Replies to post #68879 on Biotech Values

[DewDiligence]

Small Biotechs With Layoffs Are the Lucky Ones

This is the inescapable conclusion from reading the Bloomberg article in #msg-33720220.

Since that article came out barely 24 hours ago, two more companies—ANPI (#msg-33743249) and ARTE (#msg-33721281)—have moved to the brink of filing for bankruptcy.

What’s noteworthy about all this is that a year ago—perhaps even as recently as six months ago—even crappy companies like ARTE could expect to raise money in a private placement by tacitly permitting the PP investors to short with abandon. But the increased regulatory scrutiny of short-selling that has accompanied the financial crisis has changed the dynamics of these kinds of deals. Prospective PP investors now have to worry about being stuck with their shares, which make the deals too risky even after taking into account the opportunity to get free warrants and to buy shares at below-market prices.

All told, the changes described above are probably a good thing for biotech investors. Less money being thrown at the crappiest biotech companies ought to mean that, in due course, more money will be available for good biotech companies who are not yet cash-flow positive.

[DewDiligence]

New biotech layoffs announced

TTP, 40%:
http://biz.yahoo.com/bw/081202/20081202005517.html

ISV, 35%:
http://biz.yahoo.com/bw/081201/20081201006024.html

BLTI, 20%:
http://biz.yahoo.com/iw/081202/0456925.html


Previously reported

Arpida, 60%:
#msg-33838996

CRXX, 67%:
#msg-33890421

Cambria Pharmaceuticals, 50%:
#msg-33890421

ACUS, 25%:
#msg-33890421

BPUR, 90%+
#msg-33890421

[DewDiligence]

Here’s PANC’s recent ‘restructuring’ announcement for archival purposes. My
(somewhat out of date) comments on PANC’s prospects are in #msg-28310435.
In a nutshell, I think PANC is screwed because GILD has rendered the slice of
the HIV pie PANC is pursuing too small to be consequential. Cash on hand as
of 12/8/08 was a paltry $4.7M after PANC was forced to repay a creditor who
claimed the company was in default of its loan covenants (#msg-33758038).

http://finance.yahoo.com/news/Panacos-Provides-Update-on-bw-13799214.html

›Panacos Provides Update on Corporate Strategy

Wednesday December 10, 2008, 4:05 pm EST

WATERTOWN, Mass.--(BUSINESS WIRE)--Panacos Pharmaceuticals, Inc. (NASDAQ: PANC ), today provided an update on its corporate strategy. The Company is reducing its workforce, effective immediately, from 33 employees to 15. These actions are being taken to manage capital resources while Panacos pursues strategic alternatives, including the financing, partnering or sale of the Company or one of its several antiviral assets, including bevirimat (PA-457), the Company’s first-in-class maturation inhibitor, which is currently in Phase 2b clinical studies in HIV-positive patients, the next-generation maturation inhibitor program (consisting of second- and third-generation compounds) and the oral fusion program (consisting of its lead compound, PA-161).

“Our talented and dedicated development team has worked so diligently on programs that continue to show great promise,” stated Alan W. Dunton, MD, President and Chief Executive of Panacos. “However, we are faced with the reality that we must take drastic measures to reflect the current market environment. These actions are in line with our goal to secure partnerships or sale for our spectrum of HIV programs, including bevirimat, our second- and third-generation maturation inhibitors, as well as the oral fusion inhibitor program. Ultimately, everyone at Panacos is dedicated to ensuring HIV patients have access to these compounds, as there are limited choices for patients once their virus becomes resistant to the treatments that are currently available.”

As of September 30, 2008, unrestricted cash, cash equivalents and marketable securities totaled $26.9 million. Under the terms of the recently terminated loan agreement with Hercules Technology Growth Capital, Inc. (NASDAQ: HTGC ), Panacos paid Hercules approximately $17.9 million on Monday, November 24, 2008. As of December 8, 2008, unrestricted cash, cash equivalents and marketable securities totaled approximately $4.7 million. The Company is seeking additional sources of capital to continue operations.

Panacos’ Development Programs

Panacos’ lead compound, bevirimat (PA-457), is the first in the new class of HIV drugs under development called maturation inhibitors, discovered by Company scientists and their academic collaborators. Bevirimat is designed to have potent activity against a broad range of HIV strains, and studies have shown bevirimat is a potent inhibitor of HIV isolates that are resistant to currently approved drugs. Panacos has completed 15 clinical studies with bevirimat in nearly 650 patients and healthy volunteers, showing significant reductions in viral load in HIV-infected patients and a promising safety profile. It is currently in Phase 2b clinical studies. The Company previously determined the optimal dose range of bevirimat and identified patient response predictors to bevirimat, which now have been confirmed in multiple laboratory analyses and a prospective study. Panacos has recently developed a tablet formulation of bevirimat that demonstrates bioavailability and pharmacokinetics comparable to that of the previous solution formulation (Study 114). The Company has also completed a Phase 2b study of bevirimat (Study 204) that confirmed an optimal dose can be achieved with a twice daily dose of bevirimat tablets. Efficacy and additional safety data obtained from Study 204 support the Company’s view that the 100mg bevirimat tablet formulation should be studied further in HIV patients.

In addition to bevirimat, the Company has second- and third-generation programs in HIV maturation inhibition that include compounds with activity against HIV containing Gag polymorphisms. Panacos has also selected a lead compound, PA-161, for preclinical development in its oral HIV fusion inhibitor program.

About Panacos

Panacos is developing the next generation of anti-infective products through discovery and development of small molecule oral drugs for the treatment of HIV and other major human viral diseases. Approximately 1 million people in the United States and approximately 33 million people worldwide are living with HIV. Approximately 475,000 patients are treated annually for HIV in the United States. Resistance to currently available drugs is one of the most pressing problems in HIV therapy and the leading cause of treatment failure. Panacos' proprietary discovery technologies are designed to combat resistance by focusing on novel targets in the virus life cycle, including virus maturation and virus fusion.‹

[DewDiligence]

Pfizer to Lay Off 5-8% of R&D Staff

[The layoffs will occur in CT, MO, CA, and England.]

http://online.wsj.com/article/SB123186230445977567.html

›JANUARY 13, 2009, 12:01 P.M. ET
By JONATHAN D. ROCKOFF

Pfizer Inc. will lay off as many as 800 researchers Tuesday in a tacit admission that its laboratories have failed to live up to the tens of billions of dollars it has poured into them in recent years.

The world's largest pharmaceutical company by sales began Tuesday telling scores of scientists and technicians that it is eliminating their jobs, according to a person familiar with the matter. By year end, the New York drug maker expects to have laid off 5% to 8% of its 10,000 research employees, according to Martin Mackay, who heads Pfizer's research and development.

The pharmaceutical industry faces pressure from investors to slash its spending because drugs with an estimated $30 billion in sales will lose patent protection and start facing competition from cheaper generics over the next several years. The recession may trigger even bigger cuts, analysts say, if cash-strapped consumers start filling fewer prescriptions or turning more to generics.

Pfizer is at a strategic crossroads as it braces for the 2011 expiration of its patent on cholesterol fighter Lipitor, the world's top selling drug. Lipitor accounts for a quarter of Pfizer's roughly $48 billion in annual revenue [and an even higher proportion of profits].

Investors have been losing patience with the incremental measures announced by Pfizer Chief Executive Jeffrey Kindler since he took the company's helm in July 2006. Some have been clamoring for a big acquisition to offset the pending loss of Lipitor revenue.

While the 800 job cuts will only dent Pfizer's overall work force of 83,400, they strike at the company's lifeblood: The labs charged with discovering lucrative new drugs. At $7.5 billion, Pfizer has the biggest research-and-development budget of any drug maker. But it has run into problems.

In the past two years, Pfizer has dropped the insulin spray Exubera after spending $2.8 billion on it and scrapped a once-promising Lipitor successor drug because it was linked to too many deaths in clinical trials.

For years, big drug makers considered their R&D operations sacrosanct and focused their cutbacks on other departments, such as sales and manufacturing. But that is changing as industry executives conclude that in-house research isn't yielding enough drugs to justify its high costs.

Now, pharmaceutical companies think they can trim their research costs while still bringing the same, if not more, new drugs to market, either by buying the rights to promising molecules from smaller biotechnology companies or by purchasing those companies outright.

"R&D is still the heart and soul of a pharmaceutical company, but it doesn't always have to express itself as a company's own R&D, and that's what I'm seeing more and more," says David Canter, who headed Pfizer's Michigan labs until they shut down last year.

In an interview, Dr. Mackay said the R&D layoffs are part of a continuing reorganization designed to focus Pfizer's research work on treatments with the best chances of reaching the market. As part of this reorganization, Pfizer has abandoned work on new cardiovascular drugs—the research area it was once best known for.

Pfizer closed six labs last year. The coming cuts will take place at labs in Groton, Conn., St. Louis, La Jolla, Calif., and Sandwich, England, Dr. Mackay said.

The cuts will reduce Pfizer's $7.5 billion in yearly spending on research and development, although company officials wouldn't say by how much until the company reports fourth-quarter results on Jan. 28.

Even as it makes those cuts, Dr. Mackay said Pfizer was making progress in shoring up its research pipeline. He said that the number of drugs in Pfizer's pipeline that are in the late stages of human testing jumped to 25 from 16 less than a year earlier.

Pfizer has bought stakes in biotechnology companies like Avant Immunotherapeutics, which is developing a brain cancer vaccine, and is increasing its collaborations with academic researchers, Dr. Mackay said. And it is hiring at new labs developing vaccines, other biologic drugs and treatments using stem cells, he added.‹

[DewDiligence]

PFE to Axe Another 2,400 US Sales Reps

[This is about 1/3 of PFE’s US salesforce. These layoffs are in addition to the 800 jobs in R&D (#msg-34786258). Industry-wide, there are now 90K US sales reps, down from a peak of 105K in 2006.]

http://online.wsj.com/article/SB123212608532390787.html

›JANUARY 17, 2009
By JONATHAN D. ROCKOFF

Pfizer Inc. plans to lay off as many as 2,400 salespeople in the U.S., or as much as a third of its field force, according to a person familiar with the matter.

The cuts are likely to knock the drug industry's leading employer of sales representatives from the top spot, said Jaideep Bajaj, managing director of ZS Associates, a sales and marketing consulting firm.

In a statement, Pfizer said it wouldn't comment about "rumors or speculation," but it added that it was continually looking to operate in a "more effective and efficient way." The cutbacks will include sales representatives and middle managers and are to be completed this quarter, the person familiar with the matter said.

Pharmaceutical companies have been slashing sales jobs built up more than a decade ago, when blockbusters like Pfizer's cholesterol fighter Lipitor were prescribed mainly by primary-care doctors. Companies hired so many sales reps that as many as a half-dozen might end up calling on the same doctor to tout the same product.

While the push worked initially to boost sales, it became less successful as growing numbers of reps crowded waiting rooms. Companies began slashing sales forces when their top sellers began to face cutthroat competition from less expensive generics. Sales jobs in the U.S. drug industry have dropped to about 90,000 now from a peak of 105,000 in the 2006 first quarter, Mr. Bajaj said.

Pfizer has eliminated more than 15,000 jobs since January 2007. The sales-layoff plans, which were reported by Bloomberg News, are part of a strategy announced in October to divide Pfizer's commercial operations into smaller, largely autonomous business units focusing on specific areas, such as primary care and emerging markets.‹

[DewDiligence]

LXRX cuts 22% of workforce:

http://finance.yahoo.com/news/Lexicon-Consolidates-pz-14131444.html

[genisi]

Teva laying off 1,000 from Croatia and Florida firms

http://www.haaretz.com/hasen/spages/1063189.html

By Yoram Gabison February 11, 2009

Teva Pharmaceutical Industries will fire more than 1,000 employees from its companies in Croatia and the United States, both bought together with acquisitions carried out in recent years that made Israeli company the biggest manufacturer of generic drugs in the world.

Pliva has been the weak link in the Barr Pharmaceuticals group that Teva Pharmaceutical Industries bought in December 2008. Now the limping Croatian drug company has begun to streamline as it integrates into the global group.

Less than two months after Teva bought a controlling interest in Barr for $7.5 million, before write-downs, the Israeli company is taking steps to improve Pliva's profitability toward the average in the Teva group. And so, 790 of Pliva's workers, 26%, will be sent home in the next year, according to the Croatian Times.
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Teva will give dismissed Pliva workers with more than 25 years on the job severance compensation of 50,000 euros. Workers with less time on the job will get compensation of 41,000 euros. Pliva workers who reached retirement age will get 270,000 euros.

The dismissal of a quarter of Pliva's staff follows negotiations with labor unions in Croatia.

At the same time, Teva plans to use surplus production capacity at Pliva to make raw materials and drugs in tablet form. Pliva says Teva will increase its production by 30%, apparently without need for fresh investments, merely using existing manufacturing means.

For the first nine months of 2008 Pliva reported losing $18 million on turnover of $565 million.

In the same period of 2007 it had netted $148 million on turnover of $685 million.

In previous years, Pliva had been highly successful profitwise thanks to a unique blockbuster antibiotic it had developed, Azythromycin, which it marketed in collaboration with Pfizer. But the end of patent coverage did nothing good for the Croatian company's figures, and acquisitions in Germany, Poland and Russia didn't help.

A day after announcing the layoffs agreement regarding Pliva, Teva also advised the Florida statehouse that it plans to shut down its plant in the city of Doral and gradually fire all 300 workers there from June 2009 to October 2010.

Altogether in the two moves, Teva will be letting 1,090 people go.

Teva obtained the Doral plant when buying Ivax Corp. in January 2006 for $7.4 billion.

[genisi]

Top 5 layoffs of 2008

http://www.fiercepharma.com/special-reports/top-5-layoffs-2008

By Maureen Martino

Welcome to our second annual report [1] on the top five layoffs of the year. Companies like Pfizer, AstraZeneca and Bayer posted the biggest numbers in 2007 [2]. In 2008, patent expirations, drug safety problems and a general need to become leaner and meaner put Merck, Schering-Plough, Wyeth, UCB and AstraZeneca at the top of this list.

A drop in Vytorin sales, along with other factors, helped Merck and Schering-Plough find their way into this report. Wyeth, UCB and Abbott's restructuring efforts figured prominently into their cutbacks. But most drug developers--including the ones that weren't in the top five--cut at least some of their sales forces. That's in line with Big Pharma's overall trend of spending less on sales budgets.

Yet for every Big Pharma layoff, there seemd to be five small companies cutting a portion of their workers. An inhospitable funding environment made it difficult for many smaller companies to raise capital, and they were forced to cut jobs and non-essential programs in order to stretch their cash. These smaller cuts didn't make it into our top five but you can see a full list of this year's layoffs here [3]. And here is the list of the top 5 layoffs of 2008:

1. Merck - 8,400 jobs [4]

2. Schering-Plough - 5,500 jobs [5]

3. Wyeth - 5,000 jobs [6]

4. UCB Pharma - 2000 jobs [7]

5. AstraZeneca - 1,400 jobs [8]*

6. Abbott - 1,000 jobs [9]

*This job cut announcement occurred after the date this report was originally published. AstraZeneca made its announcement on November 20, 2008.