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Pharmas Market with Mike Huckman

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  Monday, 5 Apr 2010 | 3:30 PM ET

What's In A Number At Boston Scientific

Posted By: Mike Huckman

Ray Elliott put in less than six months on the job last year at Boston Scientific as the medical device maker's new CEO. But, according to "The New York Times," in that short amount of time Elliott received enough total compensation to make him the second-highest paid head honcho behind only Oracle's Larry Ellison (albeit a distant #2.) All in, Elliott reportedly received $33.4 million.

If you're interested in going behind the numbers, you can read all about it in BSX's SEC filing under the "Executive Compensation" section . Elliott's base annual salary is $1.2 million. The company also gave the former Zimmer Holdings CEO a sign-on bonus of a million-and-a-half bucks. Elliott also received nearly a million dollars to pay for his move to Boston. And, oh, they gave him a $78,000 "cost of living allowance."

But things may not be quite as they seem.

The overwhelming majority of Elliott's 2009 total compensation was in stock options that are under water and probably will be for a pretty long time. The deal gets rather complex and detailed, but the company granted him 3.4 million options that vest in installments over four years and with an exercise price of $9.51 a share, which was the closing price on the day he got them. The stock right now is worth a little more than seven bucks a share. There's also a bunch of performance-based rewards built in, including one-and-a-quarter million so-called "deferred stock units" that are only good if the stock stays above 20 bucks for at least 10 straight trading days. (The minimum stock value tied to Elliott's "DSUs" goes up to as much as $30 over time.) Again, BSX is trading for seven-dollars-and-change today.

Regardless of whether the $33.4 million figure is inaccurate or misleading, the timing and publicity over the rather eye-popping amount couldn't be worse for BSX. The company is reeling from a recall of and brouhaha over a redesigned implantable cardio defibrillator. Investors have punished the stock and rewarded the shares of Boston Scientific's top competitors Medtronic and St. Jude Medical . Given the current situation, Elliott certainly has his work cut out for him. Whether he's adequately, over- or under-compensated for that work is for shareholders to decide.

Questions? Comments? Pharma@cnbc.com and follow me on Twitter at mhuckman

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  Thursday, 1 Apr 2010 | 2:45 PM ET

The FDA's Big, Fat Advisory Committee Meeting

Posted By: Mike Huckman
Comstock Images | Getty Images

FDA advisory committee votes sometimes end in confusion.

First, because the actual vote often gets all convoluted and recounted as some panelists hem and haw about voting thumbs up or thumbs down and try to equivocate their decision. And second, because no matter how many times I've explained it to people here, the votes get misread and miscommunicated as actual approval or rejection of a drug versus a recommendation that the FDA clear or spike a drug.

For the uninitiated, FDA advisory committees are outside panels of experts the agency convenes to review the safety and/or effectiveness of a product. They only give advice to the FDA, they don't make decisions for the agency, but nonetheless they represent a key regulatory hurdle. For investors they can be a major source of uncertainty ahead of a meeting and a fast, stock-moving trigger when a vote is tallied. The term itself may sound boring and bureaucratic, but in the biopharma/investment world advisory committees are a big deal.

And there could be a barnburner of a panel meeting this July.

Vivus recently announced that an advisory committee will review its diet pill Qnexa on July 15th. Some analysts believe Arena Pharmaceuticals , which filed for FDA approval of its weightloss drug around the same time, will get put through the wringer at the same meeting. So far, ARNA hasn't announced that it has a date. Then late yesterday, Orexigen pulled up the rear . It's the last of the three companies in this race to bring a new prescription diet drug to market to file for FDA approval. And even though OREX submitted its paperwork months after the other two, it's certainly possible that it, too, could be thrown onto the plate of the July 15th panel.

If that happens, my guess is the event becomes a two-day affair. For example, ARNA says its application is three million pages! Of course, the panel doesn't have to pore through all that, but you get the picture. It's dense, detailed data. And given the history of prescription diet pills, the FDA and its outside experts are going to go through the safety and side-effect issues of each company's drug with an ultra-fine-toothed comb.

But here's where the meeting could have high drama.

If this committee were to take up all three drugs at one sitting, can you imagine the anticipation as they vote on the fate of each pill? If the first one passes muster, would that mean the other two would sail through? Or might the panel favor one drug over the others? Or favor two drugs over another? The handicapping, spin and analysis would be intense, to say the least. For reporters it'd be a field day. For the companies it'd be a nail-biting experience. And for investors it'd be a crapshoot.

Questions? Comments? Pharma@cnbc.com and follow me on Twitter at mhuckman

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  Thursday, 1 Apr 2010 | 11:08 AM ET

Pfizer Chief Says Growth Is Imminent

Posted By: Duff Wilson|The New York Times

The world’s largest drug company, Pfizer, has handled mergers badly, invented too few drugs and left its reputation in disrepair after two criminal cases.

And that is the assessment of its own chief executive.

But Jeffrey B. Kindler, Pfizer’s chief since 2006, says the pharmaceutical giant is poised to enter a new period of growth from its $68 billion purchase of Wyeth six months ago — the largest acquisition in the nation last year — and, paradoxically, by dividing itself into nine semi-autonomous business units meant to diversify the company’s products.

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  Wednesday, 31 Mar 2010 | 3:30 PM ET

Darn Those Genzyme Gremlins

Posted By: Mike Huckman

One thing you learn quickly in the "live" TV-news business is that you're always at the mercy of the technology. Sometimes, Murphy's Law rules and there's nothing you can do about it. Whatever can go wrong, will go wrong. A camera battery dies right as the anchor in the studio is tossing to you out in the field, a competitor's microwave signal (inadvertantly?) interferes with yours and causes the picture to fill with static, the sound being fed back into your earpiece gets left on reverb because someone in the production booth didn't push a button. All those things and many more have happened to me and my colleagues repeatedly. It's never fun, but you've gotta get used to it.

Well, today beleaguered biotech Genzyme is getting schooled on all that.

This afternoon GENZ is holding an analyst/investor meeting and conducting a show-and-tell tour at its Boston manufacturing plant. It's the one that got contaminated last year and which the FDA will almost certainly assume temporary jurisdiction over in the near future. The stock tanked on that regulatory revelation and a subsequent analyst downgrade last week.

But, oh! The irony. At a meeting designed to convince the Street the company is well on its way to correcting a major manufacturing problem, a simple technical glitch keeps executives from conveying that message to a broader, off-site audience.

The webcast of the event started without a hitch. As the embattled Chairman and CEO Henri Termeer kicked it off with prepared opening remarks, I was sitting at my desk listening to it, ready to tweet away with quoteable quotes But shortly into his presentation, the audio suddenly cut out and for nearly half an hour all of the presentations were muffled and unintelligible.

Eventually, it got straightened out.

Investors only wish the manufacturing problems could have been solved as quickly, easily and inexpensively.

After the audio came back, Genzyme officials said they expect to start negotiations with the FDA soon, but that it's too early to tell how much, including a to-be-determined amount of profit disgorgement, this whole mess is ultimately going to cost in time and money. But it could cost Termeer, the longest-serving big biotech CEO, his job. Billionaire activist investor Carl Icahn is trying to get himself and three of his people on the GENZ board. And if he wins, many say heads are gonna roll.

Questions? Comments? Pharma@cnbc.com and follow me on Twitter at mhuckman

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  Monday, 29 Mar 2010 | 2:52 PM ET

Abbott's White Is The (Only) One

Posted By: Mike Huckman

You need to buy the paper edition for $5 or subscribe to the website to see it for yourself, but Barron's has put only one biopharma honcho on its annual list of the world's top-30 CEOs.

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  Friday, 26 Mar 2010 | 2:51 PM ET

Fat Thursday For Vivus

Posted By: Mike Huckman

Vivusannounced this morning that an FDA advisory committee is tentatively scheduled to take a look at its diet drug Qnexa on Thursday, July 15th. If the outside panel of experts gives the weightloss pill thumbs up then the company expects the agency to make a decision on whether to approve it on or before October 28th.

But Leerink Swann analyst Steve Yoo thinks that Vivus and Arena could have a double-date on the 15th of July. Although Arena hasn't made an announcement yet, Yoo is telling clients in a research note that because the two companies filed for FDA approval of their diet pills within days of each other, that they'll probably both get their drugs reviewed by an advisory committee at the same time. Orexigen , the remaining little biopharma company with an obesity fighter in late-stage development, says it plans to file for approval of its drug Contrave by the end of next month.

The FDA usually, but not always, follows the advice of its outside panels. And with diet drugs, in particular, the agency is, no doubt, going to apply extra scrutiny. There's the fen-phen diet drug craze of the 90s that led to some people having heart trouble. The pill ended up being pulled off the market and Wyeth had to pay billions of dollars in damages. Then, a few years ago Sanofi-Aventis had a drug called Zimulti that some analysts were saying was going to be a mega-blockbuster wonder pill. But an advisory committee killed it over concerns about psychiatric side effects.

That kind of uncertainty is why many believe that potential corporate partners for VVUS, ARNA and OREX are going to wait to see if the companies can clear this huge regulatory hurdle before handing over any cash. Again, these are small companies and so if or when their drugs get approved, they're likely going to need the help of a much bigger company's sales force to market them. And, of course, there's always the possibility that one, two or all three of them just get bought.

July is shaping up to be a big month for regulatory action in biopharma. In addition to the Qnexa meeting, the FDA had already announced it's going to have a special super-sized advisory committee in July re-review the safety of Glaxo's diabetes drug Avandia. Better book a room now in Gaithersburg or Silver Spring, Maryland--the two places the agency holds these things. Why the FDA doesn't do them in Washington, DC is one of the many mysteries surrounding the agency.

Questions? Comments? Pharma@cnbc.com and follow me on Twitter at mhuckman

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  Thursday, 25 Mar 2010 | 3:19 PM ET

California Marijuana Vote Has Outlaw Growers Worried

Posted By: AP

The smell of pot hung heavy in the air as men with dreadlocks and gray beards contemplated a nightmarish possibility in this legendary region of outlaw marijuana growers: legal weed.

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  Thursday, 25 Mar 2010 | 2:57 PM ET

The Battle of BioMarin

Posted By: Mike Huckman

One of the many things I think is great about Twitter is the direct contact it gives me with a handful of biopharma reporters who are using it. Don't get me wrong. We're not giving away scoops. No way! But I do get to see what a few of them are paying attention to. Sometimes we get into interesting exchanges and occasionally I spot a story idea.

In fact, I got the tip for this blog post from a tweet TheStreet.com's Adam Feuerstein sent out yesterday. He spotted this rather extraordinary SEC filing from BioMarin Pharmaceuticals . It's a resignation letter from one of its board members, Joseph Klein. Now, usually that kind of stuff is pretty boring and boilerplate. For example, "I have submitted my resignation, effective immediately, for personal reasons." Or, "I hereby resign, effective immediately, so I can spend more time with my family and pursue other interests." Blah, blah, blah. But, no. This resignation letter appears to be sending shares of BMRN to a new high in very heavy trading volume. Klein airs several pieces of dirty laundry in the letter, but the biggest item is this: "Disagreement with the CEO on How and When the CEO should present to our entire Board a serious, reasonable offer by a third party to acquire the company."

The company responds that it "disputes Mr. Klein's assertion that Mr. Bienaime, (the CEO,) received a bona fide offer from a third party and failed to share this offer with the Board for consideration. Notice that the company used the words "bona fide offer." Klein used the words "serious, reasonable offer." And speaking of bona fides, Klein sits on the boards of OSIPharma, Savient and Isis. The company also intimates that Klein is trying to save face by resigning because the rest of the board had decided not to re-nominate him. Liana Moussatos, who covers BMRN for Wedbush Securities, says there's been speculation about the company being a takeout target for years, but that she was completely surprised by the tit-for-tat in the SEC filing. She says feedback from investors suggests they think "maybe there was a low-bid offer that wasn't taken seriously." Moussatos has been neutral on the stock because of its price. Wedbush makes a market in BMRN and wants to do business with the company. As Adam Feuerstein tweeted, "I love a good fight." So do I. So do I.

Questions? Comments? Pharma@cnbc.com and follow me on Twitter at mhuckman

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  Wednesday, 24 Mar 2010 | 2:42 PM ET

A Turning Point For Termeer?

Posted By: Mike Huckman

Carl Icahn, reputed to be a late-riser, woke up to good news and bad news today.

First the bad news: His stake in Genzyme is worth less. The good news? His chances of winning a proxy fight against the embattled biotech might be greater.

For those who aren't familiar with the company, Genzyme is kind of unique in that it has been built around drugs for rare diseases that few, if any, other companies bother with. And then it charges a pretty penny for them.

As Bernstein analyst Geoffrey Porges wrote in a research note to clients, "The case for activist involvement, including restructuring of the company and changes to top management, is now stronger than ever." Icahn has nominated himself and three of his people to be on the GENZ Board of Directors because he thinks the formerly high-flying biotech stumbled big time last year when its Boston manufacturing plant got contaiminated by a virus. I blogged about the plant when the company gave did a little show-and-tell tour before my interview with the comapny's chairman and CEO Henri Termeer a few months ago.

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  Monday, 22 Mar 2010 | 2:03 PM ET

The Human Tragedy Behind A Drug Deal

Posted By: Mike Huckman

Shares of Teva Pharmaceutical (there’s awkwardly no “s” at the end because its full name is Teva Pharmaceutical Industries) are once again trading at an historic high.

But they might not be there today if it weren’t for a tragedy.

One of my Twitter followers tweeted this link to an article that details the awful backstory on what happened to the founder of Ratiopharm. Teva is buying the German generic drug company for nearly five billion bucks. Adolf Merckle literally threw himself in front of a train because he lost his shirt speculating in shares of VW. So, his family put Ratiopharm on the auction block.

He owned a drug company. No doubt, he could have had access to all sorts of pharmaceuticals. But instead of taking an overdose, he committed the ugly, messy spectacle of jumping in front of a train.

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