acquisition of Ranbaxy for $4.6 billion, and Takeda’s purchase of Millennium for $8.8 billion.

As for the investment banker I ran into in the halls of the San Diego Convention Center, he managed to chuckle when we talked about the dismal IPO market. He doesn’t expect to see a change this year and said he believed it would be well into 2009 before the IPO market starts up again for the life sciences.

But he didn’t seem too concerned. That’s because he seems to be keeping plenty busy with M&A deals.