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Johnson & Johnson (JNJ) is trying to regain sole marketing rights to Remicade, its lucrative anti-TNF treatment for arthritis and psoriasis, because Schering Plough (SGP)—which has most of the marketing rights to the drug outside of the US—is being acquired by Merck. JNJ is seeking arbitration to determine whether or not Centocor, its subsidiary that manufactures Remicade and Simponi, can terminate a marketing agreement for the two drugs—based on terms stipulated in the original contract —if there is a “change of control” at SGP.

As you may recall, Merck was acutely aware of the terms of marketing agreement before it decided to purchase SGP and cleverly engineered the acquisition as a reverse merger— to prevent triggering provisions that could return Schering’s marketing rights for Remicade and Simponi to JNJ if their were leadership changes or a change of control at SGP. JNJ’s announcement contesting wasn’t unexpected after the Merck-Schering Plough deal was announced early last winter—sales of Remicade outside of the US topped $2.0 billion in last year. Simponi, Remicade’s highly touted successor (which recently received FDA approval), is also expected to reach blockbuster status after it reaches the market. 

The Merck-Schering deal left JNJ with few alternative or choices. The company could have counter offered to purchase SGP in its entirety or simply, as it did, invoke terms of the original agreement that would terminate SGP’s marketing rights if there was a “change of control” at the company. JNJ rightfully believes that a change of control will occur when Merck acquires SGP. According to a JNJ spokesperson “As its public statements make clear Merck is acquiring Schering Plough. The acquisition constitutes a change of control and trigger’s Centocor’s right to terminate.” It will be interesting to see how an arbitrator rules in the case.

While the loss of Remicade and Simponi isn’t likely to jeopardize the Merck-Schering Plough deal (according to Merck executives), it may affect the financial terms and overall benefit or upside of the acquisition. The expected completion of the deal is scheduled for the fourth quarter of this year.

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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