Travesty Within Tragedy

For those of you who haven’t really had much sympathy for Madoff fraud victims, here’s some food for thought. It seems that at least 147 foundations had all their assets invested with Big Bernie – money that was to be allocated to several non-profits, charities, research & social projects - further proof that there is no room for sustainable philanthropy in traditional Laissez-faire economics.

In addition to significant cutbacks in securing any sort of traditional funding, healthcare research & science initiatives may well be forced to go on hiatus or depend solely on government funding. Here are some of the notable victims (direct & coincidental) with ties to life sciences:
- The $1 billion Picower Foundation of Florida, whose beneficiaries include a neurological research institute at MIT (led by nobel laureate Susumu Tonegawa), children’s health fund, a planned parenthood group, and Parkinson & diabetes research at UPenn.
- The $1.75 million Auld foundation of Seattle, supporter of the Seattle biomedical research institute.
- The $15 million Elie Wiesel Foundation for Humanity - Over $5 million of the Shapiro Foundation donations to various health & human services.
- The Fiterman Endowment Fund for Digestive Diseases.
- The Gift of Life Bone Marrow Foundation which is now $1.8 million short of its projected annual budget.
- North Shore Long Island Jewish Health System which had a $5.7 million gift invested with Madoff.

Madoff's absence of integrity is no longer shocking, but what continues to strike me is how such a sociopath can gain such an immensely deep level of trust within a circle valued for its smarts (arguable), without ever being questioned. Even more sickening, is the lack of due diligence and the level of laziness & stupidity demonstrated by the above mentioned foundations. Not only do they decide to invest all assets in one basket, but what exactly were the board’s upto? To quote a comment on a blog - “Were these boards having investment advisors come in monthly or quarterly and explain exactly where the funds were and how they were diversified? And questioning why they were not riding the market more instead of such fabulously steady returns?”

Private foundations are too often treated as extensions of the founder’s estate - to be managed with the same care or lack of care - when by law they are separate entities obligated to serve the public good. The losses of these foundations are the public’s losses, and it’s important to remember they were funded 1/3 or more by the U.S. Treasury through tax deductions. In the wake of this scandal perhaps the best option is to limit the types of investments & securities that can be held by foundations & pension funds, in order to secure and to maintain their exempt status.

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Dapoxetine: The Final Blockbuster?

Janssen-Cilag (a Johnson & Johnson company) announced on Feb 10 that it had received regulatory approval in Finland and Sweden for its dapoxetine drug Priligy™. These approvals follow the December 2008 decentralised marketing authorisation procedure adopted by seven European Union countries: Sweden, Austria, Finland, Germany, Spain, Italy and Portugal. The two Scandinavian countries can now boast another claim to fame: being the first nations to offer their men an approved treatment for Premature Ejaculation (PE).

Dapoxetine hydrochloride is a novel, selective serotonin reuptake inhibitor (SSRI) compound that last made headlines in 2005 when the US FDA declined to approve the drug for PE. The reasons cited back then were lack of sufficient evidence and side effect issues. Dapoxetine has now been extensively evaluated in five randomised, placebo-controlled Phase III clinical trials involving more than 6,000 men with PE and their partners. More details about that here. J&J hopes that their comprehensive trial programme pays dividends, and has applied for market authorization in the other 5 European nations with a decentralized system as well as 10 other countries, including Canada, Australia, Mexico and Turkey. Successful approval in these markets may well mean that it is only a matter of time before the FDA is faced with a second review of dapoxetine.

So why the big fuss you ask? Well, according to a well publicized 2005 study in the Journal of Sexual Medicine, PE is the most common male sexual dysfunction affecting between 20-30% of males (It just so happens that the study was funded in part by J&J and its subsidiary Alza). Nonetheless, it is a legitimate condition that millions suffer from, and at a time when pipelines can no longer cater to blockbuster categories, J&J finds itself sitting on a golden cash cow. The US erectile dysfunction (ED) market (Viagra, Cialis and Levitra) was $3.4 billion in 2007 and continues to grow; according to industry analysts, the market for PE drugs is estimated to be as large as the erectile dysfunction market. In contrast to ED, which is more prevalent in men over 50, PE is a problem encountered by sexually active men of all ages. Importantly, there is no major competition being faced as both Pfizer & GSK abandoned their candidate drugs after the FDA rejection in 2005. A Massachusetts company – NeuroHealing Pharmaceuticals- has a d-modafinil (of Provigil fame) isomer in development for PE, but they don’t expect to commence clinicals until early 2010.

Even more astonishing (and a testament to J&J’s superior deal-making capacity) is that the rights to dapoxetine were bought for a meager $65 million. Dapoxetine (originally known as LY 210448) was one of David Wong’s creations (others include Prozac, Cymbalta, Stattera) in the late 80’s when Eli Lilly actively began pursuing the depression market. However, after several failures, Lilly sold the patent to J&J in 2003 subsequent to their purchase of Alza. Although it is known that high serotonin levels do play a major factor in lengthening ejaculatory response, off label use of currently approved SSRI’s in treating PE have been largely discouraged due to the side effects such as ED, loss of libido, nausea, serotonin syndrome, and increased suicide risk. The beauty of dapoxetine however, is its very short half life of 1.2 hours, meaning men can take the medication on demand with low risk of accumulation.

Whether dapoxetine is effective or if it will be a successful product are no longer valid questions. In a post Viagra world, it is almost certain that it will achieve near-cult status. The real question is whether dapoxetine’s success will be its eventual downfall. Not unlike the COX drugs, the potential for flagrant prescribing of dapoxetine is high. Combined with what will certainly be a high rate of abuse, it will be interesting to see what medical precautions & dispensing limitations are placed. One thing is for sure, a dapoxetine tragedy can not be blamed solely on the manufacturer. This time around, the entire medical community will have to shoulder the responsibility.

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Canadian Brain Drain to continue

The Canadian science community, hoping to harness energy from the southern winds of change, had some long faces as the Federal Budget was announced on January 28. As President Obama finds momentum for his $16 billion radical cash infusion into R&D, innovation, and academic infrastructure, the Canadian conservative government seems to be of the opinion that scientific research should not cost so much and investing in the blue collar economy is the best way to get out of recession. So lacklustre was the 2009 budget that the biggest headline seems to be a 15% Temporary Home Renovation Tax Credit! For all the Conservatives reading this – No, I have not forgotten about the miserly TFSA or the extra $500 you will save on taxes only to be ripped off at the gas stations. I am glad you lot are so easy to please. But, I digress – lets stick to what has been allocated to life science initiatives.

Here are the numbers:
• $750 million for the Canada Foundation for Innovation (CFI)
• $500 million for Canada Health Infoway
• $87.5 million for Canada Graduate Scholarships disbursed by NSERC, CIHR, SSHRC (over 3 years)
• $3.5 million for Industrial Research and Development Internship program (over 2 years)
• $200 million for the NRC Industrial Research Assistance Program (over 2 years)
• $250-million for deferred maintenance at federal research labs (over 2 years)
• $2 billion to “repair, retrofit & expand” infrastructure at universities & colleges.
• $80 million for Transformative Technologies program
• $1.5 billion each to Export Development Corporation & Business Development Bank of Canada.
• The taxable income threshold for refundable Scientific Research & Experimental Development (SR&ED) tax credits increased from $400,000 to $500,000

Where is some of this money coming from you ask? How about:
• $27.7 million cut from the NRC budget
• $147.9 million cut from the NSERC, CIHR, SHRC (over 3 years)
• $167.8 million cut from Health Canada & Public Health Agency of Canada (over 3 years)
• No new funding for Genome Canada

Upon initial review, one could say that it is a surprisingly decent “stimulus” package to spur on the knowledge based economy. But like most things in our society, the fine print always makes us cringe. Most of the increased funding comes with significant caveats, while the rest comes simply through re-allocation of funds from the total organisational budget to more focused initiatives.

For instance:
• The $2 billon earmarked for infrastructure projects can only be allocated if 50% of project costs are funded through other sources. Yet another great excuse for universities to raise tuition.
• Of the $750 million received by the CFI, $600 will be reserved for new competitions in “support of areas of priority identified by the Minister of Industry”. The conservative agenda will certainly be promulgated through this minor detail (no word of course on whether this is a use it or lose it deal).
• The money for maintenance of federal labs will be used to modernize government labs that submit a “realistic business plan” for their transfer to university, business, or non-profit group. In what seems to be a precursor to privatization of healthcare, the present government is clearly divesting interest in federally funded research capability.
• The cuts to Health Canada & PHAC will be achieved through streamlining operations it seems. Now while I certainly do believe both agencies could become a lot leaner, I also believe that both are understaffed. I hope the governments “strategic review” is not innuendo for layoffs.
• The provisions made to help small & medium life science enterprises secure capital is simply abysmal compared with other nation’s plans. France has already announced a tripling of their equivalent tax credit program, Norway has created a new fund valued at almost $500 million solely for biotechnology, the UK is currently working to confirm a new national fund specific to life sciences and the US is contemplating allowing the sale of tax losses for cash infusion to small emerging technology based companies.


This is not stimulus, and it certainly is not based on forward looking public policy. It is clear that the government intends to make the disbursement of allocated monies as challenging as possible. What they don’t seem to realise is that Canada will be falling behind the rest if we continue to ignore the competitive environment other nations will be adopting to help grow and stimulate their knowledge based industries that are vital to economic recovery in both the short and long term.

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