Here's what WSJ had to say about Searle:
The Wall Street Journal Interactive Edition -- June 2, 1998
Once a Floundering Business,
Searle Is Now Pharmaceutical Plum
By THOMAS M. BURTON
Staff Reporter of THE WALL STREET JOURNAL
Six years ago, Monsanto Co. fired one-fifth of the 10,000 employees at its G.D. Searle pharmaceutical unit outside Chicago and explored selling the floundering business.
Now, American Home Products Corp. is planning to acquire Monsanto, and Searle is one of the prizes. With a blockbuster arthritis drug called Celebra on the way and promising research on cancer and heart disease far along, Searle's influence far outweighs its modest size in the rapidly consolidating pharmaceutical business. Indeed, Searle's drug research is so successful that some analysts estimate that the company, if traded separately, would account for more than half of Monsanto's market value.
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Searle's turnaround was engineered through a combination of investing relatively heavily in drug research and killing off drug development early if a new product appeared to be falling short.
The man behind the revival is Philip Needleman, an intense scientist who left his research lab at Washington University in St. Louis in 1989 and now is Monsanto's senior vice president and chief scientist. In that role, he runs Searle's pharmaceutical research.
A Cause Celebra
Dr. Needleman is also the man behind Celebra, the first of a new class of arthritis drugs. Drug industry analyst Hemant Shah predicts Celebra, which could be on the U.S. market by next year, would ring up $2 billion to $3 billion in annual sales.
At $600 million last year, Searle's research spending is modest compared with what the industry giants spend. But the unit, based in Skokie, Ill., appears to have a relatively high success rate. Its arthritis drug is the first of a class of medicines known as "COX-2 inhibitors." These drugs block an enzyme, known as COX-2, that occurs in various diseases, including arthritis.
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Searle's Pipeline
DrugDiseaseStatusCelebraArthritisFinished Phase III (advanced) clinical trialsValdecoxibArthritis, painPhase II (moderately advanced) clinical trialsXemilofibanCardiovascular diseasePhase IIIOrbofibanCardiovascular diseasePhase IIICelebra-aCancer, Alzheimer'sPhase IIDaniplestimCancerPhase IIIMyelopoietinCancerPhase II
a-Same drug, new use
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But because the enzyme also appears in other seemingly unrelated illnesses, including cancer and Alzheimer's, the drugs may be useful in treating or preventing them as well. For instance, Celebra appears useful in halting the formation of precancerous polyps in the colon and thus may play a role in cancer prevention, says Peter B. Corr, Monsanto's senior vice president for discovery research.
In cardiovascular disease -- potentially a far bigger market than arthritis --Searle has two other promising drugs, called xemilofiban and orbofiban, that are known as antiplatelet agents. Xemilofiban is being tested as an oral drug to be taken for several months to prevent an artery from blocking up after coronary angioplasty or the placement of coronary stents. Orbofiban would be taken during a heart attack or stroke to prevent further blood-clot formation.
And in cancer, Searle has a drug in the works called myelopoetin, which appears to bolsters the white-cell count during chemotherapy.
Dr. Needleman is ruthless about cutting off drugs early in lab research if they don't survive what he calls "killer experiments" -- acid tests of their usefulness. That saves precious resources for other new drugs.
In addition, Searle's research spending isn't so small considering the company's size -- $2.4 billion in sales in 1997 out of total Monsanto sales of $7.5 billion. Searle spends about 25% of its sales on drug research, compared with spending of about 15% at some leading drug companies.
"Phil's the only guy I know who looks at an unlimited budget and exceeds it," jokes Richard U. DeSchutter, Searle's co-president.
Entering the Top Ranks
The combination of Searle's laboratories with those of American Home would catapult the combined entity into the top ranks of the U.S. pharmaceutical industry. Together, the two will be investing $2 billion a year in drug research, placing the combined company on a par with the industry's leaders. By comparison, Pfizer Inc. invests about $2.2 billion a year and Merck & Co. $1.9 billion in research, analysts say.
Before Dr. Needleman arrived at Searle, the company had a long history of household-name products like the laxative Metamusil and the motion-sickness drug Dramamine, but it had an anemic new-drug pipeline. Research was diffuse, and much of it wasn't very promising, company officials now say. Searle's heart drug Calan went off patent. The 1992 layoffs, along with a related $425 million charge against earnings, "were when Searle hit bottom," says Mr. DeSchutter.
Dr. Needleman decided that Searle, because it was competing scientifically with much bigger companies, needed to have a higher percentage of "hits" among drugs it was working on.
"The big companies have an enormous number of shots on goal," he said in a recent interview. Because Searle has fewer of them, it has to aim more accurately. To try to keep up, Searle was $64 million over its research budget at one point last year.
But the investment appears to be paying off: Searle is neck-and-neck with Merck in the race to get its arthritis drug approved first, hoping for approval from the U.S. Food and Drug Administration by late this year or early next year.
Even as he was investing heavily in promising research, Dr. Needleman was jettisoning research programs into ulcer, central-nervous-system and heart-rhythm drugs. "We're really at the limit now," Dr. Needleman said in the interview, which he gave before the announcement of the American Home merger.
In the case of the anti-arrhythmia drug that Searle abandoned, Dr. Needleman recalls, "We gathered the team, mourned for half an hour and moved on."
In the case of Celebra, the Searle research team concluded that the "killer experiment" to prove or disprove the drug's worth early on would be if it relieved severe tooth pain.
"We knew that if we got dental pain, the drug would also get arthritis," Dr. Needleman says. The team did the dental-pain experiment within the first year after the first arthritis patients received the drug. Celebra survived the experiment, and so far it isn't producing the gastrointestinal side effects associated with traditional arthritis drugs. |
