These Airplanes Are Fake!

Imagine the leaders of the Cargo Cult Airport leading a group of people around their airport. They bring the people close up to the airplanes but never close enough to actually touch one. They show them the workers but never allow a conversation. If they did they would see that the airplanes are merely wooden replicas and the workers have no clue what they are doing.

This is a biotech website. Those who chose to look will see the white lab coats.

But alas, not all who contribute to the biz are cargo cult scientists. For example, some are there to make the product that goes into the clinical trials. These people have experience and expensive equipment that make biological products. They cannot survive for the long term making wooden replicas. They make real biological products. It is up to the biotech company to use the products to create the dream that one day the airplanes will come.

Now we see someone who has a real concern about the quality of the airplanes/drugs. The airplane/drugs must have certain attributes that are not properly ascertained by looking from a distance.

Long story short, we (my biotech co.) are being discovered. A contract manufacturer is asking questions about how we produced and purified and packaged our drug, an antibody. Not just how, but why did we do what we did. Our answers we not sufficient. The CMO is now doing what it does with less and less help from the little biotech who is paying them to do their job.

The moral of this story is that not all biotech is Cargo Cult. Although it is embarrassing to be on the wrong side of right and wrong, I am pleased to see a contract manufacturing company asking the right questions and getting the wrong answers... and knowing that they are wrong. 

A River Runs Through It

I'm currently faced with a situation that would have pushed me over the edge in my younger days. We are working in "process development" in a small biotech company. We spent a few years getting by, purifying antibodies on a routine basis. All of our methods seemed to have come from a contract manufacturer who was hired years ago to produce a drug candidate for us. Our people knew nothing to begin with, and after watching the contract manufacturer do their work, they knew very little. What our people did was to find out what buffers were used. That is all they came away with. They did not know why the buffers were chosen but they knew that they worked.

What we have now is a clear "Cargo Cult Science". (CCS)

Our contract manufacturers succeed. They must or they will not continue as an entity. We on the other hand can carry on for years, because we do not have to produce anything other than charts and graphs that can be presented at meetings with affluential people. Contract manufacturers produce our drug and they must not only convince the world that the protein exists, but it is in the very vials that they send forth! And they do it very well. We don't know how.

But we, in this little company, take the proteins in the vials and we take them to the Cargo Cult Airport. We incorporate them into our rituals and invite our investors to sit with us and wait for the airplanes to arrive. So far nothing but a whole lot of money.

Pfizer Shuts Down Several Airports

As part of its integration of Wyeth, Pfizer said it will close a total of six research facilities and ultimately reduce the work occurring at 20 research facilities into five main research campuses and nine specialized units around the world.

What were they doing wrong? Here they are admitting that the planes were not landing. They've restructured. Will the planes land?

It all seems so random. To the investor or the executive they have a new path. But what was really wrong? Why couldn't the millions of dollars, pHDs up the arse, cutting edge technology and the latest advances in medical science produce promising candidates?

Something was missing...

Science, Sequences and God

I used the Henderson–Hasselbalch equation to calculate the amounts of acetic acid and sodium acetate needed for a certain buffer. When the pH of the solution was taken it was exactly what it should have been.  This is the kind of science that the CCS likes.  Now consider the human genome project.  

After a fortune was spent on the project, and more than a few "leaders" of the sequencing became famous, what do we really have? Has anyone ever truly used it logically? It's a bunch of As Ts Gs and Cs.  I originally thought there would be patterns that a computer could pull out that would help us to understand what a gene is.  Unfortunately, most people believe they already know what a gene is.  The genome project has only resulted in the kind of science the CCS dislikes.  You take a finite set and you select a piece of the set that best describes your pre-conceived notion.  In the case of the genome project, they selected five people and they began sequencing their DNA.  When they were done they said, "wallah, the human genome, now go and cure diseases.  But don't ask us how to use this tool."  The "how" is science.  The sequence is a whole bunch of sequencing machines working day and night.  

Another such science is RNAi where you select a set of sequences to knock out a gene.  You select the best one.  You can't lose.

In the Henderson–Hasselbalch example, you can lose.  You can screw up the math and get the wrong pH.  Biotech companies practice the genome project and RNAi type of science.  A company selects a drug or some service and hires "scientists" to prove that it works.  The leadership are university trained scientists who find work in laboratories to be unpleasant and better suited for the lesser intelligent university trained scientists.  

This brings me to the point of this post.  One of the scientists who gained some fame from the genome project has been promoted to NIH director.  

http://www.bloomberg.com/apps/news?pid=20601087&sid=atJa8QDGj8QU

Here is the craziest part of it.

http://biologos.org/

Randomly Fumbling Through the Day

Quite often in our business we move from one experiment to the next, never analyzing the previous set of data.  After a while people begin to believe that such a logical process is not possible in our special set of circumstances.  

Take for example the case of the gender assay from AcuGen Biolabs Inc.  They claim a 99.9% accuracy in guessing the sex of your baby as soon as 5 weeks after conception.  Due to patent issues, they claim, they are unable to share with anyone the data from where this accuracy was calculated.  Statistically, how many tests would have to be done to verify that they can significantly predict male, female or twins with a 99.9% accuracy?  Can't we test this biotech company to make sure they are not selling a bogus product.  

But kudos for their method of sidestepping the FDA.  Each day we in biotech attempt to create data that we think will satisfy the FDA.  They do not tell anyone ahead of time what to do so we fumble along looking for things we think will help our case.  The real skill then becomes how to avoid exposing bad data.  Randomness allows less than favorable data to be hidden.  Well thought our research leaves you wide open for failure.  And that is a bad business model.

Stats

My career in biotech has been maddening.  But it is not biotechnology that is the issue.  The issue is statistical analysis of data.  This became very clear last week when some of us sat through a course in a software product that analyzes data.  A lot of time was spent debating what a sample was versus what a population was.  We even had people arguing over the term bogus results versus "not validated".  The useful aspect of statistics was not of interest to our group.  

There was a simple illustration about a lady who could tell the difference between tea with milk added versus milk with tea added.  The design of the experiment to test this lady was rigorous.  The people testing the lady were highly skeptical about her claim.  The design of experiment however, left out the possibility of bias on either side of the question.  In the end they all agreed, the lady could tell the order in which her tea and milk were combined.

When Feynman said, "So we really ought to look into theories that don't work, and science that isn't science." he seemed to touching on the powers of statistics to analyze experimental design.  Psychics and people who speak to the dead are best exposed using statistics.  Biotechnology can also be analyzed this way.  The real trick for our future is to find ways to get Biotech and the pharmaceutical industry to allow outside groups to analyze their data and their analysis of their data.  The thought of a group of MDs locking themselves in a conference room to make a recommendation to the FDA regarding research seems absurd to me.  The Design of Experiments is the whole issue behind the Cargo Cult Scientist.  

Can't Blog Very Well

http://www.youtube.com/watch?v=0XgmrMZ0h54&playnext_from=PL&feature=PlayList&p=BA10ADCB66375592&index=3&playnext=4&playnext_from=PL

Large Groups of Humans

Deliver Us From Evil, http://www.deliverusfromevilthemovie.com/index_flash.php, is a disturbing documentary that depicts an organization that cannot fail. The Catholic church was organized to promote the christian religion and to perhaps improve the morals of society. What it has become is a highly immoral group of men who do horrible things and protect each other from prosecution. They continue to sell their product, christianity and morality, but they've been outed. For those who choose to open their eyes to reality, the Catholic church is truly a criminal organization.



Something happens to large organizations after they reach a certain level. Banks aren't allowed to fail. Corporations are protected. Think of them as groups of people who got together and started making rules, setting up legal protections and hiring people to advance the cause. Eventually, they reach a certain level. Success. They can't fail. At this point a certain type of person begins to emerge as management material. That person understands that the group must not fail. When enough of these types surround a corporation they begin to protect the organization from any harmful reality. If your church is employing pedophiles who are raping the children of the congregation, you must protect the church from the negative press. When your corporation is losing money, you get creative with the accounting.



Which, of course, brings me to the merger of Merck and Sherring Plough. Their products are meant to make our lives better through chemistry and biology. But they were already big. The problem was that they were not succeeding at making new drugs. They know all about the FDA and fill finish production lines. They are good at many things, but not at creative science. So they merge. They know how to merge. It involves paperwork and meetings. There will be plenty of paperwork and meetings surrounding the merger.

Where will the new improved drugs come from? When large companies fail to develop their pipeline they go to the smaller companies. They must then make decisions that involve millions of company dollars. Decision making becomes more and more beaurocratic. Distancing oneself from accountability while remaining close enough to claim a piece of possible success is an artform. Not a science. The new protectors of Merck/Sherring will have to be very careful yet find replacements for the billion dollar drugs that will be losing patent protection. What will they do? With 90 thousand employees they have plenty of humans working on their cause. What will they do?

Optimism For the Seattle Cargo Cult Airport

http://seattletimes.nwsource.com/html/businesstechnology/2008667376_biotech25.html

"I'm fairly optimistic that this year will see good things for the industry," said ZymoGenetics President Doug Williams.

"We have some great, great research institutions here," said Chris Rivera, the new president of the Washington Biotechnology and Biomedical Association.

Next year at this time I will try and revisit this article. The CCS is not optimistic. It's not about the money. It's about things like RNAi and PhDs trying to be businessmen. It's about the product. In other words, the airplanes. Are they coming in 2009?

Is It Over Yet?

MDRNA Cuts Executive Pay, Freezes Salaries as Cash Runs Out
Luke Timmerman 1/23/09
MDRNA is running out of cash, and is drastically cutting down payroll expenses, according to a source close to the situation. The Bothell, WA-based biotech company (NASDAQ: MRNA) has asked executives to work for no pay, and has frozen employee salaries at $1,250 for the final two weeks of January, according to the source.
Matt Haines, a spokesman for MDRNA, said the company hasn’t done any layoffs, although he declined to comment on specifics about any payroll cuts. “As a public company, we cannot get into details of any cost-cutting we are taking at MDRNA,” Haines said in a voice message.
The company, formerly known as Nastech Pharmaceutical, has been trying to reinvent itself over the past year from a company that specialized in nasal delivery of existing drugs into one that develops new medicines that work via RNA interference, or silencing problematic genes. The company changed its name in June to MDRNA, removed CEO Steven Quay from the top job, and replaced him with Michael French.
The new boss has a track record in RNAi, as a former senior vice president of corporate development at Sirna Therapeutics, a San Francisco RNAi drug developer that was sold to Merck for more than $1.1 billion in October 2006. Still, he joined MDRNA when its work was at the very early stages of development and would require significant capital investment to create something of more value. MDRNA said it has 4 issued patents on RNAi technology, and has 304 pending applications. None of its RNAi work has yet advanced into clinical trials, leaving it behind leaders in the sector like Cambridge, MA-based Alnylam Pharmaceuticals.
MDRNA’s effort has also been plagued by its rapidly dwindling cash reserves. The company slashed 23 jobs in August, mostly among people from the nasal delivery business, leaving it with 58 employees at the end of September. But the cuts may have been too little, too late. The company had just $10.9 million in cash and investments left at the end of September, down from more than $41 million when it started the year. At the end of September, MDRNA’s last formal financial update to investors, the company said it had just enough cash to last “into the first quarter of 2009.” Since then, the company has been notified that it is in jeopardy of having its ticker symbol de-listed from the NASDAQ. The company’s stock traded today as low as 25 cents, with a market valuation of just $8 million. It hasn’t announced any new round of investment.
MDRNA in its various forms has been in business since 1983, and never developed a successful marketed product to push it consistently into the black. The company has run up an accumulated deficit of more than $241 million from its beginning through the end of September 2008, according to its most recent quarterly report. When French was hired, his starting base compensation was set at $340,000, and he was given 1.26 million company stock options, according to a regulatory filing.

Is Vytorin a Failure?

http://www.time.com/time/health/article/0,8599,1703827,00.html



If one had read Gary Taubes' 'Good Calorie Bad Calorie' they would not have been surprised by the results from Vytorins ENHANCE study. To the Cargo Cult Scientist, statins represent the holy grail of our current state of medical research. Statins are the biggest money makers in the industry. And they don't save lives. Diet and exercise are the best answer but you can't sell them in a pill. One study after another proves that they are not the answer. But we must have an answer. And the FDA knows what that answer must be: http://www.google.com/hostednews/ap/article/ALeqM5h6pzZiObVnCNNNsI0McxoMN8WZVAD95J8NK80

Goodbye Seattle PI

While we expect the loss of Biotech companies we do not enjoy seeing honest people lose their livelihood. We do get pleasure when people like James Bianco and Steve Quay are acknowledged as Cargo Cult leaders. They love money and they love power. Science is a bunch of words to them. The words can be used to extract money from investors. That money is used to create companies that create powerful positions.

Another group of people who live by their words are the fine journalists at the Seattle PI. They make less than 100K per year. They put out a product everyday. When they make a mistake they have to retract what they said. They also serve as a watchdog against government and corporate America. Sadly they are going to be silenced.http://seattlepi.nwsource.com/business/395463_newspapersale10.html

In terms of the Cargo Cult world, the newspapers report on the airport. Not just the promises, but the reality of what is happening out there on the runways. They look up to the skies 24 hours a day. Each day they report, " no airplanes have been spotted". Seattle will have only one newspaper. A day will come when a major US city will have no local newspaper. That will be the day when local government becomes as free as a biotech company to report it's own news.

Fires Are Burning Out

http://seattletimes.nwsource.com/html/sundaybuzz/2008613921_sundaybuzz11.html
http://seattlepi.nwsource.com/business/394854_northstar06.html

Note the ending of the first article and how it leads into the second.

...an investment fund with major stock ownership, which in December wrote to Northstar board members: "It would seem that some of you remain content to pay yourselves salaries from cash that belongs to stockholders while contributing nothing of any positive value in return."

With Cell Therapeutics, which has few, if any, institutional shareholders left since it became a penny stock, it's unlikely there's anyone to write that kind of letter.

Zing!

Analysts predict that Biotech will lose a third of its publicly traded companies. One third! They're on to us.

Rosetta

I missed the demise of Rosetta out here in Seattle. Merck bought this company back in 2001 for 630 million dollars. http://seattlepi.nwsource.com/business/22771_rosetta12.shtml

Things were going well in 20004. http://community.seattletimes.nwsource.com/archive/?date=20040325&slug=rosetta25

Then they discontinued the project last October. http://seattletimes.nwsource.com/html/businesstechnology/2008300061_rosetta23.html

It's a classic Cargo Cult scenario. We have a technology that will change the way drugs are discovered. Where are the drugs? Who is talking about why Rosetta failed to do what it promised? Only the Cargo Cult Scientist is wondering why computer programmers couldn't turn human speculations (medical research) into the fountain of youth. Too much BS was piled too high. So long Rosetta. I know you'll get an office or two in New Jersey but you won't produce any drugs. Silly.

2009 Predictions

There are not many companies left in Seattle. There are more than the CCS is aware of but many of the big players went down or were at least knocked down a peg last year. 2007 was already covered at the beginning of 2008. Dismal. But what about the upcoming year? I know that people will have a bias that the CCS is optimistic about the upcoming year of scientific discovery among the scientists of Biotech. But wait, I've got to admit that I can be a little negative from time to time. For example:

Gilead is expanding and hiring: http://blog.seattlepi.nwsource.com/thelifesciencesblog/archives/141124.asp

I predict they will grow in the most foolish ways imaginable. They have the brass from the ruins of Corus and they have no idea what they are doing. They do have a lot of money to spend however and they will do so for the sole purpose of creating a Cargo Cult Airport. It will be a nice facility with lots of promises presented on all of the lastest equipment available from Dell and software from Microsoft.

But I can also be positive. For example:

Amgen will rebound. http://seattlepi.nwsource.com/xconomy/392982_xconomy7075.html
It's an untestable osteoporesis drug. No harm means no foul. Lots of money will be handed over and the leadership will go back to spending the profits on their own Cargo Cult airports within the organization. Their RNAi projects will quietly start to fade and antibody work will be pumped up using new technologies bought from smaller companies.

I'm not an insider. I'll find out what is going on nonetheless. It makes life in the biz much more interesting.

How Can You Lose?

"Harry is an experienced portfolio manager who has a proven track record of success."

So says Adam Banker, a spokesman for Fidelity Investments. Harry Lange runs Fidelity Investments' Magellan Fund. The Magellan Fund has seen assets decline 83 percent since reaching a peak eight years ago. The 18.6 billion dollar fund declined 52 percent this year, trailing 99 percent of competing funds.

Somebody had to finish towards rock bottom. It makes you wonder what funds trailed the Magellan Fund. Did their managers also have a proven track record of success?

My interest in the financial worlds folly is directly tied to Cargo Cult philosophy. Clearly the world has seen behind the Wizard of Ozs' curtain. They didn't see failure coming anymore than they saw success in the past. These are the same people who invest in Biotech. Someone points out that RNAi is a hot investment because SIRNA sold for over a billion dollars. Fund managers get their clients checkbooks out and go looking for RNAi companies. Meanwhile it is no certainty that any of these people know what RNA is, let alone RNAi.

I'll end with a funny story about a biotech investor. This person was looking for investments in a hot biotech field he had just heard about. He called the investor relations department. A very nice lady who had just started in the department answered the phone. She had just been promoted up from her previous position as receptionist. Before that she spent 7 years as a secretary at the local high school. The investor spoke authoritatively to the nice lady. "Yes, can you tell me if you have any research taking place involving monoclonal antibiotics?"

Wallstreet Logic and Biotech

Why is it that Treasury Secretary Henry Paulson didn't originally ask for 1.5 billion dollars for his bailout plan? The original amount of 700 billion was a shock. The 800 billion seemed to be less appalling. Not only is it 100 billion dollars more, it comes right on the heals of the 700 billion. The most likely answer is that Paulson knew he needed a blank check but knew better than to ask for one. So he went about it this way. Creating an illusion of stability is the plan. Investors will buy into illusions.

This is clearly a Cargo Cult approach. We've noticed that during more prosperous times our bankers were flush with cash. Now they are all facing annihilation. If we slather them with cash then they will appear to be well again. But what about the fact that they ran out of that cash? Will they run out again?

Biotech financing works this way as well. We don't know how much we'll need. Give us millions and we'll get started. Give us more millions and we'll keep up the good work. And just keep on giving until we succeed. But we rarely succeed. Now we are watching our government give billions to individuals who also have a promise.

Another issue is whether or not the meltdown is really bad for us. Gas is now 1.85 per gallon. Real estate is dropping which is bad for the profits I would have needed to make a downpayment on the next place. But I now get to select from a whole new set of properties for my next place. I'll have less to put down but I won't need as much. It appears that our economy is merely correcting for a decade or more of inflation.

If 100 people live on an island with only enough food to comfortably feed 100 people then you have to figure out how to ration the daily intake. If you do it wrong then some will have too much and some will have too little. It takes a special kind of person to admit that they are getting more than their share. They must also decide who gets their extra food. What is needed is a governing body on this island that knows how to ration. Some will gather the food, some will prepare the food and some will search for new sources. All will need food. The important thing for the governing body is to not make any one group of the team so important that another is eliminated.

The main point today is that money fuels wallstreet and it fuels biotech. It's great when you have it but humiliating when it's gone. So somewhere along the way to failure we have to take a look at how effectively were using our limited resource, money. Once again... Dr. Richard Feynman:

"So we really ought to look into theories that don't work, and science that isn't science."

And I might add, look into it sooner than later.

DOH!!!

http://health.msn.com/health-topics/colon-cancer/articlepage.aspx?cp-documentid=100220689

Chaulk up another swing-and-a-miss for medical science.

Back to RNAi

We recently put the flame of Nastech out. Tight junction technology didn't work!!! Nastech lit the side of our runway for many years. Then one day it ended. The name was changed, the CEO was replaced and the stock became a steal at 15 cents a share. The name of the company was changed to MDRNA, as in RNAi. The new CEO was in fact the old CEO of SIRNA, as in siRNA. The latest addition to the MDRNA staff is the old CSO of SIRNA. SIRNA was sold for 1.1 billion dollars to Merck. Can lightening strike twice?

The first question is, what has Merck done with their aquisition of SIRNA? Any regrets? 1.1 billion is a lot of money. One might hope to make that kind of money from an approved product. Merck did not buy an approved product. The second question is, what does MDRNAs new brain trust plan to do with the 12 million bucks left behind by Nastech? The SIRNA patents are in the hands of Merck leaving only the brain power behind SIRNA and the power of RNAi.

The brains behind this new flame along our runway have a major obstacle. Can they stay in business long enough to get a drug approved? The villagers must be very enthusiastic, but will they hand over their money? If not this latest RNAi project will not get off the ground. If they get funds they will be free to conduct the science. We are watching.

A Villager Speaks Up

One of the most outspoken villager, who looks up daily to spot the cargo planes, has detected a way to spot a false profit: http://www.thestreet.com/story/10443120/1/dont-get-burned-by-the-next-cell-genesys.html?puc=googlefi&cm_ven=GOOGLEFI&cm_cat=FREE&cm_ite=NA

Mr Feuerstein makes a living telling the other villagers, who look to the sky, what it is they should expect to see any day now. But he speaks from the investment perspective. The science is something he peppers into his columns. He doesn't know. It would be interesting to see an accounting of his ability to predict good from bad investments. Are his predictions best measured by his understanding of the science? Would a random stock pick make more or less?

Keep looking up Mr. Feuerstein.

Once again, Feynman; "So they've arranged to imitate things like runways, to put fires along the sides of the runways, to make awooden hut for a man to sit in, with two wooden pieces on his headlike headphones and bars of bamboo sticking out like antennas--he's the controller--and they wait for the airplanes to land."

I will promote Feuerstain to control tower supervisor.