The good, the bad and the ug­ly for the top 15 spenders in the glob­al drug R&D busi­ness: 2018

As a general rule, the top 15 R&D groups in biopharma are known for keeping a very steady hand on spending. I’ve been following this group for more than a decade now, and it hasn’t been unusual seeing little year-to-year variations in the total spend.

But that’s no longer the case.

Four giant companies — J&J, Bristol-Myers Squibb, GlaxoSmithKline and Celgene — all increased R&D spending last year by more than a billion dollars each, according to their recent year-end tallies. That represents some big bets on late-stage efforts during an intense and growing rivalry to score bigger markets in oncology and other key disease focuses. And several will continue to wager fresh billions in the year to come, as analysts now keenly wait to see which of these big players — such as Amgen or Pfizer — pull off some new acquisitions in 2018.

The very biggest players, such as Basel-based Roche and Novartis, will likely keep hunting those bolt-ons they like best.

As we’ve been tracking in our ongoing survey of biotech execs, this is all playing out at a time that experimental drug valuations are at an all-time high, showing few signs of stagnating now. Bristol-Myers just helped prove that with its record pact to partner with Nektar.

Over the past year we’ve seen a continued pullback from brick-and-mortar ops in China, as GlaxoSmithKline helped illustrate with its retreat from Shanghai. But J&J is helping blaze a path toward new alliances with Chinese upstarts, just as Celgene did when it partnered with BeiGene on PD-1. China is becoming a huge new influence on drug development, and they have the scientific capability to make some stunning advances with the help of a reenergized CFDA making it easier to gain an approval there.

Along the way, Chinese biotechs are becoming so prolific that some categories could become commoditized by a slew of me-toos.

Reorganization never stops in Big Biopharma, either. That can mean increased spending at a company like GSK, which tore up its US ops several years ago to knit something new in the Philadelphia area. Lilly has made some deep cuts, presumably ahead of new dealmaking. Amgen keeps trimming staff. And Pfizer demonstrated its zeal for the ax when it cut off neurosciences in a brutal stab. Takeda has undergone a complete remake over the past two years, and like the rest of the pack, it’s building more externalization into the research structure.

The race for PD-1/L1 domination is far from over, even though a tsunami of experimental meds would seem to be setting up some cheaper alternatives. As a result, the leaders are distinguishing themselves with new combos that can top any single therapy. And we’ve moved from pioneering approvals in CAR-T to a race for CAR-T 2.0, with aggressive players like Gilead and Celgene stepping in to fight it out with a powerhouse team at Novartis.

In this field, scoring two or three significant new drug approvals in one year is good, maybe even great. But with old franchises fading fast, it’s the companies that can stay ahead with dominant late-stage pipelines that promise a steady stream of blockbuster OKs that earn the most respect. That requires round-the-clock vigilance, a keen ability to design and execute the right trials and one eye to look over your shoulder to see who’s catching up. All while the industry’s ROI for the giants continues to shrink.

Whew.

And without more ado, here are the top 15 companies by R&D budgets.


This is Endpoints News’ third annual look at the top 15 spenders in the global R&D business. Read the 2016 edition and 2017 follow-up here.

Get instant access to this report with a paid Endpoints News subscription. Includes a detailed analysis of each top spender and the players involved.

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A New Fron­tier: The In­ner Ear

What happens when a successful biotech venture capitalist is unexpectedly diagnosed with a chronic, life-disrupting vertigo disorder? Innovation in neurotology.

That venture capitalist was Jay Lichter, Ph.D., and after learning there was no FDA-approved drug treatment for his condition, Ménière’s disease, he decided to create a company to bring drug development to neurotology. Otonomy was founded in 2008 and is dedicated to finding new drug treatments for the hugely underserved community living with balance and hearing disorders. Helping patients like Jay has been the driving force behind Otonomy, a company heading into a transformative 2020 with three clinical trial readouts: Phase 3 in Ménière’s disease, Phase 2 in tinnitus, and Phase 1/2 in hearing loss. These catalysts, together with others in the field, highlight the emerging opportunity in neurotology.
Otonomy is leading the way in neurotology
Neurotology, or the treatment of inner ear neurological disorders, is a large and untapped market for drug developers: one in eight individuals in the U.S. have moderate-to-severe hearing loss, tinnitus or vertigo disorders such as Ménière’s disease.1 With no FDA-approved drug treatments available for these conditions, the burden on patients—including social anxiety, lower quality of life, reduced work productivity, and higher rates of depression—can be significant.2, 3, 4

Joe Jimenez, Getty

Ex-No­var­tis CEO Joe Jimenez is tak­ing an­oth­er crack at open­ing a new chap­ter in his ca­reer — and that in­cludes a new board seat and a $250M start­up

Joe Jimenez is back.

The ex-CEO of Novartis has taken a board seat on Century Therapeutics, the Versant and Bayer-backed startup focused on coming up with a brand new twist on cell therapies for cancer — a field where Jimenez made his mark backing the first personalized CAR-T approved for use.

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Can we make the an­tibi­ot­ic mar­ket great again?

The standard for-profit model in drug development is straightforward. Spend millions, even billions, to develop a medicine from scratch. The return on investment (and ideally a tidy profit) comes via volume and/or price, depending on the disease. But the string of big pharma exits and slew of biotech bankruptcies indicate that the model is sorely flawed when it comes to antibiotics.

The industry players contributing to the arsenal of antimicrobials are fast dwindling, and the pipeline for new antibiotics is embarrassingly sparse, the WHO has warned. Drugmakers are enticed by greener pastures, compared to the long, arduous and expensive path to antibiotic approval that offers little financial gain as treatments are typically priced cheaply, and often lose potency over time as microbes grow resistant to them.

Amber Saltzman (Ohana)

Flag­ship's first ven­ture of 2020 is out, and it's all about sperm

A couple years ago, Amber Salzman got a call as she was returning East full-time after a two-year stint running a gene therapy company in California.

It was from someone at Flagship Pioneering, the deep-pocketed biotech venture firm. They had a new company with a new way of thinking about sperm. It had been incubating for over a year, and now they wanted her to run it.

“It exactly fit,” Salzman told Endpoints News. “I just thought I had to do something.”

Pfiz­er ax­es 6 ear­ly to late-stage can­cer stud­ies from the pipeline — with one oth­er cut for sick­le cell dis­ease

Pfizer trimmed a group of 3 R&D programs using their PD-L1 Bavencio — partnered with Merck KGaA — in their latest pipeline cull.

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UP­DAT­ED: In­cyte scores much need­ed PhI­II suc­cess — and of course it’s de­liv­ered by rux­oli­tinib

Incyte’s efforts to breathe a second life into ruxolitinib — its JAK inhibitor sold in pill form as Jakafi — has been greeted with clear, if preliminary and unsurprising, Phase III success.

Topline data from the TRuE-AD2 cements ruxolitinib’s foundational importance for Incyte, and gives analysts hope that there might yet be room for growth in a pipeline that’s suffered multiple R&D setbacks.

The FTC and New York state ac­cuse Mar­tin Shkre­li of run­ning a drug mo­nop­oly. They plan to squash it — and per­ma­nent­ly ex­ile him

Pharma bro Martin Shkreli was jailed, publicly pilloried and forced to confront some lawmakers in Washington riled by his move to take an old generic and move the price from $17.50 per pill to $750. But through 4 years of controversy and public revulsion, his company never backed away from the price — left uncontrolled by a laissez faire federal policy on a drug’s cost.

Now the FTC and the state of New York plan to pry his fingers off the drug once and for all and open it up to some cheap competition. And their lawsuit is asking that Shkreli — with several years left on his prison sentence — be banned permanently from the pharma industry.

UP­DAT­ED: Ac­celeron res­ur­rects block­buster hopes for so­tater­cept with pos­i­tive PhII — and shares rock­et up

Acceleron $XLRN says that its first major trial readout of 2020 is a success.

In a Phase II study of 106 patients with pulmonary arterial hypertension (PAH), Acceleron’s experimental drug sotatercept hit its primary endpoint: a significant reduction in pulmonary vascular resistance. The drug also met three different secondary endpoints, including the 6-minute walking test.

“We’re thrilled to report such positive topline results from the PULSAR trial,” Acceleron CEO Habib Dable said in a statement. The company said in a conference call they plan on discussing a Phase III trial design with regulators.

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Stephen Hahn, AP

The FDA un­veils a new reg­u­la­to­ry frame­work to speed along gene ther­a­pies, re­ward­ing the lead­ing play­ers

Bioregnum Opinion Column by John Carroll

The emphasis at the FDA over the past 5 years or so has been on assisting drug developers as much as they can to speed up regulatory reviews and push more drugs into the market. And they are now crafting a final set of regulations aimed at flagging through a whole new generation of gene therapies in clinical testing at a rapid clip.

In a set of 6 prospective guidances posted on the FDA web site Tuesday morning, FDA commissioner Stephen Hahn committed the agency to staying flexible in handing out designations that are critical to gaining early approvals for drugs that claim to be once-and-done but don’t have anything close to the data needed to prove it.

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