Wacky trading indeed in Pain Therapeutics stock Thursday.  As faithful THCB readers know I’ve been in this stock for some time. They have two parallel phase 3s on the first of their potentially huge drugs– Oxytrex, a replacement for Oxycontin.  In the phase 2 Oxytrex  did better on pain control than generic oxycontin (oxycodone).  In the phase 3 it did only as well (or slightly better depending on how you interpret it) BUT it showed lower side effects. The stock would obviously have been much better today if it had done better on pain (the primary end point) and on the news the stock sold off from $6 down to about $5.20.  But over the course of the day people started looking at the side-effects — particularly proxies for addiction — and the stock came back to where it started.

Of course oxycodone is already pretty good at dealing with pain, as any hillbilly heroin addict knows, so the FDA’s decision is probably as dependent on the side-effects as it is on the pain reduction effects of Oxytrex. In that way it’s an improved me-too. But many successful US drugs are improved me-toos (anyone for Lipitor?) and reducing the addictive properties of opiates would be  a substantial improvement in the real world of DEA crack-downs on doctors.

It’s the addiction story that has been the key all along, as the drug binds a molecule to the opiate that has shown it to be less addictive in rats. That’s hard to test in humans, but they got a finding which suggests that it’s working in this trial. If it does OK (i.e. no negative surprises) in the next phase III then I think they’ll get FDA approval at the end of the year.  I’m surprised that the stock hasn’t gone up alot more on this news — but even if it’s a moderately successful drug which gets 25% of the market for OxyContin (now $1.5bn), that’s revenues of 3-400m a year for a company with a market cap of less than 300m with 100m in cash.  That should translate to a market cap of $1-1.5bn or a stock price of 30-50.  So the market is confused, but I think the downside is low from here — and Pain Therapeutics has TWO more drugs in phase 3!

I still think this stock eventually will be a barn burner, but it  definitely would have been better for us poor shareholders had it shown better performance on the pain metric v oxycodone. Of course Oxycontin will come off patent soon and the revenue size of the market will fall, but Oxytrex looks like the logical replacement to me. I still think anyone who got some at 5.20 this morning will be very happy.  I have a bunch lower than that but I’ve been here since 1999 and I ain’t leaving yet!

Over on the pharma-mkting list serv there’s been some fun with those slighly misspelt words that make more sense than the original — apparently this started in the Washington Post’s Mensa Invitational.  Well the pharma marketing folks got into it and I saved them all meaning to compile  them on a rainy day.  John Mack has published these already over on his Pharma Marketing Blog but as we don’t share too many readers I thought some of you might like to see them. (I’ve also had them cluttering up my in-tray for a while and I’m up late uncluttering it! (Author is listed after definition).

Adhorence – deep hatred of advertising (John Mack)

Relationslip Marketing:  Establishing an initial connection with a consumer and then never doing anything meaningful with it.

Derail Aid:  A tool to confuse physicians (both David Reim)

DTC advertising: Direct to courthouse (James Gardner)

Salety Study: Which proves that the drug is worth selling, whether safe or not.

Generich Companies: Which make plenty of $ with somebody else’s innovations.

Phate III: Which concludes that the drug can be sold, the fate of a certain % of the target population being left to a higher power. (all Sanjay Virmani)

Charmaceutical:  An SSRI taken by someone who thinks they have a genuine diagnosis, but in reality are simply unpleasant.

Byotech:  A small, specialty pharmaceutical company whose stock rises paradoxically whenever they announce failed clinical trials.

Contrasindication:  A DTC ad deliberately designed to generate controversy, so as to get aired on cable news 10 times for every paid slot. (all Paul McNiven)

DTP-Direct to Plaintiff:  The art and science of creating plaintiffs with puffery enticing them to try dangereous drugs they would be better off without. (Terry Nugent)

Antibositics: Therapies undertaken to antagonise bosses’ criticism. (Kamran Shamsi)

Adverstising: The fine art of promoting adverse reactions through the use of realistic images of afflicted patients to target audiences consisting of physicians and consumers in a repulsive, yet memorable fashion. (Mario Nacinovich)

CEA: A term used to describe a ranking officer whose public utterances remind one of a pejorative or disdainful reference to a bodily part normally used to express intense disagreement with another’s expressed opinion. (Harry Sweeney)

Complieance — what patients tell their doctors about whether they are taking their pills (Me)

Pharmochondria: a morbid condition characterised by depressed spirits
and fancies of ill health induced by pharmaceutical "awareness"
campigns and advertising (Michael Lascelles)

and my favorite

Pharmasuitickle:- An overall pleasant tingling a personal trial attorney gets when contacted by a former Vioxx patient. (Jim Weidert)

And finally from Bob Iles (?), these are not misspellings but "daffynitions" from his Dictionary of Pharmaceutical Research.

Conclusions — What you designed your study to prove.

Informed consent — A document lawyers, doctors and administrators took weeks to write and revise but which a 100-IQ patient is expected to read, understand and sign within minutes before getting the drug, needle, knife and/or shaft.

Insight — The innate ability I have to see the clinical importance of my data. Called bias in those who disagree with me.

Null hypothesis — Conclusion you do not want to prove but which you strive mightily to reach. Makes as much sense as anything else in statistics.   

Strategy — The name you give after the fact to any series of random events that ended in your favor.

Statistics — [From Sanskrit "sadistics," meaning confounding verbiage] A means of getting people to argue about numbers instead of whether the test drug worked.

John Abramson’s Overdosed America gets the excellent review I never got around to giving it at THCB over at Health Affairs.

Forbes has an article out called The Dark Side of Whistleblowing which discusses the growth of somewhat dubious methods to make cash by insiders at the scene of the crime reporting and documenting government rip-offs by contractors, rather than the individual trying to stop the practices themselves. They focus on the case of TAP pharmaceuticals which after its "alleged" misbehavior agreed to pay a fine in order to stay in the Medicare program, but more recently had all its executives involved in the scam if not exonerated, at least found not guilty in their criminal trials. In fact this controversy over how culpable is the whistleblower is famous enough that it’s the basis for a book by John Grisham (on of his better ones, The Partner) in which a whistleblower has in fact secretly set up the scam that he’s blowing the whistle on. (I haven’t given away the main part of the plot so you’re still safe to read it) . In general I don’t think anyone really doubts that TAP was sailing pretty close to and in fact beyond the wind. The entire Medicare Part B, infusion center resale of pharmaceuticals has been rife with little scams for many years, whether they are strictly within the letter of the law or not, and in some ways the recent change in pricing in that market contained in the MMA has got something to do with trying to reduce the level of confusion that makes those scams so possible. But of course the Industry Veteran has a much finer interpretation of the real implications of this issue to those searching out their future in the world of big pharma:

In the piece on whistleblowing from Forbes, The author makes the required genuflections at capitalism’s altar by disparaging the archaic Civil War era legislation and a legal system that pays someone $126 million for ratting out his company.  Despite such obeisance, the sheer facts of the case, together with some reflexive fairness that the author couldn’t quite squelch, obliged him to grudgingly admit that the informer did the right thing even if his compensation does seem excessive. My wry reflection concerns the fact that a young person starting out in the pharmaceutical industry can do good and well by pursuing a career as a whistleblower rather than some other position. I base this on the fact that too many land mines and matters of chance stand in the way of ascending to the CEO’s office where one can earn unconscionable sums in the manner of Hank McKinnell or Sidney Taurel.  On the other hand, the Pharma companies routinely defraud the public and all levels of government, as well as other, large corporations. Given the fact that the various tattlers in the cases cited below came from mid-management positions, whistleblowing certainly appears as a more feasible career goal. 

If I were a schoolkid today and an aunt or a teacher asked me what I wanted to be when I grow up, it’s clear that I’d answer with "whistleblower" because the prospects for risky, exciting and noble activity is greater there than in becoming a fiduciary officer.  It used to be that when kids told their elders they wanted to become firemen, ballplayers or astronauts, their parents would begin deflecting them from these choices in favor of one of the professions or business. These traditional aspirations of the middle class offered the promise of stability, prestige and good money.  The beauty of the whistleblower choice is that it provides kids with the perfect response to parental objections.  "How many people, mom, in business or the professions walk off with a $126 million haul at the age of 53?"

Within the pharmaceutical industry I feel that my words of encouragement represent sermons for the choir.  Even today I see in Reuters that the Justice Department is investigating GlaxoSmithKline for failing to provide government agencies with best-pricing on some drugs.  More creatively still, an Associated Press story announced the premier of a tell-all movie by an ex-Pfizer rep while another ex-Pfizerite has published a tell-all book with its own gory details  about being a Viagra salesman.  In short, if the prospect of cashing in as a whistleblower appears too farfetched, then books and the movies offer a more conservative opportunity to make out by denouncing Big Pharma.

As a quick coda, I was modestly amused that while it may not be the Veteran’s newly preferred way to wealth, the titans of big pharma are still managing to get by.  You may have thought that Merck had a tough year last year, what with the Vioxx problem and that nasty little stock collapse, but that didn’t stop CEO Gilmartin raking in a tidy $34 million in stock options.  Meanwhile the relatively impoverished Hank McKinnel over at Pfizer, where shareholders saw their worth drop 30% in 2004, found that his annual compensation went up 72%, albeit to a mere $16 million — although that doesn’t count even more stock option grants and the use of the corporate jet for personal travel. Eli Lilly’s President Sidney Taurel had according to the Indianapolis Star‘s initial version of events to struggle by on $4.7 million but somehow I suspect that he got an easy ride from the hometown paper which somehow missed the minor fact picked up by the AP and printed in the next day’s paper that his actual compensation counting options was $15 million.  Although the poor chap will have to start paying for his corporate jet rides from now on.

And I know that you Silicon Valley folk think options don’t count, and yes my 200,000 options for my failed start-up were never worth much and now are worth nothing. But being given millions of dollars worth of options "in the money" does count as real compensation, even if there’s a chance that the value of the shares underlying those options can go down — something that shareholders of Merck, Lilly and Pfizer know only too well — as this chart below tells you.

Apologies in advance, THCB goes back into movie mode once again to discuss the somewhat arcane subject of DTC Rx marketing…..

A long time ago in a universe far, far away a bright young survey researcher enrolled with some fellow Jedi warriors to make the universe safe and easier for the pharmaco guild to better target the right citizens of the galaxy with the right message about their wondrous potions. The Jedi warriors wanted to build a great database that would create a Beacon to tell the noble pharmaco guildsmen which of the citizens of the galaxy were responding to their clarion calls, and how they ought to change the sound and direction of those calls.  Their goal was for the the noble pharmaco guild to spread health and prosperity while increasing the general well-being and respecting the sanctity of the galaxians’ information as mandated by the Emperor’s HIPAA army — while cutting down on the spending on those pesky airwave borne messages that ineffectively carried the narrow message far wider than it needed to go and surrounded every spare moment of the great Seers’ nightly network prophecy.

Well, as is common in these stories, this episode opens with our band of Jedi heroes distributed to the four corners of the galaxy. Their mighty Death StarData Base was never properly completed before a cold wind crashing down from the NASDAQ quadrant blew fear and loathing into the heart of the great vulture capital birds, and they ceased flying around the universe distributing their nourishing droppings which had kept the Jedis warm and safe while they built their great i-Beacon. Oh, how the poor Jedis suffered, as did many of their fellow warriors in the freedom loving Dotcomposition and many were forced into exile for lengthy periods, marooned on the tropical beaches of the land with the Faraway Thais.

Indeed while the Jedis endured their exile, the pharmaco guild kept sending out its messages, a little less in some years but again with greater volume in 2003 and 2004, mostly because of the need to let the galaxy celebrex the nexium generation of wonderous potions. But the pharma guild still had to rely on the whispers of Oracles and Monitors to figure out if their message was getting across.

Indeed the Monitor which drew its wisdom from a mere 6,000 voices empaneled across the known galaxy continued to tell the noble pharmaco guild that indeed their clarion calls to the undifferentiated hordes known as the health care consumer were "increasingly believable and likeable". Now the brave pharmaco guild members really believed that sending their messages of health and happiness helped their mission.  And there was some reason to believe that it was true. Indeed the green eyeshaders at the Imperial Senate reported that:

DTC advertising appears to increase prescription drug spending and utilization. Drugs that are promoted directly to consumers often are among the best-selling drugs, and sales for DTC-advertised drugs have increased faster than sales for drugs that are not heavily advertised to consumers. Most of the spending increase for heavily advertised drugs is the result of increased utilization, not price increases. For example, between 1999 and 2000, the number of prescriptions dispensed for the most heavily advertised drugs rose 25 percent, but increased only 4 percent for drugs that were not heavily advertised. Over the same period,prices rose 6 percent for the most heavily advertised drugs and 9 percent for the others. The concentration of DTC spending on a small number of drugs for chronic diseases that are likely to have high sales anyway and the simultaneous promotion of these drugs to physicians may contribute to increased utilization and thereby increase sales of DTC-advertised drugs.

But the pharmaco guildsmen still didn’t know nearly as much about their messages as their friends in the consumer packaged goods guild. Where were their ACNeilsen data on the citizens of the galaxy’s consumption habits? They couldn’t track whether their citizens saw their messages and bought their drugs because they couldn’t link their viewing, activity and usage data together safely?  And where was the data broken down by planet and type of citizen? In marked contrast, they did know much about the potion-prescribing habits of the Shamans who were overwhelmed by visits from their drone detail armies because they were told the answers by the all-knowing Xponents of the IMS.

In the good times perhaps these details didn’t matter very much. For example a group of wise men in an ivory tower quoted by the Oracles at Brandweek (Ed: don’t be fooled by the anti-pharma group hosting it, this is a balanced article) found out this :

A study by Harvard University’s schools of medicine and public health, published in 2003, found that for every 10% increase in DTC
advertising, drug sales rose 1%. That does not sound too impressive until it is translated into hard
cash: Every additional dollar spent on DTC yielded an average of $4.20 in sales.

So perhaps there was no need for the pharmaco guildsmen to be able to link the real uses of their potions in real people to the messages they were sending out; for a wise man once said "if you cast enough mud against a wall some will stick up there".

But then came a pestilence upon the pharmaco guilds. All at once the flood of wondrous potions coming down their great pipeline from the wells on the planet Arandee began to slow. In woe the guildsmen looked at each other and searched hard in the neighboring planets of Bio and Tek. But to no avail, and their creditors and bankers from the iBanker guild over on the Street of The Impassable Barrier, took askance at their new found woes. Many pharmaco guildsmen who’s life had seemed as happy as walk through a field full of daisies in one of the allergy messages found that their bankers, schering a fall in their profits, had mercked down their stock price.
And worse was to come.

Some of the wondrous potions were perhaps not quite as wondrous as the pharmaco guildsmen had first said, and and some heretics declared that the messages of the guild were not to be trusted, and even had hidden the truth from the good citizens of the galaxy in their messages. Still other heretics released satirical songs suggesting that anyone believing the messages was a dumb as a mark at a carnival, and some of the guilds members took fright and began to dismantle some of their detail drones that visited and policed the shamans in every nook of every planet.

Then even the guildsmen’s friends who lived in the Imperial Bureaucracy in the friendly city of Effdeeay suggested that the guildsmen might need to quieten their messages and even told the guildsmen to stop them all together for the mysteriously troubling potions known as Cokstoos. And the great bastions of information across the galaxy began to suggest that the overbearing amount of the messages was counterproductive and might even be beginning to have a wearying effect on the citizens of the galaxy. There were even calls for the messages that surrounded the all knowing Seers delivering their nightly prophecies to be banned altogether, and for the power of persuasion to be used only on the shamans and not to be taken direct to their supplicants. Even the noted wise MackMan who was a good friend of the pharmaco guildsmen suggested that the time had come to change their tune and to understand that they couldn’t escape all culpability with a quickly read disclaimer.

But the lone Jedi survey researcher looked on from his lonely exile in a planet on the far left coast of the galaxy, and his mind wandered.  He wondered if the pharmaco guild, too, might not have been happier if they had been able to better target their messaging. Perhaps they didn’t need to surround the seers with messages about their potions as they prophesied, and perhaps if they hadn’t the prophecies would have not been so nasty about the pharmaco guildsmen quite as often. Perhaps they didn’t need to persuade the not-really sick that they had another dread aliment.  Perhaps instead they needed a way to connect just with the citizens of the galaxy who could truly use their help. Perhaps they could benefit from knowing what those citizens who had problems that they could help were doing in their everyday lives, and how they could target them more effectively, and hand over less money to the Seers’ employers in the process.  The lone Jedi wondered wistfully if the Force might ever return to the DeathStar Data Base, and if it would one day be able to help the right citizens hear the right message from the guildsmen, without pissing off the rest of the universe.  Would the pharmaco guildsmen change their tune, or would they
stubbornly continue on to ultimate humiliation in the next great battle
to come?

The lone Jedi sighed. The Force was weak. He saw no way to recreate the DeathStar Data Base by himself.  But he began to realize that his fellow warriors had been on the cusp of a great thing before they were scattered to the four corners of the galaxy. And he wondered if an alternative universe of anonymity protected one-to-one marketing wouldn’t just have been better for the pharmaco guild, the citizens and the galaxy. Perhaps the prophecy of old would come true and a new Jedi would be found to lead the warriors, but the lone Jedi didn’t see much hope.

John Mack has an excellent article in his Pharma Marketing Blog called FDA Advisory Panels: Elephants in the Room. I’m glad he wrote this so I don’t have to.  The news is that 10 of the 29 panelists had active ties (i.e. money) to Pfizer and Merck, and that those 10 voted in favor of keeping Vioxx and Bextra on the market.  As both those votes were pretty close, the quote unquote unbiased panel members voted to remove them from the market, and the quote unquote biased panel members were responsible for the swing vote, which by the way resulted in bumping up Merck’s stock some 15%.

But  as Mack points out, there’s really no one who works closely with pharmaceutical development who can possibly avoid taking money from pharma in one way or another. Either they are advocates who are paid to promote the drug (key opinion leaders) or they are having their research supported by one pharma or another.  Or they are developing their own products and are hopeful of pharma support in the future. And of course these are open government panels so every pharma knows who’s for you or against you! 

This deal was made back in the early 1980s when the biotech industry emerged and scientists were allowed to take their government-supported research into the private sector. Since then the dividing line between government-supported and conducted research and the private sector has more or less disappeared. To put it back firmly into place so that there are "unbiased government experts" available with no ties to the industry they are making decisions about would be a huge reform. Not one that, even post-Vioxx, there seems to be much appetite for. So realistically these conflicts of interest will continue by necessity and we’ll just have to rely on the personal integrity of those involved and look hawkishly for pharma’s reaction to individual votes.

And to add to yesterday’s post (which Blogger prevented from getting up there till most of you had gone home, so it’s really today’s post) the FDA panel this morning ruled that Celebrex can stay on the market, although they concluded that it did have risks. They are due to rule on Bextra and Vioxx later in the day.

UPDATE: The FDA also said that Bextra and Vioxx can stay too, even though Vioxx has already gone.