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Monday, November 29, 2010

Biotech is Back Tonight

I've been typing away on this ridiculous forum of a blog since 2006. I'd left my latest job in biotech and I was at a loss to explain my life. Were these people honestly conducting what they thought science was or were they running a scam? I couldn't tell. So I started writing as a form of therapy. Why not, it was free.

It's 2010. The company I left back in 2006 is gone. They set a record on Wall Street for the rate of decreasing market capitalization. Impressive indeed. I moved onto another company that hasn't crashed yet, but in many ways could be more of a Cargo Cult than the previous company. I used the metaphor of fires along a cargo cult airport to track the comings and goings of the biotech companies. The fires have been burning out left and right since I began. Big ones like Zymogenetics, gone. Small ones like Homestead from Accelerator Corp. whom you never hear about. They just burn up a couple million bucks and they go away.

Tonight we have the Biotech Is Back forum taking place at the Path headquarters downtown. If you haven't seen this place let me set the stage. Paul Allen decided to "build it and they will come". He started building lab space, high rise apartments and high end commercial space to accommodate the well paid science community. In his "corridor" you will find a plethora of brand new spaces. As a fan of all things urban I am impressed and saddened that it is wasted on biotech. But there is a well funded high rise that houses the headquarters of PATH. Bill and Melinda Gates fund PATH, a non-profit organization that helps poor folk in third world places, including those in the good old USA. That doesn't mean the employees don't profit. They are living large. The ergonomic chairs in their cubicles are worth more than two years of the average salary of the people they are setting out to help in Africa. Tonight PATH will be hosting a forum where 4 of the few remaining biotech CEOs are going to try and make the case that biotech in Seattle is going to come roaring back.

I do not fault the sponsors. They are trying to make money. That's what good Americans do. I wish Biotechnology was into making money honestly for the sake of myself, our vendors and the people who need useful biotech products. But the forum, I fault! It's about bullshit. Biotech in Seattle is not back. It's the same people with the same tools trying to solve every problem in the same old ways.

In my next post I will compile a list of the companies that were here in the last ten years. You will see what happened and you can decide if biotech is back or not.

Thursday, November 25, 2010

Daily dose of drug cuts risk of HIV for gay men: study

A total of 2,499 men at high risk of HIV infection participated in the study, which was conducted at 11 sites in Brazil, Ecuador, Peru, South Africa, Thailand and the United States. Half of study participants received the PrEP pill, while the other half were given the placebo.

In all, 64 HIV infections were recorded among the 1,248 study participants chosen at random to receive the dummy pill, while 36 HIV infections were recorded among the 1,251 participants who got the drug.

These are the last two paragraphs from an article from CTV News, the Canadian Press.

I've also cut and pasted their headline and used it as my own. The headline indicates that there is a risk of HIV and the drug "cuts" that risk for gay men. What the last paragraph shows is that less gay men in the drug group of the trial contracted HIV than in the placebo group. The "risk" in the headline is about the risk of being infected by the virus. This shouldn't be confused with the risk of dying of AIDS because you are HIV positive.

A true test would be unethical. 2500 HIV negative people are split in two groups just as they were in this trial (placebo vs drug). They are allowed only to have sex with men from a group of HIV positive men. The sexual encounters must be done without condoms.

The truth about the trial however is that the men were allowed to randomly have sex as they saw fit. Condom use was not measured. This issue appears to have been dealt with by providing both groups with safe sex education. The measurement of whether or not each participant took his daily pill was done on the honor system. Daily use was not true to the design of experiment but dealt with after the fact to the advantage of the pharmaceutical company paying for the trial.

And I could go on. What was the diet between groups. What were their incomes. Where did they go for sex? Then you take just the ones who contracted HIV. The list of variables is beyond our comprehension. Yet a fair trial would be unethical. Science is up against a whole lot when it comes to this kind of research. In the end all you have are two groups. In one, 5% get HIV. In the next, 3% get HIV. Surprising?

Game Changer!

Friday, November 19, 2010

RNAi and Roche

The RNAi world took a big hit this week. Had they listened to the lowly CCS they could have saved over 800 million dollars! Why am I not a high paid adviser in this industry.

I know of a couple people who swear that gene therapy works. I know of no one who says that RNAi works. Keep in mind, the people I know wear white lab coats at work and speak of results that they have seen first hand. The people I mostly poke fun at wear Friday business casual and work in offices. They conduct science in board rooms with white boards and powerpoint presentations as their only tool. They need a certain story to be told and they direct people to go and get certain results.

We still have a couple RNAi fires lighting our runway up here in the Northwest. Marina, formerly MDRNA, has been raising money in dribs and drabs for the past several years. Why did they take the RNA out of their name? Next is AVI Biopharma who work with RNA anti-sense, which is different than RNAi, but equally is certain to fail. Why get nit-picky with BS?

The problem I've always had with RNAi is that it is too easy. A PHd need only select a drug target then pretend that it has been knocked out. Hitherto you had to create a knock-out mouse which is hard to do and expensive. This bailed out a whole generation of lazy scientists. It reinvented old gene therapy farts who were at end of their wasted careers. It said to the world, we have a new tool box for fighting disease. You open that tool box and their is one hammer in there that they whack every problem with. Where are we now?

Finally, a major player has closed its books on this foolish pursuit. Others will have to come to the same conclusion, but this is still biotech. They will fight for their professional lives until the money dries up. But remember, you can trust the CCS. The RNAi cargo planes will never come.

Tuesday, November 16, 2010

Dendreon Stats Revisted

Provenge has traveled a rocky road. In 2007 it was recommended for FDA approval but not approved. Controversy surrounded the FDA decision. In 2010 it was approved.

On Wednesday the Centers for Medicare and Medicaid Services, or CMS, are going to review the drug.

Just last week a government health agency that studied Provenge on Medicare's behalf found only "moderate" evidence that it works. In the clinical trial that led to FDA approval, statistics on 512 patients demonstrated a median survival of a little more than two years, or four months longer than patients in the control group.

The question for Medicare is not about the cost of the drug. Their job is to assess the efficacy and safety of Provenge. In the background is the projected sales peak of nearly $2.3 billion in 2016. If Medicare gives Provenge a thumbs up, the stock price could increase 60% in 12 months. Based on the history of the reception of the data touting Provenge, I would say Medicare approval is a toss up. Add in the money to be made and the lobbying efforts of Dendreon, I would buy up as much of this stock as you can afford.

Sunday, November 14, 2010

Biotech's Back Bullshit

Are Cargo Cult leaders honest, liars or bullshitters?

What is the motivation behind the "Biotech's Back in Seattle" forum.

In order for a Cargo Cult to survive you must convince people that the airplanes will arrive. The tribesmen are easy to convince. In the case of Seattle there are plenty of people around with the proper credentials to don a white lab coat and convince investors that there is a company engaged in research. You can find them working at Starbucks or the grocery store or even at the few remaining biotech firms up here. The investors are the real problem.

I want to point out the difference between what a tribesman thinks is in the Cargo planes and what an investor thinks. The tribesmen think that it will be great science that leads to lifelong prosperity making useful drugs. Investors think it's cash.

What does it take to get investor money? It takes bullshit. Investors in biotech have been notoriously susceptible to bullshit. That is because they are bullshitters too. They know bullshit when they see it. And when they think it's being done to the proper standards, they invest. Just check out the portfolio of the FrontPoint hedgefund.

Imagine the potential losses you could incur by running an investment firm with nothing but Seattle Biotechnology companies. I know what you're going to say, "you have to diversify". The point of this horrific financial scenario is to put yourself in the shoes of the target audience at Biotechs Back in Seattle. How much of what they are going to say will be bullshit and how much will be an honest assessment of the state of Seattle Biotech? Just look at the title of the forum! It's bullshit!

On Bullshit

Harry G. Frankfurt

Friday, November 12, 2010


It's really about money. Without money we can't live our lives. We could work in science but it would just be a hobby, like monks who contribute to scientific ideas such as genetic order or new math formulas.

As we eagerly await the Biotech is Back summit here in Seattle, we get the news that Ikaria has pulled the plug on their IPO.

We're coming back with the ferocity of a small African Gazelle.

Thursday, November 11, 2010

Keep Flames Alive

Hilarious title

Are they reading my blog?

MBA Students Cheat?

One of the most interesting interviews from the report on the Central Florida University cheating scandal is at the end of this GMA report. where the student doesn't see why it's a big deal. More interesting than getting caught is A) the percentage of the class cheating and B) the attitude of the interviewee. It's not important. Everyone does it. He even claims that 100% have cheated on a test at one point or another.

I've said before what a waste it is to spend so many years of your life learning natural science only to end up a businessperson. To think the PHd in Biochemistry ends up in a group like these students is a shame. So I propose a new degree. Lying Cheating Bastard, LCB. My name is John Smith, LCB.

The degree is about bullshitting. Liars tell lies. Bullshitters don't care if they are telling the truth or not. They say what needs to be said, just like the students who found a way to pass a course at CFU. The LCB candidate must take courses all throughout the University system and at least pass them. Failure is not an option. After the course is completed the LCB graduate student must write a report on how he/she did it. Studying hard and learning the material is an option but more points are given for working around such a system. Of course, the LCB will be Big Pharma management material.

200 out of 600 students were caught cheating, thanks to the powers of statistical analysis. Ha! I've told the story about the car dealership where 11 out of 20 salesmen tried to steal money from a mentally retarded man who came in bragging about large sums of cash he kept at home. The percentage of dishonest people, all willing to act on the first opportunity to cheat, was astonishing. 33% of MBA candidates acted upon this opportunity to cheat. Could this number have been higher? How many of the other tests given to this population were cheated on? What do these students do once they enter the corporate world? Do they seek ways to continue tipping the scale in their favor? Statistically you would have to believe so.

The LCB idea might not take off. Let's just think of 1/3rd of MBAs as LCBs. The other 2/3rds probably won't make it in business.

Wednesday, November 10, 2010

The Logic of Picking the Perfect Ice Cream

This is my favorite analogy of the mindset that has plagued my biotech life.

How do you know what the truth is?

Tuesday, November 09, 2010

Location Location Location

Bio Nebraska: Inspire, Invent, Innovate... inNebraska

This is not a criticism, like the usual post. I like the idea of people in a place like Nebraska thinking about science and technology. Most people think they are all farmers. The CCS thinks that farmers are quite often smarter and much more honest than the average PHd. They have a lifestyle that allows for this. The PHd has pressure to publish and has way too much competition to maintain employment. The farmer wakes up each day and does what he has always done. It's a sustainable lifestyle versus publish or perish.

Why do biotechnology companies have to reside in San Diego, Boston or North Carolina? Inspiration and innovation occurs in the mind. You have in the United States a plethora of resources from educational institutions to wealthy locals to invest in ideas in all 50 states.

The creative mind of the corporate world however is such that success occurs only specific geographical locations. Yet Warren Buffet set up shop in Omaha, not Wall Street. What if he had chosen Wall Street? Berkshire Hathaway makes money by investing in organizations that make money, regardless of their location. Why is Biotech different? Why does the CEO of Dendreon worry that he won't be able to attract top talent if the location of Washington state scares them away due to its tax structure? Is the talent he seeks that superficial?

Where do ideas come from? How do you apply them to real world needs? The Cargo Cult Airports that I speak of are in the minds of individuals. They believe their degrees and those of their colleagues lead the way to innovation. The Cargo Cult Airports are people in boardrooms talking about what is needed but not specifically how to get it. They know where, who, why, when but not how.

Friday, November 05, 2010

Clinical Trial Fraud

MannKind's former senior director for regulatory affairs John Arditi is alleging that the company hid "scientific misconduct" from regulators. In a lawsuit filed Sept. 16, Arditi said he uncovered irregularities at Russian and Bulgarian trial sites, noting that patients at the Russian site were recorded as having the same blood pressure at several visits--something that is highly unlikely. In Bulgaria, patients were said to have been treated with the drug despite the fact that Afrezza packing slips indicate the drug had not yet been delivered to the site. Both issues points to the possibility of fake patients. The former exec further alleges that he was fired after bringing the issue to the company's attention.

Read more Clinical trial fraud accusations rock MannKind .

Mannkind is in for a fight Biotech companies never want to get into. Standard practice is to prepare a severance for the departing Cargo Cult Scientist with a clause that prevents him/her from exposing the Cargo Cult secrets. This one should be fun to watch.

Like Aubrey Blumnsohn, people with integrity and inside clinical trial information can be a real pain in the arse. The two cases differ in the kind of information that is meant to be hidden but they are the same in the struggle to tell the truth. You begin to question yourself, "does this matter"? Your superiors are saying that it does not and perhaps you are not smart enough to understand. You dig deep and try to prove yourself wrong. Your career is at stake. Does it matter? You can't prove yourself wrong. Not only do you think your concerns matter, but you think most rational people would agree.

In a sane world clinical trials be completely transparent. In the Cargo Cult you can still have fake patients. Once discovered you can't bring it to the attention of upper management without negative effects on your career. No one ever said leaving the Cargo Cult would be easy.

Monday, November 01, 2010

Herb and Dorothy Vogel

There is a very interesting documentary about two people who are the polar opposites of me. Herb and Dorothy were two art collectors living in NYC. Dorothy was a librarian and Herb worked at the post office. They used her salary to pay the bills and his to buy art. Their collection is now kept at the National Gallery of Art.

I enjoy art and visiting museums. I've even created a few paintings myself. But I don't understand how anyone can assess art. It seems to me that these types of judgements are too subjective. Yet Herbs lifetime postal salary was spent on art that he and his wife deemed to be important. In the end others agreed with them. Many of the artists who they supported early in life went on to become famous. Did they know something special or were they two eccentrics who got lucky?

I say I'm the polar opposite because I want to focus on things that can be quantitated. Paintings are simply good or bad. You can look at them, learn about them and enjoy them. A professional career deciding where a modern art painting falls on the genius to crap continuum would be almost purely nonsensical. By using science one can understand the world and even predict certain outcomes.

So how did Herb and Dorothy become famous? I think their NYC location was a part of it. They met artists you just don't meet in Cleveland or Omaha. Devoting an entire blue collar salary for investment increased their odds. In the end, they had their own special brand that lead people to believe in them.

I think of the Vogels like I think of a venture capitalist who focused on Biotechnology. Most of these types failed miserably. A few made it big. Who do we remember?