 signed an extension of the company's research collaboration agreement with 

 to develop and commercialize novel therapies targeted against the liver X receptor, a nuclear hormone receptor implicated in various cardiovascular and metabolic disorders. The collaboration was extended through January 12, 2009. Bristol-Myers Squibb also retained the option to further extend the research collaboration by a year. Terms of the extension include $7.5 million in additional research funding paid to Exelixis. Under the terms of the collaboration, the two companies jointly identify drug candidates that are ready for investigational new drug application-enabling studies. Bristol-Myers Squibb then undertakes further preclinical development and has responsibility for clinical development, regulatory, manufacturing and sales and marketing activities for the compounds. 

 (San Diego, CA) agreed to apply Halozyme's proprietary "Enhanze" technology to the development of a subcutaneous route of administration for Baxter's "GAMMAGARD LIQUID 10%" [Immune Globulin Intravenous (Human)], known as "KIOVIG" in Europe. Under the terms of the agreement, Baxter will provide Halozyme an initial upfront payment of $10 million. Pending successful completion of a series of regulatory and sales milestones, Baxter may make further milestone payments totaling $37 million to Halozyme. Baxter also will assume development, manufacturing, clinical, regulatory, and sales and marketing costs. Halozyme will be responsible for the supply of the recombinant human hyaluronidase (rHuPH20) enzyme that provides the basis for Enhanze Technology. Upon regulatory approval, Halozyme will also receive royalties on GAMMAGARD LIQUID 10% administered subcutaneously using Enhanze Technology both in kits and in coformulations. 

 to develop VGX's constant-current electroporation technology for the intradermal delivery of DNA vaccines and therapeutics. The contract is for $1.9 million over 12 months. Under the contract, VGX will work to demonstrate 

 efficacy of novel vaccines derived from DNA plasmid-based pox virus antigens delivered using a skin micro-electroporation system. 

 entered into a two-year collaboration agreement for the development and commercialization of combination products containing inhaled corticosteroids, anticholinergics, and beta-2 agonists for the treatment of asthma and chronic obstructive pulmonary diseases. 

, the contract-manufacturing division of DRAXIS Health, expanded its existing contract manufacturing relationship with 

 (New Brunswick, NJ). DRAXIS Pharma entered into a definitive supply agreement to provide commercial manufacturing services for a broad portfolio of multiple nonsterile, specialty, semisolid products. The new multiyear contract runs to the end of 2013. It includes approximately two years of manufacturing-site transfer and process-validation activities, followed by five years of commercial production, which is scheduled to begin in 2009. 

Articles

News

The latest pacts from the pharmaceutical supply chain.

Agreements and contracts

 broke ground on an expansion of its flagship manufacturing facility at Allston Landing in Boston. The $150-million project is focused on adding space for manufacturing support functions and will allow for the creation of 90 jobs. 

, a provider of outsourced clinical and commercial packaging services, will expand its temperature-controlled warehouse in Bolton, United Kingdom, to meet increased customer demand for clinical-supply services, especially cold-chain storage and distribution. This expansion involves a purpose-built extension of the existing facility and is expected to be operational in June 2008. Planned features for the temperature-controlled warehouse include floor space of more than 7500 ft

, more than 2700 controlled ambient storage locations, and a 320-pallet refrigerator. 

 will invest in a site at the Wuxi-New District Park located northwest of Shanghai, China, for its new Asia-Pacific manufacturing hub. Sigma-Aldrich expects to initially invest $25 million to acquire land rights and construct its first phase, which includes a large-scale, non-CGMP, multipurpose organic manufacturing facility dedicated to supporting its SAFC fine chemicals business unit. Construction of the new plant is set to start by the end of 2007. When fully developed, the manufacturing plant is expected to produce raw materials, key intermediates, and final products in support of SAFC's businesses. The site will also contain analytical, packaging, and warehousing facilities. 

A roundup of manufacturing and service expansions.

Expansions

—Reflecting a strategic interest in strengthening its position in biologics, 

(BMS) agreed to acquire the biopharmaceutical company 

Adnexus is a developer of a proprietary class of biologics called "Adnectins," which are derived from fibronectin, an extracellular protein that is naturally abundant in human serum. Fibronectin binds to other proteins using protein structures called targeting domains. An Adnectin consists of a backbone of the natural amino-acid sequence of a certain domain of human fibronectin and one to three targeting loops redirected to enable an Adnectin to specifically recognize a therapeutic target of interest, according to the company. The Adnectins are generated using the company's "Profusion" proprietary protein-engineering system. Adnexus says that although Adnectins and antibodies have targeting domains with three-dimensional shapes that resemble each other, the amino-acid sequences of each protein class are distinctly different.  

Under the deal, BMS will pay $430 million in cash for Adnexus. The net purchase price is $415 million after deducting Adnexus' net-cash balance at closing. An earn-out structure could make BMS pay roughly $75 million more, in three increments of approximately $25 million each, in the event that certain developmental and regulatory milestones are achieved. The closing of the transaction is subject to customary regulatory approvals. Upon closing of the deal, Adnexus Therapeutics will become a BMS subsidiary and will remain located in Waltham, Massachusetts. 

Hamburg, Germany and South San Francisco, CA (Sept. 19)

 entered into a definitive agreement under which Evotec will acquire Renovis, a biopharmaceutical company, in a stock-for-stock transaction valued at approximately $151.8 million. The merger is expected to create a global pharmaceutical company with three clinical candidates, a late-stage preclinical pipeline focused on neurological and inflammatory diseases, and 

 cash of approximately $175 million. The merged company will be called Evotec. 

 (Grand Bahamas) for an undisclosed amount. The companies hope to combine Novasep's research and development capabilities and technologies with PharmaChem's manufacturing capacity to produce pharmaceutical actives and intermediates. PharmaChem's facility, based in Freeport, Bahamas, complies with current good manufacturing practices and is inspected by the US Food and Drug Administration. 

)—Funds advised by Apax Partners agreed to acquire generics manufacturer and distributor 

. The company produces tablets, capsules, liquids, suspensions, suppositories, creams, and ointments across a portfolio of more than 160 products. It is currently ranked among the top ten suppliers of generic pharmaceuticals based on the total number of prescriptions filled. 

, a company focused on transdermal technology, and 

, a privately held specialty transdermal therapeutics company, merged to form a single, publicly held company to operate under the name 

. The newly combined company will have corporate offices in Philadelphia and research and development facilities in Franklin, Massachusetts, and Durham, North Carolina. Patrick T. Mooney and Shawn K. Singh, both formerly of Echo, will serve as chief executive officer and interim president of the combined company, respectively. Harry G. Mitchell of Sontra will continue to serve as chief operating officer and chief financial officer of the combined company.

 officially completed the acquisition of 

's (Basel, Switzerland) biologics manufacturing facility in Emeryville, California. Bayer will manufacture its "Betaseron" (interferon beta-1b) drug at the Emeryville site. The company maintains control of all manufacturing and process technology used to produce Betaseron, a multiple-sclerosis drug, and has retained the employees who manufacture the product. 

As part of the transaction, which was announced in March 2007, Novartis transferred manufacturing responsibility for Betaseron to Bayer and received a total payment of roughly $200 million for the transfer of production equipment, inventory, and the leasing of buildings at the site. 

Bayer will pay Novartis royalties on the net sales of Betaseron manufactured at the Emeryville facilities until the original regulatory filing, development, and supply agreement expires in October 2008. 

Bayer will help Novartis submit a regulatory filing for the latter's 250-μg version of interferon beta-1b. If Novartis's drug is approved, Bayer will manufacture the product for Novartis from 2009 onward. In return, Novartis will make royalty payments to Bayer. 

(New York) plans to cease all remaining manufacturing operations at its facility in Sandwich, Kent, United Kingdom. The closure will result in the loss of approximately 420 jobs, phased over the next two years, according to a company release. 

The move is part of Pfizer's ongoing efforts to consolidate worldwide manufacturing operations to manage global capacity and demand more efficiently, as well as establish a smaller and more flexible cost base, the company specified. 

The Sandwich facility manufactures active pharmaceutical ingredients (APIs) for human and veterinary drugs. Also located at Sandwich are a bioprocess development group, which develops new processes for the manufacture of pharmaceuticals using living (biological) systems, and a process analytical support group, which develops technologies to improve process understanding and control within Pfizer's plants. 

A small API development function, comprising around 10–15 roles, will remain at Sandwich to support the development of regulatory starting materials. Site infrastructure services (e.g., provision of utilities and waste management) will also continue at Sandwich. 

In January 2005, Pfizer announced a rationalization of manufacturing at Sandwich, which scaled down manufacturing activity at the site to API manufacture only. 

 launched Regulus Therapeutics, a joint venture focused on the discovery, development, and commercialization of microRNA therapeutics. Regulus will combine the strengths and assets of Isis's and Alnylam's technologies, intellectual property, and leadership. 

A roundup of company moves and positioning from the pharmaceutical and biotechnology industries and contract service providers.

Mergers, acquisitions, and restructuring

Public perception plays an important role in policymaking, the regulatory direction of the pharmaceutical industry, and the status of the pharmaceutical industry itself. The pharmaceutical industry and the US Food and Drug Administration received a reality check when they learned the public's opinions of their activites. Last month, 

American University's Center for Congressional and Presidential Studies

 (Washington, DC) announced results from a national survey assessing public views about the safety of prescription medicines, the Food and Drug Administration, and overall satisfaction with the US healthcare system (1). 

"At a time when Congress is reviewing and debating legislation to strengthen the safety of prescription medicines and overhaul the FDA, this survey validates that drug safety is a real concern for the American public," said James Thurber, director of the Center for Congressional and Presidential Studies at American University, in a university release. "The survey shows some support for the concept of a Food and Drug Administration Revitalization Act; however, there is a clear desire and expectation among participants for regulators to balance speed of approvals with their responsibility of reducing safety risks." 

The survey was conducted by the Mellman Group and Public Opinion Strategies on Sept. 4–6, 2007. Eight hundred adults were interviewed for the survey.

 The issue of drug imports and the safety of products made abroad is now receiving a great deal of attention. The survey showed strong confidence in the safety of prescription drugs made and sold in the United States, with 88% of survey respondents reporting they were confident of the safety of drugs made in the United States.  That confidence level drops off markedly for drugs made in Europe and Canada and sold in the US. Only 56% of respondents said they were confident about such products. This level falls even lower for prescription drugs made in India and China and sold in the US. Just 14% of survey respondents said they were confident of these products.  

 The public's view of FDA was mixed. On the positive side, survey respondents regarded FDA as the most trustworthy group of four major groups: FDA, consumer advocate groups, Congress, and pharmaceutical companies. Survey respondents, were less enthused about the performance of the FDA. Only 53% of survey respondents rated the FDA as excellent or good, and 47% rated it as only fair or poor. 

Understanding of FDA's role in drug approvals. 

 The survey showed the public's uncertainty about FDA's role in the drug-approval process. Only 54% of survey respondents believe that all prescription drugs sold in the US have been approved by FDA, and 37% say just some of them have received approval.  

The survey also addressed the difficult balance between safety and risk in approving new drugs. Opinions about how well FDA handles that balance were mixed. Almost three-fourths (72%) of survey respondents say FDA's most important goal when approving new drugs is to make sure a drug carries no risk or serious side effects before it is authorized for marketing. Only 23% of respondents said they would want new drugs available as fast as possible, even if there may be some risk to patients.  

Despite the public's strong leaning toward risk-aversion in the drug-approval process, it still thinks that the drug-approval process is too long. Forty-one percent of respondents say it takes the FDA too long to approve a drug and allow it to be sold to consumers. Only 34% say it is about right, and 18% think the process is not long enough.

There public is also confused about where FDA receives its funding: 54% say it is from the government, 20% from pharmaceutical companies, and 17% say it is from both the government and pharmaceutical companies.  

The public is evenly divided on the issue of user fees, with 47% in favor of user fees, and 46% opposed to pharmaceutical companies paying user fees to FDA. 

The public seems unconvinced that the high cost of new drugs stems from the high cost of research and development. The survey showed that the public perceive that the biggest contributor to the cost of prescription drugs is the profit margin (43%). Twenty-eight percent say its the cost of marketing, and only 25% say it is the cost of research.  

 Public skepticism about Congress's ability to improve the drug-approval process is very high. Only 6% have a lot of trust in Congress to pass "common-sense laws" governing FDA approval of drugs, and 20% have no confidence, according to the survey. Overall, 50% have a lot or some confidence, but 49% have not much or no confidence in Congress. Despite these low opinions of Congress, the public wants Congress to improve the drug-safety process. Two-thirds of survey respondents said they would want Congress to do more to strengthen FDA's ability to ensure the safety of prescription drugs, compared with 30% who would want Congress to let FDA continue on  its current course.  

The issue of drug safety is a recurring theme of the publication. More than three-quarters of survey respondents say prescription-drug safety is at least somewhat important to them in deciding their vote for the 2008 presidential election. Thirty-nine percent rank it as very important, 10% qualify it as one of the two most important issues, and 28% say it is somewhat important. Roughly one-quarter (21%) say that it is not important.  

 The survey also sought to measure the public's personal experience as it related to drug safety. Nearly three-fourths (74%) of survey respondents said they had taken a prescription drug during the past year. Roughly two-thirds (66%) of those that had taken a prescription drug said that they had been informed by a doctor or pharmacist of potential side effects. The overwhelmingly majority (69%) of respondents had not suffered a negative side effect from a prescription drug, and 30% had.  

 1. "Prescription Drug Safety National Survey," Center for Congressional and Presidential Studies, Washington University, Washington DC, Sept. 2007  

Global Feature

The public gives mixed reviews to the pharmaceutical industry and the US Food and Drug Administration for issues such as drug safety, timeliness in bringing drugs to market, and their role in addressing the high costs of drugs.

A Reality Check for FDA and the Pharmaceutical Industry

Forced into a corner by lagging product development, patent expirations, and insurers unwilling to pay the price of new drugs, major pharmaceutical companies have undertaken a wave of restructuring efforts designed to improve their efficiency and bolster profitability. One of the most tangible components of those restructuring efforts has been the divestiture or closure of underused manufacturing facilities. According to William Wiederseim, founder and president of 

  (Blue Bell, PA), a consulting firm for pharmaceutical companies on facility divestitures as well as a broker for pharmaceutical properties, there are currently 20 million-ft

  of pharmaceutical space for sale in North America alone. 

In the recent past, facility divestitures by major pharmaceutical companies have driven the growth of the contract manufacturing industry. Most contract manufacturing organizations (CMOs) got their start or built their networks by buying redundant Big Pharma facilities, especially in Europe and Canada. Buying existing facilities provided low-cost capacity (because facilities could be acquired at a fraction of their replacement value) and immediate revenues from contracts to continue producing products made at the acquired facilities. Examples of CMOs that entered the industry or grew their capacity through facility acquisitions include 

In an interesting reversal of the past trend, CMOs are now joining the list of sellers. Earlier this year, 

 announced plans to sell its solid and semi-solid–liquid dose operations in Burlington and Fort Erie, Ontario, where it manufactures over-the-counter (OTC)  products. More recently, Catalent, formerly Cardinal Health Pharmaceutical Technologies and Services, put its Albuquerque, New Mexico, facility on the market. PharmaBioSource is representing Catalent for sale of that site. 

Like their Big Pharma brethren, the two CMOs turned to selling their operations as a means of improving financial performance by getting rid of underperforming assets. Patheon's OTC business, run largely from the Burlington and Fort Erie sites, has experienced declining revenues and profits for several years. The operations are still profitable, but the company's executives and new private-equity investors see no place for them in their ongoing restructuring efforts. Catalent's Albuquerque facility, which was once owned by Pharmacia, has been plagued by operating and regulatory problems despite substantial investment during the past five years. 

Despite the rapidly increasing inventory of pharma assets that are for sale, Wiederseim of PharmaBioSource predicts that both the Patheon and Catalent operations are likely to find buyers. He notes that the Patheon facilities have contracts, which will give a buyer an immediate revenue stream.  

In Albuquerque, injectables manufacturing operations may prove to be attractive because injectables capacity is much sought after, driven by new biologics in the pipeline and a growing number of injectable generic and branded generic products coming to market. There were about seven injectables facilities on the market in the United States, according to Wiederseim, but several were sold in recent months. 

 (Los Angeles, CA) recently announced it will buy a facility in Phoenix, Arizona, from 

 (Corona, CA); while a start-up venture, JHP Pharmaceuticals, is buying the 

 facility in Michigan. Both properties are older and have a history of regulatory problems, but the lack of alternatives combined with the high cost and long timeframe of green field construction made them attractive options. Abraxis has been a particularly active buyer, having acquired injectables facilities in Puerto Rico and Illinois in the past year, as well as the Phoenix operation. 

According to Wiederseim, specialized capabilities are central to successfully selling a facility in today's market. Biologics and injectables manufacturing facilities are in great demand, he says, as are pharmaceutical-chemical manufacturing facilities with high-containment capabilities. Deals that include products (as does the JHP deal) or manufacturing contracts also have a greater chance of success. 

Small-molecule active pharmaceutical ingredient (API) facilities are proving to be especially difficult to sell, except for those with high-containment capabilities. Wiederseim estimates that there are more than 500,000 gall. of chemical API capacity for sale in North America and nearly 1 million gall. worldwide. 

Several factors are driving the sell-off of pharmaceutical chemical facilities, including the decline of legacy products, the shift of production to tax-favored countries such as Ireland and Singapore (at the expense of other European countries and Puerto Rico), and the increase in sourcing from India and China. Also, the trend toward high-potency APIs means that companies need far less production capacity for a given volume of finished-product sales. 

Wiederseim says that there are far more sellers than buyers of pharmaceutical facilities, so the market is likely to remain weak. One of the best options for pharmaceutical companies seeking to sell properties is to find a buyer interested in converting the site to another use besides developing or manufacturing pharmaceuticals.  

Some recent examples include Pfizer's (New York) manufacturing facility in Augusta, Georgia, which has been converted into an ethanol plant; 

 (Leverkusen, Germany) site in West Haven, Connecticut, which has been bought by Yale University as a research campus; and the former 

 site in Skokie, Illinois, which Forest City Enterprises will convert into a bioscience incubator. 

While CMOs have been eager buyers of pharmaceutical facilities in the past, we expect few, if any, of them to be buyers today. Ten years of experience in tinkering with their business model has taught CMOs several valuable lessons about the dangers of facility acquisitions, among them: 

1. Having a few highly-used facilities is more likely to lead to success than having a lot of half-used facilities, no matter how cheaply they can be bought 

2. In an industry where the cycle for negotiating a contract and starting production is three years or more, a 3–5 year contract for legacy products isn't really much of a head start 

3. Borrowing money to buy facilities can lead to disastrous results [just ask 

 (New York), which recently was put into receivership over loans taken to finance facility acquisitions]. 

Reflecting these lessons, CMOs have shown strong discipline of late. For instance, we know a number of CMOs would love to have an injectables manufacturing facility in North America, but none have taken a serious run at any of the facilities on the market. They aren't willing to inherit the problems of some of these facilities, and aren't ready to pay a steep price for the newer sites.  

 is president of PharmSource Information Services, Inc., and publisher of Bio/Pharmaceutical Outsourcing Report, tel. 703.383.4903, fax 703.383.4905, 

Outsourcing

Contract manufacturers slim down to improve profitability.

CMOs Join Pharma Facility Swap Meet

, a privately held biotechnology company, appointed Jack M. Anthony as chief executive officer. Dr. Philip Coggins, who previously held the position of CEO, will continue as president and assume the new role of chief scientific officer. 

, a biopharmaceutical company, appointed Dr. Marc Rubin as president and chief executive officer, effective October 1, 2007. Rubin will also be a member of the board of directors. 

 named Janet Woodcock as acting director for the Center for Drug Evaluation and Research (CDER). Woodcock replaces Steven Galson, who is leaving to become acting surgeon general, effective Oct. 1, 2007. Woodcock will retain her position as FDA deputy commissioner and permanent chief medical officer. In addition to assuming the day-to-day operational responsibilities of center director, she will work directly with FDA Commissioner Andrew C. von Eschenbach in launching a national search for a permanent center director. 

In another announcement, FDA named Timothy Coté as the new director of FDA's Office of Orphan Products Development. Coté, whose experience ranges from medical epidemiology to clinical research, will promote the development of products that demonstrate promise for the diagnosis or treatment of rare diseases or conditions. 

 announced that John P. Walker was elected as chief executive officer, effective immediately. Walker has been chairman of Novacea since July 2006, and was named interim CEO in December 2006. He will maintain his role as chairman. 

, a privately held specialty pharmaceutical company focused on the development of drugs for the treatment of heart conditions, announced that David Brand, president and chief executive officer, is leaving the company. The Cardiokine board is expected to make an announcement shortly regarding Brand's successor. 

, a biopharmaceutical company, expanded its management team with the appointment of Laurent Martin as regulatory-affairs director. The company also moved to new facilities in central Paris, while maintaining its registered site in Boulogne. 

 appointed M. Fabiana Lacerca to senior vice-president and chief compliance officer. Lacerca joins Mylan from Bristol-Myers Squibb (New York), where she was the director of compliance for Latin America, Canada, and Puerto Rico. 

, a small-molecule drug-discovery and -development company, appointed Stephen R. Davis president, effective immediately. Davis previously served as executive vice-president and chief operating officer. 

—Mori Arkin, vice-chairman and general manager of 

, advised the company that he will retire upon the expiration of his current employment agreement on March 17, 2008. Arkin will remain in his current role until that time, managing the business and working to ensure an orderly transition. Arkin will remain a member of the company's board of directors and continue to assist the company as needed. 

PTSM: Pharmaceutical Technology Sourcing and Management-10-09-2007

Agreements and contracts

Expansions

Mergers, acquisitions, and restructuring

A Reality Check for FDA and the Pharmaceutical Industry

CMOs Join Pharma Facility Swap Meet

People