For Scios CEO, Sale Is Close to the Heart
As Scios Inc. accepted a $2.4-billion cash offer Monday to sell the company to pharmaceutical giant Johnson & Johnson, Scios Chief Executive Richard Brewer made plain his desire: to persuade J&J; to take the biotechnology firm’s much-coveted arthritis drug and develop it into a treatment for cancer patients.
His reasons are both professional and personal: The 51-year-old Brewer has myeloma, the blood cancer that might be helped by Scios’ arthritis pill.
Although Sunnyvale, Calif.-based Scios is one of the nation’s oldest biotech companies, it remains unprofitable and has on the market only one product, which treats congestive heart failure.
What attracted J&J;’s $45-a-share bid, in large part, was the arthritis drug that Scios is experimenting with. Known as SCIO-469, it targets p38, an enzyme responsible for inflammation in rheumatoid arthritis and other diseases. Now in its second round of human tests, the drug could become a billion-dollar-a-year product if approved, analysts say.
Yet in recent weeks -- just as J&J; was closing its negotiations with Scios -- Brewer became convinced that SCIO-469 also had another potential application: to help cancer patients like him.
Persuading his new bosses to go forward in myeloma might be his greatest challenge, however. J&J;’s pharmaceutical group president, Joseph Scodari, said Monday that the cancer studies are interesting but preliminary, while the arthritis treatments seem very promising. Any opportunity in myeloma is a long way off, he said.
Asserted Brewer, a former marketing chief at Genentech Inc.: “When they see what we have, the data we collected, I think we can convince them. Otherwise, I’ll have to put on my selling shoes.”
Scios set out to develop the arthritis pill seven years ago, almost out of desperation. It didn’t have the resources to compete with Amgen Inc. or Genentech, giant biotech companies that make injectable drugs. So Scios hired chemists and set out to make pills targeting p38, a substantially cheaper but no less risky route.
There were agonizing misfires before SCIO-469. One drug showed promise, but it couldn’t be taken orally. A second drug also looked good, but scientists couldn’t press it into a pill.
“It was a powder that had to be mixed with water,” recalled George F. Schreiner, Scios’ chief scientific officer. “Let’s face it, patients aren’t going to drink their medications, like Tang.”
As Scios researchers plugged away, the field grew crowded. Virtually every large pharmaceutical company invested in a similar drug. Almost daily, there were rumors that a competitor had leaped ahead.
Slowly, though, big companies such as GlaxoSmithKline and Boehringer Ingelheim either dropped out of the race or grew quieter about their research. By last fall, it became clear that Scios was in the lead, though the crucial round of human tests remains.
As Scios perfected its pill for arthritis, Brewer faced his private struggle with cancer. The first sign of disease came in May 2000 when the executive felt a twinge in his back. The pain worsened, and he went to a doctor, who told him he had a compressed disk.
But his condition didn’t improve with rest. By the spring of 2001, Brewer could not stand upright and had to sleep in a chair to avoid intense pain. At the recommendation of his doctor, Brewer had a surgeon inject plastic into his spine to cushion the damaged disk. During the procedure, the surgeon also took a biopsy.
Driving to work days later, Brewer answered a call on his cell phone. It was his doctor. Brewer learned that he had myeloma, a cancer he had never heard of. He pulled onto the shoulder of the 101 Freeway to compose himself. Then he drove home.
Brewer underwent high doses of chemotherapy, then a risky bone marrow transplant to restore damaged tissue. A year later, he is in remission. He takes the drug thalidomide to prevent a recurrence, but it makes him drowsy. He also has no feeling in his feet, a result of nerve damage from chemotherapy.
“Everything is rearranged after this,” he said. “You are not the same.”
Then, a few weeks ago, Brewer spotted an article in a newsletter about a laboratory study that linked p38 to myeloma.
The researcher was Kenneth Anderson of the Dana Farber Cancer Institute in Boston, an authority on the disease. Brewer turned the newsletter over to his scientists and asked them to dig deeper.
They contacted Anderson who explained that p38 releases chemicals that spur the growth of cancerous myeloma cells. In theory, if a drug blocks p38, the tumor can’t grow. “Indirectly, it kills cancer cells,” Anderson said.
In an interview Monday, Anderson was cautious about prospects for SCIO-469, which he hasn’t studied.
But to Brewer, SCIO-469 could be another wonder drug such as Gleevec, the Novartis leukemia pill that helps control the disease.
He told Scios’ scientists to think about how to test the drug beyond just arthritis, and he isn’t ready to scrap those plans in the wake of the J&J; deal.
His cancer, he said, has taught him to view the drug industry not only as a CEO but as a patient: “I think we have an ethical obligation to see whether it works.”
Scios’ shares closed Monday at $43.92, up $1.72, on Nasdaq. J&J;’s stock rose 20 cents to $52.04 on the New York Stock Exchange.
