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The US Food and Drug Administration yesterday announced that a consent decree of permanent injunction has been filed against McNeil-PPC, the consumer products division of Johnson and Johnson, and two of its senior executives, for “failing to comply with current good manufacturing practice requirements as required by federal law. The action prevents McNeil, a subsidiary of Johnson & Johnson, from manufacturing and distributing drugs from its Fort Washington, Pa., facility until the FDA determines that its operations are compliant with the law.”

McNeil Consumer Healthcare Division’s Vice President of Quality Veronica Cruz and the company’s Vice President of Operations for OTC Products Hakan Erdemir were named defendants in the consent decree, filed with the U.S. District Court for the Eastern District of Pennsylvania in Philadelphia on March 10, 2011. The highest ranking company executives in charge of the facilities named in a consent decree are always included (by law) on the civil action.

The decree also requires McNeil to adhere to a strict timetable to bring its facilities in Las Piedras, Puerto Rico, and Lancaster, Pa., into compliance.

Consent decrees are civil actions—not criminal ones— and are meant to be remedial rather than punitive. In other words, there are no fines levied and the agency expects the companies under consent decree to bring their manufacturing facilities back in to compliance with Current Good Manufacturing Practices (CGMP). However, if the company fails or refuses to comply with the FDA, criminal charges can be filed against the companies and the two executives mentioned in the consent decree. The agency had little choice but to seek a consent decree of permanent injunction against McNeil because of manufacturing problems and recalls of several of its signature brands including Tylenol, Motrin, Zyrtec, and Benedryl. Criminal charges may be forthcoming because of possible cover ups of the recall that involved hiring outside contractors to purchase tainted produced in bulk to surreptitiously remove them from store shelves.

FDA had little choice but to seek a consent decree because of the seriousness and continuous nature of the problems at its Fort Washington production facility and the fact that J&J senior executives were either unaware or unconcerned with the problems at its subsidiaries. While working under a consent decree may be embarrassing for J&J, the damage caused by the recalls of some of its most visible consumer and OTC brands may be irreparable.

 Until next time...

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Can things get any worse at Genzyme? First there were the manufacturing problems that result in plummeting stock share prices and a proxy battle by Carl Icahn and company. Next up was a $175 million consent decree judgment levied by the US Food and Drug Administration for the manufacturing problems. Then came the $18 billion takeover bid from Sanofi Aventis. Now, patients affected by shortages of the drugs Fabrazyme three patients have petitioned the US Department of Health and Human Services (HHS) to disregard Genzyme’s patent for the medicine to overcome the drug shortages.

Because of the manufacturing problems, Genzyme rationed its supplies of Fabrazyme to one-third of the normal dose for Fabry disease patients. Some of these patients reported increased pain and no newly diagnosed patients could receive the drug. Meanwhile, Shire Pharmaceuticals has been trying to obtain FDA approval of its Fabry disease treatment, Replagal which is approved in Europe.

The patients who petitioned HHS contend that HHS can override the patents because the National Institutes of Health paid for research at the Mount Sinai School of Medicine, which exclusively licensed Fabrazyme to Genzyme. The goal of the action is to induce another company to produce the drug in case Genzyme is unable to deliver adequate quantities to new and existing patients. Provisions in the Bayh-Dole Act suggest that this action may not be unreasonable if ‘a licensee cannot reasonably meet the public health and safety needs of the American public.’

Stay tuned for the next installment of the continuing Genzyme saga!

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The New York Times reported today that French drug maker Sanofi Aventis has made a bid to purchase beleaguered orphan drug manufacturer Genzyme. According to the report, Sanofi approached Genzyme about two weeks ago about a possible sale. Sanofi is currently waiting for a response from Genzyme. If Genzyme rebuffs the takeover bid, persons close to the deal said that Sanofi may possibly try to acquire Genzyme via a hostile takeover bid.

Sanofi is facing revenue losses because many of its blockbuster products including the anti-clotting agents Plavix and Lovenox will or have lost patent protection. Plavix's patent expiry will occur in 2001 whereas Lovenox has already lost patent protection ( yesterday the FDA approved a generic version of the drug). Further, Sanofi, unlike most major pharmaceutical companies, is glaringly deficient in biotechnology products and has long been known to be seeking a quick entry into the biotech market. To that end, the Genzyme bid makes complete strategic sense to bolster sales and secure Sanofi's future.

Genzyme is the fifth largest biotechnology company in the world. Sales of it orphan drugs to treat Gaucher’s, Fabry and Pompe disease annually exceed $3.0 billion in sales even though they are used to treat small numbers of patients (<20,000).

Genzyme’s value has plummeted in the past year because of manufacturing problems and is currently operating under a US Food and Drug Administration consent decree after being fined $175 million by the agency. Many shareholders have called for the dismissal of Henri Termeer, Genzyme’s CEO for the past 25 years. To date, Termeer has refused to step down even though Genzyme’s stock continues to under perform. News of a possible takeover caused Genzyme’s stock price to soar; gaining more than 15 per cent on Friday to $62.50.

I believe that Sanofi is approaching Genzyme at the right time. Recently, Genzyme reached an agreement with Carl Icahn, who owns a substantially amount of stock, to prevent a proxy battle to reshape Genzyme’s board and oust Termeer. Also, another major shareholder, Ralph Whitworth, is unhappy with recent events at the company. Sanofi’s acquisition of Genzyme would provide a quick entry into the biotechnology and orphan drug markets and also appease shareholders like Icahn and Whitworth if the deal is rich enough. Also, Sanofi’s manufacturing experience would help Genzyme overcome its problems in that area.

Stay tuned for updates.

Until next time...

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After weeks of bad press regarding manufacturing problems and a narrowly-averted proxy contest, Genzyme today announced that its experimental drug for multiple sclerosis, alemtuzumab, received fast track approval status from the US Food and Drug Administration (FDA).

Alemtuzumab (marketed as Campath, MabCampath or Campath-1H) is a monoclonal antibody used in the treatment of chronic lymphocytic leukemia (CLL), cutaneous T-cell lymphoma (CTCL) and T-cell lymphoma. Alemtuzumab targets CD52, a protein present on the surface of mature lymphocytes, but not on the stem cells from which these lymphocytes are derived.

For those of you who may not know, FDA grants fast track status to experimental drug candidates that are designed to treat serious diseases, and may be superior to current treatments. Fast track status includes an expedited review and additional collaboration between Genzyme and the and the agency and allows Genzyme to submit portions of the alemtuzumab BLA as they are completed, rather than waiting to submit the completed application when testing is finished.

Until next time..

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Genzyme announced yesterday that it had reached an agreement with Carl Icahn to settle their very public and bitter proxy battle. As you may recall, Icahn, who controls approximately 4.9% of shares in Genzyme, sought to replace Henri A. Termeer, Genzyme’s embattled long-time CEO and three other company directors.

Under the terms of the agreement, Icahn will withdraw his slate of four nominees for the Genzyme board of directors and vote his shares in favor of two company nominees. Also, the Genzyme board will appoint two Icahn nominees Steven Burakoff, MD and Eric Ende, MD to serve as directors immediately following the company June 16, 2010 annual shareholders meeting. Dr. Burakoff is Professor of Medicine, Hematology and Medical Oncology at the Mount Sinai School of Medicine and Director of the Tisch Cancer Institute at the Mount Sinai Medical Center. Dr. Ende, a participant in the Icahn funds’ proxy solicitation, is a former biotechnology analyst with Merrill Lynch & Co. Inc.

This isn’t the first time that Icahn has threatened a proxy fight to get his nominees elected to the board of directors at companies where he controls a small but significant amount of outstanding shares of stock.  Previously, he attempted to wrest control of the Biogen and ImClone and Enzon Pharmaceuticals board of directors. While his attempt to commandeer the Biogen board failed, he was successful at ImClone, the maker of the anti-colon cancer drug Erbitux that he sold to Eli Lilly in 2008 for ca. $6.1 billion. In Enzon’s case, the CEO resigned about six months after accommodating Icahn’s demands.

It is patently obvious that biotechnology company executives don’t want Icahn to gain control of their companies. This is because once Icahn gains control of the companies he sells them to the highest bidder. While this may make sense to a financial guy like Carl, it doesn’t sit well with company executives who understand that they will likely lose their jobs once a company is sold! 

Although Carl’s public proxy contest strategy usually gets him most of what he wants, I am not sure that it is in the best interests of company stock price and shareholder. Publicly airing a company’s dirty laundry tends to reduce shareholder confidence and may push its stock price lower than necessary. I think that it may be in a company’s best interest to quietly negotiate with Icahn behind the scenes rather than take the fight to the public. In the end, Icahn invariably wins and the management team that is under fire may look less competent or weaker than it actually is. Biogen ultimately won but Enzon and Genzyme lost the public opinion battle.

Until next time...

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Genzyme announced yesterday that it expects to be fined roughly $175 million in fines and penalties related to the manufacturing troubles at its Allston Landing, MA manufacturing plant that resulted in severe shortages of two of its best selling products, Cerezyme (Gaucher disease) and Fabrazyme (Fabry disease) 

The fines and penalties are part of a consent decree that the US Food and Drug Administration (FDA) intends to levy against the company for the manufacturing infractions. A substantial portion of the penalties included a disgorgement settlement, a process that allows FDA to collect a certain percentage of the sales of products made at the troubled Genzyme production facility.

According to an article in today’s New York Times business section, Genzyme representatives said that patients using Cerezyme would continue getting half a dose for two or three more months. It previously said full supplies would be restored May.

Patients who use Fabrazyme would continue to be allocated a third of their usual dose at least through the third quarter. The company had previously hoped to resolve the Fabrazyme shortage in the third quarter.

The highly publicized manufacturing problems at Genzyme, has shaken both physician and patient confidence in the company’s ability to safely manufacture and supply sufficient quantities of Cerezyme and Fabrazyme; two orphan drugs designed to treat patients with debilitating genetically-inherited diseases. 

Several physicians and patients who were previously loyal and ardent supporters of Genzyme, have indicated that they may switch to recently approved and new treatments being developed by Genzyme’s competitors that include Shire.

The lack of commitment to quality manufacturing by Genzyme executives has seriously tarnished the image of a once highly respected and reputable orphan drug developer.

Until next time…

Good Luck and Good Job Hunting!!!!!

Until next time…

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

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The recent manufacturing woes of orphan drug manufacturer Genzyme have been well documented and widely publicized. These problems resulted in massive shortages of some of its top selling drugs Cerezyme (Gaucher disease) and Fabrazyme (Fabry disease) causing many of the patients who depend on these drugs to maintain their quality of life to go without reduced or no treatments for months. 

Because both drugs were approved by the US Food and Drug Administration (FDA) as orphan drugs they enjoy seven years of market exclusivity from the date of regulatory approval which prohibits other companies from seeking approval and selling similar drugs in the US. Consequently, Genzyme is the only commercially-available source for the drugs. Genzyme’s ongoing biomanufacturing created massive shortages of both drugs last summer. Because of this, FDA allowed two other companies, Shire and Protolix Biotherapeutics (both have treatments for Gaucher (Protalix) and Fabry (Shire) disease in late stage clinical development), to make their drugs available (at no charge) to patients prior to regulatory approval. This was a relatively rare and bold move by the agency. But, to be fair, they had little choice because so many patients were suffering.  

In case you may be wondering there are approximately 1500 Cerezyme users and fewer than 1000 Fabrazyme users in the US. Despite the small numbers of patients, the cost of the treatments are extraordinarily high; costing patients as much as $200,000 per year for treatment.

According to an article in today’s NY Times as many a 15 percent of American Cerezyme users have switched to a different drug. Fewer patients with Fabry disease have switched mostly because Shire’s drug for Fabry disease Replagal was less widely available. The almost year-long shortages of both drugs have seriously tarnished Genzyme’s reputation. And previously loyal patients are questioning their almost decade long allegiance to the company. This, coupled with a 26 per cent decline in Genzyme’s stock price last year suggest that Genzyme’s standing as one of the top five biotechnology companies in the world may be in serious jeopardy. 

Despite calls for his resignation (and an attempt by Carl Icahn to wrest control of the company), CEO Henri A. Termeer, who has led Genzyme for over 20 years has vowed not to resign. While manufacturing problems are not uncommon in the biotechnology industry, the severity and ongoing nature of the manufacturing problems at Genzyme’s Allston Landing, MA production facility are unacceptable; especially for a company that specializes and prides itself in developing treatment for orphan disease indications. The FDA recently announced that it would fine Genzyme and place its manufacturing operations under a consent degree for an indefinite period of time.

Genzyme representatives now contend full supplies of Cerezyme will be available after May 1 and those for Fabrazyme possible in the third quarter of this year.

While so-called “copycat” or “me too” drugs developed by pharmaceutical companies tend to be vilified by consumers and patient advocacy groups, the agency prefers to approve more than one treatment option for a given disease indication in case one medication doesn’t deliver the intended therapeutic benefits or induces untoward adverse events. Unfortunately, the seven years of market exclusivity awarded to orphan drugs manufacturers that garner regulatory approval for their products prohibits this. The biomanufacturing fiasco at Genzyme suggests that it may be time to reexamine the Orphan Drug Act and modify some of the financial and regulatory terms that were included to induce drug companies to develop new treatments for orphan disease indications.

Until next time…

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Orphan drug manufacturer Genzyme today issued a press release that the US Food and Drug Administration (FDA) notified the company that it intends to take enforcement action to ensure that products manufactured at its troubled biomanufacturing facility in Allston Landing, MA are made in compliance with good manufacturing practice regulations.

The agency’s enforcement action will likely result in a consent decree under which a third party would inspect and review the plant’s operation for an extended period and certify compliance with FDA regulations. Under a consent decree, Genzyme also would be required to make payments to the government and could incur other costs.

The Allston Landing facility was experiencing product quality problems for some time before FDA intervened and threatened regulatory action and sanctions against the orphan drug producer. According to the press release Genzyme will:

work cooperatively with the FDA to restore the agency’s confidence in its ability to operate the Allston plant at the highest standards, building on the progress it has made over the past year to address the manufacturing deficiencies at the Allston plant. This progress includes:

• Retaining a leading quality assurance advisory firm to help develop a comprehensive strategy and risk mitigation plan. More than 30 expert consultants from this firm are currently working at the Allston plant or at other Genzyme manufacturing facilities.
• Naming a new site head and reorganizing and strengthening the management team at the facility.
• Hiring two highly regarded industry veterans to serve as President of Global Manufacturing and Corporate Operations and Senior Vice President of Global Product Quality.

While this is not good news for Genzyme, it is great news for patients who rely on Genzyme’s medicines to manage their oft times devastating and potentially life threatening genetically-inherited diseases.

Until next time…

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

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