Are drug R&D costs ex­ag­ger­at­ed for ef­fect? Re­searchers peg the me­di­an price of piv­otal suc­cess at an eco­nom­i­cal $19M

One of the most fre­quent­ly cit­ed stats in the biotech biz re­volves around the claim that it can take more than a decade and $1 bil­lion-plus to get a drug to mar­ket. For lob­by­ists, it’s a chance to un­der­score the high cost of R&D that goes in­to a new treat­ment — and help con­sumers and pay­ers swal­low the bit­ter pill that comes with big prices at­tached to the ther­a­pies that pass muster at the FDA.

But does it ac­cu­rate­ly rep­re­sent the true cost of R&D to­day?

One set of re­searchers de­cid­ed to take a telling snap­shot of one key met­ric in drug de­vel­op­ment, and you might be sur­prised to learn what they found.

Joseph Ross

Pub­lish­ing in JA­MA In­ter­nal Med­i­cine, the group sized up the 138 piv­otal tri­als that were need­ed to get an ap­proval on 59 nov­el drugs ap­proved in 2015 and 2016. They used a glob­al clin­i­cal tri­al cost as­sess­ment tool used by CROs and phar­mas to make their es­ti­mates. 

The me­di­an es­ti­mat­ed cost of the full range of stud­ies: $19 mil­lion.

The spread start­ed at a low of $5 mil­lion for some very small stud­ies test­ing drugs for very rare dis­eases — with no con­trol group — and soared to $346.8 mil­lion for a non-in­fe­ri­or­i­ty study. Of the 138 to­tal, 26 were un­con­trolled, which is def­i­nite­ly cheap­er. The mean es­ti­mat­ed cost of those un­con­trolled stud­ies was $13.5 mil­lion com­pared to $35.1 mil­lion for a place­bo con­trol or ri­val drug in the mix.

The mantra in the biotech in­dus­try in par­tic­u­lar — where you’ll find the small­est R&D bud­gets — has been small­er, faster, cheap­er when it comes to stud­ies. And that mantra may be play­ing out in new tri­al de­signs that are squeez­ing the cost of clin­i­cal tri­als, par­tic­u­lar­ly for tru­ly nov­el drugs.

The au­thors say the num­bers pro­vide “a dif­fer­ent per­spec­tive to the wide­ly held as­sump­tion that elab­o­rate and ex­pen­sive clin­i­cal tri­als are the main rea­son for the high costs of de­vel­op­ing a new drug.”

In a com­men­tary, Yale’s Joseph Ross cau­tioned against con­sid­er­ing the study a guide to de­vel­op­ment costs, as it’s re­strict­ed to the suc­cess­ful piv­otal tri­als. He adds:

(I)t sug­gests that the stronger the ev­i­dence that is gen­er­at­ed, which is most use­ful to in­form clin­i­cal prac­tice, the more it costs. We get what we pay for, and high qual­i­ty clin­i­cal tri­al da­ta are well worth the in­vest­ment to make sure we pri­or­i­tize spend­ing our health­care re­sources on ther­a­pies that have been shown to ben­e­fit pa­tients.

PhRMA took a look at these num­bers, though, and im­me­di­ate­ly bris­tled at the im­pli­ca­tions. The study, says a spokesper­son, ig­nores the full range of costs that go in­to de­vel­op­ing a new drug, from pre­clin­i­cal through ap­proval. And what about all the fail­ures com­pa­nies have to en­dure along the way? That adds enor­mous­ly to the cost of drug de­vel­op­ment, says a spokesper­son.

This study’s nar­row find­ings should not be used to make sweep­ing gen­er­al­iza­tions about the in­vest­ment bio­phar­ma­ceu­ti­cal com­pa­nies make in the de­vel­op­ment of new ther­a­pies. The study ig­nores the ma­jor­i­ty of costs re­lat­ed to the re­search and de­vel­op­ment (R&D) of a new med­i­cine, rang­ing from ex­ten­sive pre-clin­i­cal re­search, clin­i­cal tri­als, glob­al co­or­di­na­tion of clin­i­cal tri­als, de­vel­op­ment of man­u­fac­tur­ing meth­ods and mul­ti­ple oth­er as­pects of de­vel­op­ment, sug­gest­ing a nar­row view of the R&D process and risk com­pa­nies face at the out­set of an un­cer­tain project.

More fun­da­men­tal­ly, the study ex­cludes the sig­nif­i­cant cost as­so­ci­at­ed with un­suc­cess­ful drug can­di­dates and tri­als. De­vel­op­ing in­no­v­a­tive new med­i­cines is a long and com­plex process fraught with more set­backs than suc­cess­es. Less than 12 per­cent of med­i­cines en­ter­ing a phase one clin­i­cal tri­al will ul­ti­mate­ly be ap­proved for use by pa­tients. Set­backs are an in­evitable part of the R&D process, and they must be fac­tored in­to the cost of dis­cov­er­ing new med­i­cines.

Maybe the moral to this sto­ry is that fail­ure is pricey, but late-stage suc­cess can be rel­a­tive­ly cheap. And that puts a dif­fer­ent spin on the big val­ues we’ve been see­ing for ex­per­i­men­tal drugs with some hu­man da­ta to back them up.

 

The top 10 block­buster drugs in the late-stage pipeline — Eval­u­ate adds 6 new ther­a­pies to heavy-hit­ter list

Vertex comes in for a substantial amount of criticism for its no-holds-barred tactical approach toward wresting the price it wants for its commercial drugs in Europe. But the flip side of that coin is a highly admired R&D and commercial operation that regularly wins kudos from analysts for their ability to engineer greater cash flow from the breakthrough drugs they create.

Both aspects needed for success in this business are on display in the program backing Vertex’s triple for cystic fibrosis. VX-659/VX-445 + Tezacaftor + Ivacaftor — it’s been whittled down to 445 now — was singled out by Evaluate Pharma as the late-stage therapy most likely to win the crown for drug sales in 5 years, with a projected peak revenue forecast of $4.3 billion.

The latest annual list, which you can see here in their latest world preview, includes a roster of some of the most closely watched development programs in biopharma. And Evaluate has added 6 must-watch experimental drugs to the top 10 as drugs fail or go on to a first approval. With apologies to the list maker, I revamped this to rank the top 10 by projected 2024 sales, instead of Evaluate's net present value rankings.

It's how we roll at Endpoints News.

Here is a quick summary of the rest of the top 10:

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John Reed at JPM 2019. Jeff Rumans for Endpoints News

Sanofi's John Reed con­tin­ues to re­or­ga­nize R&D, cut­ting 466 jobs while boost­ing can­cer, gene ther­a­py re­search

The R&D reorganization inside Sanofi is continuing, more than a year after the pharma giant brought in John Reed to head the research arm of the Paris-based company.
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How small- to mid-sized biotechs can adopt pa­tient cen­tric­i­ty in their on­col­o­gy tri­als

By Lucy Clos­sick Thom­son, Se­nior Di­rec­tor of On­col­o­gy Pro­ject Man­age­ment, Icon

Clin­i­cal tri­als in on­col­o­gy can be cost­ly and chal­leng­ing to man­age. One fac­tor that could re­duce costs and re­duce bar­ri­ers is har­ness­ing the pa­tient voice in tri­al de­sign to help ac­cel­er­ate pa­tient en­roll­ment. Now is the time to adopt pa­tient-cen­tric strate­gies that not on­ly fo­cus on pa­tient needs, but al­so can main­tain cost ef­fi­cien­cy.

In­vestor day prep at Mer­ck in­cludes a new strat­e­gy to pick up the pace on M&A — re­port

Mer­ck’s re­cent deals to buy up two bolt-on biotechs — Ti­los and Pelo­ton — weren’t an aber­ra­tion. In­stead, both ac­qui­si­tions mark a new strat­e­gy to beef up its dom­i­nant can­cer drug op­er­a­tions cen­tered on Keytru­da while look­ing to ad­dress grow­ing con­cerns that too many of its eggs are in the one I/O bas­ket for their PD-1 pro­gram. And Mer­ck is go­ing af­ter more small- and mid-sized buy­outs to calm those fears.

John Chiminski, Catalent CEO - File Photo

'It's a growth play': Catal­ent ac­quires Bris­tol-My­er­s' Eu­ro­pean launch pad, ex­pand­ing glob­al CD­MO ops

Catalent is staying on the growth track.

Just two months after committing $1.2 billion to pick up Paragon and take a deep dive into the sizzling hot gene therapy manufacturing sector, the CDMO is bouncing right back with a deal to buy out Bristol-Myers’ central launchpad for new therapies in Europe, acquiring a complex in Anagni, Italy, southwest of Rome, that will significantly expand its capacity on the continent.

There are no terms being offered, but this is no small deal. The Anagni campus employs some 700 staffers, and Catalent is planning to go right in — once the deal closes late this year — with a blueprint to build up the operations further as they expand on oral solid, biologics, and sterile product manufacturing and packaging.

This is an uncommon deal, Catalent CEO John Chiminski tells me. But it offers a shortcut for rapid growth that cuts years out of developing a green fields project. That’s time Catalent doesn’t have as the industry undergoes unprecedented expansion around the world.

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Arc­turus ex­pands col­lab­o­ra­tion, adding $30M cash; Ku­ra shoots for $100M raise

→  Rare dis­ease play­er Ul­tragenyx $RARE is ex­pand­ing its al­liance with Arc­turus $ARCT, pay­ing $24 mil­lion for eq­ui­ty and an­oth­er $6 mil­lion in an up­front as the two part­ners ex­pand their col­lab­o­ra­tion to in­clude up to 12 tar­gets. “This ex­pand­ed col­lab­o­ra­tion fur­ther so­lid­i­fies our mR­NA plat­form by adding ad­di­tion­al tar­gets and ex­pand­ing our abil­i­ty to po­ten­tial­ly treat more dis­eases,” said Emil Kakkis, the CEO at Ul­tragenyx. “We are pleased with the progress of our on­go­ing col­lab­o­ra­tion. Our most ad­vanced mR­NA pro­gram, UX053 for the treat­ment of Glyco­gen Stor­age Dis­ease Type III, is ex­pect­ed to move in­to the clin­ic next year, and we look for­ward to fur­ther build­ing up­on the ini­tial suc­cess of this part­ner­ship.”

UP­DAT­ED: Chica­go biotech ar­gues blue­bird, Third Rock 'killed' its ri­val, pi­o­neer­ing tha­lassemia gene ther­a­py in law­suit

Blue­bird bio $BLUE chief Nick Leschly court­ed con­tro­ver­sy last week when he re­vealed the com­pa­ny’s be­ta tha­lassemia treat­ment will car­ry a jaw-drop­ping $1.8 mil­lion price tag over a 5-year pe­ri­od in Eu­rope — mak­ing it the plan­et’s sec­ond most ex­pen­sive ther­a­py be­hind No­var­tis’ $NVS fresh­ly ap­proved spinal mus­cu­lar at­ro­phy ther­a­py, Zol­gens­ma, at $2.1 mil­lion. A Chica­go biotech, mean­while, has been fum­ing at the side­lines. In a law­suit filed ear­li­er this month, Er­rant Gene Ther­a­peu­tics al­leged that blue­bird and ven­ture cap­i­tal group Third Rock un­law­ful­ly prised a vi­ral vec­tor, de­vel­oped in part­ner­ship with the Memo­r­i­al Sloan Ket­ter­ing Can­cer Cen­ter (MSK), from its grasp, and thwart­ed the de­vel­op­ment of its sem­i­nal gene ther­a­py.

Neil Woodford. Woodford Investment Management via YouTube

Wood­ford braces po­lit­i­cal storm as UK fi­nan­cial reg­u­la­tors scru­ti­nize fund sus­pen­sion

The shock of Neil Wood­ford’s de­ci­sion to block with­drawals for his flag­ship fund is still rip­pling through the rest of his port­fo­lio — and be­yond. Un­der po­lit­i­cal pres­sure, UK fi­nan­cial reg­u­la­tors are now tak­ing a hard look while in­vestors con­tin­ue to flee.

In a re­sponse let­ter to an MP, the Fi­nan­cial Con­duct Au­thor­i­ty re­vealed that it’s opened an in­ves­ti­ga­tion in­to the sus­pen­sion fol­low­ing months of en­gage­ment with Link Fund So­lu­tions, which tech­ni­cal­ly del­e­gat­ed Wood­ford’s firm to man­age its funds.

Gilead baits new al­liance with $45M up­front, div­ing in­to the busy pro­tein degra­da­tion field

Gilead is jump­ing on board the pro­tein degra­da­tion band­wag­on. And they’re turn­ing to a low-pro­file Third Rock start­up for the ex­per­tise. But if you were look­ing for a trans­for­ma­tion­al deal to kick up fresh en­thu­si­asm for Gilead, you’ll have to re­main pa­tient.

This one will have a long way to go be­fore they get in­to the clin­ic.

The big biotech said Wednes­day morn­ing that it is pay­ing $45 mil­lion up­front and re­serv­ing a whop­ping $2.3 bil­lion in biotech bucks if San Fran­cis­co-based Nurix can point the way to new can­cer ther­a­pies, as well as drugs for oth­er, un­spec­i­fied dis­eases.