Wednesday, December 10, 2008

In Follow On Biologics We Trust

Typically, Big Pharma business briefing days aren't known for being newsy events. Another year, another ho-hum pipeline update--complete with the requisite hyperbolic biodollar citations for clinical candidates to appease investors. But in the case of yesterday's annual Merck confab, that certainly wasn't the case.

At its day long event, the Big Pharma revealed the creation of Merck BioVentures, an ambitious new business unit with a heavy emphasis on follow-on biologics that aims to launch at least six such products in the 2012 - 2017 time period. The group will rely heavily on proprietary technology obtained when Merck bought the glyco-engineering biotech GlycoFi back in 2006 for $400 million.

In an interview with "The Pink Sheet" DAILY, Frank Clyburn, the newly appointed senior VP and general manager of MBV, noted that Merck plans to spend $1.5 billion over the next seven years in the hopes of putting at least five follow-on biologic candidates in the clinic by the end of 2012. "We are going to look at developing follow-on biologics in a number of therapeutic areas, a very diverse portfolio," Clyburn said.

The company is already 20% there. The only FOB Merck was willing to discuss specifically was its pegylated erythropoietin for anemia, a molecule called MK2578 designed to compete with Amgen's Aranesp currently in clinical trials that could launch as soon as 2012.

In comments to analysts and the press, CEO Richard Clark also played up the importance of FOBs to Merck's future growth strategy. Admitting that "2009 will be an important year of transformation and execution for us," Clark noted that "follow-on biologics represents a significant market opportunity due to the extensive patent expiries of leading biologics in 2017."

It is so nice to be right.

One of our favorite themes here at IN VIVO Blog--in addition to the potential benefits to biopharma of risk mitigation strategies--is that Big Pharma has a huge opportunity to become a leader in FOBs.

Think about it: as Congress continues to mull over FOB legislation, its increasingly unlikely that they will consider an abbreviated pathway to approval for these products. Indeed, it's going to take significant expertise on a number of fronts--clinical, manufacturing, and regulatory--to meet the case-by-case standards being contemplated by legislators for follow-on approvals. And, since the products are unlikely to be therapeutically substitutable, companies will also need significant sales and marketing expertise to actually make money on such products.

Who has the requisite know-how? With the exception of Teva Pharmaceuticals, it ain't the traditional generic makers. "Other players with vastly superior capabilities and resources may be at least equally—if not better—suited to participate...such as some large-cap pharmaceutical and biotech companies as well as select mid- and small-cap biotech companies," said Ken Cacciatorre, an analyst with Cowen and Co. in this April RPM feature by Kate Rawson.

A majority of Big Pharma even have the technology platforms to make it happen. Late to the biologics party, a number of Big Pharmas were extremely busy in 2006 and 2007 gobbling up so-called next generation antibody companies in their bid to build capability, especially in areas with already established intellectual property such as the anti-TNF space. In addition to Merck's purchase of GlycoFi, other biopharmas inking deals around next-generation players include GSK (Domantis), BMS (Adnexus), Pfizer (Biorexis), and Wyeth (Haptogen).

But until 2008, when Teva announced it was buying albumin-fusion play CoGenesys, the corporate spin has been about the opportunities to develop novel biologics. Teva's willingness to commit $400 million to its own FOB program seemed to jolt the thought-processes of other biopharma execs. In a matter of months, former GSK CEO JP Garnier was publicly signaling the strategic importance of Domantis' technology because it allowed the pharma to"re-do a monoclonal for everything that is on the market, from Avastin to Rituxan...without infringing IP. With a product that might even have a twist."

At Pfizer's analyst day in March, meanwhile, CEO Jeff Kindler indicated that the New York giant was also considering how to position itself in terms of FOBs. In response to a question about whether an abbreviated approval pathway would prompt the company to start developing follow-on biologics, Kindler responded: "I do think that's an opportunity for us."

But if Pfizer and GSK suggested they were willing to dip their toes in the FOB waters, Merck's news should be taken as a full-scale immersion. And it's really not that surprising. Anyone listening to Merck's financial guidance call last week knows the dire shape the pharma company is in thanks to slumping Zetia and Vytorin sales.

The company needs to do something to jump start its R&D. And using GlycoFi's technology to gain a chunk of the follow-on biologics market, poised to take off under the auspices of a new Democratic administration, is a logical place to start.

Thanks to heavily engineered yeast, Merck can develop specific protein versions that are "best-in-class" with "a better circulatory half-life, targeted tissue distribution and/or increased potency," according to Peter Kim, President of Merck Research Laboratories.

And that is the biological equivalent of the fast follower strategy Big Pharma has perfected so successfully for small molecules. At a time of increasing regulatory risk, what better way to gain a grasp on a new therapeutic modality than to create me-better versions of already well studied and hugely successful molecules such as Rituxan or Enbrel and then market the hell out of them?

It will be interesting to see if Merck's news spurs other Big Pharma down the FOB path. Certainly biotechs, such as Amgen and Genentech need to think carefully about life-cycle management strategies for their own products. Hours after the news broke, Lazard analyst Joel Sendek issued a report urging caution when it comes to Amgen:

"We view Merck’s biosimilar program as a serious long-term threat to Amgen’s anemia franchise. Neupogen follow-on biologics currently marketed in the EU have failed to acquire a very significant share of the market or dent usage of Amgen’s dominant products; however, in our view, Merck represents a more formidable competitor due to its marquee brand name and marketing expertise."
hang-glider dollar bill by flickr user J0nB0n used under a creative commons license.

1 comment:

Anonymous said...

The Innovation of Biologics (Specialty Drugs): How Is Value Defined Regarding Their Use?

Beginning in the late 1970s, biopharmaceuticals were being researched conceptually for potential creation in at that time in some academic institutions throughout the United States. And it was here that actual researchers in fact conducted basic research to identify new product candidates as they applied a great amount of time and effort fueled by their curiosity of what may be possible. This same protocol and passion is applied with biopharmaceuticals and the companies that create them today as it was then.
Known also as Red Biotechnology, it is believed that the first biopharmaceutical therapy ever was synthetic insulin called Humulin, which was made by Genetech in 1982, that utilized what is called rDNA technology, which also is used to produce human growth hormones. Later, the rights were sold to Eli Lilly for this insulin product. Yet Genetech was the catalyst and apex of biopharmaceutical growth then as it is now to a large degree. And such companies are truly research-driven. Today, they employ around 1000 scientists to continue their drive to research potential biologics. And with Genentech remains independent, although Roche owns a large portion of this company.
Biopharmaceuticals are distant and covert and distant relatives of big pharmaceuticals, whose medications are formed by synthetic small molecules, and are carbon based in their design. Due to the lack of innovation and creation of truly unique products in recent years utilizing this method, possibly, large pharmaceutical corporations in particular have become intimate with the innovative biopharmaceutical companies more often now than ever. In fact, large pharmaceutical companies often acquire biopharmaceutical companies that usually are comparatively very small start-up companies often. These large pharmaceutical corporations do this because, along with other reasons, biologics are in fact monopolies due to the undeveloped protocols for biosimiliars, which are the possible copy of what are the generic forms of typical branded pharmaceutical drugs. In addition, biopharmaceutical companies have historically experienced accelerated growth that has proven to be quite lucrative for them. Presently, this biologic industry is an 80 billion or so dollar per year franchise- with roughly 15 percent growth each year with this particular market, it is believed. It has been reported that are about 250 biologics on the market presently, with more to come.
How do these drugs differ from typical drugs that have been made before this advent of biopharmaceuticals? Unlike the small molecule, synthetic, carbon based pharmaceuticals of yesterday, biopharmaceuticals essentially are larger and very complex modified proteins derived from living biological materials, such as antibodies, hormones, or enzymes.
One method of these creations is that a transformed host cell is developed to synthesize this protein that is altered and then inserted into a selected cell line. The master cell banks, like fingerprints, are each unique and cannot be accurately duplicated, which is why there are no generic biopharmaceuticals as of yet, as there is no known process to create them. So the altered molecules are then cultured to produce the desired protein for the eventual biopharmaceutical product. These proteins are very complex and are manufactured from living organisms and material chosen for whatever biopharmaceutical that may be desired to be created. It is difficult to identify the clinically active component of biopharmaceutical drugs. So manufacturing biopharmaceuticals clearly is a different and innovative process, and a small manufacturing change could and has raised safety issues of a particular biopharmaceutical in the developing process, as altering the immune system of a potential user of a biologic therapy is risky. Also, it takes about 5 years to manufacture a biopharmaceutical. And each class has a different method of production and alteration of life forms to create what the company intends to develop. Yet overall, their development methods are rather effective, and cost over a billion dollars to bring to market.
However, there is a risk with biologics themselves, as they alter the immune system of the one receiving biologic therapy intentionally. For about the past 10 years or so, about 25 percent of biologic therapies have had one or more safety-related actions since the time these biologics were approved for marketing. Greater than 10 percent of biologic therapies have black box warnings now with their prescribing information, which indicates a higher level of risk than with other medications. Yet, since the advent of biologics about 30 years ago, the safety of these therapies have been progressively increasing as new therapies are brought to market. Yet the safety issue could be further improved by the FDA increasing their investigation of a biologic agent that is being considered for marketing approval, as well as increased reporting of adverse events after the biologic agent is approved.
Over 20 biopharmaceutical drugs were approved in 2005, it has been reported, and their growth has tripled compared with what the large pharmaceuticals experienced then. Presently, over 20 biopharmaceutical products are blockbusters by definition, according to others. They are overall very effective treatments for what are viewed as very difficult diseases to manage and treat. This is due to the fact that some biologics target specific etiologies of these diseases, while limiting side effects because of the specific way in which such products work. Yet of the nearly 400 biopharmaceutical companies that are publicly traded, about a third are more or less going broke, it has been reported presently. The industry employs about a quarter of a million people in the united states, it is believed.
Unlike traditional medications that have been created in the same way for decades, biopharmaceutical companies seek through their research specific disease targets by genetic analysis and then search for a way to manipulate this target in a very specific way to provide superior treatment for such patients. Furthermore, these products are biologically synthesized and manipulated to maximize their efficacy while not crossing into a patient’s bloodstream.
There are about a dozen different classes or mechanisms of action of biopharmaceuticals that have about a half of dozen different types of uses today. Label alterations for additional disease states occur often as well due to the progressive and novel effectiveness of biopharmaceuticals. Some of these drugs are catalysts for apoptosis of tumor cells. Others may cause angiogenesis to occur to block blood supply to the tumors of cancer patients. Then some biopharmaceuticals have multiple modes of action that benefit certain patient types and their diseases greatly, as with most biopharmaceutical products, the safety and efficacy is evident and reinforced with clinical data and eventual experience with the biopharmaceutical that is chosen to be utilized. And this clinical data is of a different method as well in comparison with what are traditional medications. For example, patients in the clinical trial involving a pharmaceutical are profiled, which allows better interpretation of this clinical data on their products.
The country of Belgium provides the most biotech products to the biopharmaceutical companies in the United States, and the U.S. leads the world in regards to biopharmaceutical product creation- with more than 70 percent of both revenues and research and development expenditures in this country. Canada is ranked number two in this area, others have said.
And with the government health care programs who are the largest U.S. payers for pharmaceuticals, Medicare pays 80 percent of the cost of biopharmaceuticals, as many are administered in the doctor’s office, and Medicare part B covers the cost in large part for biologics.
One issue with biologics is overuse or inappropriate utilization of these therapies, and biopharmaceutical companies are not exempt from federal prescription regulation that exists presently. Amgen, who makes an anemia biologic called Neupogen, recently had to pay a settlement as well as JNJ, who makes an identical drug called Procrit, for rebates and incentives both companies were giving to the users of their products, which were very lucrative benefits, and this resulted in some cases intentional overdosing their patients with these biologics at unreasonable and unnecessary levels, it has been reported. The doctors targeted with these biologics by the makers of these agents are nephrologists and oncologists, as anemia is often seen in their practices for various reasons.
Another controversy involving biopharmaceuticals is that, while they overall are efficacious and safe, the typical cost of biopharmaceuticals is rather unbelievable, as this cost may approach tens of thousands of dollars per month for some of these biologics. Furthermore, with cancer drugs, they are used together with chemotherapy for their treatment regimens in many treatment centers, so the quality of life comes into question if one considers the devastating side effects of chemo treatment. Another criticism of biopharmaceuticals is that, with cancer patients in particular, they normally provide an extension of their life of only a few months. So there is a debate as to whether the value of biologics justifies their cost.
Several years ago, I heard a presentation from Roy Vagelos, former CEO of Merck Pharmaceuticals, and heard him as he spoke to others at Washington University in St. Louis about his views on both the pharmaceutical and biologic industries. And during his presentation, he stated something similar regarding the cost of biopharmaceuticals and asked as well about whether or not the value related to the cost of biopharmaceuticals is truly clinically beneficial for such a brief life extension of cancer patients in particular, for the most part. I happen to concur with his premise.
So there are apparent controversies associated with these unique paradigms and innovations. Yet there are only a few biopharmaceuticals out of many available with debatable benefits with the high price tag. It ends up being what the market will bear for what their makers charge others. Yet the real question is the clinical evidence behind biopharmaceuticals: If a biopharmaceutical stops tumor progression without harming such patients and really extends their lifespan with efficacy that is obvious, then the benefit of such a biological is rather clear. Yet others have argued about the benefits of biological therapies, overall.
Another difference with biopharmaceuticals is that they are also are additionally regulated by what is called The Public Service Act, and are involved in authorizing the marketing of biopharmaceuticals.
With many biopharmaceuticals, such as those used to treat cancer, between 70and 80 percent of them are believed to be prescribed off-label, so it will be interesting on how these drugs will be used in such disease states now and in the future, and how they will be regulated as well.
So the future looks good for this industry, as biologics have tremendous marketing power along with superior therapeutic value with some of the products available, but not all of them. Perhaps they need to improve their absurd cost structure with their agents, as this may improve any negative image others have of the industry now or in the future. A more aggressive approach to bringing to market biosimiliars would enhance the image of this new industry.
Regardless of the challenges and flaws that exist with biopharmaceuticals and their makers, I’m pleased to see the results and realization of true innovation in pharmacology by taking a different path of drug development. Furthermore, I believe others should behave in a similar manner and be inspired by the biopharmaceutical companies and what they have done and continue to do for the benefit of patients regarding the issue of innovation.
“The progressive development of man is vitally dependent on invention.” --- N. Tesla
Dan Abshear (what has been written is based upon information and belief)