AstraZeneca plans to purchase biotech company Cambridge Antibody Technology (CAT) to bolster its long-term pipeline and tap into the growing field of biologics.

"To fully meet the needs of patients, we need access to both biological therapeutics and small molecules," said John Patterson, AstraZeneca's executive director of development. "CAT will provide AstraZeneca with biologics critical mass."

Patterson noted that AstraZeneca has been making parallel in-house investments in biologics, particularly in the area of inflammatory disease.

The deal, which is valued at more than $1.3 billion, grew out of a 2004 agreement that gave AstraZeneca a 19.2 percent stake in CAT. The biotech is best known for its collaboration with Abbott Laboratories on blockbuster rheumatoid arthritis drug Humira (adalimumab).

Analysts describe the deal as a strategic move for AstraZeneca, which has been struggling to build all stages of its pipeline. Just this month, the company discontinued studies of its diabetes drug Galida (tesaglitazar), which was already in Phase III trials.

"AstraZeneca will need a good angle to remain competitive," said Melissa Elder, pharmaceutical market analyst for Kalorama Information. "The company has some [looming] patent expirations -- and continues to face generic competitors for current products. They need some big products in the pipeline."

CAT's current pipeline includes drugs in the early phases of testing for multiple sclerosis, Crohn's disease, psoriasis, and several types of cancer.

"Biologics, five or six years ago, were clearly only a promise," said Jason Napodano, senior biotechnology analyst at Zacks Investment Research. "They're starting to deliver now. It's a very hot area."

A report from market research firm The Freedonia Group found that the demand for biologics is expected to grow about 10.8 percent per year, and is projected to reach $74.5 billion in 2009. Monoclonal antibodies are the fastest growing segment of the market with 15.5 percent annual growth, and could reach $18.9 billion in 2009, according to the report.

Since most pharma companies haven't invested in R&D for biologics, many are now playing catch-up through acquisitions and other collaborations. Johnson & Johnson became one of the first pharma companies to invest in this space in 1999, when it purchased Centocor, the biologics company that developed Remicade (infliximab). Merck this year acquired biotech shops GlycoFi and Abmaxis.

Even biotech companies are boosting their biologics investments: Amgen this year finalized its acquisition of Abgenix.

Jason McKinnie, research analyst for Frost & Sullivan's pharmaceutical and biotechnology group, noted that biologics offer the advantage of being a more targeted therapy. "Biologic drugs are the wave of the future," he said.

He added that cancer drugs are a particularly fast-growing segment of the biologics market, and have driven most of the current interest.

Patent issues, with which many pharma companies struggle, further the rationale for investing in biologics. Napodano noted that biologics offer the possibility of a revenue stream from royalties, since their patents cover an entire process, not just a single molecule.

The Freedonia report suggests that generic biologics might begin to enter the market between 2007 and 2012, once an approval process is created and bioequivalence issues are resolved.

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AstraZeneca purchases CAT, taps into growing biologics market

AstraZeneca Sets Sights on Biologics Company

Biotech company VaxGen is seeking recourse against the Department of Health and Human Services (HHS) for changing the terms of its anthrax vaccine contract without providing additional compensation.

VaxGen was awarded the $877.5 million contract under Project BioShield, and is charged with supplying the government with 75 million doses of a second-generation anthrax vaccine.

Although the biotech company was slated to deliver the vaccine as early as the end of this year, HHS ordered additional tests, postponing delivery until at least the end of 2007.

Observers in both industry and the government see the partnership's success as pivotal to encouraging other biotech companies to support future biodefense efforts.

"As precedent, this is a terrible step on the part of the government," said Sharon Seiler, a biotechnology analyst who covers VaxGen at investment bank Punk Ziegel & Company. "This contract is about more than just getting anthrax vaccine. Essentially, the government can move the goal posts any time it wants."

In a statement, HHS described the contract modifications as an "extension of time" and not a change in requirements.

Seiler noted that "it's hard to tell what the truth is," but said it appears the changes relate to tests that had originally been scheduled post-shipment, and are now required prior to delivery. VaxGen does not get paid until after it delivers the doses.

An HHS spokesman declined comment beyond the prepared statement.

"It is incontrovertible that there is a modification," said Lance Ignon, Vaxgen's vice president of corporate affairs. "We can see the rationale behind that --but clearly we should be treated fairly."

VaxGen has proposed a number of options to HHS, such as increasing the value of the contract, Ignon noted.

"These additional data will merely be confirmatory; it won't be new data," he said.

A report from the Government Accountability Office noted that Project BioShield was supposed to set a new standard for accelerated vaccine development.

"Problems with this initial Project BioShield contract could affect the biotechnology industry's response to future government overtures to develop and procure medical countermeasures against the many other biothreat agents still to be addressed," the report stated.

Separately, HHS has expanded its contract with BioPort to purchase an additional five million doses of its BioThrax anthrax vaccine for the Strategic National Stockpile. It has also put out a request for proposals from companies that can develop a third generation vaccine, which would be effective in only one to two doses.

VaxGen asks HHS for compensation after the agency modifies testing requirements

Anthrax Contract Dispute Could Reverberate Across Biotech Industry

Roche has retained advertising agency GSW Worldwide to launch a new consumer-focused campaign for antiviral drug Tamiflu (oseltamivir phosphate).

GSW will handle all consumer advertising and promotion, media planning and placement, and direct marketing. The effort is expected to begin later this year.

Roche had previously worked with Young & Rubicam on an educational campaign around flu in 2000, but scaled back its advertising efforts in recent years.

A spokesman for Roche declined to discuss the reasons behind the company's decision to ramp up its outreach efforts, or the content of the advertisements.

Tamiflu treats common flu strains that appear each winter. Animal studies suggest that it might also be effective against the deadly avian flu, and governments worldwide have begun stockpiling the drug.

But as avian flu activity escalates worldwide, Tamiflu has been at the center of several controversies ranging from patent disputes to how it should be distributed in the event of a pandemic.

Marketing experts, therefore, suggest that the company be delicate in its approach to mass marketing a product that could play a critical role during a public health crisis.

John Mack, president of VirSci, a pharma marketing consulting firm, and publisher of the Pharma Marketing Blog, pointed to the limitations of DTC advertising to communicate nuanced messages. He suggested that Roche instead focus on targeted outreach to at-risk populations and on physician education.

"I don't think the typical type of DTC will serve the public well," Mack said. "The advertising could lead to a situation where there's hording and there's going to be short supply. They should be preparing physicians to deal with these sorts of issues."

If Tamiflu's Web site is any indication, the campaign will likely focus on the message that patients only have 48 hours from the onset of their symptoms to begin treatment. Earlier this year, Roche also released a desktop flu tracker that allows users to track local and national flu activity.

Kurt Wise, a communication professor at DePaul University, noted that the impetus for Roche's campaign might be less about drug sales than corporate reputation.

"If it can be handled in a tasteful, non-threatening manner, it could be quite successful," Wise said about the effort. "It could come off looking extremely responsible."

But Roche would need to avoid messages that imply that a pandemic is "imminent" or "assured," and instead focus on a theme, like preparedness, Wise noted. "In general, preparedness is understandable, not frowned upon, and generally positively received."

Marketing campaign is the first consumer-focused effort for the antiviral drug in recent years

Pharmaceutical Executive-05-24-2006

AstraZeneca Sets Sights on Biologics Company

Anthrax Contract Dispute Could Reverberate Across Biotech Industry

Roche Hires Ad Agency for Tamiflu