Want to start a fight? Step one: Of­fer up an es­ti­mate for what it costs to de­vel­op a new drug

There’s no bet­ter way to get a de­bate un­der­way in bio­phar­ma than com­ing up with a hard es­ti­mate for what it costs to de­vel­op a new drug. In­dus­try crit­ics like Pub­lic Cit­i­zen have de­light­ed in call­ing out de­vel­op­ers for what they see as in­flat­ed num­bers. Tufts came up with the most fre­quent­ly cit­ed fig­ure: tot­ting up at $2.6 bil­lion. And FDA com­mis­sion­er Scott Got­tlieb even re­cent­ly cit­ed the high cost of drug de­vel­op­ment, ty­ing it to high prices when he laid out a plan to help speed up R&D in the US.

So this week it’s no sur­prise that a new study led by OHSU’s Vinay Prasad — which came up with a new num­ber: $648 mil­lion, or $757 mil­lion if you in­clud­ed the cost of cap­i­tal — has been spot­light­ed for days on Twit­ter as the de­bate rages on.

In com­ing up with this num­ber, Prasad and Sham Mailankody sin­gled out 10 com­pa­nies that had de­vel­oped one new can­cer drug to see how much it cost on av­er­age to win an ap­proval and what that ap­proval would be worth. While the cost ranged wild­ly be­tween the high and the low, $157 mil­lion to close to $2 bil­lion, the me­di­an of $648 mil­lion while af­ter a me­di­an 4 years of mar­ket­ing “to­tal rev­enue from sales of these 10 drugs since ap­proval was $67.0 bil­lion com­pared with to­tal R&D spend­ing of $7.2 bil­lion.”

Prasad’s bot­tom line:

In a short pe­ri­od, de­vel­op­ment cost is more than re­couped, and some com­pa­nies boast more than a 10-fold high­er rev­enue than R&D spend­ing—a sum not seen in oth­er sec­tors of the econ­o­my.

BIO’s Jim Green­wood, who’s been lead­ing an in­dus­try ef­fort to un­der­score the ex­tra­or­di­nary risks of drug R&D, quick­ly fired back, say­ing the study’s au­thors were try­ing to grind a fa­mil­iar ax with the in­dus­try. The num­bers don’t ac­count for the huge cost of fail­ures across the board — and in­clud­ed the big sums paid in ac­quir­ing two of the drugs as part of the re­ward — sin­gling out com­pa­nies that had won an ap­proval. And when you nar­row it down to the nov­el ther­a­pies that were ap­proved, the hard cost was $900 mil­lion — which they didn’t see as all that far from the $1.4 bil­lion in hard costs cit­ed by Tufts.

Not­ed Green­wood:

This in­dus­try, un­like any oth­er in­dus­try, has tremen­dous un­cer­tain­ty sur­round­ing fu­ture re­ward from on­go­ing R&D. Fail­ures are the norm in biotech. Due to this sim­ple fact, in­vestors will not in­vest in R&D com­pa­nies if there is no com­pen­sat­ing up­side for the few wins achieved across their port­fo­lio.

Per­haps Scott Got­tlieb said it best this week when he looked over the es­ti­mates and said that it wasn’t un­usu­al to spend more than a bil­lion dol­lars on drug de­vel­op­ment.

So we can all (most­ly) agree that the risks are daunt­ing — even in on­col­o­gy, where the FDA has been mak­ing big strides in speed­ing ap­provals — costs are at the least rel­a­tive­ly high and re­wards can be spec­tac­u­lar, pres­sur­ing pay­ers of all stripes.

We can al­so agree that this is one de­bate that will sim­mer on for some time to come.


Im­age: Vinay Prasad The Wash­ing­ton Post

Cell and Gene Con­tract Man­u­fac­tur­ers Must Em­brace Dig­i­ti­za­tion

The Cell and Gene Industry is growing at a staggering 30% CAGR and is estimated to reach $14B by 20251. A number of cell, gene and stem cell therapy sponsors currently have novel drug substances and products and many rely on Contract Development Manufacturing Organizations (CDMO) to produce them with adherence to stringent regulatory cGMP conditions. Cell and gene manufacturing for both autologous (one to one) and allogenic (one to many) treatments face difficult issues such as: a complex supply chain, variability on patient and cellular level, cell expansion count and a tight scheduling of lot disposition process. This complexity affects quality, compliance and accountability in the entire vein-to-vein process for critically ill patients.

A lab technician works during research on coronavirus at Johnson & Johnson subsidiary Janssen Pharmaceutical in Beerse, Belgium, Wednesday, June 17, 2020. (Virginia Mayo/AP Images)

UP­DAT­ED: End­points News ranks all 28 play­ers in the Covid-19 vac­cine race. Here's how it stacks up to­day

(This piece was last updated on August 13. Endpoints News will continue to track the latest developments through the FDA’s marketing decisions.)

The 28 players now in or close to the clinical race to get a Covid-19 vaccine over the finish line are angling for a piece of a multibillion-dollar market. And being first — or among the leaders — will play a big role in determining just how big a piece.

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Inside FDA HQ (File photo)

The FDA just ap­proved the third Duchenne MD drug. And reg­u­la­tors still don’t know if any of them work

Last year Sarepta hit center stage with the FDA’s controversial reversal of its CRL for the company’s second Duchenne muscular dystrophy drug — after the biotech was ambushed by agency insiders ready to reject a second pitch based on the same disease biomarker used for the first approval for eteplirsen, without actual data on the efficacy of the drug.

On Wednesday the FDA approved the third Duchenne MD drug, based on the same biomarker. And regulators were ready to act yet again despite the lack of efficacy data.

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Stéphane Bancel speaks to President Donald Trump at the White House meeting on March 2 (AP Images)

UP­DAT­ED: Mod­er­na of­fers steep dis­count in US sup­ply deal — but still takes the crown with close to $2.5B in vac­cine con­tracts

The US pre-order for Moderna’s Covid-19 vaccine is in.

Operation Warp Speed is reserving $1.525 billion for 100 million doses of Moderna’s Phase III mRNA candidate, rounding out to about $15 per dose — including $300 million in incentive payments for timely delivery. Given that Moderna has a two-dose regimen, it’s good for vaccinating 50 million people. The US government also has the option to purchase another 400 million doses for a total of $6.6 billion, or $16.5 per dose.

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Cal­lid­i­tas bets up to $102M on a biotech buy­out, snag­ging a once-failed PBC drug

After spending years developing its oral formulation of the corticosteroid budesonide, Sweden’s Calliditas now has its sights set on the primary biliary cholangitis field.

The company will buy out France-based Genkyotex, and it’s willing to bet up to €87 million ($102 million) that Genkyotex’s failed Phase II drug, GKT831, will do better in late-stage trials.

Under the current agreement, Calliditas $CALT will initially pay €20.3 million in cash for 62.7% of Genkyotex (or €2.80 a piece for 7,236,515 shares) in early October, then circle back for the rest of Genkyotex’s shares under the same terms. If nothing changes, the whole buyout will cost Calliditas €32.3 million, plus up to  €55 million in contingent rights.

Qi­a­gen in­vestors spurn Ther­mo Fish­er’s takeover of­fer, de­rail­ing a $12B+ deal

Thermo Fisher Scientific had announced an $11.5 billion takeover of Dutch diagnostics company Qiagen back in March, but the deal apparently did not sit well with Qiagen investors.

After getting hammered by critics who contended that Qiagen $QGEN was worth a lot more than what Thermo Fisher wanted to spend, investors turned thumbs down on the offer — derailing the buyout even after Thermo Fisher increased its offer to $12.6 billion in July. Qiagen’s share price has been boosted considerably by Covid-19 as demand for its testing kits surged.

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Xuefeng Yu in Hong Kong, 2019 (Imaginechina via AP Images)

CanSi­no reaps $748M wind­fall from Shang­hai IPO — as it warns Covid-19 vac­cine won't be a huge mon­ey mak­er

CanSino began the year with a clear goal to secure a secondary listing on Shanghai’s STAR market. Then something more urgent came along: As a rising vaccine developer on a mission to bring global standard immunizations to China, it heeded the call to make a vaccine to protect against a virus that would paralyze the whole world.

Xuefeng Yu and his team managed to keep doing both.

More than a month after CanSino’s Covid-19 vaccine candidate is authorized for military use in China, the Hong Kong-listed company has made a roaring debut in Shanghai. It fetched $748 million (RMB$5.2 billion) by floating 24.8 million shares, and soared 88% on its first trading day.

James Wilson, WuXi Global Forum at JPM20

FDA puts up a red light for Pas­sage Bio’s first gene ther­a­py pro­gram, de­lay­ing a pro­gram from James Wilson's group at Penn

Gene therapy pioneer James Wilson spearheaded animal studies demonstrating the potential of new treatments injected directly into the brain, looking to jumpstart a once-and-done fix for an extraordinarily rare disease called GM1 gangliosidosis in infants. His team at the University of Pennsylvania published their work on monkeys and handed it over to Passage Bio, a Wilson-inspired startup building a pipeline of gene therapies — with an IND for PBGM01 to lead the way.

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Bayer's Marianne De Backer with Endpoints founder John Carroll, Endpoints@JPM20 (Jeff Rumans for Endpoints News)

UP­DAT­ED: Hunt­ing a block­buster, Bay­er forges an $875M-plus M&A deal to ac­quire women’s health biotech

Bayer has dropped $425 million in cash on its latest women’s health bet, bringing a UK biotech and its non-hormonal menopause treatment into the fold.

KaNDy Therapeutics had its roots in GlaxoSmithKline, which spun out several neuroscience drugs into NeRRe Therapeutics back in 2012. Five years later the team created a new biotech to focus solely on NT-814 — which they considered “one of the few true innovations in women’s health in more than two decades.”

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