‘Pharmaphobia’ Pushes Back Against Anti-Industry Crusade, But Comes Up Short

Piles of books, journal articles, and newspaper exposes have been written about corrupt relationships between drug companies and physicians. The attacks have taken a toll. Big Pharma’s reputation is somewhere in the gutter with Big Tobacco.

While I see much admirable public-service journalism in exposing wrongdoing in science and medicine, this result strikes me as an overreaction. Pharma and biotech companies often do good, meaningful work. Yet the popular narrative is so strong, with greedy drug companies and bribe-taking physicians cast as villains, hardly anyone sees the good, and hardly anyone challenges the anti-industry line. The industry barely bothers to defend itself. When Lisa Rosenbaum tried to challenge the prevailing anti-industry view in a recent series for the New England Journal of Medicine, a hailstorm of criticism came her way.

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Making Biotech Drugs People Can Afford: KUOW Radio Segment

One day as a young reporter, I’m not sure exactly when, I got hooked on biotech. My guess is it might be the time I pushed aggressively, to the annoyance of my editors at the time, for a front-page, three-part series at my newspaper about what a guy named Jim Thomas was doing.

Thomas worked at Immunex, a Seattle company which had developed an important rheumatoid arthritis drug called etancercept (Enbrel). At the time, Immunex was the anchor, the Genentech of Seattle, so to speak. Its superstar product was suffering growing pains. The drug was in such high demand, the company couldn’t manufacture it fast enough to keep up.

I went over to Immunex’s labs, where Thomas and some others were tasked with explaining to me, a rookie, what a biotech drug was, and why it was hard to make. This was different, they said, than the way you would traditionally synthesize a chemical in a lab and mix it up into a pill like Tylenol. They showed me industrial vats, known as bioreactors, filled with purified water, nutrient broth, and cells from Chinese hamster ovaries, of all things. Gene sequences for making a certain protein had to be carefully inserted into those cells, where they would incubate a while. The vats were carefully controlled environments, with meters to control and track pH, temperature, oxygen levels and more. Everything had to be squeaky clean. Intricate control was necessary. It wasn’t easy to consistently coax Mother Nature to churn out proteins that were the key ingredients of this important drug.

Jim Thomas, CEO, Founding Partner, Just Biotherapeutics

Jim Thomas, CEO, Founding Partner, Just Biotherapeutics

It was absolutely amazing to me. Living cells? Cells that manufacture drugs? Purifying this into something you could put in a vial? And, you’re telling me that if your temperature or oxygen or acidity is off by a smidge, or a tiny virus or bacterial contaminant slipped in, you could lose a whole batch, potentially millions of dollars? This soft-spoken, understated guy and colleagues gave me a valuable lesson in biologic drug making that stuck. I drew on that experience many times over the years whenever I had a reason to write about manufacturing issues.

Equally amazingly, this wonky stuff about biotech drugmaking made the front page of a U.S. newspaper. I was lucky to work at The Seattle Times in that time and place. The editors may have also just wanted me to shut up and go back to my desk.

The reason I bring this old story up is that I had occasion to talk with Jim Thomas once again about a new thing, Just Biotherapeutics. This startup was born after Amgen (the company that acquired Immunex) decided to shut down its Seattle research center, casting off many of the people in process sciences who spent their careers learning this delicate biotech drugmaking dance. They increased yields, lowered costs, and improved reliability. They were a successful bunch, in a low-key way.

Thomas and a number of his colleagues, with these rare and valuable skills, have decided to keep lowering costs with an eye toward a larger social purpose. They want to make biotech drug manufacturing less expensive so drugs can be sold at lower prices.

It was my pleasure to talk about this unusual startup last week on KUOW 94.9 FM Seattle public radio. The segment runs for a little more than six minutes. Thanks as always to KUOW producer Amina Al-Sadi and host Marcie Sillman for their shared interest in bringing biotech to a wider audience on public radio.


Molecular Information Companies, One Way or Another, Find Value in Genomics

Way back in the day, the late 1990s, companies ran around saying, ‘Holy mackerel, we’re gathering all this cool genomic information. It’s valuable. We’ll sell it and make a bundle.”

Almost 20 years later, next-generation sequencers are exponentially better, faster, and cheaper. They pump out vast amounts of genomic information. There are many more companies gathering data, slicing it up in their own particular way, and trying to turn it into insightful applications for medicine. Many of these companies are harkening back to the 1990s, saying, “Holy mackerel, we’re gathering all this cool genomic and molecular information. Someway, somehow, it’s got value. Let’s sell it.”

Celera Genomics, led by J. Craig Venter, was one of those companies from the 1990s. One of today’s “molecular information” providers is Human Longevity, led by the same guy. One way or another, then and now, quite a few entrepreneurs are determined to prove the value of all this molecular information.

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Join Me for TR Subscriber Meetup Aug. 5 in Kendall Square

I’m traveling to Boston next week — let’s meet up at a Kendall Square watering hole.

TR subscribers are welcome to stop by for happy hour from 5-7 pm on Wednesday Aug. 5 at Meadhall, 4 Cambridge Center.  No tickets are necessary, and whatever you want to eat or drink you can get at the bar. I’m just eager to thank TR subscribers, kick around some ideas, and learn more about what you see that’s interesting in biotech. Curious non-subscribers (or, as I like to say, ‘future subscribers’) are welcome to join too. Ask whatever you want about this biotech journalism model.

This informal ‘meetup’ event, by the way, is just one type of gathering that I plan to do as part of the biotech community building mission of TR. I have a couple more event ideas on the drawing board, aimed at subscribers in different biotech hotspots. Watch this space for updates this fall.

See you Wednesday!


Data From Texas: VCs, Still Mostly Underwater, Ride Stocks As Long As Possible

If you give a biotech venture capitalist $1 to invest, odds are that you will wait more than a decade, and get less than $1 back. Along the way, millions of dollars in management fees will be paid for this service.

The data on financial performance of venture capital funds are clear, consistent, and lousy when compared in any realistic way against prevailing stock indexes, as many other observers have noted. My focus here is exclusively on biotech venture capital, and specifically driven by the question of how the boom might be boosting performance data (or not).

One reader complained last week that I was putting too much weight on actual cash-on-cash returns through the years, and not enough weight on “current value.” That is the paper wealth that is still riding in the market, and presumably could push a few more funds into the black. I found the argument to be a weak one, especially since I focused on funds between 8-15 years old, which have had plenty of time to mature and deliver actual cash returns to their limited partners. Still, when I asked one well-known VC how much longer the biotech boom would have to go before funds like his flip over into the black, he had a succinct reply:

“This year,” he said.

OK, I resolved, let’s keep an eye out on the disclosures to see if that comes true. Then, as luck would have it, my public records request came back from the University of Texas Investment Management Company (UTIMCO) much faster than expected. Not only does UTIMCO have a lot of money working in all kinds of asset classes, it has quite a few recognizable biotech VC funds in its portfolio. Even better, it gave me performance data that’s current through May 31, 2015. That’s more up to date than other state investment funds, which usually lag by a couple quarters.

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Bad Behaviors Creeping Into Biotech During the Boom

Bad behaviors tend to spread like wildfire during boom times. Lots of people rush into the market and try to strike while the iron is hot.

I’ve seen it happen before as a reporter in the dotcom days, and I’m seeing it happen again.

I’ll leave it to others to ask whether we are in a bubble, which I find to be a tiresome and predictable debate based on who’s doing the talking. People can use historic stock market data, or venture capital numbers, to support whatever position they want. Today, I just want to focus on rude, pushy, or arrogant bad behaviors creeping into everyday work. Some are serious red flags, while others are more subtle. There are flimflam men on one end of the continuum, and otherwise decent people drinking their own Kool-Aid on the other. There are still many people in the business who strike me as sane and sober, so I’m not ready to declare a tulip-mania style delusion, but I definitely see signs for concern.

To put my finger on bad behaviors in various aspects of biotech, I spoke last week with a number of thoughtful executives, investors, and service providers. Here are a few ‘bad behaviors’ that are spreading.

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The Amgen Seattle Alumni: Where Are They Now?

One year ago, Amgen said it was shutting down R&D operations in Washington. This was not an ordinary mass layoff. Amgen’s cost-cutting move freed up 660 people in the Seattle biotech cluster, many of whom had rare and valuable skills gained while working on successful drugs like Enbrel and Xgeva.

These people had good pay, good benefits, and a beautiful waterfront work environment. The shutdown was like whacking a carefully crafted, tightly-wrapped piñata, letting lots of candy spill out for kids to pick up.

Now that the whacking is old news, we can ask: Where did the Amgen Seattle veterans end up? What did they decide to do? Which organizations benefitted the most from the scattering of all this talent?

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The Non-Compete Chill Has Passed: Bristol-Myers, MedImmune Settle Over I-O Star

There’s good news today for the biotech labor market.

David Berman 225

David Berman, senior vice president, MedImmune

AstraZeneca’s MedImmune biologics unit said today that David Berman has joined the company as a senior vice president and head of its Oncology Innovative Medicines unit (iMED). Berman spent the previous decade at Bristol-Myers Squibb, becoming a key player inside the company during its rise to prominence in the hot field of immuno-oncology.

“We are thrilled to have world-renowned oncology expert David Berman join our team,” said Bahija Jallal, executive vice president, MedImmune.

What today’s statement didn’t mention is that Berman is back in the saddle, doing what he does best, after some tense moments in which his former employer filed a lawsuit against him. The lawsuit, filed in Delaware court on May 28, didn’t accuse Berman of stealing any intellectual property, but claimed he knew so much about BMS’s assets and strategy that it would be virtually impossible for him to work for a competitor without violating his non-compete agreement. Theoretically, if a judge agreed with that interpretation, it could have prevented Berman from working for MedImmune (or any other serious I-O competitor for that matter) for 12 months.

Berman joined MedImmune on June 22 “after a legal challenge from his previous employer was resolved to the satisfaction of the parties involved,” a MedImmune spokeswoman told Timmerman Report. Terms of the settlement weren’t disclosed.

I’m glad to hear that Berman is back doing what he does best, working to develop cancer immunotherapies with promise. This is a special, exciting time in cancer R&D, not a time to waste energy and money on legal intimidation games. As I editorialized on June 8, if this legal tactic had put Berman on the sidelines, it could have set a bad precedent for the free flow of talent in today’s dynamic biotech labor market.

Companies have the right to defend their intellectual property from theft, but courts need to be careful about interfering with an individual’s right to make a living, especially when there’s no actual accusation of wrongdoing. Let’s hope that Berman and his colleagues at MedImmune are successful in their quest to develop I-O drugs, and that the folks at BMS stay on their toes and focused on the fight against cancer.


How Are Biotech VCs Performing in the Boom? You’d Be Surprised (Part 2)

Yesterday, I published the first half of a two-part series on biotech venture fund performance in the boom. That story included data from venture funds backed by public employees in three states–Pennsylvania, California, and Hawaii.

Today, I’m following up with more disclosures from funds in Washington and North Carolina, plus the big California fund that invests retirement savings for schoolteachers.

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How Are Biotech VCs Performing in the Boom? You’d Be Surprised

The biotech boom has been good to many people, but especially to venture capitalists. Many can point to winners in their portfolios. They have seized the moment to raise new funds, collect even bigger management fees, and double down on more cool science and technology companies. As I reported here in March, a few firms, such as The Column Group and ARCH Venture Partners, have seen their fortunes dramatically improve.

Still, VCs can’t ignore a harsh reality about their business: Even with the rising market, most biotech venture capital funds still can’t show positive cash returns to the limited partners that bankroll them in the first place. That’s based on a Timmerman Report review of public records from six states, updated through 2014.

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Forget Price Controls – Value-Based Pricing is the New Threat to Drug Development


Troy Wilson, Ph.D., J.D., President and CEO Kura Oncology, Avidity NanoMedicines and Wellspring Biosciences

Election season is here, and every day brings a parade of presidential hopefuls, staking out positions along the political spectrum.  And, if the early rhetoric is any indication, one of the defining themes of the election will be wealth and income disparity.

In an interview with the Des Moines Register, Hillary Clinton said that, although she generally supported the Affordable Care Act, she would look for ways “to deal with the high cost of deductibles that put such a burden on so many working families, and to deal with the exploding cost of drugs, particularly the so-called specialty drugs.” This comment will sound familiar to those who recall Clinton’s first attempt at healthcare reform. Biotech and pharmaceutical stocks plummeted in 1992-93 amid uncertainty about whether price controls would stymie innovation.

Regardless of your political affiliation, if you work in cancer drug discovery and development, this debate should concern you.

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Happy (Belated) Independence Day! Timmerman Report is Here to Stay

Every day, I think about creating excellent, original journalism for biotech readers who subscribe to Timmerman Report.

This isn’t some hopelessly romantic idea. This is a business with legs.

For those unfamiliar with what Timmerman Report is about, it’s like making artisanal cheese or fine wine. Considerable craftsmanship goes into creating stories for avid biotech readers who are willing to pay for a premium product. This publication provides writing that’s timely, thoughtful, contextual, and surprising. It’s about science, business, and people. It should broaden your worldview, and give you something special that you won’t find anywhere on the free web.

Clearly, this is the road less traveled on the Internet, where free and user-generated content rule. The subscription model has skeptics.

Everywhere I go, people ask, “How is it going?”

Here’s how: More than 750 subscribers have arrived in less than five months, putting my one-year goal of 1,000 within striking distance.  Subscriber demographics are diverse. There are C-level executives, venture capitalists, R&D leaders, investors, scientists, consultants, journalists, and graduate students. A total of 19 small, medium, and large organizations have ordered bulk subscriptions as of July 3. Those orders will be fulfilled when new paywall software is installed, hopefully by the end of this month.

Of course, it’s not all candy canes and rainbows. Some administrative, behind-the-scenes stuff has given me headaches. Expenses for things like paywall software, insurance, taxes, and bookkeeping are higher than I thought. I’ve been frustrated by the unauthorized sharing of my copyrighted content with non-subscribers. Entrepreneurship can be an emotional roller-coaster.

Still, this business is earning enough money to support my family. Not only that, I have total independence as the sole owner/operator. Because I don’t accept advertising, there’s no advertising influence. With no investors, there’s no pressure to sell the company. All I want to do is quality independent journalism for the biotech community.

I’m living the dream. Timmerman Report is here to stay.

So, for relatively new subscribers or others who may have missed some of the early reports, here’s a quick rundown of work on Timmerman Report that I’m proud of, and which has helped build the audience thus far.

Thank you for your support. If you like what you see from your subscription, tell your friends what they’re missing. As always, if you have story ideas, comments, or suggestions on things I can do to improve, send me a note at luke@timmermanreport.com.

The Genentech Alumni: Where Are They Now?

The Merck Exodus: Where Are The Talented People Going?

Which Big Public Investors Are Crossing Over Into the Private Arena?

It’s Time to Re-Think How We Train and Develop Biomedical Scientists

NASH is the Next Monster Pharmaceutical Market. Here Are The Players

Cancer Combos Are the Way Forward. Will Drugmakers Put Patients First?

Bristol-Myers Should Drop the Bullying. Non-Competes Are Bad for Biotech

Cancer Immunotherapy’s Amazing Four-Year Run: A Timeline of Major Events

How Do VCs Divvy Up Their Pay?

More Than Moderna: Who’s Who in mRNA Therapeutics

Antibiotic R&D Is Getting More Attention. Who’s Doing What?

Hungry for Cash, Academia Grabs for a Bigger Piece of Biotech Action

The Big Boys Love Kendall Square. Let’s Hope They Don’t Squeeze the Life Out

It’s Time to Re-Think Some Basic Assumptions About Cancer R&D

2015 Power Rankings: Biotech Investment Banks

Q&A With Illumina CEO Jay Flatley on Building a Genome Sequencing Powerhouse


Pay Cut? That’s OK: Wall Street Veterans Find New Purpose in Biotech

Last month, I wrote about how Big Pharma executives are migrating into biotech like wildebeest across the Serengeti.

They aren’t the only big game animals moving in this direction.

More than a dozen well-known Wall Street investment bankers and analysts, in the last couple boom years, have quit to join biotech companies. This isn’t exactly unprecedented. The CEOs of Amgen and Celgene started their careers in the investment world. But the sheer volume of people coming from investment firms to biotech is striking (see chart below). It is like a bolus injection of Wall Street thinking into the biotech executive ranks.

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Q&A With Shire CEO Flemming Ornskov on Becoming More ‘Biotech-Like’

Shire has been around for almost 30 years, and last year was probably its biggest in the news. The narrative wasn’t about drugs that help people, but was about corporate tax-avoidance.

North Chicago, Ill.-based AbbVie bid $54 billion to acquire U.K.-based Shire, at least partly to re-incorporate in Britain and avoid U.S. taxes through an “inversion.” Public opposition emerged, the U.S. Treasury department changed the rules, and AbbVie walked away. Shire went back to business as usual. But when your company is, as the Financial Times put it, “listed in London, incorporated in Dublin and managed in Boston,” it’s easy for people to be confused about what exactly that business is all about. The company now wants to write a new chapter that’s more about developing good new drugs.

Flemming Ornskov, who took the helm as CEO of Shire in early 2013, looks back on the episode as a “distraction.” While few were looking, the company boosted revenues 23 percent last year to $5.8 billion. Armed with a $1.64 billion breakup fee from AbbVie and a rising stock price, Shire made a bold strategic move to acquire NPS Pharmaceuticals in January for $5.2 billion. It’s part of Ornskov’s plan to make Shire a bigger player in rare diseases, and a more creative, more biotech-like company that can discover new medicines, acquire promising ones, and plug them all into an efficient sales and marketing machine.

Ornskov visited Seattle last week for the American Optometry Association meeting. Treatments for the eye are one part of his plan to diversify the company. I sat down with him for a wide-ranging interview. Below are the highlights, edited for length and clarity.

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LinkedIn Is Integral to Biotech, But Some Still Don’t Get It

The sci-fi writer William Gibson once said, “The future is already here – it’s just not evenly distributed.”

That rings true with LinkedIn, at least in the biotech and pharmaceutical industry.

Some of the most powerful and best-connected people in the business gathered last week in Greece for the annual private summit organized by industry legend Stelios Papadopoulos. This is high-level schmoozing with fine food and drink and soccer games. It’s the biotech version of the Allen & Company retreat for media and tech moguls in Sun Valley, Idaho.

While these people are networkers extraordinaire in real life, most of them are hard to connect with online. By avoiding LinkedIn, a 12-year-old service with 364 million registered users, they have effectively walled themselves off from just about everyone else in the industry.

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The Cubist Alumni: Where Are They Now?

Cubist Pharmaceuticals was a rare company. It found a way to succeed when the prevailing market winds were blowing in its face. When Big Pharma companies abandoned the field of antibiotics, complaining about regulatory and reimbursement challenges, Cubist stuck to its guns.

The Lexington, MA-based company, founded in 1992, grew to be the largest independent developer of antibiotics in the world by the time Merck acquired it for $9.5 billion in December. The company was profitable, grew to about 1,000 employees at its peak, and was humming along at more than $1 billion in annual revenues. While heavily reliant on marketing a single hit product, daptomycin (Cubicin), the company diversified in its later years through acquisitions of smaller antibiotic players, and continued to invest in a 120-person discovery group.

As the company grew, it changed. But not radically. Top executives Mike Bonney and Rob Perez were both known among employees as warm and approachable. They knew many of the employees’ names, even when the employees didn’t necessarily expect them to. Bonney, the longtime CEO, was known for sending signed birthday cards to employees.

“The Cubist culture was genuine, honest, entrepreneurial–you worked hard, but efforts were appreciated,” said Maria Iacovelli, director of RA CMC at the company.

When Merck decided to terminate a large part of the Cubist workforce, other companies and venture firms saw it as a recruiting opportunity. Already, some highly talented people are popping up in interesting young companies in the Boston area, such as Macrolide Pharmaceuticals, Seres Therapeutics, and a stealthy operation called VL32 inside Flagship Ventures. (Subscribers can read on for the full list of 158 names).

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Like the TR? Tell a Friend to Subscribe, and Enter to Win a T-Shirt

Word of mouth is spreading about the Timmerman Report among early adopting subscribers.

For that, I want to say thanks.

So here’s the deal. Existing subscribers of Timmerman Report who successfully encourage at least one friend to subscribe before July 10 will be entered into a drawing for a free Timmerman Report T-shirt.

This prize, I’ll have you know, is not just any lousy T-shirt. These are New Balance Tempo Performance shirts with the custom TR mountain logo on the front. They are made of 100 percent polyester, moisture-wicking fabric that you want on your longest, sweatiest workouts. They cost $35 apiece, and are the most comfortable, breathable workout shirts in my closet. I personally wore one in the Boston Marathon, and it felt great, although I shivered like crazy in the wind at the end. (Don’t worry, I have since run that shirt through the laundry, and I’m keeping that one for myself).

So spread the word to your friends, and enter to win a custom Timmerman Report T-shirt. Just let me know who you encouraged, and send me an email to luke@timmermanreport.com with your shipping address. Let me know your size (small, medium or large) and whether you prefer short-sleeve or long-sleeve.

Thanks again for your support of quality independent biotech journalism.