Vytorin On Trial

The tough times for the cholesterol drugs Vytorin and Zetia may be just beginning.

Full results of a controversial artery-imaging study are due to be presented March 30 at the annual meeting of the American College of Cardiology (ACC), following an unusual 18-month delay in releasing the negative results of the study by drug makers Schering-Plough (nyse: SGP - news - people ) and Merck (nyse: MRK - news - people ). The resulting controversy drew a congressional investigation and caused prescriptions for both drugs to slump 17%.

Shares of Schering and Merck plunged as investors fretted over the threat to a $5.2 billion cholesterol franchise. Zetia is a unique drug for lowering cholesterol; Vytorin combines it in one pill with the generic drug Zocor.

The problem: The delayed study couldn't prove that Vytorin prevents artery disease that leads to heart attacks and strokes any better than Zocor does, although it costs four times as much. A trial actually measuring whether the Vytorin combo prevents heart attacks better than Zocor won't be out until 2011. In the meantime, the lack of clear data could leave the companies in a long, slow battle to hold on to their sales.

They argue the controversy is "media-driven," and Wall Street analysts have expressed hopes that a scientific discussion of data will convince doctors, quiet doubters and stabilize sales of Zetia and Vytorin. But critics will be on hand, including Harlan Krumholz of Yale University, who will be among the top cardiologists discussing the data at the ACC meeting.

Cardiologists are torn about what to think of the imaging study, called ENHANCE. Prediman K. Shah, at Cedars Sinai Medical Center, says the results are "inconclusive." But he cautions, "It's not an unimportant study. It certainly raises questions, but doesn't answer them."

If it turns out that Zetia doesn't prevent heart attacks in the 2011 study, Merck and Schering are conducting, "we have some explaining to do," Shah says.

William Boden, a top cardiologist at the University of Buffalo, still uses the Zetia in rare cases and expects the big trial due in 2011 may vindicate it. But he warns his patients, "We don't really know if putting you on this additional drug will do anything more than make your numbers look better." He says the companies have "gotten a long-overdue pass on marketing a drug where there was no outcomes data."

Zetia, approved in 2002, works completely differently from drugs like Lipitor, Zocor and Crestor. The other medicines, called statins, work in the liver to lower blood levels of LDL, the "bad cholesterol." They also seem to have other benefits. Zetia works by preventing the absorption of cholesterol in food. Adding it to the other pills gives them an added LDL-lowering wallop with few side effects.

But some prominent doctors have questioned whether they can be sure that Zetia confers the same benefit as statins. Now, the ENHANCE study has given doubters ammunition.

Mounting Evidence

The first real convincing trial came in 1984, a test of the cholesterol-lowering drug Questran. It took seven years to prove a benefit from lowering LDL 12%. Sales of cholesterol drugs remained pretty low. Lopid, a cholesterol drug from Warner-Lambert, generated only $200 million in 1988. Merck introduced the first statin, Mevacor, in mid-1987; it generated $260 million in its first full year on the market.

"People regarded cholesterol as a major risk factor," says Boden. "But we didn't have very good treatments to lower it."

It was giant studies of the statins that finally convinced many doctors that lowering cholesterol saved lives. Mevacor and other statins were developed from genetic insights gleaned from patients with familial hypercholesterolemia. In 1994 and 1995, studies of Merck's Zocor, a Mevacor replacement, and Bristol-Myers Squibb's (nyse: BMY - news - people ) new Pravachol showed a striking 30% reduction in the risk of death for patients with established heart disease.

In 1998, cholesterol drugs were reportedly a $5 billion market. By 2000, that had tripled, according to drug data company IMS Health (nyse: RX - news - people ), and by 2002 they were the best-selling drug class in the world. The top dog was Pfizer's (nyse: PFE - news - people ) Lipitor. It was approved in 1996, getting a fast review because of its unprecedented ability to lower cholesterol in patients with the FH disorder that causes cholesterol levels of 300 or more. Within two years, Pfizer already had presented data showing that Lipitor prevented heart attacks and strokes.

But big studies to prove a statin reduces heart attacks and deaths are expensive and can take half a decade. So drug companies also pursued the approach of using ultrasound to measure the thickness of the wall of the carotid artery in the neck. Mevacor, Pravachol and Novartis' (nyse: NVS - news - people ) Lescol all have such ultrasound data in their product labels. A 2005 analysis in Current Controlled Trials in Cardiovascular Medicine concluded these imaging studies predicted how well the drugs would prevent heart attacks, strokes and deaths.

"No Valid Evidence"

When Zetia was approved in October 2002, cardiologists were starting to think that the lower they could get cholesterol with statins, the better. The refrain in studies, in company press releases and at medical meetings was that lower cholesterol is better. Some cardiologists argued that LDL levels should be brought down to levels seen most often in rural China. But many doctors were statin-shy because patients didn't like the muscle achiness and liver testsrequired with Lipitor, Zocor, and Pravachol.

Zetia seemed to represent a solution. Added to a low dose of a statin, Zetia lowers LDL as much as the top dose, with fewer side effects. Vytorin, approved in 2004, provided such a combo in a single pill, allowing patients to get it for one insurance co-payment. Sales ramped up fast. Zetia had annual sales of $900 million in 2004; Vytorin hit the same mark in 2005.

But that year, Rodney Hayward, a clinical researcher at the University of Michigan's School of Public Health, wrote that cardiologists may have gone too far in assuming lower is actually better. Patients at high risk of heart attacks do better on high doses of statins, he wrote in a 2005 issue of Annals of Internal Medicine, but it hasn't been proved that how low their LDL goes predicts their risk of heart attacks or strokes.

He also warned, "There is no valid clinical evidence to suggest that using treatments other than statins to pursue proposed LDL cholesterol goals is safe or effective."

Pfizer conducted 12 big studies to prove Lipitor's benefit, and AstraZeneca (nyse: AZN - news - people ) started three imaging trials and three trials measuring hard outcomes like heart attack and stroke. Merck and Schering started only one imaging study and three outcomes trials. A second imaging trial, with Steven Nissen of the Cleveland Clinic, was planned but never begun.

The most important study, due in 2011, is a 12,500-person trial to show whether adding Zetia to Zocor predicts heart attacks, strokes and heart procedures. The study was announced two years after Zetia was approved and started one year after that.

The Problem With ENHANCE

ENHANCE, involving 720 patients, began immediately in June 2002 and was modeled on an imaging study that had worked for Pfizer, called ASAP, conducted by John Kastelein of the University of the Netherlands. The patients in ASAP had FH, the genetic cholesterol disease. LDL, the bad cholesterol, was cut 50% on Lipitor, compared with 41% on Zocor. But while artery thickness increased by 0.036 millimeters on Zocor, it actually decreased by 0.031 millimeters on Lipitor.

ENHANCE was supposed to repeat that success, this time comparing Zocor and Vytorin. But it didn't. After delaying the release of the results for more than 18 months, the companies finally revealed data showing no statistically significant benefit in using the more expensive Vytorin. One explanation is that the patients in ENHANCE had been better treated and had less atherosclerosis, making it harder to prevent plaque buildup. Another is that lowering cholesterol with Zetia in addition to Zocor didn't provide a benefit in terms of slowing atherosclerosis.

"The full data will hopefully put in full perspective that there weren't any harmful effects at all," says A. Michael Davidson, executive medical director at Radiant Research. "This was a population that was so well treated that there wasn't really any opportunity to see any difference."

He says that FH patients are no longer a good population to use in these studies. He points out that LDL lowering is a main driver of the benefit of these drugs.

The danger to Merck and Schering this week isn't simply that the full data from the study will cause doctors to decide Zetia doesn't work. More doctors may decide they don't have enough data and use other drugs instead while they wait for the big trial the companies are conducting. Zetia and Vytorin will remain blockbusters, almost certainly. But if a significant minority of doctors find the ENHANCE results unconvincing, the drug makers will face strong headwinds, and a fast-growing brand could not only stagnate but also shrink.

This is what was happening to Vioxx, because of safety concerns, before Merck yanked it. And it's what happened with the schizophrenia drug Zyprexa, from Eli Lilly (nyse: LLY - news - people ), as prescriptions in the U.S. dropped because of concerns about weight gain and high blood sugar. And the companies spent a lot of their time defending these franchises when they needed to look for new opportunities for growth.

One person who won't be convinced by ENHANCE: Eric Topol, the noted chief of translational medicine at Scripps Health in La Jolla, Calif. He still wants to see clear data on how Zetia affects heart attacks, strokes and deaths, and doesn't understand why it took so long to embark on a big study to prove it.

Doctors have been "hanging in suspense for years, unnecessarily," Topol says. "It's still conceivable there would be improvement in outcomes. Until we have that data, the jury is out."

Another Company Recalls Heparin

WASHINGTON -

A manufacturer of the blood thinner heparin initiated a nationwide recall Friday because some products may contain a potentially dangerous contaminant. Contaminated heparin from a different manufacturer has been associated with 19 deaths and hundreds of allergic reactions.

In the recall announced Friday, B. Braun Medical Inc. said it was recalling 23 lots of heparin as a precautionary measure. No adverse events have been reported in connection with their product, company officials said in a press release.

The company issued the recall after one of its suppliers, Wisconsin-based Scientific Protein Laboratories, disclosed that an ingredient it provided contained oversulfated chondroitin sulfate, a chemical that does not occur naturally. Federal officials are investigating how the contaminant got into the drug.

Heparin is derived from a mucus obtained from pig intestines and other animal tissues, often processed by small, unregistered workshops in China. Scientific Protein Laboratories owns a Chinese factory - Changzhou SPL - and buys additional raw heparin from other Chinese suppliers.

Scientific Protein Laboratories also supplies Baxter International Inc. (nyse: BAX - news - people ) Baxter recalled nearly all its U.S.-sold heparin injections after some patients experienced extreme allergic reactions. The lots of heparin linked to hundreds of allergic reactions were marketed by Baxter International and produced in China.

There have been similar recalls of Chinese-sourced heparin in Germany and Japan.

China's drug safety agency recently said that raw heparin suppliers have been required to improve their management and tests on their products.

Typical symptoms of the allergic reaction to heparin include low blood pressure, shortness of breath, nausea, vomiting, diarrhea and abdominal pain.

Customers in the U.S. and Canada that have received heparin from one of the recalled product lots should discontinue use immediately

FDA officials said that recall would still allow for an adequate supply of heparin. The heparin that Baxter recalled primarily is used in large-dose injections just prior to surgery. While the heparin from B. Braun Medical Inc., is a pre-mix solution given intravenously, officials said.

Wall Street Test Drives New Fed Loans

Wall Street outfits have begun testing out the Federal Reserve's recent offer to directly lend emergency loans to the rattled firms. The first few days of the program over the past week had the companies feeling out the new line of cash, just sort of seeing how it works.

The Federal Reserve reported Thursday that it directly leant several unnamed investment companies about $31.3 billion in the three first days since it expanded its discount window borrowings beyond commercial banks on Monday. Goldman Sachs (nyse: GS - news - people ), Lehman Brothers (nyse: LEH - news - people ) and Morgan Stanley (nyse: MS - news - people ) previously confimred they were taking advantage of the Fed's new lending facility.

March has been busy for the Fed as it scrambles to stabilize credit-crunched capital markets rattled by the subprime meltdown and stave off a potential recession.

On another front, the goverment tried to bring liquidity to the mortgage market by allowing government-backed jumbo loan lenders Freddie Mac (nyse: FRE - news - people ) and Fannie Mae (nyse: FNM - news - people ) to lower their required capital cushions. This break, announced on Wednesday, allowed the two lenders to immediately lend up to an additional $200 billion by freeing up a relatively small $2.7 billion. The loans are intended to help individuals on the verge of default get into home mortages they can actually afford. (See "Betting on Fannie and Freddie")

On Sunday night, Bernanke's Fed announced a new lending facility intended to keep other big brokerage houses from suffering the same fate as nearly broke Bear Stearns (nyse: BSC - news - people ). (See "Bear Throws In The Towel" ) The new program allows primary dealers, a group of about 20 big banks and brokers, to borrow funds for 24 hours "at the borrower's initiative" from the Fed at the discount rate, which is currently 2.5%, by posting investment-grade collateral. As the commercial bank primary dealers already had access to the discount window, the Fed's move was mainly a way to extend this direct lending to the other firms.

The Fed also closed the gap between the discount rate and the broader federal funds rate by a quarter point on Sunday. After Tuesday's rate cuts, federal funds, a target rate for loans that commercial banks charge each other, was 2.25%.

While the rate cuts were meant to encourage lending, they reflect a conventional strategy. But the opening of discount-rate loans to prime dealers that are not banks is a new front in the Fed's battle against the global credit crunch.

The central bank has been taking other unusual steps to goose the credit markets. On March 11, the Federal Reserve announced a new Term Securities Lending Facility to lend up to $200 billion of Treasury securities to primary dealers, with a term of 28 days. The Fed will accept federal agency debt, federal agency residential mortgage-backed securities and triple-A-rated private-sector residential mortgage-backed securities as collateral under the program conducted through auctions every other week. (See "Fed To The Rescue")

This bond-for-bond is a lending alternative to the term-auction facility , a cash-for-bond program for banks that injects money directly into the market, potentially impacting federal funds rate and the value of the dollar. It is also an alternative to buying mortgage investments outright, which would go against the Federal Reserve's aim to avoid directly influencing security prices and put the central bank in the business of home loans.

Just a few days before on March 7, the Fed said it would increase the size of its two term auctions of 28-day loans to banks this month to $100 billion from the $60 billion previously announced. The Fed also said it would initiate a series of term repurchase transactions that are expected to total $100 billion.(See "Fed: The Bank That Keeps On Giving")

One reason for all of these permutations is that commercial banks historically have been reluctant to borrow from the Fed's discount window. The problem is that by running to the central bank, borrowers would be admitting that they are unable to obtain funds in the open market. Meanwhile, by extending emergency lending facilities to brokerage houses, the Fed seems to be hoping to prevent another firm from following Bear Stearns into oblivion.

Pfizer Foils Generic Ambitions For Lipitor

Looks like Lipitor poppers will have to a pay premium price for Pfizer's brand-name drug until the patent expires.

Late Thursday, Canada's Federal Court of Appeal protected a key patent on Pfizer, Inc. (nyse: PFE - news - people )'s cholesterol-reducing drug, Lipitor.

The ruling, which reversed a lower court's decision, prevents Ranbaxy Laboratories Ltd. (other-otc: RBXZF - news - people ) from making a generic version of the drug until after Pfizer's patent expires in July 2010, at which point it would be eligible to receive Canadian regulatory approval.

"This decision sends a strong signal about the importance of protecting intellectual property in Canada, which provides the incentive for research-driven pharmaceutical companies to make the significant high-risk investments necessary to develop new life-saving medicines," said Pfizer Senior Vice President Peter Richardson, calling it an important decision for both the company and patients.

Ranbaxy, an international pharmaceutical company based in India, may ask the Supreme Court of Canada to review the decision.

The New York Stock Exchange was closed Friday for a holiday. Pfizer shares closed down by 2 cents, or 0.1%, at $20.59 and gained 5 cents, or 0.2%, to $20.64 in after-hours trading Thursday.

Lipitor is one of the New York City-based pharmaceutical drug company's best-selling drugs with 2007 sales of $12.7 billion. Three percent of the year's sales, or $360 million, stemmed from the favorable foreign exchange rate. Sales fell 2% from the previous year. Patents protecting some of Pfizer's blockbuster drugs begin expiring in 2010, jeopardizing the one-third of its revenue generated from patents.

On Mar. 7, the U.S. Court of Appeals of the Federal District upheld all but one of Pfizer's patents on arthritis pain drug, Celebrex. The ruling prevented Teva Pharmaceuticals from making a generic version until the patent expires in 2014. (See: Pfizer Protects Celebrex Patent from Teva)

All The Wrong Numbers

Thursday, Amgen shares surged 5% as advisers told the Food and Drug Administration to warn patients not to use the company's top-selling anemia drug for head and neck cancer, breast cancer or in any case where patients might be cured of their cancer by chemotherapy.

Investors had expected worse. Some were scared that Amgen's (nasdaq: AMGN - news - people ) Aranesp, used to relieve anemia caused by chemotherapy, would get yanked from the market entirely. Or that the advisers would say to forcibly restrict how the drug was prescribed, shrinking its market even further. Amgen shares are still down 25% from their 52-week high.

Amgen just got another FDA panel vote, a unanimous recommendation of a treatment for platelet disorders. But sales of the drug are expected to peak at $500 million, according to investment bank Friedman, Billings Ramsey, which project the medicine will make up only 3% of Amgen's 2012 sales. (The panel also affected J&J's (nyse: JNJ - news - people ) Procrit, but J&J's stock is less dependent on that drug.)

This is the predicament facing the entire drug business. The U.S. market for medicines grew 3.8%, the slowest rate since 1961, according to a report released this week by drug data firm IMS Health (nyse: RX - news - people ). Of the top 10 drug companies, six saw U.S. sales remain basically flat or decrease. Worse, new innovative drugs generated a measly $440 million, as fewer new medicines were approved than in three decades and, IMS says, doctors were slower to adopt them than ever before.

Companies expected their drugs would lose patent protection and go generic, as is happening now. And they knew that the Medicare prescription drug benefit, which gave earnings a nice tailwind at first, would stop being such a boon. What they didn't bet on is a string of controversies about the safety and efficacy of their medicines. They have ranged from the safety controversy that stung GlaxoSmithKline's (nyse: GSK - news - people ) Avandia to a study that raised doubts about how effective Merck (nyse: MRK - news - people ) and Schering-Plough's (nyse: SGP - news - people ) Zetia is at preventing the artery disease that can lead to heart attacks.

What's now becoming clear is that many of these problems have a common root: a fixation that getting results in blood tests equates to treating the disease. A string of clinical trials and other studies has raised questions about whether we really know enough about biology to be sure a drug that alters a blood test for hemoglobin levels (raised by Aranesp), blood sugar (lowered by Avandia) or LDL cholesterol (lowered by Zetia) is actually going to help patients get healthier.

For an individual patient, these tests scores may matter. But in the case of Amgen and J&J's anemia drugs, trust that raising hemoglobin was always good helped lead to overuse of the drugs, says Otis W. Brawley, chief medical officer of the American Cancer Society. "The real lesson here is the danger of surrogate endpoints," Brawley says.

"I think we're too often fixated on numbers, and not enough on what outcomes they relate to," says Clifford Rosen, a top expert on bone disease at the Jackson Laboratory in Barr Harbor, Maine, who headed an FDA advisory panel on Avandia. That drug was linked in several analyses of published data to an increase in the risk of heart attacks, but big studies didn't provide a clear answer as to whether the risk was real.

Then last month an NIH trial, called ACCORD, had to be stopped because patients were being harmed by having their blood sugar lowered too much. Diabetes treatment decisions are made based on a blood test called hemoglobin A1C (HbA1C), which measures show sugar is binding to blood cells. Healthy people have an HbA1C of 6%; diabetics usually try to get it at least below 7%.

Instead of pitting one drug against another, ACCORD used just about every different type of diabetes med on the market, in combination. Patients were randomly assigned to lower their HbA1C either below 7 or all the way below 6.

The result: 257 people in the intensive treatment group died, compared with 203 people in the regular treatment group. That translates into an extra three deaths per 1,000 patients every year. Avandia wasn't the culprit, but some effect of all the combinations of drugs these patients were taking, including insulin, may have been.

"All these studies tell us is it is much more complicated than just trying to fix that number because that is a surrogate marker, or a predictor for the disease, not the disease itself," says Robert Centor, a professor of internal medicine at the University of Alabama, Birmingham.

The ENHANCE study, a test of Zetia from Merck and Schering-Plough, was another surprise. Most approved cholesterol-lowering drugs belong to a class of medicines called statins, which work in the liver. Zetia is different; it works in the stomach. Statins have been shown to keep neck arteries from thickening due to atherosclerosis. It was expected that combining Zetia and Zocor, an off-patent statin, would do this better than Zocor alone.

There was no benefit in terms of reducing artery thickness. That could be due to a problem with the study, or it could be Zetia didn't work as expected. Full results are expected at the end of the month. The Zetia-Zocor combo is sold under the name Vytorin, which is, itself, a blockbuster.

After all these disappointments, some experts say they just don't trust a blood test to always tell them what's good for a patient. "It's one thing after another," says Eric Topol, chief academic officer of Scripps Health. "Surrogate endpoints are not working." He worries that some patients who are at low risk for a heart attack are getting statin drugs like Zocor or Pfizer's (nyse: PFE - news - people ) Lipitor just because their cholesterol is high even though they lack other risk factors.

Those growing doubts are going to make medicines even harder to get past regulators, and then they are going to make them more difficult to market to doctors. For a drug industry in a drought, that's just even more bad news.

"Drugs aren't simple. Drugs are complicated," says Steven Nissen, of the Cleveland Clinic, speaking about the ACCORD diabetes trial. "They do many things, and we don't understand all the things they do."

All Connected

Merck is using a new technique that it believes could turn genetic information into new drugs, a key bottleneck for the pharmaceutical industry as it struggles to invent new medicines.

The techniques, described in the current version of the journal Nature, are an example of a technique biologists have been touting for years: treating all 25,000 genes as a complicated network. Each gene is seen not as a single switch, but as part of a vast and complex circuit board. Scientists call this "systems biology."

"There's a heck of a lot that's going on between the change in DNA and the onset of the disease," says Eric Schadt, the Merck (nyse: MRK - news - people ) researcher who masterminded the work. "This is telling us the disease is a lot more complex than we imagined." He says his new technique, which could identify changes in this genetic circuit board that would stop obesity without causing harm, is "a path forward for how to leverage the amazing rate of discovery in genomics."

Schadt's technique combines two research approaches. The first, known as a genome-wide association study, samples DNA at thousands of places to find "spelling" differences that are more common among those who have a particular disease than among those who don't. Genome-wide association studies have linked some two-dozen spelling mistakes to diseases including heart disease, diabetes and macular degeneration.

The second approach, called gene expression, looks at which genes are being used in a particular cell. This is akin to being able to see which bits of software a computer is using at a particular time. Schadt has developed computational methods to examine how genetic spelling mistakes are linked to changes in gene expression, and then at how both are connected to obesity.

He tried the technique out first in mice, then, with the help of Iceland's DeCode Genetics, in people. The result is a circuit diagram of more than 1,000 genes that interact to determine whether or not a mouse or person becomes obese.

Francis Collins, director of the National Human Genome Research Institute, said the paper combined two different ways of looking at genes in "a marvelously integrated way," leading to "stunning and unexpected" observations about the biology of obesity.

"We've heard a lot of talk for several years about the promise of systems biology--but now that promise is really coming through," says Collins.

The Merck work could identify "pressure points" in the gene network that could be tuned using drugs, says
Dietrich Stephan, a researcher at the Translational Genomics Research Institute (TGen) in Phoenix. "These are really very important papers," says Stephan. "What he's done is really flesh out the biology of that DNA variation."

The new technique isn't a final solution to the problem of how to figure out which genetic defects actually cause disease, says Leroy Hood head of the Institute for Systems Biology. Leonid Kruglyan of Princeton University led a 2003 team that used the same basic ideas to understand genes in yeast. "It's nice to see this beginning to bear fruit in human studies," he says.

George Church of Harvard University says his project to sequence the DNA of thousands of people--called the Personal Genome Project--is collecting data from tissue samples to do similar kinds of work. Researchers at the Institute for Systems Biology have been taking a similar approach to understanding ailments like mad cow disease that are caused by malformed proteins called prions.

If Schadt's approach becomes popular among drug firms, it could be a boon to Illumina (nasdaq: ILMN - news - people ) and Affymetrix (nasdaq: AFFX - news - people ), the biotechnology companies which make the DNA chips used both for finding genetic misspellings and for examining which genes are accessed in different tissues.

The research comes out of Merck's May 2001 purchase of Rosetta InPharmatics, a tiny Seattle biotech. While Rosetta Chief Executive Stephen Friend became the boss of Merck's anti-cancer effort, researchers like Schadt continued to push forward with Rosetta's original mission: figuring out how to use genetic data to invent drugs.

Schadt, who switched from pure math to genetics during the genomics boom of the 1990s, and who previously worked at Roche (other-otc: RHHBY.PK - news - people ), published a paper using similar techniques to understand the genes of corn plants in 2003. Another paper, published in 2005, was hailed by Science as one of several examples indicating the systems biology approach was starting to yield results.

Schadt says that he believes the techniques he applied against obesity could also be used to understand other diseases, but cautions that it could be years before they lead to the invention of new drugs.

But the research could help drug giants like Merck or Pfizer (nyse: PFE - news - people )--which are facing an industry-wide dry spell when it comes to inventing new medicines--- to test medicines faster by identifying chemicals whose blood levels should change if a drug for a disease like obesity is actually going to work. That could make clinical trials go more quickly.

"This is going to take time," Schadt cautions. "Drug discovery is not a one-year process."

An Anesthesia Revolution?

Some anesthesiologists are already touting an experimental drug, sugammadex, as a groundbreaking game-changer in how they awaken patients after surgery. Will a panel of experts be as enthusiastic when they meet Tuesday to help the Food and Drug Administration decide whether to approve the drug?

Sugammadex was one of the key factors in Schering-Plough (nyse: SGP - news - people )'s $15 billion purchase of Dutch pharmaceutical firm Organon. Its prospects are one of the main near-term reasons to invest in Schering-Plough, although these "pros" must be balanced against the effects of the controversy over the cholesterol drugs Vytorin and Zetia, which are sold in a joint venture with Merck (nyse: MRK - news - people ). (See: "Waiting For Enhance.")

The journal Anesthesia & Analgesia devoted its entire April 2007 issue to sugammadex, and researchers were almost breathless about its promise. "Sugammadex is clearly one of the most exciting drugs to appear in the field of anesthesia in many years," wrote Ronald D. Miller, an anesthesiologist at the University of California, San Francisco, in one editorial. Mohamed Naguib of M.D. Anderson Cancer Center called sugammadex a "revolutionary" medicine that "may change the face of neuromuscular pharmacology."

For sensitive operations like spine, heart or brain surgery, doctors don't just put patients to sleep, they temporarily paralyze them with powerful muscle relaxants. The same relaxants are often used when inserting a breathing tube. Reversing that paralysis so patients can breathe again requires using other drugs that hog the same cellular receptors the muscle relaxants hit. (For more, see: "The Reviver.") But the drugs used to wake patients up have their own cardiovascular and other side effects.

More importantly, they don't always work that well. If a patient needed a big dose of muscle relaxant, it can mean more time on a ventilator as those drugs wear off. A faster-acting, more potent and safer drug could bring a windfall for Schering, and analysts have been getting excited about sugammadex, which will be known by the trade name Bridion if it is approved.

Instead of targeting the receptors the muscle relaxants hit, sugammadex is a big carbohydrate molecule that binds to the muscle relaxant itself. To accomplish this unique approach, Organon chemist Anton Bom came up with a molecule that resembles a hungry octopus, with eight chemical "arms" that can grab the muscle relaxant and trap it in a maw-like hole.

Because it is made of sugars, sugammadex should not cause side effects by tripping receptors unexpectedly. But in briefing documents released March 7, FDA staffers raised several concerns.

The most serious concern involves relatively rare allergic reactions. Schering-Plough is expected to present new safety data to address this on Tuesday. Investors should pay close attention, because this is the main risk that could tilt the balance of how sugammadex is used.

Other concerns noted by FDA staff are the drug's effect on the skeletal system (probably not a major concern for a medicine designed for one-time use) and on children's teeth (the staffers say there isn't enough data to know if problems seen in rats' teeth during the trial will extend to kids.) The FDA staff also raised questions about how the study measured clinical effectiveness, although anesthesiologists do seem generally impressed with the drug.

There's been speculation that sugammadex, though expensive, will actually save hospitals money. Mark Schlesinger, chairman of anesthesiology at Hackensack Medical Center, said in an interview earlier this year that he doubts the drug will save hospitals that much, but he expects to use it anyway because it appears to be safer and more effective than alternatives.

Another potential issue: Most of the studies with sugammadex have been done with Zemeuron, a muscle relaxant also made by Organon. It's possible that doctors will use it with other drugs of the same type, so the FDA may want more studies on the combination of sugammadex with other muscle relaxants.

One big issue for Schering is that advances in anesthesiology are few and far between; it's far easier for Wall Street to gauge the potential of a new cardiovascular drug than of a new anesthetic. So far, sugammadex has looked like a winner. The reaction of the FDA's expert panel will go a long way toward determining whether this bet actually pays off for Schering-Plough.

Eli Lilly Halts AIR Insulin Development

Eli Lilly has suspended development of its AIR Insulin program because of regulatory uncertainties.

As a result, the Indianapolis-based drug company expects a first-quarter charge of $90 million to $120 million, or 5 cents to 7 cents per share. The company now expects 2008 earnings per share of $3.73 to $3.90.

Eli Lilly and Co. (nyse: LLY - news - people ) was developing the diabetes drug with Alkermes Inc. (nasdaq: ALKS - news - people ) The insulin product was in Phase 3 clinical development.

The company says its decision had nothing to do with safety issues. Instead, it decided AIR Insulin could not compete with existing products.

"This decision, though difficult, is the right one to make," Chief Operating Officer John Lechleiter said.

Painful Blow to Teva From Pfizer

Pfizer served up a dose of pain for generic drug-maker Teva Pharmaceutical Industries when it defeated the company's appeals to put out a generic version of Pfizer's arthritis pain-drug Celebrex on Friday.

The U.S. Court of Appeals of the Federal District said that two of the three patents were valid, but threw out the third, saying that it was double-patented. Teva will now have to wait until 2014 to market the copycat. Celebrex provides Pfizer (nyse: PFE - news - people ) with annual global sales of $2.3 billion.

The New York-based pharma company has been battling it out with Teva Pharmaceutical Industries (nasdaq: TEVA - news - people ) to hang on to Celebrex for almost four years. Pfizer sued the Israel-based drug maker after it applied to U.S. regulators for permission to sell the generic in 2004. In March 2007, Pfizer won a ruling from a U.S. federal court over three of the main patents regarding Celebrex, barring Teva from manufacturing the generic until 2015. Teva appealed, but the ruling was mostly upheld on Friday, according to Tradethenews.com.

Shares of Pfizer were down on Friday by .8%, or 17 cents, to $21.42. Teva's stock was down by .7%, or 31 cents, $47.44.

In other Celebrex-related news, the New York Supreme Court ruled in Pfizer's favor at the beginning of January, saying the plaintiffs failed to present enough scientific evidence to prove that the arthritis drug can cause heart attacks and strokes at the 200 mg daily dosage. This follow a similar ruling by a U.S. District Court in Northern California in November.

FDA Is Favorable on Anti-Anesthesia Drug

WASHINGTON -

Federal health regulators said Friday a Schering-Plough Corp. drug appears effective at helping patients recover from anesthesia, though some safety questions remain.

A Food and Drug Administration panel of experts will meet next Tuesday to review Schering's Bridion, an injectable drug designed to reverse the effects of anesthesia in patients after surgery.

An analysis of the drug was posted to the FDA Web site Friday, along with questions the agency will ask the panel. The agency is not required to follow the recommendation of its panel, though it usually does.

Similar drugs are on the market, but Schering said Bridion is unique because it reverses the effects of mild and serious anesthesia.

FDA reviewers said Bridion appears safe in healthy adults, but that additional studies may be needed to answer questions about allergic reactions and the drug's effects on children's' teeth.

The agency said it is concerned about reports of some adults having hypersensitivity reactions while taking the drug. Schering is studying the reactions, and FDA said the results "could have a significant effect on the overall finding of safety" for the drug.

FDA also said Schering has not addressed Bridion's effects on teeth in young children. Studies of the drug in young rats showed it interfered with growth of tooth enamel.

Studies of the drug in human adults also showed minor changes in bone strength, though they were not considered significant.

Only one study of Bridion in children has been completed, the FDA said.

The agency will ask its advisers Tuesday whether the company should be required to conduct additional studies in children.

Shares of Schering Plough Corp. (nyse: SGP - news - people ) fell 38 cents, or 1.9 percent, Friday to $19.65 in midday trading.

German Version of Heparin Recalled

FRANKFURT, Germany -

Germany's medical authority said Friday it has recalled a locally produced version of the blood thinner heparin believed to be linked to contaminated ingredients from China after 80 patients suffered adverse reactions.

Axel Thiele, a spokesman for the Federal Institute for Drugs and Medical Devices, told The Associated Press the drug, produced by RotexMedica GmbH, was pulled from the market Wednesday night after 80 patients suffered shortness of breath, low blood pressure and episodes of an overly rapid heartbeat.

No one taking the drug in Germany has died, he said.

"We have indications that after taking heparin, some - sometimes quite serious - side effects have occurred," Thiele said, adding that most patients who suffered a reaction were undergoing dialysis treatment,

The German institute said it believes the complications suffered by the German patients are derived from possibly contaminated ingredients imported from China, the world's leading source of heparin.

The only version of the drug that seems to be triggering a reaction in Germany so far is an inexpensive, less highly processed form, Thiele said. A more heavily processed form of heparin appeared not to be affected.

A different brand of heparin produced in the United States has been linked to 19 deaths there, according to the U.S. Food and Drug Administration. The FDA urged all U.S. suppliers of heparin to start using high-tech tests to make sure their products are free of a contaminant that is the prime suspect for hundreds of allergic-type reactions linked to Baxter International Inc. (nyse: BAX - news - people )'s U.S.-sold heparin injections.

In the U.S., heparin injections produced by Baxter International have been linked to the deaths among dialysis patients. The FDA said that, although Baxter uses different ingredients than RotexMedica, they also come from China.

A spokesman for Trittau-based RotexMedica, who declined to give his name, refused to comment to The Associated Press on Friday, but said the company was working together with authorities to clear up the incident.

Rotexmedica is owned by Groupe Panpharme, based in Fougeres, France.

Associated Press writer Melissa Eddy in Berlin contributed to this report.

Abbott Working on Lung Cancer Test

DES PLAINES, Ill. -

Health care company Abbott Laboratories said Friday it will work with Genentech Inc., F. Hoffmann-La Roche Ltd. and OSI Pharmaceuticals Inc. to develop a gene test to potentially determine the benefit of a certain lung cancer treatment.

Terms were not disclosed.

Abbott's molecular diagnostics unit will develop the test for Tarceva, an oral tablet used to treat patients with locally advanced or metastatic non-small cell lung cancer that had at least one unsuccessful chemotherapy session.

"By helping to unlock the information found at the molecular level in each person's DNA, we believe that molecular diagnostics hold the promise of personalized medicine," Stafford O'Kelly, Abbott's vice president of molecular diagnostics, said in a statement.

Abbott shares fell 75 cents to $51.34 in morning trading.

Anemia Drugs Face New Limits, Hits Amgen

WASHINGTON -

Amgen shares have dropped 27 percent the past year with two-thirds of the decline coming since early December, reflecting investor fears its best-selling anemia drugs could plunge again this year after 25 percent revenue drops in 2007.

Driving the declines: federal regulators coming down on the anemia treatments, which have been linked to increased risk of death and cancerous tumor growth surges.

Next Thursday, an outside panel of experts for the Food and Drug Administration will review data on three injectable anemia drugs: Epogen and Aranesp, made by Amgen, and Johnson & Johnson's Procrit.

The drugs treat the blood-disorder anemia patients with kidney failure or who are undergoing chemotherapy.

FDA outside panelists could recommend no action or an outright halt to the drugs' use in cancer patients or some action in between those two extremes. Most analysts say they expect regulators will take a middle road, perhaps limiting use of the drugs to certain forms of cancer.

FDA is not required to follow its panelists recommendations, though it often does. The agency twice slapped warnings on anemia drugs last year, after six studies showed patients had higher risk of death or accelerated tumor growth.

Since regulators added "black box" warnings, the most serious ones the FDA has, in November, new studies and analysis have further underscored the risks of these drugs.

Amgen released preliminary results late last year showing women with cervical and breast cancer died sooner and had faster tumor growth when taking its drugs. The current drug labeling does not mention those risks.

Diversified giant J&J has weathered the added regulatory scrutiny and action, but Amgen, which some Wall Street analysts presumed had bottomed last fall, continue to slide.

U.S. sales of Amgen's anemia drugs fell nearly 25 percent to $6.3 billion for 2007, according to figures from IMS Health Inc., a health care research firm. If the FDA's outside panel recommends middle-of-the-road limits next week and the FDA concurs, Amgen sales this year would fall another $150 million to $250 million to just over $6 billion, estimates Goldman Sachs' analyst May-Kin Ho. She adds that the stock could fall another $1 to $2 a share in the meantime.

Last month an analysis of 51 trials showed patients taking anemia drugs were 10 percent more likely to die and 57 percent more likely to have dangerous blood clots than those who weren't taking the drugs. Previous reports had found similar results.

Amgen scientists are expected to argue next week that those safety problems were caused by doctors using higher-than-recommended doses of the drugs. That issue is already addressed by FDA's labeling, they say, which warns doctors to use the lowest doses of the drugs possible.

Amgen will also argue that the risks of Aranesp and Epogen still do not outweigh the alternative - giving patients regular blood transfusions.

"There are various risks with blood transfusion and you have to wonder if we would be having this vigorous debate if there were an epidemic of blood-borne illness," said Amgen Vice President Dr. Roy Baynes.

However, many experts say blood transfusions are safer now than two decades ago, when concerns over HIV in the national blood supply persuaded many doctors to prescribe anemia drugs.

Given that all blood donations are now screened for HIV, Dr. Charles Bennett argued doctors can cut down on prescribing drugs like Aranesp.

"It's clear that these drugs were overused because we've seen sales drop so dramatically in the past year without seeing reports of people dying in the streets," said Bennett, a professor at Northwestern University, who authored the most recent analysis of anemia drug risks.

Bennett and other cancer experts said it's unlikely FDA would withdrawal Aranesp and its peers for use in all cancer patients - but analysts are not ruling that possibility out.

Under that scenario, Goldman's Ho estimates Amgen's 2008 sales would fall $750 million, reducing earnings 35 to 40 cents per share while shares could fall another $3 to $4 a share.

WASHINGTON -

Amgen shares have dropped 27 percent the past year with two-thirds of the decline coming since early December, reflecting investor fears its best-selling anemia drugs could plunge again this year after 25 percent revenue drops in 2007.

Driving the declines: federal regulators coming down on the anemia treatments, which have been linked to increased risk of death and cancerous tumor growth surges.

Next Thursday, an outside panel of experts for the Food and Drug Administration will review data on three injectable anemia drugs: Epogen and Aranesp, made by Amgen, and Johnson & Johnson's Procrit.

The drugs treat the blood-disorder anemia patients with kidney failure or who are undergoing chemotherapy.

FDA outside panelists could recommend no action or an outright halt to the drugs' use in cancer patients or some action in between those two extremes. Most analysts say they expect regulators will take a middle road, perhaps limiting use of the drugs to certain forms of cancer.

FDA is not required to follow its panelists recommendations, though it often does. The agency twice slapped warnings on anemia drugs last year, after six studies showed patients had higher risk of death or accelerated tumor growth.

Since regulators added "black box" warnings, the most serious ones the FDA has, in November, new studies and analysis have further underscored the risks of these drugs.

Amgen released preliminary results late last year showing women with cervical and breast cancer died sooner and had faster tumor growth when taking its drugs. The current drug labeling does not mention those risks.

Diversified giant J&J has weathered the added regulatory scrutiny and action, but Amgen, which some Wall Street analysts presumed had bottomed last fall, continue to slide.

U.S. sales of Amgen's anemia drugs fell nearly 25 percent to $6.3 billion for 2007, according to figures from IMS Health Inc., a health care research firm. If the FDA's outside panel recommends middle-of-the-road limits next week and the FDA concurs, Amgen sales this year would fall another $150 million to $250 million to just over $6 billion, estimates Goldman Sachs' analyst May-Kin Ho. She adds that the stock could fall another $1 to $2 a share in the meantime.

Last month an analysis of 51 trials showed patients taking anemia drugs were 10 percent more likely to die and 57 percent more likely to have dangerous blood clots than those who weren't taking the drugs. Previous reports had found similar results.

Amgen scientists are expected to argue next week that those safety problems were caused by doctors using higher-than-recommended doses of the drugs. That issue is already addressed by FDA's labeling, they say, which warns doctors to use the lowest doses of the drugs possible.

Amgen will also argue that the risks of Aranesp and Epogen still do not outweigh the alternative - giving patients regular blood transfusions.

"There are various risks with blood transfusion and you have to wonder if we would be having this vigorous debate if there were an epidemic of blood-borne illness," said Amgen Vice President Dr. Roy Baynes.

However, many experts say blood transfusions are safer now than two decades ago, when concerns over HIV in the national blood supply persuaded many doctors to prescribe anemia drugs.

Given that all blood donations are now screened for HIV, Dr. Charles Bennett argued doctors can cut down on prescribing drugs like Aranesp.

"It's clear that these drugs were overused because we've seen sales drop so dramatically in the past year without seeing reports of people dying in the streets," said Bennett, a professor at Northwestern University, who authored the most recent analysis of anemia drug risks.

Bennett and other cancer experts said it's unlikely FDA would withdrawal Aranesp and its peers for use in all cancer patients - but analysts are not ruling that possibility out.

Under that scenario, Goldman's Ho estimates Amgen's 2008 sales would fall $750 million, reducing earnings 35 to 40 cents per share while shares could fall another $3 to $4 a share.

Panacos Pharma Rises on HIV Drug Data

NEW YORK -

Shares of Panacos Pharmaceuticals Inc. surged Wednesday after the company said it may have identified a group of patients who will respond to its HIV drug candidate bevirimat.

Panacos shares plunged in December due to disappointing trial results, which appeared to show that the drug did not lead to significant improvement. Late Tuesday, the company said a midstage trial showed patients who had few mutations on a protein called HIV Gag were more likely to have a strong response to bevirimat.

The results were drawn from a recent midstage clinical trial.

Shares rose 18 cents, or 26.4 percent, to 87 cents. The stock last traded at 87 cents in December. Wednesday's trading volume was nearly triple the stock's average over the past 100 days.

Analysts said Panacos will have to conduct new trials to prove its hypothesis, but Bear Stearns (nyse: BSC - news - people ) analyst Mark Schoenebaum upgraded Panacos shares to "Outperform," from "Peer Perform" on the news. He estimated peak sales of $200 million.

"Panacos believes it may be able to predetermine the responder population with a simple blood test," he said. "If Panacos can pre-determine efficacy in a subpopulation of HIV patients, we believe there will be a market for bevirimat."

Cowen and Co. analyst Eric Schmidt agreed that, if confirmed, the findings would be a major boost to the Watertown, Mass., company.

"If Panacos' hypothesis is correct, Panacos will be in the enviable position of owning 100 percent rights to solid and liquid formulations of a very well tolerated (thus far), once per day, novel mechanism HIV drug," he wrote.

Pfizer to Cut Costs, Expand in China

NEW YORK -

Pfizer Inc. says it plans to outsource more drug manufacturing, lower costs ahead of generic competition for its blockbuster cholesterol drug, Lipitor, and expand broadly in China.

At a meeting with investment analysts, the New York-based drugmaker also reaffirmed its outlook for 2008 profit and sales Wednesday, still forecasting adjusted profit of $2.35 to $2.45 per share and revenue of $47 billion to $49 billion.

Analysts surveyed by Thomson Financial are expecting profit of $2.37 per share and revenue of $48.08 billion.

Shares rose 22 cents to $22.46 in premarket trading.

"We are proactively managing our total cost structure to do what is necessary to size the company appropriately to align with our revenues so that we deliver growing profitability after the Lipitor loss of exclusivity," said Chief Financial Officer Frank D'Amelio, in a statement.

The key patent on Lipitor, the world's best-selling drug, expires in November 2011.

Pfizer (nyse: PFE - news - people ) said it wants to boost its market share in Asia to 6 percent by 2012, up from 4 percent currently, and will expand operations in China from the 110 cities it now serves to more than 650 cities.

Pfizer also said the number of experimental drugs in its pipeline which will move forward from midstage testing to late-stage trials will range from 15 to 20 by the end of 2009. In an effort to stave off the threat of generic competition to its top-line, the company said it will grow its Phase III programs by 50 percent to 75 percent to between 24 and 28 programs by December 2009 - up from 16 programs currently.

Three compounds moving to late-stage development include: CP-751871, a treatment for gastrointestinal, genitourinary, lung and breast cancer; CP-690550, to treat rheumatoid arthritis, transplant rejection, psoriasis, Crohn's disease, and asthma; and diabetes drug PF-734200.

Pfizer is targeting 15 to 20 regulatory submissions between 2010 and 2012.

The company said it will speed clinical development on 20 programs in disease areas such as arthritis, cancer, pain and diabetes, and terminate 24 clinical and preclinical programs so it can reinvest in high-value areas.

Pfizer said it currently has 26 biotech drugs spanning 8 treatment areas and has set the goal of becoming a top-tier biotherapeutics company.

Pfizer also said it is forming a new business unit focused solely on cancer drugs, a market expected to more than double in the next decade. The oncology business unit will help Pfizer expedite launches of new cancer agents, and focus research efforts on cancers common in Asia, including those of the liver, esophagus and nasopharynx

FDA's Review Process Under Investigation

WASHINGTON -

The government's watchdog agency is investigating whether the Food and Drug Administration's drug-review process cleared two blockbuster medications without sufficient proof of their safety or effectiveness.

Sen. Charles Grassley said Tuesday the Government Accountability Office has agreed to study a much-debated method for approving drugs used to clear GlaxoSmithKline PLC's diabetes pill Avandia and Merck & Co. Inc. and Schering-Plough's cholesterol drug Vytorin.

The Iowa Republican requested the investigation after recent studies suggested the drugs may not lower the risk of heart attack and artery-clogging plaque, as assumed by millions of patients and doctors.

"There's enough of a pattern of problematic drugs to ask for an independent review of how the FDA follows up on the effects of medicines that it's approved," said Grassley, in a statement.

FDA cleared Avandia because it helped control blood sugar, which many doctors believe decreases diabetics' risk of heart attack. But the agency came under fire last year when an analysis showed Avandia could actually increase heart attack risk.

FDA argued that it has never required diabetes drugs to show lower heart attack risk, and that lowering blood sugar alone is an important benefit.

The agency approved Vytorin, which combines Schering-Plough's Zetia with Merck's older cholesterol drug Zocor, based on its cholesterol-lowering capability. But a study released earlier this year showed Vytorin was no more effective at limiting plaque buildup in neck arteries than Zocor alone, which is now available as a low-cost generic.

At issue now is whether FDA should approve drugs based on biological measures, like cholesterol and blood sugar, without evidence they improve more meaningful measures like survival.

FDA's Director for Medical Policy Robert Temple said the agency has used several alternate study goals, often called surrogate endpoints, to approve drugs for decades.

For example, HIV drugs are cleared based on their virus-lowering power, an effective predictor of survival.

Drug industry advocates favor shorter study goals because they involve smaller, less expensive and faster trials.

Longer trials, they say, may actually jeopardize patients.

"It's probably unethical to do an overall survival study where you're going to have HIV patients taking a placebo for 10 years," said Alan Goldhammer, vice president with the Pharmaceutical Research and Manufacturers of America.

But those who criticize FDA's handling of Avandia and Vytorin say surrogate endpoints aren't the problem. Rather, it's when FDA doesn't demand follow-up studies to prove drugs delivered on the predicted benefits.

"These studies are often never done, so we're left without the knowledge we need to use these drugs wisely," said Dr. Steve Nissen, chairman of cardiovascular medicine at the Cleveland Clinic. "And obviously we've paid the price for that with the safety issues and lack of efficacy issues with Avandia and Vytorin."

Nissen wrote the analysis that showed Avandia raised the risk of heart attack. Last year FDA said the drug's risks were still unclear and asked GlaxoSmithKline to study its effect on the heart. Results from that trial aren't expected until 2014 - 15 years after the drug was approved.

Schering-Plough and Merck are working on a study to determine if Vytorin extends patients' lives. Results from that study, which FDA did not request or require, are expected in 2011.

When the agency does require follow-up studies of drugs, its track record is poor for making sure companies complete them. A 2006 investigation by the Health and Human Services Department inspector general concluded FDA could not readily identify what progress companies made on the studies.

In its most recent report, FDA said 900 of more than 1,200 studies required of drug makers had not even begun.

Under a law that takes affect next month FDA can fine companies up to $1 million for failing to honor drug study commitments.

Grassley argued for higher fines, and in his request to GAO asked investigators whether FDA needs more authority.

The agency shows no sign of scaling back its use of surrogate endpoints.

Last month FDA cleared Genentech Inc.'s drug Avastin for use in breast cancer patients who have not taken other drugs. Agency reviewers based their decision on Avastin's ability to slow the spread of cancer. Previously FDA had approved drugs as a first-choice option for cancer patients if they extended, or improved the quality, of patients' lives.

FBR Sees Truvada Sales Up for Gilead

NEW YORK -

A Friedman, Billings, Ramsey analyst on Tuesday raised his price target on HIV drug maker Gilead Sciences Inc., saying changes to regulatory guidelines could leave the company's Truvada drug as the only preferred treatment in the category.

FBR analyst Jim Reddoch lifted his price target to $57 from $54 and maintained his "Outperform" rating on the stock. After hosting a conference call with a leading HIV expert, he believes negative hypersensitivity data on rival drug Epzicom may drive Health and Human Services to remove the drug from its current prescription guidelines.

As a result, 10 percent to 15 percent of GlaxoSmithKline (nyse: GSK - news - people ) PLC's Epzicom and Trizivir prescriptions could shift over time to Truvada, a combination of Gilead's Viread and Emtriva medicines.

"Furthermore, early diagnosis efforts by the Centers for Disease Control and SMART study results, which showed it is better to put AIDS patients on HIV anti-retroviral therapy earlier rather than later, are both background tailwinds to Gilead's HIV franchise," Reddoch wrote in a note to clients.

Reddoch raised his U.S. Truvada sales estimates by roughly 7 percent through 2011, with 2008 U.S. sales now forecast at $927 million instead of $866 million. He also thinks there could be more upside to estimates based on results of the AIDS Clinical Trials Group trial, due out later this week.

Gilead shares dipped 57 cents to $48 in morning trading. Over the past year, the stock has ranged between $34.15 and $49.05.

Roche Urges More Caution With Tamiflu

WASHINGTON -

Under pressure from regulators, drug maker Roche has added stronger language to its Tamiflu label, warning of sometimes fatal psychiatric problems seen in a small number of patients.

The Swiss pharmaceutical company warned in a letter to doctors that cases of delirium and self-injury have been reported among patients taking the prescription flu medication. The Food and Drug Administration posted the letter to its Web site Tuesday, along with the drug's updated labeling.

The older label mentioned reports of psychiatric problems, primarily seen among children in Japan. But the new label specifies that those problems sometimes proved to be fatal, as recommended by FDA advisers at a November meeting.

At that meeting FDA revealed that nearly 600 cases of psychiatric problems had been reported in Tamiflu patients, with 75 percent of them coming from Japan. At least five children there died after "falling from windows or balconies or running into traffic," according to FDA.

Roche (other-otc: RHHBY.PK - news - people )'s new label states that "the contribution of Tamiflu to these events has not been established." The label also stresses that the flu, with or without treatment, can cause behavioral problems ranging from delirium to hallucinations.

"Patients with influenza should be closely monitored for signs of abnormal behavior," states the Tamiflu label.

Japan accounts for two-thirds of the $2.4 billion global market for Tamiflu because doctors there usually prescribe drugs to treat flu symptoms.

Bayer Loses Yasmin Patent Ruling

LEVERKUSEN, Germany -

Bayer AG said Tuesday a U.S. court had ruled against the company in a patent dispute over one of its major products, oral contraceptive Yasmin. The company's stock fell sharply.

The U.S. District Court in New Jersey ruled against the validity of Bayer (nyse: BAY - news - people ) Schering Pharma's patent after Barr Pharmaceuticals (nyse: BRL - news - people ) Inc. challenged it, the company said in a statement.

Although that means the company no longer has exclusive production rights, it does retain exclusive distribution rights in the U.S. until March 2009. "Bayer disagrees with the court's decision and will consider its legal options in this regard," the company said.

Loss of patent can mean sharp drops in sales revenue as other companies offer generic versions.

Bayer is currently assessing the full impact of the ruling but has already adjusted the profit margin for Bayer Schering Pharma - the unit that makes Yasmin.

Sales of Yasmin in the U.S. amounted to euro321 million (US$487.9 million) in 2007.

Bayer shares dropped 4.7 percent to euro47.85 (US$72.73) in Frankfurt

Drug Maker Teva Growing in Ireland

DUBLIN, Ireland -

Teva Pharmaceutical Industries Ltd., a world-leading maker of generic drugs, announced Monday it is expanding its operations in Ireland to counter growing global competition.

The Irish government provided a confidential level of aid to secure the 65 million euros ($98.6 million) investment in Teva's facilities in Waterford, southeast Ireland.

Teva, an Israeli company with plants worldwide, said it planned to boost its current 650-strong work force in Waterford to 815 within the next five years.

The announcement follows a string of job cuts in Waterford, most notably in the city's flagship crystal plant, which is cutting its Irish work force nearly in half.

Jacob Winter, Teva's vice president for global generic resources, said the Waterford expansion "will allow us to protect our products' leading market shares, add new capability and broaden our geographical reach and impact."

"We face intense competition in the generic drug market from other generic drug manufacturers, brand-name drug companies through authorized generics, manufacturers of branded drugs that continue to produce those drugs after patent expirations, and manufacturers of therapeutically similar drugs," Winter said.

The Waterford facility is operated by Teva's subsidiary IVAX, a previously Miami-based competitor that Teva acquired in January 2006. It includes three production plants and a research and development lab that specializes in combating respiratory ailments.

Tom McCabe, general manager of the Waterford operation, said the expansion was "akin to building a new factory" and would allow Teva to "more than double" its current production of medicines in inhalers and tablet form. The facility is already Teva's No. 1 site worldwide for producing products that relieve and prevent asthma.

Ireland is a major European hub for drug development and production. Most of the world's biggest drug companies have manufacturing and R&D operations here, and about 25,000 people are employed in pharmaceuticals in the country of 4.2 million

Thai Drug Administration Chief Resigns

BANGKOK, Thailand -

The recently appointed head of Thailand's Food and Drug Administration resigned Monday amid controversy over the new government's plan to review a policy of overriding patents on several expensive cancer-fighting drugs.

Chatree Banchuen was named secretary general of the FDA last week, making him the government's chief negotiator with multinational drug companies over pricing and licensing terms.

Chatree said he decided to resign because he felt "uncomfortable with the politics," explaining that critics had brought up old, unproven allegations linking him to corruption in a computer procurement project in 2003. He called the allegations "politically motivated and groundless," without elaborating.

Chatree's predecessor, Siriwat Thiptharadon, was transferred to an inactive post last Tuesday by the new government of Prime Minister Samak Sundaravej. Siriwat called his transfer unfair, charging it was because he supported compulsory licensing of drug patents.

Compulsory licensing is intended to make some drugs more affordable by taking away the patent holder's ability to control the drug's price, a benefit of being a drug's exclusive supplier. International trade rules allow a government to issue a compulsory license to manufacture a generic version of a drug only in case of a national public health emergency.

Siriwat was the architect of the government's policy leading to the issuing of compulsory licenses on Jan. 4 for four cancer-fighting drugs.

In the past two years, the Thai government has also issued compulsory licenses for several drugs used to treat AIDS and heart disease, drawing criticism from companies holding patents on the drugs.

The drug companies dispute whether the circumstances in Thailand qualify for such licenses.

Newly appointed Public Health Minister Chaiya Sasomsup said Monday the ministry will review the licensing policy on the cancer-fighting drugs, while ensuring patients have affordable access to the medicines.

He said that if negotiations fail to get drug companies to lower their prices, compulsory licensing would be maintained.

Chaiya earlier said the government planned to review the drug licensing policy because U.S. drug manufacturers might ask Washington to apply trade sanctions against Thailand.

The four drugs issued compulsory licenses on Jan. 4 are Novartis (nyse: NVS - news - people )' Imatinib and Letrozole, Sanofi-Aventis (nyse: SNY - news - people )' Docetaxel, and Roche (other-otc: RHHBY.PK - news - people )'s Erlotinib.

Novartis AG and Roche Holding (other-otc: RHHBY.PK - news - people ) AG are Swiss, and Sanofi-Aventis SA is French.

Pfizer Buying Biotech Company

NEW YORK -

Drug developer Pfizer Inc. said Monday it will buy privately-held biotechnology company Serenex Inc. for an undisclosed amount.

Serenex has one drug candidate in early-stage studies, called SNX-5422, focusing on cancer. Its other compounds are in still in preclinical development and could help treat a range of conditions from cancer to inflammatory and neurodegenerative diseases, Pfizer (nyse: PFE - news - people ) said.

The buyout is expected to close in the second quarter.

Pfizer and several other large pharmaceutical companies have seen several blockbuster drugs lose patent protection recently, with the trend expected to continue. The company is attempting to rebuild its development pipeline and in August said it plans to triple its number of late-stage development products by 2009.

Shares of Pfizer fell 5 cents to $22.23 in morning trading.

FDA to Speed Ligand, Glaxo Application

NEW YORK -

Drug developers Ligand Pharmaceuticals Inc. and GlaxoSmithKline PLC said Monday the Food and Drug Administration will give their blood-disorder drug Promacta priority review, accelerating its path toward approval.

The drug is aimed at treating chronic short-term idiopathic thrombocytopenic purpura, a condition which causes increased risk of bruising and bleeding. The companies said there are about 60,000 people in the U.S. with the condition.

When the FDA designates a priority review, it attempts to make a decision on the drug candidate within six months instead of the normal 10 to 12 months.

GlaxoSmithKline (nyse: GSK - news - people ) and Ligand have been partners since 1997. Glaxo will be responsible for worldwide marketing of the drug, which would be the first treatment approved for the blood condition. It also plans on asking for European regulatory approval in 2008.

Shares of San Diego-based Ligand rose 31 cents, or 9 percent, to $3.70 in morning trading. The stock has traded between $3.31 and $11.45 over the last 52 weeks. Shares of U.K.-based Glaxo rose 58 cents to $44.49

Top Drugs' Strange Side Effects

Ever experience a sudden, strong desire to gamble , or a funny feeling that you've been driving in your sleep?

It could be nothing. Or maybe it's time to finally read the warnings that came with that bottle of over-the-counter or prescription drugs you're taking. Strange as it may sound, compulsive gambling and sleep-driving are two real side effects that have been reported by patients or drug manufacturers in recent years.

In recent months, popular new anti-smoking treatment Chantix has made headlines for its array of potential side effects, which include insomnia and nightmares. In February, the U.S. Food and Drug Administration announced that Pfizer (nyse: PFE - news - people ), the manufacturer of Chantix, had updated the drug's prescribing information to include additional warnings about the possibility of severe changes in mood and behavior in patients taking it.

In Depth: Drugs' Strangest Side Effects

Last year, over-the-counter diet drug Alli made waves. Late-night talk show hosts in particular had a field day joking about the product's warning label, which included a recommendation to wear dark pants and bring a change of clothes to work until users had a sense for the drug's gastrointestinal effects.

Even though drugs must pass through three phases of clinical studies before getting FDA approval, new side effects often emerge only once a medicine reaches the broader population, says Cynthia Reilly, director of clinical standards and quality for the American Society of Health-System Pharmacists.

FDA officials confirmed last week that the agency is launching a plan to strengthen oversight of prescription drugs after they are approved, including a new database of medications' possible side effects, and timelines for following up on those concerns.

But in the meantime, how much attention should consumers pay to news of strange side effects?

The answer, experts say, is plenty. "People really need to be aware of all [a drug's] side effects, strange or not," says Reilly.

That means actually reading the drug's label, as well as those papers that come stapled to your prescription bag at the pharmacy. No one--not your family members, not your assistant, not even your doctor, is going to recognize changes in your health as quickly as you can. And left ignored, some side effects can cause permanent damage.

Pharmacy handouts and data cribbed from vetted Internet sources may be your best bets for getting more information about side effects, since TV drug ads don't devote much time to them. A new University of Georgia study found that the average 60-second prescription drug ad aired on broadcast and cable television contained less than eight seconds of side effect disclaimers, and the average 30-second ad had less than 4.4 seconds. Most 15-second ads studied devoted no time at all.

When researching potential hazards, be careful not to lose perspective. While it is important to acquaint yourself with all of a drugs' side effects, only some are worth really worrying about, such as an increased likelihood of suicide, says Dr. Darrell Abernethy, chief science officer for the United States Pharmacopeia, a private, non-profit, standards-setting organization that promotes the safe use of medications. Other side effects, like the temporary loss of sense of taste often associated with hypertension treating ACE inhibitors, aren't as big a deal.

Experts suggest making a quick call to your doctor when you hear about side effects associated with a drug you've been taking. That will help you figure out how common the side effects really are, and evaluate alternative treatments.

"People need a medical home," says Dr. Peter Lund, president of the Pennsylvania Medical Society and founder of the organization's Institute For Good Medicine. "They need to have a health care provider or doctor to turn to with those questions."

Just keep in mind that a doctor might weigh a drug's side effects differently than you would. "You have to make your own choice about how you want to proceed," says Abernethy.

Gilead Shares Rise on Drug Sales Outlook

NEW YORK -

Shares of biotechnology company Gilead Sciences Inc. received a boost Friday from a safety board recommendation suggesting some patients should switch to its HIV treatment Truvada.

The stock gained $2.24, or 5 percent, to reach $47.70 in afternoon trading. Shares have traded between $34.15 and $49.05 over the past 52 weeks.

Gilead already has a commanding position in the HIV treatment market, with the three-in-one drug Atripla and Truvada. A National Institutes of Health-sponsored study found that patients with a high viral load were better off taking Truvada than GlaxoSmithKline (nyse: GSK - news - people )'s Epzicom. Several analysts said the results will only help bolster Gilead's position in the market.

"The results provide further proof of something that we already believed, which is that Truvada is the best backbone therapy for HIV," RBC Capital Markets analyst Jason Kantor said in a note to investors.

He reaffirmed a "Outperform" rating, saying the NIH results coupled with other positive study data for Gilead will eventually help it gain 100 percent of the market for new HIV patients.

Goldman Sachs (nyse: GS - news - people ) analyst Meg Malloy, meanwhile, reaffirmed a "Buy" rating for Gilead, citing a series of factors including trends toward earlier treatment and an increase in HIV prevalence.

Citi analyst Dr. Yaron Werber said Gilead could gain 5 cents per share in earnings for every 10 percent market-share gain in the U.S. and 15 percent market-share gain in Europe from patients switching to Truvada. He reaffirmed a "Buy" rating with a $55 price target.

Alnylam Says Drug Study Meets Goal

CAMBRIDGE, Mass. -

Alnylam Pharmaceuticals Inc. reported Friday that its midstage study for experimental drug ALN-RSV01 met its main goal and reduced levels of the respiratory syncytial virus, a highly contagious virus that causes infections in the respiratory tract.

The stock fell, however, as some analysts questioned the drug's true potential effectiveness in a real-world scenario, because patients in the trial took the drug before becoming sick.

ALN-RSV01 is an RNA-interference (RNAi) drug, a class of drugs designed to treat illnesses by shutting off the genes that cause them.

The company claimed ALN-RSV01 is the first RNAi drug to show effectiveness in humans.

The Phase II clinical trial of ALN-RSV01 showed "statistically significant" effectiveness, with about a 40 percent reduction in RSV infection rate. Alnylam also said the drug showed an increase in the number of subjects who remained free of infection.

The drug was safe and well-tolerated, the company said.

In an interview with AP, Needham & Co. analyst Alan Carr highlighted potential challenges for the drug in light of the study's design.

He said that while the results were positive, people in the trial were given the drug before they were infected with the virus, meaning the results fail to show a "real-world" scenario.

The numbers were slightly disappointing with respect to viral load and symptom reduction, said Carr, and left him wondering how the drug would work in patients who don't take the drug before infection.

Caris & Co. analyst Douglas Chow told the AP he viewed the results as positive but said the drug still has a long way to go.

"The company will still need further studies before the drug gets commercialized and there are still many questions that remain unanswered," Chow said.

He said the stock also likely fell because some investors may have expected the company to release more trial data.

Alnylam's stock fell 92 cents, or 3.1 percent, to $29 in midday trading, as the broader market declined Friday.