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Oscient Pharmaceuticals Corporation (GENE) |
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CEOCFO
Interview Index |
This is a printer friendly page! With its FACTIVEŽ product approved
by the FDA and its Ramoplanin
product in late-stage clinical trials, Oscient
Pharmaceuticals is ready to arm physicians with the next weapons in the fight against community-and hospital-acquired infections BIO: In addition to the oral tablet form, Oscient
Pharmaceuticals is developing an intravenous formulation of FACTIVEŽ for use in
hospitalized patients. The Company has a second novel antibiotic
candidate, Ramoplanin, in Phase III development for the prevention of serious
hospital-acquired bloodstream infections caused by vancomycin-resistant enterococci (VRE),
and in a Phase II trial for the treatment of Clostridium difficile-associated
diarrhea (CDAD). The Company's preclinical programs include an oral peptide deformylase
(PDF) inhibitor series, under preclinical development for community-based respiratory
tract infections. CEOCFOinterviews: Mr. Rauscher, you have been with Oscient for a while; what was your vision when you first started and how has that vision developed? Mr. Rauscher: “I was a member of the company’s Board of Directors before I joined as CEO, so I knew the company relatively well before arriving here. I was attracted to the company because I thought it had a lot of potential and I thought it had a great platform around which to grow a pharmaceutical company. The vision that we had for the company was to create a pharmaceutical business. The company built a great track-record in genomics-based target discovery during the 1990’s, and parlayed that scientific capability into a number of successful alliances with major pharmaceutical companies. During the last three years, the company has taken the next step to focus on developing and marketing products of its own. Today, that is the chief mission of the company.” CEOCFOinterviews: How has it worked out? Mr. Rauscher: “So far, we are on track. We successfully in-licensed our first product in 2001, a product called Ramoplanin, which is in late stages of clinical development. More recently, we completed a merger, whereby we gained access to another product called FACTIVEŽ, which is already approved by the FDA (Food & Drug Administration), and is ready for launch. We are in the process now of building the remaining parts of the sales and marketing organization to launch FACTIVEŽ this year. We are delighted with the progress that we have made to date, and we think that we have now emerged as a very interesting biopharmaceutical company.” CEOCFOinterviews: Please tell us about your recent change of name. Mr. Rauscher: CEOCFOinterviews: How did you decide on the two products that you have going out there now? Mr. Rauscher: “Both of these products are anti-infectives. We are interested in anti-infectives for several reasons. First of all, we had a lot of expertise in the genomics and microbiology of infectious organisms, particularly bacterial and fungal species. Secondly, we liked the marketplace. Anti-infectives represent a big market of around $27 billion worldwide and the market is growing. There is always a demand for new anti-infectives because the bacterial and fungal species that cause infections continue to mutate and develop resistance to existing therapeutics. As a result, there is constantly a need for new and improved anti-infectives to treat these infections. The third reason we like anti-infectives is due the changing competitive environment. Increasingly, larger pharmaceutical companies are de-emphasizing their efforts in anti-infectives and are focusing on pharmaceutical products that can be used for chronic illnesses. There is decreasing competition in this area and the new products in the field are being developed and marketed by emerging pharmaceutical companies like our own. We feel that anti-infectives are a great way to start building a biopharmaceutical business.” CEOCFOinterviews: What is FACTIVEŽ used for? Mr. Rauscher: “FACTIVEŽ is used for respiratory tract infections, which are infections of the ears, nasal passages, throat, bronchial tree and the lungs. FACTIVEŽ is indicated for the treatment of lower respiratory tract infections, specifically, acute bacterial exacerbations of chronic bronchitis and community-acquired pneumonia. Respiratory tract infections are one of the most common causes of visits to physicians in this country; we all get them from time-to-time and in many cases, these infections are caused by bacteria and require treatment with antibiotics.” CEOCFOinterviews: You mentioned a developing market for new anti-infectives for new strains of bacteria, why the need? Mr. Rauscher: “Bacterial species evolve in response to their environment. If you expose bacteria to antibiotics, you begin to select for bacteria that are resistant to antibiotics. Over time, the resistant organisms gradually begin to displace the ones that are sensitive because they have a preferential advantage; they can survive in the presence of antibiotics. In U.S. hospitals for example, the majority of the Staphylococcus aureus species will be resistant to most common anti-infectives because the hospital is an antibiotic-rich environment. The same thing is now happening with Streptococcus pneumoniae in the community. The very success of antibiotics ultimately leads to the selection of bacteria that are resistant to them.” CEOCFOinterviews: You mentioned that you are getting the marketing situation organized. Are you doing that yourselves and how do you get the attention of the medical community? Mr. Rauscher: “There are a variety of things that we will be doing to reach physicians this year and introduce the product to them. We have a top-notch, experienced team of Medical Science Liaisons. These are highly trained, sophisticated scientific and medical representatives that call on opinion leaders to discuss clinical and scientific data. We will be exhibiting at major medical meetings this year and we will continue to publish new data in medical journals. We will have our own sales reps that will visit and call on the physicians in their offices to introduce them to the product so they can begin to prescribe FACTIVE to their patients.” CEOCFOinterviews: Is the challenge to get them to look or to convince them after they look? Mr. Rauscher: “I think it is both. Physicians are busy just like the rest of us; perhaps busier. They typically see many people during a day, each for just a short amount of time. They must quickly appraise situations and make decisions. Because physicians are busy and pressed for time, sales reps have to work hard to find ways to get their attention. One of the best ways to do that is to talk to them about something that they think is important, such as the growing problem of bacterial resistance. Physicians are highly educated and are always seeking to learn new information; they respect data that are published in peer-reviewed journals. They also like to hear about new products from a peer or an opinion leader, so medical education is a good vehicle to gain their interest. It is the combination of well-trained sales reps with a compelling and relevant message, peer-reviewed literature and medical education that enables you to get physicians to stop, look and listen to information about a new product.” CEOCFOinterviews: You have another product called Ramoplanin, where is that? Mr. Rauscher: “Ramoplanin is being developed for hospital-acquired infections, which are a large and growing problem. There are two million hospital-acquired infections each year leading to 90,000 deaths in the U.S. The hospital is an antibiotic-rich environment and because of that, the microorganisms that live in the hospital are much more likely to be resistant to antibiotics. So, we are developing Ramoplanin for the prevention and treatment of these hospital-acquired infections. The product is administered orally and is designed to kill pathogenic bacteria that grow in the intestinal tract of patients. When these bacteria overgrow, they can cause a local gastrointestinal infection called pseudomembranous colitis which affects about 400,000 patients annually in the U.S. Another organism that overgrows in patients’ gastrointestinal tracts are enterococci, a bacteria often resistant to multiple antibiotics. When enterococci overgrow, they can invade the bloodstream and cause a life-threatening infection in patients. Our drug is being tested in both of these indications.” CEOCFOinterviews: Will you tell us about how FACTIVEŽ is manufactured and the process involved in that? Mr. Rauscher: “The product was discovered by a firm called L.G. Life Sciences, a large company based in Korea. The active pharmaceutical ingredient, which is called gemifloxacin mesylate, is manufactured at a special purpose facility by L.G. Life Sciences in South Korea. They ship the product to a third-party manufacturer here in the United States that works on our behalf. That third-party manufacturer takes the active pharmaceutical ingredient and blends it with other constituents to create tablets of the final product that are sold to pharmacies. We sell the product in two kinds of packages: packages of five tablets and packages of seven tablets.” CEOCFOinterviews: Will you tell us about the financial situation of Oscient? Mr. Rauscher: “We just completed a merger with Genesoft Pharmaceuticals, and as part of that merger, we conducted a common stock offering. On a net basis, we raised about $81 million. Coming out of the merger we had about $110 million worth of cash in the bank. We have about $15 million of one-time expenditures associated with the merger, most of which have already been made, leaving us with about $95 million in cash. We have not started the selling phase yet, and right now, we are in the investment mode where we are using those resources to build the sales and marketing organization and to continue the development work for both FACTIVEŽ and Ramoplanin.” CEOCFOinterviews: You have some other uses for FACTIVEŽ that you are working on, will you tell us about them? Mr. Rauscher: “I mentioned that the product is indicated for lower respiratory tract infections. An extensive amount of work has also been done to study the product for an infection in the upper respiratory tract called acute bacterial sinusitis. The drug has shown good activity in clinical trials. We expect to file with the FDA for a claim for acute bacterial sinusitis some time in 2005. Additionally, we are developing an intravenous form of FACTIVEŽ that we expect to be used in the hospital for patients that are hospitalized for severe cases of pneumonia. We will begin our first trials of the IV form of FACTIVEŽ in early 2005.” CEOCFOinterviews: What is the leading cause of bacterial respiratory tract infections in this country and what part does FACTIVE play? Mr. Rauscher: “The leading cause of bacterial respiratory tract infections in this country is a microorganism called Streptococcus pneumoniae. It is not only the leading cause of these infections, but is also quite dangerous. The mortality rate of pneumonia caused by this organism, even when it is treated appropriately with antibiotics, is 5%, making it one of the leading causes of death in the country. In the elderly, pneumonia is the leading infectious disease cause of death and the fifth leading cause of death overall. There are well over a million people hospitalized every year with pneumonia. Streptococcus pneumoniae has managed, in the last four or five years, to develop resistance to commonly used antibiotics. Ten years ago the mainstay of antibiotic therapy for Streptococcus pneumoniae was penicillin and now 30-40% of the Strep pneumoniae in this country are resistant to penicillin. The same is true for a group of antibiotics know as macrolides, which include products like clarithromycin (Biaxin) and azithromycin (Zithromax). Thirty percent of Strep pneumoniae are now resistant to macrolides and 25% of Strep pneumoniae are resistant to multiple classes of antibiotics, creating a significant challenge for physicians. FACTIVE has approval from the FDA for the treatment of community-acquired pneumonia (CAP) that is caused by the strains of Strep pneumoniae that are resistant to multiple classes of anti-infectives. That makes it an important new drug.” CEOCFOinterviews: Will physicians be using FACTIVEŽ to treat infections initially? Mr. Rauscher: “Yes, we expect that they will for certain types of patients. When a patient presents to a doctor with a respiratory tract infection, the physician does not know which microorganism is causing the infection. To identify the organism, a physician has to take a specimen from the patient and send it to the lab. Typically, they will not get an answer for a couple of days. Physicians can’t wait for a couple of days with a patient with pneumonia; they need to start treatment right away. The physician has to make a judgment based on the history of the patient and the condition of the patient. It is the recommendation of the Infectious Disease Society of America that when a patient has pneumonia and some kind of co-morbidity, such as heart disease, diabetes or a pulmonary condition, the first choice single agent for these patients should be a product from the respiratory fluoroquinolone class, of which FACTIVE is a member. We believe we have the most active of the respiratory fluoroquinolones and certainly the most active against Streptococcus pneumoniae, therefore FACTIVE represents a very good first choice when a patient presents with some type of co-morbidity.” CEOCFOinterviews: If yours works so well, why shouldn’t it become the standard at some point? Mr. Rauscher: “We think that in certain patient populations we could make a good case that our product should be a first choice and the standard. Opinion leaders, like those at IDSA, have identified the at-risk patient populations most likely to benefit from our product. FACTIVE may become the standard for patients with co-morbidities and for patients who recently had antibiotic therapy.” CEOCFOinterviews: People are living longer and diabetes and chronic diseases are very prevalent! This would help create a larger market for you. Mr. Rauscher: “The majority of patients who get pneumonia have some type of underlying chronic condition. Infections are more dangerous in these patients because of the additional vulnerability caused by their underlying chronic medical condition. We all get older and eventually we start to get these conditions, and we become more vulnerable to bacterial infections as a result.” CEOCFOinterviews: As CEO, what are your functions throughout the day? Mr. Rauscher:
“I try to spend a third of my time in each of three areas. About a third of my
time is devoted to communicating with shareholders, dealing with financial planning issues
for the company and talking to institutional investors. Another third of my time is
devoted to sales and marketing efforts. We are ready to launch our first product and
building a sales and marketing team. I have spent most of my career in pharmaceutical
sales and marketing, so I am intensely involved. The final third of my time is spent on
clinical development, new product research and overall organizational development. At any
point in time we have four or five different new product activities that we are
evaluating. For every 20 that we evaluate, we might select three or four that we really
want to pursue, so we spend a lot of time trying to understand those opportunities.” Mr. Rauscher:
“We are big believers that the emerging biopharmaceutical companies are an
interesting place for investors to get good returns these days. If you look at large and
successful pharmaceutical companies, they are pretty well studied by analysts and
investors know what they are getting. The emerging pharmaceutical companies tend to be new
and they represent interesting opportunities if investors can find the ones that are most
promising. We think we are an attractive choice among emerging pharmaceutical companies
because we are a fully integrated company. We aren’t just involved in research, we
are actually commercializing our own approved product which we will launch into the U.S.
marketplace this year. The product has a great profile; it fulfills a medical need and has
a long patent life that runs to the end of 2015 with the possibility of extension to 2017.
In addition to having a product ready to launch, we have a novel second antibiotic in
clinical development, which fills an important medical need in the hospital setting. The leadership team in the company has been drawn from the pharmaceutical industry. All of the senior management used to work for large drug companies. We not only have a great deal of experience in clinical development and registration of pharmaceutical products, particularly anti-infectives, but also a lot of experience in the sales and marketing of these products. I think that for investors that like to look at emerging pharmaceutical companies, we represent a compelling investment opportunity.” disclaimers |
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