A magazine ad for Boniva, fronted by actor Sally Field, generated the DDMAC (now the Office of Prescription Drug Promotion, or OPDP) Untitled Letter last year due to following phrase: “After one year on Boniva, 9 out of 10 women stopped and reversed their bone loss.” That didn’t jibe with the scientific data, DDMAC said in the letter, before requesting that all ads containing the phrase be removed from the campaign.

Genentech went a step further. In September of last year, the company began running corrective magazine ads addressing the overstated claim. The corrective ad states that the violative ad “may have given you the wrong impression.” It goes on to state that “Boniva has not been proven to stop and reverse bone loss in 9 out of 10 women and is not a cure for postmenopausal osteoporosis.” The corrective ads will run though April 2012.

Unlike their mild-mannered, Untitled Letter cousins, Warning Letters are considered more severe, and they typically mandate corrective ads to clear up any overstated claims or minimized risk information. Given that Genentech received the former communique and not the latter, it’s notable that the company chose to run corrective ads without a mandate.

After speaking with DDMAC about the Untitled Letter, Genentech worked with the agency to create and then “voluntarily” launch the corrective ads last September, according to Chris Vancheri, director, public affairs, at Genentech.

In a statement, Genentech said that in addition to the corrective advertisements – which are running in several women’s magazines, including Weight Watchers and this month’s WebMD the Magazine – “our clinical specialists have reached out to health care providers” to inform them about the corrective ads, which intend to “clarify the benefits and risks of Boniva in women suffering from post-menopausal osteoporosis.”

Sally Field was the face of Boniva beginning in 2006, but Vancheri says Field is “no longer engaged” on the campaign. GlaxoSmithKline signed a co-promotion deal with Roche on Boniva in 2001, but the companies broke the partnership in 2010.

But what they do need is a greater emphasis on post-integration planning during the deal-making phase and some fundamental (non-scientific) principles, writes Brian McGilligan.

Ex-Pfizer R&D boss John L. LaMattina recently proclaimed that Big Pharma mergers are crippling science. Whether or not you agree, mergers are a core part of business and the chances of safe-guarding future R&D investment in merged companies will best be achieved by ensuring mergers are delivered in a way that doesn’t negatively affect share-holder value and, therefore, cash-flow.

The last time we witnessed merger-mania in the sector was just over two years ago when, during a heady six weeks in the first quarter of 2009, Pfizer agreed to buy Wyeth, Merck & Co and Schering Plough followed suit. Then just a couple of days later, Roche won its long-running battle for full control of Genentech.

While the announcement of such deals tend to herald opportunities to grow market share and, in many cases, reduce costs, if a detailed post-mortem was carried out you would not only find that the benefits outlined prior to the deal hadn’t been realized, but value may have been eroded rather than created.

Clearly, some deals in the sector have already been identified as failures by sector analysts. For instance, the Wall Street Journal has reported, in the case of Daiichi Sankyo, the Tokyo-based pharmaceutical company that acquired Gurgaon-based Ranbaxy for $4.6billion in June 2008, more went wrong than right. Analysis suggests that this deal failed largely because of a lack of due diligence. This isn’t uncommon but, by far, the greatest reason for mergers failing is poorly planned and executed integration activity.

Unfortunately, for many companies the executive team often see this as peripheral, treating it as a secondary element while they work with any number of nominated advisors, incentivised only on doing the deal, not on its downstream success.

So while deals may not need science to increase their success rate, they do need a greater emphasis on post-integration planning during the deal making phase and some fundamental (non-scientific) principles should be followed.

Firstly, it may sound simple, but it is important to have a clear and well-architected direction/end state design. This factor is so often the root cause of so many integration failures, resulting in a tortuous technical process to knit together disparate systems and data structures.

Secondly, integration must be the priority. This is not the time for fixing every operational issue en route or pandering to internal pressures to add additional functionality to the business operating model. It’s a time to look at ways to take complexity (and change) out of the plan not add unnecessary change to it.

The next thing to consider is that no plan will be perfect and striving for it will lead to delays rather than a perfect plan. There will always be unpredictable events that will shape decision making during the integration. Single accountability and a dedicated focus on delivering the integration is also hugely important as managing the delivery of a successful integration is not a part time activity … nor is it for the uninitiated.

Finally, the logic of the acquisition and the integration plan – and the progress made against it – must be communicated to the external market and employees. As a result of past acquisitions within the sector, huge global networks (e.g. Novartis in 140 countries), are in even greater need of regular communication!

Whilst Mr LaMattina may highlight that R&D is suffering as a result of some mergers, surely if the integration is delivered on time and to budget, then this could allow more money for those very same cash strapped R&D departments?

Brian McGillian is Partner, Pharmaceutical Practice, PIPC.

About PIPC
PIPC is a project and programme management consultancy responsible for some of the largest business transformations and post-acquisition integrations in corporate history. Founded in 1992, the firm operates globally from 16 international offices across over 25 countries.

This is a huge problem for Roche who purchased the treatment as part of its merger with Genentech. The drug firm could see sales drop by $1 billion if FDA agrees with the panel and ceases use of the drug for breast cancer. The drug earned Roche $5.7 billion in 2009.

“We are disappointed by the committee’s recommendation and believe Avastin should continue to be an option for women with this incurable disease,” stated Sandra Horning, Roche’s global head of clinical development hematology/oncology, in a release. “We will continue to discuss the data from the more than 2,400 women who participated in three Phase III studies with the FDA. This recommendation does not impact Avastin’s approved uses for other cancer types.”

Avastin (in combination with chemotherapy) was given fast-track approval in early 2008, because it treated HER2 negative breast cancer, a form of the disease with few treatment options. FDA requested that Genetech release the results of two post-market trials to determine how effective the drug is at improving patient lifespan.

According to the two trials, the treatment only slowed cancer progression by approximately a month and didn’t do anything to boost patient survival. Additionally, patients taking Avastin had more adverse reactions than patients taking chemotherapy alone.

FDA will give a final ruling on Sept. 17.

The data was released at the annual meeting of American Society of Clinical Oncologists. According to Roche, Genentech’s parent company, patients treated with a combination of Avastin and chemo, followed by the continuation of Avastin alone, survived more that 14 months without seeing symptoms worsen. Comparatively, patients on chemotherapy alone were progression-free for about 10 months.

Roche studied 1,873 untreated patients with advanced ovarian cancer. Patients taking Avastin with chemo saw a higher frequency of adverse events including low white blood cell counts, pain, gastrointestinal problems, and hypertension.

Here’s a run down of the other news coming out of Chicago:

•Argos Therapeutics released positive Phase II data about its AGS-003 drug in combination with sunitnib for the treatment of advanced renal cell carcinoma. “Sunitinib has been shown to modulate the immune system by decreasing T-regulatory cells that can potentially suppress immune responses in the tumor microenvironment,” said Asim Amin, co-director, Immunotherapy Program for the Blumenthal Cancer Center.

•Novartis announced that a Phase II trial involving the drug Afinitor showed positive results in dropping the size of benign brain tumors caused by tuberous sclerosis. Of the 28 patients in the study, 75 percent saw a decrease of around 30 percent in size.

I had the opportunity to catch up with a few seasoned participants who are widely known throughout the HBA for their commitment to the organization—Charlotte Sibley with Shire, Ilyssa Levins, president of the Center for Communication, and Shellie Caplan, founder of Caplan Associates. First timers like Ellen Chi, principal research scientist in San Diego for Johnson & Johnson, came out to get prospective on career development. “It’s not too common you find women in pharma, so it’s nice to hear how women in the industry [at the conference] started their careers,” she said.

Hot topics of conversation are in long supply, including plenty about two companies: Roche and Genentech. And it’s no surprise: At the peak of transition and in HQ territory, the merger is one change never quite experienced before in pharma, said Jennifer Cook, vice president portfolio management of Genentech, who opened today’s morning welcome address by sharing her thoughts. “The culture of leadership that emerges for this new company will be most important,” she said. “We’ll need every employee going through this time of transition to ask themselves ‘what can I do?’”

The keynote speaker, best selling author Libby Gill, might have provided the solution. Gill shared three strategies for creating a culture of bold leadership: Develop your own leadership DNA or determine how you lead; clarify, simplify, and execute your vision of success; and then pursue a radical sense of purpose.

But perhaps the highlight of Gill’s speech came when she shared an ancient proverb to a ballroom with more than 600 women in it: “If you’re leading and nobody is following, maybe you’re just taking a walk.”

Well, I doubt anybody’s “walking” here. Empowered women are everywhere and ready to change the status quo. Stay tuned to find out how Renee Tannenbaum, chief commercial officer, Elan Pharmaceuticals, is leading her company’s operations to new heights.

Score another win for Genentech and its cancer treatment Avastin (bevacizumab). On Monday, the biotech giant, now owned entirely by Roche, announced that FDA has approved the drug for kidney cancer.

Avastin blocks new blood vessels from forming and supplying tumors with the nutrients they need to grow and spread to other parts of the body.

Since it was first approved in 2004, Genentech has expanded Avastin’s uses to colorectal cancer, breast cancer, and non-small cell lung cancer. According to Roche, the treatment is being tested for treatment in more than 30 tumor types.

“We hope that researchers some day find a cure for kidney cancer,” stated William P. Bro, chief executive of the Kidney Cancer Association, in a release.  “Until then, each new medicine, like Avastin, offers patients an opportunity to find the treatment best suited for them.”

FDA approved this indication of Avastin after reviewing data from a study that documented a 67 percent increase in progression-free survival of patients receiving Avastin for previously untreated metastatic renal cell carcinoma. Additionally, 30 percent of patients taking Avastin with interferon alpha saw a drop in tumor size, compared to 12 percent in patients not taking Avastin.

According to Roche, the study was conceived to show an increase in overall survival in patients with this type of cancer. The company didn’t succeed in that regard, stating that there was no improvement in overall survival. However, the endpoints that were reached were more than enough to satisfy FDA’s approval process.

Avastin now enters a very crowded kidney cancer market with competition from Pfizer, Wyeth, and Bayer. However, CNN reports that many physicians have been using the drug off-label for kidney cancer, which could boost market penetration.

Roche plans to keep the Genentech site in San Francisco, and transition its New Jersey corporate headquarters to the West Coast. Additionally, research and early stage development will operate as standalone units. Roche expects to save about $850 million in the reduction of redundant services and positions, but there’s no word yet as to the actual number of jobs that could be eliminated.

Negotiations between the two firms were far from smooth. An initial $44B offer by Roche, made last July, was met with disdain by Genentech’s board of directors. Roche fired back by taking an even lower offer of $43.7B directly to Genentech’s shareholders—but that didn’t go over well either, and Roche was forced to go back to the well. Last week, the drug company made a firm offer of $46.8 billion, a price that appears to have satisfied Genentech’s board.

“We believe this is a fair offer for Genentech shareholders, and the committee is pleased to come to a successful conclusion of this process,” said Charles Sanders, chairman of the special committee of Genentech’s board of directors. “We look forward to working with Roche to complete the transaction as expeditiously as possible.”

Genentech and Roche’s partnership began nearly two decades ago, when Roche purchased controlling interest in the biotech firm. Over the years, Genentech has morphed from a smaller specialty firm to a sprawling bio-giant with annual revenue fluctuating around the $12 billion mark.

Roche has not commented on the deal beyond statements in a press release. The company has scheduled no press conferences or investor calls, and told Pharm Exec that none are in the works.

Another Mega Merger
The Roche/Genentech deal comes just three days after news broke that Merck would merge with Schering-Plough, and less than two months after Pfizer signed a deal to purchase Wyeth. Mergers and acquisitions are going strong, as Big Pharma faces looming patent expiration and a scarce supply of new drugs. However, not everyone thinks mergers are the best strategy. The New York Times comments section exploded with negative reactions after the Merck announcement. Most readers voiced fears that Big Pharma was getting “too big.”

While many analysts disagree that the general public should be concerned at this point, some did tell Pharm Exec that the push for large-scale mergers might not be the best course.

“Large-scale mega mergers at this stage in the game don’t really solve the fundamental problem,” said Peter Young, president of Young & Partners. “You don’t invent faster because you’re bigger, and the reality is that they are only buying themselves a little bit more time. The best analogy is that if you own four houses on a lot and one burns down, the others are fine. However, if you decide to glue them together in order to have more size and scale, [then] if one part of the house burns, there’s a risk that everything will burn down.”

Roche wants Genentech and it’s sick of waiting for a deal.

Six months after a special committee for the biotech firm’s board of directors rejected Roche’s offer of $43.7 billion or $89 a share, Roche has switched gears and dropped the offer to $86.50 per share and is taking negotiations to the stockholders.

“We are disappointed that the discussions over the last six months between Roche and the special committee of Genentech have not produced a negotiated agreement,” Roche Chairman Franz B. Humer stated in a release. “We feel it is now time to give the Genentech minority shareholders the opportunity to decide on our offer. Especially in the current market environment the offer provides an opportunity for all public shareholders to achieve liquidity and to receive a fair price for all their shares.”

Roche already owns 55 percent of Genentech and hopes to snag full control of its top cancer treatment Avastin. When the deal is approved, Roche plans to leave Genentech’s R&D division as a stand alone unit based in San Francisco. Meanwhile, Roche’s Nutley, New Jersey-based pharma commercial operations and Palto Alto-based virology division would be transplanted to SF. The Nutley branch will not be shuttered, instead it’s going to be turned into ground zero for Roche’s disease biology and metabolism units.

Roche plans to pay for the aquisition merger using a combination of cash, loans, and bonds.

The global economic crisis and its impact on the healthcare industry clearly became the central theme beginning with the opening remarks Monday morning when Doug Braunstein, Head of Investment Banking at JP Morgan, claimed there has never been a time when “credit, liquidity, and capital” were so central to every healthcare company’s strategy. This focus permeated presentations of companies and keynote luncheon speakers. Company presentations I attended included some mention or clarification about the company’s cash balance, cash flow, cash management, operational efficiencies, etc. up front and center—across big pharma, big biotech, specialty, and generic companies.

Art Levinson, GENE CEO, had a slightly different message slant—assuring listeners that innovation wasn’t dead at his company by listing their 26 NMEs in clinical development. He amused all when he took several minutes at the beginning of his talk to demonstrate how JP Morgan’s conference logo incorrectly represented the right-handed DNA helix as left-handed, a fact he thought a bank with involvement in such a highly capitalized sector should correct. He commented that if he talked about pursuing biogenerics as a strategy he would expect his board to fire him. Was this remark directed at Merck, Roche or both? Both companies have recently mentioned their prowess to pursue that business opportunity with Merck CEO Richard T. Clark making a strong point on Tuesday that they would be pursuing new revenue growth opportunities in “follow on biologics.”

A day earlier, Roche CFO Erich Hunziker spoke about its management of cash which he noted was critical to managing the business. He also wanted to make it clear that Roche wasn’t making short-sighted cost cuts and, thereby, sacrificing long-term perspective. He spoke of enhancing innovation and “operational efficiency” in the planned merger of Roche and Genentech operations. Hunziker answered an unspoken question—that Roche did not intend to kill innovation at Genentech with their planned buyout of the remaining 44 percent that they don’t already own. His tone of voice suggested he really meant it but many just don’t believe Roche can control their management style from destroying the GENE culture that nurtures their innovation. Many believe the “biomarker” for implementation of that intent or not will be whether Art Levinson and his team leaves or stays.

It was clear that there will be major changes in the healthcare system in the US with reinforcement of how that might take form by the keynote speakers Uwe Reinhardt, professor of health economics at Princeton University on Tuesday and Ted Kennedy, Jr., Marwood Group, on Wednesday. Reinhardt thought that a universal healthcare plan could be sold on its stimulus potential alone, and Kennedy assured the audience that “out the gate” the new administration would deliver the expansion of SCHIP, a Medicaid bailout for the states and a major investment in Health IT. Kennedy declared there was a “planetary alignment” on a health plan as result of the appointment of former Sen. Tom Daschle (D-SD) to head Health and Human Services and the new White House Office of Health Reform and the state of the economy. This coming together might finally result in a single comprehensive universal coverage bill in the US.

Kennedy further delineated the industry sectors most likely to feel pricing pressure and included all branded pharma and biotech drugs. He predicted new policy initiatives would drive growth for generic pharma and pathway for biogenerics as well.

There were 337 healthcare companies presenting starting Monday and running through Thursday, Jan. 12–15. These include 276 public and 61 private companies making their “pitches” to 1,427 public and 1,124 private equity and venture capital investors, respectively. Registration of attendees was sharply constrained by JP Morgan to a total of about 3,500 altogether versus 6,000 in the past. Many who couldn’t gain admittance to the upper floors where the formal presentations and breakout sessions occur filled the St. Francis hotel lobby below. They made appointments with attendees for meetings in the lobby and other venues around Union Square or waited near the elevators and stairs to introduce themselves to attendees exiting the meeting.

The low-ball $43.7 billion buyout offer was made late Sunday night. Although widely viewed as a fait accompli, by Friday the Wall Street Journal’s Health Blog was reporting that “it sounds like Genentech may put up a fight.” 

Even more interesting, TheStreet.com’s Adam Feuerstein was floating the prospect of Genentech, backed by private equity, making its own hostile bid for Roche. “If I were [Genentech CEO Arthur] Levinson, I’d get in the face of [Roche Chairman Franz] Humer and tell him, ‘You don’t buy us, we’ll buy you, punk’” is how one analyst put it.

Everyone loves a good fight. But lost in the breaking story was the news on Tuesday of another Roche acquisition. The Swiss drug giant paid $125 million for a little biotech in Madison, Wisconsin, called Mirus Bio, the maker of a systemic delivery technology for RNA interruption therapeutics. Called Dynamic PolyConjugates (DPC), these tiny transporters are amazingly target specific—they seem able to enter a single cell and dump their payload without apparent spillover.

An effective, efficient delivery system is the Gorgon blocking the road to RNAi drug development, and the Mirus purchase indicates that Roche is up for the challenge. Pharm Exec spoke to Louis Renzetti, Roche’s global head of RNAi therapeutics, to find out what’s cooking.

All of a sudden, Roche is a leading player in the RNAi space. How did that happen?
We’re serious about the further evolution of medicine—especially better efficacy in more people and gaining better control of some serious diseases. And whenever we were looking at emerging technologies, RNA interference always came to the top of the list.
But we knew that if we were going to get into this, we had to make a very real and focused commitment. We began investing a year ago, and that’s how we ended up with our [$1 billion milestone] deal with Alnylam [for an IP license] and acquisition of its European RNAi research site.

Why Mirus Bio?
Mirus offers us two things: a really cool technology and a team of scientists with deep know-how. They addressed the delivery problem almost from a virus approach and developed DPC technology, which selects a particular cell—much like an antibody—and gives nearly 100 percent gene knockdown.

So this week it’s Genentech and Mirus. What’s on the shopping list for next week?
Well, we’re developing a global RNAi network of scientists—we have the Madison site, the Center of Excellence in RNAi Therapeutics in Germany, as well as labs in Nutley, New Jersey, and Basel, Switzerland. We have efforts going on using proteins as a delivery technique. We all agree that there’s probably not going to be a one-size-fits-all approach because these are complex diseases and we’re looking at knocking down multiple genes and different genes in the same population.
This is all part of Roche’s ongoing drive toward personalized medicine. Our diagnostics division can help identify biomarkers and pathways. Genentech has deep expertise in oncology and immunology, and we expect there to be synergy between monoclonal antibodies and RNAi.
We believe in this area as a therapeutic. We want to turn RNAi into drugs.

For more on how Roche is rockin’ RNAi therapeutics—and why they may leave Merck and Pfizer in the dust—read Dirk Haussecker’s blog here.