'Seeds of change' sprout in­to high­er pro­ject­ed re­turn on in­vest­ments for the bio­phar­ma in­dus­try, ac­cord­ing to De­loitte

Since 2010, De­loitte has been track­ing the re­turn on in­vest­ment that a hand­ful of top bio­phar­ma com­pa­nies might ex­pect to see from their late-stage as­sets. Last year, the com­pa­ny not­ed “seeds of change” fol­low­ing a six-year de­cline in av­er­age in­ter­nal rate of re­turns.

De­loitte’s lat­est re­port in­di­cates the trend has con­tin­ued this year, as pro­ject­ed R&D re­turns have risen from 2.7% to 7%, the largest an­nu­al in­crease since the study be­gan in 2010.

Son­al Shah

“We had ex­pect­ed an uptick in the IRR this year be­cause of the COVID vac­cines and ther­a­pies,” Son­al Shah, se­nior man­ag­er for the De­loitte Cen­ter for Health So­lu­tions, told End­points News. “But the fact that when you ac­tu­al­ly ex­clude them, you still see an in­crease, and we see this de­crease in R&D costs as well as a de­crease in cy­cle time was sur­pris­ing to me.”

When cal­cu­lat­ing IRR, De­loitte takes in­to ac­count a com­pa­ny’s to­tal R&D ex­pen­di­ture for bring­ing as­sets to launch, plus a fore­cast es­ti­mate of the fu­ture rev­enue that these as­sets could ex­pect to earn fol­low­ing launch.

From this year’s com­bined co­hort of 15 top-earn­ing com­pa­nies — which were not list­ed in De­loitte’s re­port — three achieved a fore­cast peak sales per as­set greater than $500 mil­lion in 2021, with six com­pa­nies im­prov­ing their pro­ject­ed peak sales per as­set com­pared to the year be­fore.

Along­side an in­crease in peak sales fore­casts, De­loitte not­ed that the cost to bring an as­set to mar­ket has de­clined over the last three years, which it at­trib­ut­es to “nov­el tri­al de­signs and im­prove­ments in ef­fi­cien­cy through the dig­i­tal­i­sa­tion of drug dis­cov­ery and de­vel­op­ment.” It’s al­so, in part, due to “very high” sales fore­casts for the com­pa­nies’ Covid-19 as­sets and one high-val­ue late-stage neu­ro­log­i­cal as­set.

How­ev­er, even if you ex­clude the Covid-19 re­lat­ed as­sets, the pro­ject­ed IRR for 2021 is still 3.2%, which is high­er than the 2.7% re­port­ed for 2020.

“This is a big re­ver­sal, af­ter al­most a decade-long de­cline in re­turns on in­no­va­tion. So the fact that that turn­around is hap­pen­ing in spite of Covid is re­al­ly ex­cit­ing,” Shah said.

While the av­er­age cost to de­vel­op an as­set, in­clud­ing cost of fail­ure, was at $2.376 bil­lion in 2020, that fig­ure de­creased slight­ly to $2.006 bil­lion in 2021, ac­cord­ing to De­loitte. How­ev­er, that de­crease is main­ly due to an in­crease in the num­ber of as­sets in the late-stage pipeline. And it’s still quite an in­crease from the av­er­age cost in 2013, which mea­sured in at $1.296 bil­lion.

De­loitte did note an in­crease in tri­al ef­fi­cien­cy, large­ly due to the rapid de­vel­op­ment of Covid can­di­dates. The com­pa­ny re­port­ed that Phase III tri­als for Covid as­sets were 3.7 times faster than non-Covid in­fec­tious dis­ease tri­als.

“Nev­er­the­less, de­spite the dip, the over­all cy­cle time for com­bined co­hort con­tin­ues to re­main above 2019 lev­els, re­in­forc­ing the need to op­ti­mise process­es or fun­da­men­tal­ly change the drug de­vel­op­ment par­a­digm,” the re­port states.

There was al­so an uptick in col­lab­o­ra­tion last year, with De­loitte not­ing that 46% of late-stage as­sets in 2021 were co-de­vel­oped, up from 32% in 2020. On­col­o­gy as­sets still dom­i­nate the group’s col­lec­tive pipeline, rep­re­sent­ing 35% of late-stage as­sets. As ex­pect­ed, the pro­por­tion of in­fec­tious dis­ease as­sets in­creased quite a bit in the last year, now oc­cu­py­ing 14% of late-stage pro­grams.

“We’re see­ing high­er-val­ue pro­grams, low­er ex­pense, and ul­ti­mate­ly more pro­duc­tiv­i­ty for the in­dus­try,” Shah said. “And a lot of that I’ll say re­flects the in­vest­ments the in­dus­try has been mak­ing over the last sev­er­al years in terms of dig­i­tal tech­nolo­gies, re­al­ly look­ing at de­cen­tral­ized tri­als and more ef­fec­tive­ly and ef­fi­cient­ly run­ning clin­i­cal tri­als.”

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His­toric drug pric­ing re­forms pass; Pfiz­er ac­quires GBT; The long search for non-opi­oid pain drugs; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

The Endpoints Weekly has officially crossed the 60,000 mark on subscribers — thanks to all of your support. As the editorial team grows, we’ve been able to do a lot more, with many of those on display this week. Be sure to check out Lei Lei Wu’s deep dive on pain R&D. If you missed it, you may also rewatch her companion panel here.

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Gold for adults, sil­ver for in­fants: Pfiz­er's Pre­vnar 2.0 head­ed to FDA months af­ter Mer­ck­'s green light

Pfizer was first to the finish line for the next-gen pneumococcal vaccine in adults, but Merck beat its rival with a jab for children in June.

Now, two months after Merck’s 15-valent Vaxneuvance won the FDA stamp of approval for kids, Pfizer is out with some late-stage data on its 20-valent shot for infants.

Known as Prevnar 20 for adults, Pfizer’s 20vPnC will head to the FDA by the end of this year for an approval request in infants, the Big Pharma said Friday morning. Discussions with the FDA will occur first and more late-stage pediatric trials are expected to read out soon, informing the regulatory pathway in other countries and regions.

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Seagen interim CEO Roger Dansey and Daiichi Sankyo CEO Sunao Manabe

Paving the way for Mer­ck­'s buy­out, Seagen los­es ar­bi­tra­tion dis­pute with Dai­ichi over ADC tech

As Seagen awaits a final buyout offer from Merck that could be in the territory of $40 billion, Seagen revealed Friday afternoon that it lost an arbitration dispute with Daiichi Sankyo relating to the companies’ 2008 collaboration around the use of antibody-drug conjugate (ADC) technology.

But that loss likely won’t matter much when it comes to Merck’s deal.

After breaking off its pact with Daiichi in mid-2015, the two companies battled over “linker” tech — a chemical bridge between an ADC’s antibody component and the cytotoxic payload — that Seagen claims Daiichi would improve upon and implement in its current generation of ADCs.

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Senate Finance Committee Chair Ron Wyden (D-OR) (Francis Chung/E&E News/POLITICO via AP Images)

Sen­ate Fi­nance chair con­tin­ues his in­ves­ti­ga­tion in­to phar­ma tax­es with re­quests for Am­gen

Amgen is the latest pharma company to appear on the radar of Senate Finance Committee Chair Ron Wyden (D-OR), who is investigating the way pharma companies are using subsidiaries in low- or zero-tax countries to lower their tax bills.

Like its peers Merck, AbbVie and Bristol Myers Squibb, Wyden notes how Amgen uses its Puerto Rico operations to consistently pay tax rates that are substantially lower than the U.S. corporate tax rate of 21%, with an effective tax rate of 10.7% in 2020 and 12.1% in 2021.

FDA ap­proves sec­ond in­di­ca­tion for As­traZeneca and Dai­ichi's En­her­tu in less than a week

AstraZeneca and Daiichi Sankyo’s antibody-drug conjugate Enhertu scored its second approval in less than a week, this time for a subset of lung cancer patients.

Enhertu received accelerated approval on Thursday to treat adults with unresectable or metastatic non-small cell lung cancer (NSCLC) whose tumors have activating HER2 (ERBB2) mutations, and who have already received a prior systemic therapy.

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J&J to re­move talc prod­ucts from shelves world­wide, re­plac­ing with corn­starch-based port­fo­lio

After controversially spinning out its talc liabilities and filing for bankruptcy in an attempt to settle 38,000 lawsuits, Johnson & Johnson is now changing up the formula for its baby powder products.

J&J is beginning the transition to an all cornstarch-based baby powder portfolio, the pharma giant announced on Thursday — just months after a federal judge ruled in favor of its “Texas two-step” bankruptcy to settle allegations that its talc products contained asbestos and caused cancer. An appeals court has since agreed to revisit that case.

CSL is gathering its four business units under a unified brand identity strategy (Credit: CSL company site)

CSL brings Se­qirus, Vi­for un­der par­ent um­brel­la brand in iden­ti­ty re­vamp

CSL is gathering its brands under the family name umbrella, renaming its vaccine and newly acquired nephrology specialty businesses with the parent initials.

CSL Seqirus and CSL Vifor join CSL Plasma and CSL Behring as the four now uniformly branded business units of the global biopharma. The Seqirus vaccine division was formed in 2015 with the combination of bioCSL and its purchase of Novartis’ flu vaccine business. CSL picked up Vifor Pharma late last year in an $11.7 billion deal for the nephrology, iron deficiency and cardio-renal drug developer.

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No­var­tis re­ports two pa­tient deaths af­ter treat­ment with Zol­gens­ma

Two children with spinal muscular atrophy have died after receiving Novartis’ Zolgensma, a gene therapy designed as a one-time treatment for the rare fatal disease.

The deaths, which resulted from acute liver failure, occurred in Russia and Kazakhstan, Novartis confirmed in a statement to Endpoints News. Having notified health authorities across all the markets where Zolgensma is available, it will update the drug label “to specify that fatal acute liver failure has been reported,” a spokesperson wrote.

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