Intimidation, a leak and a private meeting

A two-year investigation by a Senate committee didn’t solve the question whether GlaxoSmithKline’s diabetes pill Avandia does or doesn’t increase the risk of heart attack. But the report issued by the committee’s Democratic chairman and ranking Republican member claims GSK, which has its U.S. headquarters in Research Triangle Park, deliberately kept the evidence inconclusive  to avoid having to withdraw the drug from market.

Warning signs about possible cardiovascular side effects arose as early as 1999, but GSK forced Dr. John Buse, a diabetes expert at the University of North Carolina at Chapel Hill, to stop talking and writing about his concerns. According to the report, GSK threatened to sue Buse and complained about him to his superiors.

The Senate committee investigators, who reviewed more than 250,000 documents, determined that GSK was aware Avandia possibly increased cardiovascular risks as early as 2004 but failed to disclose this to patients and physicians.

In May 2007, the New England Journal of Medicine published an analysis of 42 studies by Dr. Steven Nissen, an outspoken cardiologist at the Cleveland Clinic. Nissen’s analysis suggested that Avandia was associated with a 43 percent increased risk of heart attack, a finding with which GSK executives strongly disagreed and that another researcher couldn’t repeat.

The Senate committee report found that a GSK consultant and peer reviewer for the medical journal leaked Nissen’s paper to GSK before publication. A week before the New England Journal of Medicine published the paper online, the New York Times reported, GSK asked Nissen during a private meeting to reconsider publication.

In a statement, GSK rejected the conclusions of the Senate committee report as unfair and unbalanced and accused the investigators of mischaracterizing GSK’s research efforts.

Doctors have long abandoned the drug regardless of whether they believe it poses increased cardiovascular risks or not. As a result, Avandia’s sales have dropped from about $3 billion in 2006 to $1.2 billion last year.

In other business news:

• Biolex raised $10 million in investments and debt. The Pittsboro biotech company will use the money to continue testing a hepatitis drug in patients.
• Viamet Pharmaceuticals of Morrisville signed a drug research partnership with a venture capital arm of Swiss pharmaceutical giant Novartis. The deal could be worth more than $200 million.

Dr. Ronald Kahn

To better understand the other 90 percent, said Dr. Ronald Kahn, a Harvard University medical professor and vice chairman of the Joslin Diabetes Center, “we have to look at the environment.”

It’s a task that researchers at the National Institute of Environmental Health in Research Triangle Park have already taken to heart. But Kahn, who spoke Tuesday at NIEHS, said much work still has to be done and it could be done at the NIEHS.

Environment means factors such as diet and lifestyle, Kahn said. Looking means drilling down to individual nutrients rather than number of trips to fast food joints. And then there are the other about 30,000 genes that aren’t directly linked to diabetes but may still play a role.

“The environment may interact with genes in very subtle ways we’ve not yet tapped,” said Kahn.

As part of his talk at the NIEHS, he presented several research examples, including an unpublished one that resulted from a collaboration with Metabolon, a Durham company that uses metabolic profiling to discover new medicines and diagnostics.

Counties with the highest rates of obesity and diabetes are in the South.

The epidemic rise in diabetes, which is closely related to increasing U.S. obesity rates in the past 15 years, fuels the search for what really happens when the body slowly loses its ability to use insulin, a hormone that converts glucose from food into energy.

One in about eight Americans is diabetic, according to 2009 figures by the National Institutes of Health and the Centers for Disease Control and Prevention. Ninety-five percent of diabetics are Type 2, which means they’re becoming more and more resistant to insulin.

Type 2 diabetes is a chronic and progressive disease without a cure that is linked to high blood pressure, reproductive dysfunction, some cancers and even Alzheimer’s disease. In 2007, estimated medical costs for diabetes were $174 billion in the U.S., according to the National Diabetes Information Clearinghouse.

Numerous diabetes medicines lower damaging glucose levels in the blood. Some pills work in the liver, others in the pancreas or in muscles. But according to American Diabetes Association guidelines, the preferred treatment for diabetes is metformin, a drug developed more than 50 years ago and still not fully understood.

Diabetes is a disease that continues to confound and puzzle researchers, who have even come up with contradictory answers to similar questions.

The black 6 mouse is a diabetic nightmare.

Case in point: Research from Kahn’s lab showed that two related mice bred to share the same genetic risks for developing diabetes respond quite differently to a high-fat diet. The research was published in 2007 in the Proceeedings of the National Academy of Sciences. Kahn used it during his NIEHS talk to illustrate unexpected interactions between genetic and environmental factors.

A high-fat diet is known to cause significantly more damage associated with diabetes, including plaque deposits in blood vessels, in mice genetically prone to the disease. Not in the two mice used in Kahn’s research. One mouse, known as a 129S6/SvEvTac mouse, gained about 50 percent less weight and did not develop insulin resistance. The other mouse, a C57BL/6 or black 6 mouse, became severely obese and diabetic.

Brown fat cells in the muscle tissue made the difference. The much larger pockets of good fat protected the 129 mouse against weight gain and diabetes.

“Sorting this out in mice is difficult,” Kahn said. “Sorting this out in humans is incredibly difficult but incredibly important.”

Researchers at the University of North Carolina at Chapel Hill studying patients undergoing treatment in the UNC heart catherization lab stumbled across an example where genes and environment interact in humans.

The researchers said they found a genetic marker in African-Americans that contributes to higher obesity and diabetes rates than among Americans of European descent eating a Western diet high in carbohydrates. People with the marker seem to be less able to break down sugar and starches in food.

Monday

- 3:40 p.m.

N.C. State University, 105 Schaub Hall, Raleigh

Dept. of Food, Bioprocessing and Nutrition Sciences Seminar: Enumeration of sublethally injured escherichia coli 0157:H7 in ground beef using selective agar overlays versus commercial methods

Speaker: John McKillip, Ball State University

- 4 p.m.

N.C. State University, Stephens Room, Gardner 3503, Raleigh

Dept. of Plant Pathology Seminar: Transcripton factors involved in virulence and proteins secreted during intial infection in the rice blast fungus Magnaporthe oryzae Speaker: Gregory Bernard, Ph.D. candidate, NCSU

- 6 p.m. to 8 p.m.

Tipsy Teapot, 409 Evans Street, Greenville

Science Cafe: Coasts in crisis – a vision for the future

Speaker: Stan Riggs

More information here.

Tuesday

- 8:30 a.m. to 11 a.m.

Research Triangle Park headquarters, 12 Davis Drive, Research Triangle Park

Emerging Technologies and Trends Breakfast: Social media – the personal, corporate and enterprise use of social media to gain an edge

Cost: $30 for NCTA members

More information here.

- 9 a.m. to 4 p.m.

N.C. Biotechnology Center, 15 T.W. Alexander Drive, Research Triangle Park

SBIR Commercialization Seminar: From R&D to the market

Cost: $149

More Information here.

- 11 a.m. to noon

National Institute of Environmental Health Sciences, 111 T.W. Alexander Drive, Research Triangle Park

Rall Bldg. Rodbell ABC

Distinguished Lecture Seminar Series: Genes and environment in the epidemic of diabetes and obesity

Speaker: Dr. Ronald Kahn, Joslin Diabetes Clinic

- 5 p.m. to 8 p.m.

N.C. State University, McKimmon Center, 1101 Gorman Street, Raleigh

CED: University Innovation Showcase

Cost: $15 for non-NCSU attendees

More information here.

Wednesday

- 4 p.m. to 5 p.m.

Research Triangle Park headquarters, 12 Davis Drive, Research Triangle Park

Innovation in RTP Speaker Series: Text messaging – the countless possibilities of 160 characters

Speaker: Alan Pascoe, product marketing executive at Tekelec

More information here.

- 5:30 p.m. to 8 p.m.

N.C. Biotechnology Center, 15 T. W. Alexander Drive, Research Triangle Park

CED’s Biotech Forum: New paradigm for financing – how to create a successful virtual company

More information here.

Thursday

- 10 a.m. to 11 a.m.

NIEHS, 111 T.W. Alexander Drive, Research Triangle Park

Rall Bldg. Room D450

LMC Seminar Series: Leptin and cancer

Speaker: Eva Surmancz, Temple University

- 5 p.m.

National Humanities Center, 7 T.W. Alexander Drive, Research Triangle Park

Lecture: Parental feeling in 19th century, middle-class Britain

Speaker: Eileen Gillooly, Columbia University

More information here.

Friday

- Noon

National Evolutionary Synthesis Center, 2024 W. Main Street, Suite A200, Durham

Seminar: Phylontal – ontology alignment meets phylogeny

Speaker: Peter Midford, University of Kansas

More information here.

Developing medicines is a minefield that Tranzyme Pharma has navigated well so far. But the Durham company is about to embark on one of its trickiest missions.

Unlike its two rivals, which had to cut costs, delay projects or sell itself in past months, Tranzyme has had enough cash to sit out the financial crisis of the past 18 months. With the recession easing and Wall Street coming back to life, the company is about to act on one of three options: Go public, sell part or all of itself or go back to its investors hat in hand one more time.

Tranzyme’s board of directors and executive management will have to weigh costs and benefits of each option, said Mike Constantino, who oversees Ernst & Young’s life science business in the Southeast. “They have to look into their own crystal ball.”

Like any investor, they will want to squeeze the most out of their stake in the company, Constantino said. But, he added, “this is a very interesting time.”

Initial public offerings of stock, favored by venture capitalists because IPOs can recoup large investments plus gains, all but vanished when the burst housing bubble turned into a full-fledged financial crisis about a year ago. (See Renaissance Capital graphic on right.)

Elixir Pharmaceuticals, a Tranzyme rival, filed for an IPO in September 2007 and withdrew the filing in May 2008. Tranzyme, which had toyed with the idea to go public  about the same time, also scrapped its IPO plans.

As investors became tight-fisted, venture capital fundraising and investment declined sharply.

With sources of cash limited, research and development companies cut costs and then turned to other deals that brought in money or kept the research alive. Some sold themselves. Others sold the rights to some of their medicines to large drugmakers.

Tranzyme was able to stretch the about $20 million in venture capital it received in 2007. But now, the company cannot wait much longer.

To stay competitive, Tranzyme has to figure out a way to pay for the large, international tests it must embark on next to get regulatory approval for its experimental drugs.

Vipin Garg, Tranzyme’s chief executive, said the company may still find a large drugmaker willing to buy it or the rights to develop and commercialize its drugs. Existing and possibly new investors may be willing to put another $30 million into the company, enough to get a first product ready to go to market.

But Wall Street’s rekindled appetite for biotech and pharma stock sales in past weeks could prompt Tranzyme to revive its IPO plans, Garg said.

After being dead in the water for months, the market looks like its coming back, said John Fitzgibbon, who tracks IPOs on iposcoop.com.

Wave of IPOs to come?

Several publicly traded pharmaceutical companies were able to sell large chunks of stock, including Inspire Pharmaceuticals of Durham, which raised $115 million on Aug. 10. The same day, Cumberland Pharmaceuticals, a specialty pharmaceutical company in Nashville, Tenn., pulled off the first IPO of a health care company in 12 months, according to Renaissance Capital.

Fitzgibbon expected a wave of IPOs after Labor Day. Venture capitalists are under a lot of pressure to recoup investments, he said. “There’s a big backup.”

Ernst & Young’s Constantino also projected a possible flurry of activity on Wall Street after Labor Day. If the IPO window opens, he said, it could stay open into the first quarter next year and allow Triangle biotech companies such as Tranzyme and Talecris Biotherapeutics to take the plunge. Talecris, which makes blood-based therapies, aims to raise as much as $1 billion in one of the Triangle’s largest IPOs.

In the past eight years, Tranzyme raised about $55 million in venture capital and moved its drug development ahead steadily without the unpleasant surprises that so often accompany a biotech company’s maturation. It’s an accomplishment that earned Garg this year’s Ernst & Young Entrepreneur of the Year award in the Carolinas.

Targeting gastrointestinal problems with custom-made ghrelin drugs was a strategy that proved smart financially and scientifically.

In three different tests TZP-101, Tranzyme’s most advanced drug, was safe and highly effective, according to results announced in October and April. The oral version, TZP-102, is being tested as a treatment for chronic gastroparesis, which particularly affects patients with diabetes.

By mid-2010, the company could have two therapies ready to advance into final testing and a pipeline of other ghrelin drugs in the wings.

Garg acknowledged that an IPO that raises $50 million to $100 million would allow Tranzyme to go ahead with the testing and build a sales force to bring its drugs to market.

A sale is likely to accomplish the same, but Trazyme would no longer be an independent company and the Triangle would lose a corporate headquarters.

And then, there’s the punt: Asking Tranzyme’s existing investors for another cash injection to gain time.

The call is the board’s.

Work on promising ghrelin medicines has gotten to a critical stage a decade after Japanese researchers discovered the hormone that stimulates hunger and is linked to insulin production.

A handful of ghrelin therapies are being tested in patients and two more are ready to advance to the final stage of drug develoment. But a clinical trial can cost tens of millions of dollars and raising enough money for this stage has always been a challenge for small companies running on venture capital. The financial crisis of the past 18 months has forced two of the three companies working on ghrelin drugs to take drastic steps.

In February, Sapphire Therapeutics, a New Jersey company, was bought by the Swiss pharmaceutical group Helsinn for an undisclosed amount. Three months later, Elixir Pharmaceuticals near Boston offered itself to Swiss pharmaceutical giant Novartis. The deal with Novartis is worth up to $500 million and has allowed Elixir to continue to operate.

That leaves Durham-based Tranzyme Pharma as the company still looking for a deal.

“We’re going to take advantage of the momentum,” said Vipin Garg, Tranzyme’s chief executive. (See photo, left.)

Garg had long intended to find a partner to finish testing Tranzyme’s ghrelin agonists and bring them to market. TZP-101 and its oral version, TZP-102, target gastroparesis, an inability of the stomach to empty food efficiently.

About 5 million Americans suffer from the disease, which is a major complication in patients with diabetes, and existing treatments carry the risk of side effects. The Food and Drug Administration granted TZP-102 expedited review, Tranzyme announced July 23. That could shave six month off the approval time. But TZP-102, which is currently being tested in patients, isn’t likely to come to market before 2013.

Large drugmakers such as Merck, Pfizer and GlaxoSmithKline have shown interest, Garg said. “But you want to make sure you make the right deal.” Tranzyme turned down an offer because it was too low, he said. “Sometimes you have to wait.”

Dealing for drugs

Dealmaking in the biotech and pharma industry has flourished in the past 18 months. Large drugmakers with deep pockets replenished their bare drug development pipelines and small, venture-funded R&D companies sold themselves or the rights to their offspring as more and more investors put away their checkbooks. While the financial crisis deepened in 2008, biotech dealmaking reached $93.7 billion, according to Health Care M&A Monthly. (Top 40 biotech deals of 2008)

Dealmaking accelerated in the first three months of 2009, with two deals – Pfizer buying Wyeth and Merck buying Schering-Plough – accounting for more than $100 billion, according to Windhover Information.

In pursuit of getting a ghrelin drug to market, Elixir, Sapphire and Tranzyme had raised a total of nearly $200 million in venture capital before the recession began December 2007, according to filings with the Securities and Exchange Commission and news reports. Diabetes and obesity are growing problems and some of the ghrelin drugs under development are projected to generate as much as $2 billion in annual sales if they pass regulatory hurdles and are approved.

But by early 2009, Elixir, a company the Boston Globe in 2007 called “one of biotech’s brightest players,” had scrapped plans to sell stock to the public and cut about half of its work force. Sapphire was also in need of investments. Only Tranzyme was able to bide its time.

Shots on goal

Each company is trying to reach goal using a different route.

Elixir and Sapphire are developing ghrelin drugs discovered by others. Tranzyme came up with its own ghrelin drugs. Elixir, which had raised nearly twice as much venture capital as each of its rivals, took the riskiest approach with the highest potential payoff.

All the while, each was closely watching its rivals. Elixir, Sapphire and Tranzyme employ fewer than 50 each and their scientists meet and talk to each other at conferences. Some of the current or former executives are personal friends.

Elixir started out researching sirtuins, drugs that manipulate a gene involved in the onset of diseases related to age and obesity, such as Type 2 diabetes. When development of the sirtuins proved too slow, the company shifted gears and bought the development rights for drugs that were more advanced. Two of them, versions of a new diabetic treatment Elixir scooped up from a Japanese company, could come to market in the next two years.

Novartis is interested in a third experimental drug, Elixir’s oral ghrelin blocker that has shown to increase insulin sensitivity in animal studies. The Swiss drugmaker has an option to buy Elixir should tests in patients confirm the findings. A $12 million venture capital injection accompanied the Novartis deal.

Elixir is also getting a fourth experimental drug, an oral ghrelin agonist, ready for clinical tests. The drug came from Bristol-Myers Squibb and targets diabetic gastroparesis and cachexia, a wasting disease that affects terminally ill cancer patients.

Sapphire bought the rights to its ghrelin agonist from Novo Nordisk shortly after being founded near Houston as Rejuvenon. Versions of the ghrelin agonist are being tested in patients suffering from post operative ileus, a bowel impairment following surgery, and cancer cachexia.

The company moved to New Jersey five years ago after hiring a new CEO, and was renamed a year later. But by the time the recession started, the whopping $37.8 million in venture capital Sapphire had raised in 2004 was dwindling. In June 2008, the company managed to raise just $7.5 million, SEC filings show. Less than a year later, Helsinn bought Sapphire.

Further development of the ghrelin drugs is now up to Helsinn, which is turning Sapphire into its U.S. R&D and commercial operation.

Garg said he talked to Helsinn about how much the Swiss company thought Sapphire was worth. “I wouldn’t do the deal Sapphire did,” Garg said. “We’re not desperate enough.”

Continued in part 3.

Tranzyme Pharma is one of dozens of drug development companies in North Carolina’s Research Triangle area, a biotech hot spot that is ranked third in the nation by number of companies. The Durham company has diligently advanced therapies based on a hormone that was discovered a decade ago, a technology  also used by two rivals. Now, Tranzyme’s Board of Directors has to decide how to pay for the final development step and get its drugs to market: Go public, sell the company or go back to its investors hat in hand one more time.

This is the first part of three.

People who claim their weight problem is related to a gland aren’t all wrong.

Sure, taking in too many calories and not exercising enough carry much of the blame for the obesity epidemic. But there is indeed a gland that plays a role in feeling hungry.

It’s the pituitary gland, an important structure that sits at the base of the brain and is about the size and shape of a garbanzo bean (shown in picture).

A hormone produced mostly in the stomach lining provides a key signal that it’s time to eat. Discovered by Japanese researchers in 1999, ghrelin gets around in the blood. It can be found in many places in the body, including the brain, the heart and the digestive tract.

Ghrelin stimulates the release of growth hormones in the pituitary gland. Researchers believe that this partly explains why teen-age boys can have such outsized appetites.

There’s a lot that researchers have yet to figure out about ghrelin, for example how it affects insulin producing cells in the pancreas as food is digested into glucose. Generally, high ghrelin levels are linked to low levels of insulin.

Insulin is a hormone that helps cells absorb glucose from the blood as fuel. Blood glucose levels rise when cells have a harder and harder time responding to insulin or when the pancreas produces insufficient amounts of insulin. The result is frequently Type 2 diabetes, a disease linked to obesity and other risk factors.

In 2007, an estimated 24 million Americans, or 7.8 percent of the U.S. population, suffered from Type 2 diabetes, according to the National Diabetes Information Clearinghouse, which is part of the National Institutes of Health.

The disease is particulalry prevalent among Americans 60 years and older. (See NDIC chart.)

The discovery of ghrelin, which was published December 1999 in the science journal Nature, was a breakthrough.

It wasn’t easy to find and synthesize it, Masayasu Kojima, one of the researchers who discovered it, wrote in the journal ScienceDirect.

The hormone’s chemical structure and its origin in the stomach surprised the researchers. Its existence had long been suspected, because ghrelin receptors, places in a cell where it docks, were known. But the Japanese researchers had expected ghrelin to be produced in the brain. The discovery took more than a year and one failed test after another, Kojima wrote.

The day the correct synthesized sample was ready, Kojima bicycled to pick it up.

“On my way back I espied a bale of turtles swimming in the Senri river,” he wrote. “This brought me high hopes for the sample: for the turtle is respected as an augury of good fortune in Japan.”

The tireless work of the Japanese researchers revealed the origin and the structure of ghrelin. Their discovery allowed chemists at pharmaceutical companies to come up with versions of the hormone that target particular areas in the body.

Three East Coast companies were inspired to develop ghrelin therapies. One of them is Tranzyme Pharma, a drug development company in Durham, just south of Research Triangle Park.

Each company is using a different version of ghrelin and is testing them in animals or patients.

It is unclear which version will make it all the way to the pharmacy shelve. Much work remains to be done, said Mark Peterson, an organic chemist who is Transzyme’s vice president of operations. “People know a lot about ghrelin and ghrelin receptors,” Peterson said. “But there is still a lot to be learned about the molecular biology.”

Continued in part 2.