Big Phar­ma’s busi­ness mod­el is bro­ken; New drug OKs plunged this year, high­light­ing an ug­ly re­al­i­ty

End­points as­sess­es the big bio­phar­ma R&D sto­ries of the week, with a lit­tle added com­men­tary on what they mean for the in­dus­try.

  Big Phar­ma’s busi­ness mod­el is bro­ken, so change it

When your ac­coun­tant tells you the busi­ness you’re run­ning is un­sus­tain­able, it’s a good idea to pay very, very close at­ten­tion to the de­tails. So it is with Big Phar­ma and drug de­vel­op­ment, a game which the largest play­ers in the in­dus­try have not mas­tered. De­loitte reck­ons that an al­ready bad ROI just got worse for the top 12 phar­ma com­pa­nies, and there are no signs that the num­bers are go­ing to get any bet­ter. So maybe it’s time that these big out­fits re­think how they’re run­ning R&D. What are they good at? Why in­vest heav­i­ly in ear­ly-stage re­search? Are they bet­ter at de­vel­op­ment? Aside from a few rare ex­cep­tions, there’s lit­tle ev­i­dence that any­one in this league has thought through the long-term con­se­quences of a lack of pro­duc­tiv­i­ty. It’s time to start, and come up with some­thing bold and new. The old busi­ness mod­el, where you con­tin­u­al­ly hike the price of ag­ing ther­a­peu­tics, won’t cut it go­ing for­ward.

  New drug OKs plunged this year, high­light­ing an ug­ly re­al­i­ty

Speak­ing of poor pro­duc­tiv­i­ty, we’re see­ing one of the worst years in the past decade for new drug OKs, a fact high­light­ed in John Jenk­ins’ lat­est — and last — an­nu­al re­view as head of the Of­fice of New Drugs. When a year goes by and some of your biggest de­vel­op­ers whiff on new drug ap­provals, it adds to the pres­sure for some kind of fun­da­men­tal change. The FDA in part blamed its will­ing­ness to beef up 2015 num­bers with ac­cel­er­at­ed ap­provals ahead of their 2016 PDU­FA dates, but log­ic would in­di­cate that you could make that up with some snap­py de­ci­sions at the end of 2016, and we’re not see­ing a whole lot of that. In­ter­est­ing­ly, no one can pin this short­fall on reg­u­la­tors, who have en­gi­neered a sea change in the way many drugs are re­viewed. When you re­move one pos­si­ble el­e­ment from an equa­tion, it’s eas­i­er to gain some clar­i­ty on where the prob­lem is. And at the risk of re­peat­ing my­self, that prob­lem has come home to roost.

  Sarep­ta sparked a pay­er re­volt, and the FDA needs to pay at­ten­tion

There’s fresh ev­i­dence this week that quite a few pay­ers will do every­thing pos­si­ble to avoid pay­ing for Sarep­ta’s Ex­ondys 51. And why should they cov­er an ex­per­i­men­tal drug that was giv­en an ac­cel­er­at­ed ap­proval based on the opin­ion of a sin­gle FDA ex­ec­u­tive? The FDA set the stage for a pay­er re­volt and it should think through how it plans to han­dle fu­ture cas­es — which are cer­tain to come along. I’m not op­posed to ac­cel­er­at­ed ap­provals based on lit­tle ev­i­dence when the pa­tient pop­u­la­tion faces a slow death and there are no ap­proved ther­a­pies. And there are good rea­sons for mak­ing Ex­ondys 51 avail­able. A spe­cial ap­proval cat­e­go­ry for com­pas­sion­ate use makes sense. But there’s no rea­son why com­pa­nies should be al­lowed to make mon­ey on those ap­provals. If you want to make mon­ey on drugs, you have to es­tab­lish the safe­ty/ben­e­fit pro­file first. End of sto­ry.

  Maybe the odds will ac­tu­al­ly fa­vor New York’s big gam­ble on biotech

I’ve seen state ini­tia­tives aimed at spark­ing a biotech rev­o­lu­tion come, and I’ve seen them go, usu­al­ly af­ter fail­ing woe­ful­ly at cre­at­ing any­thing like the num­ber of jobs that were promised. (Hel­lo Flori­da, Cal­i­for­nia and Texas.) This week, New York, state and city, came up with more than a bil­lion dol­lars worth of in­cen­tives to do the same thing. And maybe, just maybe, it’s dif­fer­ent this time. It’s im­por­tant to re­call that Mass­a­chu­setts saw the birth of a mas­sive biotech hub af­ter lo­cal gov­ern­ments had gained the rep for be­ing hos­tile to new busi­ness­es. When it added in­cen­tives to fos­ter the in­dus­try, the growth in life sci­ences was al­ready well en­trenched, for rea­sons that had noth­ing to do with gov­ern­ment plan­ning. The changes in at­ti­tude and pol­i­cy made a pos­i­tive, sig­nif­i­cant im­prove­ment, but they did not cre­ate Kendall Square. What I’m hop­ing is that the ba­sic el­e­ments need­ed to cre­ate a biotech re­nais­sance are al­ready in place in New York. The sci­ence is out­stand­ing. There’s space and grow­ing streams of ven­ture cash. And there’s plen­ty of tal­ent avail­able in the coun­try to helm a fleet of star­tups. So, fin­gers crossed. A ri­val hub is just what the US needs to keep the juices flow­ing.

  Biotech de­ja vu: That big R&D over­haul sto­ry isn’t go­ing away

R&D over­hauls are not a trend. They are a per­ma­nent con­di­tion, as Bris­tol-My­ers demon­strat­ed with its an­nounce­ment this week that it is rip­ping up its old struc­ture and cre­at­ing a new one. Jobs will end. Jobs will move. New jobs will be­come avail­able. And they’ll all be that much clos­er to the biggest hubs as the con­cen­tra­tion of R&D fire­pow­er con­tin­ues. I’ve been see­ing this move­ment play out for the past decade as Roche, Mer­ck, Pfiz­er and on and on all did the same thing. In some cas­es, com­pa­nies are in their sec­ond or third re­vamps. Job se­cu­ri­ty in R&D is over, un­for­tu­nate­ly. But it all makes biotech look all that much more ap­peal­ing. If you’re gam­bling every­thing on a project, it’s like­ly to be more fun and lu­cra­tive at a start­up. The tal­ent will con­tin­ue to head in­to biotech, and away from Big Bio­phar­ma. Where do you think that leads?

Lessons for biotech and phar­ma from a doc­tor who chased his own cure

After being struck by a rare disease as a healthy third year medical student, David Fajgenbaum began an arduous journey chasing his own cure. Amidst the hustle of this year’s JP Morgan conference, the digital trials platform Medable partnered with Endpoints Studio to share Dr. Fajgenbaum’s story with the drug development industry.

What follows is an edited transcript of the conversation between Medable CEO Dr. Michelle Longmire and Dr. Fajgenbaum, and it is full of lessons for biotech executives charged with bringing the next generation of medicines to patients.

Christos Kyratsous (via LinkedIn)

He built a MERS treat­ment in 6 months and then the best Ebo­la drug. Now Chris­tos Kyrat­sous turns his sights on Covid-19

TARRYTOWN, NY — In 2015, as the Ebola epidemic raged through swaths of West Africa, Kristen Pascal’s roommates sat her down on their couch and staged an intervention.

“Are you sure this is what you want to be doing with your life?” she recalls them asking her.

Pascal, a research associate for Regeneron, had been coming home at 2 am and leaving at 6 am. At one point, she didn’t see her roommate for a week. For months, that was life in Christos Kyratsous’ lab as the pair led a company-wide race to develop the first drug that could effectively treat Ebola before the outbreak ended. For Pascal, that was worth it.

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Left to right, top to bottom: Carl Gordon, Adam Stone, Peter Moglia, David Schenkein, Robert Nelsen, Carol Gallagher; Srinivas Akkaraju, Ray Debbane, Jim Flynn, Peter Kolchinsky, Thilo Schroeder, Brad Bolzon

UP­DAT­ED: The top 100 bio­phar­ma ven­ture in­vestors at the mega­bil­lions deal ta­ble

The VC crowd took a step back last year, but nevertheless maintained a furious pace of new investments in therapeutic tech platforms and biotech startups. And the top 100 players completely dominated the megabillions game.

Just looking at the number of deals done by each of the top 100, OrbiMed came in at the top, with 20, followed by Alexandria (18), Perceptive (16) and the ubiquitous RA Capital at 16. It’s impossible to say exactly how much they invested in total — those numbers are only rarely provided — but it is clear from the numbers assembled by Chris Dokomajilar at DealForma who’s most likely to be found sitting at the table during the go-go days of biotech investing.

Dokomajilar tracked $14.06 billion in biotech venture investing last year, a dip from the frenzied pace of $16.02 billion in 2018 and more than $10 billion higher than he recorded for 2010, as the economy was recovering from a profound economic crisis.

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Rahul Ballal, Imara

As sick­le cell pa­tients find new op­tions, NEA-found­ed Imara pitch­es mid-stage al­ter­na­tive for $86M IPO

November 2019 proved to be a fruitful month for patients with blood disorders known as hemoglobinopathies. Within days, the FDA ushered two drugs for sickle cell disease and another for beta thalassemia to the market — livening up a barren field.

Imara, a relatively young plower, is riding on that enthusiasm as it shoots for an $86.25 million IPO.

Imara emerged from New Enterprise Associates’ orphan drug accelerator Cydan in 2016 as a single-product company. $77.3 million in private financing later IMR-687 remains the sole asset in its pipeline; the difference is the drug is now in Phase II for sickle cell disease, with topline data slated for later this year and two other mid-stage beta thalassemia studies lined up.

UP­DAT­ED: RA joins glob­al syn­di­cate to back a $98M round for CAN­bridge

A Beijing-based rare disease and oncology player has raised $98 million to help fund the expansion of its pipeline as well as a commercial portfolio.

CANbridge put out word Tuesday that the global private equity player General Atlantic joined forces with Chinese CRO Wuxi AppTec to lead the Series D, with both ready to chip in an extra $10 million each under the right conditions. The syndicate includes RA Capital Management, Hudson Bay Capital Management, YuanMing Prudence Fund and Tigermed.

Carol Robinson, Professor Dame Carol Robinson Research Group

UP­DAT­ED: Drug dis­cov­ery in HD: Ox­ford spin­of­f's mass spec­trom­e­try ap­proach scores fresh fund­ing

The technology used to detect explosives at airports — mass spectrometry — is being piloted as an engine for drug discovery.

Mass spectrometry is a tool designed to measure with profound accuracy the mass of a single molecule. Typically, mass spectrometers can be used to identify unknown compounds, to quantify known compounds, and to determine the structure and chemical properties of molecules.

Lars Fruergaard Jørgensen, chief executive officer of Novo Nordisk A/S, (via Getty Images)

The list of the 11 block­busters-to-be in line for a 2020 launch high­light agony and ec­sta­sy of drug R&D

For all the talk about unmet medical need and patients first and so on, the key criteria investors watch for any new drug in the pipelines is peak sales projection. Are you going to hit the blockbuster mark, at $1 billion-plus, or are you going to be an also-ran in the sales department?

Of course, analysts’ peak sales projections by themselves are of limited value in many cases. When the PCSK9 drugs started arriving 5 years ago, Repatha was billed as a $2.5 billion peak earner. They’re nowhere near that, with new competition threatening current levels. And if Biogen’s controversial Alzheimer’s drug aducanumab (submission planned but not on the list) is approved, per chance, will payers cover it?

Maybe not. And then those $10 billion in peak sales assumptions would go straight down the drain.

But, analysts are analysts, and peak sales projections have to be factored in when assessing the top experimental drugs up for a launch in the year ahead.

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UP­DAT­ED: Chi­na ap­proves flu drug be­ing tout­ed as a po­ten­tial coro­n­avirus treat­ment amid a rush of clin­i­cal stud­ies

One of the three drugs that China’s Ministry of Science and Technology has tapped as potential COVID-19 treatments to watch has notched its first Chinese OK — for the flu.

While there’s no proof yet that fapilavir, or favipiravir, is the cure that patients and physicians are yearning for, it stands out for a unique constellation of qualities. It’s been commercially available in Japan for several years (unlike Gilead’s experimental remdesivir) yet it’s new to China (unlike the malaria drug chloroquine phosphate). Perhaps more importantly, a domestic biotech — Zhejiang Hisun Pharma — owns the rights to manufacture and market the drug, preempting any concerns about patents.

FDA goes on high alert as coro­n­avirus rais­es threat to drug man­u­fac­tur­ing and clin­i­cal tri­als grind to a halt

The FDA isn’t quite sure just what the coronavirus outbreak in China will mean for the US pharma industry, but it has the potential to trigger a host of troublesome issues around the supply chain the country is directly plugged into.

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