Big Phar­ma’s woe­ful num­bers on drug R&D just got even worse

Col­in Ter­ry, De­loitte

The an­a­lysts at De­loitte con­tin­ue to cal­cu­late a dwin­dling re­turn for Big Phar­ma’s R&D dol­lars. Their lat­est num­ber crunch­ing for the world’s top 12 bio­phar­ma com­pa­nies con­cludes that ROI on their in­vest­ment cash has shrunk to 3.7%, the low­est lev­el yet af­ter hit­ting 10.1% in 2010.

What’s killing these com­pa­nies’ num­bers, De­loitte says, is that while de­vel­op­ment costs on new drugs have plateaued at about $1.5 bil­lion on each pro­gram, their rev­enue keeps falling. There’s been an 11.4% drop in rev­enue year-on-year over 6 years, which has now fall­en to $394 mil­lion in av­er­age peak an­nu­al sales.

A hunt for any sil­ver lin­ing in this new re­port can be des­per­ate­ly hard. The De­loitte guys — Col­in Ter­ry and Neil Less­er — con­clude that the num­ber of block­busters pro­duced by this crowd has dwin­dled by more than half, so they keep spend­ing big in search of small­er drugs. And as they fo­cus more and more on their own pipeline, they are ig­nor­ing the ex­ter­nal pro­grams that can de­liv­er bet­ter re­turns — set­ting up a push, per­haps, for a surge in M&A as the re­al­iza­tion sinks in that they are on the wrong track.

The best ap­proach, they add, is to think and act like a biotech. Small­er biotech groups sim­ply do bet­ter than Big Phar­ma at R&D. And the big com­pa­nies that stay fo­cused on core dis­eases do far bet­ter than the com­pa­nies that keep shift­ing R&D spot­lights.

Neil Less­er, De­loitte

It’s hard to over­es­ti­mate the im­por­tance of R&D spend­ing by this group, and the need to get it right. My lat­est as­sess­ment con­clud­ed that the top 15 com­pa­nies spent $87 bil­lion on re­search last year, the li­on’s share of the glob­al R&D bud­get. And this year we’re look­ing at a sharp, painful drop in new drug ap­provals at the FDA, now run­ning at less than half of last year’s to­tal.

Less­er’s bot­tom line: Change now or court ex­tinc­tion.

“With phar­ma R&D re­turns con­tin­u­ing to fall, our analy­sis shows that the cur­rent mod­el is not sus­tain­able.  What is clear is that fun­da­men­tal change may no longer be an op­tion, but a ne­ces­si­ty for the in­dus­try.”

Don’t look for the glob­al drug mar­ket to pro­vide any sud­den re­lief. Not in this price-sen­si­tive en­vi­ron­ment.

“Pric­ing is per­haps the most pub­li­cized chal­lenge, with po­lit­i­cal and pub­lic scruti­ny on the top­ic in­ten­si­fy­ing,” says Ter­ry. “The ma­jor­i­ty of com­pa­nies are strug­gling to achieve his­tor­i­cal peak sales de­spite con­tin­u­ing to launch many new prod­ucts.  They are al­so in­creas­ing­ly look­ing for re­turns from treat­ments in small­er pa­tient groups.  As costs per prod­uct re­main high, sales pro­jec­tions de­cline, and giv­en it now takes the in­dus­try over 14 years to launch a drug, re­al ques­tions should be raised about pro­duc­tiv­i­ty and re­turns on in­no­va­tion.”

Brent Saunders [Getty Photos]

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While Ako­rn works to re­vive its for­tunes, the FDA hits it with an­oth­er warn­ing let­ter

Ako­rn just can’t dig it­self out of its hole.

The spe­cial­ty gener­ic drug­mak­er has re­ceived yet an­oth­er warn­ing let­ter from the FDA this year. With­out dis­clos­ing any specifics, the Lake For­est, Illi­nois-based drug­mak­er on Wednes­day said the US reg­u­la­tor had is­sued the let­ter, cit­ing an in­spec­tion of its Som­er­set, New Jer­sey man­u­fac­tur­ing fa­cil­i­ty in Ju­ly and Au­gust of 2018. The com­pa­ny’s shares $AKRX dipped about 1.7% to $4.65 be­fore the bell.

Af­ter rais­ing $158M, this up­start's founders have star back­ers and plans to break new ground in gene ther­a­py

Back in 2014, Stephanie Tagliatela opted to take an early exit out of her PhD program after working in Mark Bear’s lab at MIT, where she specialized in the synaptic connections between neuronal cells in the brain. She never finished that PhD, but she and fellow MIT student Kartik Ramamoorthi — who was on the founding team at Voyager — came away with some ideas for a gene therapy startup.

Today, fully 5 years later, she and Ramamoorthi are taking the wraps off of a $104 million mega-round designed to take the cumulative work of their preclinical formative stage for Encoded Therapeutics into human studies. They’ve now raised $158 million since starting out in Illumina’s incubator in the Bay Area, and they believe they are firmly on track to do something unique in gene therapy.

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FDA re­jects Ac­er's rare dis­ease drug, asks for new tri­al — shares crater

Ac­er Ther­a­peu­tics’ bid to re­pur­pose celipro­lol — a be­ta-block­er on the mar­ket for hy­per­ten­sion — as a treat­ment for a rare, in­her­it­ed con­nec­tive tis­sue dis­or­der has hit a se­vere set­back. The New­ton, Mass­a­chu­setts-based com­pa­ny on Tues­day said the FDA re­ject­ed the drug and has asked for an­oth­er clin­i­cal tri­al.

The com­pa­ny’s shares $AC­ER cratered near­ly 77% to $4.47 in Tues­day morn­ing trad­ing.

Richard Gonzalez testifying in front of Senate Finance Committee, February 2019 [AP Images]

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Over the past 18 months we’ve now seen three major buyouts announced: Takeda/Shire; Bristol-Myers/Celgene and now AbbVie/Allergan. And with this latest deal it’s increasingly clear that the sharp fall from grace suffered by high-profile players which have seen their share prices blasted has created an opening for the growth players in big pharma to up their game — in sharp contrast to the popular bolt-on deals that have been driving the growth strategy at Novartis, Merck, Roche and others.

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Novotech CEO Dr. John Moller

Novotech CRO Award­ed Frost & Sul­li­van Best Biotech CRO Asia-Pa­cif­ic 2019

Known in the in­dus­try as the Asia-Pa­cif­ic CRO, Novotech is now lead CRO ser­vices provider for the grow­ing num­ber of in­ter­na­tion­al biotechs se­lect­ing the re­gion for their stud­ies.

Re­flect­ing this Asia-Pa­cif­ic growth, Novotech staff num­bers are up 20% since De­cem­ber 2018 to 600 in-house clin­i­cal re­search peo­ple across a full range of ser­vices, across the re­gion.

Novotech’s ca­pa­bil­i­ties have been rec­og­nized by an­a­lysts like Frost & Sul­li­van, most re­cent­ly with the pres­ti­gious Asia-Pa­cif­ic CRO Biotech of the year award for best prac­tices in clin­i­cal re­search for biotechs for the fifth year. See oth­er awards here.

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More than 2 years af­ter No­var­tis sur­prised the biotech in­vest­ment com­mu­ni­ty with its $50 mil­lion up­front and promise of R&D sup­port to part­ner with the lit­tle biotech on NASH — ig­nit­ing a light­ning strike for the share price — Cona­tus $CNAT is back with the lat­est bit­ter tale to tell about em­ri­c­as­an, which once in­spired con­fi­dence at the phar­ma gi­ant.

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In a de­tailed up­date, the Waltham, MA-based biotech said sel­torex­ant (MIN-202) hit both the pri­ma­ry and sev­er­al sec­ondary end­points, ef­fec­tive­ly im­prov­ing sleep in­duc­tion and pro­long­ing sleep du­ra­tion. In­ves­ti­ga­tors made a point to note that the ef­fects were con­sis­tent across the adult and el­der­ly pop­u­la­tions, with the lat­ter more prone to the sleep dis­or­der.

Gene ther­a­py biotech sees its stock rock­et high­er on promis­ing re­sults for rare cas­es of but­ter­fly dis­ease

Shares of Krys­tal Biotech took off this morn­ing $KRYS af­ter the lit­tle biotech re­port­ed promis­ing re­sults from its gene ther­a­py to treat a rare skin dis­ease called epi­der­mol­y­sis bul­losa.

Fo­cus­ing on an up­date with 4 new pa­tients, re­searchers spot­light­ed the suc­cess of KB103 in clos­ing some stub­born wounds. Krys­tal says that of 4 re­cur­ring and 2 chron­ic skin wounds treat­ed with the gene ther­a­py, the KB103 group saw the clo­sure of 5. The 6th — a chron­ic wound, de­fined as a wound that had re­mained open for more than 12 weeks — was par­tial­ly closed. That brings the to­tal so far to 8 treat­ed wounds, with 7 clo­sures.