New Law Aims to Reduce Financial Risk of Developing Biothreat Tools for US Gov't
A little-known bill enacted into law at the end of last year could be a boon to biotech companies, including those using genomic technologies, developing diagnostics for pathogens and other biosecurity-related products and services.
The Pandemic and All-Hazards Preparedness Act creates a new way for the federal government to contract out its biosecurity programs for biothreat responses, among other provisions.
It aims to reduce some of the risks faced by companies developing bio-threat technologies for the federal government.
Specifically, it will try to cover R&D costs for companies developing biothreat tools as NIH funding runs out but before Project BioShield kicks in, which can take between three and five years.
“The government is finally getting it,” David Persing, a vice president at Cepheid, told BioCommerce Week sister publication GenomeWeb News. “They’re finally understanding what companies need and how companies work.”
The Pandemic Act creates a new scaffold of powers, called the Biomedical Advanced Research and Development Authority, through which federal agencies are given more freedom to offer companies enticements to develop biothreat responses.
BARDA, which is slated to receive a $1.07 billion funding budget for fiscal years 2006-2008, will be used to supplement Project BioShield, which includes the Departments of Homeland Security, Agriculture, Energy, Health and Human Services, and the National Science Foundation, among other organizations.
HHS spokesman Bill Hall said there are inherent and novel risks to developing biothreat products, and BARDA “will help some of these companies … get through that valley.”
Hall said all drug- and disease-related research is risky, but biothreat programs are doubly so. “There is a tremendous amount of money spent on biotech on cancer,” Hall explained, “but there have been many dead ends. The same is true for biotech or biosecurity. But [in biosecurity] you’re dealing with issues [such as terrorist attacks] which may not come to fruition.
“And there is not a built-in delivery system in place,” Hall continued. “For a cancer drug, there is a delivery system: hospitals, doctors, etcetera. …”
BARDA may help companies cross the Valley of Death by “authoriz[ing] us to spend more money for these programs,” Hall told GenomeWeb News. “This is not a new agency with a new staff. It is a new authority.”
BARDA “allows us more flexibility to offer advance payments” for biothreat contracts. “Or, if a company gets to point x in development, and they say they need an infusion of money, then the department can make a payment to that company,” he said.
“Once a threat has been assessed and decided on” by HHS or the Department of Defense, “part of it involves canvassing industry to find out what’s out there already, and going to them and saying, ‘We’re interested in developing a countermeasure,’” Hall said.
Then, HHS will be able to tell industry: “’We’re going to give you $500 million, and you need to meet certain milestones.”
Hill stressed that because the project is new, it is not yet clear where its funding will come from, how it will be overseen, or how it will be implemented.
Some in industry welcome the new bureaucracy. “What it says to me is that the government is finally getting it,” said David Persing, a vice president at Cepheid, which makes diagnostic tests for influenza, including a portable test designed to identify flu viruses within 24 hours. “They’re finally understanding what companies need and how companies work.”
As a contractor making a diagnostic for avian flu, for example, Persing said Cepheid might be likely to shy away from a restrictive contract.
“If [the government] had come up with a proposal and restricted it to avian flu, we’d say, ‘Well, why do we want to do that? We don’t even know if we’re ever even going to need” the tests. “Nobody is excited about that kind of business model. Everybody gets discouraged and interest starts to wane.”
Supreme Court's Genentech Patent Ruling May Hinder IP Deals; Academia, Biotech Vulnerable
A recent ruling by the US Supreme Court allowing MedImmune to challenge a fundamental Genentech patent while Genentech continues to out-license the IP may hinder future technology licensing deals, the Licensing Executives Society said this week.
The Court’s decision may be particularly detrimental to future deals in the biotechnology industry and in academic technology-transfer offices, according to the LES, a 30-year-old tech-transfer professional society comprising more than 6,000 members. The ruling, handed down on Jan. 9, allows MedImmune to sue Genentech over the validity of a patent that covers techniques for making monoclonal antibodies.
According to the LES, 80 percent of a 186-participant survey said that the Court’s ruling would “hold large implications for the [IP] licensing profession.” The survey, released yesterday at the LES winter meeting in San Francisco, also found that 79 percent of participants said that licensees would be either “somewhat” or “much more” likely to challenge patents even after striking a licensing agreement, and that 57 percent thought that licensors would be “somewhat” or “much more” likely to seek higher upfront payments to offset the risk of losing out on future royalties.
“Historically, once you did a [licensing] deal, for the most part you stopped thinking about whether the patent you licensed was really valid,” Allen Baum, president of the LES and a partner with Raleigh, NC-based Hutchison Law Group, told GenomeWeb News yesterday. As a result of the ruling, licensees “are going to think about whether they need the relationship and whether they need the rights; or whether they should roll the dice and challenge the patent.”
Before the ruling, a patent licensee would have to breach a license agreement in order to challenge the patent in court. “Now you don’t have to do that,” Baum said.
“Under the old rules, if you decided to go ahead and breach, you exposed yourself to the potential of enhanced damages, up to triple,” he said. “Now, because you can keep paying royalties and challenge the patent, there is really no downside risk to the licensee other than … legal expenses if they ultimately lose.”
In addition, according to Baum, “biotechnology is an obvious place where [challenging a patent] is likely to happen because you’ve got such big dollar values — where you’ve got large amounts of money changing hands for enabling technologies.
“If you start thinking about the patents that are going to be most affected by this decision, [then] what you’re talking about typically are sort of fundamental, enabling technologies,” he added.
Academic tech-transfer offices could be particularly vulnerable. “This case will particularly hurt academic institutions, which cannot afford litigation costs and have relied on licensing fees to pay for their technology transfer efforts,” an unnamed survey respondent said, according to the LES.
Some experts believe that the decision may also spur university tech-transfer offices to add language to license contracts that would prohibit licensees from challenging the validity of a patent, which in turn could further hamper future tech-transfer efforts.
In a live online discussion held last week by The Chronicle of Higher Education, Jonathan Soderstrom, managing director of the Yale University Office of Cooperative Research, wrote: “My guess is that it will have a bigger impact in non-exclusive licenses than in exclusive licenses. I think obtaining contractual prohibitions will be very difficult to negotiate into license agreements.”
However, Soderstrom also wrote that it is still too early to judge exactly how the court ruling will change university licensing practices.
ABI/MDS Sciex, Pfizer, and Sound Analytics to Develop New ADME Software
Applied Biosystems, MDS Sciex, Pfizer, and Sound Analytics plan to develop software that will work with high-throughput automation technology to improve compound analysis, ABI said this week.
The technology will focus on improving techniques for analyzing absorption, distribution, metabolism, and excretion.
By improving the “timeliness and accuracy” of information drawn from ADME testing, ABI said, the new software would increase the efficiency of the pre-clinical drug-development process.
Pfizer R&D Director Cornelis Hop said that because a swift analysis of the characteristics of compounds is a “major challenge in drug discovery,” drug makers “need a new approach that delivers rapid turnaround of ADME-related assay data.”
ABI proteomics researcher Laura Lauman said that the end goal of the project is to help drug makers kill bad compounds early and often.
Agilent, Picometrics to Integrate Fluorescence and Electrophoresis Technologies
Agilent Technologies and Picometrics will integrate their electrophoresis and fluorescence technologies, and Picometrics will market the integrated tool through a value-added reseller agreement, Agilent said this week.
Under the agreement, Picometrics’ laser-induced fluorescence detector will be available to maintain temperature control inside of Agilent’s capillary electrophoresis cassette.
Agilent said the integrated unit will be useful to detect proteins, peptides, carbohydrates, amino acids, and oligonucleotides.
Thermo Fisher Scientific to Develop LIMS Tool With Microsoft
Thermo Fisher Scientific today said it will work with Microsoft to develop a new next-generation lab-management system on the Microsoft platform.
The technology will be called the Electronic Laboratory Notebook.
Thermo, a member of Microsoft’s BioIT Alliance, said it has already developed its Darwin LIM system using the Microsoft.NET platform and will use Microsoft.NET 3.0 for the ELN system.
Thermo said the ELN will be used to record extensive notes, share data in collaborations, and access both structured and unstructured reference data.
Bruker Revenues Rise 27 Percent, Profits Double
Bruker BioSciences last week reported that its fourth-quarter revenues increased 27 percent as R&D spending rose 23 percent and profit nearly doubled.
Total receipts for the three months ended Dec. 31, 2006, increased to $135.6 million from $106.7 million year over year.
Product revenue increased 25 percent to $120.4 million; service revenue increased 45 percent to $15 million; and “other” revenue decreased 48 percent to $146,000.
CEO Frank Laukien said the acquisition of Bruker Optics and other expansions added to revenue for the year. He said the company “continued to strengthen both our traditional research systems business and our newer industrial and applied analysis business,” and added that the fourth quarter was “particularly strong.”
Bruker said profit surged 98 percent to $9.7 million from $4.9 million in the year-ago period.
Bruker said it had around $52.7 million in cash and equivalents and short-term investments as of Dec. 31.
Laukien said the company expects revenue to grow more than 10 percent in 2007.
Cepheid’s Q4 Revenues Flat as Loss Surges
Cepheid last week said that its fourth-quarter revenues were flat as its net loss surged 156 percent.
Total revenue for the three months ended Dec. 31, 2006, decreased to $23.6 million from $23.7 million year over year.
Cepheid said its instrument sales increased 8.5 percent to $6.8 million; reagent and disposable sales dipped 7.4 percent to $14.7 million; contract revenue increased 93 percent to $1.6 million, and revenue from grants and government funding dropped 38 percent to $341,000.
Breaking out its products sales for the quarter, the company said clinical products sales were up 81 percent to $6.2 million; industrial products sales increased 5 percent to $3.8 million; and biothreat product sales were down 24 percent to $11.6 million.
The wilting biothreat sales were expected, Cepheid said, because the company fulfilled a US Postal Service contract for the GeneXpert technology at the end of last year.
Cepheid added that it is “currently in discussion with Northrop Grumman and the USPS to potentially develop a five-year anthrax test cartridge purchasing agreement.”
The company reported that its net loss increased to $8.3 million, or $.15 per share, from $5.1 million, or $.08 per share, in the year-ago period.
Its fourth-quarter R&D spending increased to $6.7 million from $5.2 million year over year, Cepheid said.
The firm said the widened loss includes a $3.4-million payment as part of a licensing agreement with Idaho Technology to settle a PCR technology patent lawsuit.
Cepheid said it had around $17.2 million in cash and equivalents and $77.8 million in marketable securities as of Dec. 30.
CEO John Bishop said the company expects product sales to “increase significantly in the second half of the year.”
The company expects total revenues in 2007 to increase by between 28 percent and 37 percent to between $112 million and $120 million, largely coming from product sales of between $100 million and $120 million.
Third Wave’s Q4 Revenues Rise 17 Percent
Third Wave Technologies last week said that its fourth-quarter revenues increased 17 percent as its net loss narrowed 8 percent.
Total revenue for the three months ended Dec. 31, 2006, increased to $6.8 million from $5.8 million year over year.
Revenue from molecular diagnostics rose to $5.8 million from $4.3 million, but receipts from research products declined to $954,000 from $2.4 million.
Third Wave’s net loss for the period declined to $4.6 million, or $.11 per share, from $5 million, or $.12 per share, year over year.
Its R&D expenses doubled to $3.6 million compared with $1.8 million the previous year.
CEO Kevin Conroy said the company “met or exceeded” its 2006 objectives and said it met its product-development goals for the year, including starting clinical trials for HPV products and submitting a cystic fibrosis diagnostic test for FDA approval.
Third Wave had around $44.2 million in cash, cash equivalents, and short-term investments as of Dec. 31.
The company said it expects 2007 revenue to be between $31 million and $33 million, or an improvement of between 10.7 percent and 17.8 percent year over year. Third Wave said that between $26 million and $28 million of this year’s revenue will come from molecular diagnostics.
Tm Shareholders Approve Luminex Purchase
Shareholders and option holders in Tm Bioscience have approved a plan by Luminex to buy the Canadian company, Tm said last week.
This week, an Ontario Superior Court of Justice has cleared the way for Luminex to acquire Tm Bioscience. Tm last week said that the deal could close within a day of the court’s favorable decision.
The acquisition was originally announced last December.
JP Morgan Downgrades Waters, Invitrogen Stocks
JP Morgan last week downgraded the stock of both Waters and Invitrogen to ‘neutral’ from ‘overweight.’
Shares in Waters traded at a 52-week high of $58.61 last Wednesday, a day before the downgrade. On Tuesday, Waters’ shares closed at tktk.
JP Morgan analyst Tycho Peterson downgraded Invitrogen’s stock, saying that it was priced fairly and the benefits of the divestiture of BioReliance were not likely to be realized until 2008.
Shares of Invitrogen closed at $64.35 on Tuesday
Oxford University Purchases Waters HDMS System
Oxford University has purchased a mass spectrometer from Waters and plans to use it in joint studies with the Department of Medicine, Waters said this week.
The company said the school's Department of Chemistry will use the Synapt HDMS system to study interactions between proteins and small molecules and bio-macromolecules.
The Chemistry and Medicine departments at Oxford will use the system to continue ongoing research on oxygen-sensitive enzymes that could be used to “starve cancerous tissues of oxygen” and possibly to restore damaged heart tissue.
Oxford professor Chris Schofield said the mass spectrometer will “enable us to study the effect of binding events on protein conformation in an efficient manner.”
The company said Schoefield also plans to use the tool to study protein complexes with multiple components.
Financial terms of the agreement were not released.
CombiMatrix Q4 Revenues Drop, Net Loss Widens
CombiMatrix last week said that its fourth-quarter revenue plunged 76 percent as R&D spending jumped 24 percent and net loss widened 150 percent.
The company also said it has named Mansoor Mohammed to be CEO of CombiMatrix subsidiary CombiMatrix Molecular Diagnostics, replacing Matt Watson, who stepped down to “pursue other opportunities.” Mohammed had been president and COO of CMDX.
CMDX said Watson will remain a consultant to the company for three months.
Total receipts for the three months ended Dec. 31, 2006, decreased to $859,000 from $3.5 million during the same period last year.
Much of the decline came from the loss of revenue from collaboration agreements, which had no receipts in the fourth quarter of 2006 but generated $2.25 million in the same period last year.
Array equipment and services revenue decreased to $228,000 from $467,000; government contracts decreased to $511,000 from $864,000 and service contract revenue increased to $120,000 from $47,000.
R&D spending increased 87 percent to $2.8 million.
Net loss increased 150 percent to $4.5 million from $1.8 million year over year.
CombiMatrix had around $14.3 million in cash, cash equivalents, and short term investments as of Dec. 31.
Expression Analysis Expands; Will Offer Services on Illumina, Luminex, ABI Platforms
Expression Analysis has relocated its lab to a larger facility in Durham, NC, the company said last week.
The firm, which uses Affymetrix’ GeneChip to provide microarray services for clinical trials, said the new space is triple the size of its previous lab.
Expression Analysis said it needed new space because over the past year it tripled its capacity of its gene-expression and genotyping services and recently doubled its lab and informatics staff.
The extra space will allow the company to install new hardware for use in high-throughput testing using Affy’s and other platforms, including those from Illumina, Luminex, and Applied Biosystems.
Illumina to Buy Back as Much as $75M in Stock
Illumina this week said it plans to buy back as much as $75 million of its outstanding common stock over a six-month period, and has filed a trading plan to allow it to complete the transactions.
Earlier this month Illumina said it would use $200 million from a senior note sale to buy back its own stock.