About Michaela Drapes

Novartis, hardly the stodgiest member of the Big Pharma pack, has made good on promises to expand its research and development business in China. Last week the company announced plans to build a $100 million biomedical research center in Shanghai’s Zhangjiang Hi-Tech Park that will employ some 400 research scientists. (The company and its predecessors have operated dye, chemical, and pharmaceutical factories in China since 1938.)

Novartis joins fellow multinational drug companies Novo Nordisk, Roche, Eli Lilly, Pfizer, and AstraZeneca — all of which either have research facilities in China or have announced plans to invest in operations there.

Lax Chinese patent laws have understandably kept Big Pharma from making any big plays in what could be one of the world’s largest drug markets. However, the quality and the relative bargain-basement price of the country’s scientific talent apparently have finally tipped the scales. Additionally, though many Chinese still utilize traditional homeopathic remedies, Novartis sees an increased need for products specifically aimed at the country’s health care needs. According to Novartis CEO Dr. Daniel Vasella, research at the Shanghai facility will “combine modern drug discovery approaches with those of traditional Chinese medicine that have been used to treat patients in China for thousands of years.” These include the study of the infectious causes of cancer, such as the link between Hepatits B and liver cancer. Other research will focus on developing mechanism-based therapies (a tactic that attempts to identify how drugs work in order to streamline the R&D process) with Chinese universities and research centers.

Novartis’ revenues in China slipped about 5% last year, so it’s easy to understand why the company is looking to find new and innovative ways to make money in that market. The company claims the move into China won’t initially be a cost-saving effort. Most of the leading scientists staffing the facility will come from Novartis’ existing team of Chinese expats (including Dr. En Li, formerly based at the company’s Boston facility), in order to train native scientists in the finer points of working for a multinational corporation.

However, the Wall Street Journal points out that the salary of a Chinese scientist working in Shanghai is about $25,000 per year, as compared to the $250,000 salaries pulled down by research chemists in the US. (registration required)

If this investment pays off for Novartis, industry analysts predict that China could become “the next India” for outsourced pharmaceutical research and development.

The Heart Rhythm Society, a professional organization for cardiac arrhythmia specialists, is lobbying the FDA to change the guidelines surrounding recalls of implanted cardiac devices. This move is in response to patient confusion about recalls and the devastating business effects surrounding major recalls of potentially faulty pacemakers and defibrillators from Medtronic and Guidant (now owned by Boston Scientific) in 2005 and early 2006.

The Society claims that some words cause undue distress among consumers, especially when a patient must replace potentially faulty cardiac devices. Such procedures could be just as damaging to a patient’s heath — replacement operations have a high risk of fatal infection and other health issues — as a malfunctioning defibrillator or pacemaker. They suggest the FDA adopt less stark words, but still use “safety advisory” or “safety alert” instead.

Some skeptics, not surprisingly, see this move as a way to pull the wool over the eyes of consumers. In their minds, the FDA should not sugar coat the news that a pacemaker might fail. Additionally, they feel consumers may be confused by the change in terminology, or that they may not understand the urgency of the situation if recalls are not plainly stated as such.

The FDA has acknowledged, in its bureaucratic way, the receipt of these recommendations, and is already working to improving communications between device manufacturers and consumers — but has argued in the past that changing use of the term ‘recall’ will require legislative action. It is implementing focus group research to study consumer reactions to word choices.

Meanwhile, big industry players like Boston Scientific, Medtronic, and St. Jude Medical — among others — have already agreed to communicate device performance more effectively, appoint external review panels to evaluate after-market performance of their devices, and develop wireless monitoring systems for patients and doctors.

First there was Extreme Makeover and The Swan. But those “reality” television shows were missing one key element that makes pilot-season contender The Hottest Mom in America such a sticky prospect. The show’s main sponsor is a pharmaceutical company — Medicis Pharaceuticals, maker of cosmetic pharmaceutical treatment and “wrinkle filler” Restylane.

The production is the wacky scheme of “Felicity Huffman’s former manager” (I wasn’t kidding with that Desperate Housewives reference!) and champion poker player Jamie Gold. Gold’s viral marketing firm BuzzNation, is also in on the action — it’s spamming every message board imaginable with information about the show’s auditions in Dallas, Miami, Chicago, Atlanta, New York City, and Los Angeles — as well as canvassing salons in the upscale neighborhoods of those communities. The production is off to a rocky start: The first audition, in Dallas, hardly drummed up the thousands of hopefuls that vie for berths on American Idol — a pool of 300 applicants seems a bit thin. Meanwhile, behind the scenes, Gold is tied up in a Nevada court, sorting out his World Series of Poker winnings in a lawsuit brought by a business partner.

This certainly is a novel way to market a drug — Restylane is a prescription-only topical cream that hasn’t even made a dent in cosmeceutical market dominated by Allergan’s Botox. Medicis is hoping that this viral marketing campaign will get your average housewife hooked on the Restlyane treatment (and its $2,000 per year price tag) before Allergan’s next potential blockbuster, topical wrinkle cream Juvederm, hits the market in January 2007. If the reality show scheme works, it could open the door for more elaborate viral marketing campaigns in the pharmaceutical space in the future. What’s unclear, though, is exactly how these campaigns will shore up with regulations that police the marketing of pharmaceuticals directly to consumers.

If the show is picked up by networks — there’s no word yet if it has been — the winner of the title of America’s Hottest Mom will become Restlyane’s spokeswoman and she’ll be awarded a college scholarship for her child. No word yet, though, if BuzzNation’s next reality show pitch will feature said Hot Mom’s brood in a televised battle for the college-funding booty.

Advanced Cell Technology, which made front page news around the world last month with its claim that scientists had obtained stem cells from embryos without destroying them, is now fielding hard questions about its research from other scientists. The company’s business practices are also facing scrutiny.

Scientist Dr. Robin Lovell-Badge told the BBC the day of the stem cell announcement in the science journal Nature that: “I am unconvinced by the ethical arguments - spare IVF embryos used to derive the cell lines would have been destroyed anyway.”

After Dr. Lovell-Badge’s statement, Nature asked Advanced Cell Technology’s head of research, Dr. Robert Lanza, to clarify his work. Not one but two press releases, as reported by The Scientist’s blogger Brendan Maher, were sent out by the Nature press office over the next several days to clarify the original announcement. They stated that though stem cells were indeed grown from one cell extracted from an 8-to-10 cell blastomeres, those embryos were destroyed in the course of Dr. Lanza’s research.

The company maintains that it did not intentionally mislead the press, according to an article in the Philadelphia Inquirer. But Advanced Cell Technology clearly caused the scientific and the lay press to look like bunglers for rushing a hot-button story out to the public without examining the underlying science more carefully.

I’m no scientist, but as I wrote in a previous entry, the company has made other grand announcements about its research at around the same time it needed money to keep the company running. In 2001 and 2003 (before its reverse merger), the company claimed that it had developed procedures to clone embryos and thus harvest stem cells ethically. However, neither produced viable stem cells for biomedical research. It then merged with a publicly traded shell company that formerly manufactured Hopi katchina dolls. The move enabled Advanced Cell Technology to raise equity in the public markets.

That’s not all — a quick peek at the company’s recent SEC filings and press releases reveals even more interesting developments in this story: The company privately financed new debt to investors, including Anthem Venture Partners (who own 20% of ACT), that netted the company some $13 million in cash. The deal closed on September 8, 2006. CEO William Caldwell IV told the UPI, “We expect the proceeds generated by these financings will fund preclinical studies and accelerate our progress to commencement of the clinical studies necessary to develop real treatments that tap the amazing promise of stem cell technology.”

The company may also want to make sure that breakthrough technology it developed for the ethical harvesting of stem cells actually works.

It’s the kind of story that seems too good to be true, really. A team of scientists published a study in the scientific journal Nature, claiming they have developed a process to ethically extract stem cells from human embryos without destroying them. 

Concern about destroying embryos is what led the Bush administration, under pressure from pro-life activists, to withdraw government funding from stem cell research in 2001. At the time, critics claimed that US scientists would lag behind researchers abroad or in privately funded businesses. As it turns out, the scientists who wrote the article work for Advanced Cell Technology, a struggling company trading on the OTC market. 

When the story hit this week, I recalled that the company in 2001 and 2003 (before its reverse merger) developed procedures to clone embryos and thus harvest stem cells ethically. However, neither produced viable stem cells for biomedical research — thus the need to merge with a publicly traded shell company that formerly manufactured Hopi katchina dolls. The move enabled Advanced Cell Technology to raise equity in the public markets. 

Of course, if Advance Cell Technology’s stem cell extraction techniques are successful, it will be a tremendous breakthrough for science and the company. Before the stem cell announcement, which coincided with its most recent debt offering, the company appeared in need of some good news. Its stock was trading at its lowest point, and its most recent 10Q filing showed a decline in revenues and assets. (In 2005 the firm had $10 million in losses and $400,000 in revenues.) CFO James G. Stewart resigned August 17; the next day the company released a proxy soliciting a stock split. An 8K announced that stock option grants had been made to the company’s remaining top executives, including Dr. Robert Lanza, head of research and lead author of Nature article. 

 After the Nature press release August 23, the company’s stock price jumped 358%. More than 400 articles appeared on the Internet that afternoon alone, immediately re-igniting the controversy of government funding of stem cell research. By the next morning, the political and ethical issues raised by the study were front-page news around the world. 

My take is there’s likely another story about the company behind the headlines.