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BioCentury Extra
As published Friday, September 19, 2014 6:27 PM PST


  • GSK apologizes after huge fine in China

    A Chinese court has fined the GSK China Investment Co. Ltd. subsidiary of GlaxoSmithKline plc (LSE:GSK; NYSE:GSK) and found it guilty of bribing "non-government personnel" and violating Chinese law by offering money or property to obtain improper commercial gains.

    The RMB3 billion ($488 million) penalty is a record corporate fine in China, according to state news agency Xinhua. Authorities last year accused GSK of funneling the same amount to doctors and officials to boost product sales in China, according to the government-run CCTV. The fine represents about 40% of the pharma's pharmaceutical and vaccine sales in China in 2012, the year before the Ministry of Public Security began investigating GSK.

    In a closed-door trial Sept. 19, Changsha Intermediate People's Court in Hunan Province also sentenced five GSK executives to suspended prison sentences of two to four years, according to Xinhua. Mark Reilly, a British national and former general manager of GSK China, received three years in prison with a four-year reprieve and will be deported, Xinhua said.

    GSK apologized to the Chinese government, the nation's people, patients, doctors and hospitals in a statement. The pharma said it cooperated with authorities and took steps to rectify relevant issues that were in "clear breach" of the company's governance and compliance procedures.

    GSK will pay the fine with existing cash, and report related charges in its 3Q14 financial update.

    China's year-plus investigation of GSK shined a light on structural issues within China's healthcare system, including underfunded public hospitals, which depend on authorized markups on drug sales by their pharmacies, and poorly compensated doctors.

    Left unclear is the fate of other multinational pharma companies Chinese authorities investigated in the wake of the GSK allegations. GSK also remains under investigation in both the U.S. and U.K. for allegations of bribing foreign officials under the Foreign Corrupt Practices Act and U.K. Bribery Act.

    GSK was up $0.09 to $47.38 on Friday. It also committed to renewed investments in China (see Company News, below).

    BioCentury is co-organizing its first China Healthcare Summit, "The Bridge To Innovation," Nov. 12-13 in Shanghai with BayHelix, in collaboration with McKinsey & Co. and other key stakeholders. For more information, visit our website.

  • GSK pledges further China investment after fine

    GlaxoSmithKline plc (LSE:GSK; NYSE:GSK) has pledged to "regain the trust of the Chinese people" by making further commitments and investment in China in the wake of executive convictions and a corporate fine for bribery.

    The pharma said it would attempt to become a "model of reform" for the China healthcare industry by continuing its scientific investment in the country, developing new medicines and vaccines for diseases prevalent in China, and increasing access to its products in city and rural areas through expansion of local production and price flexibility.

    Any actions GSK takes on pricing and market access -- particularly if they include major steps such as participating in China's Essential Drug List -- would be closely watched by other multinationals.

    The company said it has already attempted to rectify issues uncovered during China's investigation. GSK has changed the incentive program for its sales force, reduced engagement activities with healthcare professionals, and expanded its review and monitoring processes for invoicing and payment.

    The company has invested more than $500 million in China and constructed a global R&D center in Shanghai focused on neurodegenerative diseases.

  • EC approves Gilead's Zydelig

    The European Commission approved Zydelig idelalisib from Gilead Sciences Inc. (NASDAQ:GILD) to treat chronic lymphocytic leukemia (CLL) and refractory follicular lymphoma (FL).

    Gilead declined to disclose specific plans regarding the European launch timeline and price of the small molecule inhibitor of phosphoinositide 3-kinase (PI3K) delta.

    In July, FDA approved Zydelig to treat CLL, FL and small lymphocytic lymphoma (SLL) (see BioCentury Extra, July 23).

    Gilead was up $0.03 to $105.96 on Friday.

  • Whelan resigns as Ariad director

    Oncology company Ariad Pharmaceuticals Inc. (NASDAQ:ARIA) said in an SEC filing late Thursday that Robert Whelan resigned as director, effective Oct. 1. Whelan had served on Ariad's board since April 2010.

    Ariad said that Whelan's replacement is not subject to approval by activist investor Alexander Denner, contradicting media reports. Denner joined Ariad's board in February under an agreement that a tenth board member be appointed with Denner's approval; however, according to the company, that agreement does not apply to Whelan's seat.

    Ariad markets Iclusig ponatinib, a pan-BCR-ABL tyrosine kinase inhibitor, to treat acute lymphoblastic leukemia and chronic myelogenous leukemia.

  • Management tracks

    Aisling Capital (New York, N.Y.) promoted Aftab Kherani and Stacey Seltzer to partners from principals. They joined Aisling in 2008.

    Frazier Healthcare (Seattle, Wash.) hired David Socks as a venture partner. Socks will be based in Boston and will lead the firm's company creation efforts. Previously, Socks was president and COO of Incline Therapeutics until its acquisition by The Medicines Co. (NASDAQ:MDCO) in 2012 (see BioCentury Extra, Dec. 12, 2012).

    MPM Capital (Boston, Mass.) hired Sarah Reed as general counsel. Reed was general counsel at Charles River Ventures.

  • Stakeholders: ADAPT alone insufficient

    Stakeholders at Friday's meeting of the House Energy and Commerce Committee's Subcommittee on Health agreed that the proposed Antibiotic Development To Advance Patient Treatment (ADAPT) Act is necessary but insufficient to fully address antibiotic resistance.

    The subcommittee called upon FDA, industry, non-government agencies and academia to discuss ADAPT, as part of a larger hearing on antibiotic resistance and new drug development. ADAPT was introduced last December and would create an accelerated approval pathway for limited patient populations based on alternative endpoints.

    Stakeholders also called for stronger financial incentives at all stages of drug development and distribution to help build an antimicrobial pipeline.

    The hearing was part of the committee's 21st Century Cures initiative. Kathy Hudson, deputy director for science, outreach and policy at NIH, Rep. Diana DeGette (D-Colo.) and Rep. Fred Upton (R-Mich.) described the initiative's goals on the June 1 edition of BioCentury This Week television (see BioCentury This Week, June 1).

  • USVP to raise $275M 11th fund

    U.S. Venture Partners is looking to raise up to $275 million for its U.S. Venture Partners XI fund, according to an SEC filing. The firm, which declined to discuss its fundraising, invests primarily in IT and healthcare companies. Its portfolio includes cancer companies OncoMed Pharmaceuticals Inc. (NASDAQ:OMED), Cleave Biosciences Inc. (Burlingame, Calif.) and Effector Therapeutics Inc. (San Diego, Calif.); medical device play Valeritas Inc. (Bridgewater, N.J.); diagnostics play HeartFlow Inc. (Redwood City, Calif.); and infectious disease company Intersect ENT Inc. (NASDAQ:XENT).

  • Calithera sets IPO range

    Calithera Biosciences Inc. (South San Francisco, Calif.) amended its IPO on NASDAQ and now plans to sell 6 million shares at $13-$15. At $14, the company would raise $84 million and be valued at $222.3 million. Calithera filed to raise up to $80 million in the offering last month. Citigroup; Leerink; Wells Fargo; and JMP Securities are underwriters.

    In February, Calithera started Phase I trials of lead product CB-839, an oral selective glutaminase (GLS) inhibitor to treat acute leukemia, advanced multiple myeloma (MM), non-Hodgkin's lymphoma (NHL) and advanced solid tumors. Calithera expects final data for CB-839 monotherapy in mid-2015 and as a combination therapy in late 2015.

  • Dermira sets IPO terms

    Dermira Inc. (Redwood City, Calif.) amended its IPO on NASDAQ and now plans to sell 5.3 million shares at $14-$16. At $15 the dermatology company would raise $80.3 million and be valued at $253.4 million. Citigroup; Leerink; Guggenheim Securities; and Needham are underwriters.

    Dermira said partner UCB Group (Euronext:UCB) will purchase about $7.5 million of stock in a separate private placement concurrent with the offering. Dermira filed to raise up to $75 million last month.

    Dermira's topical small molecule anticholinergic DRM04 is in Phase IIb testing to treat hyperhidrosis (excessive sweating), with data expected next half. Also next half, the company plans to start a Phase IIb study of DRM01, a topical small molecule sebum inhibitor, to treat acne.

    In July, Dermira gained exclusive rights to develop UCB's autoimmune drug Cimzia certolizumab pegol for psoriasis in the U.S., Canada and the EU. Next half, the company plans to start a Phase III program for the pegylated humanized antibody fragment against tumor necrosis factor (TNF) alpha to treat moderate to severe plaque psoriasis.

    Last month, Dermira raised $51 million in a series C round (see BioCentury Extra, Aug. 19).

  • Exagen files for IPO

    Exagen Diagnostics Inc. (Vista, Calif.) filed to raise up to $69 million in an IPO on NASDAQ underwritten by Leerink; Baird; and William Blair.

    Exagen markets four products to diagnose rheumatic diseases. Its lead product, Avise SLE+CT, is used to diagnose systemic lupus erythematosus (SLE) and other autoimmune rheumatic diseases. Exagen had 1H14 revenues of $3.8 million.

  • Microlin pulls IPO

    Microlin Bio Inc. (New York, N.Y.) withdrew its IPO on NASDAQ, citing market conditions. In June the company amended its IPO to sell 5.5 million units consisting of one share and one warrant at $4.50-$5.50. At $5, the company would have raised $27.5 million and been valued at $51.3 million. Brean Capital; Summer Street; and Meyers Associates were underwriters. In January, the company filed to raise $25 million with Sunrise Securities as the sole underwriter. As of Sept. 30, 2013, Microlin had no cash.

    Microlin is developing a pipeline of miRNA therapies, including lumiralin, a compound against miR-21 that is in preclinical development for lung cancer. The company has an exclusive license from Ohio State University to a portfolio of about 100 issued and pending patents and patent applications covering miRNAs.

  • Correction

    Galeterone from Tokai Pharmaceuticals Inc. (NASDAQ:TKAI) is an androgen receptor inhibitor, an inhibitor of cytochrome P450 17 alpha-hydroxylase/C17, 20 lyase (CYP17), and degrades androgen receptors. The Sept. 2 and Sept. 17 BioCentury Extra misstated the molecule's mechanisms.

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