OSI Pharmaceuticals President Colin Goddard: An Interview With “The Pink Sheet” DAILY (Part 2 of 2)
This article was originally published in The Pink Sheet Daily
Executive Summary
Goddard talks about OSI’s metabolic syndrome pipeline, competing with Merck in the DPP-4 space and profitability.
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OSI Pharmaceuticals CEO Colin Goddard spoke with "The Pink Sheet" DAILY Feb. 2 about his company's developmental pipeline and his plan to "demonstrate a full year of profitability" in 2007. Goddard, who joined OSI in 1989 as a scientist, took the helm of the company in 1998. [Editor's note: This is the second of a two-part interview (1 (Also see "OSI Pharmaceuticals President Colin Goddard: An Interview With “The Pink Sheet” DAILY (Part 1 of 2)" - Pink Sheet, 2 Feb, 2007.)).] "The Pink Sheet" DAILY: Let's talk about Prosidion, your metabolic syndrome subsidiary in Oxford, England. You recently outlicensed your glucokinase activator program to Eli Lilly, and you have other things in development there. What is your plan for the S1RUP (serotonin 1A agonism and monoamine reuptake inhibition) program? [In a deal announced Jan. 5, potentially valued at nearly $400 million, Lilly gained exclusive rights to Prosidion's GKA program, including lead-candidate PSN010 (2 (Also see "Lilly Licenses OSI Glucokinase Activator Program For Type 2 Diabetes" - Pink Sheet, 5 Jan, 2007.)).] Colin Goddard: I think with S1RUP, we've got a very interesting lead molecule there. It sort of addresses some of the complications seen with [Abbott's] Meridia , or sibutramine, in terms of side effects, and we're very excited to carry that forward into development [for obesity]. We also have another program we think will be in the clinic in a year or so which targets the novel g protein coupled receptor [GPCR] - GPR119. And of course we have our own DPP-4 [dipeptidyl peptidase-4 inhibitor] program in Phase II trials. It's a healthy franchise, and the challenge for us as we look at juxtaposing this hybrid of needs, if you will, between driving Tarceva (erlotinib), driving our R&D investments in our pipeline, and delivering financial performance into profitability [is] how far we should take our diabetes assets. Because in a primary care area like diabetes, the cost of putting in the infrastructure and funding major Phase II and Phase III studies is rather daunting, and we've chosen in the near term to seek partners when we've demonstrated clinical proof of principle here. [Last fall, following disappointing returns on its wet age-related macular degeneration drug Macugen (pegaptanib) and first-in-class approval of Merck's DPP-4 Januvia (sitagliptin), OSI decided not to go into Phase III trials with it's DPP-4 candidate PSN9301 (3 (Also see "OSI Seeks Partner For DPP-4 Inhibitor Paused At Phase III Gate" - Pink Sheet, 9 Nov, 2006.).] "The Pink Sheet" DAILY : So it's not out of the question that when you've achieved equilibrium you would start developing more things in-house again? Goddard: It's clearly an option for us. Equally well, I think we achieved a very attractive deal with Lilly, with the clinical program there. That's one of the choices we'll have to wrestle with as these programs achieve proof of principle and we see how well balanced and how strong the company is in all those other attributes as well. "The Pink Sheet" DAILY: Are you still looking for a partner for your DPP-4 candidate? Goddard: Yes, and we're still moving it forward. At the moment, we're working busily on developing the final drug form for the Phase IIb clinical program. But obviously with the continued interest in the DPP-4 class as a whole - the success of the Januvia launch and the pending launch of [Novartis'] Galvus (vildagliptin), I think, continues to build on that interest. There's obviously an opportunity to partner [9301] as well, and we will be exploring those options. "The Pink Sheet" DAILY: Have you done skin toxicity studies on 9301? Goddard: The skin toxicity studies are in essence almost prerequisite now from the FDA's perspective. They're ongoing for our molecule at the moment. [FDA began requesting in November 2005 that all sponsors of DPP-4 inhibitors conduct three-month oral toxicity studies in monkeys to assess their compounds' potential for necrotic skin lesions (4 (Also see "Skin Toxicity Seen In Other DPP-4 Inhibitors Missing In Januvia NDA – FDA Review" - Pink Sheet, 22 Jan, 2007.)).] "The Pink Sheet" DAILY: Do you think the class in general has a problem with cross reactivity with other proteases, such as DPP-8/9, which could be a possible explanation for the lesions? Goddard: It's interesting looking at the data because obviously DPP-4's selectivity against other dipeptidyl peptidases is something to monitor. The other thing to monitor is the fact that there are other substrates that DPP-4 ... where one might presuppose you could get some effects as well. I think the answer to date is that the side-effect [profile] we've seen so far in the Phase III programs for Januvia and Galvus ... has been very credible. Nonetheless, one of the things that we hope to exploit going forward is, because our DPP-4 inhibitor is given twice daily and is cleared very quickly, we've developed this notion of inter-prandial sparing, and if there are some advantages for exquisite selectivity and controlled exposure, we'd expect to exploit those. "The Pink Sheet" DAILY: So, you've essentially got an opportunity to fine tune here. Goddard: We think so. Absolutely. "The Pink Sheet" DAILY: Do you believe the patent estate you purchased a few years ago on the DPP-4s turned out to be a good investment? Goddard: Yes, that's worked out very, very well for us. Just milestones we've received to date on the patent estate alone is paying for the transaction. And then if you add to that what could be very, very significant royalty flow to us around the sales of Januvia and Galvus, we feel pretty good about that loan. If you take the sell-side analysts' estimates for the market potential for the DPP-4 class, and back-calculate potential royalties to us from that, we can see that at peak sales we would anticipate receiving $100 million a year revenue there. [In 2004, OSI bought the DPP-4 patent estate from the German pharmaceutical company Probiodrug for $32.8 million. In December, Bristol-Myers Squibb became the latest to license the intellectual property (5 (Also see "Bristol-Myers Squibb Latest To License DPP-4 Patents From OSI" - Pink Sheet, 14 Dec, 2006.)).] "The Pink Sheet" DAILY: How do you present OSI as a partner of choice to companies like a Lilly with the environment becoming so competitive? With the diabetes [pipeline] that we've built over in the U.K., this was important to us in terms of proof of principle basically. I think the Lilly folks got in and they saw the quality of the research group we have over there. In this world of, if you will, discovery through proof of concept, I think we can provide a very credible, high-quality niche R&D organization in diabetes that will be very attractive to suitors going forward. At the end of the day, it's about the quality of the molecules and the target that you're working in. We feel that our pipeline continues to be replete with good targets and good early-lead-stage molecules there, so we see that being something we can continue to advance over the next several years. In oncology, when we talk about partner of choice, we're talking about it in the other direction. That is, we would like to be the partner of choice for smaller biotech companies looking for options and opportunities to maximize their prospects for success in developing oncology products. And I think with a high-quality commercial organization, a good development organization, we could play that role in reverse in perhaps a less overbearing and threatening way than some of the bigger players in oncology. "The Pink Sheet" DAILY: Have you thought about doing any more acquisitions, moving into any other therapeutic spaces, or are you more or focused on oncology and metabolic disorders? Goddard: For now, it's a logical alignment of our skills and capabilities and our resources to stay focused in those two areas. Obviously we had the foray into eye disease with the Eyetech transaction, which made a good deal of sense to us strategically and obviously didn't turn out the way we would have liked it to turn out. On the other hand, this is an industry that is all about managing and taking risk. It's essential that we as an organization continue to learn from the lessons of taking risks along the way, but we most certainly can't stop taking risks. We continue to look for opportunities to supplement and complement our pipeline although in general we're pretty much focused on supplementing and complementing in the oncology and metabolic diseases area. - Shirley Haley ([email protected]) |