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Monday, December 02, 2013

PharmAthene Theraclone Call It Quits

  • Forest Laboratories Inc. To Trim Jobs in $500M Restructuring
  • Eisai Inc. R&D Organization Undergoes "Transformation," Chops 130 Jobs
  • Merck & Co., Inc. To Shutter Irish Plant, 570 Jobs To Go
  • PharmAthene, Inc. Terminates Merger Agreement With Theraclone Sciences, Inc.

On of these stories is not like the others, at least not on the surface. The first three are typical Monday morning job loss stories from the Cargo Cults of BioPharma. The last story is about the failure of a new business model. The failure can be used however, to explain the massive layoffs among scientists who develop drugs.

On Aug. 1, 2013 PharmAthene and Theraclone announced:
ANNAPOLIS, Md. and SEATTLEAug. 1, 2013 /PRNewswire/ -- PharmAthene, Inc. (NYSE MKT: PIP) and Theraclone Sciences, Inc., a privately-held monoclonal antibody (mAb) discovery and development company, announced today the signing of a definitive agreement for the merger of PharmAthene and Theraclone in an all-stock transaction.
The combined company will be a fully-integrated and diversified biologics company with four clinical-stage product candidates targeting high-value commercial and government markets.  The merged company will combine vaccine and human monoclonal antibody expertise with a focus on infectious diseases and oncology, and will feature a robust discovery pipeline with four pre-clinical programs and multiple discovery candidates, along with three partnered products.
"A merger with Theraclone will significantly advance PharmAthene's goal of achieving broader portfolio diversification," said Eric I. Richman, President and Chief Executive Officer of PharmAthene. "As a company with multiple clinical, pre-clinical and discovery candidates targeting important indications, the combined company will have the potential to generate substantial value for stockholders through both corporate collaborations and the development of its own proprietary therapeutic mAbs targeting high-value commercial markets."
Mr. Richman continued, "The combined company also expects to be able to leverage non-dilutive government funding sources to support ongoing and future product development efforts, with the possibility to receive a share of revenues from sales of SIGA Technologies' smallpox antiviral, Arestvyr.  As a stronger company, with expanded access to non-dilutive funding, we expect to be solidly financed through resolution of the SIGA litigation."
Clifford J. Stocks, Chief Executive Officer of Theraclone, who will head the new company, commented, "By combining PharmAthene's strong vaccine and biologics development capabilities and government contracting experience, with our clinical antibody candidates and novel discovery platform we are establishing a premier biologics organization with multiple product candidates possessing significant near- and longer-term revenue potential in high-value commercial markets."
Then came some bad news last week:
Theraclone Sciences, Inc., a therapeutic antibody discovery and development company, today announced that it has received notification from the Biomedical Advanced Research and Development Authority (BARDA) informing the Company that their proposal, “Broad-spectrum anti-influenza A M2e fully human monoclonal antibody TCN-032: Determination of efficacy in serious influenza disease,” was not selected for funding under the current proposal. Theraclone submitted the proposal on August 29, 2013, to apply for government funding to advance development of TCN-032 into Phase 2 clinical development for serious influenza disease, including pandemic flu. - 
Note the hopes of the leaders from each Cargo Cult. They hoped to advance four drug candidates "targeting high-value commercial and government markets".  The merged company will combine vaccine and human monoclonal antibody expertise with a focus on infectious diseases and oncology, and will feature a robust discovery pipeline with four pre-clinical programs.  

And it all fell apart a week after BARDA rejected Theraclones TCN-032 request for funding. As the Theraclone CEO stated in the hopes and dreams section (the press release) of their business model, PharmAthene was suppose to bring the government contracting experience. With the termination of the contract, a $1M termination fee is to be paid by PharmAthene to Theraclone. Thereaclone provided the drug. PharmAthene was to suppose to get BARDA on board. Did the drug fail to impress or did the government contract experts fail?

Either way, things didn't go as expected. One day before the cult leaders (shareholders) were to meet, both companies agreed that the plans they had made were not going to generate value. So much for combining vaccine and monoclonal antibody expertise. So much for their robust pipeline discovery and four pre-clinical programs. The reality of the proposed merger was that it was a bit more short sighted than advertised. One would think that something as simple as a failed attempt at funding wouldn't sink the promise of this combined biopharma company. 

The connection to the layoffs at Forest, Merck and Eisai is the business model designed primarily to make more money. Once again, George W. Merck:
"We never try to forget medicine is for the people. It is not for the profits. The profits follow, and if we remembered that, they have never failed to appear. The better we have remembered it, the larger they have been." Good medicine comes from good science. You have to remember how this science works. It takes many years from start to finish. Often times the finish is disappointing. To divest in the process because of the current lot of disappointments is a misunderstanding of timeline of this science." 

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