The scoop: Marathon’s R&D pro­gram for Duchenne MD drug like­ly came in at a bar­gain base­ment price

On Fri­day, as news spread about the FDA’s ap­proval of Marathon Phar­ma­ceu­ti­cals’ ap­pli­ca­tion for Em­flaza (de­flaza­cort) as an or­phan drug for Duchenne mus­cu­lar dy­s­tro­phy, CEO Jeff Aronin went on the of­fen­sive over his plans to sell the drug at an $89,000 list price, which im­me­di­ate­ly drew scruti­ny from some long­time ob­servers of the in­dus­try.

Aronin pulled what has be­come a stan­dard play out of the guide book for phar­ma com­pa­nies fac­ing price goug­ing charges. He told re­porters at sev­er­al pub­li­ca­tions, in­clud­ing the Chica­go Tri­bune and the Wall Street Jour­nal, that it would take years for Marathon to be­come prof­itable, con­sid­er­ing all the R&D costs that had been sunk in­to de­flaza­cort. And — like Tur­ing founder Mar­tin Shkre­li, caught on the horns of a con­tro­ver­sy over Dara­prim pric­ing — he vowed that pa­tients would be pro­tect­ed, with pay­ers cov­er­ing the cost.

“We had to start from scratch with the FDA,” Aronin in­sist­ed on a we­bi­nar with par­ents on Fri­day, as he as­sured fam­i­lies that their out-of-pock­et costs would be “ze­ro to low cost” while in­sist­ing that the net price to in­sur­ers was based en­tire­ly on the ex­ten­sive re­search the com­pa­ny com­plet­ed.

“It was a heavy lift,” he told par­ents, “but we did all these tri­als.”

Many of those tri­als he cit­ed, though, prob­a­bly on­ly cost a few hun­dred thou­sand dol­lars. That was one piece of the puz­zle, though, that was omit­ted from Marathon’s de­fense. And you won’t hear a word about it from the FDA, which ac­tive­ly as­sist­ed at every step, hand­ing out valu­able help by step­ping up an ap­proval for a drug that has been wide­ly avail­able at a tiny frac­tion of the cost through over­seas sup­pli­ers and then capped it with a bonus that could eas­i­ly turn an overnight prof­it for Marathon.

Just like Shkre­li?

One dif­fer­ence that’s been point­ed out be­tween Aronin and Shkre­li — who re­cent­ly point­ed out that Aronin and Ova­tion, which he sold to Lund­beck for $900 mil­lion, “in­vent­ed price in­creas­es” — was that Shkre­li sim­ply hiked the price of an old drug he ac­quired for $55 mil­lion and protest­ed that he need­ed the mon­ey from the Dara­prim price hike to do more re­search in­to a bet­ter drug, while Aronin in­vest­ed in a de­vel­op­ment pro­gram for a cheap, gener­ic drug that’s been used around the world for decades to qual­i­fy for an FDA ap­proval in the US for the first time.

The com­pa­ny, Aronin main­tained, con­duct­ed 17 pre­clin­i­cal and clin­i­cal stud­ies to get this drug, plus in-li­cens­ing two old­er stud­ies. The piv­otal tri­al was com­plet­ed orig­i­nal­ly in 1995, be­fore the spon­sor aban­doned it. But the CEO re­fused to de­tail the ac­tu­al hard re­search costs. (Aronin and Marathon have al­so re­fused to re­spond to sev­er­al re­quests for an in­ter­view.)

On Fri­day, though, Marathon went one step fur­ther with the Duchenne par­ents that they’ve been court­ing as Aronin prepped for a mar­ket launch of a drug now OK’d for DMD kids 5 and old­er. In a we­bi­nar, he post­ed a slide of the tri­al pro­gram for de­flaza­cort de­tail­ing the pre­clin­i­cal and clin­i­cal ef­fort.

The we­bi­nar was host­ed by Par­ent Pro­ject Mus­cu­lar Dy­s­tro­phy, one of sev­er­al par­ent groups that counts Marathon as a cor­po­rate spon­sor, which al­so post­ed a link to the event.

Marathon Slide

The slide cites the two old ef­fi­ca­cy stud­ies they ac­quired along with de­tails on 9 pre­clin­i­cal stud­ies, in­clud­ing a mon­key tri­al and two rat stud­ies.

Marathon’s clin­i­cal pro­gram in­volved no new reg­is­tra­tional stud­ies, the pri­ma­ry dri­ver be­hind R&D costs.

There were projects like a drug/drug in­ter­ac­tion study and an ADME study (a stan­dard ab­sorp­tion, dis­tri­b­u­tion, me­tab­o­lism and ex­cre­tion study) and so on. They al­so start­ed an ex­tend­ed ac­cess pro­gram as they put more boys on the steroid ahead of the US mar­ket­ing launch.

Man­u­fac­tur­ing costs for this drug are clear­ly just a frac­tion of what Marathon will be charg­ing, based on the cur­rent price in the UK and Cana­da.

I hand­ed the slide on to two tri­al ex­perts, Bernard Munos, an Eli Lil­ly vet­er­an now run­ning In­no­Think, and David Grainger, who’s found­ed a slate of biotechs from his base at Medicxi in Lon­don. They both ran cost es­ti­mates on what it would take to do this kind of pro­gram.

What did it re­al­ly cost?

Munos and Grainger each came up with a fi­nal fig­ure not far off from what Shkre­li paid to lay his hands on Dara­prim. But they have two dis­tinct­ly dif­fer­ent views of the re­search costs.

Munos turned to G. Sit­ta Sit­tam­palam, an­oth­er de­vel­op­ment vet at Lil­ly who has been close­ly in­volved with the Ther­a­peu­tics for Rare and Ne­glect­ed Dis­eases pro­gram at NIH’s Na­tion­al Cen­ter for Ad­vanc­ing Trans­la­tion­al Sci­ences and with drug re­pur­pos­ing for leukemia at Kansas Uni­ver­si­ty Med­ical Cen­ter.

“From his ex­pe­ri­ence,” notes Munos, “the pre­clin­i­cal work for Em­flaza (the 9 tox stud­ies in red on their slide) can be es­ti­mat­ed at $5-10 mil­lion, and the clin­i­cal de­vel­op­ment pro­gram at $50-60 mil­lion.”

“The stud­ies from the 1990s that Marathon ac­quired were like­ly cheap (<$5 mil­lion) since they were old da­ta that had ba­si­cal­ly no val­ue when they were ac­quired; and from Marathon CEO’s ad­mis­sion need­ed a fair amount of “cleanup” to be us­able. That puts the en­tire pack­age at $65-75 mil­lion.”

Grainger, who spe­cial­izes in low-cost biotech star­tups, looked up the stud­ies he could find on­line, ran the num­bers for the whole thing, and con­clud­ed that this could all be done for much, much less. But his po­ten­tial ini­tial val­u­a­tion for the com­pa­ny al­so reach­es fair­ly close to the $55 mil­lion that Shkre­li paid for Dara­prim be­fore trig­ger­ing his own well-doc­u­ment­ed scheme to rip off the sys­tem.

The whole pre­clin­i­cal ef­fort at Marathon, Grainger says, could be done for less than $2 mil­lion, in­clud­ing $600,000 for a 9-month mon­key study of tox­i­c­i­ty. The clin­i­cal pro­gram is hard­er to map out en­tire­ly, but if you in­clude a max­i­mum amount of $400,000 for a US ADME study, $400,00 for a food ef­fect study and $720,000 for the ex­ten­sion study, it’s not hard to see that Marathon was look­ing at a small over­all bud­get. He added, though, that it was hard to fig­ure what the com­par­i­son study on Cal­cort — the drug sold in the UK — would cost, as it’s not list­ed on clin­i­cal­tri­als.gov.

Then there was over­head. Medicxi likes to run vir­tu­al com­pa­nies, and he es­ti­mates that if this was their op­er­a­tion, they would re­serve $2 mil­lion for over­head, plus $500,000 for ex­ter­nal reg­u­la­to­ry as­sis­tance. “They very prob­a­bly had a larg­er team than we would have had, though,” he adds.

“So that comes to just over $6 mil­lion in to­tal,” he notes in a break­down, “which feels about right to me. If some­one came to Medicxi propos­ing to de­liv­er that op­er­at­ing plan, and want­ed to raise $10 mil­lion to do it, we would think that was a gen­er­ous, but prob­a­bly not out­ra­geous, amount of mon­ey. If any­one told me it would cost them much more than $10 mil­lion, then I’d laugh and say you must be do­ing it wrong!”

“Re­gard­ing your last ques­tion, I can’t of course es­ti­mate what the li­cense to the ef­fi­ca­cy da­ta might have cost. That is, as you say, a wild-card. But if Marathon had come to Medicxi with this pro­pos­al and sug­gest­ed a pre-mon­ey val­u­a­tion of more than $25 mil­lion we would prob­a­bly have walked away. Oth­ers might be more gen­er­ous, but I find it hard to be­lieve it was more than $50 mil­lion.”

The 1% so­lu­tion

To put those es­ti­mates in­to some added con­text, the phar­ma in­dus­try likes to use fig­ures that show the av­er­age cost of new drug de­vel­op­ment is $2.6 bil­lion per ap­proved ther­a­py, all in. Marathon’s cost for R&D — or its ini­tial val­u­a­tion — would have been sig­nif­i­cant­ly less than 1% to 3% of that fig­ure, based on the es­ti­mates I ob­tained.

Marathon claims that its $89,000 list price will net out at around $54,000 a year af­ter dis­counts. Based on their low­er net es­ti­mat­ed price, the R&D bud­get — based on the Munos es­ti­mate — would be the same as the cost for treat­ing few­er than 1,400 pa­tients over the course of 1 year, or rough­ly 8% of the mar­ket. If you use Grainger’s num­bers, it would take few­er than 200 pa­tients to cov­er a bare­bones R&D ef­fort at the claimed net price.

At the list price, it would take a max­i­mum of cov­er­ing 115 pa­tients for a year to cov­er Grainger’s R&D es­ti­mate, and that’s with­out sell­ing the pri­or­i­ty re­view vouch­er they ob­tained from the FDA with the ap­proval — which could eas­i­ly be worth far more than the en­tire re­search/over­head bud­get for Marathon.

Quite a few Duchenne MD par­ents have been turn­ing to Mas­ters Glob­al in the UK for years to buy this drug — an old gener­ic steroid stan­dard avail­able for decades in Cana­da, the UK, etc — for around $1,200 a year. But once the FDA ap­proved it, that and oth­er life­lines got cut off. Now, to ob­tain this steroid, they’ll have to use Marathon’s sup­ply or find a way to cir­cum­vent the law.

Marathon’s price sound­ed like prof­i­teer­ing to peo­ple look­ing at a min­i­mum overnight price hike of about 6000%, a close match to Tur­ing’s 5000% price hike for Dara­prim, which land­ed Shkre­li in a Con­gres­sion­al spot­light. The com­pa­ny’s whole­sale price is al­so un­com­fort­ably close to the con­tro­ver­sial 6-fig­ure prices charged for many new can­cer drugs that spent years in the clin­ic, with the da­ta pub­lished in peer-re­viewed pub­li­ca­tions.

Chris­tine Mc­Sh­er­ry

“They main­tain that the drug is go­ing to be free (to fam­i­lies), with no out-of-pock­et costs,” says Chris­tine Mc­Sh­er­ry, an out­spo­ken cham­pi­on for Sarep­ta’s Ex­ondys 51 who runs The Jett Foun­da­tion. “But it af­fects all of us, all of us. It im­pacts our pre­mi­ums” and may well fac­tor in­to life­time caps on in­sur­ance cov­er­age for a host of Duchenne fam­i­lies. Now Marathon is forc­ing them to add an $89,000 drug to a $300,000 a year drug, she adds, which “at the end of the day is a steroid.”

By her own es­ti­mate, Marathon is rais­ing the cost of a drug that she had paid $2.04 a pill for to $148.33, a hike of more than 7000%.

“At $10,000, come on, you’re still go­ing to make mon­ey,” says Mc­Sh­er­ry. “It puts a bad taste in your mouth.”

How big is this mar­ket?

Pa­tient ad­vo­ca­cy groups say that about 15,000 to 20,000 boys suf­fer from DMD in the US, a dis­ease that first crip­ples them and then slow­ly kills them. De­flaza­cort has be­come a stan­dard ther­a­py in this group be­cause it’s well known to be ef­fec­tive in boost­ing strength, like most steroids, with less weight gain.

Ac­cord­ing to Aronin’s pre­sen­ta­tion to Duchenne par­ents on Fri­day, de­flaza­cort cur­rent­ly is on­ly avail­able to less than 10% of the pa­tient pop­u­la­tion, with the rest cut off, un­able to ob­tain the drug or re­quired to use pred­nisone.

“Hope­ful­ly this is just a start,” Aronin said on Fri­day. “Well over 90% of pa­tients did not have ac­cess to this drug.”

Many physi­cians re­sist­ed pre­scrib­ing an un­ap­proved drug, as many moth­ers re­sist­ed a drug with­out FDA ap­proval, he claimed. “And even, un­for­tu­nate­ly cost” was a fac­tor. “Most pa­tients did not have ac­cess to this drug.”

Ap­proval was the on­ly way to gain ac­cess to this drug, he in­sist­ed. Yes, he added, it took over 6 years, “was a bur­den…The rea­son we got this ap­proved was that so every­body would have ac­cess to this prod­uct.” And now it will be avail­able for low or no cost, with a se­cure, FDA ap­proved safe source for the drug.

“We had to do a lot of of oth­er stud­ies “ to sat­is­fy the FDA, Tim Cu­niff, Marathon’s EVP of drug de­vel­op­ment told par­ents on Fri­day. The food ef­fect study showed no ef­fect of food on dosage. The Cal­cort stur­dy looked at switch­ing from the im­port­ed UK drug, and found sim­i­lar blood lev­els with their ver­sion of de­flaza­cort.

How about off-la­bel pa­tients un­der 5, who weren’t ap­proved for the drug?

Cu­niff re­peat­ed­ly sug­gest­ed that the un­der-5 kids could get the drug cov­ered as well.

“We would ex­pect that an in­sur­er, es­pe­cial­ly for pa­tients al­ready on drug, would fill that pre­scrip­tion,” he added, ex­plain­ing how the com­pa­ny planned to launch a tri­al for tod­dlers. “We’ll han­dle that on a case-by-case ba­sis,” he added, with flex­i­bil­i­ty on com­pas­sion­ate use for the drug.

The block­buster case for de­flaza­cort

But Mc­Sh­er­ry says that fig­ure on pa­tients who have ob­tained de­flaza­cort to date would ap­pear to be a gross un­der­es­ti­mate, based on her per­son­al ex­pe­ri­ence net­work­ing with the tight-knit Duchenne com­mu­ni­ty. None of the par­ents she talks with have had the is­sues Marathon cit­ed in ob­tain­ing the drug. Af­ter reg­u­lar­ly polling Duchenne par­ents about de­flaza­cort, Mc­Sh­er­ry ini­tial­ly es­ti­mat­ed that 40% to 50% of the DMD kids are al­ready on de­flaza­cort and will now be forced to switch to Marathon’s sup­ply, then ad­just­ed that down to a con­ser­v­a­tive 25%.

But there’s no guar­an­tee they can stay on de­flaza­cort now, she adds, par­tic­u­lar­ly if in­sur­ers re­quire them to use pred­nisone, a gener­ic steroid in the US that is sold for pen­nies a pill. And that rais­es big is­sues for pa­tients as well, as pred­nisone — which is not ap­proved for Duchenne MD – is clear­ly not the pre­ferred steroid for Duchenne.

If half of all US pa­tients are put on Marathon’s steroid, that’s at least $405 mil­lion gross a year — $33.7 mil­lion a month — based on their low­er $54,000 an­nu­al net price. The to­tal mar­ket could be worth up to a block­buster bil­lion dol­lars-plus a year in an­nu­al rev­enue.

Be­cause the FDA gave them or­phan sta­tus, Marathon has a 7-year ex­clu­siv­i­ty deal for de­flaza­cort. Based on the com­pa­ny’s whole­sale price of $89,000, that mar­ket is the­o­ret­i­cal­ly worth up to $12.6 bil­lion in to­tal through the full stretch.

The pri­or­i­ty re­view vouch­er giv­en by the FDA with the ap­proval — in recog­ni­tion of its rare dis­ease sta­tus — would cov­er all of Marathon’s R&D costs in­stant­ly, even if it doesn’t come any­where near to fetch­ing the top $350 mil­lion price Ab­b­Vie paid for one of these vouch­ers in 2015.

De­flaza­cort won’t bring in all the high-end mon­ey. But based on ex­pert es­ti­mates, they have the po­ten­tial to blow past their re­search in­vest­ment with just a few months worth of rev­enue when it’s all up and run­ning.

That’s some­thing, though, you’ll nev­er hear from Marathon.

What Will it Take to Re­al­ize the Promise and Po­ten­tial of Im­mune Cell Ther­a­pies?

What does it take to get to the finish line with a new cancer therapy – fast? With approvals in place and hundreds of immune cell therapy candidates in the pipeline, the global industry is poised to create a fundamental shift in cancer treatments towards precision medicine. At the same time, unique challenges associated with cell and process complexity present manufacturing bottlenecks that delay speed to market and heighten cost of goods sold (COGS) — these hurdles must be overcome to make precision treatments an option for every cancer patient. This series of articles highlights some of the key manufacturing challenges associated with the production of cell-based cancer therapies as well as the solutions needed to transcend them. Automation, process knowledge, scalability, and assured supply of high-quality starting material and reagents are all critical to realizing the full potential of CAR-based therapies and sustaining the momentum achieved in recent years. The articles will highlight leading-edge technologies that incorporate these features to integrate across workflows, accelerate timelines and reduce COGS – along with how these approaches are enabling the biopharmaceutical industry to cross the finish line faster with new treatment options for patients in need.

The biggest ques­tions fac­ing gene ther­a­py, the XLMTM com­mu­ni­ty, and Astel­las af­ter fourth pa­tient death

After three patients died last year in an Astellas gene therapy trial, the company halted the study and began figuring out how to safely get the program back on track. They would, executives eventually explained, cut the dose by more than half and institute a battery of other measures to try to prevent the same thing from happening again.

Then tragically, Astellas announced this week that the first patient to receive the new regimen had died, just weeks after administration.

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Lat­est news: It’s a no on uni­ver­sal boost­ers; Pa­tient death stuns gene ther­a­py field; In­side Tril­li­um’s $2.3B turn­around; 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.

Next week is shaping up to be a busy one, as our editor-in-chief John Carroll and managing editor Kyle Blankenship lead back-to-back discussions with a great group of experts to discuss the weekend news and trends. John will be spending 30 minutes with Jake Van Naarden, the CEO of Lilly Oncology, and Kyle has a brilliant panel lined up: Harvard’s Cigall Kadoch, Susan Galbraith, the new head of cancer R&D at AstraZeneca, Roy Baynes at Merck, and James Christensen at Mirati. Don’t miss out on the action — sign up here.

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President Biden and Pfizer CEO Albert Bourla (Patrick Semansky/AP Images)

Chaot­ic ad­comm sees Pfiz­er/BioN­Tech boost­ers re­ject­ed for gen­er­al pop­u­la­tion, but rec­om­mend­ed for old­er and high-risk pop­u­la­tions

With just days before President Joe Biden’s Covid-19 booster rollout is set to go into effect, an FDA advisory committee appeared on the verge of not recommending boosters for anyone in the US before a last-minute change of wording laid the groundwork for older adults to have access to a third dose.

The FDA’s adcomm on Vaccines and Related Biological Products (VRBPAC) roundly rejected Pfizer/BioNTech booster shots for all individuals older than 16 by a 16-2 vote Friday afternoon. Soon after, however, the agency posed committee members a new question limiting booster use to the 65-and-older population and individuals at high risk of disease due to occupational exposure or comorbidities.

As­traZeneca, Dai­ichi Sanky­o's ADC En­her­tu blows away Roche's Kad­cy­la in sec­ond-line ad­vanced breast can­cer

AstraZeneca and Japanese drugmaker Daiichi Sankyo think they’ve struck gold with their next-gen ADC drug Enhertu, which has shown some striking data in late-stage breast cancer trials and early solid tumor tests. Getting into earlier patients is now the goal, starting with Enhertu’s complete walkover of a Roche drug in second-line breast cancer revealed Saturday.

Enhertu cut the risk of disease progression or death by a whopping 72% (p=<0.0001) compared with Roche’s ADC Kadcyla in second-line unresectable and/or metastatic HER2-positive breast cancer patients who had previously undergone treatment with a Herceptin-chemo combo, according to interim data from the Phase III DESTINY-Breast03 head-to-head study presented at this weekend’s #ESMO21.

Merck Research Laboratories CMO Roy Baynes

Mer­ck­'s Keytru­da un­corks full da­ta on lat­est ad­ju­vant win — this time in melanoma — adding bricks to ear­ly can­cer wall

In recent months, the battle for PD-(L)1 dominance has spilled over into early cancer with Merck’s Keytruda and Bristol Myers Squibb’s Opdivo all alone on the front lines. Keytruda now has another shell in its bandolier, and it could spell a quick approval.

Keytruda cut the risk of relapse or death by 35% over placebo (p=0.00658) in high-risk, stage 2 melanoma patients who had previously undergone surgery to remove their tumors, according to full data from the Phase III KEYNOTE-716 presented Saturday at #ESMO21.

Mer­ck flesh­es out Keytru­da win in first-line cer­vi­cal can­cer, adding more fire­pow­er to its ear­ly can­cer push

Merck has worked hard to bring its I/O blockbuster Keytruda into earlier and earlier lines of therapy, and now the wonder drug appears poised to make a quick entry into early advanced cervical cancer.

A combination of Keytruda and chemotherapy with or without Roche’s Avastin cut the risk of death by 33% over chemo with or without Avastin (p=<0.001) in first-line patients with persistent, recurrent or metastatic cervical cancer, according to full data from the Phase III KEYNOTE-826 study presented Saturday at #ESMO21.

Boston skyline (Shutterstock)

Boston, the Bay Area and San Diego dom­i­nate the life sci­ences re­al es­tate mar­ket. Where to next?

With strong competition for life sciences real estate in key clusters — greater Boston, San Francisco and San Diego — where will the industry look to expand next? That’s the question that real estate company JLL sought to answer in its latest report, released on Wednesday.

JLL scored US biotech hubs on a variety of criteria to come up with this year’s ranking, including talent, industry depth, innovation and lab real estate dynamics. Unsurprisingly, they found that last year’s top three clusters remain unchanged. JLL predicts that these core clusters will be “immovable” for the foreseeable future, comparing them to the Silicon Valley of biotech.

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Skin tu­mors in mice force Pro­tag­o­nist to halt lead pro­gram, crush­ing stock

Protagonist Therapeutics just can’t catch a break.

Six months after the Newark, CA-based biotech unveiled grand plans to launch its lead candidate for blood disorders into a Phase III trial, the FDA has slapped the program with a clinical hold. The halt — which applies to all trials involving the candidate, rusfertide — comes after skin tumors were discovered in mice treated with the drug, according to Protagonist.

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