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Friday, November 08, 2013

BMS in Seattle

Bristol Meyers Squibb spent $885M on Zymogenetics. The guys and gals who spend their work life serving a company like Zymogenetics inevitably get notified that their efforts will be rewarded with a termination. These individuals now have to go forth and convince another company that it was BMS and/or Zymo who made the mistakes. To add to the pain, the researcher must make this case without bad mouthing their previous company!

The reason for the acquisition of Zymo was primarily for Zymos interferon alpha product to fight Hep C. The job cuts in Seattle are being made as BMS' moves out of the Hep C, neuroscience, and diabetes areas. One has to wonder what value is left in Zymogenetics? The individuals who are being cut apparently only had value in the Hep C space. They are not researchers. They are Hep C Zymogenetic workers.

I have long railed against the notion that a research professional is only valuable in the field in which they have been working. In a non-cargo-cult world a researcher is a cog in the machine that conducts research. Put ideas into the machine and out will come the results that are nothing-but-the-facts-ma'am. In this fantasy world, the researchers at Zymo would be given new research projects, not pink slips. Having the ability to move from Hep C to cancer to diabetes would create a research department that relies on the scientific method more than the cargo cult mentality. The researchers would be partners in ending things that need to end. When their careers end with their projects, they will act in their best interest, not the companies.

Right around the time BMS was sniffing around Zymo they had a team conducting due diligence on an anti-IL6 antibody from a small Bothell WA biotech called AlderBiopharmaceuticals. They paid Alder $85M with milestone payments up to $764M. In June of 2011 BMS paid Alder a $15M milestone payment for the launch of a phase II Rheumatoid Arthritis trial that they reported on last week (positively) with no mention of milestone payments. This could mean trouble for Alder. The workers at Alder are in a typical biotech quandary. Their jobs might be in jeopardy and there is nothing they can do. The lead candidate is the money maker. The rest of the pipeline is window dressing.

What would an Alder worker have to tell BMS if their job wasn't on the line? The diseases the IL-6 crowd fights are Rheumatoid Arthritis and cancer. Genentech already sells Actemra, which is an antibody against the IL-6 receptor. The BMS/Alder drug is different in two ways. It binds to IL-6, not the receptor of IL-6, and it is expressed in Pichia pastoris yeast. The norm in biopharma is expression in Chinese Hamster Ovarian (CHO) cells such as the CHO platform employed by Genentech for drugs like Actemra. If BMS and their anti-IL6 drug is going to compete, they will have to also compete with pricing. That means they will have to somehow compete with the CHO platform. Do the workers at a small biotech even understand what they are up against?

The claims at Alder:
  • The cost of producing mammalian cell cultures is US$300 to $1,000 per gram. Alder’s microbial cultures cost a fraction of this amount.
  • Over 75% of antibody manufacturing capacity is held by a limited number of companies. Alder provides an alternative manufacturing process that avoids this bottleneck.
This is quite a claim. Having witnessed the pricing fiasco of Seattle based Dendreon, one has to wonder if Seattle has the right kind of talent to properly factor in the cost of providing a drug product. They have not produced many research professionals who are highly skilled in dealing with manufacturing. Cargo Cults specialize in the narrative. Manufacturing and engineering issues cut through the BS of cargo cults. Did BMS truly find the Pichia pastoris story convincing? The biopharma world, one would think, would be banging down Alders door to get at their manufacturing technology. It is not. Alder claims that their system "scales rapidly to 50,000 liter tanks" Compare this to Genentechs 15,000 liter tanks in Oceanside CA where Actemra is made. One can assume the CHO platform at Genentech expresses somewhere between 3 to 5 grams per liter. What is the Pichia pastoris expression level?  

The workers know but their jobs are on the line. Keep positive or parish. In spite of the unbridled optimism of Seattle biotechies, the layoffs and the confusion around Alder underlies the Cargo Cult nature of this business. The people being laid off at Zymo had no control over the competition against interferon alpha. The workers at Alder have no clue about big pharma manufacturing issues. The things that take away from the value of these researchers are things they have no control over. Like the Cargo Cult watchtower worker, the fact that the planes do not land has little to do with what is going on in the watchtower. It's something else. You can go back to watchtower school or you can work a little harder to find out why these things keep happening. 75 people at BMS, 160 at Ariad, 500 R&D jobs cut at Novartis... Just another week in the Cargo Cults.   

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