The Cross-Border Biotech Blog

Biotechnology, Health and Business in Canada, the United States and Worldwide

Monthly Archives: April 2009

The Week Ahead: FTC Hearing on “Evolving IP Marketplace”

The Federal Trade Comission will be hosting a public hearing this Friday on the “The Evolving IP Marketplace: Markets for Intellectual Property”.  This is part of series of public hearings the FTC has held around changes in intellectual property law, patent-related business models and the new IP marketplace.  Looking at the agenda, I was surprised to see that life sciences industry will not be represented on the industry witness panel that will discuss valuing and monetizing patents. The meeting will be webcast.

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New Life Sciences Industry Data

New data from Delaware and Arizona last week:

Some highlights from a study by Edward Ratledge and Simon Condliffe of the University of Delaware’s Center for Applied Demography and Survey Research:

  • The biopharmaceuticals industry contributed $4 billion to Delaware’s economic output in 2008.
  • 247 biopharmaceutical firms employing 12,000 people, paying $1.6 billion in wages,
  • average salary of $132,000, which grew at a pace of 22.8% over the past five years, almost 8% faster than the wages of Delaware’s other industries
  • An additional 16,000 people are employed in support industries.
  • The industry is expected to add more than 120,000 jobs nationwide between now and 2016.

In Arizona, a similar study by Battelle Technology Partnership Practice had the following stats:

  • The state of Arizona and private philanthropists have pledged more than $1 billion to grow Arizona’s bioscience economy.
  • Excluding biotech jobs at hospitals and university labs, the industry employed 13,543 workers who earned $777.8 million [= average salary of $57,432] and contributed $177.8 million in state and local taxes.

For more stats on life sciences money and jobs, see our Bailout Page.

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About the Delayed Sebelius Confirmation

Contrary to expectations, Secretary of HHS-designate Kathleen Sebelius did not receive her Senate confirmation before the Congressional recess on April 3, due to the objection of one Senator.  Is Sebelius using the break to make greater assurances to Republican lawmakers before her vote is taken up again during the week of April 20? 

In her confirmation hearing, Sebelius addressed Republican concerns about comparative effectiveness research leading to “rationed care.”  Mike Enzi (R-Wyoming), top Republican on the Senate Health, Education, Labor and Pensions Committee questioned whether or not Sebelius would support a budget reconciliation measure opposed by Republicans to expedite Congressional approval of health reform. Republicans have also raised strong opposition to the idea of a government-run insurance plan to compete with private insurers.  The recess has provided more time for Republicans to press Sebelius on these matters and dangle them in front of her Senate confirmation.  Let’s see if this leads to more detailed commitments on comparative effectiveness and health reform!

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Bailout Updates: Results May Vary

We’re beginning to see a round of adjustments in government budgets. 

On the one hand, some programs are facing further cuts as aspirational commitments meet fiscal reality.  For example, state legislators in Washington are proposing cuts of betwen 50 and 90 percent to spending on the state’s Life Sciences Discovery Fund over the next two years.  Similarly, the government in Ireland, which had funded a remarkable increase in innovative activity, announced an emergency budget that will reduce academic funding and salaries.

On the other hand, some early cutbacks are looking shortsighted and are being reconsidered or worked around.  For example, genomics funding that was originally cut (or not increased) in the Canadian budget has triggered an inflow of funds from other sources: $26 million from the Canada Foundation for Innovation, and provincial funds in Ontario and Quebec.  In the UK, where the focus has been on education funding, the Biotechnology and Biological Sciences Research Council is providing most of the £13.5M to launch and operate The Genome Analysis Centre (TCAG) that will use genomics to support food security and animal health research.

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Trends Update — IP Constituencies: Sanofi Buys Medley in Brazil

Continuing a trend we have been following of increased “innovator” pharma investment in global generics and biosimilars, Sanofi-Aventis is spending €500 million to acquire Medley, a  privately-held Brazilian manufacturer. The acquisition will make Sanofi Latin America’s biggest generics manufacturer.  A post at the WSJ Health Blog on the acquisition includes a nice overview of the other recent pharma-generics deals.

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Trends Update — Electronic Medical Records: Military and Vetrans System Should Speed Adoption, Standards

In a speech Thursday, President Obama announced that the Defense and Veterans Affairs departments will set up a system that will ultimately provide “unified lifetime electronic health record” for members of the armed services. 

Any large-scale government implementation like this is bound to help set standards and encourage adoption by other providers.  With luck it will also, over time, provide data on cost-savings and care improvements.

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Friday Science Review: Run For it Edition

Only one actual science development made the news from Canada this week:

On the topic of putting things in your body, also note this week that the Ontario Medical Association has a push on to make chain restaurants and school cafeterias list how many calories are found in the foods; and that patients in Saskatchewan who don’t like the wait times for gastric bypass are travelling and paying out of pocket for lap-band surgeries instead.

Here’s hoping for more news next week…

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Yet Another Way Canadian Employment Law Can Mess You Up

U.S. clients are always surprised that one step across the 49th parallel opens up such a radically different (employee-favo(u)rable) world in employment law.  Here’s the latest and greatest…

The Supreme Court of Canada recently handed down a decision in Shafron v. KRG Insurance Brokers (Western) Inc. … that highlights how narrowly Canadian courts will interpret and apply restrictive covenants in employment contracts. The Supreme Court has reinforced the Canadian view that a restrictive covenant is prima facie a restraint on trade and that only restrictive covenants that are reasonable (i.e., limited and directly tied to a demonstrable economic concern) and unambiguous will be enforced.

Because the non-compete clause used the phrase “Metropolitan City of Vancouver,” which did not have a fixed meaning, the entire clause was voided. 

As you can guess from the caption, this was a case in the insurance industry, but biotech employers have at least as tricky a time defining appropriate territory, scope and duration limitations and this decision emphasizes that there is very little room for error.  Read the full Ogilvy Bulletin here.

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Wednesday Brain Dump: Things that Might Surprise You Edition

Things that surprised me this week:

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Cardiome Licenses Vernakalant (Oral) to Merck

Merck & Co., Inc. and Cardiome Pharma Corp. announced a collaboration and license agreement that provides Merck with exclusive global rights to the oral formulation of vernakalant for the maintenance of normal heart rhythm in patients with atrial fibrillation.

Here’s the deal:

  • US$60 million upfront
  • up to US$200 million in development and approval milestones
  • up to US$100 million for approval and subsequent indication milestones
  • tiered royalty payments
  • and up to US$340 million in sales threshold milestone payments
  • Cardiome retains a U.S. co-promotion right
  • Merck will be responsible for all future costs associated with the development, manufacturing and commercialization
  • Merck has granted Cardiome a secured, interest-bearing credit facility of up to US$100 million that Cardiome may access in tranches over several years commencing in 2010.

Cardiome and Astellas Pharma U.S., Inc. have a deal for vernakalant (IV) in the United States, Canada and Mexico; and this deal provides a Merck affiliate, Merck Sharp & Dohme (Switzerland) GmbH, with exclusive rights to the IV formulation outside of the United States, Canada and Mexico.

Effectiveness is subject to the HSR clearance, as well as other customary closing conditions.

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Trend Update — Electronic Medical Records: View From HIMSS

The 2009 Healthcare Information and Management Systems Society (HIMSS) conference was in Chicago this week, and was obviously energized by the stimulus money in the U.S. and the budget allocation in Canada, which have greatly increased the available funding for Electronic Medical Records.

There’s a great overview of trends at HIMSS from Dr. John D. Halamka, chief information officer and dean for technology at Harvard Medical School, at his blog: Life as a Healthcare CIO.

His headlines: Stimulus; Economy; Software as a Service; Security; Open Source; PHR; Appliances for HIE; Home Healthcare Care/Telemedicine; Performance Measurement and Outcomes; and Decision Support. 

Read the whole thing.  Read our other electronic medical records posts.

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Ontario Venture Capital Fund (OVCF) Scoreboard: Commitments 2, Biotech/Cleantech 0

The Ontario Venture Capital Fund announced its second commitment today (third?): $20 million to EdgeStone Capital to “help support innovative, high-growth businesses, including high-potential companies in Ontario.”  EdgeStone’s previous venture fund has $108 million of committed capital in this portfolio of IT companies.  Fund III has a first close milestone of $100 million and an ultimate target of $150 million.

Hey, Canadian IT VCs — feel better?

We’ll continue to follow OVCF activity as best we can.  You can find other OVCF coverage here; and other OVCF scoreboard posts here.

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Trends in 2009 Update: Hospital Hits Electronic Medical Record Milestone

As the momentum behind electronic medical records builds, New York-Presbyterian Hospital — with the help of the Microsoft Health Solutions Group — has  kicked it up a notch with MyNYP.org, an electronic personal health record.  According to a report in the New York Times on Sunday:

NewYork-Presbyterian Hospital … is the first large institution to move beyond the pilot stage this week as it begins to offer consumer-controlled health records for patients…

The NYP initiative facilitates the transfer of medical information into personal electronic records that are not tied to any institution.  According to the Times, Google has entered into similar partnerships with large healthcare providers so there’s more to come.

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It’s a Bird! It’s a Plane! It’s Super Provincial Genomics Funding!!

You may remember Genome Canada’s reaction to the 2009 Canadian Federal budget.  Here’s one bit from ScienceInsider at the time:

Researchers funded by Genome Canada … are reacting with shock to news that the Canadian government is withdrawing funding from the 9-year-old organization.

Not true! Cried the Canadian government.

Well, this week Genome Canada’s Board decided  (unanimously) to withdraw funding from the International Regulome Consortium project.  Here’s the reaction from IRC:

Michael Rudnicki, the senior scientist and chair of the International Regulome Consortium, said he is devastated by the news.  He said Martin Godbout, president and CEO of Genome Canada, phoned him this week to say that the agency had to terminate its support because of the budget.

Not true!  Cried Genome Canada.  Well, there’s some support for that, with Godbout citing “significant scientific and management issues;” but more importantly, the recent Ontario Budget included $100 million in the Ontario Research Fund to support “genomics and gene-related research,” so I don’t think genomics research in Ontario is short the money right now.

In fact, according to Ontario Minister of Research and Innovation John Wilkinson’s comments at a BIO2009 preparation meeting last week, that $100 million is targeted to rebut any suggestion of a weakening of support for genomics research in Ontari0.

And, right at the other end of the Ontario-Quebec Corridor, a $5 million donation plus a $6.6 million construction investment, plus recruitment of internationally renowned scientists, has added up to over $80 million in funding attracted from various sources to advance pharmacogenomics and personalized medicine research at the new Centre de pharmacogénomique Beaulieu-Saucier de l’Université de Montréal (Beaulieu-Saucier Centre for Pharmacogenomics at the University of Montréal).

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Wait Wait… You Should Hear This!

Ever since I lived in Chicago, I’ve been a huge fan of National Public Radio’s “weekly hour-long [very funny] quiz program” wait wait… don’t tell me!

This week, they did their show focused on “technology: high, low, and really low … a special innovation theme” 

Catch it online here, or download or subscribe to the podcast.

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Monday Deal Review: April 6, 2009

One complex arrangement, two clinical trial updates, three commercial deals and other bits of Canadian deal and company miscellany after the jump…

Existential Question for 2009: Is a Virtual Company Virtually as Good?

A thought-provoking piece over at Capital Rants (and the BlackBerry Partners Fund Blog) from Pierre Donaldson says, basically:

virtual-schmirtual, there’s no substitute for the interpersonal benefits of a physical headquarters where the whole team is regularly under the same roof and interacting face to face.

On the legal side, we have a tendency to view virtual/physical, outsource/in-house issues from a straightforward economic perspective, basically:

is the price of the virtual/outsourced service, plus the cost of managing the service, plus the transaction cost of setting up the service, less than the cost of providing it in-house?

Nominally, the issues Pierre is talking about fall into the service management costs bucket, but his post draws attention to some opportunity costs of virtualization, something generally not given enough attention in the  accounting cost version of these calculations.

Overall,  I agree that lack of physical interaction is an impediment to team spirit — the post’s central “Locker Room Theory”.  

The point I want to quibble with is:

“We can e-mail, IM, SMS, blog, tweet… you name it.  It is exactly as if we are constantly sitting right next to each other, right? … I’m sorry, but I don’t buy that at all…

“It’s about the water cooler conversations and finding out that your sysadmin’s favourite uncle has a golf buddy who is CIO at that large corporation you’ve been trying [to] partner with.” 

Lumping e-mail with Twitter, and leaving out LinkedIn and Facebook from his list is obviously leaving out a lot of nuance.  All three are useful virtual tools with far greater reach (though maybe less (normalized) utility) than sysadmins and uncles and golf buddies.

But, can we really virtualize networking the way we’ve virtualized companies?  When the BlackBerry Partners Fund shackles their portfolio company teams to an office and sends them on corporate trust-building retreats, are they building the next … BlackBerry … or are they taking valuable time away from meetups and status updates and the next great tweet

The current economic climate will likely result in a large-scale experiment as companies in a variety of industries either hunker down and go back to the water cooler or attempt to tweet their way out of their individual crises.  Hindsight, no doubt, will be 20/20.

Pharma and biotech companies are constantly faced with these virtual/physical outsource/in-source questions; and I expect we’ll continue to see a lot of comepeting approaches.  Fully virtual companies are possible and successful, with R&D, formulation, CMC, regulatory and clinical trial capabilities fully available on a contract basis from a bevy of worldwide competitors.

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Friday Science Review: Good News, Bad News Edition

Good news: If you happen to be in Montréal on Monday, you should check out the opening of the  Centre de pharmacogénomique Beaulieu-Saucier de l’Université de Montréal (that’s the Beaulieu-Saucier Centre for Pharmacogenomics at the University of Montréal, y’all).  It will be great to see what comes out of this centre for Canadian personalized medicine.

Bad news: If you happen to have been relying on a Nature paper from 2000 in which researchers in Canada and South Korea said they used gene therapy to reverse Type 1 diabetes, you should reconsider.

Good news: If you happen to do a science fair project that dovetails with a Minister’s legislative efforts, you could be famous.  Also, don’t drive and talk.

Bad news: If you were excited about the availability of private clinics in Canada offering CT and PET scans, you should read this new study from the Canadian Center for Policy Alternatives first, which found that there are prevalent misconceptions about the safety and regulation of these screening technologies.

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Canadian Life Sciences VCs Lead the Realization Parade

Liquidity Shrivels Up For VCs in First Quarter” was the banner screaming across the wire services earlier this week. While true, what was lost in the subtext were a few important observations for Canadian VCs, particularly those focused on life sciences:

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U.S. Unemployment Numbers Hit 25-Year High

Updated – Sibelius Senate Hearing: Interesting Bits from Prepared Testimony

Update from the NY Times:

Gov. Kathleen Sebelius of Kansas appeared Thursday to be headed for confirmation as health and human services secretary, but several Republican senators objected to an immediate vote, so the Senate is unlikely to take up the nomination until later this month.

Following our initial posts on Sibelius and her Ag Secretary in Kansas, we thought we’d pull out some interesting bits from HHS Secretary-elect Sibelius’ testimony this week. Read on after the jump…

Preparing for Passover

Trends in 2009: Comparative Effectiveness Meets Personalized Medicine in the Senate

Yesterday Senator Kyl (R-AZ) introduced a “comparative effectiveness amendment” (SA 793) to the budget which would have:

  1. required that legislation resulting from the health care reserve fund not use data obtained from comparative effectiveness research to deny coverage under Federal health care programs; and
  2. ensured that comparative effectiveness research accounts for advancements in genomics and personalized medicine, the unique needs of health disparity populations, and differences in the treatment response and the treatment preferences of patients.

As I noted in our earlier Trends post, I believe the comparative effectiveness advocates in the Obama administration are perfectly on board with point (2), a point I made again with further examples when the U.S. Stimulus allocated $1.1 billion to comparative effectiveness research.  It’s point (1) that most likely caused the amendment to be rejected, 44-54. 

Bottom line:  until the research is done, we won’t know how much of what appears to be “comparative effectiveness” is actually accounted for by “personalized medicine” (i.e., individual, genetically-based response variation to the subject medication/treatment), as compared to different “effectiveness” (i.e., response to a medication/treatment in a (relatively) homogeneous population). 

My guess is that the vast majority of apparently differential effectiveness will boil down to underlying genetic differences in patient subpopulations. 

But ultimately, there may be some treatments that are genuinely less effective than others in comparable populations.  As a patient and as a taxpayer, I’d like to know what those are and avoid taking or paying for them.

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Wednesday Brain Dump: Deal-O-Rama Edition

There’s still plenty of deal activity in the pharma and biotech sector this week, even outside Canada, so here’s a roundup of what’s done, what’s pending and what’s in the rumor mill:

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Google to Venture into the Life Sciences

Google announced on Monday that it’s launching its own venture capital fund under the leadership of Rich Miner and Bill Maris

Interestingly, they have taken pains to assure companies  that “[y]ou don’t have to be a potential Google acquisition for us to want to work with you.”  So don’t be shy.

In fact, Google Ventures aims to invest some of its $100 million in the biotech and healthcare industries.  Maybe Google’s previous investment in the bio-informatics company 23andMe has whet their appetite.

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