Deals Of The Week: A Top Analyst Sees R&D Productivity Improving, Now Where’s The Value

Recently there’s been a more positive outlook on the industry from some sectors of Wall Street built on conviction that pharma has really improved its pipelines and, by implication, its R&D decision making capabilities, helped in part by its persistence in evolving new and more flexible business models. Opinions are still mixed on this score, but the sea-change in sentiment was underscored in a talk earlier this week by Citibank’s managing director of global healthcare, Andrew Baum.

Speaking at Elsevier’s Pharmaceutical Strategic Alliances conference on Sept. 19, Baum, who is not shy about criticizing the industry, said he is encouraged that it has successfully evolved to deliver value through each period of change and “this time will not be an exception.” Efforts in the past two to three years to down size and revamp its R&D organizations -- led by AstraZeneca and including rate-changing shut-downs such as Pfizer's Sandwich labs -- have in reality resulted in less spent on fixed-cost research and fewer research sites, in absolute terms. And that shrinkage is continuing. "Three-quarters of the global pharma industry is existing research and re-allocating capital to externalization," he added.

More than that, Baum argues that “the presence of research labs is a material driver of bad decision making and shareholder value destruction, as research labs kept drugs alive that should have been killed."

But improving R&D is straightforward compared to what Baum sees as the biggest challenge facing pharma in the next 10 years: the demonstration of value to payers. “That is where there are enumerable problems and that should be the major preoccupation of any CEO in pharma for next 10 years or so,” he said. Delivering affordable value will require a very different paradigm. “The impact of taking a 20% price reduction or anything that reduces profit by 20% kills the economic value of a molecule."

Ongoing changes in the U.S. and European healthcare landscape forcing value to the forefront include provider consolidation in the increasingly complex U.S. healthcare infrastructure, European pricing pressures, and the advent of more sophisticated IT systems, including electronic health records, that allow better methodologies for tracking value. In the U.S., where these changes coincide with the introduction of accountable care organizations -- admittedly still a small part of the overall infrastructure -- accurate identification of areas of under treatment or over treatment is possible and that has broad implications for pharma. That said, “it’s not entirely clear that this will be net positive or negative for the [pharma] industry,” he observed. “There is mixed evidence whether ACOs and capitated care will result in reduced costs, but there is the beginnings of evidence.” The opportunity to leverage data and capture patient information "has to be weighed against more rational implementation of existing care through use of pathways."

While R&D improvement is underway, other key factors influencing his optimism are improving regulatory climate, government incentives to support the industry -- notably around tax breaks -- and a modest improvement in relations between the industry and health technology assessment agencies, albeit from a very low base.

FDA’s appetite for risk is increasing, highlighted by its recent willingness to accept neoadjuvant data for the approval of a breast cancer drug that previously would have required a progression free survival endpoint. In taxes, a number of governments are compensating for rigid HTA views and very heavy price reductions by implementing ‘patent boxes’ which reduce the rate of corporation tax levied on profits derived from patents. European countries that have such programs include the U.K., Belgium, The Netherlands, and Spain, according to a report Baum’s group published in late 2011.

The industry's embrace of externalization is certainly evident in the plethora of deals announced this week, so without much ado, let's jump to ...

United Therapeutics/Ascendis Pharma: United Therapeutics has licensed exclusive rights to apply Ascendis Pharma’s TransCon technology platform to treprostinil, the active ingredient in its flagship product Remodulin. Treprostinil is a synthetic analog of prostacyclin. These rights will additionally extend to the development of prostacyclin, prostacyclin analog, and prostacyclin-related products for pulmonary arterial hypertension, and UT will hold worldwide commercial rights to products resulting from the collaboration. Financial terms were not disclosed. Ascendis’ TransCon technology is designed to release a drug in a precise, time-controlled way, enabling a longer-lasting therapeutic effect. A subcutaneous infusion formulation of Remodulin has been approved in the U.S. and EU. UT’s COO Roger Jeffs said  that a formulation of treprostinil using the TransCon technology may also eliminate injection site pain and reactions that frequently occur with continuously infused subcutaneous Remodulin.” This collaboration is Ascendis’ first since its 2010 deal struck with Sanofi. --Michael Goodman 

Baxter/Onconova: Privately held Onconova sold European rights to its promising Phase III cancer drug Estybon (rigosertib) to Baxter in a Sept. 19 deal. The drug is in late-stage trials for myelodysplastic syndromes, a group of disorders that often lead to acute myelogenous leukemia, as well as Phase II/III studies in pancreatic cancer. The alliance nets Onconova $50 million in upfront funding, plus $515 million in milestones that could pay out before the drug is even commercialized. Subsequent sales milestones and royalties could add more value to the deal. Baxter receives full rights to all indications of rigosertib in 32 countries, including the full European and adjoining territories such as Norway, Switzerland and Turkey. Deerfield, Ill.-based Baxter took a $50 million equity position in Onconova in a separate deal last month. Rigosertib targets both the PI3-K and PLK pathways, each of which is implicated in solid tumor and blood cancers. Baxter already has a hematological sales force, as well as modest holdings in cancer that include both marketed products and pipeline drugs. Onconova previously partnered rigosertib with Japan’s SymBio Pharmaceuticals in Japan and Korea. The Newtown, Penn.-based company expects to use some of the proceeds to support ongoing trials for lymphoma drug ON-013105 and Ex-RAD, a radioprotectant. –Paul Bonanos

Bionomics/Eclipse: Australian biotech firm Bionomics has acquired San Diego-based private biotechnology company Eclipse Therapeutics in a $10 million deal, from which Eclipse shareholders – including Biogen Idec – will emerge holding about 6.5% of Bionomics' issued capital. A spin-off of the Biogen Idec oncology franchise, Eclipse is developing drug candidates that target cancer stem cells (CSCs), thought by some to be the “seeds” at the root of cancer. Eclipse’s lead compound, ET101 – aimed at an undisclosed CSC target that is over-expressed on most solid tumors – is expected to move into human trials in 2014. "This acquisition elevates and expands Bionomics’ oncology pipeline beyond BNC105, our primary cancer drug candidate, which is now at advanced clinical stages,” said Bionomics CEO Deborah Rathjen. “It also establishes Bionomics as a global leader at the forefront of cancer stem cell therapeutics … and provides Bionomics with an important strategic base in the U.S.” Eclipse co-founders Jonathan Lim, Peter Chu and Chris Reyes all will take up roles with Bionomics, with Lim becoming a non-executive director, Chu the company’s VP of U.S. operations and cancer biology, and Reyes, VP, R&D biologics.—James Dunn

Dyax/Kadmon: Dyax and Kadmon signed a strategic licensing agreement Sept. 20 under which Kadmon has been granted an exclusive worldwide license for the development and commercialization of DX-2400, a fully human monoclonal antibody that inhibits matrix metalloproteinase 14. Specific deal terms were not disclosed, but Dyax will receive an upfront payment and can earn development and commercial milestones, as well as up to double-digit, tiered royalties on commercial sales. The deal follows a July 2011 agreement in which Kadmon obtained a non-exclusive license to Dyax’s antibody phage display libraries for drug-discovery work. Now, Kadmon is responsible for further development and commercialization of ‘2400, currently in IND-enabling studies. “This agreement expands on our longstanding relationship with Dyax and [its] antibody technology platform," Kadmon Chairman and CEO Samuel Waksal said. “We believe MMP-14 is an important piece of the puzzle for overcoming cancer’s growth, proliferation and resistance mechanisms. In particular, its role in tumors and ocular disease neovascularization represents a unique target opportunity that may be complementary to other anti-angiogenic therapies on the market and in development.” —Joseph Haas

MacroGenics/Servier: Expanding upon their December 2011 licensing deal around Phase I anti-cancer antibody MGA 271, MacroGenics and Servier have signed a territorial option agreement for the development and commercialization of three DART (Dual-Affinity Re-Targeting) antibody therapeutics aimed at undisclosed targets. MacroGenics will receive a $20 million upfront payment, and could earn option fees and preclinical milestones reaching up to $80 million under the deal. The deal also calls for clinical, regulatory and commercial milestones that could reach $1 billion, as well as tiered, double-digit royalties on product sales. The Rockville, Md.-based biotech retains full development and commercialization rights to the three programs in North America, Japan, Korea and India, while Servier, of Suresnes, France, acquires an option for an exclusive license covering the rest of the world for each program. The two firms will co-fund and conduct R&D activities leading up to Servier’s go/no-go decision points. Servier can exercise one of the options prior to IND submission, and the other two after initial Phase I trials are conducted for each. For each program Servier elects to option, the two companies will split clinical development costs.—J.A.H

Bristol-Myers Squibb/Vanderbilt University: Already partnered with Johnson & Johnson, Seaside Therapeutics and Karuna Pharmaceuticals on the development of allosteric modulators for neurological indications, the tech-transfer folks at Vanderbilt University are at it again. The school’s Center for Neuroscience Drug Discovery (VCNDD), headed by former Merck researcher Jeffrey Conn, signed an agreement Sept. 21 with Bristol-Myers Squibb to collaborate on the discovery, development and commercialization of positive allosteric modulators (PAMs) to treat Parkinson’s disease. VCNDD will receive an undisclosed upfront payment along with multi-year research funding for continuing discovery efforts. The collaboration will focus mainly on VCNDD identifying potential drug candidates that act on the metabotropic glutamate receptor 4 (mGluR4), and then turning them over to Bristol for development and potential commercialization. VCNDD will be eligible to earn development milestones and royalties on product sales under the collaboration. Previously VCNDD’s discovery efforts in Parkinson’s received funding support from the Michael J. Fox Foundation. The partnerships with J&J and Karuna focus on schizophrenia, while the Seaside tie-up works toward therapies for Fragile X syndrome, autism and other brain development disorders.—J.A.H

Novartis/Selexys: Selexys Pharmaceuticals of Oklahoma City announced a $23 million Series A round led by MPM Capital on Sept. 19 but also signed a side deal granting Novartis an option to acquire the biotech if Selexys’ lead compound, an anti P-selectin antibody called SelG1, succeeds in a Phase II trial against sickle-cell disease. With the cash infusion, the trial is slated to start next year and finish possibly in 2015. Several Selexys top managers, including President and CEO Scott Rollins, are veterans of the rare-disease firm Alexion. Novartis’ purchase option calls for up to $665 million in upfront payments and potential earn-outs. Founded in 2002 with technology exclusively licensed from the University of Oklahoma, Selexys is developing antibodies for acute and chronic inflammatory and thrombotic diseases. Specifically, the company is focusing on the adhesion of white blood cells – the first step in the inflammatory process – which involves the interaction of the P-selectin and PSGL-1 proteins. SelG1, a P-selectin antagonist, is a humanized monoclonal antibody which completed Phase I late last year for vaso-occlusive crisis, a painful complication in sickle-cell disease. The antibody was granted orphan drug status by the FDA in 2008. Selexys believes SelG1 will fill the void left by the one and only approved medication for sickle-cell disease, hydroxyurea, which only benefits half of the patients, and even they don’t respond completely to the drug.—Alex Lash and J.A.H

Covance/GNS: Cambridge, Ma.-based data analytics company GNS Healthcare has teamed up with contract research organization Covance to help pharmaceutical companies create more efficient drug development methods using GNS’s super computer-driven Reverse Engineering And Forward Simulation (REFS) data analytics platform. The collaboration will use data provided by Covance to create models that can better predict the success of a drug given certain patient characteristics. “Our collaboration with Covance combines our unique collective resources and capabilities to tackle what has previously been an intractable challenge—improving dismal clinical drug development success rates,” said Colin Hill, president and CEO of GNS. The companies are going to start with models for type II diabetes. Covance is hoping that the technology will help it offer its clients a forecasting option. Financial terms of the deal were not disclosed. The work is similar to that done by GNS for other clients including Huntington’s disease models for the CHDI Foundation and modeling work on inflammatory work for Bristol-Myers Squibb.--Lisa Lamotta

TransCelerate BioPharma: Unveiled Sept. 18, TransCelerate BioPharma Inc. will strive to identify and solve common drug-development challenges, improve clinical trial quality and ultimately bring new products to market more quickly. The non-profit organization is being staffed and funded by ten pharmaceutical companies (the charter members of TransCelerate are Abbott Laboratories Inc., AstraZeneca, Boehringer Ingelheim, Bristol-Myers Squibb, Eli Lilly, GlaxoSmithKline, J&J, Pfizer, Sanofi, and Roche/Genentech Inc.). During the PSA conference on Sept 19, J&J CSO and pharma chairman Paul Stoffels said he expected the effort could cut development time – and development costs – by up to 5% for an average program. The outfit is led by acting CEO Garry Neil, former corporate VP, science & technology, at J&J, who said the primary issues TransCelerate can solve come down to a lack of standardization in drug development that results in needless repetition of effort, and with it, the draining of resources. Intended to be a virtual initiative, the firm will be headquartered in Philadelphia but have no staff at the start other than Neil. Instead, full-time equivalents from the 10 charter companies will work together on the goals. Each participating company is contributing an undisclosed amount of money to the effort, along with the FTEs, Neil said. Though not every big pharma is involved the door remains open, said Neil, for large, medium or small firms to join in. Also expected to play a role, Neil added, are academia, regulatory agencies, contract research organizations and patient advocacy groups. – J.A.H.

 

At PSA: Thinking Primarily About Primary Care Rx

Has the life gone out of primary care drug market?

Referring to the category as “dead” is hardly a jaw dropping comment in today's marketplace given regulatory and reimbursement hurdles. Indeed, when it comes to launching successful drugs into traditional mass-market categories, as an industry, biopharma's track record is painfully diminished.

But surely better ways exist to describe the state of primary care, a business that is of vital importance to pharma. A panel of experts will discuss the topic on the afternoon of Sept. 22 at Elsevier’s annual Pharmaceutical Strategic Alliances conference. Yes, the landscape is challenging, with the advent of generics, diminishing physician autonomy, increasing interest in accountability for costs, and greater complexity in sales strategy. But pharmas are adapting. McKinsey director David Quigley and colleagues forcefully outline this evolution and the corporatization of American health care in this month’s issue of IN VIVO. Quigley will also be on the PSA panel, where he will lead off the discussion by pointing out key commercial trends.

True, the widely-cited Express Scripts 2010 Drug Trend Report calculates that specialty spend (inflammatory conditions, MS, cancer, anti-coagulation, growth deficiencies, and pulmonary hypertension) is rising far faster than money spent on traditional medicines (high cholesterol, diabetes, high blood pressure, depression, asthma, and ulcers). The former accounted for 25% of all payer drug spend in 2010 – and grew nearly 20% from 2009 to 2010, albeit off a smaller base, compared to less than 2% growth for the latter.

Worrisome statistics, but primary care is still the bulk of Big Pharma's bread and butter. And execs like Pfizer's Adele Gulfo, who will likely have responsibility for at least one ultra-high profile launch in the next year, believe the key to a successful commercial strategy in mass market drugs rests -- as it has historically -- largely on doctors’ interaction with manufacturers. Other top commercial executives set to give their thoughts on successful drug launches in 2012 and beyond include Wael Fayad, VP, business development at Forest Laboratories, and Riad el-Dada, SVP, diabetes and obesity, at Merck.

The tools driving that doctor-sales rep interaction, however, may be changing – although in proportions one might not expect, based on media hype. Traditional ‘reach and frequency’ and “mirrored territories’ may be strategies of the past. The panelists are likely to have lots to say on this issue. The best route to success, of course, is addressing unmet medical need with a truly innovative offering. But it's the road that may be steepest: not every drug can be a Januvia(Merck)or the anti-coagulation medication apixiban (Pfizer/Bristol).

So, they talk about the best ways to think about me-too drugs (or not). Forest Laboratories, for instance, is an expert in maximizing the value of drugs that are latecomers to competitive categories--witness the slow build of its anti-hypertension drug Bystolic. Can Forest pull off another slow-build surprise with its new anti-depressant Viibryd?

On the whole, these panelists – as PSA attendees will hear -- have a surprisingly vibrant attitude towards primary care – one likely to hold up over time, given that biosimilars should start making a dent in demand for older, until now, protected specialty brands. Industry doesn’t expect biosimilars to have a significant competitive impact until 2015. Then, the seasoned primary care experts will be able to show specialty executives a thing or two about what's what and help them weather the onslaught of low-priced competition and tightening payer control over utilization.

Merck's $500 Million Venture Bet -- Industry's Latest and Largest Attempt to Get Closer to VCs

Today in the newly released September issue of IN VIVO we're reporting that Merck & Co., until recently one of the few large pharmaceutical companies seemingly disinterested in playing venture capitalist, is placing a significant corporate venture bet.

Two bets, actually. We told you a little about the first one -- The Global Health Innovation Fund -- back in March, but back then details were thin. And since the Spring that fund, set up to invest in non-pharmaceutical health care spaces, has doubled in size to $250 million (and it may yet grow some more). It's led by ex-J&Jer Bill Taranto and has a remit to invest capital in service-oriented businesses like home health as well as health IT, and other so-called 'adjacencies' where Merck may see itself as a future player. Internally the GHIF strategy is referred to as 'Pharma Plus'; so far it has made a handful of (undisclosed) investments.

Meanwhile Merck has been quietly shopping a second initiative to prospective venture partners. And here's where it gets very interesting.

The Merck Research Venture Fund, also staked with $250 million, is an effort to partner up with traditional VCs to gain access to innovative companies early on in their life-cycles. Merck plans to invest in a handful of funds as a strategic LP (in the US, in Europe, in China, and elsewhere), provide 'advice and guidance' from Merck scientists to those funds' portfolio companies, and hope it secures an inside track on those biotechs or their programs when they mature to the point that Merck's business development group can step in. So far Merck has teamed up with one (undisclosed) venture fund.

The initiative has echoes of Lilly's Mirror Portfolio, though Merck SVP and head of worldwide licensing and knowledge management David Nicholson avoids the explicit comparison and notes that Merck isn't routinely taking options on nor contributing assets to the biotechs in which it invests. As Merck may sometimes invest in a side-car structure it has also drawn comparisons to the MPM Capital-Novartis tie up and others like it.

All of these structures are part of industry's efforts to access innovation earlier on in the value chain, externalize increasingly large portions of their own R&D efforts, and pump money into a venture community that has served as the lifeblood of its future product opportunities.

Response to the MRVF among venture capitalists we talked to has varied from deep skepticism to reluctant acceptance. No doubt there are plenty of life sciences venture funds out there that could use Merck's money and see the idea of guidance from Merck scientists as a plus. But the idea, voiced by Nicholson, that Merck's involvement would fundamentally enable greater financial returns for the funds' other LPs was uniformly questioned.

Will the best entrepreneurs want Merck poking around in their companies? Will Merck's early involvement put off other potential pharma investors or acquirers? Does the value of Merck's involvement -- again it's just 'advice and guidance' -- outweigh the potential drawbacks?

The fact that its first venture partner prefers to remain anonymous, for now, suggests to some that the answer to this last question is no, at least for venture firms who have fundraising options. "Only the funds that need their money will accept it," said one VC we spoke with.

That was a fairly common sentiment, but one Nicholson shrugs off and one that is hard to measure. The success of the MRVF -- and indeed the GHIF and other pharmas' initiatives to get closer to venture firms and their portfolio companies -- can't be gauged for years.

Only when Merck starts signing deals with these now-fledgling biotechs -- or failing to do so -- will we know whether its $500 million was money well spent.

You can read the whole feature here. Or come see us at next week's Pharmaceutical Strategic Alliances meeting in New York where we'll be discussing the MRVF and pharma's other R&D experiments.

image courtesy flickr user spaceyjessie used under creative commons license.

PSA Update: Dealing with Diagnostics

Last week, we added Mike Pellini, CEO of the cancer genomics start-up Foundation Medicine, to our Pharmaceutical Strategic Alliances Conference panel that will be discussing strategies for sharing risk in relationships between pharma companies and diagnostics developers. Mike was president and COO of Clarient Labs until its sale to GE Healthcare last year – one of several notable M&A transactions involving CLIA lab-oriented assets.

We recruited Mike after Iain Miller, head of theranostics strategy and business development at BioMerieux, told us he was taking a new position as global head of personalized medicine at GE Healthcare, where he started this week. Iain will still be at PSA to talk about Biomerieux’s deals with Ipsen and GSK around predictive cancer biomarkers and now, also a bit about his new role at GE, which includes the challenge of leveraging the value of Clarient and bringing additional assets in around it. With Iain’s move and Mike’s addition, we maintain a balance on the panel between larger and smaller company perspectives. Rounding out the session are Nic Dracopoli of J&J and Risa Stack of Kleiner Perkins Caufield & Byers, an early and frequent investor in companies developing complex, high-value diagnostics, the vast majority of which are performed in the CLIA setting.

The potential value a CLIA lab brings to pharma as well as other players like GE is a subject we’ve discussed in several IN VIVO features this year, including in the current (Sept.) issue, where we ask the question “Is Diagnostics the New Biotech…and Will Pharma Embrace It?”

The two fields share obvious historical parallels including common starting points, first with the use of antibodies as targeting agents and probes, and later with genomics. In both cases, the same core assumptions existed around using those tools to unlock the power of the biological perspective. And there was a need for physicians, potential development partners, and regulators to get their arms on a unique and innovative set of promising technologies.

Pharma’s interest in the new wave of complex diagnostics is two-fold. It clearly needs to be able to ensure the development and distribution of companion diagnostics for its targeted therapies – why some argue risk sharing is inevitable, if not yet in evidence. For some, diagnostics also appears to have regained its appeal as a way to diversify: think Novartis with Genoptix or Eli Lilly with Avid Radiopharmaceuticals.

Unlike big box diagnostics companies, which are primarily interested in running as many tests as possible on their platforms, the developers of complex diagnostics tend to be vertically oriented. They feature the kind of narrow and deep focus on a specific disease state that is required for adoption and payment of high-value offerings. Those capabilities fit well with – and some would argue are essential to – the biomarker discovery efforts now woven into virtually all of new drug development. On the commercial side, they also offer the potential to leverage the value of a specialized sales force.

Pharma has danced with diagnostics but also maintained its distance, much as it did with biotech in its early days, keeping in touch via alliances until the emergence of product franchises it could acquire. But unlike biotech, where products and franchises are basically additive to a portfolio, there’s a co-dependency with diagnostics, at minimum in the area of companion diagnostics and potentially more broadly, as an increasing number of diagnostics and related services emerge that help direct the choice and management of therapy over all.

The question is: What business models best address this evolution. Is collaboration and risk-sharing the way to go? Are diagnostics franchises now becoming investible assets for pharma such that they will be swallowed lock, stock, and barrel (and if so, which underlying tools and technologies will be most sought after)? Let’s see what the experts at PSA have to say.

Join us September 23.

No Biosimilars on The Horizon, Says Sanofi's Viehbacher

He was talking about biosimilar Lantus, of course, which is the company's most important drug.

During a Q&A session following Sanofi's Sept. 6 'strategy and outlook' seminar for investors, Chris Viehbacher said he didn't expect biosimilars to have "a significant impact on our performance" before 2015.

On one level, he may be justified in brushing off biosimilar insulin, given this is a high-volume, (relatively) low -price play that's unattractive to most competitors -- particular those lacking significant production capacity.

What's more, the insulin market is increasingly about pens and peripherals -- precisely what Sanofi is pushing as it shifts "from Lantus brand-management to Lantus-based solutions," as SVP Diabetes Pierre Chancel put it (and described in this 2010 IN VIVO feature). Hence Sanofi's focus on the SoloSTAR pen (which accounts for 40% of new Lantus scrips in the US), the BGStar glucose monitoring devices, and a forthcoming integrated device for Lantus dosing with a patient-driven titration algorithm.

Such strategies show how biopharma companies are evolving to think beyond the drug -- a topic that will be discussed on September 22 on stage at the Millennium Broadway hotel, the first day of Elsevier's 21st annual Pharmaceutical Strategic Alliances meeting. (And Sanofi will be well represented, with Dennis Urbaniak, Chancel's US deputy in diabetes, weighing in.)

Still, it would be wrong to dismiss biosimilar insulin entirely, however. Lilly has two basal insulins (including a copy of Lantus) starting Phase III this year -- and that's a company, like partner Boehringer Ingelheim, with nothing to lose, but a lot to gain, by entering the basal insulin game.

And certainly biosimilars more broadly remain as hot as they were pre-summer; indeed, the season's continuing economic woes make the prospect of cheaper biologics even more relevant. FDA expects to have its biosimilars guidance in place by the end of 2011, thus paving the way for the second-generation wave of biosimilars, including copies of Enbrel and Rituxan. (Better late than never, we say, although who knows where the user-fee debacle will end up)

Will these more complex biosimilars succeed commercially where many of their first-generation brethren thus far haven't? And will they be just cheap copies, or are innovator-cum-biosimilar players like Merck justified in calling them an entirely new 'proposition', representing 'value and quality', and supported by a well-known brand? And just how abbreviated is FDA's new biosimilars pathway anyway?

In case Urbaniak and other Sanofi execs responsible for Lantus are interested in the answers to such questions, they should stick around for the second day of PSA, which kicks off with a panel that's a veritable who's who of biosimilar experts. Not only will the discussion feature the biosimilars chiefs at Merck and Pfizer (Michael Kamarck and Diem Nguyen respectively), but add in Sandoz's Mark McCamish, FDA's Janice Soreth and Momenta's CMO James Roach and there will be insights into every facet of the biosimilar biz.

Indeed, the companies these panelists represent make up a big chunk of the competition that will determine whether the $50 billion biosimilars opportunity becomes a reality -- and whether Viehbacher's right not to be concerned.

See you there!

Image courtesy of flickrer Old Shoe Woman used with permission under a creative commons license.

Deals Of The Week Battens Down The Hatches

Mother Nature, you've been busy this week. The entire East Coast population remains glued to Wunderground or The Weather Channel as it tracks the path of the lumbering hurricane Irene. The good news? After the strongest earthquake in nearly seven decades struck outside Washington DC, everyone should have already stocked up on batteries and bread. Just in case, you know, there's an after shock.

Yes, residents of the bankrupt but beautiful California mocked the twitter outcry that ensued after the 5.8 temblor. Consider it pay back for the repeated digs about our obsessions with tree-hugging, organic grass-fed lamb, Steve Jobs, and the Facebook IPO. Maybe the daily lack of humidity just makes us mean. Based on this blogger's perspective, the only truism that matters is that residents of neither coast know how to drive in the snow -- or rain.

If it's been quiet in biopharma land on the deal front, companies like Seattle Genetics are finding ways to make noise. Lots of noise. Hundreds of thousands of dollars per patient worth of noise. Yes, hard on the heels of the Friday August 19 approval of Adcetris came the Monday August 22 unveiling of SeaGen's pricing strategy for the new conjugated antibody. And it's ambitious: depending on the course of treatment, the biologic, which is approved for late-stage Hodgkin lymphoma and systemic anaplastic large cell lymphoma, could cost as $121,500 based on the clinical trial experience.

We applaud the company's chutzpah; the company's CEO, Clay Siegall has come out swinging as to why this hefty price will pass the ever higher bar payers set on "value". Indeed, this is the first drug for Hodgkin lymphoma in 30 years and boasts a strong objective response rate. And we understand that the two approved indications in the drug's label are not the most prevalent cancers, meaning insurers likely won't balk at paying the price tag, given the total dollars won't quickly run into the billions.

All of which is not so subtle messaging from Seattle Genetics execs that they think Adcetris won't suffer from what is now widely being termed the "Provenge Problem" (and before that "the Folotyn Foible") -- essentially the lackluster launch of a new oncologic in part because of the drug's high price tag. Still, given the lack of traction for Dendreon's Provenge in the marketplace, it's not surprising that investors reacted to SeaGen's pricing news with all the enthusiasm of Cleveland welcoming home its prodigal son, LeBron James.

Siegall and his commercial team are confident they won't repeat Provenge's mistakes. As we write in this week's "The Pink Sheet", the biotech has a plan -- an extended payment plan to be exact -- to overcome the reluctance of physicians, who may hesitate to front the cost of the drug before there is clarity on its reimbursement. That has apparently been a major issue for urologists when choosing between Provenge and other alternatives, like the significantly cheaper Zytiga from Johnson & Johnson.

But the twinning of Adcetris and Provenge may not ultimately prove the best comparison. What Seattle Genetics really wants to avoid is the Avastin issue. You see, while payers may not balk at shelling out $120K (or whatever the drug ultimately costs, since labeling permits administration of up to 16 cycles of the drug, which potentially raises the price tag north of $200,000) for a few thousand patients, eyebrows could rise as the biotech and its partner, Takeda Pharmaceuticals, look to expand the drug's label into more prevalent cancers like non-Hodgkin lymphoma. Especially if there aren't overall survival data and/or quality of life measures to support Adcetris's use in a particular indication.

You can bet the topic will be front and center at this year's 21st annual Pharmaceutical Strategic Alliances meeting (tune in September 22 for a discussion officially titled "The Changing Oncology Landscape and watch for #PSA11 tweets).

We know. You haven't had time to check out the agenda because you've mistakenly been crooning "Come On, Irene" all week. By now, you've bought the candles and the water. You've unearthed the hand-crank radio. Take a break from battening down the hatches and tune into another Category 5 edition of...

Baxter/Baxa: Publicly traded Baxter International made a move to expand its medication delivery business by acquiring Baxa, a closely held maker of pharmacy products used to prepare and administer fluid drugs. Baxter will pay $380 million in cash to acquire Englewood, Colo.-based Baxa, which posted $157 million in 2010 sales. Founded in 1975, Baxa still sells its first product, an oral syringe, but also manufactures automated compounding devices used in pharmacies, as well as dose preparation systems for intravenous and oral drug delivery. Baxa is thought to have about a 65% share of the automated compounding device market, placing it ahead of the larger but more diversified Baxter, which also has a bioscience division and significant sales from renal health products. Baxter’s medication delivery division, which includes a variety of pre-mixed drugs, syringes, drug reconstitution systems, infusion pumps, and nutrition products, brought in $4.8 billion in 2010 sales, about three-eighths of its $12.8 billion in overall sales. Baxter has since merged its medication delivery and renal businesses into a single unit; the company also bought irregular heartbeat drug developer Prism Pharmaceuticals for $170 million up-front, plus contingent payments worth up to $168 million, earlier this year. Analysts regarded the Baxa deal as sensibly-priced and low-risk. – Paul Bonanos and Zach Miners

Par Pharmaceuticals/Anchen: The earthquake and impending storm didn't stop Par from making s.its second acquisition this year: the $410 million purchase of privately-held generic drug maker Anchen Pharmaceutical. The latest acquisition, announced August 24, is significantly larger -- and thus, more important -- than the company's May purchase of Edict Pharmaceuticals for $37.6 million. Chairman and CEO Patrick LePore said during a same-day conference call that the Anchen buy would be immediately accretive to earnings, expand the Woodcliff Lake, N.J., company's R&D capacity and nearly double its pipeline of ANDAs awaiting FDA approval. The company, which has both a generics and a proprietary drug business unit, called Strativa, has been focused on topping up its generics portfolio, which generates 80% of its total sales. Through the deal, Par acquires 218 Anchen employees, including about 70 R&D staff, greater expertise in extended release technology, and manufacturing capabilities in southern California. Anchen also brings with it five marketed products that are expected to generate about $125 million in gross revenues this year, including generic versions of GlaxoSmithKline's antidepressant Wellbutrin XL and Bayer's Cipro. Par had $307 million in cash as of June 30, 2011, and plans to finance the acquisition with cash and a $350 million loan.--Joseph Haas

Sanofi/Universal Medicare: After rumors started to circulate early in the week that Sanofi was eyeing acquisitions in India, came Wednesday's news that the French pharma's subsidiary, Aventis Pharma Ltd., will purchase the over-the-counter drug biz of Mumbai-based Universal Medicare. The final purchase price was undisclosed but The Indian Express reports the take-out could cost around $110 million based on discussions with undisclosed sources. The deal gives Sanofi, which has been a nominal player in the Indian OTC space, around 30 brands with estimated annual sales of around one billion rupees. It's no secret big pharmas have been moving aggressively into high growth emerging markets, especially India and China, as sales of key drugs in emerged arenas like Europe and the U.S. stall due to patent expiries. Even as companies eventually look to sell their expensive, on patent medicines in these markets, much of the initial effort has been on creating a presence via a stable of more affordable products aimed directly at consumers. Sanofi has been among the most aggressive of the big drug makers in its pursuit of local EM players (it's recent hunt for Genzyme not withstanding). This latest bid doesn't eclipse its 2009 take-out of the Indian vaccine player Shanta Biotechnics, which cost the French pharma an estimated $784 million. But hopefully the revenue pay back will be better. Shanta hasn't turned out to be such a great deal for Sanofi, given the vaccine company's manufacturing woes.--EL

Image courtesy of www.nasa.gov.

DOTW: Save The Date

Miss the crowds? BIO’s just around the corner. This year there’s an added je ne sais quoi to the trade event as deal makers and execs converge on the regulatory swampland that is our nation’s capital. Amidst discussions of the state of the industry -- the strengthening IPO market (?), the venture financing climate, and the impact of both on deal making -- all eyes will be on FDA as it holds forth on Provenge and Avastin.

But while there’s no question BIO is a must-attend event, here at IN VIVO Blog, we’re admittedly biased in believing there’s another networking opportunity that is de rigueur for the industry’s top deal makers. That’s right: IN VIVO’s annual Pharmaceutical Strategic Alliances meeting, taking place September 22 and 23 in New York City at the Millennium Broadway Hotel.

Yes, we’re tooting our own horn, but once you’ve checked out our stellar line-up you’ll understand why. Key notes by Biogen Idec’s George Scangos and Bristol’s Lamberto Andreotti kick off the meeting. Then there’s an all-star discussion of biz dev on day 2 with help from Pfizer’s Kristen Peck, BMS’s Jeremy Levin, J&J’s Tom Heyman, Roche’s Joe McCracken, and Glaxo’s Ian Tomlinson.

You want deal making? We have it in spades. And not just at PSA. As we head into a summer time Friday, we bring you your weekly wrap up of the deal making headlines…

Boehringer Ingelheim/Zealand: Surprise! The Danish biotech Zealand pharma inked a deal this week for its Phase I-ready dual-acting GLP-1 and glucagon agonist for type 2 diabetes and obesity, ZP2929. But the partner, Boehringer Ingelheim, probably wasn’t the one folks expected given Zealand’s previous tie-up with Sanofi (the pharma formerly known as Sanofi-Aventis). This week’s deal, which includes a research collaboration, is worth €20 million in committed funding to the Danish biotech during 2011, and up to €41 million in the first two years. Zealand will conduct the first Phase I study with ZP2929, but Boehringer will pay for the research, development and commercialization of the compound, as well as any other additional GLP-1/glucagon agonists that eventually. Total biobucks for ZP2929, hailed by its inventors as a “next-generation GLP-1 agonist that improves on Byetta and Victoza, could reach €376 million. According to “The Pink Sheet” DAILY, Zealand, which raised nearly $60 million via the public markets in October 2010, had plenty of suitors for the compound. But with Zealand's most advanced compound, the GLP-1 agonist Lyxumia (lixisenatide) an increasingly important asset within partner Sanofi's diabetes pipeline, "we felt... it was better to diversify its partnership base," CEO David Solomon explained. Boehringer is a relative newcomer to diabetes, only unveiling its interest in the therapeutic area in 2008. Still it has moved rather quickly, and boasts a newly expanded late-stage pipeline thanks to the broad-ranging, risk-sharing deal it signing with Lilly in January of this year. As part of that tie-up, the two drug makers agreed to co-develop and co-commercialize up to five diabetes drugs, including Boehringer's DPP-4 compound Tradjenta (linagliptin), which FDA approved in May 2011, and a Phase III sodium-dependent glucose transporter-2 inhibitor. – EL

Vertex/Alios: Less than a month after FDA approval of its protease inhibitor for hepatitis C Incivek, Vertex Pharmaceuticals is looking to bolster its ability to offer potential combo therapies. Thus, it’s tie-up this week with Bay Area-based Alios Biopharma. The worldwide license to a pair of preclinical polymerase inhibitors, ALS-2200 and ALS-2158, is worth $60 million upfront to the privately-held Alios. In addition to the licensing agreement, the deal includes a research collaboration between the two companies: Vertex will provide undisclosed funding to Alios for discovery of additional polymerase inhibitors and retains an option on compounds unearthed via the collaboration. The bio-bucks owed Alios aren’t insignificant either: the biotech could earn up to $715 million in research and development milestones related to these two nucleotide analogs. Vertex has plans to move both molecules into Phase I trials during the fourth quarter of 2011. Longer-term, the big biotech intends to test the two molecules in varying combinations with telaprevir and VX-222, its Phase II non-nucleoside polymerase inhibitor, in an effort to find and develop an all-oral combo of drugs to treat HCV. Vertex said it expects to pay out $35 million in milestones this year, when both programs are scheduled to enter the clinic, but would not specify whether that also might cover other milestones to be met this year.—Joseph Haas

Sanofi/Audion: Sanofi has signed a two-year research agreement with Amsterdam-based Audion Therapeutics to discover and develop small molecule treatments for age-related hearing loss. Financial terms of the agreement weren’t disclosed, but Sanofi will have the option to license any compounds resulting from research done under the collaboration. Audion, a regenerative medicine play, aims to stave off deafness via developing compounds that protect and resurrect the inner ear hair cells, which are responsible for the amplification and transduction of sound waves to the auditory nervefor relay to the brain. As might be expected, Audion will work with Sanofi’s Aging unit, one of five new therapeutic strategic units established in the past year under the pharma’s revamped R&D model. Sanofi’s Early-to-Candidate Unit will also be involved. Paul August, U.S. head of the Early-to-Candidate unit, said his team aims to provide the Aging unit with a clinic-ready candidate by the end of the two-year collaboration. As this Start-Up feature noted, big pharma generally has stayed out of hearing loss, which has been dominated by med-tech firms providing hearing aids and, more recently, cochlear implants. Many venture capital firms and other investors see hearing loss as a potentially lucrative space, similar to ophthalmology, because of unmet medical need and demographic trends. The Sanofi/Audion tie-up is the first drug development partnership for hearing loss since Novartis licensed rights to a group of preclinical hearing loss and balance disorder programs from GenVec in exchange for a $5 million upfront payment and a $2 million equity investment last year.—JH

Pfizer/pSivida: Is Pfizer in or out of ophthalmology these days? This week’s amended deal between the big pharma behemoth and drug delivery play pSivida makes it clear Pfizer is willing to do what it must to protect its once daily glaucoma eye-drop Xalatan, which generated $1.75 billion in revenue in 2010 but lost key patent protection in March. Still, as Pfizer continues to redefine its innovative core (without, one hopes, experiencing a breach), it’s not so interested in ophtho that it wants to consider a broader deal with pSivida any longer. The Watertown, MA-biotech pSivida originally aligned with Pfizer in 2007 under a far-reaching deal that gave the big drug maker exclusive world-wide rights to its implant technology, as well as a 10% ownership stake. Under the revised agreement announced June 14, Pfizer will pay the biotech $2.3 million upfront for an option, which can be exercised at the end of Phase II, on an implant device that bathes the front of the eye with a sustained-release version of Xalatan. If Pfizer options the product, it will pay pSivida an additional $20 million and up to $146.5 million more in clinical and regulatory milestones. Despite Xalatan’s ability to effectively lower intra-ocular pressures without terribly onerous side-effects, compliance is a problem. (One main reason: Administering drops on a daily basis is a pain in the…er, eye.) As a result, there’s a lot of effort in the start-up community to develop implantable devices that improve adherence by obviating the need for daily administration. The 2007 deal revision provides significant potential upside for pSivida since it can now solicit partnerships with other drug makers. Among the most active deal makers in ophtho: Merck (which took out Inspire earlier this year), Novartis (via its Alcon group), Roche/Genentech, and of course specialty players like Allergan and Baush & Lomb. This wasn’t the only ophtho deal to be revised this week. On June 16 came news that Alcon was pulling out of its he collaboration with NovaBay, returning all rights to the first-in-class anti-infective Aganocide and back-up compounds. -- EL

Merck/Hanwha: Merck vaulted to the pole position in the race to bring a low-cost version of Pfizer and Amgen's rheumatoid arthritis blockbuster Enbrel to market this week, gaining rights to a late-stage biosimilar version of the biologic developed by South Korea's Hanwha Chemical. According to the June 13 partnership, Merck will develop and commercialize a biosimilar form of Enbrel, HD203, in all markets except Korea and Turkey, where Hanwha has retained marketing rights. In exchange, Hanwha receives an undisclosed upfront payment, and is eligible for milestones as well as tiered royalties on sales. Although financial terms of the deal were not disclosed in the official release, Hanwha Chemical spokesman Kwon HyukBum confirmed to PharmAsia News that the total potential cost of the collaboration to Merck is $720 million. Although Merck declined to confirm that figure, Merck BioVentures President Michael Kamarck said in an interview with “The Pink Sheet” DAILY that the deal is heavily back-end loaded. Nonetheless, the financial arrangement is "symbolic” of the huge opportunity for Enbrel biosimilars, he said. Merck has assembled a pipeline of biosimilar drugs since announcing the formation of Merck BioVentures in December 2008. Still, the company has revealed plans only for a couple of products, including a granulocyte colony-stimulating factor referencing Amgen's Neupogen and a pegylated version of Neulasta. Earlier plans to develop a biosimilar version of Amgen's Aranesp were scrapped in 2010, given emerging safety issues with the class. Merck continues to stand by its goal of having five biosimilars in Phase III by the end of 2012 and says it is mainly interested in harder-to-replicate monoclonal antibodies. – Peter Chang & Jessica Merrill

Notes From PSA: More on Lilly's Next Project Financing Project

If at first your project financing doesn't succeed, try try again. That was the message during a panel discussion at our (20th Anniversary) Pharmaceutical Strategic Alliances conference in NYC on Wednesday. The topic of conversation was deal structures for high-risk, high-reward projects, which screamed for analysis of the 2008 three-party deal to finance two of Eli Lilly's late-stage Alzheimer drugs.

Private equity firm TPG-Axon Capital and CRO Quintiles Transnational put up much of the cash, with Quintiles running the Phase III trials. The structure is still in place for one of the compounds, solanezumab, but the other, the gamma-secretase inhibitor semagacestat, is no longer in development.

We should amend our opening statement: The deal has succeeded for Lilly in the sense that someone else helped pay for development of a drug that failed (or, at least, is currently on the shelf). Lilly senior vice president Gino Santini and Quintiles senior vice president Tom Perkins, both on the panel, said everyone knew from the start that the risk-reward calculation for Alzheimer's was high on both counts. "We went in with our eyes wide open," said Perkins.

The deal turned out to be a true product of its time, announced just two months before Lehman Brothers imploded, and cheap, leverageable private equity suddenly became a distant dream. "I don't know that we could attract capital of that size for a project of that risk profile if we went out looking today," said Perkins.

Then again, the lure of reaching the brass ring in Alzheimer's has proved over and again to be awfully tempting. Just ask Lundbeck (Flurizan, ouch), Pfizer (Dimebon -- not a happy result), and J&J (bapineuzumab -- jury's still out).

Meanwhile, Lilly keeps plugging away at project finance models. Its latest, reported in part a couple weeks ago, centers around three venture funds that Lilly is backing, putting up just shy of 20% of each fund's capital, up to $50 million in each. Lilly will be the only biopharma LP in each fund.

One will be reportedly run by CMEA Ventures in San Francisco, which Lilly officials haven't disputed; one we hear by a well-established firm in Cambridge, Mass.; and the third remains a mystery. The final two funds haven't closed yet. Lilly is also offering a portfolio of its pipeline compounds to each fund manager. They can choose from Lilly's basket or from outside opportunities. Santini said today the mix of compounds in each fund should be 50/50. Lilly gets call options on all its own molecules and on one of five sourced externally. For the calls it exercises, Lilly must pay "fair market value," though it's unclear how independently that value will be determined. The funds can also use Lilly's Chorus development team -- or teams, as the company has two in Indianapolis, one in India and could add a fourth in Europe -- to run the development.

Santini said the one general partner up and running has already chosen one Lilly molecule and one third-party molecule.

Various attempts at project financing haven't turned out very well so far, but the promise of newly freed assets, released by Big Pharma mergers and downsizing, has kept the dream alive. And we emphasize dream -- the next wave of funds mostly remain behind the scenes, as their founders scramble to convince investors to join. (We examined the dream of asset financing, and the difficulties it faces, in this feature.)

Goodbye Empty Promises, Hello Self-Awareness

In case you hadn't already noticed, we drew together some of the industry's most senior, and influential, executives at our Pharmaceutical Strategic Alliances meeting last week in New York. Here's a selection of their most memorable quotes--the ones we think speak volumes about the industry and how it's changing.

1. "I'll look down the back of a sofa for a good medicine. In my darker moments, I've tried it,"--Martin Mackay, R&D chief at Pfizer. Read: not-invented-here at Pfizer is history. Really.

2. "The last thing you can accuse this industry of is being productive,"--Thomas Hofstaetter, SVP, Corporate Business Development, Wyeth. Read: we acknowledge reality nowadays.

3. "We lost our way, as an industry...we have to have patient needs upfront,"--Elliott Sigal, CSO, Bristol-Myers Squibb. Read: as above, & we're no longer complacent

4. "We need to sweat more,"--Moncef Slaoui, Chairman, R&D, GSK. Read: as above

5. "It's possible that we'll terminate a DPU (drug performance unit); we've already given signals to three of them that they're not doing so great,"--Slaoui again. Read: our effort to re-create a biotech-like risk-reward climate in R&D isn't just talk; we will slash 'em if they fail. (But not before the end of the three-year investment cycle.)

6. "Earlier this year, we terminated two Phase III programs because of pharmaco-economics. They were safe and effective compounds,"--Martin Mackay, R&D chief at Pfizer. Read: yes, we do (at last) realize that reimbursability is the new proof-of-concept.

7. "In the US, we're so far from being able to talk about 'cost-effectiveness'. Congress won’t even use ‘comparative effectiveness’ (…) the fear that [UK cost-effectiveness watchdog] NICE brings to the US is such that US advocates of comparative effectiveness research have to stress it’s ‘not like NICE’,"--Ian Spatz, former VP Global Health Policy at Merck. Read: many in the US have their heads in the sand when it comes to figuring out how to pay for health care.

8. "There isn't really a fixed cost-per-QALY threshold; advisory committees aren’t told not to go beyond £30,000-per-QALY,"--Andrew Dillon, CEO, NICE. Read: don't be scared, Americans. There's room for maneuver when it comes to getting your drugs past us. (Paying for advice ahead of time helps.)

9. "We just forecast how much we'll need the following year, and request the money from our CFO's office,"--Asish Xavier, VP, Venture Investments, Johnson & Johnson Development Corporation. Read: if you're a private biotech working in one of J&J's areas, you're in luck.

Our summary (of 1-6, anyway): Goodbye empty promises, hello self-awareness.

image by flickrer m kasahara used under a creative commons license

What's the Hardest Job in the Biopharma World?

Maybe it's yours. Maybe it's Jeff Kindler's (keep Pfizer small? Yeah right.) Maybe it's Elan CEO Kelly Martin's(all those shenanigans with Biogen over the J&J Alzheimer deal, ouch).

Most likely, though, it's Andrew Dillon's--he, in case you forgot, is the CEO of UK cost-effectiveness watchdog, NICE. That's what David Mott, ex-CEO of MedImmune and now a General Partner with VC firm New Enterprise Associates, thinks (and this blogger agrees). "Andrew has the hardest job of anyone up here," Mott remarked from the stage during a panel at last week's Pharmaceutical Strategic Alliances conference in New York.

Harder, then, than that of drug developers like co-panelist Peter Wirth, EVP Legal & Corp. Dev at Genzyme, which (besides dealing with manufacturing snafus extraordinaire) is having to "quite deliberately gather the information [around our development programs] that people like NICE will use in their decisions"--(not that we think all of NICE's analysis is right, he added later on). Harder than Mott's, faced as he is with the "triple whammy" of reimbursement hurdles, the elimination of the IPO market and "fundamental changes in Big Pharma's pipelines," all of which have "raised the innovation bar significantly," leaving him (and one presumes any other VCs that have money) with fewer promising investment opportunities. Harder than Ian Spatz's--no longer VP, Global Health Policy at Merck, instead running his own policy advisory firm (and due to start a policy advisory service with Elsevier Business Intelligence, too--plug plug).

Yup, Dillon's job takes the biscuit: He is responsible for 'rationing' health care in the UK--a word so hated in the US that we were pleasantly surprised that no audience-launched projectiles made it up onto the stage. To him (and his teams) to decide "what level of reward is given for the benefit being offered, and....how much of a fixed resource to make available [for a particular drug] given the opportunity cost, if that cost was allocated somewhere else, for another patient group perhaps."

We felt Dillon calmly defended NICE's approach, acknowledged its weaknesses, and tried to correct misconceptions. "I know we have a reputation for only caring about cost, but that simply isn't the case," he argued. "We begin our exploration of the product with the evidence of its clinical effectiveness and try to measure the impact [of that] on patients," he said. "By and large our decision-makers are physicians in the NHS," he added, who know their decisions affect patient wellbeing. (Not that this necessarily means they don't think about cost, mind you.)

In response to accusations that NICE stifles innovation, Dillon elaborated on how the agency attempts to unpick sponsors' 'innovation' claims and translate them into concrete clinical benefits. It's not easy, and he knows NICE needs to be more transparent in explaining how and at what point in the assessment process this is done. "We need to be much more explicit about the particular innovative features that [we believe] will bring benefits to patients. We probably didn't [used to] spend enough time talking about that [with sponsors] right at the start" of the assessment process, he told the PSA audience.

While conceding on transparency, though, Dillon put up a robust defense of the QALY, the controversial utility metric used by NICE, and its 'acceptability range' of around £30,000-per-QALY. (Refresher: Quality-Adjusted-Life-Year is the estimated cost of one additional year of life per person when comparing a new drug with the current standard.) "The QALY is the best approach despite its flaws," he said. And as to why the QALY threshold hasn't increased over the years, with inflation, "well there isn't really a fixed threshold. Advisory Committees aren't told not to go beyond £30,000-per-QALY," he said. (Hear that? Indeed there's already ample evidence of slippage....)

Dillon left the stage at PSA composed and unscathed, we'd say. Which is a very good thing (thank you, audience, for not throwing things) since he--and others with similar jobs, and there will be a growing number thereof, including, yes, in the US--will be invited back to similarly important industry events. Reimbursability is the new proof-of-concept, after all.

image by flickrer Brooks Elliott used under a creative commons license