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Hot Topics In This Week's Issue … September 15, 2014

U.S. SECOND-QUARTER GROWTH SEEN HIGHER ON HEALTHCARE SPENDING -- The sprawling U.S. healthcare industry saw revenue rebound last quarter, a sign that stronger spending at hospitals and medical offices could help boost U.S. economic growth to its highest level in eight years. Total revenue at healthcare and social-assistance firms rose 3% in the second quarter from the first three months of the year, the Commerce Department said Thursday in its Quarterly Services Survey (QSS). Hospital revenue rose 2.8% from the first quarter and revenue at physician offices jumped 4.1%. Thursday’s report showed “modest acceleration in health spending” in the second quarter, driven likely by both “more people insured under the Affordable Care Act and the recovering economy putting some upward pressure on healthcare costs,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation (Menlo Park CA). Economists have predicted the rollout of the Affordable Care Act this year will lead to higher healthcare spending as millions of Americans obtain insurance coverage and begin using it. The Centers for Medicare and Medicaid Services recently projected healthcare spending would grow 5.6% this year, up from an estimated 3.6% in 2013. But that spending surge didn’t materialize in the first quarter, when revenue at healthcare and social-assistance firms fell 2% from the fourth quarter.

          U.S. spending on healthcare services, adjusted for inflation, fell at a 1.4% pace and dragged down overall economic growth, the Commerce Department estimated. Mr. Levitt said many newly insured Americans signed up for coverage in late March, and “those people didn’t actually get their insurance cards until May. The real increase in health insurance came in the second quarter, and this is when you’d expect to see the effects.” From a year earlier, healthcare and social-assistance revenue rose 3.7% last quarter, up from 2.9% annual growth in the first quarter. The figures weren’t adjusted for seasonal variation or price changes. Consumer spending generates more than two-thirds of U.S. economic output, and stronger spending on health care and other services should bolster overall growth. The Commerce Department last month said gross domestic product expanded at a 4.2% seasonally adjusted annual rate in the second quarter, rebounding from an unexpected first-quarter contraction. That estimate assumed inflation-adjusted healthcare spending rose last quarter at a modest 0.5% pace. Wall Street economists believe the government will revise spending higher based on the QSS report, in turn boosting GDP growth. The government is set to release its third estimate of second-quarter GDP on Sept. 26.

THIRD AMERICAN INFECTED WITH EBOLA IN STABLE CONDITION -- The third American to be treated for Ebola in the United States is showing “remarkable improvement” after receiving an infusion of plasma from U.S. Ebola survivor Dr. Kent Brantly, as well as an undisclosed experimental drug, his doctors said on Thursday. Dr. Rick Sacra, 51, who is being treated in a special biocontainment unit at the University of Nebraska Medical Center in Omaha, received two doses of plasma from Brantly, which doctors are calling a convalescent serum, and has been given nightly doses of an undisclosed experimental drug, Dr. Phil Smith, one of Sacra’s doctors, said. “I don’t know how much of his recovery is due to the drug, how much is due to the convalescent serum and how much to the aggressive intravenous fluids,” Smith said. Brantly’s blood likely contains protective antibodies that may help buy Sacra some time while his body tries to fight off the infection, Smith said. The hospital tried a number of potential donors, but Brantly’s blood type turned out to be a match for his friend and fellow missionary Sacra. “It really meant a lot to us that he was willing to give that donation so soon after his recovery,” Debbie Sacra, the patient’s wife, told the briefing. “I spoke to his (Brantly’s) wife. We marveled that they had the same blood,” she said. Smith said he has been asked not to disclose the name of the experimental drug Sacra is receiving.

          The number of new Ebola cases in West Africa is growing faster than authorities can manage them, the World Health Organization (WHO) said on Friday, renewing a call for health workers from around the world to go to the region to help. As the death toll rose to more than 2,400 people out of 4,784 cases, WHO director general Margaret Chan told a news conference in Geneva the vast nature of the outbreak--particularly in the three hardest-hit countries of Guinea, Liberia and Sierra Leone--required a massive emergency response. Sarah Crowe, a spokeswoman for UNICEF, said the U.N. children’s agency was using innovative ways to tackle the epidemic, including telling people to “use whatever means they have, such as plastic bags, to cover themselves if they have to deal with sick members of their family”. She added, “The Ebola treatment centers are full, there are only three in the country. Families need help in finding new ways to deal with this and deal with their loved ones and give them care without exposing themselves to this infection.” Cuban Health Minister Roberto Morales Ojeda said his country would send 165 healthcare workers to help in the fight--the largest contingent of foreign doctors and nurses to be committed so far.

TRACKING WASHINGTON -- The Federal Trade Commission last week sued AbbVie Inc. (North Chicago) and other drug companies over allegations they unlawfully sought to delay generic competition for AbbVie’s blockbuster testosterone-replacement drug AndroGel. The commission’s lawsuit was the first of its kind since a Supreme Court ruling last year boosted FTC efforts to challenge certain agreements between drugmakers that can postpone the introduction of generic drugs. The FTC, in a lawsuit filed in a Pennsylvania federal court, alleges AbbVie and partner Besins Healthcare SA (Brussels BEL) filed baseless patent-infringement litigation against potential generic-drug competitors to delay generic versions of AndroGel, a drug that has generated more than $1 billion annually in U.S. sales. The commission also sued the U.S. unit of Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR) over a legal settlement it reached with AbbVie. The FTC alleges AbbVie paid Teva to back away from legal claims that could have led to a lower-priced generic version of AndroGel. The FTC alleged AbbVie compensated Teva not with a monetary payment but instead with a supply agreement for an authorized generic version of an unrelated drug: the cholesterol medication Tricor.

          Elsewhere, Sylvia Mathews Burwell, the secretary of Health and Human Services, said in her first major speech last week that she wanted to move beyond the politics of health care and work with members of both parties to improve the management and operation of HealthCare.gov, the website used by millions of people to sign up for insurance coverage. What I’ve told my team,” she said, “is that we’re not here to fight last year’s battles. We’re here to fight for affordability, access and quality.” With midterm elections two months away, Ms. Burwell said she wanted to shift the conversation to areas of potential agreement. Polls consistently show that the public remains more negative than positive on the Affordable Care Act, but that Americans want Congress to improve the law rather than to repeal it. “The American people are sending a very clear message that they want us to work together on health care,” Ms. Burwell said. Ms. Burwell said that since she took office in June she has heard the same message from many people: “Enough already with the back-and-forth on the Affordable Care Act. We just want to move forward.” The next open enrollment period begins in 10 weeks, on Nov. 15, and runs through Feb. 15, half as long as the first sign-up period.

FDA/EMA ROUNDUP -- Orexigen Therapeutics Inc. (La Jolla CA) won approval from the Food and Drug Administration for its obesity drug, making Contrave the third weight-loss pill to hit the market in the last two years. The shares fell the most in three months as the agency required notice of potential health complications from the treatment. The FDA said it cleared the pill, designed to reduce appetite and control cravings, for chronic weight management to be used with a lower-calorie diet and exercise. The drug will compete with Belviq from Arena Pharmaceuticals Inc. and Eisai Co. and Vivus Inc.’s Qsymia. Osaka, Japan-based Takeda Pharmaceutical Co., Asia’s largest drugmaker, will market Contrave, also known as NB32, in the U.S. Orexigen closed the week down 16% at $5.16.

          Elsewhere, Sanofi SA (Paris) announced that it has won the approval of from the FDA for a label expansion of its meningococcal vaccine Menactra for use as a booster shot. The vaccine’s indication is now in line with the Centers for Disease Control and Prevention’s (CDC) guidelines for meningococcal vaccination and may help the company boost sales for the vaccine. Meningococcal diseases are a broad group of diseases caused by Neisseria meningitidis, a bacterium which is also known as meningococcus. The diseases include severe infections, septicemia (blood poisoning) and meningitis (inflammation of tissues around the brain).

          Actavis Plc (Dublin IRL) failed to win the backing of FDA advisers for an experimental pill that combines two existing drugs to lower high blood pressure. The combination pill shouldn’t be approved to treat hypertension because it doesn’t provide a clinically meaningful benefit over the two drugs alone, advisers said. The advisory panel voted 6 to 4 against recommending the treatment. Regulators have questioned whether Actavis’s combination of nebivolol and valsartan would be a better treatment than the highest dose of one of the medicines alone. Using the combination treatment means it would take longer for patients to get their blood pressure under control, the FDA’s Division of Cardio-Renal Drug Products said in a report.

          In Europe, regulators approved a long-lasting insulin from Eli Lilly & Co. (Indianapolis IN) and German drugmaker Boehringer Ingelheim GmbH (Ingelheim) that is the subject of patent infringement litigation with French rival Sanofi SA (Paris). Lilly said that the European Commission granted marketing authorization for its product, named Abasria in Europe, to be used in treating diabetes in adults, adolescents and children ages 2 years and above. Last month, the Food and Drug Administration gave a tentative approval to the insulin, named Basaglar in the United States. That is subject to a stay of more than two years due to the Sanofi litigation. The drugmaker has sued in U.S. federal court alleging that the Lilly product infringes on patents protecting its insulin Lantus. Lilly has denied the allegation. The Lilly and Boehringer insulin is a biosimilar product that has the same amino acid sequence as Lantus.

MEDICAL STOCK SPOTLIGHT -- Flexion Therapeutics Inc. (Nasdaq) led advancing issues, soaring $5.93, or 42% over the week, to $19.99. The specialty pharmaceutical company focused on the development and commercialization of injectable pain therapies had its target price lifted by Needham & Company LLC from $26.00 to $31.00 in a research note released on Wednesday. Burlington, MA-based Flexion has a 1-year low of $11.06 and a 1-year high of $20.92. The company last issued its quarterly earnings data on August 7th. The company reported ($0.38) EPS for the quarter, beating the Thomson Reuters consensus estimate of ($0.52) by $0.14. On average, analysts predict that Flexion will post $-2.17 earnings per share for the current fiscal year.

          Elsewhere, Misonix Inc. (Nasdaq) surged $2.25, or 34%, to $8.88 on the back of positive fourth-quarter financial results for its fiscal year 2014. The company, which has been making losses in recent years, not only beat analysts’ estimates, but also reported double digit year-over-year growth for both revenues and earnings. New York-based Misonix manufactures, develops, and markets ultrasonic surgical equipment used in various general surgical procedures, as well as in spine surgery, neurosurgery, skull-based surgery, wound debridement, and cosmetic surgery. The company’s devices are designed to be minimally invasive. Misonix operates in 45 countries and is a leader in ultrasound technology.

          And Endocyte Inc. (Nasdaq) leaped $1.98, or 30%, to $8.58 after analysts at Cantor Fitzgerald initiated coverage on the stock, giving it a Buy rating with a $21 price target. Meanwhile, Cowen and Company also reiterated its Outperform rating on the stock. The stock has remained close to its 52-week low of $5.91, since the company reported that its ovarian cancer drug, Vintafolide, failed in the phase-III trials in May. West Lafayette, IN-based Endocyte was developing Vintafolide in partnership with Merck & Co. Although the companies have dissolved their work on Vintafolide, they are still conducting trials for treating non-small cell lung cancer (SMCLC). Vintafolide is currently in a Phase IIb TARGET trial for NSCLC.

          But RXi Pharmaceuticals Inc. (Nasdaq) skidded $1.01, or 30%, to $2.32 after presenting at the Rodman & Renshaw Annual Global Investment Conference. The highlight of this presentation was the 1-month interim results for the first of three RXI-109 Phase IIa studies that are in progress. With data from 16 patients available, RXI-109 is currently showing statistically significant results for the 8 patients in the delayed cohort group. Fifty nine percent of the blinded observations were positive for RXI-109 over placebo, which would indicate approximately 5 out of the 8 patients had significant improvement with RXI-109 over placebo. The results for the 8 patients in the early treatment group were not statistically different from placebo. Unfortunately, Worcester, MA-based RXi chose to release the results by posting the slides to its website, rather than via a Press Release. An initial quick scan led some investors to conclude that Cohort 1 (the early treatment group) did not have success.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Mevion Medical Systems Inc. (Littleton MA), which markets recently-approved proton radiation therapy systems to treat cancer, registered up to $69 million worth of common stock. The company first received 510(k) clearance from the FDA in July 2012. In December 2013, its first and only proton therapy system was installed at the Siteman Cancer Center in St. Louis, MO. Mevion plans to use IPO proceeds to expand its manufacturing and distribution facilities and to further develop its proton therapy technology. For the nine months ended June 30, 2014, the company booked $7.6 million in revenue. The company, which was founded in 2004, plans to list on the Nasdaq Global Market under the symbol “MEVI.” Jefferies and Leerink Partners are the joint bookrunners on the deal.

Previous Week's Issue ... September 8, 2014

HEALTHCARE SPENDING TO RISE, FEDERAL EXPERTS PREDICT -- U.S. healthcare spending is expected to grow more slowly in the coming decade as a sluggish economic recovery and higher cost sharing in private insurance plans limit demand for services, according to a government report released last week. The Centers for Medicare and Medicaid Services said it expects average annual healthcare spending to grow by 5.7% from 2013 to 2023, compared to 5.8% in last year’s projections, which covered the years 2012 to 2022. The projected growth rate is well below the 7.2% annual average between 1990 and 2008, CMS said. The projections coincide with Congressional Budget Office estimates released recently that show another $11 billion reduction in projected spending for Medicare for the 2015-24 period. This reduction from projections made in February contributes directly to lower federal deficits. The CMS study projects both public and private healthcare outlays and showed the overall total will make up a smaller portion of the economy than previously thought in coming years. In 2023, it estimated that healthcare spending will equal 19.3% of Gross Domestic Product, compared with last year’s projection of 19.9% for 2022. It made up 17.2% of GDP in 2012. The spending growth rate for 2013 will be 3.6%, nearly at the historic low since CMS started tracking healthcare spending in 1960.

          For 2014, the spending growth will accelerate to 5.6% as more people gain healthcare coverage under President Barack Obama’s health insurance reform law, largely through its expansion of Medicaid, and because of an increase in economic growth. But this will still be below last year’s estimate of 6.1% growth for 2014. “The major factor is the relationship between health spending and economic growth,” said Andrea Sisko, an economist in the CMS actuarial division. Loss of jobs and associated healthcare benefits tend to discourage healthcare utilization, she said, adding that employment has been slow to recover. Another deterrent has been the increase in healthcare plans that require beneficiaries to bear a greater proportion of costs for doctor visits, procedures and prescription drugs. Medicare reimbursement rates also have been curtailed by the “sequester” budget cuts and by the Affordable Care Act, and prescription drug costs have eased because patents on a number of major medications have expired in recent years, making cheaper generic versions available. But as the economy improves and more Baby Boomers retire and draw benefits, spending growth is still expected to pick up, averaging 6.0% from 2015-23, CMS said.

THIRD U.S. MISSIONARY WITH EBOLA IS IDENTIFIED -- On Friday, another U.S. medical missionary infected with the Ebola virus entered the Nebraska Medical Center in Omaha for treatment after being flown in from West Africa, a spokeswoman for the medical center said. Dr. Rick Sacra, a 51-year-old Boston physician, is the third U.S. missionary doing health work with the SIM USA (Charlotte NC) Christian group in Liberia infected with the deadly virus. Sacra’s plane landed at the Offutt Air Force Base and he was transported to the medical center in an ambulance escorted by state highway patrol, said Jenny Nowatzke, media relations coordinator with the medical center. Sacra walked onto the airplane in Liberia on Thursday. He will be treated at the Nebraska hospital’s Biocontainment Patient Care Unit. The virus has killed 1,900 people out of 3,500 cases in Liberia, Sierra Leone, Guinea, Nigeria and Senegal since March, in the worst outbreak since Ebola was first uncovered in 1976. The pace of the epidemic has accelerated with close to 400 deaths in last week. Two other SIM USA missionaries infected with Ebola, Nancy Writebol and Kent Brantly, were also flown back to the U.S. for treatment. The Nebraska facility where Sacra is being treated is similar to the one at Emory University in Atlanta where Writebol and Brantly were treated and recovered.

          Writebol and Brantly received an experimental treatment, ZMapp, that has been available for only a few patients, but it is not clear whether it aided their recovery. There are no more doses of the experimental drug--made by Mapp Biopharmaceutical Inc. (San Diego CA)--for Sacra, the director of the biocontainment unit in Omaha told reporters on Thursday. Sacra had volunteered to return to Liberia when Writebol and Brantly became infected. It is not known how he contracted the virus because he had not been caring for Ebola patients but was delivering babies, and had been following protocols to prevent the spread of the disease, SIM USA said.

TRACKING WASHINGTON -- Hackers successfully breached HealthCare.gov, but no consumer information was taken from the health insurance website that serves more than 5 million Americans, the Obama administration disclosed Thursday. Instead, the hackers installed malicious software that could have been used to launch an attack on other websites from the federal insurance portal. Health and Human Services spokesman Aaron Albright said the website component that was breached had been used for testing and did not contain consumer information, such as names, birth dates, Social Security numbers and income details. The initial intrusion took place July 8, but it was not detected until August 25 during a manual scan of system logs. HHS said the component that was breached did not have a firewall, or intrusion detection software, installed on it. Technicians manually scanning logs discovered the breach and took action. The Homeland Security Department, which helps safeguard federal systems, said the scope of the attack was limited to one server. There is no evidence an attack was subsequently launched from the tainted machine. Federal computer systems are the targets of hundreds of cyberattacks every day, but this is believed to be the first successful one involving HealthCare.gov. The incident was first reported by The Wall Street Journal.

          Elsewhere, the full U.S. Court of Appeals in Washington will rehear a case on Obamacare tax subsidies, granting a government request in a move that may reduce chances of a new Supreme Court showdown over a central part of the law. A rehearing sets up the possibility that the full court will reverse the July ruling of a three-judge panel that blocked subsidies for consumers on federally run health exchanges, a key element to the 2010 healthcare overhaul. Another U.S. appeals court, in Richmond, VA, upheld the provision’s application to federal exchanges. Eliminating the split would reduce the chances of the Supreme Court’s taking the case. Divisions between appeals courts are among the factors the justices consider when deciding whether to hear a case. In a short order last week, the Washington appeals court set aside the July ruling and scheduled new arguments for Dec. 17. “If the government wins, you have certainly reduced the likelihood of Supreme Court review, no question,” said Jonathan Adler, a law professor at Case Western Reserve University in Cleveland, who co-wrote a brief in support of plaintiffs in the case seeking to restrict the subsidies. The D.C. case is Halbig v. Sebelius, 14-5018, U.S. Court of Appeals for the District of Columbia (Washington). The Virginia case is King v. Sebelius, 14-1158, U.S. Court of Appeals for the Fourth Circuit, (Richmond).

FDA/EMA ROUNDUP -- General Electric Co. (Fairfield CT) won approval from the Food and Drug Administration to offer its 3-D breast-imaging technology in the U.S., the company said, adding substantial new competition to the fast-growing market dominated by Hologic Inc. Three-dimensional imaging--also known as tomosynthesis--combines X-rays taken from multiple angles to produce a more detailed picture than regular mammograms. The technology costs more than regular mammography, but finds more cancers with fewer false alarms, studies have found, and is rapidly replacing the traditional mammography in the $10 billion-a-year market for breast screenings.

          Elsewhere, Merck & Co. (Whitehouse Station NJ) won FDA approval for the first in a new line of cancer-fighting treatments that use patients’ own immune systems against the disease. The agency cleared Keytruda, known chemically as pembrolizumab, to treat advanced melanoma, the deadliest form of skin cancer. The medicine is the first in an emerging class of drugs that target a protein called PD-1 to boost the immune system and fight cancer cells that manage to evade the body’s natural defenses. Bristol-Myers Squibb Co., Roche Holding AG and Novartis AG are among companies working on similar treatments.

          OncoMed Pharmaceuticals Inc. (Redwood City CA) said the FDA lifted a partial hold on patient enrolments for three trials testing its experimental cancer drug, vantictumab. Enrolment of new patients is expected to resume in the next few weeks after the revised trial protocols are approved, the company said. OncoMed had voluntarily halted enrollments on June 13 as a “precautionary measure,” after reports that two of its drugs, vantictumab and ipafricept, were causing mild-to-moderate bone-related side effects. On the same day, the FDA formally placed a partial hold on vantictumab, which is being tested in combination with standard-of-care chemotherapy in three studies in patients with forms of advanced lung, breast and pancreatic cancer.

          And in Europe, Abbott Laboratories Inc. (Abbott Park IL) announced that it has received a CE mark (Conformité Européenne) from the European authorities for its FreeStyle Libre Glucose Monitoring System, a new glucose sensing device for diabetes patients. After the EU approval, this sensor will be available in seven countries including France, Germany, Italy, Netherlands, Spain, Sweden, and the United Kingdom. Libre is a revolutionary wearable water-resistant sensor system which saves patients of diabetes from going through routine finger pricks. It is worn at the back of upper arm for 14 days and is capable of sensing blood glucose levels through its sensor. The device also eliminates the need for “finger prick calibration,” which is required by all glucose monitoring systems currently available in the market.

MEDICAL STOCK SPOTLIGHT -- IntelliPharmaCeutics International Inc. (Nasdaq) led a meager group of advancing issues, surging 25% over the week to $3.14. Maxim Group upgraded IntelliPharmaCeutics from Hold to Buy and moved its price target from $3 to $7. The Toronto, Ontario-based company develops drug-delivery technologies. The company says it has developed a controlled-release, drug-delivery platform “to provide life cycle management or new chemical entity delivery system solutions for virtually any small molecule.”

          Elsewhere, ACADIA Pharmaceuticals Inc. (Nasdaq) jumped $2.90, or 12%, to $26.96 after the company announced that its Parkinson’s disease psychosis treatment NUPLAZID was granted a “Breakthrough Therapy” designation from the FDA. Drugs meeting the FDA’s breakthrough requirements must treat life threatening diseases and should have preliminary clinical evidence demonstrating a substantial improvement over current treatment options. The FDA reserves the right to expedite the review process for drugs meeting this criteria and San Diego, CA-based ACADIA plans to submit the drug to the FDA for approval later this year.

          But Exelixis Inc. (Nasdaq) plunged $2.29, or 55%, to $1.85 after its experimental drug failed to prolong the lives of men with advanced prostate cancer in a late-stage clinical trial. The South San Francisco-based biotechnology company said it will lay off 70% of its workforce--about 160 employees--and halt its other prostate cancer studies. Its remaining 70 employees will focus on two ongoing phase III studies of the drug, cabozantinib, in advanced liver and kidney cancer. Cabozantinib is already approved to treat advanced medullary thyroid cancer. But that disease accounts for just 3% to 4% of all thyroid cancers. Exelixis was betting that cabozantinib would also work in prostate cancer, a much bigger market.

          And Recro Pharma Inc. (Nasdaq) slumped $2.92, or 49%, to $3.00 after equities researchers at Aegis reduced their price objective on shares of the Malvern, PA-based company from $40.00 to $38.00 in a report issued on Friday. Recro Pharma had a 52 week low of $5.01 and a 52 week high of $9.88. The company last posted its quarterly earnings results on August 12th. The company reported ($0.36) EPS for the quarter, missing the Thomson Reuters consensus estimate of ($0.25) by $0.11. Recro Pharma is a clinical stage specialty pharmaceutical company developing non-opioid therapeutics for the treatment of pain, initially for acute pain following surgery.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Calithera Biosciences Inc. (San Francisco), an early-stage biotech developing a drug platform for tumor metabolism and immunology, registered up to $80 million worth of common stock. The company, which was founded in 2010, plans to list on the Nasdaq Global Market under the symbol “CALA.” Citi, Leerink Partners, Wells Fargo Securities and JMP Securities are the joint bookrunners on the deal. No pricing terms were disclosed.

August 25, 2014...

BOTH U.S. EBOLA PATIENTS RELEASED FROM ATLANTA HOSPITAL -- The two American aid workers who were the first patients ever to be treated for the Ebola virus at a U.S. hospital were released Thursday. Dr. Kent Bradley, who weeks ago entered an Atlanta hospital in a full-body biohazard suit, said he was “thrilled to be alive” as doctors declared him virus-free and safe for release. Dr. Brantly’s release came two days after a second U.S. missionary, Nancy Writebol, was quietly allowed to leave Emory University Hospital, where both had been treated after contracting the deadly virus in July while working for Christian organizations in Liberia. The announcement of their release and expected full recovery from a disease that has killed 1,350 people in West Africa prompted an emotional scene in Atlanta. “Today is a miraculous day,” said Brantly, a 33-year-old medical missionary from Texas, working for the Christian relief group Samaritan’s Purse. As he left the press conference to rejoin his family, he hugged many of the five doctors, 21 nurses and other hospital workers who had helped care for him and Writebol while at Emory. Writebol did not attend. The 59-year-old from Charlotte, NC, left the hospital on Tuesday and was resting in an undisclosed location with her husband, Christian mission group SIM USA said in a statement.

          Dr. Bruce Ribner, medical director of the infectious disease unit at Emory’s hospital, credited aggressive supportive care and the fact that both Brantly and Writebol were healthy and well-nourished with helping them recover. The pair received an experimental therapy called ZMapp, a cocktail of antibodies made by tiny California biotech Mapp Biopharmaceutical Inc. (San Diego). Health experts cautioned against declaring the drug a medical breakthrough based on two patients. “The honest answer is we have no idea,” Ribner said, when asked if the experimental drugs helped the missionaries’ survival. He said early studies in primates suggest the drug has few long-term side effects. The scale of the Ebola outbreak in West Africa, the largest in history with 2,473 people infected and at least 1,350 dead, has prompted a scramble for experimental drugs, most of which have only been tested in monkeys and cell cultures. The week prior, the World Health Organization backed the use of untested drugs and vaccines, but the scarcity of supplies has raised questions about who gets the treatments.

ALLERGAN, SEEKING TO FEND OFF HOSTILE BID, APPROACHES SALIX -- Allergan Inc. (Irvine CA), working to fend off a hostile approach from Valeant Pharmaceuticals Inc. (Laval, Quebec), is reportedly taking a look at the smaller Salix Pharmaceuticals Inc. (Morrisville NC), weighing a multibillion-dollar deal that could render it unattainable--or at least drive up its asking price. Citing unnamed sources, The Wall Street Journal reported that Allergan has approached Salix about a deal, allured by its stable of gastrointestinal drugs and pipeline full of treatments for inflammatory bowel disease and pain. Salix commands a market cap north of $10 billion, and consuming it could be just what Allergan needs to foil Valeant in its attempt to stir a shareholder revolt and get management to accept a $48.7 billion bid. Complicating matters is the fact that Salix is in the midst of an M&A operation of its own, awaiting the close of a $2.6 billion all-stock merger with a subsidiary of Italy-based Cosmo Pharmaceuticals SpA. Under that deal, Salix would reverse-merge with Cosmo’s Irish division, thereby granting the U.S. company a tax-friendly domicile and lowering its effective rate via a trendy process called “inversion.” Whether Salix’s Irish plans have anything to do with Allergan’s reported interest remains unknown, though the Journal’s sources note that the two companies could strike a deal as soon as next month.

          The news is a philosophical fit with past statements from Allergan CEO David Pyott, who has repeatedly talked up the potential benefits of a sizable acquisition without disclosing any targets. At January’s J.P. Morgan Healthcare Conference, Pyott told FierceBiotech he had a $10 billion purse earmarked for takeovers and an eye on M&A. But that was before Valeant launched a series of hostile offers, sparking a months-long back and forth that has led Allergan to reevaluate its approach to R&D. On Thursday, a federal judge in California denied a request by Allergan to expedite its civil suit claiming that Valeant and Pershing Square Capital Management (New York) engaged in insider trading ahead of their bid to buy Allergan. Judge David Carter said the U.S. District Court for the Central District of California “would be reluctant to create a precedent that allows corporations to demand at will the immediate attention and input of the federal courts in order to resolve intra-corporate disputes that might be better left to the dynamic free market or to the state court.” Allergan closed the week up 5% at $165.56. Valeant rose 4% to $117.26. Salix jumped 14% to $158.96.

TRACKING WASHINGTON -- In a policy change, the Obama administration is planning to pay doctors to coordinate the care of Medicare beneficiaries, amid growing evidence that patients with chronic illnesses suffer from disjointed, fragmented care. Although doctors have often performed such work between office visits by patients, they have historically not been paid for it. Starting in January, Medicare will pay monthly fees to doctors who manage care for patients with two or more chronic conditions like heart disease, diabetes and depression.Paying separately for chronic care management services is a significant policy change,” said Marilyn B. Tavenner, the administrator of the Centers for Medicare and Medicaid Services. Officials said such care coordination could pay for itself by keeping patients healthier and out of hospitals. With the new initiative, Medicare will adopt some of the techniques devised by health maintenance organizations to manage the care of their patients. About 30% of the 54 million Medicare beneficiaries are in HMOs and other private health plans run by companies like Kaiser Permanente (Oakland CA) and Humana Inc. (Louisville KY), but 70% are still in the traditional fee-for-service Medicare program.

          Doctors will draft and help carry out a comprehensive plan of care for each patient who signs up for one. Under federal rules, these patients will have access to doctors or other healthcare providers on a doctor’s staff 24 hours a day and seven days a week to deal with “urgent chronic care needs.” The Obama administration rejected pleas from doctors to relax or delay “the 24/7 requirement,” saying it was essential. Two-thirds of Medicare beneficiaries have at least two chronic conditions, and they account for 93% of Medicare spending, said Kimberly A. Lochner, a statistician at the Department of Health and Human Services. As part of the new service, doctors will assess patients’ medical, psychological and social needs; check whether they are taking medications as prescribed; monitor the care provided by other doctors; and make arrangements to ensure a smooth transition when patients move from a hospital to their home or to a nursing home. Doctors can expect to receive about $42 a month for managing the care of a Medicare patient. Care management services can be provided only if patients agree in writing. Patients will pay about 20% of the $42 fee, the same proportion as for many other doctor services.

FDA/EMA ROUNDUP -- Bristol-Myers Squibb Co. (New York) and Pfizer Inc. (New York) said Thursday the Food and Drug Administration expanded approval of their blood thinner Eliquis to treat two types of dangerous blood clots. The agency cleared the drug for patients suffering from or at risk of deep vein thrombosis and pulmonary embolism. The drug was originally approved in 2012 to treat a common form of irregular heartbeat, atrial fibrillation, in patients at risk for strokes or dangerous clots. Eliquis, known chemically as apixaban, is manufactured by Bristol-Myers Squibb and co-marketed with Pfizer. Deep vein thrombosis occurs when blood clots form in one of the large, deep veins, usually in the legs. Pulmonary embolism most commonly occurs when part or all of a thrombosis dislodges and travels to the lung, via the heart, where it can partially or completely block a branch of the pulmonary artery. Xarelto, another blood thinner from rival Johnson & Johnson, was approved to treat the same conditions in 2012.

          Elsewhere, the FDA approved a new capsule-based drug to treat Gaucher’s disease. Regulators approved the new drug, Cerdelga, for patients with the Type 1 form of the rare genetic disorder, which causes excess fat to build up in the spleen, liver and bone marrow. Cerdelga is from Genzyme Corp. (Cambridge MA), the specialty drugmaker that introduced the first drug for Gaucher’s disease 20 years ago. The oral treatment could serve as an alternative to Genzyme’s best-selling drug Cerezyme, which is given intravenously. Type 1 is the most common form of Gaucher’s disease and affects an estimated 6,000 people in the U.S. Patients with Gaucher’s disease lack a certain enzyme that helps the body break down fat. Genzyme is a subsidiary of French drugmaker Sanofi SA, which acquired the company in 2011.

          The FDA granted tentative approval for Eli Lilly & Co. (Indianapolis IN) and Boehringer Ingelheim GmbH’s (Ingelheim DEU) insulin injection that helps control blood sugar levels in diabetes patients, Lilly said in a statement. The drug, Basaglar, is intended to provide long-lasting blood sugar control in between meals and during the night. It is approved for adults with type 2 diabetes and in combination with mealtime insulin in adults and children with type 1 diabetes. Although the drug meets all regulatory requirements for approval, it is subject to an automatic stay order of up to 30 months because of litigation filed by Sanofi SA (Paris). Sanofi, whose top-selling Lantus helps diabetics control blood sugar levels, has brought a lawsuit accusing Lilly of infringing seven patents related to insulin and devices used to deliver it. FDA cannot give final approval until the end of the 30-month period in mid-2016, unless a court finds in favor of Lilly earlier.

          And ViiV Healthcare Co. (Brentford GBR), a joint venture of GlaxoSmithKline Plc (London), Pfizer Inc. (New York) and Shionogi & Co. (Osaka JPN), won FDA approval for an HIV treatment that combines three drugs into one, reducing side effects and providing greater convenience for patients. The FDA cleared Triumeq for patients who have no past history of resistance to any of its component drugs. Triumeq is made up of Glaxo’s Tivicay, developed by ViiV, and the medicines abacavir and lamivudine. Tivicay was approved in August 2013 and may top $1 billion in sales in 2016 for Glaxo, rising to $2.2 billion in 2018, according to analysts’ estimates compiled by Bloomberg. More than 1.1 million Americans are living with HIV, according to the Centers for Disease Control and Prevention. Treatment has involved a cocktail of drugs, making single-tablet combinations more convenient. Tivicay is in a class of drugs called integrase inhibitors that interfere with one of the enzymes required for HIV to multiply.

MEDICAL STOCK SPOTLIGHT -- Heat Biologics Inc. (Nasdaq) led advancing issues, soaring 67% over the week to $6.68. The clinical stage biopharmaceutical company, that is focused on the development of cancer immunotherapies, announced its financial results for the second quarter ended June 30, 2014. It also outlined key highlights of its lead clinical development programs. Chapel Hill, NC-based Heat Biologics reported a second quarter loss of $0.44 per share, compared to the loss of $0.92 per share last year. Heat’s Viagenpumatucel-L (HS-110) will be entering phase II trials against non-small cell lung cancer and its Vesigenurtacel-L (HS-410) is being evaluated in an ongoing Phase 1/2 clinical trial against bladder cancer.

          Elsewhere, Amicus Therapeutics Inc. (Nasdaq), a clinical-stage biotech, leaped 32% to $5.87 after announcing positive late-stage results for migalastat as an orally administered treatment for Fabry disease. Fabry disease is a rare, yet often fatal, genetic disorder that causes fat to accumulate in various parts of the body. In a late-stage study, Cranbury, NJ-based Amicus’s migalastat was found to be both a safe and effective treatment for certain types of Fabry disease patients when compared to enzyme replacement therapy. Patients afflicted with Fabry disease presently have two treatment options: Fabrazyme from Sanofi SA and Replagal from Shire Plc. Migalastat’s potential competitive advantage over existing therapies is that it comes in pill form, whereas the others are administered intravenously.

          And Pernix Therapeutics Holdings Inc. (Nasdaq) surged 17% to $8.40 after announcing it has closed its acquisition of Treximet (sumatriptan/naproxen sodium) for the acute treatment of migraine attacks with or without aura in adults. Pernix first announced its agreement with GlaxoSmithKline Plc to acquire the U.S rights to Treximet on May 14. Houston, TX-based Pernix’s team of approximately 100 specialty sales professionals will support the sales and marketing of Treximet. With the addition of Treximet, Pernix estimates FY 2014 revenue to be in the range of $110 million to $120 million with adjusted EBITDA of $22 million to $24 million.

          But Ampio Pharmaceuticals Inc. (Nasdaq) plunged 30% to a 52-week low of $4.84 on Friday, one day after the biopharmaceutical company announced a major setback to a study on its osteoarthritis drug Ampion. The Greenwood Village, CO-based company said a shipment of Ampion and a placebo was accidentally exposed to freezing temperatures prior to the phase III study, which could have affected Ampion’s efficacy and safety. Ampio said the analysis of the study’s results, which was scheduled to come out this quarter, will be delayed; the company also said it could dismiss the study altogether. Ampio only discovered the Ampion temperature problem after the phase III study was unblinded. This means Ampio has the study results but is choosing not to disclose them.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Foamix Pharmaceuticals Inc. (Weizmann Science Park), an Israeli biotech developing topical foam treatments for moderate-to-severe acne, registered up to $75 million worth of common stock. The company expects to enter phase III trials for its lead candidate, a 4% minocycline foam formulation, in 2015. The company, which was founded in 2003 and booked $3 million in licensing agreements for the 12 months ended June 30, 2014, plans to list on the Nasdaq Global Market under the symbol “FOMX.” Barclays and Cowen & Company are the joint bookrunners on the deal. No pricing terms were disclosed.

August 18, 2014 ...

WHO SAYS UNPROVEN EBOLA DRUGS ETHICAL TO USE IN OUTBREAK -- The World Health Organization (Geneva) gave the green light last week for the use of unproven drugs to fight the deadly Ebola outbreak in four West African countries. A panel of specialists agreed it is ethical to offer these treatments to try to curb the Ebola epidemic, which is the largest ever seen. There have been a number of Ebola outbreaks in Eastern and Central Africa over the past 40 years. The WHO was able to stop those outbreaks by identifying and isolating all cases of the disease, tracing those who have come in contact with infected individuals and providing protective covering to healthcare workers. But officials from the U.N. health agency acknowledge what has worked in the past is not working now. They say the outbreak in four West African countries--Guinea, Sierra Leone, Liberia, and Nigeria--continues to spread and appears unstoppable. That’s why the panel of experts who convened last week unanimously agreed it is ethical to offer unproven medicines as potential treatments, according to WHO Assistant Director-General Marie-Paule Kieny. “The magnitude and the spread of the outbreak makes it (such) that we do not have enough people to use and to rely only, if I may say, on what has traditionally worked if we want to stop the outbreak as quickly as possible,” Kieny said.

          The death toll from this worst-ever outbreak of Ebola has risen to 1,145, the WHO said on Friday, as 76 new deaths were reported in the two days to August 13 in the four West African nations affected by the epidemic. The U.N. health agency said that a total of 152 confirmed, probable and suspected new cases of the deadly hemorrhagic fever were reported, bringing the total for the outbreak to 2,127. Researchers have found some potential treatments and vaccines that could help bring Ebola under control. But, while a handful of these drugs have shown positive results in monkeys, they have not been clinically tested in humans to see whether they are safe and effective. The health of two American aid workers who got infected with Ebola in Liberia has improved since they were treated with an experimental drug known as ZMapp. This has raised hopes of other successful treatments by using this and other unproven drugs. But finding doses poses an immediate challenge after ZMapp’s developer, Mapp Biopharmaceutical Inc. (San Diego CA), said it’s already exhausted its supply. The WHO says it will push for the speedy start of clinical trials for Ebola drugs that look promising.

MEDICAID ROLLS ARE GROWING EVEN IN STATES THAT REJECTED FEDERAL FUNDS -- Even in states that haven’t changed their Medicaid programs, nearly a million people signed up for Medicaid this year, a side effect of the Affordable Care Act, says the New York Times. The law has expanded insurance coverage to millions of poor Americans through its broadening of the federal-state Medicaid program. In about half the states, that expanded program means that anyone below a certain income threshold is automatically qualified for the program. As might be expected, Medicaid enrollment went way up in those states. But Medicaid enrollment has also increased this year in many states that chose not to accept federal funds. Data from Medicaid last week show that enrollment jumped in most states that did not expand their programs, including Georgia (16%), Montana (10%), Idaho (9%) and Florida (7%). Altogether, enrollment in Medicaid and the Children’s Health Insurance Program in the states that didn’t make any changes has gone up by 975,000. The reason is a phenomenon that health experts like to call the “welcome mat effect” or the “woodwork effect,” depending on whether they see it as good news. What happened is that many people who were always eligible for the program have finally decided to sign up.

          There was no policy change that gave people new access to Medicaid insurance, but new online marketplaces and all the public conversation around new insurance options encouraged them to apply and get benefits they were always eligible for, the Times said. There are quite a lot of uninsured people in the country who fall into this category. A 2012 study in the journal Health Affairs estimated that, in some states, fewer than half of all eligible people were enrolled in their state’s programs. These enrollees tagged along with the Affordable Care Act’s coverage expansion. For states, like Washington, that are eager to get eligible people signed up for coverage, this enrollment is a development they cheer. The state has had an explicit goal of covering all children in the state since 2007; this year, they’ve made significant strides. “If you go out into the communities, and you talk about the programs, there is a bump,” said Jim Stevenson, a spokesman for the state’s HealthCare Authority. Washington has added about 400,000 people to its program, most through expansion, with about 40,000 through spreading the word and making it a little easier to sign up. (Source: newyorktimes.com)

TRACKING WASHINGTON -- The Obama administration moved last week to cut off health insurance for up to 310,000 people who signed up through the HealthCare.gov system unless they can provide documents in the next few weeks showing they are U.S. citizens or legal residents. Those individuals have until Sept. 5 to send in additional information that could confirm they are in the U.S. legally, a condition of using the online insurance exchanges to obtain coverage. Officials at the Centers for Medicare and Medicaid Services, which administers the 2010 Affordable Care Act, said they would tell insurers to terminate health policies for people who don’t respond, starting Sept. 30. CMS and its contractors are still trying to dig out from technological flaws with HealthCare.gov. Millions of users had difficulties using the site to shop for insurance when it launched last fall, but deeper problems remain within the system, including the ability to use databases held by various federal agencies to check people’s eligibility for coverage. Federal officials have said the application system wasn’t able to determine citizenship and immigration status for almost one million people of the 5.4 million who had obtained plans through HealthCare.gov by the time the main enrollment period closed in mid-April.

          Immigration status has been one of the most politically charged aspects of the law. During congressional debate, supporters added a provision banning people living in the U.S. without authorization from using the exchanges to buy coverage and from receiving tax credits that many lower-income Americans and legal residents can get. Some immigration activists grudgingly accepted the restriction as necessary to maintain support for the legislation, but said it was spiteful to prohibit people from using the site entirely. At the same time, Republicans critical of the law said they didn’t believe the federal government was capable of preventing widespread fraud and have pointed to the data problems as proof of their predictions. CMS officials said 970,000 people had applications with inconsistencies. Around 450,000 cases had since been resolved, and another 210,000 had responded to notices asking for more data. Letters were mailed Tuesday to another 310,000 people who don’t appear to have responded, with warnings that they must send in documents now or lose their insurance.

FDA/EMA ROUNDUP -- The Food and Drug Administration approved a DNA test to screen for colon cancer in people with a lower risk of developing the disease, the first such test of its kind to be cleared by U.S. regulators. The test, called Cologuard, is used to detect genetic mutations in patients’ stool associated with cancerous and precancerous growths in the colon. Doctors must prescribe the test, but patients collect stool samples at home and ship the samples to laboratories for analysis. The FDA said the Cologuard test, made by Exact Sciences Inc. (Madison WI), identified more cancers during clinical trials than a rival blood test. Colon cancer is the fourth most common type of tumor, and was responsible for 51,000 deaths in the U.S. last year, according to the National Cancer Institute. The disease can often be effectively treated if detected early enough, but many people avoid colonoscopy screening out of fear it will be painful and time-consuming.

          Elsewhere, Merck & Co. (Whitehouse Station NJ) won FDA approval for a new type of sleeping pill designed to help people with insomnia stay asleep. The tablet, Belsomra, works by temporarily blocking chemicals known as orexins that control the sleep cycle and can keep people awake at night. It’s unclear whether the new drug is safer or more effective than older drugs because it was tested against a placebo, rather than other sleeping medications. The FDA approved the drug in four different doses for various degrees of insomnia. The agency noted that patients who took the highest dose, 20 milligrams, experienced drowsiness and difficulty driving the next morning.

          Swiss drugmaker Roche Holding AG (Basel) said on Friday the FDA had approved the use of its Avastin cancer drug in combination with chemotherapy to treat advanced cervical cancer. Avastin has now been approved to treat five distinct tumor types in the United States, Roche said.

          In Europe, Gilead Sciences Inc.’s (Foster City CA) hepatitis C drug Sovaldi won the backing of the U.K.’s health-cost regulator, paving the way for the treatment to be reimbursed by British taxpayers at a price of almost $700 a pill. A standard 12-week course of Sovaldi will cost almost 35,000 pounds ($58,380), not including tax or the price of immune-boosting therapies interferon and ribavirin, the immune-boosting therapies that may be taken alongside the drug, the National Institute for Health and Care Excellence said. The therapy has become a lightning rod for debate about drug pricing globally because its cost has prompted some insurers in the U.S. to deny coverage to patients they deem not sick enough. The drug is transforming the treatment of hepatitis C by boosting cure rates to more than 90% and allowing patients to shorten the time they spend taking interferon and ribavirin, which can cause side effects including depression and rash.

MEDICAL STOCK SPOTLIGHT -- Cerulean Pharma Inc. (Nasdaq) led advancing issues, soaring $1.45, or 40% over the week, to $5.04. The company provided an update on corporate activities during the quarter ended June 30, 2014 and the market responded enthusiastically. The Cambridge, MA-based biotech raised net IPO proceeds of $59.9 million, including the exercise of the underwriters’ over-allotment option. Key uses of proceeds include a randomized phase II clinical trial of CRLX101 in relapsed renal cell carcinoma, a single-arm phase II clinical trial of CRLX101 in relapsed ovarian cancer, a single-arm Phase Ib/II clinical trial of CRLX101 in non-metastatic rectal cancer, and a planned phase I clinical trial of its CRLX301. Both candidates are nanoparticle-drug conjugates, or NDCs, that are designed to selectively attack tumor cells, reduce toxicity by sparing the body’s normal cells, and enable therapeutic combinations.”

          Elsewhere, T2 Biosystems Inc. (Nasdaq) surged $3.60, or 27%, to $17.00 after announcing the closing of its initial public offering of 5.98 million shares of its common stock at an initial public offering price of $11.00 per share. The shares began trading on the Nasdaq Global Market under the ticker symbol “TTOO” on August 7, 2014. Goldman Sachs & Co. and Morgan Stanley acted as joint book-running managers for the offering. Lexington, MA-based T2 Biosystems will use the funding to commercialize its technology for faster and more accurate diagnosis of infectious diseases in hospitals, a hot area considering all the news about the spread of Ebola.

          And Achillion Pharmaceuticals Inc. (Nasdaq) leaped $1.89, or 26%, to $9.25 after the company on Friday announced positive interim results for its hepatitis C treatment. The trial is for the company’s ACH-3102 inhibitor in combination with sofosbuvir, which is marketed and sold as Sovaldi by Gilead Sciences Inc. In its most recent quarterly report, Gilead said sales of Sovaldi, which was approved by the FDA in December 2013, totaled $3.48 billion. In its announcement Friday, New Haven, CT-based Achillion said, “ACH-3102 continues to demonstrate good safety and tolerability through three phase II studies. We believe these studies also confirm a differentiated efficacy profile for an NS5A inhibitor.” As a result of its findings, Achillion said 12 additional patients would begin treatment with six weeks of its ACH-3102 inhibitor with sofosbuvir. Year-to-date, Achillion shares are up more than 190%.

          But Dendreon Corp. (Nasdaq) plummeted 31% to $1.40 after the company warned that it will not be able to repay or refinance its notes due 2016. The company also noted in its regulatory filing that it is currently considering alternatives to the repayment of notes due in 2016. As per the company, the alternatives to repay the debt might also leave its current stockholders with little or no financial ownership of Dendreon. The company is a Seattle, WA-based biotech whose lead product, Provenge, is an immunotherapy for prostate cancer. It consists of a mixture of the patient’s own blood cells that have been incubated with the Dendreon PAP-GM-CSF fusion protein.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Forward Pharma A/S (Copenhagen DNK), a late-stage biotech developing treatments for multiple sclerosis and psoriasis, registered up to $200 million worth of common stock. The company, which was founded in 2005, plans to list on the Nasdaq Global Market under the symbol “FWP.” Forward Pharma initially filed confidentially on April 9, 2014. Leerink Partners is the sole bookrunner on the deal. No pricing terms were disclosed.

August 11, 2014 ...

EBOLA DECLARED INTERNATIONAL PUBLIC HEALTH EMERGENCY -- The World Health Organization (Geneva CHE) on Friday declared the Ebola outbreak in West Africa to be an international public health emergency that requires an extraordinary response to stop its spread. It is the largest and longest outbreak ever recorded of Ebola, which has a death rate of about 50% and has so far killed at least 961 people. WHO declared similar emergencies for the swine flu pandemic in 2009 and for polio in May. The WHO chief, Dr. Margaret Chan, said the announcement is “a clear call for international solidarity” although she acknowledged that many countries would probably not have any Ebola cases. “Countries affected to date simply do not have the capacity to manage an outbreak of this size and complexity on their own,” Chan said at a news conference in Geneva. “I urge the international community to provide this support on the most urgent basis possible.” The agency had convened an expert committee last week to assess the severity of the continuing epidemic. The current outbreak of Ebola emerged in Guinea in March and has since spread to Sierra Leone and Liberia, with a suspected cluster in Nigeria. Since it was first identified in 1976, there have been more than 20 outbreaks in central and eastern Africa; this is the first one to affect West Africa.

          “Statements won’t save lives,” said Dr. Bart Janssens, director of operations for Doctors Without Borders (Geneva).For weeks, (we) have been repeating that a massive medical, epidemiological and public health response is desperately needed. Lives are being lost because the response is too slow.” In the United States, the Centers for Disease Control and Prevention already recommends against traveling to West Africa. The agency has also put U.S. hospitals on alert for symptoms to spot potential cases as quickly as possible. Two Americans infected with Ebola recently received a drug never before tested in people and seem to be improving slightly, according to the charity they work for. This week, WHO will hold another meeting to discuss whether it’s ethical to use experimental treatments and drugs in the current outbreak. There’s no evidence in people that the experimental treatments work and it would take months even to have a modest amount. There is no licensed drug or treatment for Ebola.

FDA SAYS EBOLA DRUG BY TEKMIRA MAY BE USED ON INFECTED PATIENTS -- U.S. health authorities have eased safety restrictions on an experimental drug to treat Ebola, a move that could clear the way for its use in patients infected with the deadly virus. Canadian drugmaker Tekmira Pharmaceuticals Corp. (Burnaby BC) said the U.S. Food and Drug Administration modified a hold recently placed on the company’s drug after safety issues emerged in human testing. The company has a $140 million contract with the U.S. government to develop its drug, TKM-Ebola, which targets the genetic material of Ebola. But last month the FDA halted a small study of the injection in adults to request additional safety information. Tekmira said Thursday the agency “verbally confirmed” changes to the hold that may allow the company to make the drug available, although it has yet to be proven as safe and effective. Two Americans diagnosed with Ebola recently received a different experimental drug called ZMapp, made by Mapp Biopharmaceutical Inc. (San Diego CA). It is aimed at boosting the immune system’s efforts to fight off Ebola and is made from antibodies produced by lab animals exposed to parts of the virus. The U.S. aid workers were first treated in Liberia. And while the FDA must grant permission to use experimental treatments in the United States, it does not have authority over the use of such drugs in other countries.

          The FDA’s move Thursday comes amid an Ebola outbreak in West Africa that health officials warn could sicken more people than all previous outbreaks of the disease combined. More than 1,700 people have been sickened in the current outbreak, which began in March. Nearly 1,000 have died, according to the World Health Organization (Geneva). Currently, there are no licensed drugs or vaccines for the deadly disease. Several are in various stages of development, but none have been rigorously tested in humans. The FDA in March granted Tekmira “fast track” status for its Ebola drug, a designation designed to speed up approval of high-priority drugs by granting companies extra meetings with FDA scientists. Early studies of TKM-Ebola in monkeys suggested it could block high doses of the Ebola virus. But on July 21, the company announced the FDA had halted a small dosing study of the drug in 28 healthy adults. The company said regulators had questions about a type of drug reaction that can cause nausea, chills, low blood pressure and shortness of breath. FDA spokeswoman Stephanie Yao said she could not confirm the company’s announcement since FDA regulations bar the agency from disclosing information about experimental drugs. Tekmira’s U.S.-traded shares closed the week up $6.44, or 69%, at $20.70.

TRACKING WASHINGTON -- The U.S. government last week said that it will increase the operating payments that acute-care and long-term care hospitals receive from Medicare for inpatient care for the federal fiscal year that begins on Oct. 1. The Centers for Medicare and Medicaid Services (CMS) announced a 1.4% rate update for 3,400 acute care hospitals and a 1.1% rate update for 435 long-term care hospitals for fiscal year 2015. CMS also announced a market basket update of 2.9% but said the rate could vary depending on whether a hospital participates in government efforts to address quality care issues and automates its information systems to accommodate electronic health records. The market basket, a fixed index of goods and services, reflects the influence of inflation and is used to update payments and cost limits within Medicare. Under a final rule released last week, CMS said the market basket update would decrease by one-quarter among hospitals that do not successfully participate in its quality reporting program or use electronic health records in a meaningful way. Overall, CMS projected that payments to acute-care hospitals would decrease by $756 million, while payments to long-term hospitals would rise by $62 million.

          Elsewhere, President Barack Obama on Thursday signed into law a $16.3 billion measure to help overhaul the Department of Veterans Affairs, the agency that in recent months faced intense criticism for long wait times for health care and for manipulation of records. “This bill will help us ensure that veterans have access to the care that they’ve earned,” Mr. Obama said at Fort Belvoir, a U.S. Army installation in nearby Virginia. “This will give the VA more of the resources that it needs. It will help the VA hire more doctors and more nurses and staff more clinics.” Congress passed the bill following months of turmoil at the VA, including the resignation of Secretary Eric Shinseki in late May. The agency’s widespread problems included manipulation of official records to hide the fact that veterans had to wait months to receive proper care. The VA has since taken steps to correct the worst deficiencies, the White House said, including reaching out to more than 217,000 veterans to get them off wait lists and into clinics.

FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved The Medicines Co.’s (Parsippany NJ) single-dose intravenous drug to treat acute bacterial skin infections, the agency’s third approval for the same condition this year. Drugmakers need to constantly devise new therapies to fight bacterial infections as patients build up resistance to older antibiotics. All the three drugs target acute bacterial skin and skin structure infections (ABSSSI), caused by the Gram positive strain of bacteria. These infections involve deep tissue or are associated with an underlying disease such as diabetes. Medicines Co.’s treatment, Orbactiv, is in the same class of drugs as generic vancomycin, the standard-of-care for methicillin-resistant Staphylococcus aureus (MRSA), a serious Gram-positive infection.

          Elsewhere, Agila Specialties Ltd. (Bengaluru IND) won approval for its generic version of Ketorolac tromethamine tablets. The medicine is a non-steroidal anti-inflammatory drug (NSAID), indicated for the short-term (up to 5 days in adults) management of moderately severe acute pain that requires analgesia at the opioid level and only as continuation treatment following IV or IM dosing of Ketorolac tromethamine, if necessary. The total combined duration of use of Ketorolac tromethamine tablets and Ketorolac tromethamine should not exceed 5 days.

          Aurolife Pharma LLC (Dayton NJ) won approval for its generic version of Phentermine Hydrochloride. Phentermine is a stimulant that is similar to an amphetamine. Phentermine is an appetite suppressant that affects the central nervous system. Phentermine is used together with diet and exercise to treat obesity (overweight) in people with risk factors such as high blood pressure, high cholesterol, or diabetes.

          In Europe, one of Roche Holding AG’s (Basel CHE) most promising new drugs—for women with an aggressive form of breast cancer—has been rejected by the panel that advises the U.K. health service on the grounds that it is too expensive. The decision by the National Institute for Health and Care Excellence, known as NICE, reflects growing pressure on drug companies from health authorities in Europe and U.S. insurers over pricing. Ireland’s equivalent pricing body issued a similar decision on the Roche drug, called Kadcyla, last month. Kadcyla is one of Roche’s newly launched treatments and analysts expect it to be among the Swiss drugmaker’s top five products in coming years, with forecast sales eventually hitting more than $3 billion annually. Kadcyla is used in patients with hard-to-treat and often terminal breast cancer that has spread to other parts of the body and is no longer operable. The drug gives patients on average an extra six months of life, NICE noted, but concluded that at its full list price of more than 90,000 pounds ($151,000) per patient annually, it was unaffordable for use on the National Health Service.

MEDICAL STOCK SPOTLIGHT -- Radius Health Inc. (Nasdaq) led advancing issues, soaring $3.43, or 41% over the week, to $11.81. Analysts at Cantor Fitzgerald recently started coverage on shares of Radius with a “buy” rating and a $20.00 price target on the stock. Cantor Fitzgerald’s price target suggests a potential upside of 69% from the company’s current price. Cambridge, MA-based Radius has been the subject of a number of other recent research reports. Analysts at Canaccord Genuity initiated coverage, also setting a “buy” rating and a $21.00 price target on the stock. And analysts at Jefferies Group initiated coverage setting a “buy” rating and a $17.00 price target on the stock. Radius Health is focused on developing therapeutics for patients with osteoporosis, as well as other serious endocrine-mediated diseases. Radius is currently conducting a phase III study of abaloparatide-SC for the treatment of osteoporosis, and expects initial 18-month fracture data to be available in the fourth quarter this year.

          Elsewhere, Raptor Pharmaceuticals Corp. (Nasdaq) surged $2.44, or 30%, to $10.56 after beating estimates in the second quarter and raising its guidance for the full-year. The company reported $16.3 million of net product sales for the quarter, which was ahead of analysts’ expectations of $14.6 million. The company’s loss per share was $0.15 compared to estimates of a loss of $0.18. The quarter was driven by sales of the company’s only product, Procysbi, which was launched in June of 2013. The drug saw sequential growth in sales of 34% during the quarter. The strong performance allowed the Novato, CA-based company to raise its full-year sales guidance to a range of $65-$70 million compared to the previously guided range of $55-$65 million. Procysbi is used to treat nephropathic cystinosis--a condition beginning in infancy--causing poor growth and a particular type of kidney damage (renal Fanconi syndrome) in which certain molecules that should be reabsorbed into the bloodstream are instead eliminated in the urine.

          And Relypsa Inc. (Nasdaq) jumped $4.54, or 20%, to $27.25. The relatively unknown company ranks high with hedge funds and institutional accounts. The Redwood City, CA-based company is focused on the development and commercialization of non-absorbed polymeric drugs to treat disorders in the areas of renal, cardiovascular and metabolic diseases. Relypsa’s two-part pivotal phase III trial of its lead product candidate, patiromer, for the treatment of hyperkalemia--a life-threatening condition defined as abnormally elevated levels of potassium in the blood--has been completed and the primary and secondary endpoints were met. Wedbush has the stock rated as a “buy” with a $57 target. The teams at Stifel and Deutsche Bank are also big on the name with a “buy” rating, and both have a $45 price target.

          But Enzymotec Ltd. (Nasdaq) plunged $5.69, or 38%, to $9.31 after investment analysts at Jefferies Group lowered their target price on shares from $14.50 to $10.00. Jefferies’s price objective suggests a potential upside of just 7% from the company’s current price. Israel-based Enzymotec reported $0.02 earnings per share (EPS) for the second quarter, missing the consensus estimate of $0.10 by $0.08. The company had revenue of $11.5 million for the quarter, compared to the consensus estimate of $14.88 million. The company’s revenue was down 40.3% on a year-over-year basis. Analysts at Wells Fargo & Co. downgraded shares of Enzymotec from an “outperform” rating to a “market perform” rating last week. Analysts at Wedbush cut their price target from $33.00 to $25.00 in May. Enzymotec is engaged in the manufacturing of ingredients for medical foods.

IPO SECTOR -- Included among initial public offerings coming to market last week, the IPO for T2 Biosystems Inc. (Lexington MA) opened for trading at $15.95 after pricing 5. 2 million shares of common stock at a public offering price of $11.00 per share, well below the expected $15-$17 range. The IPO size was increased from 4 million shares. Shares trade on the Nasdaq Global Market under the symbol “TTOO.” Goldman, Sachs & Co. and Morgan Stanley & Co. are acting as joint book-running managers for the offering. T2 Biosystems will use the funding to commercialize its technology for faster and more accurate diagnosis of infectious diseases in hospitals. Shares closed the week up 22% at $13.40.

August 4, 2014 ...

AMGEN PLANS JOB CUTS AND PLANT CLOSINGS -- Amgen Inc. (Thousand Oaks CA), the world’s biggest biotechnology company by sales, reported second-quarter earnings that beat analysts’ estimates and raised its profit estimate for the year. The company also announced it will cut more than 2,400 jobs through 2015 and close plants in two states. Net income rose 23% to $1.55 billion, or $2.01 a share, from $1.26 billion, or $1.65 a share, a year earlier, the company said in a statement. Earnings excluding one-time items were $2.37 a share, topping by 30 cents analysts’ estimates compiled by Bloomberg. Revenue increased 11% to $5.18 billion. “The earnings-per-share beat was massive,” said Mark Schoenebaum, an analyst with ISI Group LLC in New York. He called the job cuts “just as important,” and predicted they would add to profits this year and beyond. The higher-than-expected earnings were driven by sales of Enbrel, the company’s top drug for arthritis, which increased 7% to $1.24 billion, beating analysts’ projections of $1.14 billion. Enbrel sales missed estimates in the first quarter, which at the time sent the company’s shares down the most in a year. The company raised its 2014 EPS forecast to $8.20 per share to $8.40 per share, and revenue to $19.5 billion to $19.7 billion. Previously, Amgen predicted EPS of $7.90 to $8.20 and $19.2 billion to $19.6 billion in revenue.

          Amgen announced last week it would cut 2,400 to 2,900 employees, or 12% to 15% of its total workforce, with the firings beginning this year and continuing through 2015. Most of the job reductions will come in the U.S., Amgen said. The company also said it will close facilities in Washington and Colorado, while expanding its presence in South San Francisco, CA, and Cambridge, MA. The changes “will allow us to reallocate resources to invest in our upcoming launches and drive growth,” CEO Robert Bradway said in the statement. The great companies are constantly figuring out how to do better,” said Bill Smead, CEO and chief investment officer of Smead Capital Management, which owns Amgen shares. “They have a great balance between creating shareholder value and keeping an eye to the future.” Amgen said it would take a pretax charge of $775 million to $950 million for the costs of the restructuring. Shares closed the week up $2.71, or 2%, at $125.55.

U.S. APPELLATE COURTS ISSUE CONFLICTING RULINGS ON HEALTHCARE LAW -- President Barack Obama’s signature legislative initiative and the cost of health insurance for millions of Americans were cast into doubt after two federal appeals courts issued opposite verdicts on whether the government can subsidize policies through federally run insurance exchanges. The rulings were handed down on July 22. About 4.5 million Americans who qualified for subsidies when they signed up will be able to keep their benefits while the court system sorts out the law, White House officials said. The subsidies for policies purchased through state-administered exchanges aren’t under challenge in the cases. Republicans seized on the first ruling, a decision from the U.S. Court of Appeals for the District of Columbia striking down IRS subsidies for coverage, as evidence that Obama overstepped in implementing the law. Virginia judges made the reverse decision just hours later, yet Republicans already had a new line of attack mapped out. “It’s just the tip of the iceberg with a law that’s also destined to either crush patients with obscenely high costs, lead to a taxpayer bailout of health-insurance companies, or both,” said Senator Marco Rubio, a Florida Republican who is considering a 2016 presidential campaign. “With two conflicting appellate court rulings on Obamacare today, I reaffirm my belief that this law ultimately will fall apart.”

          If the first decision stands, it could damage Obama’s legacy as a policy maker and render his party’s candidates more vulnerable to Republican attacks in November’s midterm election. The ruling also threatens to gut the law’s basic premise--to provide affordable insurance for Americans who don’t have it. At a minimum, the court rulings inject new uncertainty into a law that has been beset since its 2010 passage by legal and political challenges, skirmishes that have already twice reached the Supreme Court and once provoked a 16-day partial federal government shutdown. House Democratic Leader Nancy Pelosi of California focused on the Virginia decision upholding the subsidies, casting it as a rebuff to Republicans’ “toxic obsession with destroying the Affordable Care Act.” Americans are divided on the law along party lines. Fifty-six percent of Republicans want the law repealed compared with 8% of Democrats. Political independents are still finding their way with 38% supporting repeal, 52% saying the country should wait to see how the law works and 8% saying it should be left as is, according to a Bloomberg National Poll in June.

TRACKING WASHINGTON -- The price tag for healthcare.gov, the Obamacare website, is approaching $1 billion even as key features remain incomplete, congressional auditors said. Year two of Obamacare “won’t be perfect,” a top Obama administration official said Thursday as the government’s website to sell health insurance plans continues to be developed. Andy Slavitt, the principle deputy administrator of the Centers for Medicare and Medicaid Services, would not promise that the site, healthcare.gov, will be “fully ready” in November, when people can start buying insurance plans for 2015. “It’s a bumpy process at times,” Slavitt, a former UnitedHealth Group Inc. (Minnetonka MN) executive, said at a congressional hearing. “We’ve got committed people who by-and-large are doing a good job. There will certainly be bumps.” The budget to get the site ready for the next round of enrollments, starting in November, jumped to $840 million as of March, according to the Government Accountability Office. That’s a $163 million increase since December. Accenture Plc (Dublin IRL), which took over building the site that failed at its introduction this past October, is expected to be paid $175 million as of June, an $84 million increase from the estimate in January when it signed a contract.

          The data are part of testimony from the GAO prepared for Thursday’s hearing in the Republican-led House. The GAO places blame for the site’s rising price on poor planning and supervision of contractors who built the federal health exchange. If the management doesn’t improve “significant risks remain that upcoming open enrollment periods could encounter challenges,” William Woods, the GAO’s director of acquisition and sourcing management, testified, according to prepared remarks released by the Energy and Commerce Committee. After frantic repairs to healthcare.gov in October and November last year, about 8 million people signed up for coverage by the end of the first enrollment period in April. Enrollment for 2015 begins Nov. 15.

FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration granted Orphan Drug Designation to Array BioPharma Inc.’s (Boulder CO) binimetinib for ovarian cancer treatment. The Orphan Drug Act defines a disease as rare if fewer than 200,000 people in the United States have it. Orphan designation qualifies the sponsor of the drug for various development incentives, including tax credits for the costs of clinical research, a seven-year period of exclusive marketing after an orphan drug is approved, and the waiver of Prescription Drug User Fee Act filing fees, as well as access to federal grants. Ovarian cancer is the deadliest of gynecologic cancers, representing the tenth most common cancer among women and the fifth leading cause of cancer-related death among women.

          Elsewhere, the FDA approved a new combination pain pill from Purdue Pharma LP (Stamford CT)--the maker of OxyContin--that is designed to discourage abuse by painkiller addicts. Purdue’s new drug, Targiniq ER, is an extended release tablet that combines oxycodone--the active ingredient in OxyContin--with the drug naloxone. FDA regulators approved the drug for daily, round-the-clock pain that does not respond to other medications. If abusers crush the tablets for snorting or injecting naloxone blocks the euphoric effects of oxycodone, making the drug more difficult to abuse.

          The FDA said on Thursday it has approved Boehringer Ingelheim GmbH’s (Ingelheim DEU) drug to treat chronic obstructive pulmonary disease (COPD), an umbrella term that includes chronic bronchitis and emphysema. The drug, Striverdi Respimat, known also as olodaterol, is one of a class of drugs known as long-acting beta-adrenergic agonists (LABAs) that relax airways in the lungs to ease wheezing, cough and shortness of breath. COPD, which is usually caused by smoking, is the third leading cause of death in the United States.

          And in Europe, Roche AG (Basel CHE) said the European Commission has approved its Gazyvaro treatment for chronic lymphocytic leukemia, the most common form of the disease. Roche said it would begin selling Gazyvaro, which is marketed as Gazyva outside of Europe, in several European countries later this year. The company is also studying the drug’s possible use for treating other blood cancers. Gazyvaro was approved after a late-stage study showed use of the drug in combination with chemotherapy extended the life of patients without a worsening of the disease, Roche said.

MEDICAL STOCK SPOTLIGHT -- In a week featuring a major downdraft in prices, Zeltiq Aesthetics Inc. (Nasdaq) led advancing issues, surging $4.47, or 29% over the week, to $20.13. The upward bounce came after releasing positive second quarter earnings and an upbeat full year outlook, helped by increasing momentum in sales of its CoolSculpting fat cell removal devices. The company reported net income for the second quarter of $2.8 million, or 7 cents per share, up from a net loss of $3.6 million, or (0.10) cents per share in the same quarter the previous year, and beating analysts’ consensus estimate of (0.13) cents by 20 cents. Revenue for the second quarter was up 79.1% from the same quarter of 2013 at $47.1 million, beating the consensus estimate of $34.93 million. The Pleasonton, CA-based medical device development company increased its full year 2014 revenue guidance to $160 million and $165 million, up from the prior $137 million to $140 million, and more than the consensus of $140.1 million.

          Elsewhere, Amedisys Inc. (Nasdaq) jumped $3.61, or 23%, to $19.49. The company reported a better-than-expected rise in adjusted quarterly profit after closing some of its hospices and home-healthcare centers to reduce costs. The closures helped Amedisys to reverse three straight quarterly losses, reflecting a turnaround since the appointment of Ronald LaBorde as interim chief executive. While Amedisys did not forecast earnings for the rest of the year, interim CFO Dave Redmond said the company was well poised to exceed analyst expectations. Baton Rouge, LA-based Amedisys said in March, a month after LaBorde became interim CEO, that it planned to close 29 care centers and consolidate a further 25 with other centers in the same markets. Adjusted net income from continuing operations rose to $8 million, or 25 cents per share, for the three months ended June 30 from $5.8 million, or 18 cents, a year earlier. Amedisys generated net service revenue of $305 million in the quarter. Analysts on average expected the company to earn 4 cents per share on revenue of $298.9 million.

          But EDAP TMS SA (Nasdaq), the maker of an ultrasound device to treat prostate cancer with lower rates of erectile dysfunction, plunged $3.04, or 62%, to $1.84 after failing to win an FDA advisory panel’s backing. Vaulx-en-Velin, France-based EDAP didn’t provide evidence the device is safe and effective, advisers to the Food and Drug Administration voted. The device, called Ablatherm, is an alternative to traditional surgical and radiation treatments. It uses a robotic arm to insert a high-intensity, focused ultrasound device that kills cancer cells. While the company said Ablatherm produces lower rates of side effects than traditional treatments, an FDA staff report released July 28 questioned whether EDAP’s methods for testing are adequate.

          And Galectin Therapeutics Inc. (Nasdaq) plummeted $23.17, or 60%, to $15.25 after the company reported poor results in an early-stage trial of its experimental drug for treatment of a fatty liver disease. Galectin’s experimental drug GR-MD-02 failed in a phase I study of nonalcoholic steatohepatitis (NASH), a severe form of fatty liver disease. Across just about every biomarker for efficacy Galectin thought to measure, GR-MD-02 showed no difference from placebo, according to TheStreet.com. Galectin deemed the updated results from the phase I study to be a success because patients treated with GR-MD-02 reported no serious side effects, but ineffective placebos rarely raise safety concerns. Aegis Capital downgraded the company from “Buy” to “Hold” following the mixed clinical data.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Eyegate Pharmaceuticals Inc. (Waltham MA) registered up to $30.3 million worth of common stock. The company plans to list on the Nasdaq under the symbol “EYEG.” Aegis Capital Corp is the sole underwriter. Eyegate is aclinical-stage specialty pharmaceutical company that is focused on developing and commercializing therapeutics and drug delivery systems for treating diseases of the eye. EGP-437, its first and only product in clinical trials, incorporates a reformulated topically active corticosteroid, dexamethasone phosphate, that is delivered into the ocular tissues though the company’s proprietary drug-delivery system, the EyeGate II Delivery System.

July 21, 2014 ...

ABBVIE FINALLY SEALS $55-BILLION DEAL FOR SHIRE IN HUGE TAX INVERSION -- U.S. drugmaker AbbVie Inc. (North Chicago) bought Dublin-based Shire Plc on Friday in a 32 billion pound ($54.7 billion) deal that will allow it to slash its tax bill by relocating to Britain. The London-listed company, which makes expensive medicines to treat rare diseases, fought off four earlier bids from AbbVie until the U.S. firm raised its price to 52.48 pounds per share--made up of 24.44 pounds in cash and 0.8960 new AbbVie shares. AbbVie is buying Shire to cut both its U.S. tax bill and its reliance on arthritis drug Humira, the world’s top selling medicine which loses U.S. patent protection in 2016. AbbVie, which generates nearly 60% of its revenue from Humira, had until Friday to announce a firm offer for Shire, extend the deadline or walk away under U.K. takeover rules. It now plans to create a company listed in New York, incorporated in Jersey, the Channel Islands, and tax-domiciled in Britain, which will pay an effective tax of about 13% by 2016, sharply lower than its current rate of about 22%, making the deal one of the biggest driven by the tactic known as tax inversion. Pfizer Inc. (New York) tried to pull off the same maneuver earlier this year when it made a bid for Britain’s AstraZeneca Plc, though its $118 billion deal was rejected.

          Calls for political action to stop tax inversion deals are growing in the United States. AbbVie’s chairman and CEO Richard Gonzalez said he thought the debate would be more appropriately shifted to tax reform and making companies more competitive in the global economy. U.S. companies cannot move overseas earnings back into the country for acquisitions or investment without losing part of it. “Companies like ours need access to our global cash flows to be able to make investments all around the world, but specifically to be able to make investments in the United States, and today we are at a disadvantage versus many of our foreign competitors,” he said. “It’s not the primary rationale for this,” he said, explaining that the combined group would have leadership positions in immunology, rare diseases, neuroscience, and metabolic and liver diseases. Abbvie closed the week off 5 cents $54.91 in New York. Shire rose 3% to 4,996 pence in London.

JOHNSON & JOHNSON BEATS FORECASTS, HELPED BY HEPATITIS C DRUG -- While Johnson & Johnson’s (New Brunswick NJ) new hepatitis C pill Olysio has had blockbuster revenue in 2014, concerns the sales surge probably won’t last drove shares down last week. Olysio, approved in November, generated second-quarter sales of $831 million, the company said as it reported earnings that beat analysts’ estimates. The drug, though, may face competition from a similar product as early as October. Gilead Sciences Inc.’s (Foster City CA) Solvadi, controversial because of its price, helps cure hepatitis C in people with HIV, according to researchers who say the drug has the potential to limit a top cause of death in those patients. In a study of 223 HIV-infected patients, Solvadi combined with ribavirin cleared the most common U.S. strain of hepatitis C in 76% of newly treated patients over 24 weeks. There were no adverse effects on HIV treatment, according to a report Sunday in the Journal of the American Medical Association. While J&J’s pharmaceutical unit grew 21% in the second quarter, that growth was largely driven by Olysio. “There may not have been as many folks dialing in the pressure on the back half of next year from competition,” said Matt Miksic, an analyst with Piper Jaffray Cos.That’s certainly something that was driven home.” Positive earnings results were not enough to offset Olysio’s likely future decline.

          Shares of J&J closed the week down 3% at $101.80. The share decline may reflect “the lack of a more meaningful guidance increase to reflect this quarter’s out-performance, again, a move that we believe is the company being conservative,” said Danielle Antalffy, an analyst with Leerink Research. Second-quarter net income rose 13% to $4.3 billion, or $1.51 a share, from $3.8 billion, or $1.33 a share, a year earlier. Total revenue was $19.5 billion, up 9% from a year before. After losing patent protection on drugs with $8 billion a year in sales since the early 2000s, J&J has launched 14 new compounds since 2009, making it the fastest growing of the 10 biggest pharmaceutical companies in the U.S., Europe and Japan, CEO Alex Gorsky said. Joaquin Duato, head of J&J’s drug business, credited the company’s long-term investments with the drug unit’s growth. “Is this just a lucky run, or is there something more to it?” Duato said. “After facing significant challenges in the early 2000s, we made a number of changes to our business,” he said, including increasing their focus on drug development. “These changes are directly responsible for the success we are seeing now,” he said.

TRACKING WASHINGTON -- The Obama administration last week urged congressional leaders to take swift action to halt the rush of United States companies moving abroad. In letters sent to four lawmakers, Treasury Secretary Jacob J. Lew said the administration supported a quick fix that would halt the trend of so-called “inversions,” in which U.S. companies buy a smaller competitor and reincorporate overseas to save money on taxes. Mr. Lew called for legislation that would include a package of business reforms, one of which would bring tax levels of companies into the 20% range. “The best way to deal with this is through comprehensive business tax reform and we have a plan out there that would accomplish multiple goals,” he said, citing business tax reforms and providing resources for infrastructure investments. Members of the House and Senate have made proposals to curb the inversion trend in recent months, and the president included a provision in the budget he presented to Congress this year that would have effectively banned the move. But none of these efforts have yet gained traction. Since May, Medtronic Inc. (Minneapolis MN) agreed to acquire Dublin-based Covidien Plc for $43 billion. AbbVie Inc. (North Chicago) on Friday succeeded in buying Irish drugmaker Shire for a $55 billion deal that would be the biggest of the year. Both U.S. companies plan to reincorporate in Europe as part of the deals.

          Elsewhere, the U.S. Securities and Exchange Commission disclosed in a legal filing Wednesday that it believes 44 investment funds may be involved in a suspected healthcare insider trading scandal, urging a New York federal court to force the U.S. House of Representatives to turn over documents on an information leak that could have led to the scheme. In arguing against the House’s motion to dismiss the case or send it to a court in Washington, the SEC told a Manhattan federal judge that the geographic scope of its investigation is “much wider” than described by lawyers for the House and involves a total of 44 entities. The agency subpoenaed the House committee and the staff member, Brian Sutter, for its inquiry into whether non-public information was illegally passed about a change in healthcare policy that resulted in a spike in share prices of insurance companies. The case is testing whether U.S. insider-trading laws allow regulators to investigate the committee or its staff. According to the regulators, minutes before the government announced the policy change, an analyst at Height Securities LLC sent clients a flash report outlining the proposal. The government announced an increase, rather than decrease, in payments to health insurers, boosting the shares of companies including Humana Inc. (Louisville KY).

FDA/EMA ROUNDUP -- Glenmark Generics Inc., the U.S.-based subsidiary of Glenmark Generics Ltd. (Mumbai), won final approval by the U.S. Food and Drug Administration for its abbreviated new drug application (ANDA) for fluocinonide cream USP 0.1%, the generic version of Vanos Cream by Medicis Pharmaceuticals Corp. Fluocinonide cream is indicated for the relief of the inflammatory and pruritic manifestations of corticosteroid responsive dermatoses. According to IMS Health and sales data for the 12 month period ending March 2014, fluocinonide cream garnered annual sales of approximately $103 million.

          The FDA also granted marketing clearance to generic drugmaker Taro Pharmaceuticals Ltd.’s (Haifa ISR) fluocinonide ointment 0.05%, a topical corticosteroid for the relief of inflammatory and pruritic manifestations of corticosteroid dermatitis. Fluocinonide is the bioequivalent to Medicis’s Lidex.

          Fougera Pharmaceuticals Inc.’s (Melville NY) version of fluocinonide ointment was likewise granted FDA approval. The company is a unit of Novartis AG.

          And the Food and Drug Administration has called an advisory committee meeting on Sept. 17, to discuss the adverse cardiovascular outcomes with the usage of testosterone replacement therapy. The FDA has called for a joint meeting of the bone, reproductive and urologic drugs advisory committee and the drug safety and risk management advisory committee. In June, the FDA said that all testosterone products on the market should include in their labels a general warning about the risk of blood clots in veins. These treatments are used by men who have low levels of testosterone. Products on the market or about to be launched include AbbVie Inc.’s AndroGel, Endo International Plc’s Aveed and Trimel Pharmaceuticals Corp.’s Natesto.

MEDICAL STOCK SPOTLIGHT -- NeoGenomics Laboratories Inc. (Nasdaq) led advancing issues, rallying $1.23, or 29% over the week, to $5.44 on the back of record results for its second quarter. The company beat analysts’ estimates for both revenue and earnings. For the second quarter, NeoGenomics had revenues of $20.7 million, which beat analysts’ expectations of $19.9 million and marked the fourth consecutive quarter in which the company beat expectations. Earnings came in at $0.01 per share which was also ahead of analysts’ expectations. On a year-over-year basis the company reported a revenue increase of 32%. This was achieved as test volumes rose 40% and the average revenue from each test was up 5.3%. Along with that, the Fort Meyers, FL-based company saw a decline of 11.7% in the cost of sales for each test, which resulted in the gross margin increase to 49.5%. NeoGenomics is a specialized cancer diagnostics reference laboratory with four labs in the United States.

          Elsewhere, Codexis Inc. (Nasdaq), which develops bio-catalysts for pharmaceutical and chemical production, leaped 26% to $1.83. The company said it has granted GlaxoSmithKline Plc a license to use its CodeEvolver protein technology. The license lets Glaxo use Codexis’s platform technology to develop enzymes for use in pharmaceutical and healthcare products. Redwood City, CA-based Codexis said it is eligible to receive up to $25 million over a period of about two years, $6 million of which will be paid upfront and $19 million that is subject to completion of technology transfer milestones. The company could receive additional milestone payments of $5.75 million to $38.5 million per project, depending on successful application of the technology.

          And Vital Therapies Inc. (Nasdaq) shot up $4.19, or 18%, to $27.71. Vital’s shares have surged more than 100% this month as investors become increasingly hopeful that its liver assist technology will post positive results in phase III trials when they’re released next year. San Diego, CA-based Vital is working on a process that would use human cells to simulate liver function in people with acute liver failure, or ALF. Although ALF isn’t common--there are just 2,000 cases annually in the U.S.--there are few treatment options other than liver transplant. Vital hopes that its therapy can help bridge the gap for these patients, but it may face a tough hurdle in phase III. That’s because the company’s phase II trials, while showing an improving trend in survival, didn’t achieve statistical significance. As a result, Vital reworked its phase III patient enrollment.

          But The Female Health Co. (Nasdaq) skidded $1.40, or 25%, to $4.19 after announcing that it would suspend quarterly dividend payments in an effort to promote more sustainable earnings and revenue growth. “In order to position the company to pursue a growth strategy, the board of directors has elected to suspend the payment of quarterly dividends at the present time and devote cash flows towards these strategic initiatives that have the potential to accelerate the company’s long-term growth in revenue and earnings,” CEO Karen King said. TheStreet Ratings team rates Chicago-based Female Health Co. as a “Hold” with a ratings score of C. The company manufactures and markets a female condom which can prevent unintended pregnancy and sexually-transmitted diseases. The company’s product is sold over-the-counter and is marketed under the brand name “Reality” in the United States.

IPO SECTOR -- The initial public offering for Sage Therapeutics Inc. (Cambridge MA) opened for trading at $27.00 last week after pricing its initial public offering of 5 million shares of common stock at a public offering price of $18.00 per share, the high end of the expected $17-$18 range. Shares trade on the Nasdaq Global Market under the symbol “SAGE.” J.P. Morgan Securities LLC and Goldman, Sachs & Co. are acting as joint book-running managers for the offering. Sage Therapeutics is a biopharmaceutical company committed to developing and commercializing novel medicines to treat life-threatening, rare central nervous system (CNS) disorders. Sage Therapeutics is currently evaluating SAGE-547 in a Phase I/II clinical trial for the treatment of super-refractory status epilepticus (SRSE). Status epilepticus (SE) is a life-threatening seizure condition that occurs in approximately 150,000 people each year in the U.S., of which 30,000 SE patients die. “Status epilepticus is a life-threatening disease with limited treatment options, and this advancement demonstrates our commitment to delivering SAGE-547 and other therapies to patients with life-threatening, rare CNS disorders,” said Jeff Jonas, MD, Sage’s CEO. Shares closed the week up $12.10, or 67%, at $30.10.

Previous Week's Issue … July 14, 2014

ABBVIE RAISES OFFER FOR SHIRE TO $51.5 BILLION -- Shire Plc (Dublin IRL) has begun negotiating with AbbVie Inc. (North Chicago) for a deal to combine the two drugmakers after the U.S. company raised its takeover offer to about $51.5 billion, people with knowledge of the matter said. AbbVie CEO Richard Gonzalez met in New York last week with officials from Shire for the discussions, which are at an early stage, the people said, asking not to be identified because the matter is private. The talks may not lead to an agreement, the people said. As part of the deal, AbbVie would move its legal address to the U.K., thereby dropping its tax rate to 13% from about 22%. Shire’s rare disease treatments and drugs for attention deficit hyperactivity disorder would also give AbbVie a broader array of products beyond the rheumatoid arthritis injection Humira, which accounts for more than half of sales. AbbVie made a fourth offer for Shire on July 8, valuing the Dublin-based company’s shares at 51.15 pounds each, or about 30.1 billion pounds ($51.5 billion) in total. Shire, which had rejected the previous offers saying they undervalued the prospects of its rare-disease medicines, hasn’t made a formal response. Shire closed the week up 5% at 48.7 pounds in London, valuing the company at 28.7 billion pounds. Its U.S.-listed ADR’s gained 5% to $48.70 in New York. AbbVie tumbled 6% to $54.96.

          Since the raised offer, Shire has been hearing from top shareholders pushing the company to come to the table and work out a deal--in letters, telephone calls and meetings with Shire’s Chairwoman Susan Kilsby. The campaign is being encouraged by AbbVie and its advisers, people with knowledge of the matter have said. The companies have a July 18 deadline set by U.K. regulations to work out an agreement. If no deal is approved by then, AbbVie must walk away for as long as six months. Spokespeople for both companies declined to comment. A corporate jet registered to AbbVie traveled to Teterboro Airport in New Jersey from the Chicago area Thursday, according to data provider FlightAware. The data didn’t indicate who was on the aircraft which eventually left the New York-area and flew to Boca Raton, FL. While Shire’s tax domicile is in Ireland, AbbVie has said the combined company would be domiciled in the U.K., where Shire has some executive offices. AbbVie’s top managers will continue to work in North Chicago.

ACKMAN PROPOSES NEW DIRECTORS AHEAD OF ALLERGAN SPECIAL MEETING -- Activist investor Bill Ackman’s Pershing Square Capital Management LP (New York) has put forth its slate of six board nominees for takeover target Allergan Inc. (Irvine CA) in its move to try to unseat a majority of the company’s directors. Pershing Square, Allergan’s largest shareholder, is backing Valeant Pharmaceuticals International Inc. (Laval, Quebec) in its US$54-billion hostile takeover bid for Botox-maker Allergan. Allergan has refused to enter discussions with Valeant, arguing that the company is a serial acquirer that slashes research and development costs of the firms it takes over. Last month, Pershing Square and Allergan reached an agreement under which Pershing Square can enter a process to hold a special meeting of Allergan shareholders. The slate proposed by Pershing Square includes former venture capital firm CEO Betsy Atkins, venture capital adviser Cathleen Black, healthcare investment fund executive Fredric Eshelman, private equity firm executive Steven Hulman, corporate director David Wilson and the former executive chairman of an industrial and specialty chemicals distributor, John Zillmer. Pershing Square also said that it is filing revised preliminary solicitation materials with the U.S. Securities and Exchange Commission.

          “Each member of our slate of nominees is an independent, skilled leader with relevant domain, industry and/or executive management experience,” Mr. Ackman said. “By supporting this slate, Allergan shareholders can ensure that the interests of shareholders will be well represented on the board of Allergan.” Allergan was quick to fire back in a news release, charging that “today’s announcement is a further attempt by co-bidders Pershing Square and Valeant to acquire Allergan at a grossly inadequate price that substantially undervalues the company and creates significant risks and uncertainties for Allergan stockholders. Today’s announcement also fails to address the serious concerns raised by Allergan and important members of the investment community about Valeant’s anemic organic growth driven by unsustainable price increases, among other fundamental business model issues.” Allergan’s current board includes individuals “with significantly more industry experience than Pershing Square’s nominees” and the company has a plan to drive long-term organic growth, the company said. Allergan closed the week off $2.90, or 2%, at $166.43. Valeant slipped $4.59, or 4%, to $120.47.

TRACKING WASHINGTON -- Speaker of the House John A. Boehner’s (R-OH) lawsuit against President Obama will focus on changes to the healthcare law that Mr. Boehner says should have been left to Congress, according to a statement issued Thursday by the speaker’s office. By narrowly focusing the legal action on the Affordable Care Act, Mr. Boehner will sidestep the more politically problematic issue involving Mr. Obama’s executive action offering work permits for some illegal immigrants who were brought to the United States as children. Last month, Mr. Boehner announced his intention to seek legislation allowing the House to sue the president over his use of executive actions, a reflection of charges by congressional Republicans that the president has overreached his authority. On Thursday, Mr. Boehner said the lawsuit would specifically challenge the president’s decision to delay imposing penalties on employers who do not offer health insurance to employees in compliance with the Affordable Care Act. “The current president believes he has the power to make his own laws--at times even boasting about it,” Mr. Boehner said. “He has said that if Congress won’t make the laws he wants, he’ll go ahead and make them himself, and in the case of the employer mandate in his healthcare law, that’s exactly what he did.”

          Mr. Boehner is acting in part to quell Tea Party members of his Republican caucus, some of whom want to impeach Obama, and to show he can be tough on the president without risking the political damage that an impeachment effort might cause. To proceed with its suit, the House must vote on the resolution, which won’t need Senate approval and would immediately take effect upon passage. The House Rules Committee is set to hold a hearing on the draft resolution July 16, and a House floor vote may be held during the last week of July. Legal scholars have expressed doubt about whether Republicans can win in court. Obama has dismissed the effort as a “stunt” and made a scoffing reference to the threatened suit Thursday during a speech in Austin, TX.

FDA/EMA ROUNDUP -- Purdue Pharma LP’s (Stamford CT) tamper-resistant competitor to Zogenix Inc.’s (San Diego CA) powerful pain pill has received priority review from U.S. regulators, the company said. The Food and Drug Administration will expedite the application process for Purdue’s hydrocodone tablet, the closely held drugmaker said in a statement. The review is expected to take six months instead of the standard 10 months, Purdue said. The chronic pain medication is hard for abusers to crush and snort or inject, making it a threat to Zongenix’s Zohydro ER, which doesn’t have abuse-deterrent features. Zohydro, approved by the FDA in October, is the only pure hydrocodone painkiller on the market. The FDA has said that Zohydro could be pulled from the market if Zogenix or another manufacturer gets an abuse-deterrent formula approved. Zogenix closed the week down 24% at $1.75.

          Elsewhere, Protein Sciences Corp. (Meriden CT) announced that the FDA has approved the company’s strain change amendment for its seasonal influenza vaccine, Flublok. Every year influenza vaccine manufacturers must receive approval from the Agency for changes they make to the upcoming season’s manufacturing process and product formulation, as the influenza vaccine is adapted annually. Early approval for Flublok will enable delivery on time to healthcare providers in the fall. This is especially important for those that rely on Flublok’s unique properties for protection from the flu; namely, that the vaccine is egg-free, highly pure and triple the strength compared to conventional influenza vaccines.

          India’s Sun Pharmaceutical Industries Ltd. (Mumbai) is recalling 41,127 bottles of antidepressant venlafaxine hydrochloride in the United States after the drug failed to dissolve properly, the U.S. Food and Drug Administration said. The voluntary recall was begun by Sun Pharma’s unit Caraco Pharmaceutical Laboratories Ltd. in June, and was classified by the FDA as Class II, meaning that use of or exposure to the drug may cause temporary or medically reversible adverse health consequences. “Stability results found the product did not meet the drug release dissolution specifications,” the FDA said in a post on its website on Friday. Dissolution tests are commonly conducted to help predict how a drug performs inside the body. A company spokesman in Mumbai declined comment.

          And a member of a panel advising the government on the safety of a medical device that can spread cancer in women stepped down after the FDA reviewed consulting fees he accepted from a device manufacturer, the agency said Thursday. San Francisco gynecologist Andrew Brill removed himself from the 16-member panel before two days of hearings on the device were set to begin Thursday, an FDA spokeswoman said. A spokesman for Dr. Brill referred questions to the FDA. In 2013, he received nearly $100,000 in consulting fees from Johnson & Johnson (New Brunswick NJ) subsidiary Ethicon, according to J&J’s website. Ethicon is by far the largest manufacturer of a tool known as a laparoscopic power morcellator. The advisory panel is expected to recommend to the FDA whether regulations governing morcellators, used in an estimated 50,000 hysterectomies a year, should be altered.

MEDICAL STOCK SPOTLIGHT -- La Jolla Pharmaceutical Co. (Nasdaq) led advancing issues, surging $1.68, or 19% for the week, to $10.65. Stock analysts at Noble Financial boosted their target price on shares of La Jolla Pharmaceutical from $34.00 to $38.00. The firm currently has a “buy” rating on the stock. Noble Financial’s price objective would suggest a potential upside of 324.58% from the stock’s previous close. San Diego, CA-based LJPC has been the subject of a number of other recent research reports. Analysts at Zacks downgraded shares to a “neutral” rating in a research note May 7th. They now have a $9.70 price target on the stock. The company is focused on the development of therapeutic agents that inhibit the activity of galectins as a means of treating human diseases such as chronic organ failure and cancer.

          Elsewhere, BioDelivery Sciences International Inc. (Nasdaq) leaped $2.03, or 17%, to $14.02 after the drug developer said its potential severe pain treatment fared better than a placebo in another late-stage study. The Raleigh, NC-based company said the trial also triggered another $10 million milestone payment from Endo International Plc, which has a licensing agreement with BioDelivery. The drugmaker said its treatment, BEMA buprenorphine, led to significantly improved chronic pain relief when compared to a placebo in patients who had tried other opiates. The drug is being developed to manage pain that is bad enough to require daily, around-the-clock, long-term opioid treatment. BioDelivery said it will meet with Food and Drug Administration officials this month and then prepare and submit its drug application as soon as possible.

          And TherapeuticsMD Inc. (Nasdaq), a drug manufacturer focused on developing over-the-counter, prescription generic, and branded clinical-stage therapies for women, jumped 14% to $4.77 after FBR Capital initiated coverage on the company with an “outperform” rating and a price target of $34 per share. Keeping in mind the company’s closing price of $4.77, FBR is implying as much as a 723% upside. According to FBR’s theory, the company’s hormone replacement pipeline, specifically investigational hot flash treatment TX-001, could revolutionize the way women receive hormone replacement therapy. Some analysts believe TX-001HR has peak sales potential in the U.S. of more than $2 billion. But it appears FBR has shrugged off any notion that there could be competing drugs, launch issues, or even FDA concerns. Although the Boca Raton, FL-based company may succeed, a $34 price target seems high.

          But Intellipharmaceutics International Inc. (Nasdaq) plunged $1.32, or 32%, to $2.83 after Maxim Group downgraded the stock to “hold” from “buy” and decreased its price target to $3 from $7. The firm cited the company’s lower-than-expected revenue and greater-than-expected expenses. Maxim also has concerns that Intellipharmaceutics’ Abuse Deterrent Technology is no longer different from that of Teva Pharmaceutical Industries Ltd. Maxim Group’s price objective points to a potential downside of 11.24% from the stock’s previous close. Toronto-based Intellipharmaceutics has a 52 week low of $1.56 and a 52 week high of $6.46. Intellipharmaceutics specializes in the controlled and targeted once-a-day delivery of oral, solid dose pharmaceutical products.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, ReWalk Robotics Ltd. (Marlborough MA) registered up to $57.5 million shares of common after recently receiving Food and Drug Administration approval for a motorized device that will aid movement for some people with lower body paralysis. ReWalk plans to use proceeds for purposes including sales and marketing costs aimed at expansion, and research and development expenses. The company, formerly known as Argo Medical Technologies Ltd., could use some proceeds for acquisitions. Barclays Capital and Jefferies are joint book-running managers. ReWalk plans to trade on the Nasdaq Global Market under the symbol “RWLK.” ReWalk’s largest shareholders are SCP Vitalife Partners and Yaskawa Electric Corp. In June, the FDA cleared for marketing the company’s ReWalk product, the first motorized device that will aid movement for certain people who are paraplegic because of spinal-cord injuries. The device will help some of these people with lower body paralysis to walk, sit, stand or rise up from a chair.

July 7, 2014 ...

SUPREME COURT UPHOLDS FIRMS' RELIGIOUS OBJECTIONS TO CONTRACEPTION -- Small companies across the U.S. will be forced to make hard decisions about whether to offer employees coverage for contraception following last week’s Supreme Court decision. The court ruled in a 5-4 decision that two closely held companies, Hobby Lobby Stores Inc. (Oklahoma City OK) and Conestoga Wood Specialties Corp. (East Earl PA), don’t have to comply with a requirement of the Patient Protection and Affordable Care Act that their health plans cover birth control without cost to their workers. Democrats and proponents for abortion rights and women’s health criticized the decision, which is likely to factor into this year’s congressional campaigns. While the ruling appeared to damage the health law by raising the possibility that other medical services, even life-saving procedures such as blood transfusions, could be rejected on religious grounds, such a step is unlikely, benefits experts and lawyers said. Scaling back health coverage in such a way would hamstring an employer in labor markets, they said. “This is a very narrow decision and the prospects of using it to justify cutting other health benefits are highly unlikely,” said Steve Wojcik, vice president of policy at the National Business Group on Health, a Washington trade association for large employers. “This ruling was mainly, if not exclusively, about religious freedom, not health care.”

          About 116.6 million Americans were employed in the private sector in May, according to data compiled by Bloomberg. It’s unknown how many are at closely held companies covered by the Supreme Court decision. The category includes anything from people who are self-employed to huge corporations such as Cargill Inc. (Minneapolis MN), which has about 143,000 workers and recorded $137 billion in revenue in 2014. Forty-nine for-profit companies have sued the Obama administration over the birth-control requirement, according to the Becket Fund for Religious Liberty (Washington DC), which represented Hobby Lobby and other firms. Forty won injunctions, sparing them from complying with the requirement while the issue wound its way through the courts, according to the fund. “Clearly some companies are going to go down this road with contraception,” Paul Fronstin, director of health research and education at the Employee Benefit Research Institute in Washington, said. “They’re doing it because of their beliefs and maybe helping to attract like-minded people.”

SCIENCE JOURNAL NATURE RETRACTS STEM-CELL RESEARCH STUDIES -- Two scientific papers that initially electrified biologists by describing an easy way to make stem cells were retracted last week by the journal that published them after they were found to be riddled with “critical errors.” The papers, published in Nature in January, were a source of pride in Japan, where much of the research had been performed in the government-backed Riken Center for Developmental Biology (Kobe). The lead scientist, Haruko Obokata, became an instant celebrity. But pride soon turned to embarrassment as one error after another came to light, and an internal investigation by Riken concluded that Ms. Obokata had misrepresented or altered images. So far, independent scientists have not reproduced the work described in the papers, raising substantial doubts about whether the simple way to produce stem cells really exists. “We apologize for the mistakes,” the authors of the two papers wrote in a retraction. “These multiple errors impair the credibility of the study as a whole, and we are unable to say without doubt whether the STAP-SC phenomenon is real,” they wrote. “Ongoing studies are investigating this phenomenon afresh, but given the extensive nature of the errors currently found, we consider it appropriate to retract both papers.” STAP-SC stands for stem cells resulting from stimulus-triggered acquisition of pluripotency.

          The researchers reported in January that regular cells taken from the body could be turned into stem cells by simply exposing them to stress, as by dipping them in an acid bath. That seemed to provide an easy way to create multipurpose stem cells that could then be turned into different types of tissues, which might one day be used to treat diseases or repair injuries. The retraction notices listed five errors that were not previously disclosed in the Riken investigation. Most of them were that images in the papers did not show what they were said to have shown. One error was that cells used in a crucial experiment did not match the mice from which the cells were supposed to have been taken. While many of the authors of the work at Riken had previously agreed to a retraction, one holdout had been Dr. Charles A. Vacanti of Harvard University and the Brigham and Women’s Hospital, who had been Ms. Obokata’s supervisor when she was a graduate student in his laboratory and was the senior author of one of the papers. In a statement Wednesday, Dr. Vacanti said he was “deeply saddened by all that has transpired, and after thoughtful consideration of the errors presented in the Riken report and other concerns that have been raised, I have agreed to retract the papers.”

TRACKING WASHINGTON -- The Obama administration proposed raising Medicare payments to hospitals for care they provide on an outpatient basis, part of a trend toward discouraging unnecessary admissions. Payments for outpatient services would be increased 2.1% under a proposal last week from the U.S. Centers for Medicare and Medicaid Services. Medicare paid about $37 billion in 2013 for outpatient treatment at hospitals and $139 billion for admissions.  Hospitals are grappling with insurance expansions under the Patient Protection and Affordable Care Act known as Obamacare. Health insurers have negotiated prices aggressively for plans they sell in new government-run exchanges serving about 8 million people, while Medicaid, the state-run program for the poor with traditionally low payment rates, has grown to cover about 6 million more people. “Most people agree that if a procedure can be performed on an outpatient basis, it should be,” Les Funtleyder, a consultant who is the author of “Healthcare Investing,” said. “For acute-care hospitals who haven’t figured out they need to bolster their outpatient activities, it’s going to be a problem.”

          The Medicare agency already proposed trimming payments for admissions at hospitals next year by about $241 million. Those cuts are in part due to the Affordable Care Act, which ordered reductions in Medicare costs to help pay for its expansion of insurance coverage, in a deal with the hospital industry. Combined with increases in Medicare enrollment next year and other changes, the rate boost for outpatient services will mean Medicare pays about $5 billion more for the services than it did this year, the agency said in a regulatory filing. The proposed rule is open for a 60-day comment period before it can become final.

FDA/EMA ROUNDUP -- Allergan Inc. (Irvine CA), the drugmaker resisting a takeover by Valeant Pharmaceuticals International Inc. (Laval Quebec), won U.S. approval for a treatment of vision loss in diabetics and rejection for its migraine inhaler. The Food and Drug Administration approved Allergan’s Ozurdex, a drug for diabetic macular edema, which can cause vision loss and eventual blindness in people with diabetes, according to a regulatory filing. The agency rejected Semprana, formerly known as Levadex, an inhalable treatment for migraines, because of problems with the drug’s delivery device. An eventual approval for Levadex could “vindicate” Allergan’s research capabilities and its argument to investors that it’s better off alone than as part of Valeant, according to Shibani Malhotra, an analyst at Sterne Agee & Leach Inc. Allergan plans to meet with the FDA about Semprana and estimates the agency could have an answer on the drug by July 2015, according to the filing.

          Elsewhere, the FDA has approved a drug from Spectrum Pharmaceuticals Inc. (Henderson NV) to treat patients with a rare, aggressive form of cancer that affects the lymph nodes. The agency cleared the drug, Beleodaq, to treat peripheral T-cell lymphoma that has returned after earlier treatments or has not responded to any treatments. An estimated 70,800 Americans will be diagnosed with the cancer this year and 18,990 will die from it, according to the National Cancer Institute. The drug works by stopping an enzyme that makes T-cells cancerous. T-cells are a type of white blood cell that helps the immune system fight off infections and foreign cells. The FDA approved Beleodaq under its accelerated approval program, which grants early approval to drugs based on promising test results. In this case the FDA said a small study of Beleodaq showed that more than 25% of patients given the drug had their cancer tumors disappear or shrink.

          Human tests of Tekmira Pharmaceuticals Corp.’s (Vancouver, British Columbia) treatment against Ebola, one of the world’s most lethal diseases, have been put on hold by the FDA due to safety concerns. The agency has requested additional information to ensure the treatment is safe at higher doses, the company said. The drug is in the first of three stages of clinical trials usually required by regulators before approval. Tekmira will “continue our dialogue with the FDA, provided for under our fast-track status, in order to advance the development of this important therapeutic agent,” Tekmira’s CEO Mark Murray said. The company didn’t say how long the hold was expected to last. Shares of the drugmaker closed the week off $1.99, or 15%, at $11.63.

          And AstraZeneca Plc (London), the drugmaker that rejected a $117 billion takeover offer from Pfizer Inc., failed to win the backing of FDA advisers for an ovarian cancer treatment the company has resurrected for certain patients. Agency advisers voted 11-2 that AstraZeneca should complete a study meant to confirm olaparib’s benefit before the FDA considers approving the drug. While the U.K.-based company scrapped plans for the drug in 2011, it revived olaparib after deciding to reanalyze data on patients with a hereditary mutation of the BRCA genes.

MEDICAL STOCK SPOTLIGHT -- Amicus Therapeutics Inc. (Nasdaq) led advancing issues, soaring 33% over the week to $4.02 after providing a detailed statistical analysis plan including updates on the company’s second phase III study of its experimental drug, migalastat. The new study, titled Study 012, will further test migalastat as a monotherapy for patients suffering from Fabry disease. Earlier this year in April, the company had announced results of its first phase III study of migalastat, which showed positive results. The news had sent the stock up over 20% during trading. After having completed the 18-month primary treatment period, for which the company will present top-line data in its third quarter, 96% of the patients opted to continue with its 12-month treatment extension. Additionally, JPMorgan Chase & Co. upgraded its rating on the Cranbury, NJ-based company to “Overweight,” with a target price of $7.

          Elsewhere, Dicerna Pharmaceuticals Inc. (Nasdaq) surged $2.63, or 14%, to $21.47 after announcing the presentation of preclinical data demonstrating the promise of DCR-PH1, the Watertown, MA-based company’s therapeutic candidate for the treatment of primary hyperoxaluria type 1 (PH1). The disease stems from a rare inherited liver disorder that often results in progressive and severe kidney damage. The preclinical studies showed that DCR-PH1 provides potent and long-term inhibition of HAO1, a gene implicated in the pathogenesis of PH1. In a genetically modified mouse model of PH1, researchers reported a 97% reduction of the HAO1 transcript in the liver after a single dose of DCR-PH1 and a significant reduction in urinary oxalate levels, a key marker of the disease. In mice treated with DCR-PH1, urinary oxalate levels returned to near baseline levels, similar to normal mice.

          And Transcept Pharmaceuticals Inc. (Nasdaq) leaped 14% to $2.23 after announcing its merger with Paratek Pharmaceuticals Inc. The merger will result in a Nasdaq-listed biopharmaceutical company whose lead asset is a novel phase III-ready, oral and intravenous antibiotic drug candidate designed to address the treatment needs of patients with serious community-acquired bacterial infections. Upon the closing of the merger, Paratek stockholders will acquire in the aggregate approximately 89.6% of the outstanding capital stock of Point Richmond, CA-based Transcept in exchange for their shares in Paratek, and Paratek will become a wholly owned subsidiary of Transcept.

          But Regado Biosciences Inc. (Nasdaq) plunged $4.11, or 59%, to $2.81 after it was announced that the Data Safety and Monitoring Board (DSMB) had initiated an unplanned review of its findings regarding an actively-controllable antithrombotic drug system, Revolixys Kit, which has been the subject of a phase III clinical study. The company announced that the DSMB had initiated an unplanned review of data from testing the system and will return its findings sometime over the next eight weeks. Patient enrollment into the program has been paused while the review, which is focusing on “serious adverse events related to allergic reaction,” runs its course. The Board will also conduct a full analysis of the risk-benefit ratio of the more than 3,000 enrollees in the program; results of the analysis will be kept private from those leading the study. Basking Ridge, NJ-based Regado is focused on antithrombotic drug systems designed for acute and sub-acute cardiovascular treatments.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, T2 Biosystems Inc. (Lexington MA), which is developing diagnostics tests that screen for sepsis and hemostasis, registered up to $69 million worth of common stock. The company, which was founded in 2006, plans to list on the Nasdaq Global Market under the symbol “TTOO.” T2 Biosystems initially filed confidentially on April 24, 2014. Goldman Sachs and Morgan Stanley are the joint bookrunners on the deal. No pricing terms were disclosed. The company claims that its technology platform will lead to an earlier detection of sepsis, which is the most expensive hospital-treated condition in the U.S. with a 30% mortality rate. Combined with the detection of impaired hemostasis, T2 pegs its annual U.S. addressable market at $3 billion. Primary backers include Goldman Sachs, Polaris Partners and Flagship Ventures.

June 30, 2014 ...

U.S. HEALTHCARE PROFIT OUTLOOK SURGES ON OBAMACARE DRUG PRICES -- U.S. healthcare companies are winning higher profit forecasts, defying a wider trend on Wall Street, as pricey new biotech drugs hit the market and insurance enrollment rises under the Affordable Care Act. Analysts’ profit expectations for the group have risen sharply since the start of the year, while estimates for most of the other nine Standard & Poor’s 500 macro sectors have fallen, according to Thomson Reuters data. The jump in forecasts has come in the past two months, thanks largely to rising estimates for biotechnology companies such as Gilead Sciences Inc. (Foster City CA), and for insurers, including Aetna Inc. (Hartford CT). It provides some early evidence that President Barack Obama’s signature healthcare overhaul could be a long-term source of profit growth for managed care providers. “Now you’re actually seeing real numbers grow and that population start to take off,” said Betsy Pecor, portfolio manager at Eagle Asset Management (St. Petersburg FL). Companies “are actually seeing that growth.” About 8 million people have signed up for the plans, which are provided by commercial subscribers and come with income-based government subsidies, above the 2 million who had enrolled by January. Aetna and other insurers have said they lost money on the plans this year, but insurers are heading into new markets for 2015 to add customers.

          Many healthcare companies are better able to manage Obamacare now than they were last year, Pecor said. Profit estimates for healthcare companies for 2014 have jumped from up 8.3% at the start of January to up 12.2% now, one of just a few sectors with a 2014 earnings outlook that exceeds profit-growth forecasts at the start of the year, Thomson Reuters data showed. Earnings growth estimates for the whole S&P 500 this year have gone down slightly in that period, from 10.8% in January to 9.1% now. The upward revision is also the most of any sector except utilities, where estimates reflect a blow-out first quarter courtesy of home heating needs during the cold winter in North America. By contrast, the revisions to the health sector earnings reflect rising expectations for the second quarter and beyond. The healthcare sector jumped 39% in 2013, more than any other sector except consumer discretionaries. Healthcare is up 10.2% so far for 2014, outpacing the 6% rise for the wider S&P 500.

3-D MAMMOGRAM SCANS MAY DETECT MORE BREAST CANCER -- Hologic Inc.’s (Bedford MA) three-dimensional mammograms, when paired with traditional screening, caught more deadly breast cancers than standard scans alone and resulted in fewer women being called back for more testing, a study found. When combined, the two screening methods caught 41% more cancers than traditional mammography alone, according to research funded by Hologic and published last week in the Journal of the American Medical Association. With the combination approach, 15% fewer women had to get more tests because of unclear results, researchers said. The study is the largest to evaluate the effectiveness of 3-D mammography, a technology approved by U.S. regulators in 2011 that is not as widely available as conventional screening, the authors said. The method lets doctors see through the layers of the breast like the pages of a book to find cancers that may not be detected in traditional 2-D tests, they said. “We have a technology that is improving upon the main limitations of standard mammograms,” said lead study author Sarah Friedewald, section chief of breast imaging at Advocate Lutheran General Hospital (Park Ridge IL). “We now have a more accurate examination.”

          The U.S. Preventive Services Task Force, an independent medical advisory group to the government, in 2009 recommended against routine mammograms for women ages 40 to 49 who aren’t at an increased risk for breast cancer, while suggesting a mammogram once every two years for those 50 to 74. The guidelines recommended against annual screenings for women in their 40s because they are more likely to get false-positive results that can lead to unnecessary biopsies. The American Cancer Society suggests annual mammograms starting at 40. More than 232,000 women and 2,360 men will be diagnosed with breast cancer this year, according to the National Cancer Institute. About 40,000 will die. The 3-D technology, known as tomosynthesis, is designed to detect tumors that overlapping tissue can mask in conventional mammogram images. Currently, Hologic has the only approved 3-D mammogram device in the U.S. More than 1,100 of these devices are in use nationwide, said Peter Valenti, division president of Breast and Skeletal Health Solutions at Hologic. About six million women in the U.S. will be screened this year with a Hologic device, he said.

TRACKING WASHINGTON -- Two senior Republican lawmakers voiced support last week for the generic drug industry’s fight against a proposed U.S. rule requiring companies to change labels on products if they receive new safety information. Representative Bob Goodlatte, chairman of the House Judiciary Committee, and Senator Lamar Alexander, ranking member on the Senate’s Committee on Health, Education, Labor & Pensions, wrote to the White House’s Office of Management and Budget requesting justification for the cost-benefit analysis on the proposed rule by the Food and Drug Administration. If finalized, the FDA’s proposal would overturn long-standing regulations that prohibit generic drugmakers from updating safety data on labels without the changes first being made by the medicine’s original manufacturer. The FDA has said the change is designed to create parity between branded and generic drugmakers and make it easier for generic firms to pass on safety information. Generics say the proposed rule would open them to product liability lawsuits and raise the cost of products. Goodlatte and Alexander said in their letter that the FDA did not consider litigation-associated costs in its cost-benefit analysis. It cited figures from a report commissioned by the Generic Pharmaceutical Association (Washington DC) suggesting the costs of the proposal rise to $4 billion a year when litigation is included.

          In other news, the Obama administration plans to automatically renew for next year the health plans and premium subsidies that consumers obtained through the Affordable Care Act’s federal insurance exchange. The move, which will apply to most of the five million people who selected insurance through HealthCare.gov for 2014, will make it easier for consumers to stay in their plans and retain tax credits lowering the cost of coverage. It also will relieve pressure on the federal exchange, which was crippled during parts of its first enrollment period. But the decision could cause complications as the federal government tries to update consumers’ eligibility for tax credits. The Department of Health and Human Services said Thursday it would allow about 95% of people who signed up for coverage to be automatically re-enrolled in their current plan if they didn’t return to the site to switch plans. People who don’t come back to the site and report changes in income also would have their tax credits renewed based on information the federal government has on file about them.

FDA/EMA ROUNDUP -- The first robotic device that acts as legs to help paraplegics walk was cleared for sale by U.S. regulators. The device, called ReWalk, is a motorized “exoskeleton” approved for those whose lower body is paralyzed from a spinal cord injury, the Food and Drug Administration said in a statement. The product, from closely held Argo Medical Technologies Inc. (Marlborough MA), consists of a fitted, metal brace; motors at the hips, knees and ankles; and a backpack that contains the computer and power supply. About 200,000 people in the U.S. are living with a spinal injury, according to the Centers for Disease Control and Prevention. ReWalk weighs 46 pounds, only 5 pounds of which users feel from the backpack, according to Argo. The personal system costs $69,500, the company said.

          Elsewhere, MannKind Corp. (Valencia CA) won FDA approval to sell its inhaled insulin, culminating an almost decade-long effort, with a warning that the product shouldn’t be used by those with asthma or a serious lung disease. The FDA said it cleared MannKind’s Afrezza as a fast-acting insulin to be used at meal times for those with Type 1 and Type 2 diabetes. The drug labeling will warn that spasms in the airways of the lung have been seen in patients with asthma and chronic obstructive pulmonary disease and will advise against smokers using the medicine, the agency said in a statement. MannKind has spent almost eight years seeking approval of the diabetes therapy since starting late-stage clinical trials.

          Ranbaxy Laboratories Ltd. (Gurgaon IND) won FDA approval to make a generic version of Diovan, a blood pressure drug from Novartis AG, almost two years after the $3.5 billion medicine lost patent protection from low-cost competition. The agency approved Ranbaxy’s Ohm Laboratories in New Jersey to make the generic. Ranbaxy has held exclusive rights to copy Diovan for the first six months of the medicine’s generic period though it couldn’t manufacture the drug after plants in India failed inspections.

          And AstraZeneca Plc (London), the drugmaker that rejected a $117 billion takeover offer from Pfizer Inc., failed to win the backing of FDA advisers for an ovarian cancer treatment the company has resurrected for certain patients. Agency advisers voted 11-2 that AstraZeneca should complete a study meant to confirm olaparib’s benefit before the FDA considers approving the drug. While the U.K.-based company scrapped plans for the drug in 2011, it revived olaparib after deciding to reanalyze data on patients with a hereditary mutation of the BRCA genes.

MEDICAL STOCK SPOTLIGHT -- Medical Action Industries Inc. (Nasdaq) led advancing issues, soaring $6.78, or 97% over the week, to $13.80. Owens & Minor Inc. announced Wednesday it has agreed to acquire the company for about $208 million. Brentwood, NY-based Medical Action Industries makes custom procedure trays and minor procedure kits. Owens & Minor is a healthcare logistics company that provides services across the spectrum of medical products from disposable medical supplies to devices and implants. The Fortune 500 company’s annual revenues exceed $9 billion. Medical Action reported $287.8 million in net sales from continuing operations for the fiscal year that ended March 31, of which approximately 45% represented sales to Owens & Minor.

          Elsewhere, drug developer Aerie Pharmaceuticals Inc. (Nasdaq) surged $6.86, or 35%, to $26.58 after saying its single-drop eye treatment was shown to be superior to each of its two components in a mid-stage trial. The drug, Roclatan, combines Aerie’s other experimental glaucoma drug Rhopressa with the approved latanoprost. Patients treated with the drug experienced a significant reduction in fluid pressure inside the eye, compared with those treated with either latanoprost or Rhopressa. Bedminster, NJ-based Aerie Pharma said it would immediately start preparing for Roclatan’s late-stage trial.

          And Agile Therapeutics Inc. (Nasdaq) leaped $1.60, or 21%, to $9.25 after the women’s health specialty pharmaceutical company announced the U.S. Patent and Trademark Office issued a new patent for its Skinfusion transdermal delivery device, the contraceptive patch Twirla. “The granting of this patent further strengthens the patent protection of our proprietary Skinfusion transdermal technology used in our contraceptive patch, Twirla, currently in Phase 3 clinical development,” said Princeton, NJ-based Agile president and CEO Al Altomari. “The issuance of this patent demonstrates our commitment to protecting our intellectual property in our proprietary transdermal technology and is expected to provide protection into 2028.”

          But Alnylam Pharmaceuticals Inc. (Nasdaq) sank $7.78, or 11%, to $62.23. CEO John Maraganore sold 113,668 shares of the company’s stock on the open market, something that never sits well with other investors. That trade represented over half his holdings and shares were sold at an average price of $65.45, for a total value of about $7.44 million. Following the sale, the CEO now directly owns 106,320 shares of the company’s stock, valued at approximately $6,958,644. The sale was disclosed in a document filed with the Securities & Exchange Commission. Cambridge, MA-based Alnylam has a one year low of $30.65 and a one year high of $112.57. Alnylam is a biopharmaceutical company developing therapeutics based on ribonucleic acid interface (RNAi).

IPO SECTOR -- Included among recent SEC filings for initial public offerings, MacroCure Ltd. (Petach Tikva ISR) registered up to $75 million worth of common stock. The company plans to list on the Nasdaq Global Market under the symbol “MCUR.” The offering is being made via Credit Suisse AG, Jefferies LLC, Nomura Securities Inc., and Oppenheimer & Co. The Israeli company will use the proceeds to fund the ongoing late-stage trial of its CureXcell product and to establish manufacturing facilities in the U.S. MacroCure, which uses white blood cells from donor blood to promote wound healing, says its CureXcell product showed a 90% reduction rate in patients with deep wound infections in Israeli clinical trials. Since gaining approval in Israel, the treatment has been provided to more than 4,000 patients and no serious adverse events were reported, it said. A late-stage trial in the U.S. is set to be completed next year. Israeli healthcare companies have raised $475 million in 10 deals this year, according to data compiled by Bloomberg.

June 23, 2014 ...

MEDTRONIC TO BUY IRISH DEVICE MAKER COVIDIEN FOR $42.9 BILLION -- U.S. medical device manufacturer Medtronic Inc. (Minneapolis IN) has agreed to buy Ireland-based competitor Covidien Plc (Dublin) for $42.9 billion in cash and stock. The combined company would have its executive offices in Dublin, where it could benefit from Ireland’s lower corporate tax rates. But the merged company would continue to operate in Minneapolis, where Medtronic employs more than 8,000, the companies said in a statement. Medtronic is paying a 29% premium on Covidien’s stock price prior to news of the deal. Shares of both companies surged over the week. The deal is the latest in a series of acquisitions by medical-device manufacturers. The companies are seeking to expand their offerings and contain costs in response to price curbs forced by the nation’s new healthcare law. In April, Zimmer Holdings Inc. (Warsaw IN), an orthopedic device maker, announced that it was buying cross-town rival Biomet in a $13 billion deal. Medtronic makes pacemakers and insulin pumps, among other products. Covidien specializes in surgical equipment. As a result of savings from the deal, Medtronic said it would spend an additional $10 billion over the next decade in investments, acquisitions and research and development in the United States.

          “The medical technology industry is critical to the U.S. economy, and we will continue to invest and innovate and create well-paying jobs,” Omar Ishrak, Medtronic’s CEO, said in a statement. Efforts by domestic companies to use mergers to reincorporate overseas for tax reasons have raised concern among some U.S. lawmakers. Ireland taxes corporate income at 12.5%, compared with a top marginal rate of 39.6% in the United States, according to the tax advisory firm KPMG LLP (Amstelveen NLD). Pfizer Inc. (New York) recently tried unsuccessfully to acquire U.K.-based AstraZeneca Plc (London). Sen. Carl Levin (D-MI) and 13 other senators introduced a bill in May to restrict the deals. “These transactions are about tax avoidance, plain and simple,” Levin said in a statement. “Our legislation would clamp down on this loophole to prevent corporations from shifting their tax burden onto their competitors and average Americans.” Covidien closed the week up $18.09, or 25.12%, at $90.11 in New York. Medtronic rose $3.16, or 5%, to $63.86.

VALEANT BEGINS EXCHANGE OFFER FOR ALLERGAN -- Valeant Pharmaceuticals International Inc. (Laval Quebec) last Wednesday began a tender offer to acquire the shares of Allergan Inc. (Irvine CA), the maker of Botox, the first move in its attempted hostile takeover of the drugmaker. Valeant’s $54 billion cash-and-stock bid partly depends on Allergan removing anti-takeover defenses triggered if any one entity gains 10% or more of the company’s stock. It will be followed by an effort to replace most of the board and force a merger with Canada-based Valeant. Valeant has teamed with Bill Ackman, who heads hedge fund Pershing Square Capital Management LP (New York) and took a 9.7% stake in Allergan to drive the deal. “This offer, together with Pershing Square’s ongoing efforts to call a special meeting of Allergan stockholders, is part of Valeant’s clear path to complete a transaction,” Michael Pearson, Valeant’s CEO, said in a statement. Allergan urged shareholders to take no action, and said its board of directors will review the offer.

          Allergan shareholders would receive $72 in cash and 0.83 share of Valeant for every Allergan share they own. Valeant has twice raised its bid to buy Allergan as part of its strategy to become one of the world’s five biggest drugmakers. Allergan has rejected those offers and Valeant has responded by taking its attempt hostile. A special meeting to remove most of Allergan’s current board could come before the end of the year, Valeant said. Allergan holders have until 5 p.m. New York time Aug. 15 to tender their shares, though Valeant can extend the offer. Valeant shares closed the week up $2.33, or 2%, at $121.93. Allergan gained $3.53, or 2%, to $165.32.

TRACKING WASHINGTON -- Gilead Sciences Inc. (Foster City CA) should explain at a congressional hearing why a full course of its hepatitis C pill Sovaldi costs $84,000, two House Democrats said. Gilead, the biggest maker of HIV drugs, hasn’t sufficiently explained its reason for Sovaldi’s price for the standard 12 weeks of treatment, U.S. Representatives Henry Waxman, a California Democrat, and Diana DeGette, a Democrat from Colorado, wrote Thursday in a letter to House Energy and Commerce Committee Republican leaders. The lawmakers are concerned that paying for Sovaldi will be a drain on Medicare after researchers said the drug will increase spending by as much as 8%, or $6.5 billion, next year in the government’s health plan for the elderly and disabled. The analysis from Georgetown University (Washington DC) and Kaiser Family Foundation (Menlo Park CA) estimates 75,000 Medicare patients will get treated and notes other federal programs will get discounts. Gilead briefed Democrats in March on Sovaldi’s cost.

          Sovaldi, which costs $1,000 a pill, is the first all-oral hepatitis C medicine on the market for some patients with a goal of being more convenient and effective than older treatments requiring injections. The drug cured 90% of patients in clinical trials with certain types of hepatitis, including the most common form. About 3.2 million Americans have chronic hepatitis C, which can cause liver cirrhosis, according to the Centers for Disease Control and Prevention. Hearings would help them understand the implications of Sovaldi’s high cost, Waxman and DeGette wrote.

FDA/EMA ROUNDUP -- Edwards Lifesciences Corp. (Irvine CA) said the Food and Drug Administration approved its next generation heart valve replacement system for high risk patients and those deemed too frail to endure open heart surgery. The FDA approved the Sapien XT transcatheter aortic valve replacement (TAVR) system, Edwards said, adding that it will make the device immediately available to patients with severely diseased aortic valves. U.S. physicians had long been waiting for the updated version of the original Sapien as the XT employs a smaller, potentially easier to maneuver, catheter than its predecessor. The XT has been available since 2010 in Europe, where medical devices tend to receive much swifter approvals than in the United States. Wall Street has also been looking for this approval as the XT is seen as crucial for competing with Medtronic Inc.’s CoreValve, which uses a smaller catheter than the original Sapien. Edwards shares closed the week up $6.94, or 9%, at $85.30.

          Elsewhere, Cubist Pharmaceuticals Inc. (Lexington MA) won FDA approval for its antibiotic Sivextro to treat certain skin infections, including potentially fatal MRSA. The agency cleared Sivextro to combat acute bacterial skin infections caused by Gram-positive bacteria, the agency said. Sivextro is the second antibiotic to treat MRSA to hit the market in a month. MRSA is a staph infection often acquired in the hospital that is resistant to commonly used antibiotics. The ability of bacteria to mutate and resist treatment is one of the most serious threats to human health, according to the Centers for Disease Control and Prevention.

          Drug and device makers who send social media messages on services like Twitter will be required to include the risks and benefits of their products when they do so, the FDA proposed last week in two draft guidelines. That means packing that information inside the strict 140-character limit of the social media site from Twitter Inc. (San Francisco). Drugmakers have been awaiting the guidelines since the FDA held a public meeting in 2009 to gather input on social media promotion. Companies have avoided tweeting about products as they wait on the FDA, Lori Leskin, a partner at the law firm Kaye Scholer LLP in New York, said. “I think this is clear enough guidance you’ll start seeing more tweets,” Leskin said. “It’s the more significant drugs that do have black box warnings, that do have more significant risk, that are used in limited populations that this won’t be appropriate for.” Single tweets that tout a drug’s benefit must include the most pressing risks associated with the therapy and a link to a full description of potential harm.

          And the FDA said all testosterone products on the market should include in their labels a general warning about the risk of blood clots in veins. The agency cited post-market reports of such clots for the warning. The FDA said that while testosterone products already carry a warning about the risk of clots related to a condition that sometimes occurs with testosterone treatment, the latest reports of clots were unrelated to that condition, called polycythemia. Polycythemia refers to an abnormal increase in the number of red blood cells that sometimes occurs with testosterone treatment. Testosterone products are also at the center of an FDA investigation which is looking at the risk of stroke, heart attack and death in men taking these drugs. The FDA said the new warning was not related to the ongoing investigation.

MEDICAL STOCK SPOTLIGHT -- Cellectis (Nasdaq) led advancing issues surging $5.15, or 58% over the week, to $14.10. The upward move came after Pfizer Inc. bought rights to the Paris-based company’s experimental CAR-T projects, following Novartis AG into a new area of cancer immune therapy. Pfizer will give Cellectis $80 million upfront, plus milestone payments of as much as $185 million for each product that hits certain development and commercial targets, the drugmakers said. Pfizer also agreed to buy about 10% of the French biotech company’s capital through newly issued shares at 9.25 euros apiece, 49% above its close prior to news of the deal. The deal sets up a challenge between Pfizer and Novartis, the world’s two biggest drugmakers. The Swiss company is already testing a CAR-T therapy, which involves taking T cells from blood, engineering them to identify proteins on cancer cells, then putting them into the body to seek and destroy a tumor. Technology from Cellectis will simplify the delicate process of engineering those cells, Pfizer said. CAR-T refers to Chimeric Antigen Receptor T-cell immunotherapies.

          Elsewhere, Insmed Inc. (Nasdaq) soared $6.33, or 51%, to $18.74 after the Food and Drug Administration granted its lead investigational drug Arikayce the breakthrough designation following phase II studies for treatment-resistant nontuberculous mycobacterial infection. A breakthrough designation could allow Monmouth Junction, NJ-based Insmed to bring its inhaled drug to market without having to run a costly and time-consuming phase III study, so this is a potentially key win for the company. But while its phase II secondary endpoints, which focused on negative NTM cultures after 12 and 24 weeks, did favor Arikayce compared to the control arm, it still failed to meet its primary endpoint of a statistically significant change in mycobacterial density using a seven-point scale over 12 weeks, and resulted in far more adverse events than the control group.

          And StemCells Inc. (Nasdaq) leaped $51% to $2.14 on news of the company’s lead drug HuCNS-SC showing strong results in a phase I/II trial for treating macular degeneration (AMD). The Palo Alto, CA-based company announced the results at the International Society for Stem Cell Research. AMD impairs visual functions and has become the major cause of blindness in adults over the age of 55. The disease is estimated to affect about 10 million people in the U.S. who are over the age of 50. The trials conducted were targeted to measure the safety and efficacy of HuCNS-SC for patients suffering from dry AMD. Results from the tests showed that the rate of Geographic Atrophy (GA), which is an advanced stage of dry AMD, witnessed a 65% reduction compared to the disease’s natural growth rate. Moreover, compared to the controlled eye, the treated eye saw a 70% reduction in GA. Patients were reported to have better visual function at the end of the treatment, judged by their ability to differentiate between light and dark shades.

          But Vital Therapies Inc. (NYSE) fell back to earth, plummeting $5.81, or 18%, to $26.33. The company soared 75% the previous week following news that Merck & Co. agreed to buy Idenix Pharmaceuticals Inc. for $3.85 billion to gain its top hepatitis C experimental medicines. Vital Therapies is a biotherapeutic company developing a cell-based therapy targeting the treatment of acute liver failure and some analysts believe it too may be a takeover target in the near future. San Diego, CA-based Vital Therapies has been the subject of a number of recent research reports. Analysts at Bank of America initiated coverage on shares of Vital setting a “Buy” rating on the stock. Separately, analysts at Canaccord Genuity initiated coverage, also setting a “Buy” rating and a $20.00 price target.

IPO SECTOR -- Included among initial public offerings which were priced last week, Zafgen Inc. (Cambridge MA) opened for trading at $20 after pricing 6 million shares of its common stock at a price to the public of $16.00 per share, the high end of the expected $14-$16 range. The size of the offering was raised from 5 million shares. The shares trade on the Nasdaq Global Market under the symbol “ZFGN.” The IPO is the 10th by a Massachusetts-based biotech firm so far this year, setting a record. Leerink Partners LLC and Cowen and Company LLC are acting as joint book-running managers of the offering. Zafgen is a biopharmaceutical company focused upon patients affected by obesity who aren’t helped by other treatments. Its lead drug, called beloranib, has been granted orphan drug designation in the U.S. for a rare genetic condition known as Prader-Willi, which causes severe obesity, but the company ultimately plans to develop a drug for more common causes of obesity. Zafgen shares closed the week up $3.80, or 24%, at $19.80.

June 16, 2014 ...

MERCK TO BUY HEPATITIS C DRUGMAKER IDENIX FOR $3.85 BILLION -- Merck & Co. (Whitehouse Station NJ) announced a definitive agreement to acquire Idenix Pharmaceuticals Inc. (Cambridge MA) at $24.50 a share for cash, offering a hefty premium of about 270% over the company’s closing price prior to news of the deal. It’s the highest premium on record for any healthcare deal of at least $100 million, according to data compiled by Bloomberg. The acquisition will strengthen Merck’s hepatitis C portfolio and help it stem the revenue decline resulting from patent expiry of major drugs. The company will be conducting phase 3 trials for a combination treatment for hepatitis C, which could potentially rejuvenate the pharmaceutical giant’s revenue growth. The clinical data for a combination of drugs MK-5172 and MK-8742 have shown high cure rates among patients with genotype 1 of the disease, and this has encouraged Merck to move to phase 3 trials. Acquisition of Idenix could be a game changer considering the possibility that a combination treatment leveraging Idenix’s drugs could potentially reduce the treatment window to four to six weeks. With the Idenix deal, Merck is eying the potentially $20 billion market for hepatitis C treatments after agreeing last month to sell its consumer-health division to Germany’s Bayer AG. The moves signal the $169 billion company is increasing its focus on riskier businesses that have the potential to yield bigger returns.

          “If you’ve got a $20 billion industry and you can pay $4 billion to get into it, I think that’s great,” said Scott Redmond, founder of Richmond, VA-based Redmond Asset Management LLC. “It’s a huge market and for the next 10 years or so there are going to be very, very few competitors whereas in the consumer products, there are competitors all over the place.” Idenix’s lead drug, IDX21437, works by stopping the hepatitis C virus from replicating within the body. Combining that with Merck’s existing regimen could improve potency and reduce treatment duration, said Brian Abrahams, an analyst at Wells Fargo & Co. That will better position Merck to compete against rivals such as Gilead Sciences Inc. (Foster City CA) in the race to develop a more effective treatment for the estimated 170 million hepatitis C patients worldwide. Idenix closed the week up $16.41, or 270%, at $23.64. Merck rose 39 cents, or 1%, to $58.24.

SENATE PASSES BILL TO STOP PREVENTABLE VETERAN DEATHS -- The Senate last week overwhelmingly passed legislation aimed at increasing veterans’ access to health care and holding accountable bad actors in the Department of Veterans Affairs. The legislation passed 93-3 and represents rare cooperation between the House and Senate, raising hopes that Congress is moving swiftly toward a VA reform compromise to send to the president’s desk. The Senate legislation largely mirrors similar proposals from the House, and lawmakers and aides do not expect a knock-down political fight as the two chambers iron out their discrepancies over the coming days. “We can work on our differences with the House and send this to the president’s desk as soon as possible,” said Sen. Patty Murray (D-WA), a member of Senate leadership and a former Veterans Affairs’ Committee chairwoman. “This is an important compromise.” Current Veterans Affairs’ Committee Chairman Bernie Sanders (I-VT) said he is “certain” he can work with House VA leaders Jeff Miller (R-FL) and Mike Michaud (D-ME) to come to an agreement between the two chambers. But Miller is vowing to find the billions needed to pay for it--which could pose a challenge. “We’ll pay for it. We’ve got to pay for it,” he said. “We’ll have to find a way.”

          But if the Senate’s bill eventually becomes law, there could be a large tab for Washington. The Congressional Budget Office estimated last week that increased veterans healthcare access could cost the federal government an additional $50 billion a year. Though the Senate often moves with snail-like speed on legislation, the politically sensitive issue of veterans affairs spurred uncharacteristically quick action aimed at boosting veterans’ access to health care following revelations about wait times and falsified appointment records at veterans’ hospitals nationwide. The scandal ousted Veterans Affairs Secretary Eric Shinseki and threatened to further prove that Congress can’t do anything in an election year. But last Wednesday all 100 senators quickly agreed to allow a speedy afternoon vote on the bill. The vote was held open for more than an hour so that nearly every member of the Senate could register their approval for the popular legislation, which required only a simple majority to pass. Three Republicans opposed the bill: Sens. Bob Corker of Tennessee, Ron Johnson of Wisconsin and Jeff Sessions of Alabama.

TRACKING WASHINGTON -- The House Oversight and Government Reform Committee released figures on Thursday showing that the majority of nonprofit health-insurance cooperatives created for the Affordable Care Act hadn’t met their anticipated enrollment numbers. The committee obtained figures from 23 cooperatives, showing that 14 of them didn’t reach projected enrollments for 2014 in the $2 billion Consumer Operated and Oriented Plan, which was established by the ACA to foster the creation of nonprofit health insurance issuers to offer plans to the individual and small group markets. “We know that most of the co-ops failed to meet their expected enrollment numbers with 11 co-ops spending more than $10,000 for each person they ultimately enrolled,” Rep. Darrell Issa (R-CA), who chairs the Oversight Committee, said in a statement. “Enrollment figures to date raise serious questions about how these co-ops plan on staying solvent and that taxpayers will ever be repaid.” Tennessee-based Community Health Alliance Mutual Insurance Co. (Knoxville) had expected more than 25,000 enrollees, but only had 354 as of April 1. The company received over $73 million in funding under the program, or more than $207,000 for each enrollee, the figures showed.

          Among the cooperatives that exceeded enrollment estimates, Health Republic Insurance of New York saw the most with over 112,000 enrollees, against an estimate of just under 18,000. Health Republic also received the most funding of any of the 23 cooperatives at more than $174 million. The second- and third-largest funding recipients didn’t fare as well in enrollments, however. Land of Lincoln Health (Chicago), which received about $160 million in funding, had 3,630 enrollees, falling short of its initial estimate of 36,277, although that figure was later revised down to 4,375. Minuteman Health (Boston), the recipient of more than $156 million in funding, had 1,435 customers sign on, well less than the 37,003 projected.

FDA/EMA ROUNDUP -- Medtronic Inc. (Minneapolis MN) said Thursday that the Food and Drug Administration approved its artificial heart valve, CoreValve, for use in more patients who face serious risks from open-heart surgery, the standard treatment. Medtronic’s implant is a less invasive approach to replacing diseased aortic heart valves, which can often lead to heart failure, blood clots and sudden death. The FDA first approved the implant in January, but only for patients who are so sick or frail that surgery is not an option. The additional FDA approval allows Medtronic to market its device to a much broader group of patients who are healthier but would still face serious risks from surgery.

          Elsewhere, the FDA on Friday approved Navidea Biopharmaceuticals Inc.’s (Dublin OH) imaging agent, Lymphoseek, to help physicians determine the extent of head and neck cancer. Lymphoseek was approved in the U.S. last year in injectable form in patients with breast cancer or melanoma. The radioactive agent can now be used to guide the testing or biopsy of lymph nodes (called sentinel nodes) closest to the primary tumor in patients with cancer of the head and neck, the FDA said. A sentinel lymph node is the first lymph node to which cancer cells are most likely to spread from a primary tumor.

          Geron Corp. (Menlo Park CA), a biotech company with no marketed products, rose the most in about three months after the FDA removed a partial hold on a clinical trial for its drug to treat a rare form of leukemia. Geron is developing its drug imetelstat for a form of leukemia called myelofibrosis. The FDA lifted the freeze after the Mayo Clinic, the trial’s sponsor, gave the agency more information about the reversibility of the experimental drug’s toxic effect on the liver, Geron said. Myelofibrosis is a bone marrow cancer that can lead to severe anemia, fatigue and an enlarged spleen and liver. After patients taking the drug showed low-grade liver function test abnormalities, the FDA halted dosing of imetelstat for all patients except those who were showing a benefit from it. Geron closed the week up 90 cents, or 43%, at $2.98. The company has almost tripled in the past 12 months.

          And Orexigen Therapeutics Inc. (San Diego CA) said the FDA delayed a decision on the marketing application for its obesity drug, contrave, by three months, sending the company’s shares down 10% over the week. The FDA indicated that the extension was needed to reach agreement on packaging and other post-marketing obligations related to the evaluation of potential heart risks associated with the drug, Orexigen said. Analysts said they still expected contrave to be approved, as the FDA and Orexigen were in talks over the package insert and other post-marketing requirements. The FDA, which rejected the drug in 2011, had asked Orexigen to conduct additional trials to assess potential heart risk of the drug. Orexigen’s shares closed the week down 66 cents at $5.85.

MEDICAL STOCK SPOTLIGHT -- Karyopharm Therapeutics Inc. (Nasdaq) led advancing issues, leaping $21.95, or 87% for the week, to $47.12. The development-stage biotech is enjoying a huge influx of positive sentiment following the release of its initial Phase 1 data for Selinexor. The drug, which is a selective inhibitor of nuclear export designed to treat multiple myeloma, has been part of an eight-patient trial in conjunction with a low dosage of dexamethasone. The Natick, MA-based company reported a clinical benefit response rate--a category combining stringent complete responses (one patient), partial responses (three patients), and minor responses (two patients)--of 75%. All patients had advanced hematological malignancies and had received a median of 5.5 prior rounds of therapy for multiple myeloma, and all but one had received failed stem cell transplants. Although the news is promising, analysts point out that it’s the later-stage trials that are more important for Selinexor’s success.

          Elsewhere, Vital Therapies Inc. (NYSE) rocketed $13.81, or 75%, to $32.14. Earlier in the week, Merck & Co. agreed to buy Idenix Pharmaceuticals Inc. for $3.85 billion to gain its top hepatitis C experimental medicines. Vital Therapies is a biotherapeutic company developing a cell-based therapy targeting the treatment of acute liver failure and some analysts believe it too may be a takeover target in the near future. San Diego, CA-based Vital Therapies has been the subject of a number of recent research reports. Analysts at Bank of America initiated coverage on shares of Vital setting a “Buy” rating on the stock. Separately, analysts at Canaccord Genuity initiated coverage, also setting a “Buy” rating and a $20.00 price target. Finally, analysts at William Blair initiated coverage setting an “Outperform” rating and a $28.00 price target.

          And Receptos Inc. (Nasdaq) surged $14.10, or 54%, to $40.10 on exciting phase 2 data for its lead drug candidate RPC1063 in multiple sclerosis. And with a phase 3 trial pitting RPC1063 against Biogen Idec.’s Avonex ongoing, there is some exciting data ahead too. The phase 2 trial met its primary and secondary endpoints and showed what appeared to be a pretty clean safety profile. Of course, the big question is whether San Diego-based Receptos can compete effectively in a multiple sclerosis market littered with heavyweights like Biogen, Novartis AG, and Teva Pharmaceutical Industries.

          But Orexigen Therapeutics Inc. (Nasdaq) fell 10% to $5.85--the most in three years--after regulators pushed back a decision on whether to approve the company’s obesity drug NB32. La Jolla, CA-based Orexigen had gained 6.7% in the previous 12 months. The Food and Drug Administration extended its review to work out an agreement with Orexigen on post-marketing obligations related to evaluating the drug’s effect on the heart, the company said in a statement. The new decision date is Sept. 11. Osaka, Japan-based Takeda Pharmaceutical Co., Asia’s largest drugmaker, would market the weight-loss pill in the U.S.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, HealthEquity Inc. (Draper UT), a custodian of health-savings accounts, registered up to $100 million worth of common stock via JPMorgan Securities LLC and Wells Fargo Securities LLC. The company plans to list on the Nasdaq Global Market under the symbol “HQY.” HealthEquity’s largest shareholder is Berkley Capital. Berkley first invested in HealthEquity in 2006 and held about 36.8% of HealthEquity’s voting shares as of May 31. In its filing, the company discussed the expansion of health-savings accounts and noted that it is the integrated Health Systems Agency (HSA) platform for 20 of the nation’s 50 largest health plans. The company’s revenue was $20.2 million for the quarter ended April 30, up from $14.6 million a year earlier, while net income and comprehensive income rose to $2.7 million from $1.8 million.

June 9, 2014 ...

HOSPITAL CHARGES SURGE FOR COMMON AILMENTS, DATA SHOW -- The charge to treat Medicare patients with chest pain at U.S. hospitals rose 10% to $18,568 in just a year, the biggest rise seen among the most common inpatient procedures, according to federal data. Average charges for most hospital services, meanwhile, rose less than 5% from 2011 to 2012, according to a report released last week by the U.S. Centers for Medicare and Medicaid Services. It is the second year CMS has released the data, gathered from more than 3,000 hospitals that take patients on Medicare, the U.S. program for the elderly and disabled. Last year, CMS reported that hospital pricing for medical care varied widely, and that trend continued in the latest report. In California alone, for instance, the price of treating chest pain averaged $58,988 in the Sacramento area and $11,619 around Los Angeles, according to the fiscal 2012 data. The numbers “provide a better understanding of Medicare utilization, the burden of chronic conditions among beneficiaries and the implications for our healthcare system, and how this varies by where beneficiaries are located,” said Bryan Sivak, chief technology officer for the Department of Health and Human Services, which oversees Medicare.

          Medicare released data on hospital charges for the first time last year. Medicare and private insurance companies tend not to pay the full amount of what hospitals bill. The average Medicare payment for chest pain is $2,874, according to the data. Last week, the government also made available information on outpatient services and chronic conditions. The release, required under the Patient Protection and Affordable Care Act, came during the annual Health Datapalooza conference that brings together technology experts and government officials to discuss trends in health care. At the conference, the Obama administration also announced a platform called openFDA, which includes data on millions of drug-related adverse events and errors reported to the Food and Drug Administration by doctors and members of the public from 2004 to 2013. Some observers say the hospital charge data may also, in part, reflect a huge shift among hospitals. The industry has been caught up in the biggest wave of mergers since the 1990s, a reaction, in part, to President Obama’s signature healthcare law.

FIRST QUICK DNA TEST DIAGNOSES BOY'S PUZZLING ILLNESS -- A 14-year-old boy’s turnaround and quick recovery after mysteriously being stricken by brain-inflaming encephalitis--which led to him being hospitalized for six weeks and put into a medically induced coma after falling critically ill--shows that the newest generation of DNA analysis tools can be harnessed to reveal the cause of a life-threatening infection even when physicians have no suspects. The quick diagnosis and successful treatment of the adolescent just 48 hours after cerebrospinal spinal fluid and blood were received for analysis portends the broader application of powerful, “next-generation sequencing” (NGS) techniques in solving infectious disease mysteries, not only in cutting-edge research labs, but also in clinical laboratories accessible to hospital physicians everywhere, according to Charles Chiu, MD, PhD, a professor of laboratory medicine at the University of California, San Francisco. Chiu is senior author of the case study, published online in the New England Journal of Medicine (NEJM) on June 4, 2014. The workflow pipeline developed in Chiu’s UCSF laboratory to streamline genetic sleuthing of disease pathogens with NGS dramatically cut the time between sample collection and actionable diagnosis and helped a medical team at the University of Wisconsin save the young patient’s life.

          The NEJM study reflects the convergence of faster DNA sequencing, ever-growing genome databases for identifying pathogens and other organisms, and more sophisticated computational analysis tools to quickly analyze millions of data points. The protocol enabled rapid sequencing and simultaneous identification of all DNA in the patient samples without culturing or targeting for specific infectious disease agents. “From the perspective of cost and turnaround time, this is a very powerful technology that has become practical to implement routinely in clinical laboratories,” Chiu said. Some clinical labs now offer NGS testing to identify cancer mutations in clinical trials and to identify mutations underlying birth defects, but until now NGS has been regarded as too slow and laborious to be useful for routine infectious disease diagnosis. Study co-author Joseph DeRisi, PhD, chair of biochemistry and biophysics at UCSF, a Howard Hughes Medical Institute (HHMI) investigator, and a leader in using new genomics techniques to identify previously unknown pathogens, such as the SARS coronavirus, said that at a cost of a few thousand dollars, essentially any pathogen now can be detected with a single test. “This is one test to rule them all,” DeRisi said.

TRACKING WASHINGTON -- Sylvia Mathews Burwell was confirmed last week by the U.S. Senate as the Secretary of the Department of Health and Human Services, replacing Kathleen Sebelius and signaling a new stage for Obamacare. The vote for Burwell, currently President Barack Obama’s budget chief, was 78-17. A majority of Republicans supported her while making clear their votes didn’t reflect backing for the Patient Protection and Affordable Care Act, known as Obamacare. Burwell, 48, assumes control of a government agency with close to a $1 trillion annual budget and programs touching the lives of every American. Her priority is the Affordable Care Act, which enters its second year of enrollment under continuing political attack and with a technology infrastructure that remains a work in progress. “Ms. Burwell has a reputation for competence, and she is going to need it,” Senator Lamar Alexander, a Tennessee Republican, said in a floor speech. “She is being asked to oversee a big mess this administration has created in health care and so far has lacked the leadership to clean up.”

          In other news, four million people are projected to pay the U.S. penalty for not carrying health insurance next year, about one-third less than previously estimated, after the Obama administration created exemptions from the fine. The Patient Protection and Affordable Care Act requires most Americans to carry insurance starting this year, or pay a tax of as much as 1% of income. The Congressional Budget Office lowered its estimate of the number of people who will pay that fine in a report released last week, saying the government will take in $3 billion less than expected from the payments. <b>The requirement to carry insurance is the heart of the law,</b> part of a deal struck with U.S. insurers to guarantee coverage to anyone regardless of their health. Late last year, the Obama administration carved out a series of “hardship” exemptions from the requirement, such as home foreclosure, bankruptcy or a death in the family.

FDA/EMA ROUNDUP -- Shares of Halozyme Therapeutics Inc. (San Diego CA) jumped 13% last week after the U.S. Food and Drug Administration lifted a hold on a trial testing an advanced version of the company’s flagship drug delivery technology. The company said it would restart enrolling patients for the trial following the approval of an amended study design by an independent review board. The agency imposed the hold in April, after Halozyme voluntarily halted the mid-stage study over concerns of a possible difference in the rate of blood clots found in pancreatic cancer patients receiving Halozyme’s treatment and those given approved cancer therapies. Halozyme said it had revised its study design to include another main goal, which will assess the rate of blood clots in patients receiving the therapy. The trial is testing a more potent form of Halozyme’s existing technology to deliver chemotherapy drugs intravenously and prolong the effectiveness of its synthetic enzyme, Hylenex, in the blood stream. Hylenex helps in the absorption of other medications by breaking down a protective barrier that surrounds cartilage and tumors. Halozyme closed the week up 99 cents at $8.89.

          Elsewhere, Prosensa Holding NV said the FDA outlined an accelerated regulatory approval path for its most advanced drug, aimed at treating a muscle disorder. The Netherlands-based company said it planned to conduct two more studies, and file for U.S. marketing approval later this year. Prosensa said it would file for European approval in the near future. Like Sarepta Therapeutics Inc.’s (Cambridge MA) eteplirsen, Prosensa’s drug to treat Duchenne muscular dystrophy (DMD) will probably win U.S. approval in 2015 at the earliest, leaving each with about half of the market, said Jan De Kerpel, an analyst at KBC Securities in Brussels. De Kerpel expects the drug to generate peak global sales of 1 billion euros ($1.36 billion) by the end of the decade, and estimates it will cost about 200,000 euros a year per patient. Prosensa’s treatment will likely fare better than Sarepta’s in Europe as it holds a patent advantage in the region, he said. Drisapersen, like eteplirsen, is designed to enhance the production of a protein called dystrophin, the lack of which causes DMD. Prosensa closed the week off 4 cents at $10.99 in New York.

          The FDA approved a drug from Takeda Pharmaceutical Co Ltd. (Osaka JPN) to treat the chronic debilitating inflammatory diseases ulcerative colitis and Crohn’s disease. The FDA said it had approved the drug, vedolizumab, which will be sold under the brand name Entyvio, for patients who failed to gain adequate relief from one or more current standard treatments. “Although there is no cure for these conditions, this approval provides an important new treatment option for patients who have had an inadequate response to conventional therapy to help control their symptoms,” said Amy Egan of the FDA. The injected biotech drug, from a class known as integrin receptor agonists, works by blocking circulating inflammatory cells from reaching areas of inflammation in the digestive tract. The most serious risks associated with Entyvio include serious infections, hypersensitivity and infusion-related reactions and liver toxicity, the agency said.

          Across the pond, European regulators said on Friday they had recommended approval of Roche Holding AG’s (Basel CHE) drug Gazyvaro, or obinutuzumab, for patients with chronic lymphocytic leukemia, boosting the Swiss group’s line-up of new cancer treatments. The new medicine is an improved follow-on medicine to Roche’s $7 billion-a-year Rituxan, or MabThera, and Roche is hoping to switch as many patients as possible to the newer product before Rituxan faces competition from cheaper copies. The European Medicines Agency also gave a green light to Biogen Idec Inc.’s (Cambridge MA) Plegridy for multiple sclerosis and a recommendation for conditional approval for PTC Therapeutics Inc.’s (S. Plainfield NJ) Translarna for Duchenne Muscular Dystrophy. Novartis AG (Basel CHE) received a mixed bag of news, with its Alcon eyecare unit winning a recommendation for Simbrinza, a treatment for open-angle glaucoma or ocular hypertension, but heart treatment serelaxin was rebuffed once again following further re-examination by EU experts. Recommendations for marketing approval by the European Medicine Agency’s Committee for Medicinal Products for Human Use (CHMP) are normally endorsed by the European Commission within a couple of months.

MEDICAL STOCK SPOTLIGHT -- Small cap Applied Genetic Technologies Corp. (Nasdaq) led advancing issues, skyrocketing $7.72, or 56% for the week, to $21.42. Analysts said it was hard to explain why the company suddenly jumped, beyond the President and CEO, Sue Washer, saying the company is “on track.” Last Monday, AGTC reported revenues of $232,000 versus $116,000 for the same period in 2013 along with a net loss of $3.6 million versus $1.6 million. Ms. Washer commented: “We successfully completed our initial public offering in early April, which provides us with the financial resources to support our strategy of developing a portfolio of gene therapy-based products for orphan eye diseases.” The Alachua, Fl-based company is currently focused on preclinical product candidates designed to treat a trio of diseases, including X-linked retionschisis (XLRS), Achromatopsia (ACHM), and X-linked retinitis pigmentosa (XLRP), and expects to have clinical data on XLRS in mid-2015 and ACHM in late 2015.

          Elsewhere, Vital Therapies Inc. (NYSE) shares shot up $6.33, or 53%, to $18.33 after an insider bought additional shares in the company, AR Network reports. Specifically, Director Muneer A. Satter bought shares of the stock at an average price of $13.16 per share, with a total value of $190,820.00. San Diego, CA-based Vital Therapies has been the subject of a number of recent research reports. Analysts at Bank of America initiated coverage on shares of Vital setting a “Buy” rating on the stock. Separately, analysts at Canaccord Genuity initiated coverage, also setting a “Buy” rating and a $20.00 price target. Finally, analysts at William Blair initiated coverage setting an “Outperform” rating and a $28.00 price target. Analysts expect that Vital Therapies will post $-2.47 EPS for the current fiscal year. Vital Therapies is focused on developing a cell-based therapy targeting the treatment of all forms of acute liver failure.

          And Vanda Pharmaceuticals Inc. (Nasdaq) surged $3.42, or 33%, to $13.71 after the European Medicines Agency accepted the company’s Marketing Authorization Application for Hetlioz, or tasimelteon, a medication that treats non-24-hour sleep-wake disorder. The disorder affects blind people who have problems adjusting their sleep cycles to natural circadian rhythms. Vanda said the disorder affects up to 95,000 people in the U.S. and 130,000 people in Europe. The Food and Drug Administration approved Hetlioz in January, and Washington, DC-based Vanda started selling the medication in the U.S. on April 21. Analysts polled by Thomson Reuters expect the drug to achieve peak sales of $295 million by 2018.

          But Retrophin Inc. (Nasdaq), a predominantly clinical-stage biopharmaceutical company focused on the development of therapies to treat rare disease, tumbled $4.28, or 29%, to $10.34 following a Form 4 filing with the Securities and Exchange Commission that showed CEO Martin Shkreli sold shares of common stock. Shareholders were miffed to discover that Shkreli on May 30 sold 292,400 shares of Retrophin stock at $15.14 per share for net proceeds of more than $4.4 million. The sale, which was filed on June 3 with the SEC, represented approximately 9.3% of Shkreli’s total holdings in the company. On a more positive note, New York-based Retrophin’s recently announced licensing agreement for kidney stone prevention treatment Thiola with privately held Mission Pharmacal is a step in the right direction.

IPO SECTOR -- The initial public offering for Radius Health Inc. (Cambridge MA) opened for trading at $8.03 Friday after pricing 6.5 million shares of its common stock at a public offering price of $8.00 per share, in-line with the expected pricing. Jefferies and Cowen and Company are acting as joint book-running managers and underwriters for the offering. Shares are trading under the symbol “RDUS” on the Nasdaq Global Market. Radius Health describes itself as a science-driven biopharmaceutical company focused on developing novel differentiated therapeutics for patients with osteoporosis as well as other serious endocrine-mediated diseases. The company’s lead product candidate is abaloparatide (BA058), a bone anabolic for the treatment of osteoporosis delivered via subcutaneous injection, which Radius refers to as Abaloparatide-SC. The company is currently in Phase 3 development of Abaloparatide-SC and expects to announce top-line data from this study in late 2014. If the results are positive, they plan to submit a new drug application, or NDA, in the United States, and a marketing authorization application, or MAA, in Europe, in mid-2015. The company holds worldwide commercialization rights to Abaloparatide-SC, other than in Japan, and with a favorable regulatory outcome, anticipates the first commercial sales of Abaloparatide-SC will take place in 2016.

June 2, 2014 ...

PFIZER PULLS ASTRAZENECA BID; PONDERS NEXT MOVE -- Pfizer Inc. (New York) dropped its pursuit of British rival AstraZeneca Plc (London), leaving both drugmakers to overcome aging pipelines and market pressures on their own. Pfizer had been chasing AstraZeneca since November in an effort to create the world’s biggest pharmaceutical company. Pfizer last proposed a deal valued at $120 billion. But AstraZeneca was able to run out the clock on last Monday’s deadline under U.K. takeover rules for reaching an agreement. Under those rules, Pfizer could submit another offer for AstraZeneca in six months. Pfizer Chairman and CEO Ian Read didn’t rule out resuming discussions with AstraZeneca but said Pfizer was going to focus on “lots of great opportunities” for growth inside the company and to look at other potential deals. “We are now moving on. We have no idea whether we’d be interested in AstraZeneca at any point in the future,” Mr. Read said. AstraZeneca Chairman Leif Johansson reiterated the company’s belief in its own growth prospects and especially its “rapidly progressing pipeline” of experimental drugs. “We welcome the opportunity to continue building on the momentum we have already demonstrated as an independent company,” he said.

          Industry observers said the two companies’ separate paths will be wobbly. Each company will need to win approval for promising--but risky--drugs in development. The companies also will probably look for other deal-making opportunities, which Pfizer’s failed pursuit of AstraZeneca demonstrates aren’t a certainty. AstraZeneca is expected to move quickly to examine strategic and other moves that could help keep its stock elevated--partly a consequence of Pfizer’s bidding for the company--and protect it from another unwanted approach. AstraZeneca recently hired Centerview Partners LLC (New York) to advise the drugmaker on potential deals, a person familiar with the matter said.

LILLY, SANOFI TAKE STEPS TOWARD GENERIC CIALIS -- Cialis maker Eli Lilly & Co. (Indianapolis IN) has struck a licensing deal allowing French drugmaker Sanofi SA (Paris) to sell a nonprescription version of the impotence drug Cialis in major markets if regulators approve. The prescription erectile-dysfunction drug garnered $2.2 billion in global sales last year, surpassing rival Viagra, which had sales of $1.9 billion. The companies say over-the-counter Cialis could provide easier treatment access for impotence sufferers, and could also help stem the illicit online sale of fake or stolen Cialis. The few over-the-counter options currently found in pharmacies include non-Food and Drug Administration-approved dietary supplements that claim to enhance male potency, such as ExtenZe and Libido-Max. Sanofi is acquiring the exclusive rights to seek regulatory approval for over-the-counter Cialis in the U.S., Europe, Canada and Australia, and to begin selling it after the expiration of certain patents for tadalafil, Cialis’s generic name. Patents are due to expire no sooner than 2017 in the U.S. and Europe.

          But the OTC Cialis project could face hurdles, including safety concerns. Sanofi will have to demonstrate to government drug regulators that men can correctly decide whether to take the drug--and use it safely--without a doctor’s guidance. Cialis, like Viagra, can cause a sudden drop in blood pressure if it is taken with certain heart and blood-pressure medications, causing fainting or even death, among other adverse events linked to the drugs. Pfizer applied for European regulatory approval to switch Viagra to OTC status in 2007, but withdrew its application in 2008 after a regulatory advisory body expressed concerns that such a product would be misused. Lilly closed the week up 6 cents at $59.86 in New York. Sanofi gained 83 cents to 78.44 euros in Paris.

TRACKING WASHINGTON -- Many employers had thought they could shift health costs to the government by sending their employees to a health insurance exchange with a tax-free contribution of cash to help pay premiums, but the Obama administration has quashed the idea in a new ruling. Such arrangements do not satisfy the healthcare law, the administration said, and employers may be subject to a tax penalty of $100 a day--or $36,500 a year--for each employee who goes into the individual marketplace. The ruling last month, by the Internal Revenue Service, blocks any wholesale move by employers to dump employees into the exchanges. Under a central provision of the healthcare law, larger employers are required to offer health coverage to full-time workers, or else the employers may be subject to penalties. Many employers--some that now offer coverage and some that do not--had concluded that it would be cheaper to provide each employee with a lump sum of money to buy insurance on an exchange, instead of providing coverage directly. But the Obama administration raised objections, contained in an authoritative question-and-answer document released by the Internal Revenue Service, in consultation with other agencies.

          The health law, known as the Affordable Care Act, builds on the current system of employer-based health insurance. The administration, like many in Congress, wants employers to continue to provide coverage to workers and their families. “I don’t think that an employer-based system is going to be, or should be, replaced anytime soon,” President Obama said recently, when asked if the law might speed the erosion of employer-sponsored insurance. When employers provide coverage, their contributions, averaging more than $5,000 a year per employee, are not counted as taxable income to workers. But the Internal Revenue Service said employers could not meet their obligations under the healthcare law by simply reimbursing employees for some or all of their premium costs. Christopher E. Condeluci, a former tax and benefits counsel to the Senate Finance Committee, said the ruling was significant because it made clear that “an employee cannot use tax-free contributions from an employer to purchase an insurance policy sold in the individual health insurance market, inside or outside an exchange.”

FDA/EMA ROUNDUP -- Amgen Inc. (Thousand Oaks CA) won expanded U.S. approval for its drug Vectibix as an initial treatment in patients with a type of advanced colorectal cancer who first undergo genetic screening. The drug was cleared by the Food and Drug Administration as an initial treatment in conjunction with chemotherapy for patients whose tumors have a gene mutation that renders their cancer susceptible to the medicine, the company said in a statement. The agency also cleared Qiagen NV’s (Venlo NLD) test that can show whether Amgen’s drug will be effective in patients, the companies said. Qiagen’s product, Therascreen, has now been approved for use with two drugs to fight colorectal cancer after it has spread. The test was approved in July 2012 to be used in conjunction with Bristol-Myers Squibb Co. and Eli Lilly & Co.’s Erbitux, which isn’t effective in people whose tumors have the KRAS mutation. The mutation occurs in about 40% of colorectal cancer patients, according to Qiagen. “Because every patient with cancer is unique, we have made it our mission to focus on identifying treatment options for patients based on their cancer’s genetic makeup,” Sean Harper, executive vice president of research and development at Amgen, said.

          Elsewhere, the FDA approved a new implantable device to help doctors monitor patients with severe heart failure as they go about their day. The agency cleared the CardioMEMS HF system for patients who have been hospitalized in the previous year due to heart failure. The device uses an implanted sensor in the peripheral artery to measure blood pressure and heart rate. The information is then wirelessly beamed to an electronic database that can be accessed by the patients’ physician. About 5.8 million people in the U.S. have heart failure, in which the heart cannot pump enough blood to meet the body’s oxygen needs. The new device was specifically approved for a subgroup of patients with heart failure that limits their physical activity, even the ability to walk short distances. Manufacturer CardioMEMS Inc. is based in Atlanta.

          The FDA approved a drug from Takeda Pharmaceutical Co Ltd. (Osaka JPN) to treat the chronic debilitating inflammatory diseases ulcerative colitis and Crohn’s disease. The FDA said it had approved the drug, vedolizumab, which will be sold under the brand name Entyvio, for patients who failed to gain adequate relief from one or more current standard treatments. “Although there is no cure for these conditions, this approval provides an important new treatment option for patients who have had an inadequate response to conventional therapy to help control their symptoms,” said Amy Egan of the FDA. The injected biotech drug, from a class known as integrin receptor agonists, works by blocking circulating inflammatory cells from reaching areas of inflammation in the digestive tract. The most serious risks associated with Entyvio include serious infections, hypersensitivity and infusion-related reactions and liver toxicity, the agency said.

          Across the pond, European regulators said on Friday they had recommended approval of Roche Holding AG’s (Basel CHE) drug Gazyvaro, or obinutuzumab, for patients with chronic lymphocytic leukemia, boosting the Swiss group’s line-up of new cancer treatments. The new medicine is an improved follow-on medicine to Roche’s $7 billion-a-year Rituxan, or MabThera, and Roche is hoping to switch as many patients as possible to the newer product before Rituxan faces competition from cheaper copies. The European Medicines Agency also gave a green light to Biogen Idec Inc.’s (Cambridge MA) Plegridy for multiple sclerosis and a recommendation for conditional approval for PTC Therapeutics Inc.’s (S. Plainfield NJ) Translarna for Duchenne Muscular Dystrophy. Novartis AG (Basel CHE) received a mixed bag of news, with its Alcon eyecare unit winning a recommendation for Simbrinza, a treatment for open-angle glaucoma or ocular hypertension, but heart treatment serelaxin was rebuffed once again following further re-examination by EU experts. Recommendations for marketing approval by the European Medicine Agency’s Committee for Medicinal Products for Human Use (CHMP) are normally endorsed by the European Commission within a couple of months.

MEDICAL STOCK SPOTLIGHT -- Ventrus Biosciences Inc. (Nasdaq) led advancing issues, soaring 40% over the week to $1.26 despite a lack of significant news on the company. Possibly contributing was CEO Russ Ellison’s disclosure of the purchase of 13,000 shares on May 27th at $0.92 per share. More than 5.5 million shares changed hands the next day, compared to the average volume of 475,097. New York-based Ventrus agreed to merge with Assembly Pharmaceuticals Inc. last month in an all-stock transaction. The combined company will be known as Assembly Biosciences and will trade on the Nasdaq under the ticker “ASMB.” This new company will focus on the development of Assembly’s small molecules to treat, and possibly cure, the hepatitis B virus infection. The companies expect the merger to be completed by July 10, 2014.

          Elsewhere, Prosensa Holding NV (Nasdaq) surged $2.62, or 31%, to $11.03. The Netherlands-based company on May 20 reported financial results for the first quarter ending March 31, 2014 and provided an update on the next steps for its exon-skipping platform for the treatment of Duchenne Muscular Dystrophy. Hans Schikan, CEO of Prosensa said, “We have made excellent progress during this period, and are very pleased that we are now in a position to commence re-dosing with drisapersen of boys that have previously participated in drisapersen trials beginning in the third quarter of 2014. Revenue for the three months ended March 31, 2014 was 14.8 million euros, compared with 2.4 million euros in the same period last year. Quarterly net income was 7.3 million euros or 0.20 per share, compared to a loss of 3.5 million euros, or 0.12 per share, last year.

          And PTC Therapeutics Inc. (Nasdaq) leaped $3.68, or 18%, to $23.71 after European regulators recommended a conditional marketing authorization for Translarna, its drug for Duchenne Muscular Dystrophy. European Medicines Agency experts had adopted a negative opinion on the S. Plainfield, NJ-based company’s drug in January. Conditional marketing authorization is an early access mechanism for medicines that address an unmet medical need for patients suffering from life-threatening diseases, even if comprehensive clinical data are not yet available.

          But Provectus Biopharmaceuticals Inc. (Nasdaq) plunged 63% to close at $0.75. Legal proceedings for a lawsuit that was filed against Provectus started on Friday. The company faces allegations that some of its officers and directors violated the Securities Exchange Act of 1934 by making false and misleading statements to investors and the public. Knoxville, TN-based Provectus develops therapies designed to target and destroy melanoma, liver and breast cancer as well as treat psoriasis and atopic dermatitis. Provectus’s management had allegedly spread rumors regarding the testing of its melanoma drug PV-10.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Civitas Solutions Inc. (Boston MA) registered up to $250 million worth of common stock. The company was bought by management and private equity firm Vestar Capital Partners in March 2006 from Madison Dearborn Partners for an estimated $800 million. Civitas is a national provider of home- and community-based healthcare services for individuals with disabilities, illnesses, injuries and other special needs. The company, which was founded in 1980 and booked $1.2 billion in sales for the 12 months ended March 31, 2014, has not selected an exchange or a ticker symbol. Barclays, Jefferies, BofA Merrill Lynch and UBS Investment Bank are the joint bookrunners on the deal. No pricing terms were disclosed.

May 19, 2014 ...

PFIZER PLEDGES TO PROTECT KEY NEW DRUGS IN ASTRAZENECA DEAL -- AstraZeneca Plc’s (London) chief last week said he would engage with Pfizer Inc. (New York) if the price was right and the risks posed from forcing the British drugmaker’s operations into the U.S. company’s new three-unit model were addressed. CEO Pascal Soriot stressed his company had a bright future as a stand-alone firm but acknowledged that shareholders would expect AstraZeneca’s board to negotiate if terms were sufficiently attractive in a sweetened offer. “Every shareholder says at the right level with the right offer you should consider it--that is very clear. But there is nobody who has told us a specific price at which we should engage,” he said. “If the offer was reflecting the value of the company but also addressing some of the integration aspects, the operating model and execution risks we are concerned about, then we certainly should engage--there’s no doubt.” Soriot and his team have held talks with the group’s leading investors during a round of meetings in London, Sweden and the United States over the past week. Pfizer made a cash-and-stock takeover approach on May 2 worth 50 pounds a share to create the world’s largest drugs company, valuing AstraZeneca at $106 billion. The bid was promptly dismissed by the British group’s board--a decision that Soriot said had the firm backing of investors.

          Buoyed by progress with its new drug pipeline--including a lung cancer medicine called AZD9291 for which data was released last Wednesday--Soriot believes AstraZeneca can enjoy a strong independent future, but he has left the door ajar to a compelling offer. In addition to price and the share of cash in any increased offer, Soriot said AstraZeneca would also need assurances about the risks faced by Pfizer in implementing a complex merger and integrating operations across two sprawling organizations. Pfizer provided results for its three business units for the first time, when it reported first-quarter results, as a prelude to possibly divesting one or more of them in 2017. As we put these companies together, we will continue with our pipeline, AZ will continue with theirs,” Pfizer’s CEO Ian Read said. “We would ringfence any important products and they would continue to be developed.”

VALEANT MAY IMPROVE ALLERGAN BID ON INVESTOR FEEDBACK -- Valeant Pharmaceuticals International Inc. (Laval Quebec) will not easily accept rejection in its bid to acquire Botox maker Allergan Inc. (Irvine CA) for nearly $46 billion. A day after Allergan formally turned down the unsolicited offer, Valeant said it will improve that proposal to show its commitment to getting a deal done. “We are prepared to pay a full and fair price, but consistent with our track record, we will remain financially disciplined,” Valeant Chairman and CEO Michael Pearson said last week in a letter to Allergan shareholders. Valeant plans a May 28 webcast to discuss why it believes its proposal is better than Allergan’s plan to remain a stand-alone company. Allergan hosted its own conference call last Monday and spent more than an hour detailing its growth prospects. Allergan said that Valeant’s uncertain long-term growth prospects and business model create a risk for Allergan shareholders, especially given the stock component of the offer. It also questioned Valeant’s cost-cutting plans and whether that would harm the long term viability of its business. Valeant promised to address concerns raised by Allergan on its own call. It noted that Allergan rejected its bid without discussing it with Valeant.

          Last month, the Canadian drugmaker and activist investor Bill Ackman proposed exchanging each Allergan share for $48.30 in cash and a portion of Valeant’s stock. Allergan stockholders would own 43% of the combined company under that proposal. Ackman’s Pershing Square Capital Management LP (New York), Allergan’s largest shareholder with a 9.7% stake, agreed to take only stock if the deal went through. It would remain as a long-term shareholder of the combined company. Shortly after Valeant and Ackman made their offer public, Allergan announced a so-called poison pill plan, a defensive tactic that makes a buyout prohibitively expensive. Allergan also told Valeant that it didn’t want to discuss a tie-up, but said that it would evaluate the offer. Credit Suisse analyst Dr. Vamil Divan said in a research note he expected Valeant to make a more compelling offer to convince most Allergan shareholders “to accept the short-term gains and certainty that the deal provides over the steady long-term share price appreciation that (Allergan) is proposing.” Allergan closed the week off $1.30, or 1%, at $160.00. Valeant fell $4.41, or 3%, to $126.76.

TRACKING WASHINGTON -- A study of Medicare beneficiaries with a history of heavy smoking found that new lung cancer screening guidelines would likely double the proportion of lung cancers found at an early stage, but at a steep cost of some $9.3 billion over five years, U.S. researchers said last week. The analysis, released ahead of the American Society for Clinical Oncology meeting from May 30 to June 3 in Chicago, estimates for the first time the cost of implementing new recommendations released last December by the U.S. Preventive Services Task Force. The influential panel of independent experts, who advise U.S. policymakers, recommended that heavy smokers and former heavy smokers should get annual low-dose computed tomography, or CT scans, based on evidence that showed the benefits of screening outweigh the potential harms of over-diagnosis and overtreatment. They gave screening a “B” recommendation, meaning the evidence of a benefit is at least moderately certain. Under President Barack Obama’s Affordable Care Act, private insurers are required to cover preventive services with a grade of “B” or higher without a copay. The law does not require the Medicare health plan for people age 65 and older to do so. The recommendation covers people aged 55 to 80 whose smoking has put them at high risk of cancer, so a large proportion of eligible patients would be covered by Medicare.

          A Medicare advisory panel on April 30 voted against covering the tests, citing a lack of evidence. The panel’s decision is not binding, and Medicare is expected to issue a proposed coverage decision by November 2014. One reason for the panel’s vote was a lack of evidence about cost, according to Joshua Roth of the Fred Hutchinson Cancer Research Center in Seattle. The study by Roth and colleagues was designed to help fill in that gap. They used a mathematical model that calculated the cost of the screening over a five-year period. Under the most likely scenario, which assumes half of people who are offered screening would get tested, doctors would order 11.2 million more CT scans, resulting in nearly 55,000 more lung cancers detected over five years versus no screening. The group estimates that the program would more than double the proportion of cancers diagnosed at an early stage, increasing from 15% to 33%. Including the cost of imaging, diagnostic work-up and care of newly detected cancers, the program would cost Medicare $9.3 billion over five years, amounting to an increase in Medicare spending of $3 per member, per month.

FDA/EMA ROUNDUP -- The Food and Drug Administration is lowering the starting dose of the popular sleeping aid drug Lunesta, due to risks of morning drowsiness that can impair driving ability and lead to injury. The FDA said Thursday it is taking action based on a study that found Lunesta users had problems with driving, memory and coordination up to 11 hours after first taking the drug. Patients are often unaware that they are still drowsy the morning after, according to the FDA. The results, published last month, compared 91 patients taking Lunesta or placebo while performing several tasks measuring coordination, memory and other cognitive measures. Lunesta manufacturer Sunovion Pharmaceuticals Inc. (Marlborough MA) will lower the starting dose of the tablet to 1 milligram from currently available 2 milligrams. Patients can increase their dose to 2 or 3 milligrams, but should keep in mind that higher doses are more likely to cause next-day impairment, according to the FDA statement. Sunovion is a subsidiary of Japanese drugmaker Dainippon Sumitomo Pharma.

          Elsewhere, the FDA turned down an application to approve Novartis AG’s (Basel CHE) experimental heart-failure drug due to insufficient evidence that it improves symptoms, the drugmaker said on Friday. Novartis said in a statement the FDA had asked for further evidence to determine the efficacy of serelaxin, also known as RLX030. The decision follows a unanimous recommendation from a panel of advisers in March against approving the drug. Serelaxin is one of several potential “blockbuster” drugs the Novartis is looking to as it bets on cancer, heart and respiratory treatments to fill the gaps left by patent expiries on drugs such as Diovan, which lost U.S. patent rights and faces generic competition. Tim Wright, global head of development at Novartis, said Novartis still believed serelaxin had the potential to become “an important treatment” for acute heart failure.

          The FDA is warning doctors against using a popular method to remove the uterus or uterine fibroids without open surgery because it can spread cancer cells. The technique, called laparoscopic power morcellation, involves shaving down the tissue or growths into pieces that can be removed through the tiny holes used to insert the equipment. The agency found that 1 in 350 women who get a hysterectomy or have their fibroids removed have a type of cancer that can spread beyond the uterus with the approach. Distribution of cancerous cells into the abdomen and pelvis can significantly worsen the woman’s chances of long-term survival, the agency said in a safety communication. Companies that make equipment for the procedure, including Johnson & Johnson (New Brunswick NJ), were urged to ensure they give accurate information about the risks on their product materials, the FDA said. “There is no reliable way to determine if a uterine fibroid is cancerous prior to removal,” said William Maisel, deputy director for science and chief scientist at the FDA’s Center for Devices and Radiological Health.

          And Britain’s healthcare cost-effectiveness agency NICE said that a Johnson & Johnson (New Brunswick NJ) prostate cancer drug, originally invented in Britain, was not worth giving to patients who have yet to receive chemotherapy. Although Zytiga, or abiraterone, is already cleared for use in some men after chemotherapy, a green light for its earlier use would allow many more patients to access the oral medicine. “We know how important it is for patients to have the option to delay chemotherapy and its associated side effects, so we are disappointed not to be able to recommend abiraterone for use in this way,” said Andrew Dillon, CEO of the National Institute for Health and Care Excellence (NICE). “However, the manufacturer’s own economic model showed that the drug would not be cost-effective at this stage--because of this we cannot recommend the drug in this preliminary guidance.” Zytiga, which is given as a daily tablet, costs 2,930 pounds ($4,900) for 120 tablets.

MEDICAL STOCK SPOTLIGHT -- Pernix Therapeutics Holdings Inc. (Nasdaq) led advancing issues, surging $1.55, or 32% over the week, to $6.33 after announcing it has signed an agreement with GlaxoSmithKline Plc to acquire the U.S rights to Treximet (sumatriptan/naproxen sodium) for the acute treatment of migraine attacks with or without aura in adults. Pernix also posted its quarterly earnings results. The company reported ($0.26) EPS for the quarter, missing analysts’ estimates of ($0.05) by $0.21. The Woodlands, TX-based company had revenue of $19.10 million for the quarter, compared to the consensus estimate of $23.65 million. Analysts expect that Pernix will post $0.07 EPS for the current fiscal year. Brokerage Needham upgraded the specialty pharmaceutical company to “strong buy” from “buy,” saying its acquisition of Treximet was a “game changer.” Pernix Therapeutics is a specialty pharmaceutical company focused on the sales, marketing and development of branded and generic pharmaceutical products for pediatric and adult indications in a range of therapeutic areas.

          Elsewhere, Everyday Health Inc. (NYSE) jumped $2.38, or 20%, to $14.35 after the newly public digital health and wellness company released better-than-expected first-quarter results. The New York-based company reported first-quarter revenue of $37.5 million and an adjusted net loss of $2.5 million, compared with revenue of $30.5 million and loss of $6.8 million posted in the same period last year. Analysts, on average, were expecting a wider $0.16 per share loss of lower sales of $36.5 million. Meanwhile, adjusted earnings before interest, taxes, depreciation, and amortization came in at $3.2 million. For the current quarter, Everyday Health sees revenue of $40.5 million to $41 million, with adjusted EBITDA of $6.5 million to $6.7 million. Analysts are calling for 2Q revenue of $40.3 million. Everyday Health provides on-line health information, resources, tools, and news through websites, as well as symptom checker videos and advertising services.

          And Clovis Oncology Inc. (Nasdaq) gained $8.13, or 17%, to $55.96 after announcing that five abstracts highlighting clinical progress and results from Phase 1 and 2 studies of the company’s three compounds will be presented at the 2014 American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago. Boulder, CO-based Clovis is developing CO-1686, a novel, oral, targeted covalent (irreversible) inhibitor of the epidermal growth factor receptor (EGFR), for the treatment of non-small cell lung cancer, in patients with initial activating EGFR mutations as well as the T790M primary resistance mutation. Rucaparib, an oral, potent, small molecule poly (ADP-ribose) polymerase (PARP) inhibitor, is being developed for ovarian cancer and is also being explored in BRCA-mutated pancreatic cancer. Lucitanib, an oral tyrosine kinase inhibitor targeting multiple growth factors and receptors, is being evaluated in FGF-aberrant breast cancer and squamous NSCLC.

          But Sorrento Therapeutics Inc. (Nasdaq), a late-stage clinical oncology company developing new treatments for cancer and its associated pain, plunged $2.99, or 37%, to $5.00 after announcing the pricing of an underwritten public offering of 4.765 million shares of common stock at a public offering price of $5.25 per share. The gross proceeds to Sorrento from this offering are expected to be approximately $25 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. Aegis Capital Corp. is acting as the sole book-running manager for the offering. San Diego, CA-based Sorrento’s most advanced product, Cynviloq--the next-generation paclitaxel--started its registrational trial in March and is being developed under the FDA’s abbreviated 505(b)(2) pathway. The 505(b)(2) NDA permits the drug manufacturer to rely on the agency’s findings for a previously-approved drug, published literature, or both.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, ZS Pharma Inc. (Coppell TX) registered up to $86.25 million worth of common stock. The company plans to list on the Nasdaq Global Market under the symbol “ZSPH.” Underwriters are being led by JP Morgan, Credit Suisse, BMO Capital Markets, and William Blair. ZS Pharma is a biopharmaceutical company focused on the development and commercialization of highly selective, non-absorbed drugs to treat renal, cardiovascular, liver and metabolic diseases. ZS Pharma is executing a familiar biotech strategy. The biotech raised $55 million from some top venture groups just a few weeks ago, and now it’s formally moving ahead with an $86 million IPO. ZS Pharma’s main claim to fame is ZS-9, a hyperkalemia drug that is involved in a late-stage research program designed to get it into the hands of regulators in the U.S. and Europe next year. And with practically all of its prospects tied to one experimental drug, the warnings regarding the potential for failure are extensive.

May 12, 2014 ...

BAYER TO BUY MERCK CONSUMER BUSINESS FOR $14.2 BILLION -- The allergy medicine Claritin is among the Merck & Co.’s (Whitehouse Station NJ) over-the-counter products for which Bayer AG (Leverkusen DEU) agreed to pay $14.2 billion last week. The latest in a series of big pharma deals, it exposes a deepening split in the way drugmakers approach their portfolios. Bayer is in an emerging group moving into brand-name treatments that can be sold straight to consumers such as pain pills, cold drops and bunion pads. Others have held back, preferring to keep to the higher-margin, higher-risk business of developing new drugs for deadly diseases like cancer. In the long run, diversification may give the biggest drugmakers a more dependable stream of revenue to funnel back into research, said Hans Bishop, a former Bayer executive who now leads oncology biotech Juno Therapeutics Inc. (Seattle WA). “It’s a conscious risk-management strategy,” Bishop said. “When you get big in pharma, it’s difficult to make your pipeline deliver predictably.” By owning different businesses, Bishop said, “you immunize yourself against those peaks and troughs.” Over-the-counter and elective products also face less interference from payers and regulators, while strong brand recognition makes people willing to pay for them out of pocket, said Thomas Rudolph, a senior partner at McKinsey & Co. in Stuttgart, Germany.

          The appeal of elective treatments is especially true for high-margin dermatology and aesthetics products such as Botox--technically a prescription medication but widely used electively--which is driving Valeant Pharmaceuticals International Inc.’s (Laval Quebec) unsolicited $45.7 billion bid for Allergan Inc. (Irvine CA), Rudolph said. “Big pharma is looking for more de-risked portfolios,” said Manfred Scheske, the former head of GlaxoSmithKline Plc’s (London) consumer unit in Europe who now runs Infirst Healthcare in London. Along the way, he said, they’re vying with so-called “fast-moving consumer goods” companies such as Procter & Gamble Co. (St. Louis) and Reckitt Benckiser Group Plc (Slough, Berkshire GBR). Reckitt, which dropped out of the race to buy Merck’s assets, will “continue to be a predator,” Scheske said. Last week’s deal solidified Bayer’s spot at No. 2, according to Euromonitor International. A joint venture announced April 22 between Novartis AG (Basel CHE), the biggest drugmaker in the world by sales, and Glaxo, the U.K.’s biggest, will sit at No. 1. Merck closed the week down 3.01, or 5%, at $55.21 in New York. Bayer rose 72 cents, or 1%, to 100.40 euros in Frankfurt.

PFIZER'S CEO STRESSES COMMITMENT FOR DEAL WITH ASTRAZENECA -- Although Pfizer Inc. (New York) announced a 15% drop in first-quarter earnings last week, its chief executive renewed his call for its British rival AstraZeneca Plc (London) to accept Pfizer’s offer to buy it. Pfizer has aggressively pursued AstraZeneca since January--raising its offer to more than $106 billion recently--but so far AstraZeneca has rejected its advances, saying the bids are too low. Pfizer has been trying since January to get AstraZeneca to discuss a deal that would include Pfizer moving its official domicile--but not its corporate offices--to London, a move that would reduce Pfizer’s income tax rate. Last week, Ian Read, Pfizer’s CEO, described Pfizer as in a “position of strength.” Meanwhile, despite sharply lower expenses and taxes, Pfizer’s first-quarter profit dropped 15%, due to cheaper generic competition for multiple medicines and some promotion partnerships with other drugmakers ending. Pfizer missed Wall Street’s revenue expectations by $730 million, but narrowly beat profit expectations. The company has seen its revenue shrink since 2011 as inexpensive generic pills hurt sales of about 20 off-patent drugs that once brought in billions annually, particularly cholesterol fighter Lipitor, the top-selling drug of all time with peak revenue of nearly $13 billion.

          According to Pfizer, “the vast majority” of generic competition will be over by the end of 2015. The maker of Viagra said net income was $2.33 billion, or 36 cents per share, for January through March, down from $2.75 billion, or 38 cents per share, a year earlier. Excluding one-time charges, income was 57 cents per share, two cents less than analysts expected. Revenue totaled $11.35 billion, down 9%. Analysts expected $12.08 billion. Among Pfizer’s top sellers, sales rose 8% to $1.15 billion for pain and fibromyalgia treatment Lyrica and 4% to $914 million for immune disorder drug Enbrel. Sales of pneumonia vaccine Prevnar were flat at $927 million, while key newer medicines--rheumatoid arthritis pill Xeljanz and cancer drugs Xalkori and Inlyta--remain disappointing at less than $100 million in the quarter. Pfizer confirmed its 2014 adjusted profit forecast for earnings per share of $2.20 to $2.30 and revenue of $49.2 billion to $52.3 billion. Analysts expect earnings of $2.24 per share on revenue of $49.77 billion. Pfizer closed the week off $1.72, or 6%, at $29.03.

TRACKING WASHINGTON -- Health and Human Services nominee Sylvia Mathews Burwell got her first taste at a Senate hearing Thursday of the many issues she will juggle if confirmed as secretary, as senators from both parties showered her with questions on issues ranging from the 2010 health law to Americans’ salt intake. Ms. Burwell, the current Office of Management and Budget director, is expected to have a relatively smooth confirmation by the Senate, where under new rules, she needs to get 51 votes if all senators are present for her confirmation to be taken up. Her appearance at the Senate Health, Education, Labor and Pensions Committee served as an opportunity for GOP lawmakers to press their critiques of the healthcare overhaul and for Democrats to solicit commitments from her about specific health programs. Ms. Burwell was asked about her plans to continue the Obama administration’s policies in implementing the health law, including whether she would further extend canceled policies or back other substantive changes to provisions in the law, such as the requirement that employers offer coverage to all workers clocking 30 hours a week or more, or pay a penalty. The nominee gave careful, noncommittal answers.

          In response to a question from Sen. Lamar Alexander (R-TN) about the canceled policies, she said: “At this point we want to see what is happening with regard to the issues of implementation.” She also defended the administration’s decision to delay enforcement of the employer requirement as “common-sense implementation within the law.” Sen. Mike Enzi (R-WY) asked what role she had played in the development of the HealthCare.gov website, which was beset with technical problems in its launch. Ms. Burwell, 48 years old, described the website as “unacceptable” and said she didn’t have a direct role in constructing the site at OMB. “If I am confirmed, the issues of information technology, especially around Healthcare.gov, would be a top priority for me,” she said. Democrats hailed Ms. Burwell’s roots in Hinton, WV, and her resume, which includes time as a top official at the Gates Foundation and Walmart Foundation, as well as in the federal government.

FDA/EMA ROUNDUP -- The Food and Drug Administration has approved a new type of blood thinner from Merck & Co. (Whitehouse Station NJ) that reduces heart attack, stroke and other fatal cardiovascular events in patients with a history of heart attack. The approval of Zontivity marks a comeback for a drug which was once hailed as a potential blockbuster, but has been plagued by bleeding side effects in clinical testing. In 2011 Merck took a $1.7 billion charge to write down the value assigned to the tablet, after studies showed it increased the risk of internal bleeding in the skull. But Merck successfully modified the drug as an option for patients who have had a recent heart attack but have not had a stroke or internal bleeding. Merck had originally sought a broader market. Zontivity, known generically as vorapaxar, is the first of a new class of drugs called protease-activated receptor-1 antagonists. The drugs work by preventing blood platelets from clumping together to form a blood clot.

          Elsewhere, the FDA approved Watson Pharmaceuticals Inc.’s (Parsippany NJ) Clonidine Hydrochloride, which belongs to the family of medications called antihypertensives. It is used alone or in combination with other medications to treat high blood pressure. It works by relaxing the blood vessels. It is usually tried when other types of blood pressure medications are ineffective or cannot be used. Watson is now a part of Actavis Plc, headquartered in Dublin, Ireland.

          Actavis Plc (Dublin IRL) said it has sued the Food and Drug Administration, challenging its decision to award exclusive rights to Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR) to sell a generic version of Pfizer Inc.’s (New York) blockbuster painkiller Celebrex. A similar lawsuit was announced Friday by Mylan Inc. (Canonsburg PA) over generic drug marketing exclusivity for Celebrex. Actavis alleges that FDA improperly awarded sole exclusivity to Teva despite an earlier ruling from the U.S. Court of Appeals for the Federal Circuit that resulted in the expiration of that entitlement. Teva, the world’s largest generic drugmaker, earlier this month signed a deal that would allow it to launch a generic version of Celebrex in December. Celebrex’s basic chemical patent is set to expire this May. Deals between patent holders and generic drugmakers have come under increased regulatory scrutiny because of their potential to delay the launch of cheaper medicines. Celebrex, which is used to treat arthritis pain and inflammation, generated about $2.92 billion in sales in 2013, according to Pfizer’s annual regulatory filing.

          And GlaxoSmithKline Plc (London) said its new inhaled lung drug, Anoro, had been approved in Europe as a treatment for chronic lung disease, boosting its respiratory franchise. A final green light had been expected for the product, which was developed with Theravance Inc. (S. San Francisco), following a recommendation from European experts in February. Respiratory drugs are a major business for GSK. Advair or Seretide, its market-leading lung drug, makes up a fifth of its sales, but it is already facing competition from generic versions in Europe. Industry analysts expect Anoro to generate worldwide annual sales of about $2.65 billion by 2019, according to Thomson Reuters data.

MEDICAL STOCK SPOTLIGHT -- Chelsea Therapeutics International Ltd. (Nasdaq) led advancing issues, surging $1.44, or 28% over the week, to $6.57. Danish pharmaceutical company H. Lundbeck (Valby) agreed to buy Chelsea for up to $658 million in a deal that would give it the rights to the U.S. firm’s neurology drug Northera. Charlotte, NC-based Chelsea stockholders will be offered $6.44 per share in cash and contingent value rights that may pay up to $1.50 per share, the two firms said. The total would represent a premium of 59% over Chelsea’s closing price prior to news of the deal. Northera was recently approved by the U.S. Food and Drug Administration and is expected to be launched in the third quarter of 2014. The drug treats a rare form of low blood pressure associated with neurological disorders such as Parkinson’s disease. Northera has the potential to become the most valuable of Lundbeck’s four neurological drugs in the United States, the Danish company said.

          Elsewhere, Rockwell Medical Inc. (Nasdaq) jumped $1.41, or 14%, to $11.45 on no particular news. The biopharmaceutical company is targeting end-stage renal disease (ESRD) and chronic kidney disease (CKD) with products and services for the treatment of iron replacement, secondary hyperparathyroidism and hemodialysis. Rockwell’s lead drug candidate Triferic is in late-stage clinical development for the treatment of iron replacement in dialysis patients. Triferic delivers iron to the bone marrow of dialysis patients in a non-invasive, physiologic manner during their regular dialysis treatment, using dialysate as the delivery mechanism. Wixom, MI-based Rockwell says that in completed clinical trials to date, Triferic has demonstrated that it can safely and effectively deliver sufficient iron to the bone marrow, maintain hemoglobin and not increase iron stores (ferritin), while significantly reducing ESA (erythropoieses-stimulating agents) dose.

          And Ampio Pharmaceuticals Inc. (Nasdaq) tacked on 10% to $7.04 after reporting first-quarter revenue of $12.5 million and loss of $.23 per share, versus revenue of $12.5 million and a loss of $.11 per share in the same period last year. Citi also started coverage on Ampio Pharma with a “Buy” rating and $21 price target. Ampio Pharmaceuticals is a development stage biopharmaceutical company focused on the discovery and development of novel therapies aimed at treating common inflammatory conditions for which there are limited treatment options. The Greenwood, Co-based company says it is developing compounds that serve significant medical needs in osteoarthritis, diabetic macular edema, and other prevalent, inflammatory diseases.

          But Corcept Therapeutics Inc. (Nasdaq) lost more than half its market value after the company said it would stop a late-stage trial of its depression drug to focus on more promising programs. The drug, mifepristone, was being developed for treating psychotic symptoms in patients with major depressive disorder. Mifepristone had failed to prove its effectiveness in three separate late-stage trials in 2006 and early 2007. “Given that mifepristone has failed to show efficacy in three prior Phase III studies, we had subscribed a low probability of success for this program and had placed no value on this program,” Janney Capital Markets analyst Kimberly Lee said in a note. Lee has a “Neutral” rating and a target of $2 on the stock. Shares of Menlo Park, CA-based Corcept closed the week down $2.11, or 53%, at $1.84.

IPO SECTOR -- The initial public offering for Alder BioPharmaceuticals Inc. (Bothell WA) opened for trading at $10.35 last week after pricing 8 million shares at $10, below the expected $13-$15 range. The size of the offering was raised from 7.15 million shares. The offering is being made via Credit Suisse, Leerink Partners, Wells Fargo Securities and Sanford C. Bernstein. Alder BioPharmaceuticals is a clinical-stage biopharmaceutical company that discovers, develops and seeks to commercialize therapeutic antibodies with the potential to meaningfully transform current treatment paradigms. The company says it has developed a proprietary antibody platform designed to select antibodies that have the potential to maximize efficacy as well as speed of onset and durability of therapeutic response. In addition, they believe their ability to efficiently manufacture antibodies using its yeast-based manufacturing technology, MabXpress, allows them to target diseases that traditionally have not been addressed by antibodies. They believe the clinical data obtained in its development program for ALD403, a wholly-owned clinical asset, exhibits the potential of this product candidate to transform the way physicians treat migraine prevention.

May 5, 2014 ...

ASTRAZENECA REJECTS SWEETENED PFIZER TAKEOVER BID -- Pfizer Inc. (New York) increased its offer for AstraZeneca Plc (London) to 63 billion pounds ($106 billion) on Friday, but the British company promptly rejected the proposal, which would create the world’s biggest pharmaceuticals company. AstraZeneca’s board said the offer undervalued the company “substantially” and was not an adequate basis on which to engage with its suitor. Industry analysts and investors said that raised the possibility that Pfizer would now bring the takeover plan, which would boost its pipeline of cancer drugs and create significant tax and cost savings, directly to AstraZeneca shareholders. The U.S. company would prefer an agreed deal, since hostile takeovers typically take longer, require a higher final price and carry more risks. One AstraZeneca investor said Pfizer management had made clear in meetings last week that it wanted a friendly deal but it was determined to the see the transaction completed and a hostile bid was a potential “tool.” While Pfizer has given assurances to the British government on retaining drug research in Britain, a spokesman for Prime Minister David Cameron said AstraZeneca’s fate would be determined by shareholders, not the state. Friday’s 50 pounds ($84.47) a share offer followed AstraZeneca’s decision to rebuff an earlier proposal that valued it at 58.8 billion pounds, or 46.61 pounds per share.

          Some investors and analysts had expected that the sweetened offer would be enough to bring AstraZeneca’s board to the negotiating table, even if it was not accepted, and the swift rejection suggests Pfizer may now go over the board’s head. “I think it’s making it increasingly likely that Pfizer is going to come back with a hostile bid,” said Mick Cooper, an analyst at Edison Investment Research. Leading investors met with Pfizer CEO Ian Read last week in London and some feel that an offer of 50 pounds or above is certainly worth discussing. “Given where the shares have come from, this doesn’t look unreasonable,” one of AstraZeneca’s 10 largest shareholders said of the latest Pfizer offer. “We expect Pfizer ultimately to have to sweeten its offer based on discussions we have had with investors, many citing a price within the 52-55 pounds range and some above this, and our analysis of the EPS accretion for Pfizer,” said Mark Clark, an analyst at Deutsche Bank. AstraZeneca closed the week up $12.36, or 18% at $81.02 in New York. Pfizer closed unchanged at $30.75.

ALLERGAN EXPLORING SALE TO SANOFI, J&J -- Allergan Inc. (Irvine CA) has contacted companies including Sanofi SA (Paris) and Johnson & Johnson (New Brunswick NJ) to determine if either would be interested in acquiring the Botox maker, said people with knowledge of the matter, as it explores its options after receiving an unsolicited $45.7 billion bid from Valeant Pharmaceuticals International Inc. Bloomberg News reported that Allergan is holding early-stage discussions with both companies while it decides whether to seek an alternative to Valeant’s offer, according to the people, who asked not to be identified because the matter is private. It isn’t clear if either company is interested although Sanofi and Johnson & Johnson are both considering their options, the people said. Allergan hasn’t decided how to respond to Valeant’s offer, and is making the inquiries to see if a sale to a larger rival is possible, said the people. In addition to finding a white knight to merge with, Allergan’s choices include buying another company to make itself tougher to acquire and negotiating with Valeant. Reuters said Allergan is preparing an approach to acquire Shire Plc (Dublin IRL) to fend off the Valeant bid, and shares of Shire closed the week up 8% at 3,467 pence in London.

          Activist investor Bill Ackman, who is supporting Valeant’s effort, spoke with Allergan CEO David Pyott and lead director Michael Gallagher last week. Ackman told them that he wouldn’t look favorably on Allergan pursuing a deal with another company in order to derail Valeant’s efforts, one of the people said. Another potential white knight for Allergan could be German manufacturer Bayer AG (Leverkusen). Investment banks have contacted Bayer to see if it has interest in Allergan, said another person familiar with the matter, though they added Bayer was focused on trying to win an auction for Merck & Co.’s (Whitehouse Station NJ) over-the-counter medicines business. Any potential suitor would have to show that its proposal would create more value than Valeant’s. Allergan closed the week up 1% at $169.91, while J&J slipped 48 cents to $99.31. Sanofi rose 2% to $54.03.

TRACKING WASHINGTON -- The number of people signing up for health insurance through the federal marketplace soared in March, exceeding the number who signed up in the previous five months, the Obama administration said Thursday in its final report on enrollment under the new healthcare law. The report, for the first time, provided information about the racial and ethnic backgrounds of those signing up. Of the 3.8 million people in the federal exchange who voluntarily disclosed such information, 63% were white, 17% were black, 11% were Hispanic and 8% were Asian, officials said. Of the more than eight million people who have bought insurance on the federal and state exchanges, 2.2 million, or 28%, were 18 to 34 years old. Insurers prize that age bracket because they tend to be healthier and file fewer claims than older consumers. Young adults accounted for nearly one-third of people signing up after March 1. The numbers reported on Thursday include people who selected health plans through the March 31 deadline, as well as people who were allowed to finish applications after that date because they had been stymied in earlier efforts to enroll. The administration was generous in granting extra time to people who needed it, and this policy paid off in higher enrollment numbers.

          About 7.1 million people had selected health plans by the March deadline. From April 1 to 19, another 910,500 people were allowed to sign up. The new report documents the dimensions of the March surge. In the final weeks of the open enrollment period, the total number of people signed up on the federal exchange more than doubled, to 5.4 million people, from 2.6 million at the end of February. And the total on state exchanges increased 59%, to 2.6 million. Administration officials said they did not know how many of the people signing up had paid their initial premiums. Without payment, consumers will not have coverage.

FDA/EMA ROUNDUP -- Novartis AG (Basel CHE) won U.S. approval of its treatment for patients with advanced non-small cell lung cancer. The drug, ceritinib, gained marketing clearance about four months ahead of the expected decision date because it has the potential to offer substantial improvement over existing therapies, the Food and Drug Administration said in a statement. Ceritinib, to be marketed by Novartis as Zykadia, blocks proteins that promote the development of cancer cells, the agency said. Lung cancer is the leading cause of cancer-related deaths in the U.S., the FDA said. An estimated 224,210 new cases will be diagnosed this year and more than 159,000 Americans will die from the disease, according to the National Cancer Institute. Zykadia is approved for a small number of patients who have a certain gene mutation.

          Elsewhere, makers of trouble-prone implants used to surgically repair women’s pelvic problems would be subject to stricter safety requirements under a federal proposal issued last week. The FDA says plastic mesh used to repair pelvic collapse should be reclassified as a “high-risk” medical device, following years of reports of pain, bleeding and infection among women who have received the implants. If adopted, the change would require manufacturers to submit studies demonstrating that their products are safe and effective before they can be sold. Plastic mesh has been used since the late 1990s to strengthen the pelvic wall in cases of pelvic organ prolapse, in which the bladder or other reproductive organs slip down into the vagina. The condition is common among older women and those who’ve had children. The most common technique for implanting the mesh involves a surgical insertion through the vagina.

          Actavis Plc (Dublin IRL) said it has sued the Food and Drug Administration, challenging its decision to award exclusive rights to Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR) to sell a generic version of Pfizer Inc.’s (New York) blockbuster painkiller Celebrex. A similar lawsuit was announced Friday by Mylan Inc. (Canonsburg PA) over generic drug marketing exclusivity for Celebrex. Actavis alleges that FDA improperly awarded sole exclusivity to Teva despite an earlier ruling from the U.S. Court of Appeals for the Federal Circuit that resulted in the expiration of that entitlement. Teva, the world’s largest generic drugmaker, earlier this month signed a deal that would allow it to launch a generic version of Celebrex in December. Celebrex’s basic chemical patent is set to expire this May. Deals between patent holders and generic drugmakers have come under increased regulatory scrutiny because of their potential to delay the launch of cheaper medicines. Celebrex, which is used to treat arthritis pain and inflammation, generated about $2.92 billion in sales in 2013, according to Pfizer’s annual regulatory filing.

          And GlaxoSmithKline Plc (London) won backing from a European Union advisory panel for a skin cancer treatment that was part of its sale of oncology drugs to Novartis AG for as much as $16 billion. Mekinist was recommended by the European Medicines Agency’s Committee for Medicinal Products for Human Use for the treatment of melanoma, the most dangerous form of skin cancer, the agency said in a statement. The European Commission, the EU’s executive arm, usually follows the panel’s recommendation. Mekinist, which won U.S. approval last year, was one of the cancer drugs that Glaxo announced it was selling to Novartis for $14.5 billion on April 22. If Mekinist is proven effective in combination with Tafinlar, another drug included in the sale, then Glaxo would receive another $1.5 billion from Novartis.

MEDICAL STOCK SPOTLIGHT -- Merrimack Pharmaceuticals Inc. (Nasdaq) led advancing issues, soaring $1.96, or 44% over the week, to $6.43. The Cambridge, MA-based company said Thursday that patients treated with its experimental pancreatic cancer drug lived longer than patients who received only standard chemotherapy. Merrimack said patients who received the drug, called MM-398, and a chemotherapy regimen in the clinical trial lived an average of 6.1 months after treatment. Patients who were given just the chemotherapy regimen lived 4.2 months on average. Patients who were treated with MM-398 without other drugs alone did not live longer than the chemotherapy patients. MM-398 is a new form of the chemotherapy drug irinotecan. Merrimack says its formulation of the drug is designed to stay in the bloodstream longer, allowing it to more effectively build up in tumors while sparing other cells. The company says it believes the drug could be effective against other types of cancer. Merrimack does not have any approved drugs, and it plans to file for marketing approval of MM-398 later this year.

          Elsewhere, Avanir Pharmaceuticals Inc. (Nasdaq) rocketed $1.33, or 40%, to $4.63. The upsurge is attributed to the favorable ruling by the U.S. District Court of Delaware in a patent infringement case. Two companies, Par Pharmaceuticals Inc. and Impax Laboratories Inc., had Abbreviated New Drug Applications for generic versions of Nuedexta, Avanir’s lead product. After a six-day bench trial, the court ruled in favor of Aliso Viejo, CA-based Avanir. Nuedexta is an innovative combination of two time-tested generic drugs, dextromethorphan hydrobromide (20 mg), an ingredient active in the central nervous system, and quinidine sulfate (10 mg), a metabolic inhibitor that enables dextromethorphan to reach therapeutic concentrations. It is the only FDA approved drug for treatment of pseudobulbar affect (PBA), a neurologic disorder marked by involuntary bouts of uncontrollable emotion, primarily laughing and crying displays--sometimes mood-incongruent.

          And Adamas Pharmaceuticals Inc. (Nasdaq) surged $4.32, or 28%, to $20.01. The Emeryville, CA-based specialty drug developer presented encouraging data on the safety and efficacy of ADS-5102 for the treatment of levodopa-induced dyskinesia (LID), a serious movement disorder associated with Parkinson’s disease treatment. The data, from Adamas’s Phase 2/3 EASED study, included assessments of patients receiving ADS-5102 using a metric called the Clinician’s Global Impression of Change (CGI-C). The clinicians were asked to assess their impression of the change in a subject’s clinical status related to overall Parkinson’s disease, including LID. CGI-C is a tool to evaluate a patient’s response over time and is routinely used for a number of diseases, including Parkinson’s disease. At the 340 mg dose level there was a statistically significant improvement in overall Parkinson’s disease clinical status, including LID, versus placebo.

          But Endocyte Inc. (Nasdaq) plunged $11.32, or 63%, to $6.62 on news that a late-stage trial for its lead drug, vintafolide, has been halted. Reuters reported Friday that West Lafayette, IN-based Endocyte and its partner, Merck & Co., were testing vintafolide in platinum-resistant ovarian cancer patients who had received prior treatment. But the drug failed to improve progression-free survival rates, and an independent study safety committee recommended that it be halted. Endocyte and Merck said that committee did not identify any safety concerns for patients enrolled in the trial. Endocyte was “surprised and disappointed” by the committee’s recommendation, Ron Ellis, Endocyte’s president and chief executive officer, said in a statement. Endocyte said it will continue to test vintafolide for lung cancer, with late-stage data possible toward the end of the year.

IPO SECTOR -- SCYNEXIS Inc. (Durham NC) announced the pricing of its initial public offering of 6.2 million shares of common stock at a public offering price of $10.00 per share. The company’s shares began trading on the Nasdaq Global Market on Friday under the symbol “SCYX.” RBC Capital Markets and Canaccord Genuity are acting as joint book-running managers of the deal. SCYNEXIS says it is a pharmaceutical company committed to the discovery, development and commercialization of anti-infectives to address significant unmet therapeutic needs. SCYNEXIS is developing its lead product candidate, SCY-078, as an oral and intravenous drug for the treatment of serious and life-threatening invasive fungal infections in humans. In addition, SCYNEXIS has clinical and preclinical programs based on the use of cyclophilin inhibitors to treat viral diseases, as well as contract research and development services primarily in the field of animal health.

April 28, 2014 ...

VALEANT, ACKMAN MAKE $45.7 BILLION BID FOR ALLERGAN -- Valeant Pharmaceuticals International Inc. (West Laval, Quebec) offered to buy Allergan Inc. (Irvine CA), maker of the Botox wrinkle treatment, in a cash-and-stock deal valued at $45.7 billion in the latest step of the Canadian company’s plan to become one of the world’s largest drugmakers. Under the deal, which came to light in broad terms last week, Allergan investors would receive $48.30 in cash and 0.83 of a Valeant stock for each share they own, Valeant said in a statement. Pershing Square Capital Management LP (New York), the fund run by Bill Ackman, Allergan’s largest shareholder, supports the offer, Valeant said. Valeant CEO Mike Pearson, 54, took the helm in 2008 and has spent at least $19 billion buying more than 35 companies as part of Valeant’s goal to join the ranks of the world’s five biggest drugmakers by the end of 2016. The Allergan deal would be his biggest acquisition, eclipsing the $8.7 billion purchase of eyecare company Bausch & Lomb Inc. last year.  Only a handful of healthcare companies have the “durability” of the combined product portfolio of Valeant and Allergan, Ackman said last week at an investor meeting. He called the deal a “great transaction.” The bid is a “substantial premium” on Allergan’s unaffected price of $116.63 on April 10, the day before Pershing crossed the 5% ownership level and commenced its rapid accumulation program, Valeant said.

          Valeant and Pershing Square’s Ackman, 47, think Allergan is undervalued and an attractive investment, according to a filing with the U.S. Securities and Exchange Commission. Pershing Square amassed 9.7% of Allergan after reaching an agreement with Valeant to jointly pursue a hostile takeover of the company, the filing showed. Allergan’s board will review the unsolicited bid in consultation with financial and legal advisers and “pursue the course of action that it believes is in the best interests of the company’s shareholders,” the company said in a statement. Ackman structured the Valeant-Allergan deal and approached Valeant with the idea, said Jeff Ubben, of ValueAct Holdings LP (San Francisco), Valeant’s third-largest shareholder. Making the bid with Ackman’s support gives Valeant “a running start on the vote, and a bit of a block position,” Ubben said. Allergan shares closed the week up $34.23, or 26%, at $168.15. Valeant gained $11.68, or 10%, to $133.73.

PFIZER SAID TO HAVE HELD TALKS TO BUY ASTRAZENECA -- AstraZeneca Plc (London) rose to a record in London trading last week even after reporting a slump in first-quarter profit amid speculation that the U.K. drugmaker may be a takeover target. AstraZeneca climbed 8% for the week to 4,080 pence in London, giving it a market value of 51.4 billion pounds ($86.4 billion). The stock advanced after reports that Pfizer Inc. (New York) approached the company about acquiring it. Investors may be reacting to the news about the progress of the company’s drugs, including new treatments for lung and ovarian cancer, that might make it a more appealing buyout candidate, said Fabian Wenner of Kepler Cheuvreux in Zurich. CEO Pascal Soriot said AstraZeneca is making progress independently by developing new medicines, and said he didn’t necessarily think big mergers are a bad idea. “From the earnings quality, the stock shouldn’t be up,” said Wenner, who recommends selling the company’s shares. “The press release and the focus on the pipeline news could mean that it makes it more attractive to Pfizer.” First-quarter profit excluding certain items fell 16% to $1.95 billion, or $1.17 a share, from $2.32 billion, or $1.41 a share, the London-based company said in a statement. Analysts expected $1.21 a share, according to Bloomberg.

          AstraZeneca took part in informal talks over selling the company to Pfizer, two people familiar with the matter said, asking not to be identified. One said the talks happened several months ago and there are no plans to resume. AstraZeneca won’t comment on the buyout speculation, Soriot said on a conference call with reporters. A Pfizer spokesman said the company doesn’t comment on speculation. On a later call with analysts, Soriot was asked whether he agreed with some other pharmaceutical company CEOs that merging two big drug companies was too messy and didn’t create shareholder value. Soriot, who became Genentech’s CEO when Roche Holding AG (Basel CHE) bought the biotechnology company for $46.8 billion in 2009, said he couldn’t subscribe to that view. “I’m a pragmatic person and I think it’s never really good to have a philosophy that applies to everything,” he said. “You’ve got to be practical and look at things case by case.” AstraZeneca will look to make deals or find partners for drugs outside its three core areas of oncology; cardiovascular and metabolic diseases; and respiratory, inflammation and autoimmunity, he said.

TRACKING WASHINGTON -- The U.S. Food and Drug Administration has proposed speeding up medical device approvals for patients who have no other treatment options through a new program focused on earlier and more frequent interactions between companies and FDA staff. The Expedited Access Premarket Approval Application program is a response to criticisms by policymakers, patient groups and industry that the FDA process for approving medical devices is inefficient and slow, delaying patients’ access to new, helpful products. The program is not a new pathway to market, the agency said, but rather a change in approach aimed at reducing the time it takes to develop a product and get it to market. It is similar to a new FDA program intended to expedite development of certain cancer drugs in the clinical trial stage, Morningstar analyst Debbie Wang said. “This is yet another aspect of how FDA is trying to work in a more coordinated fashion so they can reduce the number of false starts and situations of reinventing the wheel, and to help put some priority on which therapies are going to affect the most patients with the greatest need,” Wang said. A device can be eligible for the program if it features breakthrough technology with significant benefits over existing products.

          In recent years, review times dragged out as the FDA faced a rising number of new product applications. Recent increases in the user fees paid by industry to fund FDA work could be providing more wiggle room for the agency to devote manpower to improving the application process, Wang said. The FDA issued a rule in September that requires device manufacturers to put unique codes on their products to enable regulators to track and monitor them in the event of a safety problem. Also in September, the agency issued final rules on mobile medical apps, saying it would only regulate apps that transform smartphones into devices that the agency currently regulates, such as electrocardiography machines, which can determine whether a patient is having a heart attack. The FDA also published draft guidance last week on when data can be collected after a product’s approval and what actions the agency can take if approval conditions such as post-market data collection are not met. The agency is now seeking public comment on the proposals.

FDA/EMA ROUNDUP -- Makers of electronic cigarettes such as Lorillard Inc. (Greensboro NC) and Altria Group Inc. (Richmond VA) will for the first time face regulatory oversight--including passing a review to stay on the market--under a U.S. plan that doesn’t ban TV ads or flavored versions of the new products. The Food and Drug Administration last week proposed to extend its reach over the tobacco industry to include the $3 billion market for e-cigarettes such as NJOY and blu, as well as cigars. The rules, if made final, will prohibit sales to minors, ban free samples and require nicotine addiction warnings. Consumer groups have said e-cigarette companies use candy flavors, TV ads and music festival sponsorships to target youth, who doubled their use of the products in 2012 from a year earlier. Agency officials called the proposal a foundation that may lead to tighter control in the future.

          Elsewhere, the FDA approved an Eli Lilly & Co. (Indianapolis IN) drug to treat advanced stomach cancer and a form of cancer in the area where the esophagus joins the stomach. The agency said it has approved ramucirumab for use in patients whose cancer cannot be surgically removed or has spread following chemotherapy treatment. It will be sold by Lilly under the brand name Cyramza. The drug, which works by blocking blood supplies that tumors need to grow, had been considered one of the most important in Lilly’s developmental pipeline. Cowen and Co. has forecast annual Cyramza sales reaching $1 billion by 2019. “Although the rates of stomach cancer in the United States have decreased over the past 40 years, patients require new treatment options, particularly when they no longer respond to other therapies,” said Richard Pazdur, who oversees oncology products in the FDA’s Center for Drug Evaluation and Research.

          The FDA cleared a genetic test from Roche Holding AG (Basel CHE) as the first ever U.S.-approved alternative to the Pap smear, the decades-old mainstay of cervical cancer screening. The agency approved Roche’s cobas HPV test to detect the human Papillomavirus, or HPV, in women 25 and up. HPV causes nearly all cases of cervical cancer. Doctors already use such DNA-based tools as a follow-up to confirm Pap test results. But last Thursday’s decision means Roche can now market its test as a stand-alone option for cervical cancer screening, ahead of the Pap test. Currently no major medical guidelines recommend HPV testing alone for cervical cancer screening. Dr. David Chelmow of Virginia Commonwealth University said physicians should hold off using the test until medical societies can provide guidance on some key questions, including how frequently it should be used. Chelmow spoke on behalf of the American College of Obstetrics and Gynecology at the FDA’s meeting to review the test last month.

          And GlaxoSmithKline Plc (London) won backing from a European Union advisory panel for a skin cancer treatment that was part of its sale of oncology drugs to Novartis AG for as much as $16 billion. Mekinist was recommended by the European Medicines Agency’s Committee for Medicinal Products for Human Use for the treatment of melanoma, the most dangerous form of skin cancer, the agency said in a statement. The European Commission, the EU’s executive arm, usually follows the panel’s recommendation. Mekinist, which won U.S. approval last year, was one of the cancer drugs that Glaxo announced it was selling to Novartis for $14.5 billion on April 22. If Mekinist is proven effective in combination with Tafinlar, another drug included in the sale, then Glaxo would receive another $1.5 billion from Novartis.

MEDICAL STOCK SPOTLIGHT -- Sarepta Therapeutics Inc. (Nasdaq) led advancing issues, soaring $12.30, or 50% over the week, to $36.70. The Cambridge, MA-based drug developer with no products on the market rose to its highest value in five months after saying it plans to submit its Duchenne muscular dystrophy treatment for approval this year. On Nov. 12, Sarepta shares fell the most in 16 years after the Food and Drug Administration had called an application to sell the experimental eteplirsen compound “premature.” The FDA has provided new guidance that will enable the submission of the drug by the end of 2014, the company said in a statement last week. Sarepta anticipates the FDA may call advisers to discuss eteplirsen in the first half of 2015 and approve the drug by the second half of next year, said Robyn Karnauskas, an analyst at Deutsche Bank AG.

          Elsewhere, Morgan Stanley initiated coverage on shares of GW Pharmaceuticals Plc (Nasdaq) with an “Overweight” rating and $103 price target, sending the shares surging $15.92, or 34%, to $62.12. Analyst David Friedman believes the British company’s cannabis platform “has strong potential, with the epilepsy program driving valuation.” Epidiolex, a purified CBD (cannabidiol oil) extract for pediatric epilepsy, accounts for 90% of the analyst’s peak revenue forecast. “While small and still anecdotal, there is a consistently strong and building set of data (case cohort and controlled) which highlight the positive impact of CBD on refractory epilepsy patients,” said Friedman. The analyst sees most of the growth for the company’s Sativex therapy coming from the U.S. market over time, with Phase 3 trials in advanced cancer pain and MS (multiple sclerosis) spasticity providing the next steps.”

          And Evoke Pharma Inc. (Nasdaq), a specialty pharmaceutical company focused on treatments for gastrointestinal (GI) diseases, leaped $2.12, or 29%, to $9.53. The San Diego-based company announced the initiation of its Phase 3 clinical trial investigating the use of EVK-001, a novel metoclopramide nasal spray for the relief of symptoms associated with acute and recurrent diabetic gastroparesis in women. David Gonyer, President and CEO of Evoke Pharma, said, “Our goal is to address an important unmet need in treating gastroparesis: a therapy that can improve the GI symptoms, including nausea and vomiting, that are characteristic of this disorder.” Gastroparesis in patients with diabetes can be very difficult to treat. “There are limited FDA-approved options and the absorption of oral medications can be unpredictable,” said lead investigator Dr. Henry P. Parkman, Director of the GI Motility Laboratory at the Temple University School of Medicine.

          But Cytokinetics Inc. (Nasdaq) plunged $4.93, or 52%, to $4.59 after saying its experimental treatment for a progressive neurodegenerative disorder failed a mid-stage trial. The study tested the efficacy of the drug, tirasemtiv--one of the company’s lead compounds--against a placebo in 711 patients with amyotrophic lateral sclerosis (ALS), commonly called Lou Gehrig’s disease. Despite the market’s overwhelmingly negative reaction, analysts said all was not lost. Investor focus would now shift to the San Francisco-based company’s experimental heart failure treatment, omecamtiv mecarbil, being tested in two mid-stage studies in collaboration with Amgen Inc. I think there’s a lot of value left here,” said Needham & Co. analyst Chad Messer. The strength of the remaining pipeline “makes it a great buy at (current) prices,” Messer added.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Vyrix Pharmaceuticals Inc. (Greenwood CO), a privately held drug-development company attempting to develop a treatment for premature ejaculation, registered up to $28.75 million worth of common stock. The company did not announce a share-price range or say when its initial public offering would take place. Vyrix would be listed on the New York Stock Exchange under the ticker symbol “VYRX.” Aegis Capital and Fordham Financial Management are the joint bookrunners on the deal. Vyrix would use the IPO funds to finance development of tramadol hydrochloride (Zertane), which it wants to bring to market as the first drug approved by the FDA for premature ejaculation. Zertane would be taken orally and as-needed a few hours before sexual activity. In its prospectus, Vyrix described a large potential market for its drug, stating that premature ejaculation affects 20% to 30% of men worldwide. Vyrix is a wholly owned subsidiary of Ampio Pharmaceuticals Inc. Ampio spun off Vyrix late last year so Vyrix could focus on developing drugs for premature ejaculation. Ampio continues to develop its treatments for osteoarthritis of the knee and macular degeneration caused by diabetes. Ampio will remain the majority shareholder in Vyrix after the IPO, the prospectus said.

April 21, 2014 ...

OBAMA SAYS 8 MILLION HAVE SIGNED UP FOR HEALTH INSURANCE -- President Barack Obama said Thursday that eight million people had picked health-insurance plans through the Affordable Care Act, a number that significantly outstripped initial projections and emboldened him to step up criticism of Republicans seeking to repeal the law. The president, in a surprise Thursday afternoon appearance in the White House briefing room, employed noticeably more aggressive rhetoric in defending his signature legislative achievement, language that should help bolster Democratic candidates who have been on the defensive. The eight million sign-ups go beyond earlier projections by the Congressional Budget Office that six or seven million people would enroll through the exchanges in 2014. Mr. Obama pointed to the number to declare the law a success and that Republicans should stop trying to overturn it. “The point is, the repeal debate is and should be over,” the president said. “The Affordable Care Act is working and I know the American people don’t want us spending the next two and a half years refighting the settled political battles of the last five years.” Some 35% of those who signed up through the federal health-insurance exchange were in the coveted under-35 demographic, Mr. Obama said. The participation of younger, relatively healthy people is needed to balance out the cost of medical claims from older and sicker ones.

          The announcement contained few other new details about enrollment. Republicans quickly pointed to missing information--such as the number of people who had actually gained coverage after being uninsured, as opposed to those replacing an existing policy--to suggest the figures could be overblown as a measure of success. Democrats up for re-election in the fall have been bracing for a renewed debate around the law as the Senate prepares to hold confirmation hearings for a successor to Health and Human Services Secretary Kathleen Sebelius, whose resignation was announced the prior week. Rep. Carol Shea-Porter (D-NH), who has come under strong criticism from Republicans for supporting the law and is in a tough race for re-election, called the development great news. She has made her frustrations with the law known to the Obama administration, but said Thursday she has also heard from constituents in both parties who have been helped by the law. “The Affordable Care Act still has challenges, but today’s news is clearly a giant step forward,” she said.

JOHNSON & JOHNSON PROFIT JUMPS AS PRESCRIPTION SALES SURGE -- Johnson & Johnson (New Brunswick NJ), the world’s biggest maker of healthcare products, beat expectations and raised its 2014 forecast by focusing on new drugs and reducing its reliance on medical devices. The drug division overtook medical devices as the company’s biggest unit after its sales surged 11% to $7.5 billion. The growth, the fastest among the top 10 pharmaceutical companies worldwide, obscured a drop in demand for consumer goods and sales that were essentially unchanged in devices and surgical products after the harsh winter dampened elective medical procedures. While quarterly sales increased for medicines such as Stelara for psoriasis and Zytiga for prostate cancer, the performance of the hepatitis C drug Olysio was responsible for most of the $1 billion bump in the 2014 revenue forecast, CFO Dominic Caruso said. “There is no question they have had a string of pretty great wins in pharma that has taken four or five years to build,” said Matt Miksic, an analyst at Piper Jaffray in New York. “Pharma is the standout and it’s probably going to remain the story for at least another 18 to 24 months.” The company raised its 2014 forecast to $5.80 to $5.90 a share from $5.75 to $5.85 a share, excluding one-time items. Annual revenue is expected to be $74.5 billion to $75.3 billion.

          As the first major healthcare company to report earnings, J&J set the stage for its competitors. Net income rose 34% to $4.7 billion, or $1.64 a share, from $3.5 billion, or $1.22, a year earlier, the company said in a statement. Earnings excluding one-time items of $1.54 a share outpaced analysts’ estimates of $1.48. First-quarter revenue increased to $18.1 billion from $17.5 billion a year earlier, driven by Stelara, Zytiga, Invega Sustenna for schizophrenia, Prezista for HIV and Xarelto to prevent blood clots. The company also posted increases for specialty surgery, cardiovascular and vision care. Olysio, approved in November, received a boost when guidelines from medical societies that deal with hepatitis C infections in January recommended using J&J’s drug with Gilead Sciences Inc.’s (Foster City CA) Sovaldi for patients who can’t tolerate interferon, formerly a standard component in cocktails to treat the disease. That has become the standard of care, Caruso said. “Olysio surprised by reporting sales of $354 million, primarily sold in combination with Gilead’s Sovaldi,” said Derrick Sung, a Sanford C. Bernstein analyst. J&J closed the week at $98.96, the highest share price in more than 34 years, according to data compiled by Bloomberg. The shares have gained 21% in the past 12 months.

TRACKING WASHINGTON -- Departing Health and Human Services Secretary Kathleen Sebelius, who took scornful criticism over the botched rollout of President Barack Obama’s signature healthcare law, is considering a run for the U.S. Senate in Kansas, The New York Times reported. Sebelius, a former Kansas governor, is weighing overtures from Democrats who want her to run for the Senate seat occupied by Republican Pat Roberts, the newspaper said, quoting unidentified Democrats. It quoted one person said to have spoken directly with Sebelius as saying that she was thinking about the idea, but it was too soon to say how serious she was about it. Sebelius, who announced her resignation two weeks ago, is staying on the job until her successor, White House budget director Sylvia Mathews Burwell, is confirmed by the Senate. A representative of HHS declined to comment on The Times story. A run for the Senate would be a bold move in a solidly Republican state after Sebelius oversaw the introduction last October of the policy known as Obamacare, becoming a lightning rod for critics of the health reform law. In an interview with The New York Times, Sebelius said she wished she could take “all the animosity” toward Obamacare with her when she departs.

          The Food and Drug Administration has failed to track the effectiveness of generics that make up 80% of medicines sold in the U.S., according to doctors and researchers who told Congress last week that new efforts by the FDA still aren’t strong enough. Generic heart drugs made by some India-based companies don’t work as they should, said Preston Mason, a researcher at Brigham & Women’s Hospital in Boston who has studied the effectiveness of copies of Pfizer Inc.’s (New York) Lipitor made both in the U.S. and abroad. That may be because some companies are cutting corners to save money, he said. “This is the Wild West, the whole generics business,” Mason said during the session, which included about 50 congressional staff and representatives from the White House, the State Department and the FDA. Mason’s research included 36 different copies of the Lipitor cholesterol pill collected from 15 countries, he said. Generic versions from U.S.-based companies Mylan Inc. (Canonsburg PA) and Actavis Plc (Dublin IRL) weren’t contaminated, the study found. Two weeks ago the FDA said it was reviewing the results. Many of the drugs Mason studied “at best didn’t work, and at worst may have had adverse affects on the body,” he said at last week’s briefing. The meeting was organized at the request of the speakers to educate lawmakers in hopes of moving toward formal congressional hearings on the topic.

FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration said it approved Bristol-Myers Squibb Co.’s (New York) drug to treat rare and potentially fatal disorders involving loss of body fat. The condition, known as generalized lipodystrophy, involves fat buildup in the blood and organs such as liver and muscle and can lead to diabetes, pancreatitis and fatty liver disease. The FDA said it required seven post-marketing studies on the drug, Myalept.

          Elsewhere, GlaxoSmithKline Plc’s (London) diabetes treatment albiglutide was approved for use by the FDA, after a series of drug-development setbacks for the company. Albiglutide was approved for use in Europe in March under the brand name Eperzan. It belongs to a class of drugs called GLP-1 receptor agonists, which work by stimulating the body’s natural production of insulin and help regulate blood-sugar levels. Glaxo expects the drug to be launched in the U.S. under the brand name Tanzeum in the third quarter of this year. Despite approval, Glaxo’s drug is likely to face stiff competition from rivals that work in a similar way. The leading drug prescribed for this type of treatment is Victoza from Novo Nordisk A/S (Bagsvaerd DNK), which must be injected every day. Albiglutide could prove to be more convenient for diabetics because it is a once-weekly injection. Another once-weekly injection, called Bydureon from AstraZeneca Plc (London), is already available.

          The FDA has again approved a Merck & Co. (Whitehouse Station NJ) tablet for gradually reducing seasonal allergies, this time for ragweed pollen. Ragwitek tablets dissolve quickly under the tongue. Patients are to take one daily, from three months before ragweed season begins until it ends, for a few years. The FDA approved it for patients aged 18 through 65. Merck’s tablet for spring grass allergies, Grastek, was approved earlier in the week for patients aged 5 to 65. Both offer an alternative to medicines that just temporarily relieve symptoms or years of uncomfortable allergy shots. The shots and tablets work by gradually tamping down immune response to allergy-triggering substances and reducing sneezing, runny noses and itchy, watery eyes.

          And the European Medicines Agency (EMA) said it has concluded an inquiry into lax drug-safety reporting at Roche Holding AG (Basel CHE) and sent its report to the European Commission for the next steps. The European Commission will decide whether the matter should be pursued and financial penalties should be imposed. The process could potentially lead to hefty fines for the Swiss drugmaker for breaching EU rules but the agency gave no further details on its conclusions because the procedure is considered confidential. The EMA previously said in November it had not uncovered any new safety issues connected with Roche’s drugs as a result of the shortcomings in reporting adverse events. EMA launched its probe into Roche in 2012 after a routine inspection found the firm had failed to properly assess tens of thousands of cases of possible adverse drug reactions, involving 19 drugs, several of which were for cancer. Drugmakers are required to evaluate problems reported by doctors and patients after taking their drugs and then pass on any serious cases to regulators.

MEDICAL STOCK SPOTLIGHT -- Akebia Therapeutics Inc. (Nasdaq) led advancing issues, soaring $9.23, or 55% over the week, to $26.09. The big upward move came after the company announced it has completed enrollment in its ongoing 200-patient Phase 2b study of AKB-6548 for the treatment of anemia associated with chronic kidney disease in patients who are not dependent on dialysis. Stock in the Cincinnati, OH-based company soared, thanks to some highly optimistic analysts’ reports that were released early in the week. Tops among those was Morgan Stanley, which is predicting that Akebia’s stock price will leap to $90 within a year. Morgan Stanley analyst David Friedman said in his report that annual revenue for Akebia’s first drug could top $2 billion. He expects the drug to hit the market by 2018. Morgan Stanley was among the lead underwriters when Akebia completed its initial public offering on March 20.

          Elsewhere, Repligen Corp. (Nasdaq) leaped $2.19, or 16%, to $15.84 after replacing Hi-Tech Pharmacal Co. Inc. in the S&P SmallCap 600. In addition, Jefferies Group started coverage on shares of Repligen. The firm issued a “Buy” rating and a $17.00 price target on the stock. Waltham, MA-based Repligen develops therapeutics for the treatment of diseases of the central nervous system. The company owns intellectual property on monoclonal antibody and antibody fusion products. For the latest quarter, analysts’ consensus average estimate is for revenues of $15.30 million.

          And Horizon Pharma Inc. (Nasdaq) jumped 11% to $13.37 after announcing that it has received notice of the early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, in connection with its proposed acquisition of Vidara Therapeutics International Ltd. Horizon Pharma, a maker of treatments for arthritis, pain and inflammatory diseases, agreed last month to purchase Ireland’s Vidara for about $660 million. The combined company, to be renamed Horizon Pharma Plc, will be based in Ireland to provide a “tax-efficient corporate structure,” Deerfield, IL-based Horizon said. Vidara, a closely held company based in Dublin, markets Actimmune, a treatment for chronic granulomatous disease, a genetic disorder which affects the immune system, and severe osteopetrosis, a bone disease. Horizon Pharma’s yearly stock performance is 481%.

          But Transition Therapeutics Inc. (Nasdaq) plummeted $2.40, or 30%, to $5.59 despite reporting that there are no undisclosed material changes or corporate developments involving the company to account for its recent downdraft. The Toronto, Ontario-based company did recover nearly 12% Thursday. That reverses the trend of the company since April 9, as the stock is now down over 31% since then. Transition Therapeutics is a biopharmaceutical company focused on developing novel therapeutics in order to address global medical needs in large disease indications, including Alzheimer’s disease and diabetes.

IPO SECTOR -- The initial public offering for Vital Therapies Inc. (San Diego CA) opened at $12.25 after pricing 4.5 million shares of common stock at a price to the public of $12.00 per share, below the expected $13-$15 range. Shares, which trade on the Nasdaq under the symbol “VTL,” closed the week unchanged at $12.00. BofA Merrill Lynch and Credit Suisse Securities (USA) LLC are acting as joint book-running managers for the offering. Vital Therapies is a biotherapeutic company developing a cell-based therapy targeting the treatment of acute liver failure. The company’s lead product-candidate, ELAD, is an extracorporeal bio-artificial liver currently in Phase 3 clinical trials.

April 14, 2014 ...

OBAMA ANNOUNCES SEBELIUS RESIGNATION, SUCCESSOR -- The departure of Kathleen Sebelius from President Barack Obama’s cabinet removes a focal point for criticism over Obamacare’s troubled rollout, right at a moment when the White House can blunt attacks with enrollment numbers that exceeded targets. Senate confirmation hearings on the president’s choice to succeed Sebelius as Health and Human Services secretary, budget director Sylvia Mathews Burwell, will give Republicans days of media exposure for their criticism of Obamacare. But those hearings will now be held months ahead of midterm congressional elections, helping diminish the impact on voters. Sebelius’s departure also addresses demands from some Democrats for a change at the department to demonstrate that Obama recognizes the difficulties, political and practical, caused by the flawed startup of the healthcare law. Sebelius “has become a lightning rod,” Chris Lehane, a communications adviser in the Clinton administration, said. Now “it’s not as easy to use her as a foil in the fall because she’s hit her mark and she won’t be there.” The Obama administration set the stage for the exit hours before news of it leaked out. Sebelius, 65, delivered to a Senate committee the word that enrollment in Obamacare’s health plans had reached 7.5 million, exceeding a first-year projection of 7 million made by the Congressional Budget Office.

          Obama alluded to both early stumbles with the federal insurance exchange and the enrollment total in a White House ceremony Friday morning announcing Sebelius’s resignation and his pick to replace her. “Yes, we lost the first quarter of open enrollment period with the problems with healthcare.gov,” Obama said. “But under Kathleen’s leadership her team at HHS turned the corner, got it fixed, got the job done, and the final score speaks for itself.” Obama said Sebelius let him know last month of her desire to leave once the enrollment was done. The choice of Burwell, 48, currently director of the Office of Management and Budget, permits an expedited confirmation process. She was approved by the Senate just one year ago, by a 96-0 vote. “It will help the confirmation process that Sylvia just recently went through it,” said Jim Manley, a former top aide to Senate Majority Leader Harry Reid, a Nevada Democrat. “I still expect it to be nothing short of brutal.”

SMALL GROUP OF DOCTORS ACCOUNT FOR HUGE PORTION OF MEDICARE COSTS -- A tiny fraction of the 880,000 doctors and other healthcare providers who take Medicare accounted for nearly a quarter of the roughly $77 billion paid out to them under the federal program, receiving millions of dollars each in some cases in a single year, according to the most detailed data ever released in Medicare’s nearly 50-year history. In 2012, 100 doctors received a total of $610 million, ranging from a Florida ophthalmologist who was paid $21 million by Medicare to dozens of doctors, eye and cancer specialists chief among them, who received more than $4 million each that year. While more money by far is spent for routine office visits than any other single expenditure, one of the most heavily reimbursed procedures--costing a total of $1 billion for 143,000 patients--is for a single treatment for an eye disorder common in the elderly. The Medicare data--all for 2012 and the subject of an intense legal battle--provides an unprecedented look at the practice of medicine across the country, shedding fresh light on the treatment decisions physicians and other practitioners make every day. It will also provide consumers with an ability to compare doctors and treatments in a way they have never had until now.

          Fraud investigators, health insurance plans, researchers and others will spend weeks poring over the information about how many tests were ordered and procedures performed for every provider who received Medicare payments under Part B, which excludes payments to hospitals and other institutions. The Centers for Medicare and Medicaid Services made the data publicly available last Wednesday. While total Medicare spending--including hospitals, doctors and drugs--is approaching $600 billion a year, payments to individual doctors have long been shrouded in secrecy. For decades, the American Medical Association (Chicago), the powerful doctors’ group, and others have blocked the release of the information, citing privacy concerns and the potential for misuse of the information. But a federal judge ruled last year that the information could be made public.

TRACKING WASHINGTON -- The release last week of Medicare payment data is getting mixed reviews from doctors. Many say they favor sharing information but worry that the data presented by Medicare omits important details and may mislead the public and paint an unfairly negative picture of individual doctors. Dr. Gary Heit, a recently retired neurosurgeon in Redwood City, CA, said he thought some of the details revealed could be useful to patients who want to make sure that the physicians they choose are experienced--say in carotid-artery surgery, where more operations performed correlate with better patient outcomes. “Being able to track the number of procedures is incredibly valuable,” Dr. Heit said. “I think the ability to see the number of cases a physician does is really important.” However, the data only include treatments given to certain Medicare patients. Many other doctors worried that the data released was incomplete and often misleading. In some cases, enormous payments that seem to be going to one doctor are actually distributed to multiple others. But the data tables do not reveal that the money was shared.

          The highest-paid 2% of doctors received almost one-fourth of Medicare payments. For instance, Dr. Jean M. Malouin, a family medicine physician at the University of Michigan Health Systems, shows up as one of the top Medicare billers in the country, collecting payments of $7.58 million in 2012 for more than 207,000 patients. But Dr. Malouin directs a Medicare project that involves 1,600 primary care physicians, who each receive a small payment each month. Those payments are funneled through Dr. Malouin. The doctor’s situation is described in a website that the hospital set up last week to help explain the data to the public. Dr. David L. Longworth, chairman of the medicine institute at the Cleveland Clinic, said the data could also be misconstrued because it does not explain that some doctors treat unusually ill patients who need a great deal of complex, time-consuming care, for example those with heart failure or advanced cancers. People who focus only on the payments may assume that doctors who receive more money are doing something wrong, he said.

FDA/EMA ROUNDUP -- Zogenix Inc. (San Diego CA) won approval to sell the first painkiller made of pure hydrocodone as U.S. regulators recommended restrictions on popular combination treatments with the drug. The Food and Drug Administration cleared the company’s Zohydro for the management of pain severe enough to require continuous, long-term treatment, the agency said in a statement. Zohydro is intended as an alternative to drugs including Vicodin that mix hydrocodone with less-potent medicines such as aceteminophen. Zogenix is counting on the painkiller to boost its $44 million in 2012 revenue from sales of a migraine treatment Sumavel.

          Elsewhere, a federal task force recommended that some pregnant women take low-dose aspirin daily to avoid getting preeclampsia, a condition that can lead to preterm birth and other complications. Aspirin in general isn’t recommended during pregnancy because it can contribute to maternal and fetal bleeding. However, low-dose aspirin is sometimes prescribed for pregnant women with certain health conditions. The recommendation by the U.S. Preventive Services Task Force comes after the nation’s biggest obstetrics association issued similar advice last fall. The task force said that women who have had preeclampsia during previous pregnancies should take a pill of 81 milligrams--often called “baby aspirin”--each day after the 12th week of pregnancy. The recommendation applies to pregnant women whose doctors consider them at high risk for the condition, as long as they haven’t had previous bad medical experiences with aspirin. The task force’s advice is a draft recommendation and the panel is seeking comments from the public before making it final.

          Testosterone medicines are being reviewed by the European Union’s drug regulator after studies suggested the products may pose risks to the heart. The European Medicines Agency will study the products’ benefits and risks to issue an opinion whether their marketing authorizations should be maintained, changed, suspended or withdrawn across the 28-nation bloc. The drugs are mainly used by men who don’t produce enough of the sex hormone, the agency said. One study suggested that using testosterone increases the risk of a heart attack in men older than 65, as well as in younger men with heart disease, the agency said. Other trials have raised similar concerns, the EMA said. In January, the U.S. Food and Drug Administration said it was looking over data on testosterone drugs because of potential harm to the heart.

          And the FDA approved an easy-to-use device made by Kaleo Inc. (Richmond VA) that automatically injects the right dose of an overdose antidote named naloxone before an ambulance arrives. Doctors could prescribe it for family members or caregivers to keep on hand, in a pocket or a medicine cabinet. Opioids include legal prescription painkillers, such as OxyContin and Vicodin, as well as illegal street drugs like heroin. Called Evzio, the device contains naloxone, a long-used antidote for overdoses that is usually administered by syringe in ambulances or emergency rooms. But with the rise in drug overdose deaths, there has been a growing push to equip more people with the protection. The FDA said Evzio’s design makes it easy for anyone to administer.

MEDICAL STOCK SPOTLIGHT -- Celladon Corp. (Nasdaq) led advancing issues, surging $2.40, or 24% on the week, to $12.38. The U.S. Food and Drug Administration granted “breakthrough” therapy designation for Celladon’s lead product candidate, Mydicar, for reducing hospitalizations for heart failure in NYHA class III or IV chronic heart failure patients who are NAb negative. The company is developing Mydicar as a new first-in-class therapy for patients with chronic heart failure due to systolic dysfunction. The drug uses genetic enzyme replacement therapy to correct the deficiency in the enzyme SERCA2a, which is an enzyme that becomes deficient in heart failure patients and results in inadequate pumping of the heart. Celladon president and CEO Krisztina Zsebo said the San Diego-based company is looking forward to working with the senior staff at the FDA to determine the most expeditious path to bring Mydicar to patients with advanced heart failure.

          Elsewhere, Agios Pharmaceuticals Inc. (Nasdaq), a clinical-stage biopharmaceutical company developing cancer therapies, vaulted $7.84, or 22%, to $43.32 after the Cambridge, MA-based company released initial data on its phase 1 study of AG-221, an oral inhibitor of IDH2 mutations, in patients with hematological malignancies (blood cancers). According to its press release, Agios’s preliminary data for AG-221 demonstrated that the drug was well-tolerated and safe. More importantly, though not the initial goal of its phase 1 study, AG-221 demonstrated promising clinical activity, including complete clinical remissions, even at the lowest-tested dose. Overall, six of seven evaluable patients had an objective response, with three complete responses and two complete remissions with incomplete platelet recovery, and one patient with a partial response.

          And Health Insurance Innovations Inc. (Nasdaq) jumped $1.71, or 18%, to $11.26. The uptick came after the web-based health insurance company posted record quarterly sales results during the first quarter. The Tampa, FL-based company received 57,644 submitted applications during the quarter, a 107% jump from first quarter 2013. The numbers have been helped due to the Affordable Care Act mandate. “Our sequential growth of 56% in first-quarter over fourth-quarter 2013 confirms that consumer demand for these more agile health plans continues in this post-Obamacare market,” said CEO Mike Kosloske. TheStreet Ratings team rates the company a “Hold” with a ratings score of C-.

          But Regado Biosciences Inc. (Nasdaq) plummeted $3.70, or 39%, to $5.85 after the biopharmaceutical company priced an offering of its common stock. The Basking Ridge, NJ-based company priced 10 million shares at $6 a share. The offering should close on or about April 16 and includes a 30-day option for underwriters to purchase an additional 1.5 million shares, Regado said. Regado expects gross proceeds of $60 million, which it plans to use to fund further clinical development of its REG1 anti-coagulant.

IPO SECTOR -- Shares of Adamas Pharmaceuticals Inc. (Emeryville CA) wavered Thursday after the drug developer’s initial public offering raised $48 million. The offering of 3 million shares priced at $16 each, the low end of an expected range of $16 to $18. Shares closed the week down $3.00, or 19%, at $13.00. Credit Suisse and Piper Jaffray are acting as joint book-running managers for the offering. Adamas is developing drugs that treat central nervous system disorders such as Parkinson’s and Alzheimer’s disease. It worked with Forest Laboratories Inc. on Namenda XR, an extended-release version of a Forest drug that treats Alzheimer’s. The two companies are also studying a pill that combines Namenda XR with donepezil, the active ingredient in Pfizer Inc.’s drug Aricept. Forest filed for approval of that pill in March. Adamas is also studying a drug that could treat irritability and aggression caused by traumatic brain injury as well as movement disorders caused by levodopa, a drug that is used to treat Parkinson’s disease. Shares of the company are trading under the symbol “ADMS” on the Nasdaq Global Market.

April 7, 2014 ...

MORE THAN SEVEN MILLION SIGN UP FOR HEALTH COVERAGE, OBAMA SAYS -- More than 1 million people waited until the last five days to sign up for 2014 health coverage under Obamacare, and early indications are that many were young minorities, insurance analysts and enrollment groups said last week. That may be good news for health insurers who have been concerned that the customers enrolling in health plans through the new insurance exchanges are sicker and older than the average American. About 7.1 million people signed up for private plans under the Patient Protection and Affordable Care Act by the close of the first enrollment period on March 31, President Barack Obama announced. The figure, a symbolic triumph for the president, met a year-old projection by the Congressional Budget Office that was thought out of reach after the exchanges were plagued by computer malfunctions last October. “The enrollment surge is the best news possible for insurance companies,” the Kaiser Family Foundation, a Menlo Park, CA-based nonprofit that tracks health programs, said. Six million people had signed up by March 27. Enrollment events across the country were swarmed by late applicants the previous weekend, and the federal website, healthcare.gov, saw almost 8 million visits from March 29 to March 31. While computer errors prevented many people from signing up on the deadline day, anyone who tried can complete the process this month, federal officials have said.

          More than 5.4 million adults may have gained health insurance since the start of enrollment in Obamacare plans through early March, according to a survey released last week by the Robert Wood Johnson Foundation (Princeton NJ). That would bring the percentage of uninsured Americans to 15.2% from 17.9% in September, the nonprofit group said. The survey of 7,500 adults younger than age 65 doesn’t include the late surge of people who selected plans close to the March 31 deadline, the group said. It may be weeks before specific details are known about the impact of the Affordable Care Act or about the people who have signed up for coverage. The Department of Health and Human Services is expected to release a report later this month on enrollment through the end of March; previous reports have broken down enrollment by age and gender. They are silent on how many of the enrollees were previously uninsured, and how many have paid their first premium to health insurers, the final step required to finish signing up.

J&J ACCEPTS $4-BILLION OFFER FROM CARLYLE FOR ORTHO UNIT -- Johnson & Johnson (New Brunswick NJ) has accepted an offer of about $4 billion from the private equity firm The Carlyle Group LP (Washington DC) to buy its Ortho-Clinical Diagnostics business. J&J said last week that the deal for the blood-testing unit should close by mid-year. The healthcare giant had said in January that Carlyle had offered $4.15 billion for the business, and that it would talk to works councils and trade unions representing its employees before making a decision. The Ortho-Clinical business serves hospitals, testing laboratories and blood banks. It supplies equipment and chemicals to screen donated blood for HIV, hepatitis C and other serious diseases. It also makes technology for advanced testing of blood to diagnose health conditions and to monitor medication effects. Ortho Clinical Diagnostics is based in Raritan, NJ, and employs more than 4,500 employees. It runs factories in Rochester, NY; Pompano Beach, FL.; and Pencoed, Wales.

          J&J CEO Alex Gorsky had said last year the company was looking at strategic options for Ortho-Clinical Diagnostics, which doesn’t meet the company’s long-held strategy of focusing on businesses that rank first or second in their markets. Shares of J&J closed the week up 98 cents, or 1%, at $98.42. They have climbed more than 7% so far this year.

TRACKING WASHINGTON -- The Supreme Court last week agreed to hear an appeal from Teva Pharmaceutical Industries Ltd (Petach Tikva ISR), a decision that could conceivably delay generic competition to Teva’s big-selling multiple sclerosis drug Copaxone. An appeals court last July had invalidated a patent that would have protected Copaxone until September 2015. Without that protection, the drug could face competition from lower-priced copies as early as late May. While Teva, an Israeli company, is the world’s largest manufacturer of generic drugs, the branded product Copaxone accounts for about 20% of its revenue and around half of its profit. Sales of Copaxone reached $4.3 billion last year, of which $3.2 billion came from the United States. But health insurers are eagerly anticipating the introduction of a generic. There are none available right now as treatments for multiple sclerosis. And the prices of Copaxone and some of its competitors have roughly quadrupled over the last decade.

          So far, the Food and Drug Administration has not approved any generic versions of Copaxone, which is known as glatiramer acetate. But two teams of companies have expressed confidence that their versions could be approved by June. One team is Momenta Pharmaceuticals Inc. (Cambridge MA) and Sandoz, the generic division of Novartis AG (Basel CHE). The other is Mylan Inc. (Canonsburg PA) paired with Natco Pharma Ltd., an Indian drug company based in Hyderabad. The question now is whether the companies, in light of the Supreme Court decision, will start to market their generics this year, assuming they obtain FDA approval. David Maris, an analyst who follows Teva for BMO Capital Markets, said the Supreme Court’s decision to hear the case was “great news for Teva, as we believe it will bolster investor confidence that a generic will not be on the market in May 2014.” He said in a note that the generic companies “may not be willing to risk a launch.”

FDA/EMA ROUNDUP -- The Food and Drug Administration on Thursday approved an easy-to-use device made by Kaleo Inc. (Richmond VA) that automatically injects the right dose of an overdose antidote named naloxone before an ambulance arrives. Doctors could prescribe it for family members or caregivers to keep on hand, in a pocket or a medicine cabinet. Opioids include legal prescription painkillers, such as OxyContin and Vicodin, as well as illegal street drugs like heroin. Called Evzio, the device contains naloxone, a long-used antidote for overdoses that is usually administered by syringe in ambulances or emergency rooms. But with the rise in drug overdose deaths, there has been a growing push to equip more people with the protection. The FDA said Evzio’s design makes it easy for anyone to administer.

          Elsewhere, shares of Intuitive Surgical Inc. (Sunnyvale CA) climbed last week after the company said the FDA approved a new version of its da Vinci robotic surgical system. Intuitive Surgical said the agency cleared a new version called da Vinci Xi. It said the features of the new system include longer instrument shafts that provide greater reach; smaller, thinner surgical arms with a new joint design that improves their range of motion; and a new overhead instrument arm design that is intended to give surgeons anatomical access from almost any position. The da Vinci system uses robotic arms, cameras and a remote-control console to help doctors perform surgery with tiny incisions. It is used in minimally-invasive gynecological procedures, heart surgeries, prostatectomies, thoracic surgeries, urology procedures and other operations. Shares of Intuitive closed the week up $70.53, or 16%, at $505.52.

          The FDA said it has approved the first tablet in the U.S. for gradually reducing hay fever symptoms, an alternative to months of weekly doctor visits for uncomfortable allergy-desensitizing shots. Oralair was approved for patients ages 10 through 65. It’s made by France’s Stallergenes SA (Antony), a leader in immunotherapy medicines that dissolve under the tongue. Oralair tablets are to be taken daily starting four months before grass pollen season to reduce allergic reactions to the five most common U.S. grass types: Kentucky bluegrass, orchard, perennial rye, sweet vernal and Timothy. It contains freeze-dried extracts from pollens of those grasses. About 60 million Americans have hay fever, but fewer than 3 million are treated with allergy shots.

          And MannKind Corp.’s (Valencia CA) inhaled diabetes treatment won the backing of a panel of FDA advisers, boosting the company’s long-running effort to get its first product on the market. Advisers voted 13 to 1 and 14 to 0 that the drug, Afrezza, should be approved for Type 1 and Type 2 diabetes, respectively. The FDA doesn’t have to follow the panel’s recommendation. FDA staff raised concerns in a report March 28 that the drug may affect lung function and about missing data from a study on Type 1 diabetes patients. MannKind has spent more than seven years trying to gain approval. The FDA rejected the drug twice, most recently in 2011, after the company decided to switch inhalers during the review process.

MEDICAL STOCK SPOTLIGHT -- IsoRay Inc. (NYSE) led advancing issues, rocketing 31% over the week to $3.03, continuing to rally on high-volume after unveiling it plans to host a booth at the Annual Meeting of the American Brachytherapy Society (ABS). The annual ABS meeting took place in San Diego. The company presented five papers during the convention and believes that all studies will show exceptional results realized in all areas of the body where Cesium-131, or the physics associated with Cesium-131, was used. IsoRay produces a brachytherapy seed which is used to treat prostate and other cancers. The Richland, WA-based company’s seed delivers more than 90% of its total radiation dose in less the 33 days, reducing the incidence of common brachytherapy side effects.

          Elsewhere, genetic testing firm Myriad Genetics Inc. (Nasdaq) surged $8.12, or 25%, to $40.99 after it received a welcome boost from the Center for Medicare & Medicaid Services. Back in late December, the CMS had announced that it would cut reimbursement rates heavily for Myriad’s gene diagnostics tests for breast cancer. That took down the stock then, but Myriad bounced back last week after the CMS’s final price cuts ended up much less than originally expected. It’s a big win for Salt Lake City UT-based Myriad with concerns over competition circulating about this stock, although Myriad’s 61% year-to-date rise does invite caution according to some analysts.

          And TetraLogic Pharmaceuticals Corp. (Nasdaq) jumped 11% to $6.84 after announcing that data published in the April issue of Molecular Cancer Therapeutics further advances the preclinical characterization of its lead SMAC-Mimetic birinapant, which is currently being tested in Phase 1 and Phase 2 clinical trials for hematological malignancies and solid tumors. The publication will appear in the April edition of Molecular Cancer Therapeutics. The electronic version of the publication is available online at http://mct.aacrjournals.org/content/early/2014/03/24/1535-7163.MCT-13-0798.abstract. Malvern, PA-based Tetralogic discovers and develops small molecule peptide-mimetic drugs for the treatment of cancers.

          But Halozyme Therapeutics Inc. (Nasdaq) plunged $3.68, or 30%, to $8.43 after announcing that as a result of a recommendation received last week from an independent Data Monitoring Committee (DMC), it is temporarily halting patient enrollment and dosing of PEGPH20 in an ongoing Phase 2 trial evaluating PEGPH20 in patients with pancreatic cancer. The DMC is assessing clinical data that indicate a possible difference in the thromboembolic event rate between the group of patients treated with PEGPH20, nab-paclitaxel and gemcitabine versus the group of patients treated with nab-paclitaxel and gemcitabine without PEGPH20. San Diego-based Halozyme is a biopharmaceutical company developing products for the diabetes, cancer, dermatology and drug-delivery markets. The company’s platform technology is based on recombinant human hyaluronidase plus additional enzymes.

IPO SECTOR -- The initial public offering for Corium International Inc. (Menlo Park CA) opened for trading last week at $8.26 after pricing 6.5 million shares of common stock at a price to the public of $8.00 per share, below the expected $10-$12 range. The IPO raised $52 million. The offering size was boosted from 5.5 million shares. Shares closed the week up 1% at $8.10. Jefferies LLC and Leerink Partners LLC are acting as joint book-running managers for the offering. Together with its partners, Corium says it has successfully developed six marketed products in the prescription drug and consumer markets, and it is the sole commercial supplier of each of those products for its marketing partners. These marketed products are Clonidine Transdermal Delivery System, or TDS, Fentanyl TDS and four Crest Advanced Seal Whitestrips products.

March 31, 2014 ...

OBAMACARE'S 6 MILLION TARGET REACHED AS EXCHANGE VISITS SURGE -- Back on track after a stumbling start, President Barack Obama’s healthcare overhaul reached a milestone last Thursday, with more than 6 million Americans signed up for coverage through new insurance markets. The announcement--four days before open enrollment season ends today--fulfills a revised goal set by the Congressional Budget Office and embraced by the White House. Like much else about Obama’s healthcare law, it comes with a caveat: The administration has yet to announce how many consumers actually closed the deal by paying their first month’s premium. Some independent estimates are that as many as 10% to 20% have not paid, which would bring the total enrollment to between 5 million and 6 million people. The White House said the president made the announcement during an international conference call with enrollment counselors and volunteers, while traveling in Italy. Administration officials, focused on signing up even more people over the weekend, played down the occasion. Others said it was unmistakably a promising sign. “I think the program is finally starting to hit its stride in terms of reaching the enrollment goals the administration set,” said John Rother, CEO of the National Coalition on Health Care (Washington DC), a nonpartisan coalition of businesses, healthcare industry groups and consumer organizations.

          Today is the deadline to enroll in the new insurance exchanges, but potentially millions of people will still be able to take advantage of extensions announced last week. Some people will get more time to finish enrolling in Obamacare insurance plans under new rules that include anyone who begins signing up before midnight or was previously kept from enrolling by website flaws. Americans who aren’t insured by midnight are supposed to pay a penalty of as much as 1% of their income, according to the law. The extension, announced last week, opens up the chance to produce many more last-minute enrollees. The U.S. website, healthcare.gov, drew 1.1 million visitors on March 24, the second-most in a single day. Consumers who begin applying by 11:59 p.m. today will be able to complete their enrollment later in plans to take effect May 1. Additionally, those who attest online they had trouble signing up before the deadline can begin the enrollment process after today, said Julie Bataille, a spokeswoman for the Centers for Medicare and Medicaid Services.

BAXTER SPLITTING INTO TWO SEPARATE BUSINESSES -- Baxter International Inc. (Deerfield IL), the maker of hemophilia treatments, will split into two companies, one focused on developing biotechnology and pharmaceutical medicines and one that sells medical products. The deal, to be completed by the middle of next year, follows a two-year trend in the industry in which Abbott Laboratories Inc. (Abbott Park IL), Pfizer Inc. (New York) and Bristol-Myers Squibb Co. (New York) have all sold, spun off or split apart businesses. Baxter’s drug unit last year had $6 billion in revenue, while the medical-products division had more than $9 billion, according to a statement. “It’s a very good move,” said Joanne Wuensch, a New York-based analyst at BMO Capital Markets. “They’ll be able to focus on businesses they do best, and unleash opportunities for franchises which could have been hidden inside a larger organization.” Baxter was trading “at a steep discount” because of concern over competition in the hemophilia market, she said. The transaction may produce a market potential of $50 billion in 2017 for the medical-products division, and $65 billion for the biopharmaceuticals division, according to company data. The split will “enhance prospects for growth in both mature and emerging markets,” Baxter CEO Robert Parkinson, Jr. said.

          Parkinson will remain CEO and chairman at the medical products company, which retains the Baxter International name, according to the statement. Ludwig Hantson will be CEO of the pharmaceutical company, which will be named at a later junction, Baxter said. The new biotechnology-pharmaceutical company will focus on hemophilia and new therapies for treating bleeding disorders, Hantson said. It will be “driving scientific innovation and leveraging expertise into new therapeutic areas through acquisitions and collaborations,” he said. The two new divisions will attract new investors depending on their appetite for risk, according to Erik Gordon, a professor at the Ross School of Business at the University of Michigan. “Baxter had two businesses with very different risk profiles,” Gordon said. “The bioscience division is going to invest a lot of money in next-generation treatment, which is risky business. Then you have another business where you’re selling bags of IV solution, which has nice, steady growth but is not too risky.” Baxter closed the week up $5.14, or 8%, at $72.85.

TRACKING WASHINGTON -- Six senators, five Democratic and one independent, on Thursday rolled out a series of policy proposals they said were intended to fix and improve President Obama’s signature healthcare law. Three of the Democrats--Senators Mark Begich of Alaska, Mary L. Landrieu of Louisiana and Mark Warner of Virginia--are up for re-election in 2014. Their unveiling of the policy prescriptions comes as vulnerable Democratic candidates in both the House and Senate are under increasing pressure to distance themselves from the Affordable Care Act. The other Democratic senators, Heidi Heitkamp of North Dakota and Joe Manchin III of West Virginia, as well as Senator Angus King, independent of Maine, rounded out the group of centrists who laid out their plans in an op-ed article in Politico Magazine Thursday. The move reflects part of a broader strategy by Democrats, who are grappling with the awkward reality of how to escape the embrace of the healthcare law--which passed with no Republican votes and has become a political liability--while not going as far as their Republican counterparts who are trying to repeal it. The Democratic plan heading into the midterm elections, which has already begun to play out on the airwaves, calls on vulnerable Democrats to talk candidly about the healthcare law’s problems, while offering their own solutions.

          In other news, the U.S. Federal Trade Commission is seeking a settlement of $1 billion or more from pharmaceutical companies it has sued for delaying the sale of cheaper medicines after patents on brand-name drugs may have expired, an FTC official told a legal conference on Friday. The antitrust agency alleges that the way drugmakers settle patent-related lawsuits hurts consumers by making drugs more expensive. In the settlements, makers of brand-name drugs pay millions of dollars to generics companies while they delay putting their products on the U.S. market. Last June, the U.S. Supreme Court ruled that the FTC may challenge the deals in federal courts. A panel moderator at the American Bar Association’s spring antitrust meeting asked Deborah Feinstein, the director of the FTC’s Bureau of Competition, what developments to expect in the coming year. “My hope is that we get a billion-dollar settlement in one of the patent-settlement, pay-for-delay cases,” Feinstein responded, giving no indication that any settlement was imminent. The FTC’s long-running lawsuits are not close to going to trial. “In all truth, that is one of the biggest priorities we have,” she said. “The consumer harm there is extremely significant, and so we have a tremendous amount of resources there and hope to come out with a victory one way or another in those cases.”

FDA/EMA ROUNDUP -- William Demant Holding A/S (Smorum DNK) has received approval for its first hearing aid reducing tinnitus from the U.S. Food and Drug Administration, according to Reuters. The new hearing aid is especially targeted at the U.S. Veterans Administration (VA), a government-led program for U.S. military veterans, which currently makes up about 20% of all hearing aid units dispensed in the U.S. “There is a demand for it in the U.S. market, especially within the Veterans Administration,” a William Demant spokeswoman said. In 2011, 840,865 members of the VA had tinnitus according to Handelbanken.

          Elsewhere, Biogen Idec Inc. (Weston MA), a biotechnology company that specializes in multiple sclerosis treatments, won FDA approval for a long-lasting hemophilia B drug that may reduce the need for infusions. The medicine called Alprolix was cleared to treat the blood disorder, the FDA said. The medicine replaces the factor IX protein that helps blood clot. Biogen and Sweden’s Orphan Biovitrum AB are partners on the development of Alprolix. Current treatments can require several infusions a week, Tony Kingsley, executive vice president of Biogen’s global commercial operations, said. Alprolix may be infused once a week or less frequently depending on the patient, he said.

          A panel of FDA advisers has narrowly backed an experimental blood test that uses patients’ DNA to help screen for colon cancer. The FDA’s genetic experts voted 5-4, with one abstention, that the benefits of Epigenomics AG’s (Berlin) test outweigh the risks. The vote amounts to a recommendation for approval of the company’s Epi proColon kit. The FDA is not required to follow the panel’s recommendation. Doctors have long used stool tests to look for hidden blood that can be an early warning of cancer. Epigenomics’ test is part of a new wave of diagnostics that detect genetic markers associated with cancerous tumors. FDA scientists said in their review earlier last week that Epi proColon did not meet all of its accuracy goals in testing against older, stool-based technology.

          Separately, another colon cancer screening method that analyzes DNA from stool samples won the unanimous backing of an FDA advisory panel on Thursday, paving the way for potential regulatory approval of the non-invasive test. A panel of outside experts advising the FDA voted 10-0 to recommend approval of the Cologuard screening test made by Exact Sciences Corp. (Madison WI). The company said a large clinical trial found that its test detected 92.3% of colorectal cancers in average-risk patients based on a combination of DNA and hemoglobin markers. If Cologuard is approved by the FDA, patients who have a positive cancer finding with the test, which identifies abnormal cells shed in the stool, would then undergo a colonoscopy.

MEDICAL STOCK SPOTLIGHT -- Keryx Biopharmaceuticals Inc. (Nasdaq) led a small group of advancing issues, rising $1.77, or 12% over the week, to $16.61. The spike followed news that the “doc fix” bill moving through Congress includes language for Medicare to delay moving oral-only end-stage renal disease (ESRD) drugs into the ESRD bundle until 2024. A note sent by Guggenheim Partners to clients included the revelation that the “doc fix” would delay the inclusion of ESRD drugs that don’t have an IV alternative. This 8-year delay comes after a previous 2-year delay bumping the date to 2016 and should be a boon to those companies producing medications falling into the oral-only ESRD category. New York-based Keryx’s lead product candidate recently completed Phase 3 testing for hyperphosphatemia in ESRD patients.

          Elsewhere, Staar Surgical Co. (Nasdaq) gained $1.76, or 11%, to $18.37 after an FDA panel voted to recommend approval for the company’s novel Visian Toric implantable collamer lens for treatment of myopic astigmatism in adults aged 21-45. If the FDA follows its panel’s recommendation and grants marketing approval for Visian Toric, Monrovia, CA-based Staar Surgical will hold the only lens approved in the U.S. for placement in the posterior chamber (ciliary sulcus) of the phakic eye for myopia and astigmatism.

          But Exelixis Inc. (Nasdaq) plunged $2.91, or 46%, to $3.38--the most in almost 2 1/2 years--after the biotechnology company said trials of its prostate cancer drug wouldn’t end early. Analysts anticipated the study might be stopped in advance based on the beneficial effects of the drug, cabozantinib. “We’ve been really clear with investors that we hope to have positive results from the study, whether they come at the interim or final analysis,” said CEO Michael Morrissey. South San Francisco-based Exelixis gained approval in November 2012 from the U.S. Food and Drug Administration for cabozantinib as a treatment for thyroid cancer patients. “We see this as a disappointing outcome given that many other high-profile prostate cancer Phase 3 trials have been stopped early,” said Cory Kasimov, a New York-based analyst for JPMorgan Chase & Co.

          And the biotech sector index fell 7% for the week. With just one trading day left in March, the index was down about 13% for the month at Friday’s close. Taking it on the chin was Relypsa Inc. (Nasdaq), down 25% over the week to $30.01. Also hit were Endocyte Inc. (Nasdaq), off 22% at $21.96 and Sangamo Biosciences Inc. (Nasdaq), down 22% at $16.74. “The decline in biotech is part of the reallocation of capital as we near the end of the quarter. It seems like they are a bit out of favor right now, along with momentum stocks,” said J.J. Kinahan, chief strategist at TD Ameritrade in Chicago.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Ariosa Diagnostics Inc. (San Jose CA) registered up to $69 million worth of common stock. The company plans to list on the Nasdaq Global Market under the symbol “AROS.” The offering is being made via J.P. Morgan and Citigroup. The developer of molecular diagnostics and prenatal tests posted $53 million in sales for the fiscal year ended Dec. 31, 2013, Nasdaq.com reported. The nearly 4-year-old company develops Harmony--a prenatal genetic test that assesses the risk for chromosome conditions such as Down syndrome. The test also has an option for an analysis of fetal sex and sex chromosome conditions. Ariosa describes itself as a global commercial-stage molecular diagnostics company focused on improving overall patient care by developing and delivering innovative, affordable and widely-accessible genetic testing.

March 24, 2014 ...

HEALTHCARE SIGNUPS HIT 5 MILLION MARK -- More than 5 million people have enrolled in private health insurance under the law known as Obamacare since open enrollment began on October 1, the Obama administration said last week. With the March 31 enrollment deadline only a week away, a top administration official reported a big upswing in public interest in subsidized health insurance and said traffic on the federal website HealthCare.gov reached 1 million visitors over the previous weekend. “The last several days have been the busiest since December,” Marilyn Tavenner, administrator of the U.S. Centers for Medicare and Medicaid Services, said in a government blog posting that announced the new total. The 5 million enrollee total marked an increase of at least 800,000 people since March 1, indicating that total enrollment could approach the 6 million figure estimated by the nonpartisan Congressional Budget Office if enrollment surges in the final weeks as administration officials have predicted. The CBO initially forecast 7 million enrollees in private health coverage, but scaled back its estimate after technical problems with the rollout that continue to afflict Obamacare insurance marketplaces operated by several states.

          Last Monday’s release did not say how many new enrollees were adults aged 18 to 34, a younger demographic whose participation is seen as essential for the success of President Barack Obama’s signature domestic policy achievement. Before the rollout, administration officials said their goal was for 38% of the new online private insurance marketplaces to consist of younger consumers, who compensate for older, sicker enrollees because they tend to be healthy and cheaper to ensure. But the data so far shows young adults accounting for only one-quarter of enrollees. Another important section consists of people signing up for insurance for the first time, a group that also tends to be healthy. The administration says it has no data for that group, but the consulting firm McKinsey & Co. (New York) in a report this month put the number at around 27% of the total enrollees. Too few healthy beneficiaries could cause healthcare costs to rise as insurers grapple with higher insurance risks posed by policyholders who are sick or older. “Five million is only a good number if it’s mostly people who didn’t have insurance before,” said Joe Antos of the conservative American Enterprise Institute (Washington DC).

STUDY QUESTIONS EFECTS OF DIETARY FATS ON HEART DISEASE -- A long-held tenet of healthy nutrition is that saturated fat, the type found in meat, butter and cheese, causes heart disease. But a large and exhaustive new analysis by a team of international scientists found no evidence that eating saturated fat increased heart attacks and other cardiac events. The new findings are part of a growing body of research that has challenged the accepted wisdom that saturated fat is inherently bad for one’s health and will continue the debate about what foods are best to eat. For decades, health officials have urged the public to avoid saturated fat as much as possible, saying it should be replaced with the unsaturated fats in foods like nuts, fish, seeds and vegetable oils. But the new research, published last week in the journal Annals of Internal Medicine, did not find that people who ate higher levels of saturated fat had more heart disease than those who ate less. Nor did it find less disease in those eating higher amounts of unsaturated fat, including monounsaturated fat like olive oil or polyunsaturated fat like corn oil. “My take on this would be that it’s not saturated fat that we should worry about” in our diets, said Dr. Rajiv Chowdhury, the lead author of the new study and a cardiovascular epidemiologist in the department of public health and primary care at Cambridge University.

          But Dr. Frank Hu, a professor of nutrition and epidemiology at the Harvard School of Public Health, said the findings should not be taken as “a green light” to eat more steak, butter and other foods rich in saturated fat. He said that looking at individual fats and other nutrient groups in isolation could be misleading, because when people cut down on fats they tend to eat more bread, cold cereal and other refined carbohydrates that can also be bad for cardiovascular health. The single macronutrient approach is outdated,” said Dr. Hu, who was not involved in the study. “I think future dietary guidelines will put more and more emphasis on real food rather than giving an absolute upper limit or cutoff point for certain macronutrients.” He said people should try to eat foods that are typical of the Mediterranean diet, like nuts, fish, avocado, high-fiber grains and olive oil. A large clinical trial last year, which was not included in the current analysis, found that a Mediterranean diet with more nuts and extra virgin olive oil reduced heart attacks and strokes when compared with a lower fat diet with more starches.

TRACKING WASHINGTON -- The White House said it would shift its strategy for winning Senate confirmation of its choice for the next U.S. surgeon general after President Barack Obama’s fellow Democrats helped sink another of his nominees this month. White House spokesman Jay Carney told reporters the administration expects Vivek Hallegere Murthy, the head of a doctors group, to eventually be confirmed by the U.S. Senate and is not reconsidering withdrawing Murthy’s nomination for the top health post. Earlier this month, seven Democrats broke ranks and joined Republicans to block the nomination of lawyer Debo Adegbile to head the Justice Department’s civil rights division. The administration’s defeat came eight months before congressional elections and as some of Obama’s Democrats in Congress did not want to be seen as soft on crime by supporting Adegbile amid objections from police groups. Obama nominated Murthy in November to serve as the nation’s top public health advocate. Murthy’s appointment passed a key Senate panel with bipartisan support. But the full Senate must still vote to back him. “After the confirmation vote of Debo Adegbile, we are recalibrating the strategy around Dr. Murthy’s floor vote, Carney said.

          In other news, Gilead Sciences Inc. (Foster City CA) was asked last week by Congressional Democrats to explain how the company set its $84,000 price for hepatitis C treatment Sovaldi. CEO John Martin also was asked to explain what is being done to make sure the medicine gets into the hands of low-income patients, especially in government-run health programs, according to the letter from the representatives. “Our concern is that a treatment will not cure patients if they cannot afford it,” wrote Democratic representatives Henry Waxman of California, Frank Pallone Jr., of New Jersey, and Diana DeGette, of Colorado. In the letter they asked Gilead to brief Congress by April 3. Gilead’s drug was approved last year as a breakthrough treatment for viral liver infection. The medicine offers higher cure rates and fewer side effects than older treatments, and its high cost has attracted scrutiny and resistance from insurers and public health advocates.

FDA/EMA ROUNDUP -- Celgene Corp. (Summit NJ), the maker of the cancer drug Revlimid, won U.S. approval of a pill to treat psoriatic arthritis that may challenge injections that are among the best-selling drugs on the market. The medicine, called Otezla, was cleared to treat arthritis associated with the skin condition psoriasis, the Food and Drug Administration said, giving the company its first victory in its effort to sell the drug for a handful of other inflammatory diseases. The painful joint condition occurs in about 30% of the 125 million people worldwide who have psoriasis, according to Celgene. The drug, also known as apremilast, is an oral medication while commonly used treatments are given by injection, including AbbVie Inc.’s Humira and Enbrel, from Amgen Inc. and Pfizer Inc. Humira generated $10.7 billion in 2013 while Amgen and Pfizer reported $8.32 billion in Enbrel sales. Otezla may produce $1.1 billion in sales by 2017, according to analysts’ estimates compiled by Bloomberg.

          Elsewhere, the FDA approved a drug, Impavido, to treat the tropical disease leishmaniasis, which is caused by a parasite transmitted to humans through fly bites. The drug, also known as miltefosine, is already approved for sale in Europe, the Indian subcontinent and Central and South America. Leishmaniasis occurs primarily in people who live in the tropics and subtropics. Most U.S. patients acquire the disease while traveling overseas. Impavido, made by Canada’s Paladin Labs Inc. (Montreal), is an oral medicine approved to treat the three main types of leishmaniasis: visceral, which affects internal organs; cutaneous, which affects the skin; and mucosal, which affects the nose and throat. This is the first drug approved by the FDA to treat cutaneous or mucosal leishmaniasis.

          Staar Surgical Co. (Monrovia CA) said an independent advisory panel to the FDA recommended marketing approval for its implantable lens, bringing it closer to a long-awaited U.S. launch and sending the company’s shares up 8% over the week to $16.61. The lens--Visian Toric implantable lens--can correct both nearsightedness and blurry vision associated with astigmatism. Analysts at Canaccord Genuity said they expect regulatory approval for the lens in the second half of 2014, adding that “the positive FDA panel is the first of several important milestones on the horizon for Staar.” Staar Surgical sought U.S. marketing approval for the lens in April 2006 but had to wait as the agency raised concerns about the integrity of the submitted data. The agency later placed on hold the company’s application for a two-year period starting 2007. The regulator removed the hold in 2009 but added questions related to the patient data.

          And Biogen Idec Inc. (Weston MA) said the FDA extended the review process for the company’s multiple sclerosis drug by three months to evaluate the application. Biogen, which was expecting to launch the drug, Plegridy, by mid-2014, said the FDA did not ask for additional studies. Plegridy, is an injectable drug designed to reduce the dosing schedule of standard interferon drugs such as Biogen’s own Avonex, which are typically dosed at least once a week. Interferon is hard to tolerate as it leads to flu-like symptoms, prompting patients to delay or discontinue treatment. Analysts say the market for such interferon-based treatments will shrink over the next decade as newer generation products enter the fray.

MEDICAL STOCK SPOTLIGHT -- IsoRay Inc. (Nasdaq) led advancing issues, more than doubling over the week to $2.42 on news of a breakthrough in tumor treatment. The patient--a 12 year old boy in North Carolina--had been diagnosed with a recurrent metastatic Wilms tumor in his left chest. In a press release from Richland, WA-based IsoRay, Dr. Anthony Crimaldi, the doctor who treated him, said: “I worked closely with IsoRay to design a custom mesh containing Cesium-131 sources and we were able to place the mesh at the time of surgery so as not to expose critical organs to high doses of radiation (lung, spinal cord, and aorta). Post-treatment dose calculations were performed confirming the delivery of dose to the resection bed and sparing of the critical structures. The patient recovered normally and has been discharged home.”

          Elsewhere, Endocyte Inc. (Nasdaq), a biotechnology company with no marketed products, doubled to $28.15 after its experimental medicine slowed the progression of lung cancer in a study. The drug, vintafolide, also won the backing of a European Union panel to treat ovarian cancer along with an imaging agent that will help the therapy target the patients who will respond best, the West Lafayette, IN-based company said. The trial results in non-small cell lung cancer are key because that study involves a larger patient population, Adnan Butt, an analyst at RBC Capital Markets in San Francisco, said. The mid-stage study showed vintafolide combined with chemotherapy reduced the risk of patients’ lung cancer worsening or of death by 25% compared with chemotherapy alone.

          And Pernix Therapeutics Holdings Inc. (Nasdaq) surged $2.44, or 70%, to $5.93 after reporting fourth-quarter EPS of ($0.15), $0.05 worse than analysts’ estimates of ($0.10). Net sales increased by 31% to $23.9 million, versus the consensus estimate of $23.82 million. The Houston, TX-based company markets a portfolio of branded products, including: Cedax, an antibiotic for middle ear infections, and a number of treatments for cough and cold conditions including Zutripro, Rezira and Vituz. The company also markets Silenor, a non-narcotic product for the treatment of insomnia and Khedezla for major depressive disorder.

          But Agenus Inc. (Nasdaq) tumbled 16% to $3.64 after announcing that GlaxoSmithKline’s experimental product didn’t work in a lung cancer study, the second time the medicine failed an advanced test against cancer. The therapy known as MAGE-A3 didn’t help patients with non-small cell lung cancer live longer without the disease recurring. Glaxo plans to continue to study the treatment in a smaller group of patients who may respond better to the drug based on their genetic makeup. The treatment, which contains Lexington, MA-based Agenus’s Stimulon adjuvant, is an immunotherapy designed to stimulate the immune system to recognize and attack cancer cells.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Signal Genetics LLC (New York) registered up to 2.27 million shares of its common stock at a price to the public between $10-$12 per share. The company plans to list on the Nasdaq Market under the symbol “SGNL.” The offering is being made via Aegis Capital Corp. Signal Genetics is an emerging commercial stage, molecular diagnostic company focused on providing innovative diagnostic services that help physicians make better-informed decisions concerning the care of their patients suffering from cancer. The company’s mission is to develop, validate and deliver innovative diagnostic services that enable better patient-care decisions. The company says it was founded in January 2010 and became the exclusive licensee in its field to the research on multiple myeloma performed at the University of Arkansas for Medical Sciences, in April 2010.

March 17, 2014 ...

MORE AMERICANS BUY INSURANCE UNDER HEALTHCARE LAW -- President Barack Obama, aiming to assuage concerns about the viability of his signature healthcare law, said on Friday enough people have enrolled to make its insurance marketplaces stable. “Well, at this point, enough people are signing up that the Affordable Care Act is going to work,” Obama said in an interview with the medical website WebMD. “The insurance companies will continue to offer these plans.” The Obama administration is mounting an enrollment drive aimed at adults aged 18 to 34, whose participation in the marketplaces is vital to the success of the Patient Protection and Affordable Care Act. In his latest bid to persuade people to enroll before a March 31 deadline for 2014 coverage, Obama found himself on the defensive, noting for example that some enrollees might have to change doctors. “For the average person, many folks who don’t have health insurance initially, they’re going to have to make some choices. And they might end up having to switch doctors, in part because they’re saving money,” said Obama. That was a change from his assurance to Americans in 2009, when he was trying to get the law passed, that “if you like the doctor you have, you can keep your doctor.”

          The WebMD interview was part of Obama’s recent push to reach people beyond traditional media. Last Tuesday he made a direct appeal to the youthful audience of comedy website Funny or Die by appearing on its talk show parody, hosted by comedian Zach Galifianakis. The Obama administration is targeting younger Americans because they are cheaper to insure and can compensate for older policy holders who have been able to obtain affordable insurance due to the law, known as Obamacare. “The number of people who have signed up is already large enough that I’m confident the program will be stable,” Obama said. His administration said last Tuesday that 4.2 million people have signed up for private health insurance under the law and that total enrollment could surpass a forecast of 6 million by the end of March.

RIKEN APOLOGIZES FOR ERRORS IN TWO STEM-CELL STUDIES -- A prestigious Japanese research institute mired in controversy over two high-profile papers on stem cells apologized Friday, saying the work contained “serious errors.” Ryoji Noyori, a Nobel laureate and president of the government-funded Riken Center for Developmental Biology, appeared at the beginning of a packed, four-hour-long news conference in Tokyo and said the institute was examining whether to retract the papers, which had appeared to offer a revolutionary new approach to creating stem cells. Dr. Noyori repeatedly referred to Haruko Obokata, the 30-year-old lead author of the papers, as “immature” and “sloppy.” He said an investigation was continuing into the most serious allegations--in particular, the question of why three images in the papers were nearly identical to three images included in Dr. Obokata’s 2011 doctoral dissertation at Japan’s Waseda University. The stem-cell papers were published in late January in the journal Nature, which has said it is investigating the irregularities. The controversy has highlighted the race for improved methods of creating stem cells, long seen as a potential source of cures for heart disease, diabetes and other ailments. It has also pointed to apparent lax controls at one of Japan’s top scientific institutions.

          Dr. Obokata, who has avoided public comment since the allegations emerged, offered a defense on some points in an email to The Wall Street Journal. She said she was “very hurt” by the media hoopla surrounding the research and responded to suspicions of plagiarism in her dissertation. Portions of the dissertation posted online were almost identical to text posted on a U.S. National Institutes of Health website. “The doctoral dissertation that is currently making the rounds in the media is not the version that has passed (the university’s) screening but a rough draft,” Dr. Obokata wrote in the email. She said that version didn’t contain citations or corrections. A total of 14 Japanese and American researchers were involved in writing the two Nature papers. Riken said that as a general rule, a retraction couldn’t be made unless all the authors agreed. Charles Vacanti, another co-author and a tissue engineer at Harvard Medical School and Brigham and Women’s Hospital in Boston, has defended the paper, saying the questions raised didn’t affect the findings of the study.

TRACKING WASHINGTON -- There will be no delay in the penalty most Americans face under President Barack Obama’s healthcare reform law if they fail to obtain health coverage this year, U.S. Health and Human Services Secretary Kathleen Sebelius said last week. Sebelius also said there would be no postponement of this month’s deadline for enrolling in coverage through new private health insurance marketplaces or the Medicaid program for the poor. “No, sir,” was Sebelius’ categorical answer when asked about both prospects by Representative Kevin Brady of Texas at a hearing of the House of Representatives Ways and Means Committee. Sebelius rebuffed Republican claims that the Patient Protection and Affordable Care Act’s implementation was failing to attract enough enrollees. In response to Representative James Renacci, an Ohio Republican, Sebelius said the sign-up effort would be a success despite the botched October rollout that led the nonpartisan Congressional Budget Office to pare back its enrollment forecast from 7 million to 6 million people. ** Separately, insurers offering family policies to a person with an opposite-sex spouse must also sell to someone whose spouse is of the same sex, regardless of whether the marriage is recognized by their state government, the Department of Health and Human Services said Friday.

          In other news, the Obama administration said it would scrap much of a proposed plan to limit the types of antidepressants and other drugs that seniors can get through Medicare after a backlash from lawmakers and the health industry. In January, the Centers for Medicare and Medicaid Services proposed broad changes to the Medicare Part D prescription-drug program that covers medicines for about 39 million beneficiaries. Among the most contentious proposals was one to end the practice of covering essentially any type of antidepressant, antipsychotic or immunosuppressant prescription drug for consumers in the program. Medicare had said the plan was meant to save taxpayers money and simplify the program for seniors. In a letter sent to congressional lawmakers last week, Marilyn Tavenner, the Medicare agency administrator, said the drug-coverage provision and some other proposed changes to pharmacy networks and drug plans would be shelved for now. Ms. Tavenner said the agency would “engage in further stakeholder input before advancing some or all of the changes in future years.”

FDA/EMA ROUNDUP -- The Food and Drug Administration said it approved a nerve-stimulating headband as the first medical device to prevent migraine headaches. Agency officials said the device provides a new option for patients who cannot tolerate migraine medications. The Cefaly device is a battery-powered plastic band worn across the forehead. Using an adhesive electrode, the band emits a low electrical current to stimulate nerves associated with migraine pain. Users may feel a tingling sensation on the skin where the electrode is applied. The device is designed to be used no more than 20 minutes a day by patients 18 years and older. A 67-person study reviewed by the FDA showed patients using the device experienced fewer migraines per month than patients using a placebo device. The Cefaly headband did not completely eliminate migraine headaches or reduce the intensity of migraines that occurred. Cefaly is manufactured by STX-Med of Liege, Belgium.

          Elsewhere, the Pap test, a ritual for women that has been the mainstay of cervical cancer prevention for 60 years, may be about to play a less crucial role. A federal advisory committee recommended unanimously that a DNA test developed by Roche Holding AG (Basel CHE) be approved for use as a primary screening tool. “Has our Pap, as we know it, outlived its time?” Dr. Dorothy Rosenthal, a professor at Johns Hopkins University, testified to the committee, which advises the Food and Drug Administration. She said deaths from cervical cancer in the United States had stopped declining and that there would be “a tremendous gain” by moving to the new test. The Roche test detects the DNA of human papillomavirus, or HPV, which causes almost all cases of cervical cancer. Pap testing involves examining a cervical sample under the microscope looking for abnormalities. Until now HPV testing has been used mainly as a follow-up test when the Pap results were ambiguous, or used jointly with Pap testing. Last week’s 13-to-0 vote would allow Roche’s test to be used alone as the initial test for women 25 and older.

          The FDA has banned imports from a plant operated by Mumbai-based Sun Pharmaceutical Industries Ltd. amid widening scrutiny of Indian drugmakers that feed the $93 billion U.S. generics market. A Sun Pharma facility in Gujarat state was put on the FDA’s “red list” meaning products can be detained without physical examination, according to a posting on the FDA website. The curbs are another blow to India’s generics industry, which sells drugs and ingredients worldwide. In January, the FDA placed a ban on products from a plant run by Sun Pharma rival Ranbaxy Laboratories Ltd. (Gurgaon). “The FDA is definitely becoming more stringent--it will streamline this system,” said Surya Patra, an analyst at Phillip Securities Ltd. in Mumbai. “This plant is an old plant, and I don’t think that it is a technically very important plant for Sun.”

          And debate over a powerful new painkiller ratcheted up Thursday as the head of the Food and Drug Administration defended the drug’s approval and a West Virginia Senator responded with a bill to force it off the market. FDA Commissioner Dr. Margaret Hamburg told Senate lawmakers that the recently-launched Zohydro fills an “important and unique niche” for treating chronic pain. Her agency has been under fire for clearing the drug since December, amid concerns from lawmakers, addiction specialists and others that the drug will exacerbate the national epidemic of prescription drug abuse. Zohydro is the first single-ingredient hydrocodone drug ever cleared for U.S. patients. Each extended-release pill contains up to five times more of the narcotic than previously available combination pills, such as Vicodin. Pharmacies began dispensing the drug last week. Hours after Hamburg’s appearance on Capitol Hill, Senator Joe Manchin (D-WV) introduced a bill that would force the FDA to withdraw the drug and prohibit the approval of any similar medications that don’t have tamper-resistant design features.

MEDICAL STOCK SPOTLIGHT -- Castlight Health Inc. (NYSE) led advancing issues, more than doubling over the week after its debut on the New York Stock Exchange. The online healthcare software company raised $177.6 million in an initial public offering priced at $16 per share. Shares closed the week up 248% at $39.64. The San Francisco-based company sells cloud-based software to large companies that provide it to their workers. Castlight allows the workers to search and compare doctors, hospitals and procedures based on cost and the quality of care. Castlight sold 11.1 million share of its Class B common stock in the IPO. The $16 per share price was above its previously announced range of $13 to $15 per share. The stock is trading under the ticker symbol “CSLT.”

          Elsewhere, Oxigene Inc. (Nasdaq) soared 90% to $3.99 after the biopharmaceutical company reported positive Phase 2 clinical trial results for an ovarian cancer treatment. The company has a pipeline with various treatments under clinical studies that each aim to combine a compound known as zybrestat with other therapies to potentially treat ovarian and certain thyroid cancers. The South San Francisco-based company said its study of cancer treatment Avastin with the combination of zybrestat met its primary endpoint of a “statistically significant increase in progression-free survival” when compared with the use of Avastin alone. The patients will continue to be followed for overall survival.

          And La Jolla Pharmaceutical Co. (Nasdaq) rocketed 50% to $14.67 after saying its lead experimental drug to treat chronic kidney disease met the main goal of improving kidney function in a mid-stage study. The San Diego, CA-based company said the trial tested two doses of the drug, codenamed GCS-100, and the lower dose showed an increase in the rate of blood filtering through the kidneys, compared with a placebo. La Jolla said the lower dose also reduced the levels galectin-3, a protein associated with tissue scarring. The higher dose did not show a statistically significant increase in the rate of blood filtering or reduction of the levels of protein, compared with a placebo.

          But Geron Corp. (Nasdaq), a biotechnology company with no marketed products, plunged 60% to $1.83--the most ever--after U.S. regulators halted development of its only experimental drug, imetelstat for blood disorders, because of the possibility of liver damage. It was the biggest decline since the company first sold shares to the public in 1996. Prior to last week, the shares of the Menlo Park, CA-based company had tripled in the last 12 months. The U.S. Food and Drug Administration told Geron to place a clinical hold on its mid-stage trials of imetelstat because of low-grade liver function test abnormalities. The regulator cited the potential risk of chronic liver injury following long-term exposure to the drug, Geron said in a statement.

IPO SECTOR -- Last week’s initial public offering for Achaogen Inc. (S. San Francisco) opened for trading at $12.85 after pricing 6 million shares of its common stock at a price to the public of $12.00 per share. Shares closed the week up 35% at $16.16. Credit Suisse Securities and Cowen & Co. are acting as joint book-running managers for the offering. Achaogen is a clinical-stage biopharmaceutical company committed to the discovery, development, and commercialization of novel antibacterials to treat MDR gram-negative infections. The company is developing plazomicin, its lead product candidate, for the treatment of serious bacterial infections due to MDR Enterobacteriaceae, including carbapenem-resistant Enterobacteriaceae (CRE). Achaogen says through the Special Protocol Assessment procedure, the U.S. Food and Drug Administration “has agreed that the design and planned analyses of its single pivotal Phase 3 trial adequately address objectives in support of a New Drug Application.”

March 10, 2014 ...

CONSUMERS ALLOWED TO KEEP HEALTH PLANS FOR TWO MORE YEARS -- With midterm congressional elections bearing down, the government changed its regulation of Obamacare last week to give consumers and states more flexibility to decide on their health plans, insurers more time to sign up customers and taxpayers a chance to avoid more costs. The changes, announced by the U.S. Health and Human Services Department, will smooth enactment of the Patient Protection and Affordable Care Act, administration officials said. Republicans immediately accused President Barack Obama of making them to help congressional Democrats survive an unpopular law. Americans with health coverage that predates Obamacare can stay on their plans for two more years, insurers will have an extra month to enroll customers next winter and states will get more time to decide whether to manage the law themselves, officials said. Also, a program aimed at covering financial losses for insurers will be adjusted to help ensure it doesn’t cost taxpayers, the Obama administration said. “These policies implement the healthcare law in a common-sense way by continuing to smooth the transition for consumers and stakeholders and fixing problems wherever the law provides flexibility,” Kathleen Sebelius, the U.S. health secretary, said in a statement.

          Republicans have made clear they will try to make the troubled roll-out of the Affordable Care Act the defining issue of the November congressional elections, focusing on canceled plans, delayed features, the administration’s accommodations for insurers and employers and computer errors that prevented many Americans from signing up at the outset last October. “Each and every delay of Obamacare is an admission that the Democrats’ signature law is hurting Americans and an obvious attempt to try to save the jobs of vulnerable congressional Democrats come November,” Senator John Thune, a South Dakota Republican, said in a statement. The Obama administration said it developed the policies “in close consultation with members of Congress” including 13 Democratic lawmakers specifically named in the HHS statement. Among them were four U.S. senators who are running for re-election this year, including Senator Mary Landrieu of Louisiana, a top target for Republicans, and Representative Gary Peters, who is running for an open Senate seat in Michigan.

ALZHEIMER'S DEATHS MUCH MORE COMMON THAN REALIZED: STUDY -- Alzheimer’s, known mostly for the memory loss and confusion it causes, may be the nation’s third-most deadly killer, according to a study that suggests many more Americans die from the disease than is known. As many as a half-million people in the U.S. are killed by Alzheimer’s each year, or about five times more than the 83,494 now cited on death certificates, the research found. Many people fail to understand the destruction from Alzheimer’s disease, which is fatal when it impairs parts of the brain that control basic functions like breathing and swallowing. Heart disease and cancer remain the top U.S. killers. Alzheimer’s, however, would replace respiratory disease as No. 3 based on the study results, up from No. 6. The findings should increase urgency to spend more on research on an illness that’s becoming more common as the population ages, said Bryan James, the lead author and an epidemiologist at Rush University Medical Center in Chicago. It already costs more than $200 billion a year to care for patients with the disease, he said. “We think Alzheimer’s disease has been getting short shrift because it hasn’t been considered a major killer, when it’s really one of the top three in the country,” James said.

          The findings, published in the journal Neurology, also underscore the difficulty of identifying the ailments that cause people to die based on death certificates, which typically list only the immediate reason for the death, such as the heart stopping, James said. Some doctors may not know the patient’s history and others overlook the dementia. “Everyone knows Alzheimer’s disease is under-reported on death certificates,” he said. “There may be a long chain of events between being diagnosed with Alzheimer’s disease and dying years later of pneumonia.” James and his colleagues tracked two groups of people who enrolled in long-term studies and agreed to donate their brains after death. They noted who developed Alzheimer’s and who didn’t, and then compared death rates among the two groups. None of the 2,566 volunteers ages 65 and older had dementia at the start. After an average of eight years, 559 patients developed Alzheimer’s and 1,090 died. Patients with dementia were three to four times more likely to die than those who weren’t diagnosed with Alzheimer’s, and the median time from diagnosis to death was less than four years.

TRACKING WASHINGTON -- Gary Cohen, the top U.S. health insurance regulator accused by congressional Republicans of misleading them before the troubled start of the Obamacare insurance website, will resign. Cohen will step down as director of the Center for Consumer Information and Insurance Oversight at the end of the month, when the first enrollment period for the healthcare law concludes, Marilyn Tavenner, the administrator of the Centers for Medicare and Medicaid Services and Cohen’s boss, said last week. Cohen’s office is part of Tavenner’s agency. Cohen and Tavenner said his departure is voluntary. His agency devised the regulations for the Patient Protection and Affordable Care Act’s insurance exchanges, though it wasn’t responsible for building healthcare.gov, the federal exchange that failed in October, leaving millions of Americans unable to enroll in health plans. Cohen’s office also monitors insurers’ premiums and enforces consumer protections under the health law. “Under his leadership, CCIIO established the rules which have made the promise of the Affordable Care Act a reality for millions of Americans who now can have the security of health coverage without regard to their previous health condition, and can know that their insurance will cover all the most common services they will need,” Tavenner said.

          In other news, sounding an alarm about the growing threat of superbugs, the Obama administration is proposing a jump in spending to fight antibiotic-resistant germs in hospitals. Infections that can withstand some of the best antibiotics already are killing more than 23,000 Americans a year, and some bacteria are becoming resistant to drugs of last resort, according to the Centers for Disease Control and Prevention. In last week’s budget, the CDC is seeking $30 million to open specialized laboratories in five parts of the country to help local hospitals more quickly diagnose and combat drug-resistant infections, said CDC director Dr. Tom Frieden. The labs would offer rapid mapping of all of the bug’s genes to better spot outbreaks, and the program would work to help hospitals and communities tackle the problem, he said. If funded at $30 million annually for five years, the CDC estimated the program could cut in half the rate of one especially dangerous intestinal germ called Clostridium difficile, or “C-diff,” and thus prevent at least 20,000 deaths, 168,000 hospitalizations and over $1 billion in healthcare costs. That’s in addition to fighting other bacterial threats.

FDA/EMA ROUNDUP -- Endo Pharmaceuticals Plc (Dublin IRL) announced that it received U.S. approval for its long-acting testosterone injection Aveed, which joins a crowded field of hormone-boosting drugs aimed at aging American men. Endo said the Food and Drug Administration approved Aveed for men with low testosterone, a condition sometimes associated with fatigue, weight gain and low libido. Endo’s injection is to be taken once every 10 weeks, versus weekly or biweekly dosing for currently available products. The company said it expects to launch the drug this month. Endo already markets Fortesta, a prescription gel form of testosterone, the hormone that begins to decline after age 40. The FDA approval comes amid growing scrutiny of popular testosterone drugs. In January the FDA said it was reviewing the safety of the drugs after a study of 45,000 patients suggested testosterone therapy could double the risk of heart attack in men 65 and older.

          Elsewhere, Eli Lilly & Co. (Indianapolis IN) and Boehringer-Ingelheim GmbH (Ingelheim DEU) said the FDA didn’t approve their diabetes treatment empagliflozin because of concerns about a facility where the drug will be made. The companies said the FDA isn’t asking for new studies of empagliflozin. Empagliflozin is a tablet that is intended to be taken once per day as a treatment for type 2 diabetes. It is designed to reduce a patient’s blood sugar levels by blocking glucose reabsorption in the kidneys and removing excess glucose through urine. Unlike other diabetes treatments, it does not depend on a patient’s insulin levels to be effective. Shares of Eli Lilly closed the week off $1.00, or 2%, at $58.59.

          Regeneron Pharmaceuticals Inc. (Tarrytown NY) and Sanofi SA (Paris) must assess how their experimental cholesterol drug affects brain function after U.S. regulators learned of adverse events associated with this new class of medicines. The companies don’t know how the FDA learned of the side effect, Sanofi said Friday in a regulatory filing. Sanofi, Regeneron and Amgen Inc. are among companies in late-stage testing of the therapies, which are designed to inhibit the PCSK9 protein associated with high levels of LDL, or “bad” cholesterol.

          Anoro, a combination drug for chronic obstructive pulmonary disease (COPD) developed by GlaxoSmithKline Plc (London) and Theravance Inc. (S. San Francisco), has received the green light from European regulators, the companies said on Thursday. The drug is a combination of UMEC, a long-acting muscarinic antagonist, and VI, a long-acting beta agonist, in a single inhaler. It is expected to generate sales of more than $2 billion a year by 2018, according to analysts polled by Thomson Reuters. Recommendations for marketing approval from the European Medicines Agency are usually followed by the granting of full marketing authorization by the European Commission. The companies said they expected that decision during the second quarter of 2014. The drug, in a different strength formulation, was approved by regulators in the United States and Canada in December 2013.

          Genetic experts cautioned the FDA that it could take decades to confirm the safety of an experimental technique, meant to prevent children from inheriting debilitating diseases that would create babies from the DNA of three people. The agency heard from supporters and opponents of the controversial technique at a meeting last week, as the agency considers whether to authorize testing in women who have defective genes linked to blindness, organ failure and many other inheritable diseases. Preliminary testing in animals suggests that combining the DNA of two parents with that of a third female donor could allow prospective mothers to give birth to healthy children. But even experts in the field warned that researchers would have to follow the offspring for many years to see if they are truly healthy. “The end of the experiment will come decades later,” said Michigan State University’s Keith Latham, in a presentation before the FDA and its advisory panel. “It’s going to take us that long to figure out the health of the progeny produced from these procedures.” The FDA explicitly framed its public meeting as a “technical” discussion on the feasibility of safely testing the artificial fertilization technique in humans.

MEDICAL STOCK SPOTLIGHT -- Genocea Biosciences Inc. (Nasdaq) led advancing issues, soaring $7.78, or 53% over the week, to $22.45--a 52-week high. Analysts at Needham & Company assumed coverage on the Cambridge, MA-based company’s shares, setting a “buy” rating and a $22.00 price target on the stock. Several other analysts have also recently commented on the stock. Analysts at Stifel Nicolaus initiated coverage on shares of Genocea setting a “buy” rating and a $25.00 price target on the stock. Separately, analysts at Cowen & Company initiated coverage on shares setting an “outperform” rating and a $40.00 price target on the stock. Finally, analysts at Citigroup Inc. initiated coverage on shares setting a “buy” rating on the stock. Five investment analysts have rated the stock with a “buy” rating. The stock has a consensus rating of “buy” and an average price target of $29.00. Genocea is a clinical-stage company that develops T-cell vaccines.

          Elsewhere, analysts at Leerink Swann raised their price target on shares of Agios Pharmaceuticals Inc. (Nasdaq) from $38.00 to $51.00, and the stock rocketed $14.19, or 45%, to $45.45. Cambridge, MA-based Agios announced its earnings results last Thursday. The company reported ($0.40) earnings per share for the quarter, missing analysts’ consensus estimate of ($0.34) by $0.06. The company had revenue of $6.70 million for the quarter, compared to the consensus estimate of $6.19 million. On average, analysts predict that Agios will post $-1.04 earnings per share for the current fiscal year. Agios is a biopharmaceutical company. The company says it intends “to apply its deep understanding of metabolism, coupled with (its) ability to create medicines that can inhibit or activate metabolic enzymes, to fundamentally change the way cancer and inborn errors of metabolism are treated.”

          And Fate Therapeutics Inc. (Nasdaq) leaped $2.12, or 30%, to $9.09 after announcing the publication of an article in the journal Stem Cell Reports demonstrating high-throughput derivation of human induced pluripotent stem cells, or hiPSCs, that exhibit characteristics necessary for therapeutic application. The publication describes the use of the company’s hiPSC platform, consisting of stage-specific cell culture systems, to enable rapid, parallel derivation of hiPSC clones and their subsequent expansion as transgene-free, single cells in culture. The San Diego, CA-based company said its proprietary combinations of small molecule modulators, which include ROCK, GSK3 and MEK pathway inhibitors, used in the culture systems “were found to be critical in promoting characteristics of the ground state of pluripotency including pluripotent culture stability, homogeneity and survival.”

          But XOMA Inc. (Nasdaq) plunged $2.03, or 24%, to $6.33 after being downgraded by TheStreet Ratings from “hold” to “sell.” The Berkeley, CA-based company’s weaknesses can be seen in multiple areas, such as its deteriorating net income and feeble growth in its earnings per share. Selling pressure was exacerbated after XOMA announced that it would not proceed with late-stage studies of gevokizumab as an arthritis treatment, after two mid-stage studies failed to show a significant benefit in patients. Gevokizumab is the company’s lead drug candidate. But that doesn’t mean that gevokizumab is finished. XOMA is still testing the drug as a potential treatment for a variety of other indications, including acne, autoimmune ear disease, and non-infective scleritus.

IPO SECTOR -- Included among initial public offerings expected this week, Castlight Health Inc. (San Francisco) is looking to raise about $111 million in its IPO, according to an updated SEC filing. The company is offering 11.1 million shares in the IPO and its underwriters have the option to purchase an additional 1.65 million shares. The stock will be listed on the New York Stock Exchange under the symbol “CSLT.” Goldman Sachs and Morgan Stanley are lead underwriters. Castlight Health works with health plans and other organizations to help self-insured employers offer their employees more transparent healthcare price and quality data in the form of online consumer tools and via mobile apps. Over the past two years Castlight has inked deals with more than 95 customers, primarily large self-insured employers that include 24 Fortune 500 companies.

March 3, 2014 ...

HUMANA LEADS INSURERS AS PROPOSED MEDICARE CUTS LESS THAN FEARED -- Humana Inc. (Louisville) rose to its highest value in more than 33 years last week, leading insurance stocks higher after proposed government cuts to the Medicare Advantage program were less than previously expected. Humana, the second-largest Medicare Advantage insurer, jumped 10% over the week to close at $112.49 in New York, its highest value since at least July 1980, according to data compiled by Bloomberg. Health insurers who run Medicare Advantage, the private version of the government’s managed-care program for the elderly and disabled, face a base payment cut of about 3.55% next year, the U.S. government said on Feb. 21. Humana estimated the final reduction will be 3.5% to 4%, a smaller decline than the company’s previous estimate of 6% to 7%. “Although we still believe rate pressure of this magnitude will present a significant challenge to the company and industry, it is certainly much better” than previous estimates, said Chris Rigg, a New York-based analyst at Susquehanna International Group LLP. Rigg predicted a final rate cut of 3.5% to 4.5%. UnitedHealth Group Inc. (Minnetonka MN), the largest provider of Medicare Advantage plans, closed the week up 5% at $77.29. The proposed cuts are subject to negotiations with the industry and aren’t expected to become final until April 7.

          Before the announcement, insurers said their total payment reduction for 2015 might be as much as 7%. Analysts’ estimates last week for the final rate cut ranged from 3.5% to 7.5%. UnitedHealth CEO Stephen Hemsley had estimated rate cuts of as much as 7%, and had said reductions of that size would be “extraordinarily disruptive.” About 15.9 million people, or about 30% of Medicare beneficiaries, are enrolled in Advantage plans this year, according to February data from the government. These consumers are opting for managed care with benefits including lower out-of-pocket costs over the traditional government-run Medicare program for the elderly and disabled.

INTERMUNE MORE THAN DOUBLES ON LUNG-DRUG STUDY -- A drug being developed to treat a fatal scarring of the lungs has succeeded in an important clinical trial and could become the first medicine to be approved for that disease, known as idiopathic pulmonary fibrosis. The drug, pirfenidone, slowed the decline in lung function in patients with the disease, according to an announcement last week by the drug’s developer, InterMune Inc. (Brisbane CA). The company said it would apply to the Food and Drug Administration for approval of the drug early in the third quarter of this year. The results “met or exceeded my expectations on every metric,” Daniel G. Welch, the chief executive of InterMune, told analysts. The price of InterMune shares rose 218% over the week, closing at $30.04. Dr. Daniel M. Rose, chief executive of the Pulmonary Fibrosis Foundation, a patient advocacy group, said the news was encouraging. “This disease is deadlier than 60% to 70% of malignancies,” he said. Pirfenidone “does not cure the disease, it does not work in every patient, but there is a cohort of patients who do receive a benefit.”

          Idiopathic pulmonary fibrosis, which has no known cause, affects about 70,000 Americans, according to InterMune, though the advocacy group estimates the number could be as high as 200,000. The disease kills many people within two to five years as progressive scarring of the lungs makes it impossible to breathe. Steroids and some other drugs are sometimes used off-label to treat it. The FDA declined to approve pirfenidone in 2010 because the drug worked in one clinical trial but not in another, nearly identical study. The agency requested that InterMune run another trial. That trial’s results were announced last week. Regulators in Europe and Canada, however, did approve the drug based on the earlier trials, and it is sold in those places under the name Esbriet. It has also been sold in Japan since 2008 by Shionogi Inc. under the name Pirespa.

TRACKING WASHINGTON -- The Obama administration’s top Medicare official last week defended proposed changes to the popular Part D drug benefits program for the elderly and disabled that are fiercely opposed by a broad network of drugmakers, insurers, healthcare providers and patient advocates. The Centers for Medicare and Medicaid Services (CMS) proposed a new rule in January that would fundamentally alter the program’s private insurance coverage for certain drugs, change the pharmacy networks that some plans cover and limit the number of policies available to beneficiaries in any given region. That has stirred concern about the potential for turmoil that critics fear could leave some beneficiaries without coverage for the drugs they need and with fewer choices overall. But Medicare chief Jonathan Blum said in written testimony to a congressional panel that the 2015 policy changes are needed to head off higher costs to the program from expensive new biologic therapies and rising subsidies for insurers and lower-income consumers. “In order for Part D to remain successful, we have to celebrate its successes and address its vulnerabilities,” Blum told the House Energy and Commerce Health Subcommittee.

          CMS, which is part of the U.S. Department of Health and Human Services, is under mounting pressure to withdraw the proposed rule. More than 200 companies and groups called for the rule’s withdrawal “in the strongest terms” last week, saying in a letter to CMS Administrator Marilyn Tavenner that the changes were unnecessary for a program that has proved effective and popular up to now. The proposals have also become fodder for this year’s congressional election campaign, with Republicans warning that the changes would jeopardize the entire Part D program. Some Democrats have also expressed misgivings. Part D, a $70 billion program launched a decade ago under former President George W. Bush, provides private insurance for prescription drugs to nearly 40 million elderly and disabled Medicare beneficiaries. Over 10 years, its costs of $346 billion have been 45% lower than initially projected. Ninety-five percent of Part D beneficiaries say they are satisfied with the program, and government officials note that it has saved $8.9 billion on prescription drug costs for Medicare recipients.

FDA/EMA ROUNDUP -- Anika Therapeutics Inc. (Bedford MA) said the U.S. Food and Drug Administration approved its drug to treat pain and improve joint mobility in patients with osteoarthritis of the knee, more than four years after it first filed for approval. The company’s shares closed the week up 14% at $39.37 after the approval for Monovisc, which is already sold in Canada, the United Kingdom and countries in the Middle East, Europe and Asia. “Management did a tremendous job in pushing forward through multiple rejections at the FDA,” Summer Street Research analyst Mark Landy said. “We believe this product will be competitive in a market that is becoming more focused on single-shot injections.” Sanofi SA (Paris) and Zimmer Holdings Inc. (Warsaw IN) also market single-injection treatments for osteoarthritis of the knee. The single-injection Monovisc could be an advantage over Anika’s other knee osteoarthritis pain drug, Orthovisc, which is administered via three injections.

          Elsewhere, Bristol-Myers Squibb Co. (New York) said the FDA approved its drug to treat rare and potentially fatal disorders involving loss of body fat. The drug has been approved as a replacement therapy to treat complications caused by leptin hormone deficiency in patients with congenital or acquired generalized lipodystrophy. Generalized lipodystrophy patients experience a loss of fat tissue, especially under the skin, leading to low levels of leptin. Leptin deficiency causes serious imbalance in the body, leading to fat accumulation in muscles and organs such as the liver. The deficiency can lead to diabetes, pancreatitis and fatty liver disease. The drug, Myalept (metreleptin), is a form of leptin meant to reduce accumulation of fat in organs to better control blood sugar and high levels of triglycerides--a type of fat in the bloodstream associated with increased risk of heart disease.

          Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR) won the backing of a European Medicines Agency committee for a new version of lung therapy Symbicort, paving the way for competition to one of AstraZeneca Plc’s (London) best-selling drugs. The generic formulation of budesonide and formoterol, to be marketed as DuoResp Spiromax and BiResp Spiromax, should be approved for the treatment of asthma and chronic obstructive pulmonary disease, the London-based EMA’s Committee for Medicinal Products for Human Use, or CHMP, said in a statement. The decision increases pressure on Symbicort, which generated $3.48 billion in sales for AstraZeneca last year.

          Anoro, a combination drug for chronic obstructive pulmonary disease (COPD) developed by GlaxoSmithKline Plc (London) and Theravance Inc. (S. San Francisco), has received the green light from European regulators, the companies said on Thursday. The drug is a combination of UMEC, a long-acting muscarinic antagonist, and VI, a long-acting beta agonist, in a single inhaler. It is expected to generate sales of more than $2 billion a year by 2018, according to analysts polled by Thomson Reuters. Recommendations for marketing approval from the European Medicines Agency are usually followed by the granting of full marketing authorization by the European Commission. The companies said they expected that decision during the second quarter of 2014. The drug, in a different strength formulation, was approved by regulators in the United States and Canada in December 2013.

          Genetic experts cautioned the FDA that it could take decades to confirm the safety of an experimental technique, meant to prevent children from inheriting debilitating diseases that would create babies from the DNA of three people. The agency heard from supporters and opponents of the controversial technique at a meeting last week, as the agency considers whether to authorize testing in women who have defective genes linked to blindness, organ failure and many other inheritable diseases. Preliminary testing in animals suggests that combining the DNA of two parents with that of a third female donor could allow prospective mothers to give birth to healthy children. But even experts in the field warned that researchers would have to follow the offspring for many years to see if they are truly healthy. “The end of the experiment will come decades later,” said Michigan State University’s Keith Latham, in a presentation before the FDA and its advisory panel. “It’s going to take us that long to figure out the health of the progeny produced from these procedures.” The FDA explicitly framed its public meeting as a “technical” discussion on the feasibility of safely testing the artificial fertilization technique in humans.

MEDICAL STOCK SPOTLIGHT -- Celladon Corp. (Nasdaq) led advancing issues, soaring $3.73, or 49% over the week, to $11.30. Laboratoires Servier wants to explore San Diego-based Celladon’s technology to see if there are some small molecule applications to diabetes and other metabolic conditions that warrant clinical development. The privately owned French biotech grabbed an option on the “Serca” technology for an undisclosed price, tying it to an unspecified package of potential upfronts and milestones if they can get through a series of in vitro and in vivo tests. The newly public Celladon is best known for its late-stage heart drug Mydicar, a gene therapy which uses a benign virus to insert the Serca2a gene into heart cells. The treatment is designed to spur an ailing heart to pump up blood flow in patients. In this new pact with Servier they’ll be working on Serca2b, an enzyme that directs calcium in the endoplasmic reticulum and is found lacking in stressed cells, which may play a role in the development of heart disease, diabetes and neurodegenerative diseases.

          Elsewhere, Cara Therapeutics Inc. (Nasdaq) surged $3.88, or 26%, to $18.88. Investment analysts at Needham & Company assumed coverage on shares of Cara Therapeutics, TheFlyOnTheWall.com reports. Needham set a “buy” rating and a $27.00 price target on the stock. Needham’s price target suggests a potential upside of 74.76% from the stock’s previous close. Shelton, CT-based Cara Therapeutics has a 52-week low of $14.20 and a 52-week high of $15.87. Analysts at Stifel Nicolaus initiated coverage and set a “buy” rating and a $21.00 price target on Cara’s stock. Separately, analysts at Canaccord Genuity initiated coverage and set a “buy” rating and a $25.00 price target on the stock. Cara Therapeutics is a clinical-stage biopharmaceutical company. The company is focused on developing and commercializing new chemical agents designed to alleviate pain by selectively targeting kappa opioid receptors.

          And vaccine developer Genocea Biosciences Inc. (Nasdaq) gained $2.62, or 22%, to $14.67. The company priced an initial public offering of 5.5 million shares at $12 a share last week, raising $60 million in an offering that was more modest than those of many biotechs that have gone public in recent months. Cambridge, MA-based Genocea’s IPO priced at the lower end of an earlier specified $12 to $14 a share range. Genocea is developing a new class of human vaccines based on a platform for the rapid discovery of antigens that induce T cell immunity. The company says its platform dramatically reduces the time to discover vaccine candidates and employs a proprietary, high-throughput approach that mimics the natural immune response in the laboratory.

          But Questcor Pharmaceuticals Inc. (Nasdaq) tumbled $15.76, or 21%, to $60.75 after a research report said that the Anaheim, CA-based company’s multiple sclerosis treatment didn’t contain any of its active ingredient. Citron Research, a stock commentary website, said that two batches of Questcor’s top-selling H.P. Acthar gel, marketed for multiple sclerosis and other difficult-to-treat autoimmune and inflammatory disorders, were tested at two laboratories and found to have “little to no” corticotropin, the active ingredient, and warned that the medicine faced a “severe risk of being pulled off the market by the FDA.” Citron declined to name the labs involved because of continuing testing, and said that more batches of Acthar were being analyzed. It submitted a report to the Food and Drug Administration, which said the lab findings “raise important regulatory concerns about the identity, purity and stability of Questcor’s drug product that warrant an FDA investigation.”

IPO SECTOR -- Included among recent SEC filings for initial public offerings, health site operator Everyday Health Inc. (New York) registered up to $115 million worth of common stock. The company’s content and apps deal with losing weight, exercise, pregnancy, diet, nutrition, and medical conditions. It also has news and tools for healthcare professionals. It owns websites such as EverydayHealth.com and My-Calorie-Counter.com and has licensing agreements with brands including South Beach Diet. Everyday Health did not say how many shares it expects to sell or when it intends to complete its IPO. In forms filed with the SEC the company disclosed a loss of $18.2 million in 2013, compared with $22.5 million in 2012. Its revenue grew 13% to $155.9 million. If Everyday Health completes the IPO, its shares will trade New York Stock Exchange under the symbol “EVDY.” The offering is being led by J.P. Morgan, Credit Suisse and Citigroup.

February 24, 2014 ...

ACTAVIS TO BUY FOREST LABS FOR $25 BILLION -- Actavis Plc (Dublin IRL) last week said it had reached an agreement to acquire Forest Laboratories Inc. (New York) for $25 billion in cash and stock in a deal that would create a huge pharmaceuticals company with a trove of both branded and generic drugs. The deal marks the biggest acquisition yet for one of the pharmaceutical industry’s most aggressive buyers, and a major win for Carl C. Icahn, who had been agitating for change at Forest. Actavis, based in Dublin but operating from Parsippany, NJ, has been an aggressive acquirer of other drug companies. The latest acquisition--its largest by far--will be its seventh since January 2013, according to Standard & Poor’s Capital IQ (New York). The combined revenues of the two fast-growing specialty pharmaceutical companies are expected to be more than $15 billion in 2015, the companies said. Under terms of the deal, Forest shareholders will receive $26.04 in cash and 0.3306 of a share of Actavis or $89.48. That represents a premium of 25% to Forest’s closing stock prior to news of the deal. The stock portion of the payment will be tax-free for Actavis.

          Actavis has historically been focused on generic drugs, but in recent years has expanded into selling more branded pharmaceuticals. Forest’s best known drugs are Lexapro and Namenda. This is the first major deal Actavis has announced since it completed its takeover of Warner Chilcott last year for about $5 billion. That deal expanded Actavis’s presence in specialty pharmaceuticals, and also allowed it to complete a so-called tax inversion, relocating its headquarters to Ireland and escaping the U.S. tax system. One big advantage of tax inversions, besides a lower statutory tax rate, is that deals can become more affordable. Once inverted, companies can more easily use overseas cash to pay for a deal, and the earnings from any acquired company are also taxed at the company’s new, lower rate. The deal is a huge win for Mr. Icahn, who led an unsuccessful proxy fight at Forest in 2011 before gaining a board seat and has advocated for changes at the drugmaker. He owns more than 11% of Forest, according to Dec. 31 filings. Forest shares closed the week up $25.49, or 36%, at $96.88. Actavis gained $26.53, or 14%, to $218.41.

RANBAXY, TEVA SETTLE WITH NY ATTORNEY GENERAL OVER COLLUSION -- The New York Attorney General and the U.S. units of Ranbaxy Laboratories Ltd. (Gurgaon IND) and Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR) settled claims that an agreement between the two drugmakers unlawfully restricted competition. Shares of both companies rose after they agreed to pay $150,000 each to the state of New York and refrain from similar agreements in the future as part of the settlement. The companies neither admitted nor denied the allegations. The settlement ends an investigation into an agreement the companies signed in 2010 to sell a generic version of Pfizer Inc.’s (New York) cholesterol drug Lipitor in the United States, while not challenging each other’s exclusivity rights on other generic drugs. The agreement was drawn up as a contingency plan to allow Israel’s Teva to sell the generic Lipitor, or atorvastatin calcium, in case Ranbaxy’s version was not approved by the U.S. Food and Drug Administration before Lipitor lost its patent protection on November 30, 2011. While India’s Ranbaxy, majority-owned by Japan’s Daiichi Sankyo Co Ltd., eventually got FDA approval in time, the agreement remained in place and could have been used to protect other drugs made by the two companies.

          “Agreements between drug manufacturers to protect each other’s market positions violate fundamental principles of antitrust law, and can lead to higher drug prices,” Attorney General Eric Schneiderman said in a statement. The agreement related to the sale of only one drug, but by including the “no-challenge” clause, the companies shielded dozens of their drugs from legal and regulatory challenges by the other, the attorney general’s office said. The attorney general’s office however said that it had not identified any anti-competitive effects due to the agreement during its investigation. Schneiderman said the case represents the latest application of recent legal precedent arising out of challenges to “pay-for-delay” agreements between brand-name and generic pharmaceutical manufacturers. As a side note, Ranbaxy recently has been banned from exporting drugs to the United States after failing to adhere to the FDA’s manufacturing standards. Ranbaxy’s shares closed the week up 2% at 354.15 rupees on India’s National Stock Exchange. Teva shares gained 9% to $48.45 on the New York Stock Exchange.

TRACKING WASHINGTON -- Although officials have confidently claimed enrollment in ObamaCare is surging, Vice President Biden suddenly suggested during a stop in Minneapolis last week that the totals might be lower than projected.Initially, we talked about by the end of this period having seven million people lined up,” he told a group in a coffee shop on Wednesday. “We may not get to seven but we’re gonna get to five or six, and that’s a hell of a start with people.” That’s also a significant difference from the confident predictions last fall, just before the rollout, from Health and Human Services Secretary Kathleen Sebelius. “I think success looks like at least 7 million people having signed up by the end of March 2014,” she told NBC last September. The nonpartisan Congressional Budget Office stuck with that estimate for the exchanges until just recently, when it lowered its projection from 7 million to 6 million. But the vice president is the first to mention a number as low as 5 million, suggesting doubts in the administration. In its report on signups through the end of January, the administration claimed 9.6 million total had gotten health insurance--3.3 million in the federal and state exchanges, and another 6.3 million in Medicaid, the health care program for low-income Americans.

          But a nonpartisan healthcare firm says the number of new signups in Medicaid from ObamaCare is much lower than 6.3 million. “It’s about 1.3 to 1.8 million people who are new to the program. The rest are part of the regular churn that are in and out,” Matthew Eyeles, of the firm Avalere Health LLC (Washington DC), said. And those in the regular churn--those who come and go all the time--wouldn’t count as part of ObamaCare because they were already eligible before the healthcare law. For those new to Medicaid under the expansion encouraged by ObamaCare, the administration pays 100% of the cost for the first three years. But it pays no additional funds for those already eligible, which is often one of the top three items in state budgets. “The state pays that bill,” said former CBO Director Doug Holtz-Eakin. “If it’s the expansion, the federal government pays the bill. So it matters a lot whether it’s newly eligible or existing eligible who are signing up.”

FDA/EMA ROUNDUP -- The Food and Drug Administration has begun the nation’s first widespread testing program for generic drugs that make up almost 80% of U.S. prescriptions. The $20 million effort, coming as concerns grow over the quality of products from abroad, started in September without any public notice. At least a dozen academic centers are involved in a testing program that will run through 2017, agency officials confirmed. The research this year will focus on heart drugs, ADHD treatments, immunosuppressants, anti-seizure medicines, and antidepressants. Results aren’t yet available. Testing of generic drugs previously has been conducted only on a spot basis in the U.S. The program, testing medicines made domestically and overseas, reflects a new emphasis by the FDA on the quality of generic drugs. The agency has banned the import of treatments made at four India-based plants over the last nine months, and the FDA chief visited that country last week to talk with government officials and companies there. While the agency long wanted to test generics, “we didn’t have money for that,” said Kathleen Uhl, acting director of the FDA’s Office of Generic Drugs.

          Elsewhere, the Food and Drug Administration approved a new drug from Chelsea Therapeutics Ltd. (Charlotte NC) to treat a rare blood pressure disorder that causes dizziness and fainting in patients with Parkinson’s disease and similar conditions. Between 80,000 and 150,000 patients in the U.S. have the disorder, called neurogenic orthostatic hypotension. The drug, known chemically as droxidopa, is the first FDA approval for Chelsea Therapeutics, which has no other drugs on the market. Chelsea CEO Joe Oliveto said the company expects to launch Northera in the second half of 2014. The company has not yet priced the drug. The approval marks a major comeback for the company and its drug. The FDA previously rejected the drug in March 2012, asking the company for an additional study to demonstrate Northera’s effectiveness. Then last month FDA scientists raised serious questions about the drug’s long-term effectiveness at a public meeting advisory panel meeting.

          Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR) won the backing of a European Medicines Agency committee for a new version of lung therapy Symbicort, paving the way for competition to one of AstraZeneca Plc’s (London) best-selling drugs. The generic formulation of budesonide and formoterol, to be marketed as DuoResp Spiromax and BiResp Spiromax, should be approved for the treatment of asthma and chronic obstructive pulmonary disease, the London-based EMA’s Committee for Medicinal Products for Human Use, or CHMP, said in a statement. The decision increases pressure on Symbicort, which generated $3.48 billion in sales for AstraZeneca last year.

          Anoro, a combination drug for chronic obstructive pulmonary disease (COPD) developed by GlaxoSmithKline Plc (London) and Theravance Inc. (S. San Francisco), has received the green light from European regulators, the companies said on Thursday. The drug is a combination of UMEC, a long-acting muscarinic antagonist, and VI, a long-acting beta agonist, in a single inhaler. It is expected to generate sales of more than $2 billion a year by 2018, according to analysts polled by Thomson Reuters. Recommendations for marketing approval from the European Medicines Agency are usually followed by the granting of full marketing authorization by the European Commission. The companies said they expected that decision during the second quarter of 2014. The drug, in a different strength formulation, was approved by regulators in the United States and Canada in December 2013.

          And Dynavax Technologies Corp. (Berkeley CA) said it had withdrawn a European marketing application for its experimental hepatitis B vaccine due to safety concerns raised by the European Medicines Agency. The EMA had said current safety data on the vaccine, Heplisav, was too limited to rule out a risk of “less common serious adverse events.” Heplisav is the company’s most advanced produced under development. The drug developer said it withdrew the application because it would not be able to gather sufficient data to respond to the regulator in the time required. An additional 8,000-subject trial intended to provide the data is expected to begin soon, the company said. Dynavax suffered a similar setback in February last year when the U.S. Food and Drug Administration rejected the vaccine.

MEDICAL STOCK SPOTLIGHT -- Emeritus Corp. (NYSE) led advancing issues, soaring $7.24, or 33% for the week, to $29.01. Brookdale Senior Living Inc. said it would buy Seattle, WA-based Emeritus for about $1.4 billion in an all-stock deal, creating the largest owner-operator of senior housing in the United States. Brentwood, TN-based Brookdale will also assume $1.4 billion of Emeritus’s debt. The transaction will expand Brookdale’s unit capacity by more than two-thirds to a total of about 112,700 units in 1,161 communities. The merger is expected to reduce operating expenses by up to $45 million annually, said Brookdale CEO Andy Smith, who will be the chief executive of the combined company. Brookdale said it would offer 0.95 of its shares to each Emeritus share held, at a premium of 32% to the closing price of each company’s stock prior to news of the deal. The offer translates into $28.41 per Emeritus share. Brookdale shares closed the week up 3% at $30.55. The deal is expected to close in the third quarter of 2014.

          Elsewhere, orphan drugmaker Ultragenyx Pharmaceutical Inc. (Nasdaq) surged $15.10, or 34%, to $59.10. The Novato, CA-based company has kept climbing after raising more than $115 million in the first San Francisco Bay Area IPO of the year in late January. Ultragenyx sold its IPO shares at $21 each. It originally planned to sell 4.8 million shares at between $14 and $17, then boosted that to sell 5.5 million shares at up to $20 each. The company has four drugs in clinical trials. Its lead drug treats hereditary inclusion body myopathy, disorders that waste the muscles. Another drug targets X-linked hypophosphatemia, a bone disease that causes bowed legs, shorter height and muscle weakness. The four-year-old company has no revenue and lost $23.7 million as of Sept. 30.

          And ANI Pharmaceuticals Inc. (Nasdaq) jumped $7.12, or 33%, to $28.59 after Roth Capital raised their price target on the stock from $27.00 to $33.00. Other equities research analysts have also recently issued reports about the stock. Analysts at Oppenheimer raised their price target on shares of Baudette, MN-based ANI from $29.00 to $31.00 on Wednesday. They now have an “Outperform” rating on the stock. ANI Pharmaceuticals issued its quarterly earnings data, reporting $0.35 earnings per share (EPS) for the quarter. The company had revenue of $10.53 million for the quarter, compared to the consensus estimate of $5.32 million. Analysts expect that ANI will post $1.35 EPS for the current fiscal year. ANI Pharmaceuticals is a specialty pharmaceutical company focused on developing products for female sexual health, menopause, contraception and male hypogonadism.

          But Onconova Therapeutics Inc. (Nasdaq), a clinical-stage biopharmaceutical company focused on developing therapies to treat cancer, plunged $5.24, or 37%, to $8.74. The company announced disappointing results from its phase 3 “ONTIME” trial of rigosertib in higher-risk myelodysplastic syndrome, or MDS, patients who had progressed or relapsed while using hypomethylating agents, or HMA. Newtown, PA-based Onconova said in a press release that rigosertib did not meet the primary endpoint compared to the best supportive care, or BSC, control arm. Median overall survival in the Onconova intent-to-treat group was 8.2 months, compared to 5.8 months in the BSC arm. The real concern is that if rigosertib proves to be a dud, Onconova has only two other ongoing early stage clinical studies. The remainder of its pipeline is preclinical in nature, meaning the company could still have additional downside left in its share price.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Protalix Biotherapeutics Inc. filed a registration to list on the Nasdaq Capital Market under the symbol “PRTX.” The Israeli company is offering $26.25 million of its common shares. Protalix uses cultured plant cells to manufacture bio pharmaceuticals. As of 2012, it has developed two such products, the second of which continues to undergo clinical trials. The first is Taliglucerase alfa--a recombinant glucocerebrosidase enzyme produced from transgenic carrot cell cultures. Known also as Elelyso, taliglucerase won approval from the U.S. Food and Drug Administration in May 2012 as an orphan drug for the treatment of Type 1 Gaucher’s disease. The second is PRX-105--a recombinant human Acetylcholinesterase, also produced from transgenic carrot cells, which can be used as a counter-measure against nerve agents attack. PRX-105 has completed Phase I clinical trials.

February 17, 2014 ...

OBAMACARE GAINED MORE YOUNG ADULTS IN JANUARY, U.S. SAYS -- Nearly 3.3 million people have signed up for health insurance through the marketplaces established by President Obama’s healthcare law, and about one-fourth of them are young adults, the administration said last week. The administration reported a modest uptick in the enrollment of young adults, a group highly sought by insurers because they are usually healthier and need fewer costly medical services. In a new report on enrollment, the administration said that 1.9 million people had selected health plans in the federal marketplace from October through January, while 1.4 million chose plans in state-run insurance exchanges. In January alone, officials said, more than 1.1 million people signed up for insurance in the federal and state exchanges. Administration officials said they were pleased with the numbers. “These encouraging trends show that more Americans are enrolling every day, and finding quality, affordable coverage in the marketplace,” said Kathleen Sebelius, the secretary of health and human services. “The covered population is getting younger,” Ms. Sebelius said. In January, 318,000 people age 18 to 34 selected health plans, bringing the total in this age group to 807,500, officials said.

          The administration’s goal was to have 4.4 million people signed up by now, according to a memorandum prepared in September by the Department of Health and Human Services. But the federal insurance website, HealthCare.gov, got off to a shaky start, thwarting many people who tried to sign up in October and November. The new data show that people buying insurance on the exchanges still tend to be older and potentially less healthy. Of those who signed up in the last four months, administration officials said, 53% are age 45 to 64--down slightly from 55% in the first three months. About 25% of those choosing a health insurance plan are 18 to 34. This group accounted for 24% of those picking plans in the first three months. People 55 to 64--the range just below the age at which people qualify for Medicare--represented the largest group, at 31%, down from 33% in the months from October through December. The open enrollment period continues until March 31, and White House officials predict a surge of applications just before the deadline.

AMA SUPPORTS OVERHAUL OF MEDICARE DOCTORS' PAY -- The American Medical Association last week announced its support for the new bipartisan, bicameral proposal to repeal and replace Medicare’s sustainable growth rate (SGR) formula, Modern Healthcare reports. But the top U.S. doctor group is staying silent on how best to pay for fixing Medicare’s flawed physician payment system after lawmakers unveiled a reform framework the week prior. The AMA said last week that it supports the proposal but would not comment on pay-fors (namely, spending cuts or increased taxes) until lawmakers offer their own ideas. “We are going to wait to offer an opinion until we see what the proposal package would look like,” said AMA President Ardis Dee Hoven. “We have to wait until they present us with a proposal.” The comments underscore the fragile nature of negotiations over how to pay for the roughly $150 billion permanent “doc fix.” Industry players, especially hospitals, are loathe to undergo more cuts in the name of greater pay stability for Medicare doctors. The previous week’s announcement of legislation to repeal the sustainable growth rate intensified an already heated lobbying battle on Capitol Hill. Hoven said her group would be in close contact with lawmakers over the next several weeks, urging them to pursue the overhaul before the current “doc fix” expires on April 1.

          The AMA will also launch a paid media campaign in support of SGR repeal, one official said. “The whole concept of continued patching is fiscally irresponsible,” said Hoven. “It undermines continually the stability of the program.” Physicians who treat Medicare patients are facing a pay cut of about 24% unless lawmakers act before the end of March. For more than a decade, Congress has averted similar reductions with short-term patches. Hoven implicitly pushed back at a proposal from House Republicans to attach a nine-month “doc fix” to legislation raising the debt ceiling. “If we keep opposing it or keep delaying it, is it going to make the process any easier?” she said. The idea was abandoned last week after opposition by lawmakers and doctor groups who want permanent SGR reform, according to aides.

TRACKING WASHINGTON -- Some backers of the 2010 healthcare law are pushing to create a new kind of insurance coverage that the measure essentially had ruled out: policies offering lower premiums but significantly higher out-of-pocket costs than those now available. The plans, dubbed “copper” because they would offer a lower level of coverage than the “gold,” “silver” and “bronze” options on the government-run healthcare exchanges, would be a departure from the minimum level of coverage that is one of the Affordable Care Act’s core principles. Many plans that offered less coverage were canceled when the healthcare law was rolled out because they didn’t meet its new requirements. Republicans accused President Barack Obama of backtracking on his promise that the law would allow people to keep their preferred health plans. In the face of an uproar, the Obama administration asked insurers to reinstate some of the millions of canceled policies for one year. Now, some insurers and a pair of Senate Democrats are trying to change the law permanently so that individuals and small businesses can buy so-called copper plans. The plans likely would have lower premiums, but purchasers would pay more of their ordinary health costs upfront. Greater coverage would kick in for serious, unforeseen health episodes that would require, for example, a hospital stay.

          Sens. Mark Begich of Alaska and Mark Warner of Virginia, both Democrats facing close re-election races this year, are sponsoring legislation that would allow people to buy copper plans on the exchanges. Moreover, insurance-industry officials have been talking up the idea with federal officials, though it is unclear whether the administration could make the change through regulations. The White House said it was weighing the proposal. Copper plans would cover, on average, 50% of medical costs, and while consumers’ out-of-pocket expenses would still be capped, that limit likely would be higher than the $6,350 maximum for individuals and $12,700 for families currently set by the law. People who selected the plan would be allowed tax credits toward the cost of premiums, as they already get for bronze plans, which cover 60% of costs; silver plans, which cover 70%; and gold plans, which cover 80%. The Council for Affordable Health Coverage, a coalition of employer groups and insurers including Aetna Inc. (Hartford CT) and Cigna Corp. (Bloomfield CT), is backing the proposal.

FDA/EMA ROUNDUP -- Medical robotics company Hansen Medical Inc. (Mountain View CA), which develops devices for positioning, manipulating, and controlling catheters, advanced 13% last week to $2.50 after reporting clearance from the U.S. Food and Drug Administration for its Magellan 6Fr Robotic Catheter. This new device is an improvement over the existing Magellan 9Fr Robotic Catheter in that it possesses novel dual-bend technology and features a smaller outer diameter catheter for use in smaller vessels in the peripheral vasculature, according to Hansen.

          Elsewhere, Pharmacyclics Inc. (Sunnyvale CA) and Johnson & Johnson (New Brunswick NJ) won approval for the companies’ breakthrough cancer drug Imbruvica to treat a second blood cancer. The medicine was cleared to treat chronic lymphocytic leukemia, the second therapy for the deadly disease to come to market in the last few months, the FDA said in a statement. Roche Holding AG’s Gazyva gained FDA approval in November for CLL. Both were deemed breakthrough drugs by the FDA. Almost 16,000 new cases of CLL are expected to be diagnosed this year, which totals about one-third of leukemia cases, according to the American Cancer Society. Peak sales for Imbruvica may reach $6.5 billion in 2026, with $3 billion coming from the U.S., said Michael Yee, an analyst with RBC Capital Markets.

          Johnson & Johnson (New Brunswick NJ) said Friday that the FDA has rejected--for a third time--its application to expand use of the blood thinner Xarelto to reduce dangerous blood clots and related problems in patients with coronary artery disease. The condition occurs when narrowed blood vessels restrict blood flow to the heart, increasing the risk of heart attack and other potentially deadly problems. The FDA’s rejection letter, announced by J&J, was expected after an FDA panel of experts unanimously voted against the broader use of the pill last month. The federal advisers said too much information was missing from company studies to accurately gauge Xarelto’s benefit.

          An advisory panel to the FDA said that available evidence does not prove that the painkiller naproxen, sold under the brand names Aleve and Naprosyn, carries a lower cardiac risk than rival products. The panel was convened after a retrospective analysis from multiple clinical trials published last year in The Lancet suggested naproxen was less dangerous to the heart than other nonsteroidal anti-inflammatory drugs, or NSAIDs, such as ibuprofen and Celebrex. Panelists recommended the FDA leave the current product labeling as is, at least pending the outcome of a large ongoing study, known as Precision, which compares naproxen with ibuprofen and Celebrex. The FDA is not bound to follow the advice of its advisory panels, but typically does so.

          And Indian regulators will be told when the U.S. Food and Drug Administration is inspecting plants that produce generic drugs in that country, and will join to observe FDA standards. The agreement between Indian government officials and FDA Commissioner Margaret Hamburg came during her visit to India last week, the FDA said. Hamburg, who last week said she will expand overseas plant inspections, also met in a closed-door session with 16 drug companies and affiliated groups in India to discuss manufacturing quality. U.S. lawmakers are scheduled to hear from doctors, researchers and patient advocates in a Feb. 26 briefing on whether substandard generic drugs are leaking into the U.S. medical system from overseas.

MEDICAL STOCK SPOTLIGHT -- LasikPlus vision-correction provider LCA-Vision Inc. (Nasdaq) led advancing issues, surging $1.38, or 34% over the week, to $5.44. PhotoMedex Inc. agreed to pay about $106.4 million in cash to acquire LCA-Vision in a deal that should add to the skin healthcare company’s earnings this year. PhotoMedex, which treats psoriasis, acne and other skin diseases, agreed to pay $5.37 a share in cash to acquire LCA-Vision, a 26% premium to LCA-Vision’s closing price prior to news of the deal. The deal will combine a skin healthcare provider that generates more usage of its laser treatments than LCA-Vision, PhotoMedex said. Cincinnati, OH-based LCA-Vision’s centers typically perform only one or two procedures a week, while on other days it focuses on patient screening and pre- and post-operative care.

          Elsewhere, American depositary shares of Genetic Technologies Ltd. (Nasdaq) rallied 31% to $1.90, as the genetic-testing services company received an upgrade from analysts at Ladenburg Thalmann--one day after the U.S. Patent and Trademark Office issued a further ExParte Reexamination Certificate to the Australia-based firm. The certificate follows the third request for ex parte re-examination of specific claims by Merial LLC. A re-examination is the process where a third party can have a patent claim again reviewed by the patent office to verify the subject matter is patentable. Ladenburg Thalmann now has a “Buy” rating on the stock, up from “Neutral.” It set a price target of $2.50.

          And Stereotaxis Inc. (Nasdaq) shares closed up 23% on the week to $5.60. The company was featured favorably in a SeekingAlpha article recently stating that the company “appears to be in a sweet spot for potential revenue growth and for becoming an acquisition target by larger companies that are in the fields of medical devices and/or robotics.” St. Louis, MO-based Stereotaxis designs, manufactures and markets an advanced cardiology instrument control system for the catheterization lab in a hospital or clinic that is used in the treatment of coronary artery disease and arrhythmias.

          But Ventrus Biosciences Inc. (Nasdaq) plunged $2.68, or 63%, to $1.58 after the company said its lead experimental treatment for anal fissures failed to reduce pain compared with a placebo in a second late-stage trial. The treatment, codenamed VEN 307, was found superior to a placebo for the same indication in another late-stage trial, the company said in May 2012. New York-based Ventrus said it planned to request a meeting with the U.S. Food and Drug Administration to determine the next steps in submitting a new drug application (NDA).

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Dipexium Pharmaceuticals LLC (New York) registered up to $34.5 million worth of common. The company plans to list on the Nasdaq Global Market under the symbol “DPRX.” Oppenheimer & Co. and Feltl & Co. are lead underwriters on the deal. Dipexium says it is a late stage pharmaceutical company focused on the development and commercialization of Locilex (pexiganan acetate cream 1%), a novel, first-in-class, broad spectrum, topical antibiotic. Locilex is a chemically synthesized, 22-amino acid peptide isolated from the skin of the African Clawed Frog. Its novel mechanism of action kills microbial targets through disruption of bacterial cell membrane permeability. Locilex is initially being targeted for the treatment of mild infections of diabetic foot ulcers.

February 10, 2014 ...

NIH JOINS DRUGMAKERS, NONPROFITS ON CHRONIC DISEASES -- Ten big drug companies that have spent billions competing with one another to find breakthroughs on diseases like Alzheimer’s have formed an unusual pact to cooperate on a government-backed effort to accelerate the discovery of new medicines. Under a five-year collaboration announced last week, the companies and the National Institutes of Health have agreed to share scientists, tissue and blood samples, and data. They aim to decipher the biology behind Alzheimer’s, Type 2 diabetes, rheumatoid arthritis and lupus, and to thereby identify targets for new drugs. The price tag, roughly $230 million, is relatively small: The global drug industry spends about $135 billion a year on research and development. But the collaborators seek something money can’t buy. By pooling their brightest minds and best lab discoveries they hope to put together a research system that can decipher the diseases in ways each hasn’t been able to on its own. Diseases like Alzheimer’s and diabetes “are looming tsunamis,” says Elias Zerhouni, chief of R&D at Sanofi SA (Paris), a participant. Deciphering them “could not be done by any single organization. Even the NIH, with all of its might, doesn’t have all of the solutions inside it. And no one company can do it.”

          The pact is unusual because drug companies are traditionally secretive about their science, rushing to acquire patents to protect rights to potential future drugs. The new agreement bars participants from using any discovery for their own drug research until the project makes data public on that discovery. “The moment the project results are out,” says David Wholley, director of research partnerships of the Foundation for the NIH, “all-out competition resumes to develop the winning drug. And that’s what the patients want.” Taking a page from the “open-source” movement that has swept the software world, the group will share all findings with the public, for anyone to use freely to conduct their own experiments. The alliance involves rivals such as Bristol-Myers Squibb Co. (New York), Johnson & Johnson (New Brunswick NJ) and GlaxoSmithKline Plc (London). A number of foundations, including the American Diabetes Association and the Alzheimer’s Association, have agreed to back the project and to help recruit patients for trials. NIH Director Francis Collins, who spearheaded the effort and is well known for having led the federal human-genome project, announced the collaboration at the National Press Club.

OBAMACARE TO CUT WORK HOURS BY 2 MILLION JOBS: CBO -- Obamacare will reduce the total number of hours Americans work by the equivalent of 2 million full-time jobs in 2017, the Congressional Budget Office said, sparking renewed Republican criticism of the law and a fresh defense from the White House. The total number of hours worked will fall about 1.5% to 2% from 2017 to 2024 as a result of the healthcare overhaul, the CBO said last week in a report. The reduction, about twice the agency’s estimates in 2010, is due “almost entirely” to low-wage employees who may choose to give up extra hours of work to avoid losing subsidies or tax advantages under the law, the report said. Republicans said their warnings that the health law would discourage employment are proving correct. The report “is further evidence the president’s healthcare law is destroying full-time jobs,” U.S. Representative John Kline (R-MN), who is chairman of the House Education and the Workforce Committee, said. President Barack Obama’s advisers pushed back against Republican interpretations of the CBO report and assertions that the law would cause employers to cut jobs and hours. “Over the longer run, CBO finds that because of this law, individuals will be empowered to make choices about their own lives and livelihoods, like retiring on time rather than working into their elderly years,” White House Press Secretary Jay Carney said.

          The Patient Protection and Affordable Care Act, known as Obamacare, is expected to cover 6 million people through its insurance exchanges this year, according to the CBO report. About 8 million people will enroll in an expansion of Medicaid, the state-run health plan for the poor, under the law. Both figures represent reductions of 1 million from the agency’s estimates before the Obama administration’s faltering rollout of the insurance expansion began in October. The report indicates the CBO analysts realize “they’ve been overly optimistic about the ACA and they need to make some adjustments,” said Joseph Antos, a health economist at the nonprofit American Enterprise Institute (Washington DC) who advises the agency. “The proof of all this is actually having the law implemented and seeing what happens over the next few years with employment.”

TRACKING WASHINGTON -- House and Senate lawmakers have agreed on a five-year plan to change how physicians are paid for treating Medicare patients, an issue that has created a recurring scramble in Congress for over a decade. Under the deal announced Thursday, Medicare would increase the amount it pays physicians by 0.5% each year for the next five years. The agreement was the result of talks that included the top members of the Senate Finance, House Energy and Commerce, and House Ways and Means committees. The new bill would also offer bonuses to healthcare providers that agree to have their reimbursements based more on outcomes than on the volume of services they provide. The rates, a perennial issue in Congress since the early 2000s, stem from a 1997 budget law aimed at restraining the growth of Medicare payments. That law set a formula for physician rates that tied payment increases to economic growth, but when healthcare costs rose faster than the economy, Congress began to override the formula, in what became known as the “doc fix.” It wasn’t yet clear, however, how the repeal of the 1997 measure would be funded, or if lawmakers have reached a consensus on that.

          In other news, the Obama administration is considering an extension of the president’s decision to let people keep their individual insurance policies even if they are not compliant with the healthcare overhaul, industry and government officials said Thursday. Avalere Health (Washington DC) CEO Dan Mendelson said Thursday that the administration may let policyholders keep that coverage for as long as an additional three years, stressing that no decision has been made. Policymakers are waiting to see what rate hikes health insurers plan for the insurance exchanges that are key to the overhaul’s coverage expansions. “The administration is entertaining a range of options to ensure that this individual market has stability to it, and that would be one thing that they could do,” Mendelson said. He said his company was not advising the administration on exchange policy. Health and Human Services spokesman Joanne Peters confirmed that the issue is under discussion, saying: “We are continuing to examine all sorts of ways to provide consumers with more choices and to smooth the transition as we implement the law. No decisions have been made.”

FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration cleared a bite-size camera to help screen patients who have trouble with colonoscopies. The ingestible pill camera from Given Imaging Ltd. (Yoqneam ISR) is designed to help doctors spot polyps and other early signs of colon cancer. The FDA cleared the company’s PillCam Colon for patients who have had trouble with the cringe-inducing colonoscopy procedure, which involves probing the large intestine with a tiny camera embedded in a four-foot long, flexible tube. The Israeli company’s technology, developed from missile defense systems, uses a battery-powered camera to take high-speed photos as it slowly winds its way through the intestinal tract over eight hours. The images are transmitted to a recording device worn around the patient’s waist and later reviewed by a doctor. In December, Irish medical device firm Covidien Plc said it would buy Given for about $860 million.

          Elsewhere, Ligand Pharmaceuticals Inc. (La Jolla CA) said that its drug Promacta has received “breakthrough” designation by the FDA for a new use in patients with a rare form of anemia. Ligand and its partner GlaxoSmithKline Plc (London) already market the pill to treat chronic hepatitis C and a rare condition called chronic immune thrombocytopenic purpura, in which the body attacks its own platelets. Now the companies are asking the FDA to approve Promacta to treat severe aplastic anemia, a rare condition in which the bone marrow fails to make enough new blood cells. Currently there are no drugs approved for patients who do not respond to existing immune system drugs. About 40% of patients in this group die of infection or bleeding within five years of diagnosis, according to the drugmakers. The FDA’s breakthrough drug program was authorized by Congress in 2012 with the aim of speeding up development of promising medicines. Ligand closed the week down 3% at $60.10.

          The head of the Food and Drug Administration will visit India this week amid growing concerns over the quality of generic medicines made in that country. Generic drugmakers Ranbaxy Laboratories Ltd. (Gurgaon) and Wockhardt Ltd. (Mumbai) have been banned from selling medicines in the U.S. from Indian plants based on quality issues. Most recently, Ranbaxy’s fourth facility was prohibited last month from sending products to the U.S. after FDA inspectors found drugs were re-tested to gain favorable results after initial analyses failed. FDA Commissioner Margaret Hamburg will visit Delhi, Cochin and Mumbai from Feb. 10-18, the agency said. In doing so, she will become only the second FDA chief to go to India in an official capacity. Hamburg plans to meet with government regulators from the country, which is the second-biggest drug provider and eighth-largest food exporter to the U.S.

          No serious safety concerns were raised over Merck & Co.’s (Whitehouse Station NJ) experimental pill for ragweed allergies, according to FDA documents Friday, ahead of a meeting this week of outside medical experts who will discuss whether the drug merits approval. The Allergenic Products Advisory Committee will meet on Tuesday to review Ragwitek, a pill placed under the tongue that, if approved, would be an alternative to regular injections administered by doctors for ragweed pollen allergies. At the meeting, the panel will be asked to discuss whether available clinical trial data supports the safety and the efficacy of the product in persons 18 years of age and older and make recommendations to the FDA. The committee will also be asked to recommend to the agency whether any additional studies of the drug might be needed.

          And workers at a Ranbaxy Laboratories Ltd. (Gurgaon IND) drug plant repeatedly distorted test results to make it appear that raw materials and active pharmaceutical ingredients met required standards when they didn’t, according to a report by inspectors from the Food and Drug Administration. FDA officials visited Ranbaxy’s Toansa factory in the northwestern Indian state of Punjab early this month and said they discovered workers retesting “until acceptable results are obtained” and deleting evidence of failed tests. Two weeks ago the FDA banned in the U.S. market the use of drug ingredients from Ranbaxy’s Toansa plant--a serious blow for Ranbaxy, since Toansa supplies many of the critical ingredients used in the company’s generic drugs.

MEDICAL STOCK SPOTLIGHT -- Furiex Pharmaceuticals Inc. (Nasdaq) led advancing issues, more than doubling over the week to $109.67 after its experimental drug alleviated diarrhea and abdominal pain caused by irritable bowel syndrome in two studies. The Morrisville, NC-based company’s studies were in the last of three rounds generally needed for regulatory clearance. The drug eluxadoline met targets for improvements in stool consistency and abdominal pain that were developed in conjunction with U.S. and European regulators, the company said. Furiex will apply for approval in June, Chairman Fred Eshelman said. He estimated annual sales of $750 million to $1 billion. Diarrhea-predominant irritable bowel syndrome is a chronic disorder that affects about 28 million patients in the U.S. and Europe, Furiex said in a statement.

          Elsewhere, Pernix Therapeutics Holdings Inc. (Nasdaq) surged 35% to $3.09 after announcing it has hired industry veteran Doug Drysdale as Chief Executive Officer. Mr. Drysdale’s appointment is supported by a group of institutional investors led by Athyrium Capital Management, who have agreed to purchase $65 million worth of debt obligations, providing the Woodlands, TX-based company with expansion capital for the acquisition of accretive specialty products to be added to Pernix’s portfolio. The drugmaker acquires, develops and markets medications for the pediatric market including treatments for dermatitis, statin-induced ubiquinone deficiency, deficiencies in active cultures due to diet and antibiotics, and upper respiratory conditions.

          And BioTelemetry Inc. (Nasdaq) climbed $1.39, or 19%, to $8.68 after announcing a victory in a patent infringement case against Mednet Healthcare Technologies Inc. and its subsidiaries, Heart-Care Corporation of America, Universal Medical Inc., and Universal Medical Laboratory Inc. Mednet entered into a consent judgment, declaring that the Mednet entities infringed on five patents owned by BioTelemetry and its subsidiary, Braemar Manufacturing, and that all five patents are valid. Conshohocken, PA-based BioTelemetry provides ambulatory outpatient management solutions for monitoring clinical information regarding an individual’s health. The company’s initial efforts are focused on the diagnosis and monitoring of cardiac arrhythmias, or heart rhythm disorders.

          But Oramed Pharmaceuticals Inc. (Nasdaq) plummeted $7.84, or 35%, to $14.25 after TheStreet.com’s Adam Feuerstein called the Israeli company’s oral insulin pill data completely worthless. Oramed soared 60% the week prior after claiming that its experimental insulin pill ORMD-0801 is safe and well tolerated, based on the positive outcome of a small and short (one week) phase IIa study. Feuerstein said the company’s data show adverse events reported by 40% of type 2 diabetics treated with the high dose of ORMD-0801. The adverse event rate in the low-dose ORMD-0801 arm was 30%. Fifty percent of the placebo-treated patients reported adverse events. Ten patients were treated in each arm--30 patients total; for one week, according to Feuerstein. Also missing is any disclosure of ORMD-0801’s efficacy, he said. The company claims all secondary endpoints of the one-week study were achieved but no data or proof has been provided, he added. Oramed had not responded to the report going into the weekend.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Applied Genetic Technologies Corp. (Alachua FL) registered up to $70 million worth of common stock. The company plans to list on the Nasdaq Global Market under the symbol “AGTC.” Barclays and BMO Capital Markets are the joint bookrunners on the deal. No pricing terms were disclosed. Applied Genetic Technologies was incorporated in 1999 and is a clinical-stage biotechnology company that uses its proprietary gene therapy platform to develop products designed for patients with severe inherited orphan diseases in ophthalmology. Its lead product candidates, which are each in the preclinical stage, focus on rare diseases of the eye, caused by mutations in single genes, which significantly affect visual function and currently lack effective medical treatments, according to the company. Much of the company’s technology is licensed from the University of Florida.

February 3, 2014 ...

PFIZER 4Q RESULTS BEAT FORECAST; GIVES CAUTIOUS 2014 VIEW -- Pfizer Inc.’s (New York) fourth-quarter profit plunged 59% because of discontinued operations, restructuring and other charges, and generic competition continuing to bleed sales of former blockbuster medicines. Despite those pressures and unfavorable currency exchange rates that reduced revenue by 3%, Pfizer easily topped Wall Street’s expectations. The world’s second-biggest drugmaker (next to Johnson & Johnson) said that net income fell to $2.57 billion, or 39 cents per share, from $6.32 billion, or 85 cents per share, a year earlier. Excluding one-time items, Pfizer said income would have been 56 cents per share. Analysts expected 52 cents. Net income was reduced by the animal health business spinoff last year and the sale of Pfizer’s nutrition business in late 2012. Revenue totaled $13.56 billion, down 2%. Analysts expected $13.36 billion. Sales of primary care drugs fell 10% to $3.44 billion, mainly on generic competition for cholesterol fighter Lipitor and Viagra in Europe. Lipitor, the world’s top-selling drug until U.S. generic competition hit two years ago, also faces cheaper versions in Europe and Australia. Those smaller revenues were shifted to the established products unit, where sales edged up 2% to $2.42 billion.

          Specialty drug sales dropped 7% to $3.4 billion, on generic competition overseas for two other drugs. Meanwhile, royalties from immune disorder drug Enbrel fell as Pfizer’s co-promotion deal winds down. The bright spot was Pfizer’s fledgling cancer drug business, up 26% to $468 million. But Pfizer’s new clot-preventing drug Eliquis, a potential blockbuster that’s lagged behind two competitors, brought in only $71 million in the quarter. Pfizer shares that with partner Bristol-Myers Squibb Co. (New York). Pfizer forecast 2014 adjusted profit of $2.20 to $2.30 per share and revenue of about $50.2 billion, despite expecting another $3 billion in revenue losses due to generic competition. Analysts are closely watching heavily touted palbociclib for advanced breast cancer, and which also is being tested against melanoma, lung and other cancer types. For all of 2013, Pfizer posted net income of $22 billion, up 51%, on revenue of $51.58 billion, down 6%. Pfizer’s stock closed the week up 31 cents, or 1%, at $30.40.

REPUBLICAN SENATORS PITCH REPLACEMENT FOR OBAMACARE IN 2017 -- Three prominent Republican senators last week called for replacing Obamacare with a package of election-year proposals intended to lower health insurance costs while retaining some elements of President Barack Obama’s health-reform law. Senators Richard Burr of North Carolina, Tom Coburn of Oklahoma and Orrin Hatch of Utah released a legislative blueprint that analysts say could help the Republican Party offer a much-needed vision for health care ahead of November’s mid-term congressional elections, voting that will determine which party controls Congress in the final two years of the Obama presidency. The proposals came a day before Obama was scheduled to defend his top domestic policy in his State of the Union address on Tuesday night. “The American people have found out what is in Obamacare--broken promises in the form of increased healthcare costs, costly mandates and government bureaucracy. They don’t like it and don’t want to keep it,” Burr said in a statement. Obama’s Patient Protection and Affordable Care Act has extended health coverage to millions of people, despite a botched October rollout. The administration says 6.3 million people have signed up for private insurance as a result of implementation. A similar number have been determined eligible for Medicaid coverage.

          The Republican alternative--dubbed the Patient Choice, Affordability, Responsibility and Empowerment Act, or CARE Act--would repeal Obamacare’s mandates, taxes and fees and replace the law with what aides called “common-sense, patient-centered” reforms intended to lower costs. As with earlier Republican initiatives, the approach would address costs by making consumers responsible for more of their medical bills, with assistance from health savings accounts funded with pre-tax dollars that could be used to pay for insurance premiums as well as healthcare services. The plan would keep in place two popular Obamacare provisions by banning lifetime limits on insurance benefits and allowing adult children to stay on their parents’ health plans until age 26. It would scale back Obamacare subsidies to help lower-income people buy private insurance, allow insurers to charge older people more and protect the sick against insurance market discrimination only if they remain continuously insured.

TRACKING WASHINGTON -- The House of Representatives last week voted to impose tighter restrictions on federal payments for abortions, thrusting the issue of a woman’s right to terminate a pregnancy into the polarizing politics of an election year. The bill stands no chance of being passed by the Democratic-controlled Senate. But that mattered little to members of both parties, who seemed to relish the chance to accuse their opponents of blatantly twisting the issue to their political advantage. The House vote was 227 to 188, mainly along party lines. Six Democrats voted yes, one Republican voted no and another voted present. “Here we go again,” said Representative Barbara Lee, Democrat of California. “It’s another battle in the war on women.” Republicans, bristling at accusations that they are hostile to women’s rights, said Democrats were unfairly characterizing their motives. “I will say it again,” said Representative Virginia Foxx of North Carolina, “we are not attacking women’s health care.” Existing laws like the Hyde Amendment already restrict federal financing for abortion services. But because the Hyde Amendment must be renewed every year, Republicans said their proposal would only codify what has been the law of the land.

          Though last week’s bill had solid support from the House Republican leaders, their near-unanimity during the vote on Tuesday obscured tensions within the party. Republicans have long sought to restrict abortion rights as a move to satisfy their social conservative base. The week prior, Eric Cantor of Virginia, the House majority leader, spoke at the March for Life, an annual Washington protest by opponents of legalized abortion. But the issue has become considerably more challenging for Republicans, both because of comments from Republican men, on and off the campaign trail, and an aggressive effort by Democrats to portray the party as anti-women. The timing of the vote was telling: the House leadership chose to bring the measure up on a day when all of Washington was consumed with President Obama’s State of the Union address. Republican leaders also decided to make the bill one of their first orders of business this year, disposing of it nearly 10 months before Election Day. A senior aide to Republican leadership said it would probably be the only time an abortion-related bill would come up this year.

FDA/EMA ROUNDUP -- Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR) gained approval from the U.S. Food and Drug Administration for a longer-acting version of the Copaxone multiple-sclerosis drug, bolstering the company’s effort to defend its best-selling product as competitors seek to introduce cheaper copies this year. Teva can now market Copaxone for use as a 40-milligram shot three times a week, the company said in a statement. Teva sells a 20-milligram daily injection, which last year generated $4.2 billion in sales, based on analysts’ estimates. Teva closed the week up 2% at 15,680 shekels in Tel Aviv. The shares are down about 34% from their March 2010 peak.

          Elsewhere, Merck & Co.’s (Whitehouse Station NJ) experimental drug Ragwitek, a treatment for ragweed allergies, appears safe and effective for use in patients between the ages of 18 and 65, a panel of advisors to the FDA concluded. The panel voted 6 to 2 last week, with one abstention, that data supported the drug’s efficacy. It voted 8 to 0, with one abstention, that the data supported the drug’s safety. About 30 million people in the United States suffer allergies to ragweed pollen, according to the FDA. Analysts see eventual Ragwitek sales of about $300 million. However, Morningstar analyst Damien Conover believes sales could reach as much as $1 billion if enough allergy sufferers prefer Ragwitek, a pill, to injections.

          FDA staffers say the pain reliever in Aleve may be safer on the heart than other popular anti-inflammatory drugs taken by millions of Americans. An agency review posted online last week said naproxen--the key ingredient in Aleve and dozens of other generic pain pills--may have a lower risk of heart attack and stroke than rival medications like ibuprofen, sold as Advil and Motrin. FDA staffers recommend relabeling naproxen to emphasize its safety. The safety review was prompted by a huge analysis published last year that looked at 350,000 patients taking various pain relievers. The findings suggest naproxen does not carry the same heart risks as other medications in the class known as nonsteroidal anti-inflammatory drugs, or NSAIDs. The agency released its memo ahead of a public meeting next month where outside experts will discuss the new data and whether naproxen should be relabeled.

          No serious safety concerns were raised over Merck & Co.’s (Whitehouse Station NJ) experimental pill for ragweed allergies, according to FDA documents Friday, ahead of a meeting this week of outside medical experts who will discuss whether the drug merits approval. The Allergenic Products Advisory Committee will meet on Tuesday to review Ragwitek, a pill placed under the tongue that, if approved, would be an alternative to regular injections administered by doctors for ragweed pollen allergies. At the meeting, the panel will be asked to discuss whether available clinical trial data supports the safety and the efficacy of the product in persons 18 years of age and older and make recommendations to the FDA. The committee will also be asked to recommend to the agency whether any additional studies of the drug might be needed.

          And workers at a Ranbaxy Laboratories Ltd. (Gurgaon IND) drug plant repeatedly distorted test results to make it appear that raw materials and active pharmaceutical ingredients met required standards when they didn’t, according to a report by inspectors from the Food and Drug Administration. FDA officials visited Ranbaxy’s Toansa factory in the northwestern Indian state of Punjab early this month and said they discovered workers retesting “until acceptable results are obtained” and deleting evidence of failed tests. Two weeks ago the FDA banned in the U.S. market the use of drug ingredients from Ranbaxy’s Toansa plant--a serious blow for Ranbaxy, since Toansa supplies many of the critical ingredients used in the company’s generic drugs.

MEDICAL STOCK SPOTLIGHT -- Israel’s Oramed Pharmaceuticals Inc. (Nasdaq) led advancing issues, soaring $12.09, or 60% for the week, to $32.09. The Jerusalem-based company, which is racing Novo Nordisk of Denmark to develop the world’s first insulin pill, moved a step closer to its goal on Thursday by announcing successful results from a small mid-stage test. The oral drug delivery specialist said its insulin capsule had met all primary and secondary endpoints in a Phase IIa clinical trial and it now plans to launch a larger mid-stage study in the third quarter. The concept of oral insulin as a way to relieve diabetics of several daily injections has been around since the 1930s, but making it a reality is extremely difficult because insulin is destroyed by enzymes in the digestive system. The stock has surged from around $4 since the end of 2012 on rising hopes for its insulin pill.

          Elsewhere, Alexion Pharmaceuticals Inc. (Nasdaq), maker of the rare-disease drug Soliris, climbed $25.09, or 19%, to $158.73 after fourth-quarter earnings and its 2014 forecast exceeded analysts’ estimates. Alexion reached $169.98 at one point in the week, its highest intraday price since the company first sold stock to the public in 1996. The shares of the Cheshire, CT-based company had risen 41 percent in the 12 months through Friday. Alexion reported earnings, excluding one-time items, of 87 cents a share, topping analysts’ estimates by 3 cents. The drugmaker’s 2014 profit forecast of $3.70 to $3.80 a share was higher than estimates of $3.46.

          And tiny Australia-based Prana Biotechnology Ltd. (Nasdaq) rocketed $2.61, or 29%, to $11.60. The company’s shares gained 65% for the month of January alone. Some analysts said the meteoric rise is likely linked to the upcoming data release of the company’s two mid-stage trials for PBT2, an experimental treatment for Alzheimer’s disease and Huntington’s disease. According to these analysts, Prana’s executive management have been traveling to discuss the trials with institutional investors lately, which has probably helped drive some of the recent movement. They add that Prana will need to raise a significant amount of cash to move PBT2 into late-stage trials, if the mid-stage data warrants such a development.

          But KaloBios Pharmaceuticals Inc. (Nasdaq) tumbled $2.20, or 41%, to $3.12 after the company said it would stop developing an asthma drug that failed in a mid-stage study. The drug, KB003, failed to bring about a clinically meaningful improvement in the pulmonary function of patients with severe asthma when tested against a placebo in 160 patients. The San Francisco-based company said it would focus on developing other treatments in its pipeline, which include a drug for cancer and another to prevent a common gram negative bacterium.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Flexion Therapeutics Inc. (Burlington MA) registered up to $86.25 million worth of common stock. The company plans to list on the Nasdaq Global Market under the symbol “FLXN.” The offering is being led by BMO Capital Markets and Wells Fargo Securities. Flexion is a specialty pharmaceutical company focused on the development and commercialization of novel, long-acting, injectable pain therapies. Flexion took a drug it had originally acquired from AstraZeneca Plc (now called FX005) and used it to turn itself into an osteoarthritis specialist. Flexion now has three drug candidates in its portfolio targeting the disorder. Those three are FX006, a long-lasting form of the steroid triamcinolone; FX005, which inhibits a protein known as p38 MAP kinase that is implicated in inflammation; and FX007, which curbs pain by blocking a different kinase involved in inflammatory diseases.

January 27, 2014 ...

OBAMACARE COVERAGE ENROLLMENT HITS THREE MILLION MARK -- About 800,000 people signed up for private health plans through Obamacare in January, pushing total enrollment to 3 million as negative perceptions about the program give way to more practical needs. Kathleen Sebelius, Secretary of the Department of Health and Human Services, lauded the January figures in a speech Friday in Jacksonville, FL, which add to the 2.2 million who enrolled from Oct. 1 through December. Her agency later said in a blog post that “as our outreach efforts kick into even higher gear, we anticipate these numbers will continue to grow.” The acceleration may indicate increased familiarity and interest in the Patient Protection and Affordable Care Act among people who previously had heard only of its problems, said Ron Pollack, executive director of the advocacy group Families USA (Washington DC). Public opinion about Obamacare plunged after the Oct. 1 debut of the insurance exchanges greeted consumers with website breakdowns, higher prices and potentially broken promises. “People were bombarded about the politics and learned precious little about how it would affect their lives,” Pollack, whose organization has been promoting the health law, said. “You’re seeing a significant acceleration that is just going to be larger and larger as we move toward the end of March.”

          Higher enrollment should benefit WellPoint Inc. (Indianapolis IN), Humana Inc. (Louisville KY) and other managed-care insurers that rely on a large and diverse patient-mix to balance out the costs of coverage. If the pace of sign-ups continues, enrollment should be close to 5 million by the end of March, said Ana Gupte, an analyst at Leerink Partners in New York. “This is positive for HMO stocks that have made a bet in favor of the exchanges,” she said. WellPoint closed the week down 1.24, or 1%, at $84.25. Cigna Corp. (Bloomfield CT) dropped 3% to $86.70, while Humana lost 1% to $96.00. The Obama administration had a goal of signing up about 7 million people in private plans by the end of March, based on estimates from the Congressional Budget Office. The law’s first enrollment period ends March 31. “We continue to see strong interest nationwide from consumers who want access to quality, affordable coverage,” Marilyn Tavenner, the administrator of the U.S. Centers for Medicare and Medicaid Services, said in a blog post.

FDA APPROVES THIRD OF NEW DRUGS AFTER ONE STUDY -- Drugmakers can gain U.S. approval for medicines based on a wide variety of evidence the treatments work and are safe, including a single clinical trial, researchers said. Almost as many novel drugs approved from 2005 to 2012 were based on one study as those using two clinical trials, an analysis in the Journal of the American Medical Association found. Researchers from Yale University’s School of Medicine (New Haven CT) reviewed 188 novel therapies approved by the Food and Drug Administration for 206 uses during the time period. Clinical trials where people are randomly assigned to treatment groups, and double-blinded, meaning the patients and researchers don’t know who is taking the experimental medication, are considered the gold standard. Eighty-nine percent of pivotal trials were randomized and 80% were double-blinded, according to the study. “Such regulatory flexibility allows for a customized approach to approval, including the ability to rapidly approve potentially effective therapies for life-threatening diseases, such as certain cancers, or those diseases for which there is no existing effective treatment, such as orphan diseases,” the authors wrote.

          The week prior, an advisory panel to the FDA voted to back Chelsea Therapeutics International Ltd.’s (Charlotte NC) Northera for approval against sudden drops in blood pressure related to neurologic disorders, a rare disease known as neurogenic orthostatic hypotension that can cause dizziness and fainting. The panel’s 16-1 vote in favor of the drug came even as the FDA has twice expressed concern about Northera’s effectiveness. “I tend to lower the standard a little bit if there’s nothing else that really works,” said Michael Proschan, a panelist who is a mathematical statistician at the National Institute of Allergy and Infectious Diseases, after the vote Jan. 14. Three phases of clinical trials, including two rounds that assess the effectiveness of the medication against disease, typically are required for a new drug to gain FDA approval. The JAMA paper also found that approval of the medicines for 45% of the 206 illnesses were based on trials that relied on an assessed benefit that is reasonably likely to prove the drug works, such as a shrinking tumor, instead of a goal with a stronger correlation to effectiveness such as longer survival.

TRACKING WASHINGTON -- More than 6.3 million Americans were deemed eligible for government healthcare plans for the poor since the October 1 launch of President Barack Obama’s healthcare law through December, federal officials reported last week. The swelling rolls for Medicaid and the Children’s Health Insurance Program (CHIP) reflect both an expansion of Medicaid under Obama’s Affordable Care Act and what healthcare policy analysts call an “out-of-the-woodwork effect,” in which people who heard about Obamacare sought to obtain health insurance and discovered that they had qualified for Medicaid even before the law expanded eligibility. “We have people who for the first time will have some health security that they never had before,” Kathleen Sebelius, Secretary of the Department of Health and Human Services, said of the Medicaid numbers at the winter meeting of the U.S. Conference of Mayors in Washington, DC. It was not clear how much credit goes to the healthcare law, however. “What many people don’t read far enough to learn is that this number also can include people in some states who are eligible under pre-expansion--the woodwork effect--and whose Medicaid enrollment was simply renewed,” said Matt Salo, executive director of the National Association of Medicaid Directors (Washington DC).

          In other news, the percentage of adults without health insurance in the U.S. fell this month to the lowest level since the end of 2012 as the core provisions of Obamacare took effect, a Gallup Inc. (Washington DC) poll found. The uninsured rate dropped to 16.1% in the Jan. 2-19 poll, from 17.3% in December, according to the Gallup-Healthways Well-Being Index. The uninsured rate fell more for nonwhites and for those 35- to 64-years-old. The ability to extend health care to most of the nation’s 48 million uninsured will be a main measure of success for the 2010 Patient Protection and Affordable Care Act, known as Obamacare. The people benefiting most so far appear to be those who are unemployed, where Gallup said the uninsured rate fell 6.7 percentage points. “The unemployed remain the subgroup with the highest uninsured rate at 34.1%, but the initial decline among this group suggests the healthcare law may be working as intended for unemployed adults,” Jenna Levy, a methodologist at Gallup, wrote in the report. U.S. Representative Marsha Blackburn, a Tennessee Republican who is vice chairman of the House Energy and Commerce Committee, said the health law was “a far cry from ‘success’ by any measure.”

FDA/EMA ROUNDUP -- Amag Pharmaceuticals Inc. (Waltham MA) said the U.S. Food and Drug Administration rejected its application for wider use of its iron deficiency drug due to safety concerns and asked for more trial data, sending its shares down 3% for the week to $21.01. In a “complete response letter” to Amag, the FDA suggested that the company generate additional safety data for the wider patient population and evaluate the dosing or administration of the drug, Feraheme. Amag CEO William Heiden said, “We do have existing safety data from our two large late-stage trials; certainly we would look to that data to support the safety profile of Feraheme.” The FDA asked Amag to provide additional safety data related to serious hypersensitivity, cardiovascular events and deaths. Feraheme is already approved to treat iron deficiency anemia in adult chronic kidney disease patients.

          Elsewhere, Amarin Corp Plc (Dublin IRL) said the FDA rejected a preset testing process that was critical to the company seeking broader use of its blood fat-lowering drug. The Irish drugmaker said it planned to appeal the decision. The company may have to drop its bid to treat a wider population--for which it is currently conducting a large, multi-year study--if it doesn’t succeed, the company said. “We see a low probability of successful appeal and ultimate approval (for expanded use),” FBR Capital Markets & Co analysts wrote in a note. Analysts are skeptical of Amarin’s ability to run a profitable business without the new indication of its only approved drug, Vascepa. Advisers to the FDA had in October recommended that the agency not approve Vascepa for the new use until the larger 8,000-patient trial shows that lowering blood fats leads to reduced cardiovascular risk.

          The FDA said it is barring imported drugs from an overseas factory operated by Ranbaxy Laboratories Ltd. (Gurgaon), India’s largest drugmaker, due to quality control violations. The FDA ban effectively stops the company from shipping drugs and raw ingredients from its Toansa plant in the Punjab province. A Jan. 11 inspection by FDA staffers uncovered factory workers retesting drug ingredients that had failed quality testing, in an apparent effort to return positive results. Those practices and others found at the plant violate manufacturing standards for drugmakers that do business in the U.S. “The FDA is committed to ensuring that the drugs American consumers receive--no matter where they are produced--meet quality standards and are safe and effective,” said FDA compliance director Carol Bennett. Ranbaxy will be required to hire an outside inspector to review the plant and certify that it is meeting U.S. quality standards before the ban can be lifted.

          No serious safety concerns were raised over Merck & Co.’s (Whitehouse Station NJ) experimental pill for ragweed allergies, according to FDA documents Friday, ahead of a meeting this week of outside medical experts who will discuss whether the drug merits approval. The Allergenic Products Advisory Committee will meet on Tuesday to review Ragwitek, a pill placed under the tongue that, if approved, would be an alternative to regular injections administered by doctors for ragweed pollen allergies. At the meeting, the panel will be asked to discuss whether available clinical trial data supports the safety and the efficacy of the product in persons 18 years of age and older and make recommendations to the FDA. The committee will also be asked to recommend to the agency whether any additional studies of the drug might be needed.

          And Europe’s drugs regulator gave its backing on Friday for marketing approval to be granted for Bayer AG’s (Leverkusen DEU) pulmonary hypertension drug Adempas and for GlaxoSmithKline Plc’s (London) diabetes medicine Eperzan. The European Medicine Agency (EMA) also backed a new drug from Dainippon Sumitomo Pharma Co. Ltd. (Osaka JPN) called Latuda, for the treatment of schizophrenia, and Bemfola, a new biosimilar medicine for the treatment of infertility. But the regulator decided against recommending Teva Pharmaceutical Industries Ltd.’s (Petach Tikva ISR) new multiple sclerosis (MS) pill Nerventra, or laquinimod, which the Israeli firm is developing with Swedish partner Active Biotech, and recommended rejecting an application from Swiss drugmaker Novartis AG (Basel) to market its heart failure drug serelaxin. Recommendations for marketing approval by the EMA’s Committee for Medicinal Products for Human Use (CHMP) are normally endorsed by the European Commission within a couple of months.

MEDICAL STOCK SPOTLIGHT -- ThermoGenesis Corp. (Nasdaq) led advancing issues, soaring $1.73, or 259% over the week, to $2.82. The driving force was news that Rancho Cordova, CA-based ThermoGenesis and privately held TotipotentRX Corp. announced their co-sponsored Phase Ib clinical trial safety and efficacy results treating no-option patients suffering from critical limb ischemia with Totipotent’s CLIRST (Critical Limb Ischemia Rapid Stem cell Therapy) treatment. While the trial achieved both its primary safety and secondary efficacy endpoints at 12 months, the impressive statistical data was the driving force. The trial achieved statistical significance in the following areas: major amputation free survival rates (82.4%); both resting and walking pain reduction; improved walking distance; and open wound healing and generation of new blood vessels in the treated leg. There were also no serious adverse events.

          Elsewhere, BioDelivery Sciences International Inc. (Nasdaq) rocketed $2.94, or 45%, to $9.41 after the Raleigh, NC-based company reported positive clinical trial results for its experimental treatment for chronic pain. BioDelivery Sciences and Endo Pharmaceuticals announced late Thursday that results from the first phase of a Phase 3 clinical trial of BEMA Buprenorphine improved chronic pain relief when compared to a placebo. The results triggered a $10 million milestone payment from Endo to BioDelivery Sciences. The second phase of the trial is ongoing, and results are expected later this year. Those would also trigger a similar milestone payment for BioDelivery Sciences and, if successful, could lead to a new drug application for BEMA by the end of this year.

          And Uroplasty Inc. (Nasdaq) surged 24% to $4.49 after the medical device maker posted a smaller-than-expected loss for the third quarter, helped by strong sales growth of its Urgent PC Neuromodulation System for treating an overactive bladder. The Minnetonka, MN-based company forecast fourth-quarter revenue growth of 25-30% for the device in the United States. Roth Capital Partners raised its price target on the stock to $5 from $4.50, citing the strong quarterly results and outlook.

          But Cleveland BioLabs Inc. (Nasdaq) plummeted 40% to $0.69 after saying the U.S. Department of Health and Human Services has ended talks related to funding the development of its anti-radiation treatment. The Buffalo, NY-based company plans to pursue pre-Emergency Use Authorization for the treatment, which would make it available for procurement by federal agencies as a countermeasure against terrorist attacks even before regulatory approval. Cleveland BioLabs’ therapy, Entolimod, is being tested as a countermeasure following total body irradiation. There are no approved treatments for radiation poisoning, the company said. Entolimod, the company’s lead compound, is also being tested for use in advanced solid tumors.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Revance Therapeutics Inc. (Newark CA) registered up to $86.25 million worth of common stock. The company plans to list on the Nasdaq Global Market under the symbol “RVNC.” The offering is being led by Cowen & Co. and Piper Jaffray. Revance Therapeutics is a clinical stage specialty biopharmaceutical company focused on the development, manufacturing and commercialization of novel botulinum toxin products for multiple aesthetic and therapeutic applications. The company says potential therapeutic indications include migraine, rhinitis and other disease states for which botulinum toxin is an appropriate treatment.

January 20, 2014 ...

OBAMACARE ATTRACTING OLDER, LESS HEALTHY PEOPLE -- About 70% of Obamacare’s customers are 35 years of age or older, indicating at this point that the U.S. healthcare overhaul is initially attracting a less healthy population that may drive up insurance premiums. The federal- and state-run insurance exchanges signed up 2.2 million people for private health plans in the three months ended Dec. 28, the U.S. Department of Health and Human Services said in a report released last week. About 24% were 18- to 34-year-olds, and about one-third were 55 or older. The Obama administration wanted 18- to 34-year-olds to make up about 40% of total enrollment to help offset the cost of care for older and sicker people. Missing the target for the “young invincibles” may lead insurers to adjust prices if gains aren’t made by the March 31 end of enrollment. “It is more of a scale than a cliff,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry’s lobbying group in Washington. “The more young, healthy people participate, the more stable the marketplace will be and the more affordable premiums will be.”

          The report marks the first time the U.S. has released the demographics of customers on the exchanges that debuted Oct. 1 under the 2010 Patient Protection and Affordable Care Act. The patient-mix is important to health insurers who would have to decide by the end of May whether they want to keep selling exchange plans in 2015. Humana Inc. (Louisville KY) said last week it was evaluating its expectations for Obamacare after the initial wave of customers appeared to be sicker and costlier than anticipated. “We’re confident based on the results we have that we’ll have an appropriate mix enrolled in coverage,” Mike Hash, the director of HHS’s Office of Health Reform, said. Young adults should enroll in greater numbers as the March 31 deadline approaches, he said. Congressional analysts had projected the government-run insurance markets would attract about 7 million people in the initial six-month enrollment period. To keep the system financially stable, the White House had said it needs about 2.7 million of the new enrollees to be young, healthy customers.

J&J AGREES TO SELL ORTHO UNIT TO CARLYLE FOR $4 BILLION -- Carlyle Group LP (Washington DC) agreed to buy the Ortho Clinical unit of Johnson & Johnson (New Brunswick NJ) for $4.15 billion, a deal that would shed the healthcare products company’s only diagnostics division. The agreement is expected to close in the middle of the year, Carlyle said in a statement. Revenue has been slipping at the unit for blood and cholesterol tests, and it isn’t one of the market leaders, CEO Alex Gorsky said when J&J put the business up for sale last year. Carlyle will operate the business as a stand-alone entity, said people with knowledge of the matter before the offer was announced. The deal reflects an industry trend in which Pfizer Inc. (New York), Bristol-Myers Squibb Co. (New York) and Abbott Laboratories Inc. (Abbott Park IL) have in the past two years sold, spun off or split apart non-core businesses after patent losses on top products. J&J may not be done, said Danielle Antalffy, an analyst at Leerink Partners (New York). We’re inclined to believe J&J will continue to strategically prune its business segments,” Antalffy said. She said the company’s diabetes business “may be the target of future strategic alternatives.

          Carlyle, the world’s second-biggest manager of alternative assets such as private equity and real estate, has asked banks to line up about $3.3 billion in debt for the acquisition, with the rest funded by cash, said one of the people, who asked not to be named because the negotiations were private. “We expect to tap into rising demand for sophisticated medical diagnostic products and services worldwide,” Stephen Wise, a managing director at Carlyle, said in the statement. Ortho Clinical, which makes diagnostic equipment that tests blood for everything from cholesterol to fertility hormones, reported earnings before interest, taxes, depreciation and amortization of about $475 million in 2012. Carlyle plans to invest heavily in research and development as well as international expansion, said the person, who is familiar with the company’s strategy. J&J closed the week up 32 cents at $95.06 on the New York Stock Exchange.

TRACKING WASHINGTON -- Democrats are increasingly anxious about an onslaught of television ads hitting vulnerable Senate and House candidates for their support of the new health law, since many lack the resources to fight back in the early stages of the midterm campaign. Since September, Americans for Prosperity (Arlington VA), a group financed in part by the billionaire Koch brothers, has spent an estimated $20 million on television advertising that calls out House and Senate Democrats by name for their support of the Affordable Care Act. The unusually aggressive early run of television ads, which has been supplemented by other conservative initiatives, has gone largely unanswered, and strategists in both parties agree it is taking a toll on its targets. Building on the success, the deep-pocketed organization disclosed last Tuesday that it was expanding its Senate efforts with $1.8 million in airtime to attack Democratic House members running for the Senate in Iowa and Michigan, where Democrats are viewed as holding an early advantage. The group was also moving into Montana, a state where Democrats may struggle to defend a seat, on behalf of a Republican House member running for the Senate.

          In other news, people who buy insurance on health exchanges run by the federal government are eligible for tax credits to reduce their premiums, a U.S. judge ruled, dismissing claims that only state-run exchanges can offer the subsidies.The plain text of the statute, the statutory structure and the statutory purpose make clear that Congress intended to make premium credits available on both state-run and federally facilitated exchanges,” U.S. District Judge Paul Friedman in Washington said in a ruling dismissing a lawsuit. The ruling undercuts what one supporter of the Obama healthcare law called an “existential” threat to the law. Opponents say it forces consumers and businesses to participate in a program their state governments opted out of. The tax credits are intended to help low-income people pay for health insurance bought on the exchanges set up through the Patient Protection and Affordable Care Act. There are 14 state-run exchanges, while 36 states are covered by the federal exchange.

FDA/EMA ROUNDUP -- The Food and Drug Administration has cleared a first-of-a-kind blood test that can help predict intellectual disabilities in infants by analyzing their genetic code. The laboratory test from Affymetrix Inc. (Santa Clara CA) detects variations in patients’ chromosomes that are linked to Down syndrome, DiGeorge syndrome and other developmental disorders. About 2% to 3% of U.S. children have some sort of intellectual disability, according to the National Institutes of Health. The test, known as the CytoScan Dx Assay, is designed to help doctors diagnose children’s disabilities earlier and get them appropriate care and support. It is not intended for prenatal screening or for predicting other genetically acquired diseases and conditions, such as cancer.

          Elsewhere, Medtronic Inc.’s (Minneapolis MN) CoreValve, a device used to replace heart valves, was approved by the FDA for patients who can’t have open-heart surgery. Medtronic’s device can be inserted with a catheter while traditional valve replacement is done through an invasive operation. The FDA cleared the device without an advisory panel review, the company said in a statement. CoreValve, approved in Europe since 2007, will compete with Edwards LifeSciences Corp.’s Sapien. Medtronic may take 30% of the market for the non-surgical valves, said Michael Weinstein, a JPMorgan Chase & Co. analyst. That’s more than investors have expected, he said.

          Chelsea Therapeutics International Ltd. (Charlotte NC) said an independent panel to the FDA recommended an approval for the company’s drug to treat a rare form of low blood pressure. Analysts, however, were cautious as the FDA rejected the drug in March 2012 even after a positive recommendation from an advisory committee and cited the need for more data. The panel last week voted 16 to 1 in favor of the drug, Northera. “A degree of caution may be prudent until the FDA responds, however, given strength of regulatory opposition to the drug to date,” Needham analyst Alan Carr said. Carr raised his price target on the stock to $8 from $4. Company shares closed the week up $2.26, or 90%, at $4.76. The FDA usually follows the recommendation of advisory panels, but is not bound to do so.

          Advising the FDA to “do its due diligence” about bleeding risk, an FDA panel voted 10-1 in favor of Merck & Co.’s (Whitehouse Station NJ) anti-clotting drug vorapaxar, which would have the brand name Zontivity. The panel and Merck want to limit the drug’s use to heart attack patients without a stroke history, because of an increased bleeding risk among stroke patients. Aspirin and Bristol-Myers Squibb’s now off-patent Plavix (clopidogrel) seek the same goal--to prevent clots--but Reuters notes Merck’s potential market peer works differently, by inhibiting a PAR-1 receptor. The panel also says the drug should come with a weight minimum because lighter patients appear to be at a higher risk for bleeding.

          And Gilead Sciences Inc.’s (Foster City CA) high-profile new hepatitis C drug Sovaldi has won final European approval, the company said on Friday, paving the way for its launch across the European Union. The green light from the European Commission had been expected following a positive recommendation from the European Medicines Agency in November. The once-a-day pill, also known as sofosbuvir, is the first approved to treat certain types of hepatitis C infection without the need for interferon, an injected drug that can cause severe flu-like symptoms.

MEDICAL STOCK SPOTLIGHT -- Alimera Sciences Inc. (Nasdaq) was a big mover last week, as its shares soared $2.92, or 59%, to $7.88. The move came despite no company specific news. This continues the recent uptrend for Alimera, as the stock is now up almost 145% in the past one-month timeframe. Alpharetta, GA-based Alimera Sciences is a biopharmaceutical company that is engaged in the research, development, and commercialization of ophthalmic pharmaceuticals. The company presently focuses on diseases affecting the back of the eye, or retina, which are treated with current therapies. Its advanced product candidate is ILUVIEN, an intravitreal implant providing a therapeutic effect for up to 36 months in the treatment of vision impairment associated with diabetic macular edema (DME). The implant delivers “sustained sub-microgram levels a corticosteroid with demonstrated efficacy in the treatment of ocular disease,” according to Alimera.

          Elsewhere, Sarepta Therapeutics Inc. (Nasdaq) jumped $7.35, or 38%, to $26.78 after the company said its muscle disorder drug eteplirsen continued to help patients after more than two years of treatment. Cambridge, MA-based Sarepta reported results from an extended study of the drug. It said boys who were treated with eteplirsen continued to show stabilization of walking ability after 120 weeks of treatment. The results come from a mid-stage clinical trial involving 12 boys between the ages of 7 and 13. They have Duchenne muscular dystrophy, a rare and fatal genetic disease that causes increasing muscle weakness. It affects one of every 3,500 boys born worldwide. Sarepta does not have any drugs approved for sale. It is studying treatments for Duchenne muscular dystrophy and viruses like Ebola, Marburg and influenza. Eteplirsen is its most advanced experimental drug.

          And Agios Pharmaceuticals Inc. (Nasdaq) leaped $8.56, or 31%, to $35.93 despite no company specific news. This continues the recent uptrend of the company as the stock has now gained over 87% since Jan 6. Agios discovers and develops therapeutics in the field of cancer metabolism. The Cambridge, MA-based company is focusing on glycolysis, fatty acid metabolism, and autophagy. The biotech recently started dosing patients in an early-stage study of a new blood cancer drug candidate. The biotech, which raised $106 million in its initial public offering last July, said the Phase 1 study AG-221 will test safety and tolerability. The drug candidate will be given to patients with advanced hematologic cancers with a mutation of isocitrate dehydrogenase-2 (IDH2), including acute myelogenous leukemia (AML) and myelodysplastic syndrome. Agios believes based on its studies that IDH2 mutations contribute to cancer growth by blocking differentiation, or maturation, of primitive cells.

          But Geron Corp. (Nasdaq) slid 14% to $4.51 after Zacks restated their “neutral” rating on its shares. Zacks currently has a $5.50 price target on the stock. Zacks’ said, “Geron posted a net loss of $0.06 per share in the third quarter of 2013, in line with the Zacks consensus estimate but narrower than the year-ago loss of $0.13. Third quarter revenues of $181,000 were below the year-ago revenues of $636,000.” Geron’s third-quarter results were overshadowed by an abstract on its imetelstat drug candidate. Zacks says the data look encouraging and Geron may have another shot at developing imetelstat. Menlo Park, CA-based Geron did not have much success in developing imetelstat for breast cancer and non-small cell lung cancer earlier. In another blow, Geron got a “sell” rating at TheStreet Quant Ratings.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, Eleven Biotherapeutics Inc. (Cambridge MA) registered up to $69 million worth of common stock. The company plans to list on the Nasdaq Global Market under the symbol “EBIO.” The offering is being led by Citigroup, Cowen & Company, and Leerink Swann. Eleven Biotherapeutics is a clinical-stage biopharmaceutical company with a proprietary protein engineering platform, called AMP-Rx, that the company applies to the discovery and development of protein therapeutics to treat diseases of the eye. Its therapeutic approach is based on the role of cytokines in diseases of the eye and the ability to design and engineer proteins to modulate the effects of cytokines. Eleven Biotherapeutics believes cytokines play a major role in the pathology underlying many eye diseases and that protein therapeutics are an effective means of modulating the effects of cytokines.

January 13, 2014 ...

HEALTH SPENDING RISES SLOWLY FOR FOURTH CONSECUTIVE YEAR -- National health spending grew slowly for the fourth consecutive year, increasing 3.7% in 2012 to $2.8 trillion, the federal government said. But officials disagreed over whether the Affordable Care Act or lingering effects of the recession were primarily responsible for the remarkable trend. As a share of the economy, health spending declined slightly, to 17.2% in 2012, from 17.3% in the prior year. For decades, health spending has grown faster than the economy, taking a bigger bite out of workers’ wages and the federal budget. Health spending averaged about $8,900 a person in 2012, according to the annual report issued by the government. The authors of the report--civil servants at the Centers for Medicare and Medicaid Services--said that the Affordable Care Act, adopted in March 2010, had only “a minimal impact on overall national health spending growth through 2012” and had not yet significantly reined in or accelerated its growth. “The relatively low rates of growth that we’ve seen over the last four years are consistent with the historical trends that we’ve seen when we look at health spending and gross domestic product,” said Aaron C. Catlin, an economist and co-author of the report. “It’s consistent with what we’ve seen in post-recessionary periods in the past.”

          But the White House said the data vindicated President Obama’s healthcare policies. “The years 2009 to 2012 saw the slowest growth in U.S. healthcare expenditures since the government started collecting this information in the 1960s,” said Jeanne M. Lambrew, a health policy coordinator at the White House. “While there is a debate about how much the Affordable Care Act has contributed to this health cost slowdown,” Ms. Lambrew said, “there is no doubt that it reduced Medicare spending growth, and most experts believe that Medicare savings spill over into the private sector.” Some experts, including the Congressional Budget Office, have reduced their projections of federal health spending, based in part on their belief that pervasive changes in the healthcare system would endure. However, the authors of the new report, published in the journal Health Affairs, were more cautious. “From our perspective,” they wrote, “more historical evidence is needed before concluding that we have observed a structural break in the historical relationship between the health sector and the overall economy.” (Source: New York Times)

FOREST AGREES TO BUY APTALIS FOR $2.9 BILLION -- Forest Laboratories Inc. (New York) is buying Aptalis Holdings Inc. (Bridgewater NJ), which specializes in treatments for gastrointestinal problems and cystic fibrosis, for $2.9 billion in cash. Forest Labs President and CEO Brent Saunders said in a statement that the transaction would help his company diversify its business. There’s an anticipated $125 million in cost savings from the combination by 2016. Aptalis shareholders include private investment firm TPG Capital (Fort Worth TX). Aptalis had $688 million in sales in fiscal 2013, which ended in September. Its top three U.S. products, Canasa, Carafate, and Zenpep, made up more than 60% of its total 2013 sales. International sales comprised about 15% of revenue. Third-party delivery technology provider and drugmaker Aptalis Pharmaceutical Technologies accounted for about 15% of revenue. Forest Labs said that it plans to fund the deal with available cash and debt. The company said due to the acquisition it has not yet started its previously announced accelerated stock repurchase program. Forest Labs said that once it completes permanent financing for the buyout that it will consider starting the accelerated stock repurchase program.

          The acquisition of Aptalis is expected to add about 78 cents per share to Forest Lab’s 2015 adjusted earnings and almost $700 million in revenue. The deal requires review by anti-trust authorities in the U.S. and Canada. The buyout is planned to close in the first half of 2014. Forest Labs’ stock closed the week up $9.38, or 16%, at $69.

TRACKING WASHINGTON -- Effective Jan. 1, Medicare began covering the costs of mental health care much as it does other medical expenses. For decades, older adults with depression, anxiety and other psychological conditions have received unequal treatment under Medicare. The program paid a smaller share of the bill for therapy from psychiatrists, psychologists or clinical social workers than it did for medical services. And Medicare imposed strict lifetime limits on stays in psychiatric hospitals, although no such limits applied to medical care received in inpatient facilities. There was never a good rationale for this disparity, and in 2008 Congress passed the Medicare Improvements for Patients and Providers Act. The law required Medicare to begin covering a larger share of the cost of outpatient mental health services in 2010 and to phase in additional increases over time. On Jan. 1, that process was complete, and for the first time since Medicare’s creation seniors who seek psychological therapy will be responsible for 20% of the bill while Medicare will pay 80%, the same percentage it covers for most medical services. (Payment starts once someone exhausts an annual deductible--$147 next year.) In 2008, Medicare covered 50% of the cost of psychological treatment. Last year, it covered 65%.

          In other news, the U.S. government will end its contract with CGI Federal Inc. (Fairfax VA) for the error-plagued Obamacare enrollment website HealthCare.gov, instead signing a contract with Accenture Plc (Dublin IRL), the Washington Post reported Friday in its online edition. HealthCare.gov’s technology failures in the weeks after its October 1 launch created a political crisis for President Barack Obama, threatening the rollout of his signature healthcare law to consumers and emboldening its foes among Republican lawmakers to call for its delay. CGI has been immersed in the effort to repair the site, which began working more smoothly for hundreds of thousands of consumers in December, allowing them to enroll in new health insurance plans offered under Obama’s Affordable Care Act. But the government’s dissatisfaction over the website’s early crash, as well as aspects of the site that still do not work, are behind plans to sign a one-year contract with Accenture instead, the Post report said, quoting a person familiar with the matter. U.S.-listed shares of CGI Group, the parent of CGI Federal, closed the week down $1.30, or 4%, at $31.58 on the New York Stock Exchange.

FDA/EMA ROUNDUP -- A diabetes pill from Bristol-Myers Squibb Co. (New York) and AstraZeneca Plc (London) won U.S. approval, becoming the second in a new class of medicines to treat the disease. The Food and Drug Administration cleared the drug, known as dapagliflozin. The FDA had rejected the Type 2 diabetes treatment, to be called Farxiga, in 2012 after advisers raised concerns about the bladder and breast cancer risk. Additional data downplayed the potential harm and advisers backed the pill in December. Johnson & Johnson gained clearance in March to sell Invokana, the first in a class of therapies called SGLT2 inhibitors that includes dapagliflozin. The Bristol-Myers and AstraZeneca drug, approved in Europe in 2012, may generate $160 million in sales this year for AstraZeneca, rising to $1.5 billion in 2020, Seamus Fernandez, an analyst with Leerink Partners has estimated. Bristol-Myers is selling its share of the diabetes alliance it has with AstraZeneca for as much as $4.3 billion. The partnership includes dapagliflozin, Onglyza, Byetta and Bydureon, Bristol-Myers said.

          Elsewhere, a combination treatment from GlaxoSmithKline Plc (London) for melanoma, the deadliest form of skin cancer, has won accelerated FDA approval. The green light for the combined use of Tafinlar, also known as dabrafenib, and Mekinist, or trametinib, from the FDA is the first of its kind for a form of the disease with a specific genetic profile. Both drugs are already approved for separate use but GSK believes they will have a longer-lasting effect if given together. Industry analysts also see a combination offering the greatest commercial potential. Tafinlar, which is similar to Roche Holding AG’s rival medicine Zelboraf, is designed to work in patients with a mutation of a gene known as BRAF. So-called BRAF inhibitors have been remarkably effective in shrinking melanoma tumors but most patients eventually develop resistance to the drugs. By combining Tafinlar with Mekinist, which works in a different way, the hope is that the cancer will be held off for longer. The FDA approval covers the treatment of melanoma that cannot be removed by surgery or which has spread to other organs.

          Ariad Pharmaceuticals Inc. (Cambridge MA), the cancer-drug maker that lost about 70% of its value this year, will return its only product to the U.S. market after the FDA approved a new prescribing and risk management plan. Iclusig, cleared last year for certain types of leukemia, will now be approved for a smaller patient population and have post-marketing requirements including increased oversight for safety concerns and a trial testing other doses, Ariad said. The company plans to start selling Iclusig again by mid-January. Sales of the drug were halted in the U.S. in October after the FDA saw an increased risk of blood clots, erasing more than $2.6 billion in Ariad’s market value. The company also stopped testing the drug in patients with newly diagnosed chronic myeloid leukemia, a broader indication that would have brought more revenue, and fired 40% of its workers in a restructuring to lower expenses.

          Antibacterial hand washes would have to be proven safe and healthier than plain soap to remain on store shelves under an FDA proposal that could affect about half of the $900 million in liquid soaps sold each year. Antibacterial soaps have gained “widespread consumer use” despite a lack of data showing added health benefits, the FDA said. The common ingredient, triclosan or triclocarban, also may be linked to hormone imbalances and antibiotic resistance, the FDA said, addressing 40 years of debate on overuse of the germ-killing chemicals. New safety standards would affect as many as 2,000 soap products such as Germany-based Henkel AG’s Dial, though many companies have already started phasing out triclosan, including Johnson & Johnson and Lysol-maker Reckitt Benckiser Group Plc. The rules also won’t apply to hand sanitizers such as Purell, and the FDA stopped short of addressing mouthwash, cosmetics and cleaners.

          In the European Union, Denmark has approved the sale of a generic copy of GlaxoSmithKline Plc’s (London) $8 billion-a-year inhaled lung drug Advair, threatening future sales of the British firm’s biggest product. Sandoz, the generics division of Swiss drugmaker Novartis AG (Basel CHE), and Vectura Group Plc, another British company, said they had received approval from Danish regulators for AirFluSal Forspiro, which was previously known as VR315. The green light marks the first approval of the product in Europe and analysts said more European approvals were likely to follow, with other Nordic countries and Germany seen among initial markets. Sandoz has completed authorization procedures in a further seven European countries but the group said the timing of final approvals in these markets would depend on national health authorities.

MEDICAL STOCK SPOTLIGHT -- Intercept Pharmaceuticals Inc. (Nasdaq), whose top owners include SAC Capital Advisors LP and Orbimed Advisors LLC, rose the most ever after a trial of its liver disease drug worked well enough for the testing to be stopped. Shares of New York-based Intercept exploded for a whopping 645% gain over the week to $445.83. Intercept uses obeticholic acid, or OCA, to treat nonalcoholic steatohepatitis, or NASH, a liver disease in which people who don’t drink or drink very little alcohol get liver damage that resembles that of heavy drinkers. Eventually, the disease can cause scarring and hurt the organ’s ability to function. About 2% to 5% of Americans have the disease, according to the National Institutes of Health. The stock got another lift Friday when Bank of America Corp. analyst Rachel McMinn raised her price target to $872 from $81, saying the market for treating nonalcoholic steatohepatitis has the potential to be “as big or bigger than Hepatitis C.”

          Elsewhere, Neurocrine Biosciences Inc. (Nasdaq) soared $9.50, or 98%, to $19.15 after news of a positive mid-stage study for one of its experimental drugs. The drug, labeled NBI-98854, did much better than a placebo in reducing symptoms in patients with tardive dyskinesia, and illness that causes involuntary spasms and movements. In the study, doctors who rated patient symptoms said 67% of patients were “much improved” or “very much improved” after six weeks of using the drug. Only 16% of patients in the placebo group showed similar progress. Nuerocrine still has to meet with the Food and Drug Administration about designing a late-stage study for the experimental drug. The San Diego, CA-based drug company hopes to file a proposed study in the first half of 2014.

          And Epizyme Inc. (Nasdaq), a developer of drugs for genetically defined cancers, rocketed $19.84, or 96%, to $40.41 after two programs met goals that yielded $29 million in milestone payments from partners. The Cambridge, MA-based company has gained 269% since its IPO last May at a price of $15 per share. One program partnered with Celgene Corp. met a proof-of-concept goal after patients with a particular genetic aberration responded to the drug, EPZ-5676, earning a $25 million payment, Epizyme said. Another program partnered with GlaxoSmithKline Plc met a development milestone for a $4 million payment.

          But Chelsea Therapeutics Inc. (Nasdaq) skidded 29% to $2.50 as a Food and Drug Administration panel preparing to review its drug Northera expressed some skepticism about the blood pressure treatment. A panel of FDA advisors is scheduled to discuss Northera this week. Based on materials posted to the FDA website, the agency appears to be skeptical about the drug. “The primary reason not to recommend approval is the lack of sufficient evidence of efficacy,” the FDA’s materials say, adding that only one clinical trial of the drug has been truly successful in the agency’s view. “Evidence from two longer-term studies suggest no durability to any statistically significant endpoint.” One reviewer said the FDA should ask Charlotte, NC-based Chelsea for more information because its research doesn’t provide enough evidence Northera works. The FDA is not required to follow the advice of its advisory panelists, but it often does so.

IPO SECTOR -- Included among recent SEC filings for initial public offerings, IMS Health Holdings Inc. (Danbury CT), backed by TPG Capital Funds LP, registered up to $100 million worth of common stock. IMS provides prescription data to the pharmaceutical industry, medical device makers, government agencies and other companies in the healthcare sector. Founded in 1954, the company has over 5,000 clients and operates in more than 100 countries, according to its website. TPG, Canada Pension Plan Investment Board (CPPIB) and Leonard Green & Partners LP took IMS private in 2010 for $5.2 billion, including debt. JPMorgan, Goldman Sachs, Morgan Stanley and BofA Merrill Lynch are among the underwriters for the IPO. The filing did not reveal how many shares the company planned to sell or their expected price. The company, which intends to list its common stock on the New York Stock Exchange under the symbol “IMS,” said that net proceeds from the offering would be used for debt refinancing and general corporate purposes. IMS’s operating income rose to $276 million in the nine months ended Sept. 30, from $173 million a year earlier. Revenue increased 4% to $1.87 billion.


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