BNET Pharma

Sometimes I come across items that aren’t important enough to count as news but are nonetheless too strange to ignore. Thus, I give you the top 10 weirdest drug stories for August:

1. The connection between O.J. and Preparation H. Ever wonder why the orange juice in your fridge lasts so long? Thank this guy: Dr. Robert George Blank, 79, who died Aug. 24. He was a VP/director of R&D at Wyeth. He also invented Preparation H, which he initially thought would turn out to be a burn treatment.
2. Will Botox cure enlarged prostates? St. Joseph’s Health Care London is doing a study in which Allergan’s wrinkle-killer will be injected in to the prostates of men over 50. The logic of the study is that Botox’s gentle poison will kill off some prostate cells, thus reducing the size of the gland. The docs are hoping that a single injection has the potential to replace a lifetime of pills such as Boehringer Ingelheim’s Flomax.
3. Viagra, Cialis and Levitra may cause memory loss. Where was I? Oh, right! The FDA has changed the warnings on these three top-selling erectile dysfunction pills because they may cause “transient global amnesia.” “People who experience it lose their recall of events and can’t remember where they are or how they got there,” according to Dow Jones newswires. One presumes that the effects of the pill will soon remind them what they’re supposed to be doing. This story also produced one of the best Dow Jones ledes ever: “While a certain effect of erectile-dysfunction drugs may last more than four hours, the memories may not last so long.”
4. Novo Nordisk asks 700 sales reps to “reconstruct reality.” Are layoffs in the pharma biz getting you down? Not at Novo Nordisk, where they’ve found a cure for low morale, according to ABC. VP Frank Jacobs is sending his sales team — all 700 of them — copies of “Life Design Specialist and Architect” Ed Blunt’s “Positive Power” CD. The reps will learn about the “active process of successful living,” and, hopefully, create a “blazing trail of reconstructed realities, results and achievement! “Why isn’t everyone else doing this?
5. Nick Jonas of the Jonas Brothers shills for Bayer. Floppy-haired New Jersey boy band singer Nick Jonas signed up with Bayer to promote the “Walk In Nick’s Shoes” sweepstakes and a Walk for the Cure event for the Juvenile Diabetes Research Foundation. Jonas (pictured) has type I diabetes. The press release makes Bayer’s interest plain: “The W.I.N.S. sweepstakes kicks off the launch of Bayer’s new CONTOUR(R) blood glucose meter… For Nick and his demanding schedule, that means using the CONTOUR(R) blood glucose meter with new testing features that allow him to personalize it to match his lifestyle.” Keep on rockin, indeed!
6. Gilead believes hibernating ground squirrels may cure heart disease. That’s a vast oversimplification but it’s still true: Gilead’s Hiberna unit in Colorado has a lab full of poisonous snakes and squirrels. Scientists there are hoping the animals’ extreme metabolic adaptations to their environment will provide some clues to preserving humans’ hearts.
7. MedImmune tries to put flu on the Democratic National Convention agenda. In a rare - and somewhat refreshing — example of a gimmick drug campaign, the marketer of Flumist has developed this web site especially for the presidential campaign season. “This Fall, electing the next president isn’t the only important choice to make.” The perverse charm of the site is that it is not clear whether MedImmune is being serious or not.
8. 1970s-style feminism is alive and well at Novo Nordisk. The quixotic Danes put out this press release in which they urged parity for the sexes, all over the planet, by 2015. It’s part of Millennium Development Goal No. 3. “To empower women and promote gender equality.” Aside from being nice, what is Novo’s interest in all this? The answer: “Novo Nordisk is committed to creating awareness of how diabetes will impede development and women empowerment.”
9. Bayer thinks tobacco may cure cancer. You read that correctly. The company is conducting research into whether the evil weed can be used to grow a cancer vaccine. On behalf of all ex-smokers who really, really miss those menthols, I say Bayer, please knock this one out of the park!
10. Contract killer gangs shoot two, stab one at Pfizer. You thought dealing with the Lipitor patent expiration was tough? Try being a union leader Pfizer in India. Some sort of rivalry there has burst into an all-out war. In addition to three attempted assassinations, police have made a series of arrests and “The Crime Branch has recovered five firearms, three choppers and 11 live rounds from the accused,” according to Express India.

Bayer could be facing a damaging PR issue if separate legal actions in Washington and Germany unearth evidence that the company’s pesticide division was responsible for “colony collapse disorder,” the unexplained mass death of honeybees worldwide that happened this year and last.

Most of the attention that the media and investors pay to pharmaceutical companies gets spent on the drug side of the business. Almost all the major companies have large agricultural divisions, however, it’s just that most people find farming, well, boring. The bee death issue, however, could be about to change all that for Bayer.

Bayer’s Cropscience unit earned 1.8 billion euros last quarter, and formed 19% of Bayer’s total revenue, the company told investors. Thus, this drug company’s stock price is dependent to a significant extent on its pesticide business. It is those pesticide brands — such as the delightfully named Gaucho and Pancho – that are moving to center stage in the controversy.

Last year, bee fatalities became a huge story in the U.S., as major media interviewed bewildered apiarists about their bee colonies, many of which seemed to have flown away and not come back — or simply died en masse, seemingly overnight. In one region of Germany, 99% of all bees were lost.

The story was mysterious, depressing and dramatic all at the same time. Plus, it involved a cute animal whose only job is to provide us with honey, flowers and Haagen Dazs ice cream — thus putting it on the mental front page for most editors. Several explanations were advanced for the deaths, including a virus (”bee AIDS”) and mobile phones.

But this year attention is focusing on neo-nicotinoids, the type of pesticides marketed by Bayer under the generic name clothianidin. A German prosecutor has been asked by environmental activists there to investigate whether Bayer’s pesticides are responsible for the bee deaths.

That move comes at the same time as a suit filed by The Natural Resources Defense Council, which which seeks copies of records related to Bayer’s pesticides held by the EPA. The EPA asked Bayer in 2003 to study the effect of its chemicals on bees, but the agency has since declined to say whether those studies were done, or what they might say, according to the San Francisco Chronicle. Bayer spokesperson Greg Coffey told the Chron that controlled field studies have demonstrated that clothianidin, when used correctly, will not harm bees. And Dr. Richard Schmuck, an ecologist at Bayer CropScience, said in June:

All studies available to us confirm that our product is safe to bees if the recommended dressing quality is maintained. This is also shown by the product safety assessments which we have submitted to the registration authorities.

Note that Bayer’s line here is not that the chemical is safe for bees, but rather that it is only safe when used correctly. And this may the downfall for Bayer — because unlike drugs, pesticides are not administered in controlled doses by professional physicians. They are sprayed all over the place by farmers on tractors, as Bayer well knows. It would be nice if Bayer could simply say that its products are safe for bees, period.

Bayer’s PR folk ought to be worried. If public opinion concludes that its pesticides killed the bees then Bayer is ripe for a consumer boycott, as it has plenty of discretionary drug brands such as Aleve and Alka-Seltzer than bee-lovers can refuse to buy. Those consumer health brands for 4.5 billion euros of Bayer’s annual 32.3 billion euro revenues.

In the meantime, Bayer had better hope that those EPA records exonerate its brands.

The current big headache for Eli Lilly and Amylin is their diabetes drug Byetta, which the FDA has linked to six cases of fatal pancreatitis.

The two companies, which jointly market the drug, held a conference call yesterday in which they hoped to calm nervous investors. (It had mixed results: Lilly’s stock stayed relatively steady but Amylin’s crashed from $27.24 on Tuesday to $20.53 at the closing bell Wednesday.)

The issue behind the controversy, however, is how this drug — originally developed from the saliva of the Gila monster (pictured) — became such a huge success in the first place. It currently sells about $197 million a quarter. That’s amazing considering how limited the appeal of the drug seems to be on paper.

First, it was originally approved by the FDA as an adjunctive therapy, which means that it’s an add-on drug for diabetics who are having difficulty controlling their diabetes with the usual treatments, such as metformin or insulin. Add-on drugs tend to be less lucrative than first-line drugs, for the obvious reason that they serve only a portion of the total available patient population.

Second, it’s more expensive than the older therapies, costing up to $225 a month, about 10 times the price of generics.

Third, it has some pretty nasty side effects. Lilly’s product web site warns:

The most common side effects with BYETTA include nausea, vomiting, diarrhea, dizziness, headache, feeling jittery, and acid stomach. Nausea is most common when first starting BYETTA, but decreases over time in most patients.

A quick check of the diabetes blogosphere shows that there are plenty of patients who don’t like it. Type “Byetta” and “sucks” into Google and see for yourself.

Nausea, expense and add-on status are usually enough to confine a drug to also-ran status when it comes to sales, particularly if those qualities are couple with headlines involving fatalities. So how did Byetta avoid that fate?

Consider this article from The New York Times, published in 2006. The story hits all the bases but the overall impression it leaves is that Byetta is a diet drug. Here’s a sample:

On blogs they rave over its uncanny ability to melt away pounds, although some are wary of its side effects, which can include nausea and strange welts.

“I went from despair to life — no hope to lots of hope,” said the Rev. John L. Dodson, a 73-year-old pastor in Felton, Calif. Mr. Dodson, 5 feet 6 inches tall, says he has lost almost 60 pounds since starting Byetta last June and now weighs 178, his lowest weight since college.

The drug seems so effective for weight loss that some nondiabetics have begun using Byetta as a diet drug - causing concern among doctors who say such use has not been medically tested and could be dangerous.

One of the docs singing Byetta’s praises to the Times was Dr. Alan Garber:

“My patients have done strikingly well on the drug,” said Dr. Alan J. Garber, a professor at Baylor College of Medicine in Houston and a former member of the national board of the American Diabetes Association. “It’s a better choice for an overweight diabetic.” Dr. Garber … says he has not consulted for Amylin or Lilly.

OK, so he hasn’t taken cash from Lilly or Amylin. But the ADA has taken plenty of cash. Both companies are listed as having given ADA more than $1 million. They’re at the very top of its donors list. I’m not suggesting Garber was biased by that cash, just that it would be nice to know that information when former ADA board members endorse drugs. Such endorsements can be powerful.

Lilly hasn’t promoted Byetta as a diet drug, but it has benefited from that positioning. Its own site has this to say about the weight loss issue:

Patients taking BYETTA may feel less hungry and eat less. In clinical trials, on average, people lost 5 pounds in 30 weeks, though BYETTA is not a weight loss product.* Some medicines for type 2 diabetes, such as sulfonylureas and insulin, can cause weight gain, while other drugs, such as metformin, do not affect weight … BYETTA may reduce your appetite, the amount of food you eat, and your weight. No changes in your dose are needed for these side effects.

This, then, explains why Byetta is such a huge hit. People — especially diabetics — love to lose weight, and one suspects that it may be being prescribed as an initial therapy instead of an add-on for this reason.

One last question remains, though. Does Byetta really lead to weight loss? Lilly says this:

In clinical trials, on average, people lost 5 pounds in 30 weeks, though BYETTA is not a weight loss product.

The key words are “on average.” If you look at page 8 of this document, it describes the trials that Lilly submitted to the FDA when the drug was approved. Only the people on the highest dose lost significant weight, 2.8kg (about 6.2 pounds). Everyone else lost 1.6kg (about 3.5 pounds) or less. And even the people on a placebo lost a little bit of weight.

It’s the pancreatitis — which is still extremely rare in Byetta users — that’s making the headlines, but it may be that crisis which causes doctors to start scrutinizing their use of Byetta a little bit more carefully than perhaps they have in the past.

Figuring out whether Abbott Laboratories is firing on all cylinders or heading for a wall is a complicated business. On the one hand, the company announced it would lay off 1,000 employees in its diagnostics business.

Abbott spokesperson Melissa Brotz said:

We are taking this action from a position of strength to improve profitability and competitiveness moving forward, addressing excess capacity, reducing cost and improving efficiencies.

She was referring to the fact that Abbott’s diagnostics division is currently growing at 17 percent, and the company told investors recently that it expects continued “double-digit growth” in that area.

But the move raises a question: If Abbott’s diagnostics are in such a “position of strength,” why would it implement all these diagnostic job cuts? A peek at the Abbott radar screen shows that it is not all plain sailing ahead. Let’s take the good news first:

Abbott recently settled a class action lawsuit that had accused the company of inflating the price of its HIV drug, Norvir. The settlement was just $37.5 million. That’s pennies on the dollar for Abbott; some people had estimated that the price could go as high as $1.1 billion. (Side note: This goes to my earlier point, here and here, that drug companies may be better at estimating their legal liabilities than they let on.)

The company also signed a nice deal with AstraZeneca to comarket Crestor. And everyone seems to agree that Abbott’s new Xience stent is going to be huge.

On top of that, Abbott is one of the few companies whose sales force is actually becoming more efficient. Its SG&A dollars generated $3.56 in revenues for every dollar spent last quarter, up slightly from $3.55 a year ago. That’s one of the highest ratios in the business. (Many companies have seen recent declines in their marketing efficiency — see my previous note about Sepracor.)

So you can see why Abbott thinks it’s in that “position of strength.” But the company is talking less about the not-so-good stuff. On January 1, 2009, its bipolar and epilepsy drug Depakote goes generic. Am extended release version, Depakote ER, sees competition kick in this month. So the company is about to say goodbye to a franchise that earned $414 million in the last quarter alone and grew 2.4%.

Second, Fitch recently downgraded the company’s debt ratings due to its “sustained high leverage” that “remained above expectations.” Not a huge deal, but not as good as it was.

Lastly, Abbott may be worrying about trouble in foreign countries that believe the company sells its Kaletra HIV drug at way too high a price: Thailand issued a compulsory license for Kaletra last year; Indonesia is thinking about it; and there’s pressure in Colombia and Mexico to do the same.

If all that were to happen, it would devastate Kaletra’s global sales, currently at $355 million a quarter and growing at a clip of 12 percent.

Here’s the improbable, worst-case scenario: The collapse of Depakote and Kaletra at the same time could cost Abbott $1 billion in revenue. According to Fitch, the company has $1 billion in debt that comes due in the same year. That debt will, presumably,be easily refinanced by the company, which Fitch points out has “solid cash flow.” However, Fitch also notes that much of that cash will likely be dedicated to shareholders.

So now all those layoffs from a “position of strength” suddenly start to make a bit more sense — diagnostics are one of the places in the company where there’s likely to be fat.

Eli Lilly’s Cymbalta is fast adding indications. Today the company announced the results of a trial to see if the drug can be used for back pain
and last week it was approved in Europe for generalized anxiety disorder.

Its wide variety of uses — Cymbalta is also indicated for fibromylagia, depression, incontinence and diabetic nerve pain — have made the drug a commercial success. It recorded $1.2 billion in sales for the first six months of 2008, a 31 percent increase on last year.

But its widespread use and equally widespread indication list have also been a source of controversy. The Indianapolis Star called Cymbalta the “Swiss Army Knife of drugs,” and suggested that perhaps it was over-prescribed:

“I think the question is, should one drug compound do so much?” said Shannon Brownlee, author of “Overtreated: Why Too Much Medicine Is Making Us Sicker and Poorer … This is a drug that may have a really serious side effect called suicide … Don’t we have other drugs available that are safer and just as effective for such things as the management of chronic knee and low back pain?”

Bloggers who write about depression — there’s a huge number of them — have listed wild stories of Cymbalta’s side effects and withdrawal symptoms, including hallucinations and loss of sex drive. Check out this thread from Furious Seasons, and the dozens of comments from users that it drew.

In a story I wrote for today’s Brandweek, I noted the difficulties in doing mass consumer marketing for Cymbalta without confusing consumers as to what the drug actually treats. I was struck by how the marketing challenge is essentially similar to a supermarket-packaged-goods brand extension: The company has to convince consumers that a brand used for one thing is also good for another, just like Jack Daniels is now a brand of both bourbon and mustard. In fact, the drug business becomes more and more like the consumer goods business with every passing year. Check out the sites for Lipitor and Ambien CR. Ambien is offering a $100 discount on prescriptions, while Lipitor has a whole hard-sell anti-generics section titled, “There is no generic form of Lipitor.”

It turns out that Lilly has been learning lessons from the supermarket business. As Lilly prepares to extend Cymbalta’s marketing into all its varied indications, they’re considering whether “Cymbalta is going to be synonymous with something the way Febreze is synonymous with freshness,” one exec at their interactive marketing agency told me.

I spoke to Jacopo Leonardi, U.S. Cymbalta brand leader at Eli Lilly, for the article, but unfortunately there wasn’t much room to quote him at length. So here’s a Q&A with him on these issues.

BNET: You have indications for depression, generalized anxiety disorder, diabetic nerve pain and fibromyalgia. How do you advertise all these indications without confusing patients as to what the drug is actually for?

Jacopo Leonardi: Currently we only have mass advertising around our depression indication. [Our advertising] puts the patient first. All our research is rooted in deep customer insight. In many cases patients with depression were only having part of their depression managed. They were having painful physical symptoms like fatigue and numbness in the body. For the first time someone was actually addressing them. It really starts with that point in mind.

BNET: Isn’t there a risk that patients who have fibromyalgia will feel insulted that they’re being given a drug for depression?

JL: To the consumers we’re trying to speak to it’s very clear. We have asked ourselves that exact point. For fibromyalgia patients, oftentimes they have been stigmatized and been told this isn’t a real disease, it’s all in your head. Cymbalta’s mechanism of action is different as a pain drug from its mechanism of action as a depression drug. But it’s a challenge.

BNET: Do you have separate marketing teams for each indication, or do you all work on a single team across all indications?

JL: We do have one team. Where we separate more by customer type is by healthcare provider. We’re not trying to build two different brands. We don’t want to create a situation where a primary care physician thinks it’s two different brands.

BNET: Nonetheless, you have to now extend your consumer marketing toward different patient groups who have different symptoms than depression. It’s a bit like a packaged goods brand extension. Companies like Procter & Gamble have been doing this for years. Do you draw anything from their experience?

JL: We absolutely do. P&G is a company we have a tremendous amount of respect for. We’ve looked at all industries for that big learning. You can’t be all things to all people — in pharmaceuticals it’s a bit more complex.

BNET: To that point, you have a U.S. Cymbalta consumer marketing director, Gary Walker, whose previous experience was at P&G and also the burger chain Steak n Shake.

JL: He has tremendous experience. The reason we brought a guy like Gary on is because of that experience. [Compared to packaged goods marketers] we’re still in our infancy.

BNET: When the media calls Cymbalta the “Swiss Army Knife of drugs,” does that hurt or help?

JL: Most important to us is we want to put the patient first. We don’t want Cymbalta to be used in patients where it doesn’t make sense. We’re not one size fits all.

(This interview was edited according to the Deborah Solomon rules, described at the bottom of this item.)

Yet another company is taking a crack at the “Viagra for women” concept. This time it is Noven Pharmaceuticals, which has licensed its testosterone-based skin patch to Procter & Gamble. The companies did not disclose the terms of the deal.

The move is an interesting one for two reasons. First, P&G has already dipped a toe in this market before and largely failed to, um, excite anyone. Second, the female sex-drive-booster category is an historic graveyard of failed products. In other words, P&G ought to know better.

On paper, the idea is fabulous: Viagra was an astonishing success, but it tapped only half the market — men. Could it be repeated in the better/other half? But let’s look at the history. Back in 2004, P&G made its first attempt at a libido-enhancer for women with a product called Intrinsa, licensed from Watson Pharmaceuticals. The FDA rejected it and it hasn’t been seen since. Watson no longer mentions the product on its web site.

Although P&G maintains a web site for Intrinsa in foreign countries the company doesn’t mention sales of Intrinsa in either its most recent quarterly or annual report. And I cannot remember an occasion on which my European buddies have ever joked about having an “Intrinsa moment.” The foregoing strongly suggests that this business is — irony alert! — a modest one. And until very recently, the Noven project was on hold at P&G, according to Noven’s own site.

Elsewhere, the pursuit of the female Viagra was most recently investigated by Pfizer, which funded a study of women taking Viagra. The study found that among women whose ability to orgasm had been affected by antidepressants, using Viagra helped the situation. However, the study has a number of problems, most importantly that it is tiny. Pfizer says it has no intention of pressing the FDA for a women’s indication for the drug.

Like Noven/P&G, BioSante Pharmaceuticals is also working the testosterone skin patch idea. It claims that “[p]hase II trial results showed LibiGel significantly increased the number of satisfying sexual events by 238%” and says it expects approval in 2011. So at the very least, P&G has waited too long to get the category to itself — a key element of the Viagra business miracle.

Other topical solutions have been tried by QualiLife Pharmaceuticals, which spent a large sum of money marketing Zestra, even though a closer examination of the product indicated some wishful thinking on the part of the company. QualiLife currently does not have a web site, so I’m going to take a giant speculative leap and suggest that this company, if it still exists, did not make a fortune in this business.

Even the hucksters at Berkeley Premium Neutraceuticals got in on the business at one point, although they are currently marketing their product for something completely different — “normal hormonal balance,” whatever that is.

A cynic might point out that the problem here looks similar to pharma companies’ failed pursuit of diet drugs. In theory, the market looks highly lucrative, but in practice the biological mechanism may be too complicated to crack with a single drug.

A handful of scientists are skeptical that Genentech’s C-08 trial of its Avastin anti-cancer drug will show any benefit in preventing the recurrence of colorectal cancer following surgery, reports PharmaWire (via the Financial Times).

Avastin is one of Genentech’s most valuable products, and currently rakes in sales of $650 million a quarter. But the drug faces criticism that it is overpriced and less effective than Genentech wants it to be.

If these boffins turn out to be right, it adds an interesting wrinkle to the Roche-Genentech takeover, as part of Genentech’s value hinges on whether Avastin can kill off free-floating cancer cells — or at least prevent them from growing into new tumors.

Genentech is hoping that Avastin can be extended for use in treating post-surgical patients — the so-called “adjuvant setting.” Although surgery can remove tumors from the colon, it can’t stop tiny clumps of cancer cells from floating off in the bloodstream. If these cells take root elsewhere in the body, the cancer returns. Genentech’s C-08 trial, which has 2,700 patients in it, is designed to see whether Avastin can prevent that recurrence.

But here’s what cancer docs are telling PharmaWire’s Klara Czobor about the trial:

Dr Alberto Sobrero, the director of medical oncology at the San Martino Hospital in Genoa, Italy, said the scientific rationale behind Avastin’s use in the adjuvant setting is not very strong, and he considers it unlikely the drug’s anti-angiogenic effects will work in this setting.

Dr Axel Grothey, a colon cancer expert at the Mayo Clinic College of Medicine in Rochester, Minn., said, “I don’t think that it is safe to be used in this setting. I have a hard time seeing how Avastin would work in the adjuvant setting. We see that it works in colorectal cancer, but the presumed mechanism of action doesn’t lend itself to believe that it works in the adjuvant.”

Their argument is that Avastin works by screwing up the blood vessels that tumors develop to feed themselves. Free-floating cancer cells don’t have blood vessels attached, so there’s no apparent logic for the C-08 test.

Avastin seems to be a bit of a pinata for some doctors. Last May, some cancer scientists suggested that Genentech was looking at the wrong endpoint in C-08. They believe the goal should be to see if Avastin helps the overall survival of the patients, but C-08 primary endpoint is disease-free survival — i.e. the length of time in which cancer appears to be absent. (Overall survival is the secondary endpoint.)

The FT reported in July that Sue Hellmann, president of product development at Genentech, defended Avastin’s safety profile in an earnings call, saying the interim safety data “looked encouraging and we expect the final analysis of this study to be in 2009.” Here’s Genentech’s latest update on C-08, in which it touts the fact that no safety issues have arisen that would derail the test. That’s an important issue for Genentech, because Avastin is associated with a laundry list of serious side effects, including heart failure and hemorrhage. Obviously, it’s more difficult to persuade doctors to put patients who have had tumors removed and are ostensibly cancer-free on drugs with those risks.

And then there’s the price of the drug itself. The NYT launched a lengthy broadside at Avastin earlier this year, in which it noted that the price of treatment can reach $100,000 a year. That would be fine if Avastin was a cure for cancer. But it’s not. Avastin’s performance on metastatic colorectal cancer is summed up in the fine print of the company’s website. It gives you only about two more months to live when combined with the most up-to-date chemotherapy:

Median survival for patients receiving Avastin plus FOLFOX4 was 13.0 months, compared to 10.8 months for those receiving FOLFOX4 alone.

As I noted earlier, if the price of Genentech rises, the value of the company potentially falls as Genentech’s senior staff cash in their stock and leave. Roche can only guess about the outcome of C-08, so it will be interesting to see if the uncertainty will give Roche an extra argument for keeping the price of the deal down.

(Disclosure: Czobor was a former student of mine in an NYU journalism class. She got good grades, if memory serves.)

It’s been nearly a month since Roche bid $44 billion to completely buy out Genentech, which seems like a good point at which to ask whether Roche, if successful, could end up destroying the value it’s seeking to acquire.

When the bid was announced, there were immediate predictions that Roche was running the risk of overpaying for an office building in San Francisco with a sign that says “Genentech” on the front — while all its employees and patient allies flee for other companies. In the last four weeks, those predictions have shown every sign of coming true, in part if not in whole.

So let’s look at that worst-case scenario for Roche (because in a takeover, you’re actually supposed to plan for these events).

There are four main problems emerging from Roche’s bid:

• A significant number of Genentech employees, who like their company’s research-based, innovation-friendly culture, just don’t want to work for a big, clunky corporation like Roche. They may leave. Here’s an unrepresentative selection of employee feelings about Roche (warning: this leads to CafePharma, where the language can be salty). And here’s some more from the science side.
• Many of those scientists have stock options that will fully vest in a Roche buyout, giving them the funds to leave, as noted recently by Derek Lowe.
• Venture capital funding for start-ups funded by ex-Genentech scientists is not difficult to get, giving them more funds to leave. Recruiters are already drawing upstaff wish-lists and phone are ringing off the hook, according to the San Francisco Chronicle.
• And activist patient groups who have come to trust Genentech may take their loyalties – and marketing contacts – elsewhere if Roche takes over, according to the WSJ.

Meanwhile, Genentech’s board has made it clear that it wants more than $89 a share, which was only a nine percent premium on the stock at the time of the bid. TheStreet.com’s Adam Feuerstein thinks Roche should bid $123 a share — a 50 percent premium. Even if the bid comes in near the $100 range an awful lot of Genentech long-timers will suddenly be looking at six-figure lumps that will make life on the golf course look a lot more inviting than a few more years wearing plastic eye goggles.

In sum, the events of the last 30 days potentially indicate that once Roche completes its takeover it will find that the Genentech it has bought consists entirely of brand-new employees whose bosses just left for greener pastures. In other words, the initial predictions made in the period immediately after the buyout (my BNET colleague David Hamilton suggested that Roche could be “killing the goose that lays the golden eggs” and Reuters was more speculative and more specific just one day after the announcement) are now backed by actual evidence.

Roche may only succeed by increasing its bid toward $50 billion, which is a very expensive way to buy empty real estate in the San Francisco area, particularly in this down market. Worse, every penny it adds in premium to Genentech’s stock makes it more tempting for Genentech’s best people to cash in and get out. The more likely Roche is to succeed, the hollower its victory could be.

It may be cheaper for Roche to keep its cash in the bank and continue to enjoy the 40 percent of its revenues that already come from its minority stake in Genentech. (Plus, that move would end the desperation at the Roche headquarters in New Jersey, which recently performed a kabuki-like show of support for the governor.)

After years of funneling campaign money to Republican politicians, the drug business has suddenly decided that the Democrats — who took control of Congress in the 2006 elections — will win the White House in the fall.

From 1990 until just last year, pharma political campaign contribution money on the federal level went solidly to Republicans over Democrats, sometimes at margins of almost three to one, according to this fascinating data set from the Center for Responsive Politics.

That’s not news, of course. But in this presidential election cycle, the pharma money hose has suddenly started spraying the Democrats.

The split of donations is now 50-50 — a previously unheard of level of evenhandedness. At first glance, this chart of current donations suggests that drug companies are hedging their bets rather than voting for Obama:

But look closely at the raw dollar totals. Pharmaceutical companies upped their donations to Democrats by $2.9 million, while reducing their donations to the GOP by $3.9 million. Both parties have received about $9 million from the biz this year. That looks much more like a vote for Obama than McCain.

Click on the “recipients” tab and you’ll notice that drug/healthcare companies really seem to believe that this is not going to be the Republicans’ year. Here are the top four recipients of drug money:

Obama: $848,00
Clinton: $639,429
Romney: $410,411
McCain: $347,375

Companies better hope that McCain doesn’t win –- the industry has essentially funded his enemies at every turn of the campaign.

As Pharmalot pointed out this morning, Pfizer CEO Jeff Kindler is off to Denver to make nice to the Democrats at their convention. Kindler can show Obama’s people this chart, which shows that Pfizer donated $1.1 million in a 50-50 split between the parties. Kindler can make himself out to be a bipartisan guy. Pfizer is the largest donator in the business.

But Kindler probably shouldn’t show the Dems the same chart from the 2006 election cycle, in which Pfizer donated 67-32 in favor of Republicans.

That change of heart is typical of the industry: In 2006, Abbott Labs donated 82 percent of its money to the Republicans. This year, some Abbott donators are wearing shiny new donkey pins even though 60 percent of their $653,667 still went to Republicans.

Most companies are doubling down, around the 50-50 mark. Only Johnson & Johnson and Roche have donated a majority of their funds to the Democrats this cycle.

Lastly, I did my own search of the CRP database to look at companies’ political action committees. Companies often encourage their employees to donate to the company PAC so that the firm can direct their money in a way that most helps the company itself. This is from Pfizer’s PAC policy page:

When choosing to make a contribution to a candidate, the Pfizer PAC considers candidates’ views on issues that impact Pfizer and its employees as well as the presence of Pfizer facilities or employees in the candidate’s district or state.

AstraZeneca’s is a little more vague:

AZ PAC support is divided equally between federal and state level, and allocated among various candidates according to specific recommendations from the company’s government affairs organization and employee PAC members.

How much money did your company’s PAC give in the 2008 election cycle? Take a look:

Pfizer PAC: $134,686
Wyeth PAC: $133,922
Roche PAC: $81,054
AstraZeneca PAC: $72,271
BMS PAC: $68,483
Novartis PAC: $66,115
Sanofi PAC: $43,531
Amgen PAC: $38,600
J&J PAC: $22,432
Teva PAC: $21,650
Merck PAC: $14,875
Novo Nordisk PAC: $3,890
Abbott PAC: $1,609
Bayer PAC: $1,518
GlaxoSmithKline PAC: 0
Lilly PAC: $-1,188 (Yes, that’s a negative number, suggesting that the PAC returned money to a donor.)

Source: Center for Responsive Politics database, searched on Aug. 19, 2008.

Fourteen children have now died during a pneumonia vaccine trial run by GlaxoSmithKline in Argentina, according to the U.K.’s Daily Mail. Argentine authorities are investigating. GSK says the deaths are not linked to the tests.

This issue first emerged for GSK in July, when TradingMarkets.com reported that 12 babies had died during the trial. GSK has pointed out that 19,000 kids have received Synflorix so far and that the number of kids who have died is in fact lower than Argentina’s natural child mortality rate.

Foreign drug trials are a PR tinderbox for drug companies (just ask Pfizer how its trials for Trovan in Nigeria turned out) and the Synflorix situation illustrates that perfectly. It has all the makings of a controversy for GSK — even if the company is completely innocent.

First, there’s the fact that GSK is testing Synflorix in a poorer country than the U.S. That naturally lends itself to allegations that the company is farming out the dangers to foreigners. True, but then in order to test a pneumonia vaccine you need to actually be in a country that has a significant number of pneumococcal infections, and they’re harder to find in the U.S.

Second, there’s the conflicted nature of local politics in foreign countries that don’t have a long history of democracy. In this case, one of the lead GSK investigators is Enrique Smith, who happens to be the brother of Juan Carlos Smith, the Argentine provincial health minister. So even if GSK has done nothing wrong, it just looks… weird.

Third, there’s the inconvenient timeline. Argentine authorities asked GSK to halt recruitment of new subjects in the trial, and GSK complied — but added that it had already gotten enough of them anyway.

Fourth, GSK’s independent safety monitor briefly halted the tests while it reviewed the situation, then allowed the tests to resume even though the Argentine province of Santiago del Estero is continuing its look at the trial. However, that province’s health minister is Juan Carlos Smith, so even if it comes back with a legitimate finding that there’s nothing wrong, people will ask questions about the role of the Smiths in the case, and why GSK continued its program even though the local government was still investigating.

In short, it’s a lose-lose situation for GSK, from a PR point of view, even if Synflorix turns out to be a wonder drug.