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The New York Times reported today that Genentech’s blockbuster cancer treatment, Avastin, failed to show a significant effect on preventing the recurrence of colon cancer, limiting its utility as an adjunct treatment to treat primary colorectal cancer. While Avastin is already a best-selling cancer treatment, success in this closely watched and highly visible clinical trial could have paved the way to a new uses of the drug, potentially increasing sales by billions of dollars a year.

Avastin had sales of $2.7 billion in the United States alone last year. But it is currently approved only for late-stage colon, breast and lung cancers. For those indications, patient’s lives have been prolonged for up to a few months. The new trial was designed to determine whether or not Avastin could be used earlier in the course of the disease, right after surgery to remove the tumor. The hope of such so-called adjuvant therapy is to prevent the cancer from coming back at all, effectively curing the patient.

While the Avastin failure will have little or no effect on Genentech’s financial outlook, it does call into question whether or not Roche paid too much last month to buy the 44 percent of Genentech it did not already own. Roche has long insisted that its desire to own all of Genentech did not hinge on the results of this trial. And yet, the trial appeared to play a major role in Roche’s months-long negotiations with Genentech.  It appeared that Roche, which had started those discussions last summer, wanted to complete the deal before results of the Avastin trial were announced — on the assumption that a successful trial would have sent Genentech’s stock soaring, possibly putting the takeover price it offered out of reach.  A failed trial, on the other hand, could have pushed down the value of Genentech’s stock. So it now looks as if Roche could have paid less had the results of the Avastin trial come out before it completed the deal.

Art Levinson, Genentech’s former CEO who played hardball with Roche over the course of negotiations, needs to be recognized for his outstanding business acumen. He and other Genentech executives convinced Roche that Avastin sales could quadruple, to $10 billion, by 2015 if the drug could be used for early-stage colon, lung and breast cancers. This possibility induced Roche to raise its bid for Genentech’s outstanding shares from $86.50 to $95 per share. Although Dr. Levinson wasn’t able to fend off Roche’s takeover and is no longer Genetech's CEO, he is likely “laughing all the way to the bank” as the expression goes. And, who said that PhDs aren’t any good at business?

Roche shares were down more than 10 percent on Wednesday, closing at $29.54.

Until next time...

Good Luck and Good Job Hunting!!!!!

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It’s official!  Roche has secured more than 96 percent of shares in Genentech Inc, completing its $46.8 billion buyout of the U.S. biotech group. It now holds some 93 percent of outstanding Genentech shares, a further 3 percent are guaranteed to be delivered within the next three business days and it will integrate the U.S. biotech group as soon as possible.

Soon after Roche completed the transaction on Thursday, the company announced that Genentech's common stock would no longer be traded on the New York Stock Exchange.

Genentech, founded in 1976, was one of the first and most successful biotechnology companies in the US. After lagging behind rival Amgen for most of the 1990s, Genentech eclipsed Amgen in the early 2000s on the strength of its oncology franchise (Herceptin and Avastin) and its deep drug development pipeline.

Its acquisition by Roche truly signals the end of an era in history of the American biotechnology industry.

Until next time...

Good Luck and Good Cloning! 

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Late last week, Roche raised the price of its hostile offer to buy out Genentech to $93 a share, from $86.50. While the Genentech board advised its shareholders that the company is worth $112 per share, many financial analysts believe that the $93 per share offer may entice institutional investors to “pull the trigger” on the deal. Roche also extended its offer to shareholders by a week, until March 20. Roche already owns over 65 percent of Genentech’s outstanding shares.

Roche has indicated that if fewer than half the minority shares were tendered, it would not buy any of the shares tendered by Genentech shareholders. The new offer is likely to bring in more than half the minority shares, which would raise Roche’s ownership to at least 78 percent. About 71 percent of 131 Genentech stockholders who responded to a survey by Deutsche Bank on Friday said they would tender at least some of their shares at $93, and of those, half said they would tender virtually all. It is not clear what will happen if Roche is unable to purchase 100% of Genentech's shares.

Roche is motivated to close the deal as quickly as possible before results are released next month from a clinical trial of Avastin, one of Genentech’s top-selling cancer drugs. That trial, testing Avastin as a treatment for colon cancer after surgical removal of the tumore, could open a huge new market for the drug, which is now approved to treat cancer only at a later stage. Positive results from the trial may push Genentech’s stock price to over $100 per share—something that Roche desperately doesn’t want to happen.

If Roche is successful in its takeover bid, it  will likely to result in massive layoffs at Roche’s Nutley, NJ headquarters. Previously, Roche announced that it would move its US headquarters from Nutley to the Bay area if it acquires Genentech. Not good news for the state of New Jersey which is still reeling from the Pfizer-Wyeth takeover announced six weeks ago and the Merck-Schering Plough merger mentioned earlier today.

Until next time...

Good Luck and Good Job Hunting!!!!!!!!

 

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 As expected, Genentech summarily rejected Roche’s offer to purchase it for $43.7 billion. Genentech executives claim that Roche’s offer is too low and it undervalues the actual worth of the company. Roche offered Genentech about $88 per share for remaining 44% of the outstanding shares of stock that it doesn’t already own. Many Wall Street analysts think that the actual value of Genentech stock is roughly $100 per share. As any business person knows (with or without an MBA), the first offer is usually not the last offered that is tendered in any deal.

 

Because Roche owns a majority controlling interest in Genentech, it is not clear whether Genentech can avoid actually being purchased by Roche. Genentech executives have publicly stated that earlier agreements between the two companies that guide the sale of Genentech may no longer be in effect and that they will not abide by them.  I suspect that only time (or perhaps the courts) will tell.

 

Roche has already indicated that if it acquires Genentech, there will likely be job cuts to its 10,700 member workforce (something that Genentech wants to prevent). I suspect that Genentech’s rejection of Roche’s offer is the first in a series designed to maximize shareholder value for Genentech (not to mention the large sums of money that company workers and executives who own stock options will make as a result of a sale).

 

I predict that Roche will ultimately buy Genentech. The only thing that remains to be determined is how much Roche will have to pay to acquire the biotech giant. Roche cannot afford to let this deal go south—a bright and successful future depends on it!

 

If I were a Genentech employee, I would be dusting off the old resume right about now.

 

Until next time….

 

Good Luck and Good Job Hunting!!!

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Monoclonal antibodies (MAbs) directed against vascular endothelial growth factor (VEGF) receptors on cancer cells, have been found to slow the growth of a variety of cancers including colorectal, breast and lung.  While a number of blockbuster biotechnology products( based on these MAbs (Avastin by Genentech/Roche and Eribitux by Bristol-Myers Squibb/ImClone/Merck KGA) have been approved to treat a variety of different cancers their effectiveness as cancer treatments has been the subject of intense debate since their approvals.

Although numerous human clinical trials have shown that VEGF inhibitors slow the growth and development of tumors, they, as a class, don’t seem to significantly increase the survival time for most cancer patients. Further, Avastin and Erbitux are generally not used as stand alone treatments but are used in combination with more tradition anti-cancer chemotherapies. The high costs of these drugs, (Avastin’s worldwide sales hit $ 3.5 billion last year) and their variable effectiveness have caused many to question the usefulness of this class of drugs to treat cancer patients.

The well-publicized use of these drugs as cancer treatments coupled with anecdotal evidence about their effectiveness has put practicing oncologists between a rock and a hard place when it comes to treating patietns with cancer. In an article in Sunday’s New York Times one prominent oncologist said that depsite the controversy,  “I still use Avastin routinely. It’s not a slam dunk and, in fact, the incremental benefit may be more modest than we want to admit.” Others are more sanguine about VEGF inhibitors as cancer treatments “Even when these drugs ‘work,’ what kind of impact are you talking about?” said Fran Visco, president of the National Breast Cancer Coalition. But we market them and give them to everybody.”  

Nevertheless, most oncologists find it difficult to withhold Avastin or Erbitux from cancer patients seeking hope. As one oncologist put it “ When I am not sitting in front of a patient, I think about whether drugs like Avastin are worth it to society. But when facing a seriously ill patient, who, based on clinical trial results, might benefit — even if only a little — from Avastin, I think about the patient’s needs.” 

Regardless of their therapeutic value, the main issue with this class of anti-cancer drugs is cost. Avastin treatment costs patients about $4000-$9000 per month— Eribitux treatment is even more costly! While Medicare and most private insurers cover 80% of the cost, patients can be responsible for 20% or more of treatmetn costs.  As posited in the Times article “If Avastin were inexpensive or if it cured cancer or even held it at bay, as the drug Gleevec does for blood cancer, few might care.”

Are anti-VEGF drugs real cancer treatments or expensive red herrings? Clearly, the jury is still out on that one. That said, I think that only cancer patients can truly provide an accurate response to that question!

Until next time…

Good Luck and Good Job Hunting!!!!!!!

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The New York Times reported today that Genentech resolved a dispute with ophthalmologists that will allow its cancer drug Avastin to continue to be used to treat macular degeneration. As you may recall, the dispute began in October when the Company announced that it would change the distribution of Avastin which would have made it difficult to use the drug. Many ophthalmologists felt that the policy change was an attempt to force them to used Genentech’s newly approved macular degeneration drug Lucentis which has the same mechanism of action but is much more expensive than Avastin. Although Avastin is not approved to treat macular degeneration, many ophthalmologists use it as an off-label alternative to the more costly Lucentis.

According to the agreement, Genentech will sell Avastin directly to ophthalmologists rather than to compounding pharmacies as it previously had (Avastin which was meant as a cancer treatment must be divided into tiny portions for use in the eye under sterile conditions). Physicians who purchase Avastin will have to send it to compounding pharmacies at their own expense to prepare it for patient use. However, the American Academy of Ophthalmology and the American Society of Retina Specialists cautioned that some states might have regulations that would make it difficult to use the new arrangement.

I guess Genentech wanted to spread some “good cheer” before the holidays.

Until next time….

Good Luck and Good Job Hunting!!!!!!!!!

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The NY Times reported today that a federal advisory committee voted that Genentech’s drug Avastin should not be approved as a treatment for metastatic breast cancer.

By a 5-4 vote, the committee decided that Avastin’s ability to delay the worsening of cancer did not outweigh the drug’s toxic side effects, especially since women getting Avastin did not live significantly longer in the end. Although the committee recommended against approval for Avastin, FDA has the final word. That said, FDA usually follows the recommendations of its external advisory panels.

FDA’s staff reviewers had been critical of the drug in an analysis released on Monday. Nevertheless, many Wall Street analysts thought the committee, made up mainly of cancer experts and physicians, would vote in favor of approval.

Analysts were expecting an approval in breast cancer to add $1 billion or more to annual sales of Avastin. Genentech’s stock price has been steadily declining for the last two years because its once explosive growth appears to be slowing.

Avastin is already one of the world’s best-selling cancer drugs, with United States sales alone of $1.7 billion in the first nine months of 2007.

Until next time....

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All good things must come to an end. Yesterday, FDA regulatory reviewers suggested that Avastin, Genentech’s anti-cancer drug, may not be an effective treatment for breast cancer. FDA reviewers determined that Avastin did not help women with breast cancer live significantly longer, and it caused serious side effects, including a few deaths.

An advisory committee to the F.D.A. will meet tomorrow to discuss whether Avastin, already a blockbuster drug for colon and lung cancer, will win an additional approval for breast cancer. The drug had $1.7 billion in United States sales in the first nine months of 2007.

It is unlikely that the advisory panel (composed of practicing physicians, other healthcare professionals and community advocates) will recommend approval of Avastin given the analysis provided by agency reviewers. That said, stranger things have happened at FDA over the past 9 years or so! My sources at FDA tell me that agency reviewers recommended against approval for Vioxx (Merck’s Cox-2 inhibitor that was subsequently withdrawn from the market) but the recommendation was not heeded by agency administrators.

The analysis by the agency’s staff appeared to dim the prospects that Avastin would win an approval as a treatment for breast cancer. Genentech’s stock fell $2.75, or 3.6 percent, yesterday, closing at $73.50.

Until next time....

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Genentech announced yesterday that it is delaying a plan that would have limited the use of its cancer drug Avastin to treat wet macular degeneration. Earlier this month, Genentech unveiled plans to ban purchases of Avastin by independent compounding pharmacies to prevent them from creating smaller doses of the drug that can be used by ophthalmologists to treat wet macular degeneration.  By banning sales of Avastin to these pharmacies, Genentech sought to force ophthalmologists to use Lucentis($2,000 per dose) in lieu of Avastin –which is (40 to 50 times lower than a comparable dose of Lucentis–to treat eye disease. Lucentis, which was recently approved to treat wet macular degeneration, and Avastin®, have very similar mechanisms of action.

 

The company acted to reinstate it supply of Avastin to compounding pharmacies after senior Genentech officials met with the American Academy of Ophthalmology and American Society of Retina Specialists. I guess doctors still have some clout over the disingenuous practices of some drug companies.

 

The FDA also weighed in on the dispute and reiterated in a statement that the agency did not previously ask Genentech to stop distributing Avastin to compounding pharmacies and that it has not taken any action to limit the off-label use of Avastin to treat wet macular degeneration.

Don’t you just love it when drug companies try to blame FDA for their failed avaricious plans to increase corporate profits and bolster their stock prices?

 

Until next time…

 

Good Luck and Good Job Hunting  

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Biotech giant Genentech is moving towards restricting the use of its cancer drug Avastin to treat wet age-related macular degeneration (WMD), the most common cause of blindness in the elderly. Currently, many ophthalmologists use Avastin to treat WARMD even though it was not approved by the US Food and Drug Administration (FDA) for that indication. For those of you who may not know, physicians who are licensed to practice medicine in the United States are permitted to use approved medications to treat any disease or condition if they believe that the medication is in the best interests of a patient.

Genentech said it is restricting Avastin use because it recently won approval for a new drug called Lucentis to treat WARMD. Many ophthalmologists started using Avastin (which has the same mechanism as action as Lucentis) before Lucentis won approval from FDA in June 2006. The New York Times reports that Lucentis is being used to treat 55 percent of new patients with WMD and Avastin accounted for most of the rest of the patients — or nearly half the market.

From a medical and regulatory standpoint, Genentech is justified in restricting the use of Avastin to treat WMD because it was not approved for that indication. Further, promoting or encouraging off-label use medications is a big regulatory no-no! Nevertheless, many ophthalmologists suspect that business rather than medical reasons are what is driving Genentech’s decision to restrict the use of Avastin—Lucentis costs about $2,000 per dose whereas Avastin only costs $50 per dose.
The WMD market is a large one with 200,000 new cases of wet macular degeneration diagnosed in the United States each year. Analysts report that sales of Lucentis were $209 million in the second quarter of 2007 which means that using Lucentis instead of Avastin could easily add more than $1 billion a year in annual revenues for Genentech.

Many physicians choose to treat WMD with Avastin rather than Lucentis because the high cost of Lucentis inhibits its use because of drug formulary restrictions and onerous insurance co-pays. This leads me to posit the following questions:

Is it ethically and morally acceptable to block patient access to the best available medical care simply because a company wants to maximize its profits and keep its stock price high?

Or should biotech companies price their products at more affordable levels?

I will let you decide.

Until next time….

Good Luck and Good Job Hunting!!!!!!!!!!!

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