About this Author
Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases.
To contact Derek email him directly: derekb.lowe@gmail.com
Twitter: Dereklowe
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February 10, 2012
Posted by Derek
Matthew Herper at Forbes has a very interesting column, building on some data from Bernard Munos (whose work on drug development will be familiar to readers of this blog). What he and his colleague Scott DeCarlo have done is conceptually simple: they've gone back over the last 15 years of financial statements from a bunch of major drug companies, and they've looked at how many drugs each company has gotten approved.
Over that long a span, things should even out a bit. There will be some spending which won't show up in the count, that took place on drugs that got approved during the earlier part that span, but (on the back end) there's spending on drugs in there that haven't made it to market yet, too. What do the numbers look like? Hideous. Appalling. Unsustainable.
AstraZeneca, for example, got 5 drugs on the market during this time span, the worst performance on this list, and thus spent spent nearly $12 billion dollars per drug. No wonder they're in the shape they're in. GSK, Sanofi, Roche, and Pfizer all spent in the range of $8 billion per approved drug. Amgen did things the cheapest by this measure, 9 drugs approved at about 3.7 billion per drug.
Now, there are several things to keep in mind about these numbers. First - and I know that I'm going to hear about this from some people - you might assume that different companies are putting different things under the banner of R&D for accounting purposes. But there's a limit to how much of that you can do. Remember, there's a separate sales and marketing budget, too, of course, and people never get tired of pointing out that it's even larger than the R&D one. So how inflated can these figures be? Second, how can these numbers jibe with the 800-million-per-new-drug (recently revised to $1 billion), much less with the $43 million per new drug figure (from Light and Warburton) that was making the rounds a few months ago?
Well, I tried to dispose of that last figure at the time. It's nonsense, and if it were true, people would be lining up to start drug companies (and other people would be throwing money at them to help). Meanwhile, the drug companies that already exist wouldn't be frantically firing thousands of people and selling their lab equipment at auction. Which they are. But what about that other estimate, the Tufts/diMasi one? What's the difference?
As Herper rightly says, the biggest factor is failure. The Tufts estimate is for the costs racked up by one drug making it through. But looking at the whole R&D spend, you can see how money is being spent for all the stuff that doesn't get through. And as I and many of the other readers of this blog can testify, there's an awful lot of it. I'm now in my 23rd year of working in this industry, and nothing I've touched has ever made it to market yet. If someone wins $500 from a dollar slot machine, the proper way to figure the costs is to see how many dollars, total, they had to pump into the thing before they won - not just to figure that they spent $1 to win. (Unless, of course, they just sat down, and in this business we don't exactly have that option).
No, these figures really show you why the drug business is in the shape it's in. Look at those numbers, and look at how much a successful drug brings in, and you can see that these things don't always do a very good job of adding up. That's with the expenses doing nothing but rising, and the success rate for drug discovery going in the other direction, too. No one should be surprised that drug prices are rising under these conditions. The surprise is that there are still people out there trying to discover drugs.
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+ TrackBacks (0) | Category: Business and Markets | Drug Development | Drug Industry History | Drug Prices
January 26, 2012
Posted by Derek
There's a new paper out in Nature Chemistry called "Quantifying the Chemical Beauty of Drugs". The authors are proposing a new "desirability score" for chemical structures in drug discovery, one that's an amalgam of physical and structural scores. To their credit, they didn't decide up front which of these things should be the miost important. Rather, they took eight properties over 770 well-known oral drugs, and set about figuring how much to weight each of them. (This was done, for the info-geeks among the crowd, by calculating the Shannon entropy for each possibility to maximize the information contained in the final model). Interestingly, this approach tended to give zero weight to the number of hydrogen-bond acceptors and to the polar surface area, which suggests that those two measurements are already subsumed in the other factors.
And that's all fine, but what does the result give us? Or, more accurately, what does it give us that we haven't had before? After all, there have been a number of such compound-rating schemes proposed before (and the authors, again to their credit, compare their new proposal with the others head-to-head). But I don't see any great advantage. The Lipinski "Rule of 5" is a pretty simple metric - too simple for many tastes - and what this gives you is a Rule of 5 with both categories smeared out towards each other to give some continuous overlap. (See the figure below, which is taken from the paper). That's certainly more in line with the real world, but in that real world, will people be willing to make decisions based on this method, or not?
The authors go for a bigger splash with the title of the paper, which refers to an experiment they tried. They had chemists across AstraZeneca's organization assess some 17,000 compounds (200 or so for each) with a "Yes/No" answer to "Would you undertake chemistry on this compound if it were a hit?" Only about 30% of the list got a "Yes" vote, and the reasons for rejecting the others were mostly "Too complex", followed closely by "Too simple". (That last one really makes me wonder - doesn't AZ have a big fragment-based drug design effort?) Note also that this sort of experiment has been done before.
Applying their model, the mean score for the "Yes" compounds was 0.67 (s.d.0.16), and the mean score for the "No" compounds was 0.49 (s.d. 0.23, which they say was statistically significant, although that must have been a close call. Overall, I wouldn't say that this test has an especially strong correlation with medicinal chemists' ideas of structural attractiveness, but then, I'm not so sure of the usefulness of those ideas to start with. I think that the two ends of the scale are hard to argue with, but there's a great mass of compounds in the middle that people decide that they like or don't like, without being able to back up those statements with much data. (I'm as guilty as anyone here).
The last part of the paper tries to extend the model from hit compounds to the targets that they bind to - a druggability assessment. The authors looked through the ChEMBL database, and ranked the various target by the scores of the ligands that are associated with them. They found that their mean ligand score for all the targets in there is 0.478. For the targets of approved drugs, it's 0.492, and for the orally active ones it's 0.539 - so there seems to be a trend, although if those differences reached statistical significance, it isn't stated in the paper.
So overall, I find nothing really wrong with this paper, but nothing spectacularly right with it, either. I'd be interested in hearing other calls on it as it gets out into the community. . .
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+ TrackBacks (0) | Category: Drug Development | Drug Industry History | In Silico | Life in the Drug Labs
December 28, 2011
Posted by Derek
I wanted to let people know that I've got a "Perspective" piece in ACS Medicinal Chemistry Letters, entitled "Nowhere to Go But Up?". The journal is starting to run these opinion/overview articles, and contacted me for one - I hope it's the sort of thing that they were looking for!
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+ TrackBacks (0) | Category: Drug Industry History | The Scientific Literature
December 13, 2011
Posted by Derek
Science has a long article detailing the problems that have developed over the last few years in the whole siturin story. That's a process that I've been following here as well (scrolling through this category archive will give you the tale), but this is a different, more personality-driven take. The mess is big enough to warrant a long look, that 's for sure:
". . .The result is mass confusion over who's right and who's wrong, and a high-stakes effort to protect reputations, research money, and one of the premier theories in the biology of aging. It's also a story of science gone sour: Several principals have dug in their heels, declined to communicate, and bitterly derided one another. . ."
As the article shows, one of the problems is that many of the players in this drama came out of the same lab (Leonard Guarente's at MIT), so there are issues even beyond the usual ones. Mentioned near the end of the article is the part of the story that I've spent more time on here, the founding of Sirtris and its acquisition by GlaxoSmithKline. It's safe to say that the jury is still out on that one - from all that anyone can tell from outside, it could still work out as a big diabetes/metabolism/oncology success story, or it could turn out to have been a costly (and arguably preventable) mistake. There are a lot of very strongly held opinions on both sides.
Overall, since I've been following this field from the beginning, I find the whole thing a good example of how tough it is to make real progress in fundamental biology. Here you have something that is (or at the very least has appeared to be) very interesting and important, studied by some very hard-working and intelligent people all over the world for years now, with expenditure of huge amounts of time, effort, and money. And just look at it. The questions of what sirtuins do, how they do it, and whether they can be the basis of therapies for human disease - and which diseases - are all still the subject of heated argument. Layers upon layers of difficulty and complexity get peeled back, but the onion looks to be as big as it ever was.
I'm going to relate this to my post the other day about the engineer's approach to biology. This sort of tangle, which differs only in degree and not in kind from many others in the field, illustrates better than anything else how far away we are from formalism. Find some people who are eager to apply modern engineering techniques to medical research, and ask them to take a crack at the sirtuins. Or the nuclear receptors. Or autoimmune disease, or schizophrenia therapies. Turn 'em loose on one of those problems, come back in a year, and see what color their remaining hair is.
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+ TrackBacks (0) | Category: Aging and Lifespan | Drug Development | Drug Industry History
December 9, 2011
Posted by Derek
Here's a report from Science Careers on "A Pharma Industry in Crisis". Readers here will find much of what's said to be familiar - partly because they interviewed people like me and Chemjobber for the piece (!) But it's worth a look as a where-we-are-now perspective.
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+ TrackBacks (0) | Category: Business and Markets | Drug Industry History
Posted by Derek
Wavefunction has a good post in response to this article, which speculates "If we designed airplanes the way we design drugs. . ." I think the original article is worth reading, but some - perhaps many - of its points are arguable. For example:
Every drug that fails in a clinical trial or after it reaches the market due to some adverse effect was “bad” from the day it was first drawn by the chemist. State-of-the-art in silico structure–property prediction tools are not yet able to predict every possible toxicity for new molecular structures, but they are able to predict many of them with good enough accuracy to eliminate many poor molecules prior to synthesis. This process can be done on large chemical libraries in very little time. Why would anyone design, synthesize, and test molecules that are clearly problematic, when so many others are available that can also hit the target? It would be like aerospace companies making and testing every possible rocket motor design rather than running the simulations that would have told them ahead of time that disaster or failure to meet performance specifications was inevitable for most of them.
This particular argument mixes up several important points which should remain separate. Would these simulations have predicted those adverse-effect failures the author mentions? Can they do so now, ex post facto? That would be a very useful piece of information, but in its absence I can't help but wonder if the tools he's talking about would have cheerfully passed Vioxx, or torcetrapib, or the other big failures of recent years. Another question to ask is how many currently successful drugs these tox simulations would have killed off - any numbers there?
The whole essay recalls Lazebnik's famous paper "Can A Biologist Fix A Radio?" (PDF). This is an excellent place to start if you want to explore what I've called the Andy Grove Fallacy. Lazebnik's not having any of the reasons I give for it being a fallacy - for example:
A related argument is that engineering approaches are not applicable to cells because these little wonders are fundamentally different from objects studied by engineers. What is so special about cells is not usually specified, but it is implied that real biologists feel the difference. I consider this argument as a sign of what I call the urea syndrome because of the shock that the scientific community had two hundred years ago after learning that urea can be synthesized by a chemist from inorganic materials. It was assumed that organic chemicals could only be produced by a vital force present in living organisms. Perhaps, when we describe signal transduction pathways properly, we would realize that their similarity to the radio is not superficial. . .
That paper goes on to call for biology to come up with some sort of formal language and notation to describe biochemical systems, something that would facilitate learning and discovery in the same way as circuit diagrams and the like. And that's a really interesting proposal on several levels: would that help? Is it even possible? If so, where to even start? Engineers, like the two authors of the papers I've quoted from, tend to answer "Yes", "Certainly", and "Start anywhere, because it's got to be more useful than what you people have to work with now". But I'm still not convinced.
I've talked about my reasons for this before, but let me add another one: algorithmic complexity. Fields more closely based on physics can take advantage of what's been called "the unreasonable effectiveness" of mathematics. And mathematics, and the principles of physics that can be stated in that form, give an amazingly compact and efficient description of the physical world. Maxwell's equations are a perfect example: there's classical electromagnetism for you, wrapped up into a beautiful little sculpture.
But biological systems are harder to reduce - much harder. There are so many nonlinear effects, so many crazy little things that can add up to so much more than you'd ever think. Here's an example - I've been writing about this problem for years now. It's very hard to imagine compressing these things into a formalism, at least not one that would be useful enough to save anyone time or effort.
That doesn't mean it isn't worth trying. Just the fact that I have trouble picturing something doesn't mean it can't exist, that's for sure. And I'd definitely like to be wrong about this one. But where to begin?
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+ TrackBacks (0) | Category: Drug Development | Drug Industry History
December 8, 2011
Posted by Derek
This report on a speech by Roche's CEO, Severin Schwan, will surprise no one. He's forecasting that the pharma world is heading for a bimodal distribution. On one end, you'll have the companies that have managed to find things new enough and efficacious enough to convince regulatory agencies and payers that they're worth the price. And on the other, you'll have the generics. The in-between stuff, the me-too drugs and line extensions and things that don't work as well as anyone had hoped - that's going to get squeezed, and if that's all you have in your product portfolio, you're going to get squeezed, too. It's not that those things have no value, but they don't have enough to keep R&D efforts going at their current attrition rates and expenditures.
The analogy to the people doing this work is pretty close, too. Look at Pfizer's plans (which as far as I know are still in effect) to have a smaller number of "drug designers" and a bunch of lower-cost people cranking out the compounds in the lab. That's the same bimodal landscape, right there. You have a smaller, highly compensated group at one end of the scale, and a larger, less costly group at the other. What disappears are the folks in the middle.
The problem is, you can assign marketed drugs to the expensive-or-generic categories pretty rationally, based on efficacy and pricing. But assigning the people, well, that's a different matter. How exactly do you identify your star "drug designers"? Even after you narrow down to only the smarter and harder-working people, there are still more of them around than you need under that Pfizer system. So where do they go? Well, we've all been seeing the answer that question. Out on the street, and out into the job market, there to take their chances.
And at the other end, there are probably a lot of people in the make-this-list-of-analogs labs who are capable of much more than that, but haven't had the chance to prove themselves. The whole situation seems like a real misuse of human capital, and we really have to find conditions that don't lead to such wastes. But what conditions are those, and how do we get to them?
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+ TrackBacks (0) | Category: Business and Markets | Drug Industry History
December 5, 2011
Posted by Derek
This morning's post got me to thinking - are there any examples of modern biopharma companies that have taken the name of their founder and come out well? Back in Ye Olde Days, that was the default setting, of course, as it was for most companies. If you founded an industrial concern, you either named the thing after yourself, or called it something dead-on obvious like The American Rubber Gasket Company. There's no telling what people would have thought in 1882 if you'd decided to call your company some. . .made-up word instead.
But I'm trying to think of a successful last-name-of-founder drug company in recent years, and I'm drawing a blank. Am I missing something, or should we put this on the list of potential warning signs?
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+ TrackBacks (0) | Category: Drug Industry History
November 30, 2011
Posted by Derek
As one of Garrison Keillor's characters says (in WLT ), "I always knew the end would come. And here it is, the end". Lipitor (atorvastatin) goes off patent today, and I can recommend this overview by Matthew Herper at Forbes. Will there ever be another drug like it? The people developing the CETP inhibitors hope so. . .
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+ TrackBacks (0) | Category: Cardiovascular Disease | Drug Industry History
November 28, 2011
Posted by Derek
That's what this columnist at the Harvard Business Review would like to know. To the question "Was it worth it?", he answers "Probably not", and lists some things that other companies might learn from Pfizer's experience. I doubt that anyone will, though - the Big Acquisition looks so compelling when it comes along, and it's such a once-in-a-lifetime opportunity, and so different from all those other examples from the past, that gee, there's just no alternative. Right?
Here, for reference, is Pfizer stock versus the S&P 500 since the merger was completed in June 2000. Not that the rest of Big Pharma looks much better - for example, Eli Lilly has been an even worse investment over that span (by a bit), and they're never merged with anyone. (Although there is that Imclone business. . .)
No, big drug companies have been horrendous, hair-curling investments over this span, and yes, I'm not fully taking dividends into account. But there are tax consequences to consider on those, too, versus buy-and-hold capital appreciation. The S&P 500 has been paying in the 2% dividend yield range over that span, while Pfizer's dividend payouts have fluctuated (and the yields, too, of course). But is any dividend yield worth taking a 60% principal hit? It's hard to imagine.
At the very least, then, Pfizer's strategy has not allowed it to stand out. Its stock is in the same nasty shape as its brethren - you have to think that nothing would have gotten much worse if they'd never Lipitored themselves, and things might well have been better. Some record!
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+ TrackBacks (0) | Category: Business and Markets | Drug Industry History
November 22, 2011
Posted by Derek
I've been doing drug research since 1989 myself, which means that I'm fairly experienced. But Regeneron started in this business a year or two before I did, and they're just now getting their first major drug, Eylea (aflibercept) onto the market. To be fair, they did get approval for Araclyst (rilonacept) in 2008, but that one pays the electric bill and not much more - although that might be changing (see below).
As Andrew Pollack at the New York Times points out, the company has run through over two billion dollars over the years. I remember when they were working on nerve growth factors for ALS and other diseases, back in the early 1990s (I worked in the area briefly myself, to no good effect whatsoever). There are not a lot of nerve growth factor drugs on the market, although it seemed like a perfectly plausible mechanism for one back then.
That work shaded into another indication, ciliary neurotrophic factor for obesity. Regeneron spent a lot of time and money developing a modified form of that protein called Axokine, but in 2003 that project ran into the rocks. Some patients did lose weight on the drug (with daily injections), but too many of them developed antibodies to it, which raised the possibility of cross-reactivity with their own CNF, which would surely not have been a good thing. So much for Axokine.
But Eylea, a VEGF-based therapy for macular degeneration (entering the same space as Lucentis and Avastin), has now made it. And the company has another use for Arcalyst in preventative gout therapy coming along, and some interesting cholesterol work targeting PCSK9 in collaboration with Sanofi. So welcome, Regeneron, to the ranks of profitable biotech companies (well, pretty soon) who've developed their own products. It's taken a lot of time, a lot of patience - yours and your investors' - and a lot of cash. But you're still here, and how many other bioctech startups from the late 1980s can say that?
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+ TrackBacks (0) | Category: Cardiovascular Disease | Diabetes and Obesity | Drug Industry History | Regulatory Affairs | The Central Nervous System
November 21, 2011
Posted by Derek
This piece on Michael Lewis and Billy Beane is nice to read, even if you haven't read Moneyball . (And if you haven't, consider doing so - it's not perfect, but it's well worth the time). Several thoughts occurred to me while revisiting all this, some of them actually relevant to drug discovery.
First off, a quick peaen to Bill James. I read his Baseball Abstract books every year back in the 1980s, and found them exhilarating. And that's not just because I was following baseball closely. I was in grad school, and was up to my earlobes in day-to-day scientific research for the first time, and here was someone who applied the same worldview to a sport. Baseball had long been full of slogans and sayings, folk wisdom and beliefs, and James was willing to dig through the numbers to see which of these things were true and which weren't. His willingness to point out those latter cases, and the level of evidence he brought to those takedowns, was wonderful to see. I still have a lot of James' thoughts in my head; his books may well have changed my life a bit. I was already inclined that way, but his example of fearlessly questioning Stuff That Everybody Knows really strengthened my resolve to try to do the same.
A lot of people feel that way, I've found - there are James fans all over the place, people were were influenced the same way, at the same time, by the same books. It took a while for that attitude to penetrate the sport that those books were written about, though, as that article linked to above details. And its success once it did was part of a broader trend:
Innovation hurts. After Beane began using numbers to find players, the A’s’ scouts lost their lifelong purpose. In the movie, one of them protests to Pitt: “You are discarding what scouts have done for 150 years.” That was exactly right. Similar fates had been befalling all sorts of lesser-educated American men for years, though the process is more noticeable now than it was in 2003 when Moneyball first appeared. The book, Lewis agrees, is partly “about the intellectualisation of a previously not intellectual job. This has happened in other spheres of American life. I think the reason I saw the story so quickly is, this is exactly what happened on Wall Street while I was there. . .”
(That would be during the time of Liar's Poker , which still a fun and interesting book to read, although it describes a time that's much longer ago than the calendar would indicate). And I think that the point is a good one. I'd add that the process has also been driven by the availability of computing power. When you had to bash the numbers by hand, with a pencil, there was only so much you could do. Spreadsheets and statistical software, graphing programs and databases - these have allowed people to extract meaning from numbers without having to haul up every shovelful by hand. And it's given power to those people who are adept at extracting that meaning (or at least, to the people willing to act on their conclusions).
The article quotes Beane as saying that Lewis understood what he was doing within minutes: "You’re arbitraging the mispricing of baseball players". And I don't think that it can be put in fewer words: that's exactly what someone with a Wall Street background would make of it, and it's exactly right. Now to our own business. Can you think of an industry whose assets are mispriced more grievously, and more routinely, than drug research?
Think about it. All those preclinical programs that never quite work out. All those targets that don't turn out to be the right target when you get to Phase II. All those compounds that blow up in Phase III because of unexpected toxicity. By working on them, by putting time and effort and money into them, we're pricing them. And too much of the time, we're getting that price wrong, terribly wrong.
That's what struck me when I read Moneyball several years ago. The problem is, drug research is not baseball, circa 1985. We're already full of statisticians, computational wizards, and sharp-eyed people who are used to challenging the evidence and weighing the facts. And even with that, this is the state we're in. The history of drug research is one attempt after another to find some edge, some understanding, that can be used to correct that constant mispricing of our assets. What to do? If the salt has lost its savour, wherewith shall it be salted?
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+ TrackBacks (0) | Category: Business and Markets | Drug Industry History | Who Discovers and Why
November 18, 2011
Posted by Derek
Two of the scientists behind Glaxo's rise have passed away recently, within a couple of weeks of each other. There's John Bradshaw, who joined Allen and Hanburys in 1971. He was the chemist who discovered Zantac (ranitidine) in 1976. Later, he moved into computational chemistry and made a key insight that led to the discovery of Salmeterol, one of the two drugs that make up Advair. Not many people have ever put their fingerprints on two bigger compounds in one medicinal chemistry career.
And closely intertwined with these projects, and with at least five others that made it to market, was pharmacologist Sir David Jack, who'd joined Allen and Hanburys ten years earlier. Remarkably, he kept up his research in the field after retirement, and a compound he championed (RPL554) is even now in clinical trials from Verona Pharma.
Discoveries, never forget, don't make themselves. They're made by people, and it's well worth paying attention to people who've made several. Odds are that they are (or were) doing something right. . .
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+ TrackBacks (0) | Category: Drug Industry History
November 16, 2011
Posted by Derek
And while I'm linking out to other opinion pieces, Ray Firestone has a cri du couer in Nature Reviews Drug Discovery, looking back over his decades in the business. Regular readers of this blog (or of Ray Firestone!) will recognize all the factors he talks about, for sure. He talks about creativity (and its reception at some large companies), the size of an organization and its relation to productivity, and what's been driving a lot of decisions over the last ten or twenty years. To give you a sample:
if size is detrimental to an innovative research culture, mergers between large companies should make things worse — and they do. They have a strong negative personal impact on researchers and, consequently, the innovative research environment. For example, the merger of Bristol-Myers with Squibb in 1989, which I witnessed, was a scene of power grabs and disintegrating morale. Researchers who could get a good offer left the company, and the positions of those who remained were often decided by favouritism rather than talent. Productivity fell so low that an outside firm was hired to find out why. Of course, everyone knew what was wrong but few — if any — had the nerve to say it.
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+ TrackBacks (0) | Category: Business and Markets | Drug Industry History | Who Discovers and Why
Posted by Derek
John LaMattina takes on the perennial question of "Should a big drug company ditch R&D and just inlicense everything?". That one comes up regularly, and I've never been able to quite see how it works. (You'd also figure that since it's not exactly a new idea, that various people at said companies have run the numbers and can't see how it works, either). But as a former Pfizer honcho, LaMattina's opinion on this topic carries more weight than most.
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+ TrackBacks (0) | Category: Business and Markets | Drug Industry History
October 28, 2011
Posted by Derek
The cutbacks at Merck seem to have been pretty severe, if the messages that I'm getting from former Schering-Plough people are any indication. A lot of longtime R&D people have been let go, which is no surprise when you see what's been happening over the last few years with Pfizer's acquisitions (just to pick the biggest example). Experience, past accomplishments, and ability are not very high at all on the list of factors being judged when it comes to this point.
It's worth asking just how well that whole Schering-Plough deal is going for Merck, though. Here's a thorough breakdown of all the pipelines at the time the deal was going through. You can see that some of the areas (women's health, respiratory) have worked out as planned, but some others (cardiovascular, hepatitis C) have definitely not. And (as that link makes clear) one of the big variables when the deal went through was how much money would be left from the J&J deal after arbitration. If you look at the company's earnings, it's a mixed bag. Singulair is the biggest on the list, but that one's going off patent next year. Remicade is bringing in some money, after the territories were split up, with Merck holding on to Europe, Russia, and Turkey. The only other product from the Schering-Plough deal on the top-selling list is Nasonex, and that just makes the cut.
I just have to wonder how different this press release would have been if the deal hadn't gone through at all. But sales figures aside, what we don't see is the huge disruption in research and early development, just as you don't see that in Pfizer's deals over the years. You don't notice the drugs that don't get discovered, the early projects that don't quite advance. Was it all really worth it?
Like all the other mergers, this one only makes sense if you factor in big cost reductions - that DataMonitor link above makes this clear. And Merck does indeed look as if they're cutting their expenses as planned, so perhaps these numbers will come out right on target, and earnings-per-share will follow along. But what happened to Ken Frazier's brave attempt to withdraw EPS guidance entirely and focus on rebuilding the company's R&D? Was that just window dressing, was it an honest effort to change things that has now been abandoned, or what?
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+ TrackBacks (0) | Category: Business and Markets | Drug Industry History
October 11, 2011
Posted by Derek
According to Bruce Booth (@LifeSciVC on Twitter), Ernst & Young have estimated the proportion of drugs in the clinic in the US that are targeting cancer. Anyone want to pause for a moment to make a mental estimate of their own?
Well, I can tell you that I was a bit low. The E&Y number is 44%. The first thought I have is that I'd like to see that in some historical perspective, because I'd guess that it's been climbing for at least ten years now. My second thought is to wonder if that number is too high - no, not whether the estimate is too high. Assuming that the estimate is correct, is that too high a proportion of drug research being spent in oncology, or not?
Several factors led to the rise in the first place - lots of potential targets, ability to charge a lot for anything effective, an overall shorter and more definitive clinical pathway, no need for huge expensive ad campaigns to reach the specialists. Have these caused us to overshoot?
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+ TrackBacks (0) | Category: Cancer | Clinical Trials | Drug Development | Drug Industry History
October 7, 2011
Posted by Derek
Now here's a paper, packed to the edges with data, on what kinds of drug candidate compounds different companies produce. The authors assembled their list via the best method available to outsiders: they looked at what compounds are exemplified in patent filings
What they find is that over the 2000-2010 period that not much change has taken place, on average, in the properties of the molecules that are showing up. Note that we're assuming, for purposes of discussion, that these properties - things like molecular weight, logP, polar surface area, amount of aromaticity - are relevant. I'd have to say that they are. They're not the end of the discussion, because there are plenty of drugs that violate one or more of these criteria. But there are even more that don't, and given the finite amount of time and money we have to work with, you're probably better off approaching a new target with five hundred thousand compounds that are well within the drug-like properties boxes rather than five hundred thousand that aren't. And at the other end of things, you're probably better off with ten clinical candidates that mostly fit versus ten that mostly don't.
But even if overall properties don't seem to be changing much, that doesn't mean that there aren't differences between companies. That's actually the main thrust of the paper: the authors compare Abbott, Amgen, AstraZeneca, Bayer-Schering, Boehringer, Bristol-Myers Squibb, GlaxoSmithKline, J&J, Lilly, Merck, Novartis, Pfizer, Roche, Sanofi, Schering-Plough, Takeda, Wyeth, and Vertex. Of course, these organizations filed different numbers of patents, on different targets, with different numbers of compounds. For the record, Merck and GSK filed the most patents during those ten years (over 1500), while Amgen and Takeda filed the fewest (under 300). Merck and BMS had the largest number of unique compounds (over 70,000), and Takeda and Bayer-Schering had the fewest (in the low 20,000s). I should note that AstraZeneca just missed the top two in both patents and compounds.
If you just look at the raw numbers, ignoring targeting and therapeutic areas, Wyeth, Bayer-Schering, and Novartis come out looking the worst for properties, while Vertex and Pfizer look the best. But what's interesting is that even after you correct for targets and the like, that organizations still differ quite a bit in the sorts of compounds that they turn out. Takeda, Lilly, and Wyeth, for example, were at the top of the cLogP rankings (numberically, "top" meaning the greasiest). Meanwhile, Vertex, Pfizer, and AstraZeneca were at the other end of the scale in cLogP. In molecular weight, Novartis, Boehringer, and Schering-Plough were at the high end (up around 475), while Vertex was at the low end (around 425). I'm showing a radar-style plot from the paper where they cover several different target-unbiased properties (which have been normalized for scale), and you can see that different companies do cover very different sorts of space. (The numbers next to the company names are the total number of shared targets found and the total number of shared-target observations used - see the paper if you need more details on how they compiled the numbers).
Now, it's fair to ask how relevant the whole sweep of patented compounds might be, since only a few ever make it deep into the clinic. And some companies just have different IP approaches, patenting more broadly or narrowly. But there's an interesting comparison near the end of the paper, where the authors take a look at the set of patents that cover only single compounds. Now, those are things that someone has truly found interesting and worth extra layers of IP protection, and they average to significantly lower molecular weights, cLogP values, and number of rotatable bonds than the general run of patented compounds. Which just gets back to the points I was making in the first paragraph - other things being equal, that's where you'd want to spend more of your time and money.
What's odd is that the trends over the last ten years haven't been more pronounced. As the paper puts it:
blockquote>Over the past decade, the mean overall physico-chemical space used by many pharmaceutical companies has not changed substantially, and the overall output remains worryingly at the periphery of historical oral drug chemical space. This is despite the fact that potential candidate drugs, identified in patents protecting single compounds, seem to reflect physiological and developmental pressures, as they have improved drug-like properties relative to the full industry patent portfolio. Given these facts, and the established influence of molecular properties on ADMET risks and pipeline progression, it remains surprising that many organizations are not adjusting their strategies.
The big question that this paper leaves unanswered, because there's no way for them to answer it, is how these inter-organizational differences get going and how they continue. I'll add my speculations in another post - but speculations they will be.
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September 29, 2011
Posted by Derek
If you want to know what it was like during the height of the genomics frenzy, here's a quote for you, from an old Adam Feuerstein post. Return with me to the year 2000:
During his presentation Wednesday, Mark Levin, the very enthusiastic CEO of Millennium Pharmaceuticals (MLNM), remarked that his company's gene-to-patient technology would turbo-charge drug-development productivity to levels never before seen in the industry. Just how productive? Well, he predicted that by 2005, Millennium would be pushing one or two new drugs every year onto the market, while keeping the pipeline brimming with at least five experimental drugs entering human clinical trials every year.
Note that I'm not trying to make fun of Millennium, or of Mark Levin (still helping to found new companies at Third Rock Ventures). A lot of people were talking the same way back then - although, to be sure, Feuerstein notes that many people in the audience had trouble believing this one, too. But there's no doubt that a wild kind of optimism was in the air then. (Here's another Levin interview from that era).
That's as opposed to the wild kind of pessimism that's in the air these days. Here's hoping that it turns out to be as strange, in retrospect, as this earlier craziness. And yes, I know that the current reasons for pessimism are, in fact, rather bonier and more resilient than the glowing clouds of the genomics era were. But it's still possible to overdo it. Right?
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September 27, 2011
Posted by Derek
There's an op-ed piece over at Pharmalot that I think that many readers here will find interesting. It's by Daniel Hoffman, formerly employed in pharma, it appears, and now a consultant. He's writing about the waves of layoffs the industry has experienced over the last few years, but he's not talking so much about the people who are gone, as the ones who are left:
In addition to disrupting tens of thousands of lives, the substantial downsizing in pharma over the past two-and-a-half years has changed many companies for the worse. I previously wrote that the guidelines handed down from finance to HR have eliminated many of the more knowledgeable and experienced people at each layoff round because people over age 50 are among the first targets for separation packages. But the dysfunctional legacy is even more pernicious. The resulting culture has created a workforce that is almost entirely at odds with what pharma needs now.
What sort of workforce is that? Hoffman's take is that the people who have survived under these conditions are disproportionately those who don't rock the boat, who keep their heads down, and who keep the top management as unperturbed as possible:
Many of the people remaining in operations deliberately choose not to ask big or important questions, lest their colleagues perceive any fundamental doubt as a threat. The truly adept manage to avoid taking a position on even the most mundane matters, lest someone else equate perceptive questions with disloyalty. Some even find it wise to feign ignorance concerning the elephants in various rooms. The combination of such simulated ignorance, together with the genuine version among the inexperienced survivors, makes the task of determining the smartest guy in the room a purely theoretical exercise.
I think that these are tendencies built in to most large organizations, but it wouldn't surprise me a bit if the shakeups of the last few years have exacerbated them. Many people, when the pressure is on as hard as it's been, decide that the first thing they have to do is try to hang on to their job. Anything interesting and risky can wait until after the mortgage payment has cleared and the tuition checks have been written. The behaviors most associated with "Don't get laid off" are not the ones that are best associated with "Keep the company going", much less "Discover something new". That last set of behaviors, in fact, might be one of the first to go, along with the people who exemplify them.
Hoffman has an aggressively cynical take on the motives in other parts of large organizations - and while I wish I could say that he's completely wrong, there are indeed places - too many - that operate on these general principles:
. . .At the top, finance sets the strategic direction. The goal of finance, paramount to everything else, consists of keeping senior management in control of the company. Forget the blather about shareholder value, customers, the community and medicine for the people. Everyone outside the boardroom is the enemy. . .Reality for CFOs involves long-term product and business development approaches that would create several quarters of flat or negative earnings. In their doomsday scenario, that would prompt the board to replace management.
And that's the tricky part of capitalism. One of the philosophical reasons that I'm such a free-market kind of person is that I think that it works with human nature as it really is, without needing any magical-thinking schemes to suddenly transform or improve it. People tend to act in their own self-interest? Fine, let's use that to try to derive benefit for more than just one person at a time. But it goes without saying (or should) that not all self-interested actions can be so harvested, which is why I'll never be anything close to an anarcho-libertarian.
Philosophy aside, what we're seeing in some drug organizations is this sort of self-destruction. The fix they find themselves in leads to behavior that makes the problems worse, or at best does little to overcome them. This, taken down to its individual basis, is what Hoffman's piece is arguing. And although his editorial can also be fairly characterized as a bitter rant, that doesn't mean it isn't true. Or at least more true than it should be.
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September 15, 2011
Posted by Derek
A discussion with colleagues recently got me to wondering about this useful (albeit grim) question: what area of drug discovery over the last twenty years would you say has taken up the most resources and returned the least value? I'm thinking more of disease/therapeutic areas, but other nominations are welcome, of course.
My own candidate is the nuclear receptor field, where some of that time and effort was mine. When I think of how enthusiastic I was ten years ago, how impatient I was to get in there and start up a big effort to really understand what was going on, to dig into the details and come up with drug candidates - and then when I think of what happened to the people who actually did that, well, it's food for thought. For those outside the field, a vast amount of effort and treasure was spent trying to work out a lot of insanely complex biology, and well, not much has ever emerged. Things went toward the clinic and never got there. Things went into the clinic and never came back out. Some went all the way to the FDA and were turned down.
So that's my nominee. I ask this question not just to wallow in misery and schadenfreude, but to see if there are some trends that we can spot, so as to avoid such things the next time they come down the chute. Given the state of the industry, the last thing we need is another gigantic sinkhole of time and money, so a bit of early warning would be welcome.
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September 13, 2011
Posted by Derek
I wanted to send people to this 50-year retrospective in J. Med. Chem.. It's one of those looks through the literature, trying to see what kinds of compounds have actually been produced by medicinal chemists. The proxy for that set is all the compounds that have appeared in J. Med. Chem. during that time, all 415, 284 of them.
The idea is to survey the field from a longer perspective than some of the other papers in this vein, and from a wider perspective than the papers that have looked at marketed drugs or structures reported as being in the clinic. I'm reproducing the plot for the molecular weights of the compounds, since it's an important measure and representative of one of the trends that shows up. The prominent line is the plot of mean values, and a blue square shows that the mean for that period was statistically different than the 5-year period before it (it's red if it wasn't). The lower dashed line is the median. The dotted line, however, is the mean for actual launched drugs in each period with a grey band for the 95% confidence interval around it.
As a whole, the mean molecular weight of a J. Med. Chem. has gone up by 25% over the 50-year period, with the steeped increase coming in 1990-1994. "Why, that was the golden age of combichem", some of you might be saying, and so it was. Since that period, though, molecular weights have just increased a small amount, and may now be leveling off. Several other measures show similar trends.
Some interesting variations show up: calculated logP, for example, was just sort of bouncing around until 1985 or so. Then from 1990 on, it started a steep increase, and it's hard to tell if that's leveling off or not even now. At any rate, the clogP of the literature compounds has been higher than that of the launched drugs since the mid-1980s. Another point of interest is the fraction of the molecules with tetrahedral carbons. What you find is that "flatness" in the literature compounds held steady until the early 1990s (by which point it was already disconnected from the launched drugs), but since then it's gotten even worse (and further away from the set of actual drugs). This, as the authors speculate, is surely due to metal-catalyzed couplings taking over the world - you can see the effect right in front of you, and so far, the end is not in sight.
Those two measures are the ones moving the most outside the range of marketed drugs. And despite my shot at early combichem molecules, it's also clear that publication delays mean that some of these things were already happening even before that technique became fashionable (although it certainly revved up the trends). Actually, if you want to know When It Changed in medicinal chemistry, you have to go earlier:
It is worth noting that these trends seemed to accelerate in the mid-1980s, indicating that some change took place in the early 1980s. The most likely explanations for an upward change in the early 1980s (before the age of combinatorial chemistry or high-throughput screening) seem to be advances in molecular biology, i.e., understanding of receptor subtypes leading to concerns about specificity; target-focused drug design and its corresponding one-property-at-a-time optimization paradigm (possibly exacerbated by structural biology); and improvements in technologies which enabled the synthesis and characterization of more complex molecules.
Target-based drug design, again. I'm really starting to wonder about this whole era. And if you'd told me back in, say, 1991 about these doubts that I'd be having, I'd have been completely dumbfounded. But boy, do I ever have them now. . .
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September 6, 2011
Posted by Derek
And the well-known chem-blogger Milkshake knows how to serve it. See his latest post here. It doesn't qiote make up for having one's company bought out, having everyone moved and fired and hosed around, and having to go to court for the severance package that you were promised. . .but you have to take your pleasures where you can.
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September 1, 2011
Posted by Derek
Several readers sent along this article from the Times of London (via the Ottawa Citizen) on GlaxoSmithKline's current research setup. You can tell that the company is trying to get press for this effort, because otherwise these are the sorts of internal arrangements that would never be in the newspapers. (The direct quotes from the various people in the article are also a clear sign that GSK wants the publicity).
The piece details the three-year cycle of the company's Drug Performance Units (DPUs), which have to come and justify their existence at those intervals. We're just now hitting the first three-year review, and as the article says, not all the DPUs are expected to make it through:
In 2008, the company organized its scientists into small teams, some with just a handful of staff, and set them to work on different diseases. At the time, every one of these drug performance units (DPUs) had to plead its case for a slice of Glaxo’s four-billion-pound research and development budget. Three years on and each of the 38 DPUs is having to plead its case for another dollop of funding to 2014. . .
. . .Such a far-reaching overhaul of a fundamental part of the business has proved painful to achieve. Witty said: “If you look across research and development at Glaxo, I would say we are night-and-day different from where we were three, four, five years ago. It has been a tough period of change and challenge for people in the company. When you go through that period, of course there are moments when morale is challenged and people are worried about what will happen.”
But he said it has been worth the upheaval: “The research and development organization has never been healthier in terms of its performance and in terms of its potential.”
I'm not in a position to say whether he's right or not. One problem (mentioned by an executive in the story) is that three years isn't really long enough to say whether things are working out or not. That might give you a read on the number of preclinical projects, whether that seems to be increasing or not. But that number is notoriously easy to jigger around - just lower the bar a bit, and your productivity problem is solved, on paper. The big question is the quality of those compounds and projects, and that takes a lot more time to evaluate. And then there's the problem that the extent that you can actually improve that quality may still not be enough to really affect your clinical failure rates much, anyway, depending on the therapeutic area.
Is this a sound idea, though? It could be - asking projects and therapeutic areas to justify their existence every so often could keep them from going off the rails and motivate them to produce results. Or, on the other hand, it could motivate them to tell management exactly what they want to hear, whether that corresponds to reality or not. All of these tools can cut in both directions, and I've no idea which way the blades are moving at GSK.
There's another consideration that applies to any new management scheme. How long will GSK give this system? How many three-year cycles will be needed to really say if it's effective, and how many will actually be run? Has any big drug company kept its R&D arrangements stable for as long as nine years, say, in recent history?
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August 29, 2011
Posted by Derek
When does China take the next step in drug research? They already have a huge contract research industry, and they have branches of many of the major pharma companies. But when does a Chinese startup, doing its own research with its own people in China, develop its own international-level drug pipeline? (We'll leave aside the problem that not even all the traditional drug companies seem to be able to do that these days). It still seems clear that we're eventually going to have a Chinese Merck, or a Chinese Novartis or what have you - a company to join North America, Western Europe, and Japan in the big leagues. The Chinese government, especially, would seem to find this idea very appealing.
Opinions differ, to put it mildly, about how far away this prospect is. But Chemical and Engineering News is out with an article on homegrown Chinese research that explores just this sort of question. But you run into passages like this:
In a meeting room in a building resembling a residential home in Shanghai’s Zhangjiang Hi-Tech Park, Li Chen and John Choi describe the business plan of their new company. Called Hua Medicine, the firm will launch breakthrough drugs within four years, they predict. Hua will manufacture the compounds and sell them with its own sales force. It will also license its internally developed drugs to multinational companies.
Yet right now, Hua is a modest operation that employs eight people. Hua doesn’t have an R&D lab yet, let alone a manufacturing facility. It operates in a loaned building formerly used by the administrators of the industrial park...
It can be easy to dismiss such ambitious business plans as simply talk aimed at gullible investors or government officials handing out subsidies. Except several start-ups are led by people who have long track records of success. Moreover, the money financing these start-ups comes not from relatives and friends, but from savvy investors knowledgeable about the drug industry.
Well. . .yeah. Let me join those who dismiss business plans that are as ambitious as that one. The way I understand the drug industry, if you're planning on launching a breakthrough drug within four years, you must have that drug in your hand right now, and it has to have had a lot of preclinical work done on it already (and in most therapeutic areas, it needs to have already hit the clinic). And note, these guys aren't talking about their one pet compound, they're talking about launching drugs, plural. Drugs that they discover, develop, manufacture and sell. And they have 8 people and no labs.
No, something is off here. I get the same feeling from this that I get from a lot of leapfrog-the-world plans, the feeling that something just isn't quite right and that the world doesn't allow itself to be hopped over on such a deliberate schedule. Thoughts?
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August 10, 2011
Posted by Derek
I wanted to extract and annotate a comment of Bernard Munos' from the most recent post discussing his thoughts on the industry. Like many of the ones in that thread, there's a lot inside it to think about:
(Arthur) De Vany has shown that the movie industry has developed clever tools (e.g., adaptive contracts) to deal with (portfolio uncertainty). That may come to pharma too, and in fact he is working on creating such tools. In the meantime, one can build on the work of Frank Scherer at Harvard, and Dietmar Harhoff. (Andrew Lo at MIT is also working on this). Using simulations, they have shown that traditional portfolio management (as practiced in pharma) does achieve a degree of risk mitigation, but far too little to be effective. In other words, because of the extremely skewed probability distributions in our industry, the residual variance, after you've done portfolio management, is large enough to put you out of business if you hit a dry spell. That's why big pharma is looking down patent cliffs that portfolio management was meant to avoid. Scherer's work also shows that the broader the pipeline, the better the risk mitigation. So we know directionally where to go, but we need more work to estimate the breadth of the pipeline that is needed to get risk under control. Pfizer's example, however, gives us a clue. With nearly $9 billion in R&D spend, and a massive pipeline, they were unable to avoid patent cliffs. If they could not do it, chances are that no single pharma company can create internally a pipeline that is broad enough to tame risk. . .
That's a disturbing thought, but it's likely to be correct. Pfizer has not, I think it's safe to say, achieved any sort of self-sustaining "take-off" into a world where it discovers enough new drugs to keep its own operations running steadily. And this, I think, was the implicit promise in all that merger and acquisition growth it undertook. Just a bit bigger, just a bit broader, and those wonderful synergies and economies of scale would kick in and make everything work out. No, we're not quite big enough yet to be sure that we're going to have a steady portfolio of big, profitable drugs, but this next big acquisition? Sure to do the trick. We're so close.
And this doesn't even take into account the problems with returns on research not scaling with size (due to the penalties of bureaucracy and merger uncertainty, among other factors). Those have just made the problems with the strategy apparent more quickly - but even if Pfizer's growth had gone according to plan, and they'd turned into that great big (but still nimble and innovative!) company of their dreams, it might well still not have been enough. So here's the worrisome thesis: What size drug portfolio is big enough to avoid too high a chance of ruin? Bigger than any of us have.
Here's de Vany's book on the economics of Hollywood, for those who are interested. That analogy has been made many times, and there's a lot to it. Still, there are some key divergences: for one thing, movies are more of a discretionary item than pharmaceuticals are (you'd think). People have a much different attitude towards their physical well-being than they have towards their entertainment options. Then again, movies don't have to pass the FDA; the customers get to find out whether or not they're efficacious after they've paid their money.
On the other hand, copyright lasts a lot longer than a patent does (although it's a lot easier along the way to pirate a movie than it is to pirate a drug). And classic movies, as emotional and aesthetic experiences, don't get superseded in quite the same way that classic pharmaceuticals do. Line extension is much easier in the movie business, where people actually look forward to some of the sequels. Then there's all the ancillary merchandise that a blockbuster summer movie can spin off - no one's making Lipitor collectibles (and if I'm wrong about that, I'd prefer not to know).
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August 8, 2011
Posted by Derek
Just wanted to point out to anyone who's not reading the comments here that the ones to this post are of extremely high quality. If you want to hear the thoughts of a lot of intelligent, experienced people on what's wrong with the drug industry and what might be done to fix it, have a look.
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August 5, 2011
Posted by Derek
I've been meaning to link to Matthew Herper's piece on Bernard Munos and his ideas on what's wrong with the drug business. Readers will recall several long discussions here about Munos and his published thoughts (Parts one, two, three and four). A take-home message:
So how can companies avoid tossing away billions on medicines that won’t work? By picking better targets. Munos says the companies that have done best made very big bets in untrammeled areas of pharmacology. . .Munos also showed that mergers—endemic in the industry—don’t fix productivity and may actually hurt it. . . What correlated most with the number of new drugs approved was the total number of companies in the industry. More companies, more successful drugs.
I should note that the last time I saw Munos, he was emphasizing that these big bets need to be in areas where you can get a solid answer in the clinic in the shortest amount of time possible - otherwise, you're really setting yourself up with too much risk. Alzheimer's, for example, is a disease that he was advising that drug developers basically stay away from: tricky unanswered medical questions, tough drug development problems, followed up by big huge long expensive clinical trials. If you're going to jump into a wild, untamed medical area (as he says you should), then pick one where you don't have to spend years in the clinic. (And yes, this would seem to mean a focus on an awful lot of orphan diseases, the way I look at it).
But, as the article goes on to say, the next thought after all this is: why do your researchers need to be in the same building? Or the same site? Or in the same company? Why not spin out the various areas and programs as much as possible, so that as many new ideas get tried out as can be tried? One way to interpret that is "Outsource everything!" which is where a lot of people jump off the bus. But he's not thinking in terms of "Keep lots of central control and make other people do all your grunt work". His take is more radical:
(Munos) points to the Pentagon’s Defense Advanced Research Projects Agency, the innovation engine of the military, which developed GPS, night vision and biosensors with a staff of only 140 people—and vast imagination. What if drug companies acted that way? What areas of medicine might be revolutionized?
DARPA is a very interesting case, which a lot of people have sought to emulate. From what I know of them, their success has indeed been through funding - lightly funding - an awful lot of ideas, and basically giving them just enough money to try to prove their worth before doling out any more. They have not been afraid of going after a lot of things that might be considered "out there", which is to their credit. But neither have they been charged with making money, much less reporting earnings quarterly. I don't really know what the intersection of DARPA and a publicly traded company might look like (the old Bell Labs?), or if that's possible today. If it isn't, so much the worse for us, most likely.
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+ TrackBacks (0) | Category: Alzheimer's Disease | Business and Markets | Clinical Trials | Drug Development | Drug Industry History | Who Discovers and Why
August 3, 2011
Posted by Derek
A number of readers have noted this piece by John LaMattina in Nature Reviews Drug Discovery. He is, of course, a former head of R&D at Pfizer, which makes the title of the article something of an attention-getter: "The impact of mergers on Pharmaceutical R&D". Pfizer, for those of you just returning from a near-lightspeed trip to Alpha Centauri and still adjusting to the effects of relativistic time dilation, has been the Undisputed King of Pharma Mergers over the last ten to fifteen years, growing ever larger and larger in a way that no drug company ever had before. So how has this worked out?
". . .In this article, it is argued that although mergers and acquisitions in the pharmaceutical industry might have had a reasonable short-term business rationale, their impact on the R&D of the organizations involved has been devastating.
Lest anyone think that he's trying to make excuses for his former employer, LaMattina explicitly advances Pfizer as an example of what he's talking about, going over the company's merger and acquisition history in detail, including research site closure and layoffs. How, he asks, are we supposed to discover new drugs in the face of such cutbacks? And what has been the effect on the scientific health of the industry to have so many fewer organizations there to work on new ideas as they come along?
Good questions. The reaction to LaMattina himself asking them, though, has been varied. My first thought is that I agree with his point of view right down to the ground, and have been publicly inveighing against Pfizer-style mergers for over ten years now for the exact same reasons that he details. (Early next year, in fact, will mark the ten-year anniversary of this blog, which hardly seems possible). All such protests have done nothing, nothing at all, as far as I can tell. Pfizer, up through its acquisition of Wyeth, has getting bigger, buying more companies because it needs their pipelines because now it's so big, slashing and burning these organzations after buying them, and then turning around and buying someone else because now its pipeline needs shoring up, because for some obscure reason people haven't been discovering as many drugs as they used to. Yep, that's about the sorry size of it.
Another reaction, though, has been "How dare someone from Pfizer say that mergers aren't a good idea? Now he tells us!" And while I can understand that, I think that you have to realize that in a company the size of Pfizer, the head of R&D is not perhaps in as exalted a decision-making position as you might imagine. LaMattina alludes to this here:
"Indeed, R&D seems to be especially vulnerable to the negative impact of mergers and acquisitions. Having a sense of how mergers occur in R&D organizations is helpful for understanding this impact. R&D organizations will be the last part of the companies to begin merger discussions before regulatory approval because of the commercial sensitivity of the pipeline and the intellectual property of the company. . .
I would say that in many of these cases, the job of the R&D executives has been to roll over and take it once the higher-ups have decided an acquisition is going to happen. "Your job is to make this work - and if you don't want to do it, we'll find someone that does". After reading that alarming Fortune piece on the goings-on in the upper ranks of Pfizer, I find this view particularly believable. (And I would find LaMattina's view on the events in that article extremely interesting, although I doubt we'll ever hear them).
So, although I don't want to put words in anyone's mouth, my take is that LaMattina finds his part in Pfizer's M&A activities to be regrettable, and that he's now advancing the arguments against them - arguments that never gained any traction inside Pfizer. His own book skirted the topic - the word "mergers" only appears twice in the text, as far as Google Books can tell. But he's not skirting it any more.
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August 2, 2011
Posted by Derek
I've heard from more than one person that Merck has decided to move most discovery research out of Rahway (in favor of the former Schering-Plough site in Kenilworth). Details are welcome in the comments from those with better information. That news does bring on end-of-an-era feelings, since they've been doing medicinal chemistry in Rahway for a long, long time. Kenilworth - well, I joined Schering-Plough when it was still in Bloomfield, and I remember the Kenilworth building site when it was a huge hole in the ground. We migrated into it (the building, not the hole) at the end of 1992, in a massive moving job that involved several convoys of 18-wheel trucks going down a partially-closed-off Garden State Parkway in the middle of the night.
The move had to be done; Bloomfield was at the limits of its capacity. And while it was nice to move into a completely new facility, I realized as time went on that Bloomfied had had charms of its own that I hadn't recognized at the time. But I left Kenilworth in 1997, when the building was comparatively new, so no doubt it's acquired some character by now. Do they still have the stark white socialist-realist statue of Sir Derek Barton down in the lobby?
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Posted by Derek
I've heard from more than one person that Merck has decided to move most discovery research out of Rahway (in favor of the former Schering-Plough site in Kenilworth). Details are welcome in the comments from those with better information. That news does bring on end-of-an-era feelings, since they've been doing medicinal chemistry in Rahway for a long, long time. Kenilworth - well, I joined Schering-Plough when it was still in Bloomfield, and I remember the Kenilworth building site when it was a huge hole in the ground. We migrated into it (the building, not the hole) at the end of 1992, in a massive moving job that involved several convoys of 18-wheel trucks going down a partially-closed-off Garden State Parkway in the middle of the night.
The move had to be done; Bloomfield was at the limits of its capacity. And while it was nice to move into a completely new facility, I realized as time went on that Bloomfied had had charms of its own that I hadn't recognized at the time. But I left Kenilworth in 1997, when the building was comparatively new, so no doubt it's acquired some character by now. Do they still have the stark white socialist-realist statue of Sir Derek Barton down in the lobby?
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July 29, 2011
Posted by Derek
I've been meaning to comment on this article from the Wall Street Journal - the authors take a look at the drug approval numbers so far this year, and speculate that the industry is turning around.
Well, put me in the "not so fast" category. And I have plenty of company there. Neither Bruce Booth (from the venture capital end), John LaMattina (ex-Pfizer R&D head) nor Matthew Herper at Forbes are buying it either.
One of the biggest problems with the WSJ thesis is that most of these drugs have been in development for longer than the authors seem to think. Bruce Booth's post goes over this in detail, and he's surely correct that these drugs were basically all born in the 1990s. Nothing that's changed in the research labs in the last 5 to 10 years is likely to have significantly affected their course; we're going to have to wait several more years to see any effects. (And even then it's unlikely that we're going to get any unambiguous signals; there are too many variables in play). That, as many people have pointed out over the years, is one of the trickiest parts about drug R&D: the timelines are so long and complex that it's very hard to assign cause and effect to any big changes that you make. If your car only responds to the brake pedal and steering wheel a half hour after you touch them, how can you tell if that fancy new GPS you bought is doing you any good?
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+ TrackBacks (0) | Category: Drug Development | Drug Industry History | Press Coverage | Regulatory Affairs
July 28, 2011
Posted by Derek
Here's a fascinating account at Fortune of the departure of Jeff Kindler as Pfizer's CEO. The magazine says that they interviewed over 100 people to round up the details, but some of these meetings only feature four or five people in a room, so that narrows things down a bit. It's also a back-room history of Pfizer over the last ten or fifteen years, and there's a lot of high-level political stuff that wasn't widely known at the time:
McKinnell kept boosting R&D budgets, maintaining Pfizer's "shots on goal" approach -- the more compounds you explored, in theory, the more drugs you'd generate. But drugs can take a full decade to be developed and approved, and nothing big would be ready for years.
So McKinnell fell back on the refuge of the desperate pharma CEO: In July 2002 he announced the acquisition of Pharmacia, the industry's seventh-largest company, for $60 billion in stock. But even as Pfizer struggled to digest this latest meal, McKinnell seemed to spend less and less time at headquarters, becoming head of industry trade groups, funding an institute in Africa to combat AIDS, even writing a book about reforming health care.
That left a power vacuum, and Bill Steere, the former CEO, seemed more than willing to fill it. . ."He says almost nothing," says a person familiar with Pfizer's board. "But people look to him to see how he nods and how he moves, because he knows the company better than anyone."
With Pfizer no longer soaring, internal squabbling intensified. Vexed by what he viewed as Steere's meddling, McKinnell even tried to terminate his consulting contract. Steere fended off that move. Support for him ran deep on the board: Later, when Steere turned 72, the mandatory retirement age for directors, the board raised it to 73 so he could stick around, then amended the provision again when he hit that limit.
Steere and McKinnell, former friends and colleagues, became mortal enemies. . .
Read the whole thing, if you're interested in either Pfizer or the way that human beings behave at this level of a large corporation: anonymous letters, secret meetings, all varieties of intrigue. 14th-century Florence can offer little more in the way of power politics. There are those who swim in such waters like fish, but I've devoted time and effort trying to stay away.
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July 7, 2011
Posted by Derek
Here's another new article in Nature Reviews Drug Discovery that (for once) isn't titled something like "The Productivity Crisis in Drug Research: Hire Us And We'll Consult Your Problems Away". This one is a look back at where drugs have come from.
Looking over drug approvals (259 of them) between 1999 and 2008, the authors find that phenotypic screens account for a surprising number of the winners. (For those not in the business, a phenotypic screen is one where you give compounds to some cell- or animal-based assay and look for effects. That's in contrast to the target-based approach, where you identify some sort of target as being likely important in a given disease state and set out to find a molecule to affect it. Phenotypic screens were the only kinds around in the old days (before, say, the mid-1970s or thereabouts), but they've been making a comeback - see below!)
Out of the 259 approvals, there were 75 first-in-class drugs and 164 followers (the rest were imaging agents and the like). 100 of the total were discovered using target-based approaches, 58 through phenotypic approaches, and 18 through modifying natural substances. There were also 56 biologics, which were all assigned to the target-based category. But out of the first-in-class small molecules, 28 of them could be assigned to phenotypic assays and only 17 to target-based approaches. Considering how strongly tilted the industry has been toward target-based drug discovery, that's really disproportionate. CNS and infectious disease were the therapeutic areas that benefited the most from phenotypic screening, which makes sense. We really don't understand the targets and mechanisms in the former, and the latter provide what are probably the most straightforward and meaningful phenotypic assays in the whole business. The authors' conclusion:
(this) leads us to propose that a focus on target-based drug discovery, without accounting sufficiently for the MMOA (molecular mechanism of action) of small-molecule first-in-class medicines, could be a technical reason contributing to high attrition rates. Our reasoning for this proposal is that the MMOA is a key factor for the success of all approaches, but is addressed in different ways and at different points in the various approaches. . .
. . .The increased reliance on hypothesis-driven target-based approaches in drug discovery has coincided with the sequencing of the human genome and an apparent belief by some that every target can provide the basis for a drug. As such, research across the pharmaceutical industry as well as academic institutions has increasingly focused on targets, arguably at the expense of the development of preclinical assays that translate more effectively into clinical effects in patients with a specific disease.
I have to say, I agree (and have said so here on the blog before). It's good to see some numbers put to that belief, though. This, in fact, was the reason why I thought that the NIH funding for translational research might be partly spent on new phenotypic approaches. Will we look back on the late 20th century/early 21st as a target-based detour in drug discovery?
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July 2, 2011
Posted by Derek
Here's another look at the productivity problems in drug R&D. The authors are looking at attrition rates, development timelines, targets and therapeutic areas, and trying to find some trends to explain (or at least illuminate) what's been going on.
Their take? Attrition rates have been rising at all phases of drug development, and most steeply in Phase III. (This sounds right to me). Here are their charts:
And when they look at where the drug R&D efforts have been going, they find that comparatively more time and money has been spent on targets with lower probability of success. That means (among other things) more oncology, Alzheimer's, arthritis, Parkinson's et al. and less cardiovascular and anti-HIV.
That makes sense, too, in a paradoxical way. If we were to get drugs in those areas, the expected returns would be higher than if we found them in the well-established ones. The regulatory barriers would be smaller, the competition thinner, the potential markets are enthusiastic about new therapies - everything's lined up. If you can find a drug, that is. The problem is the higher failure rates. We knew that going in, of course, but the expectation was that the greater rewards would cancel that out. But what if they don't? What if, for a protracted period, there are no rewards at all?
The paper also has a very interesting analysis of European firms versus US ones. Instead of looking at where companies might be headquartered, the authors used the addresses of the inventors on patent filings as a better location indicator. Over 18,000 projects started by companies or public research organizations between 1990 and 2007 were examined, and they found:
Although at a first glance, European organizations seem to have higher success rates compared with US organizations, after controlling for the larger share of biotechnology companies and PROs in the United States and for differences in the composition of R&D portfolios, there is no significant gap between European and US organizations in this respect. Unconditional differences (that is, differences arising when no controls are taken into account) are driven by the higher propensity of US organizations to focus on novel R&D methodologies and riskier therapeutic endeavours. . .as an average US organization takes more risk, when successful, they attain higher price premiums than the European organizations.
The other take-home has to do with "me-too" compounds versus first-in-class ones, and is worth considering:
". . .both private and public payers discourage incremental innovation and investments in follow-on drugs in already established therapeutic classes, mostly by the use of reference pricing schemes and bids designed to maximize the intensity of price competition among different molecules. Indeed, in established markets, innovative patented drugs are often reimbursed at the same level as older drugs. As a consequence, R&D investments tend to focus on new therapeutic targets, which are characterized by high uncertainty and difficulty, but lower expected post-launch competition. Our empirical investigation indicates that this reorienting of investments accounts for most of the recent decline in productivity in pharmaceutical R&D, as measured in terms of attrition rates, development times and the number of NMEs launched."
So, rather than being in trouble for not trying to be innovative enough, according to these guys, we're in trouble for innovating too much. . .
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July 1, 2011
Posted by Derek
I've been meaning to link to John LaMattina's blog for some time now. He's a former R&D guy (and author of Drug Truths: Dispelling the Myths About Pharma R & D, which I reviewed here for Nature Chemistry), and he knows what he's talking about when it comes to med-chem and drug development.
Here he takes on the recent "Scientists Crack the Histamine Code" headlines that you may have seen this week. Do we have room, he wonders, for a third-generation antihistamine, or not?
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+ TrackBacks (0) | Category: Biological News | Drug Industry History
June 28, 2011
Posted by Derek
I hate to be such a shining beacon of happiness today, but this news can't very well be ignored, can it? For the first time ever, total drug R&D spending seems to have declined:
The global drug industry cut its research spending for the first time ever in 2010, after decades of relentless increases, and the pace of decline looks set to quicken this year.
Overall expenditure on discovering and developing new medicines amounted to an estimated $68 billion last year, down nearly 3 percent on the $70 billion spent in both 2008 and 2009, according to Thomson Reuters data released on Monday.
The fall reflects a growing disillusionment with poor returns on pharmaceutical R&D. Disappointing research productivity is arguably the biggest single factor behind the declining valuations of the sector over the past decade.
This is not good - although, to be sure, we've had plenty of warning that this day would be coming. But looking at it from another perspective, you might wonder what's taken so long. Matthew Herper has a piece up highlighting the chart below, from the Boston Consulting Group. It plots new drugs versus R&D spending in constant dollars, and if you're wondering what the Good Old Days looked like, here they are. Or were:
What's most intriguing to me about this graph is the way it seems to validate the "low-hanging fruit" argument. This looks like the course of an industry that has, from the very beginning of its modern era, been finding it steadily, relentlessly harder to mine the ore that it runs on. But that analogy leaves out another key factor that makes that line go down: good drugs don't go away. They just go generic, and get cheaper than ever. You can also interpret this graph as showing the gradual buildup of cheap, effective generics for a number of major conditions (cardiovascular, in particular).
There's one other factor that ties in with those thoughts - the therapeutic areas that we've been able to address. Look at that spike in the 1990s, labeled PDUFA and HIV. Part of that jump is, as a colleague theorized with me just this morning, the fact that a completely new disease appeared. And it was one that, in the end, we could do something about - as opposed to, say, Alzheimer's. So if you want to be completely evil about it, then the Huey Lewis model of fixing pharma has it wrong: we don't need a new drug. We need a new disease. Or several.
Well, that's clearly not the way to look at it. I don't actually think that we need to add to the list of human ailments; it's long enough already. But given all the factors listed (and the ever-tightening regulatory/safety environment, on top of them), another colleague of mine looked at this chart and asked if we ever could have expected it to look any different. Could that line go anywhere else but down? The promise of things like the genomics frenzy was, I think, that it would turn things around (and that hope still lives on in the heart of Francis Collins), even though some people argue that it did the reverse.
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May 31, 2011
Posted by Derek
My local NPR station had this report on this morning, on one-person drug companies. Can't outsource much more than that!
Here are the two companies profiled: LipimetiX and Deuteria. The former is using helical peptides to affect lipoprotein clearance, and the latter is (as you'd guess) in the deuterated-drug game, which I've most recently blogged on here. (That one's run by Sheila DeWitt, who used to work down the hall from me in grad school 25 years ago). And there are several other outfits that they could have mentioned - some of them are not quite down to one person, but you can count the employees on your fingers. In all of these cases, everything is being contracted out.
There are downsides, of course. For one thing, these are, almost by necessity, single-drug companies. It's enough of a strain just getting one project through under those conditions, let alone running a whole portfolio. So the risk is higher, given the typical failure rates in this line of work. And you have to trust your contractors, naturally. That's a bit easier to do in the Boston area (and a few other places), since you can get a lot of work sourced locally. That doesn't make it as much of a Bargain, Bargain, Bargain as it might be overseas, but at least you can drop in and see how things are going.
Another thing the NPR piece didn't address was where these projects come from. Many of them, I'd guess, are abandoned efforts from other companies that still have some possibilities. Those and the up-from-academia ideas probably take care of the whole list, wouldn't you think? Has anyone heard of one of these virtual-company ideas where the lead compound came from some sort of outsourced screen? And is an outsourced screen even possible? Now there's a business idea. . .
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May 26, 2011
Posted by Derek
OK, here's how I understand the way that medicinal chemistry now works at Pfizer. This system has been coming on for quite a while now, and I don't know if it's been fully rolled out in every therapeutic area yet, but this seems to be The Future According to Groton:
Most compounds, and most actual chemistry bench work, is apparently going to be done at WuXi (or perhaps other contract houses?) Back here in the US, there will be a small group of experienced medicinal chemists at the bench, who will presumably be doing the stuff that can't be easily shipped out (time-critical, difficult chemistry, perhaps even IP-critical stuff, one wonders?) But these people are not, as far as I can tell, supposed to have ideas of their own.
No, ideas are for the Drug Designers, which is where the rest of Pfizer's remaining medicinal chemistry head count are to be found. These are the people who keep trac of the SAR, decided what needs to be made next, and tell the folks in China to make it. It's presumably their call, what to send away for and what to do in-house, but one gets the sense that they're strongly encouraged to ship as much stuff out as possible. Cheaper that way, right? And it's not like there's a whole lot of stateside capacity, anyway, at this point.
What if someone working in the lab has (against all odds) their own thoughts about where the chemistry should go next? I presume that they're going to have to go and consult a Drug Designer, thereby to get the official laying-on of hands. That process will probably work smoothly in some cases, but not so smoothly in others, depending on the personalities involved.
So we have one group of chemists that are supposed to be all hands and no head, and one group that's supposed to be all head and no hands. And although that seems to me to be carrying specialization one crucial step too far, well, it apparently doesn't seem that way to Pfizer's management, and they're putting a lot of money down on their convictions.
And what about the whole WuXi/China angle? The bench chemists there are certainly used to keeping their heads down and taking orders, for better or worse, so that won't be any different. But running entire projects outsourced can be a tricky business. You can end up in a situation where you feel as if you're in a car that only allows you to move the steering wheel every twenty minutes or so. Ah, a package has arrived, a big bunch of analogs that aren't so relevant any more, but what the heck. And that last order has to be modified, and fast, because we just got the assay numbers back, and the PK of the para substituted series now looks like it's not reproducing. And we're not sure if that nitrogen at the other end really needs to be modified any more at this point, but that's the chemistry that works, and we need to keep people busy over there, so another series of reductive aminations it is. . .
That's how I'm picturing it, anyway. It doesn't seem like a particularly attractive (or particularly efficient) picture to me, but it will at least appear to spend less money. What comes out the other end, though, we won't know for a few years. And who knows, someone may have changed their mind by then, anyway. . .
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May 24, 2011
Posted by Derek
Here's an interesting note from the Wall Street Journal's Health Blog. I can't summarize it any better than they have:
"When former NIH head Elias Zerhouni ran the $30 billion federal research institute, he pushed for so-called translational research in which findings from basic lab research would be used to develop medicines and other applications that would help patients directly.
Now the head of R&D at French drug maker Sanofi, Zerhouni says that such “bench to bedside” research is more difficult than he thought."
And all across the industry, people are muttering "Do tell!" In fairness to Zerhouni, he was, in all likelihood, living in sort of a bubble at NIH. There probably weren't many people around him who'd ever actually done this sort of work, and unless you have, it's hard to picture just how tricky it is.
Zerhouuni is now pushing what he calls an "open innovation" model for Sanofi-Aventis. The details of this are a bit hazy, but it involves:
". . .looking for new research and ideas both internally and externally — for example, at universities and hospitals. In addition, the company is focusing on first understanding a disease and then figuring out what tools might be effective in treating it, rather than identifying a potential tool first and then looking for a disease area in which it could be helpful."
Well, I don't expect to see Sanofi's whole strategy laid out in the press, but that one doesn't even sound as impressive as it sounds. The "first understanding a disease" part sounds like what Novartis has been saying for some time now - and honestly, it really is one of the things that we need, but that understanding is painfully slow to dawn. Look at, oh, Alzheimer's, to pick one of those huge unmet medical needs that we'd really like to address in this business.
With a lot of these things, if you're going to first really understand them, you could have a couple of decades' wait on your hands, and that's if things go well. More likely, you'll end up doing what we've been doing: taking your best shot with what's known at the moment and hoping that you got something right. Which leads us to the success rates we have now.
On the other hand, maybe Zerhouni should just call up Marcia Angell or Donald Light, so that they can set him straight on the real costs of drug R&D. Why should we listen to a former head of the NIH who's now running a major industrial research department, when we can go to the folks who really know what they're talking about, right? And I'd also like to know what he thinks of Francis Collins' plan for a new NIH translational research institute, too, but we may not get to hear about that. . .
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+ TrackBacks (0) | Category: Academia (vs. Industry) | Drug Development | Drug Industry History
May 16, 2011
Posted by Derek
I was thinking the other day that I never remembered hearing the phrase "Big Pharma" when I first got a job in this business (1989). Now I have some empirical proof, thanks to the Google Labs Ngram Viewer, that the phrase has only come into prominence more recently. (Fair warning: you can waste substantial amounts of time messing with this site). Here's the incidence rate of "big pharma" in English-language books from 1988 to 2000.
It comes from nowhere, blips to life in 1992, doesn't even really get off the baseline until 1994 or so, and then takes off. (The drops in 2005 and 2008 remain unexplained - did the log phase of its growth end in 2004?)
Update: that graph holds for the uncapitalized version of the phrase. If you put the words in caps, you get the even more dramatic takeoff shown below:
To be fair, though, there seems to have been a general rise in Big Pharma-related literature during that period. Try out this graph, comparing mentions of Merck, Pfizer, and Novartis since 1970. The last-named, of course, didn't even exist until the early 1990s, but they (like the others) have spent the time since then zipping right up, with no apparent end in sight. (Merck, especially - what's with those guys?) And what accounts for this? Business books? Investing guides? Speculation is welcome.
Note: the above paragraph was written before realizing that the Google Ngram search is case-sensitive - so, as was pointed out in the comments, I was picking up on people not caring about capitalization more than anything else. Below is the correct graph, with initial capitals in the search, and it makes more sense. Merck still is the king of book mentions, though, for all the coverage that Pfizer gets.
I'll finish off with this one, using a longer time scale. Yes, folks, for better or worse, it appears that the phrase "organic chemistry" peaked out between book covers around 1950, and has been declining ever since. Meanwhile, "total synthesis" starting rising during the World War II era (penicillin?), and kept on moving up until a peak around 1980. Interestingly, things turned around in 2000 or so, and especially since 2003. And this can't be ascribed to some sort of general surge in chemistry publications - look at the "organic chemistry" line during the same period. Is there some other field that's adopted the phrase?
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+ TrackBacks (0) | Category: Drug Industry History | General Scientific News | The Scientific Literature
May 3, 2011
Posted by Derek
Now here's a comparison that you don't get to see very often: how much do two large pharma compound collections overlap? There's a paper going into just that question in the wake of the 2006-2007 merger between Bayer and Schering AG. (By two coincidences, this paper is in the same feed as the one that I highlighted yesterday, and that merger is the one that closed my former research site out from under me).
Pre-merger, Bayer had over two million structures in its corporate collection, and Schering AG had just under 900,000. Both companies had undertaken recent library clean-up programs, clearing out undesirable compounds and adding both purchased and in-house diversity structures. Interestingly, it turns out that just under 50,000 structures were duplicated across both collections, about 1.5% of the total. Almost all of these duplicates were purchased compounds; only 2,000 of them had been synthesized in-house. And even most of those turned out to be from combichem programs or were synthetic intermediates - there was almost no overlap at all in submitted med-chem compounds.
Various measures of structural complexity and similarity backed up those numbers. The two collections were surprisingly different, which might well have something to do with the different therapeutic areas the two companies had focused on over the years. The Bayer compounds tended to run higher in molecular weight, rotatable bonds, and clogP, but then, a higher percentage of the Schering AG compounds were purchased with such filters already in place. As for undesirable structures, only about 2% of the Bayer collection and 1% of the Schering AG compounds were considered to be real offenders. I hope none of those were mine; I contributed quite a few compounds to the collection over the years, but they were, for the most part, relatively sane.
The paper's conclusion can be read in more than one way:
Furthermore, an argument that might support mergers and acquisitions (M&A) in the pharmaceutical sector can be harvested from this analysis. Currently, M&As in this industry are driven by product portfolios rather than by drug discovery competencies. With the current need for innovative drugs, R&D skills of pharmaceutical companies might again become more important. The technological complementarity of two companies is often quoted as an important factor for successful M&As in the long term. If compound libraries are regarded as a kind of company knowledge-base, then a high degree of complementarity is clearly desirable and would improve drug discovery skills. Based on our data, the libraries of BHC and SAG are structurally complementary and fit together well in terms of their physico-chemical properties. However, it remains to be proven if this leads to additional innovative products.
Not so sure about that, myself. I don't know how good a proxy the compound collections are, since the represent an historical record as much as they do the current state of a company. And that paragraph glosses over the effect of mergers on R&D itself - it's not like just adding pieces together, that's for sure. The track record for mergers generating "additional innovative products" is not good. We'll see how the Bayer-Schering one holds up. . .
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May 2, 2011
Posted by Derek
Matthew Herper has a good piece over in Forbes on the speculation that Pfizer might devolve. Here's his breakdown of how five (or so) separate Pfizer-derived companies could be worth substantially more than the current entity.
But, as he notes, we're talking about several different things here. Were I a long-suffering Pfizer shareholder (which, outside of index funds, I have tried not to be), I would have one perspective on this, similar to this one. It would all be about the stock price:
“The stock can only go up if they break up the company and cut research and development,” says Jami Rubin, a pharmaceuticals analyst at Goldman Sachs who has been pushing a Pfizer breakup for three years. “When Read was announced as the new chief executive Wall Street was skeptical, but he’s listening and he’s responding to what we have been saying. My sense is he’s already made up his mind.”
As an observer of (and participant in) the drug industry, though, I have other views, and they're more like these:
Not everyone agrees that a breakup is the right fix for Pfizer, which has struggled to invent new blockbusters even as it acquired Warner-Lambert for $114 billion in 2000, Pharmacia for $60 billion in 2003 and Wyeth for $68 billion in 2009. Those big mergers sidetracked its researchers and salespeople and created baroque management structures—at one point there were 17 layers between the chief executive and the lowest employee. Critics say undoing them risks similar distraction. As one fund manager said, a breakup would just mean the investment bankers and lawyers who got rich putting Pfizer together will now get richer taking it apart, without improving its ability to invent and market drugs, already a struggle. “I think it’s financial engineering. I think it makes the stock more valuable,” says Les Funtleyder, a fund manager at Miller Tabak. “From a strategic point of view, would it solve the problem? No.”
That's the problem, all right. I've made this point in various ways over the years, but let me be as blunt as possible: I think that Pfizer's consolidation, both of large companies and of small ones, has been a disaster for drug discovery in general. Just the sheer loss of intellectual diversity is enough to call it that. And the resulting huge, ugly omelet cannot be unscrambled. The disruptions in all those research organizations can never be undone, not without a fleet of fully powered time machines.
It will give many people (I'm one) some cold satisfaction to see the company reverse course, admit that the mega-merger strategy has been a mistake all along, and painfully retrace its steps. But that's not much compensation, is it? Not compared to what's been lost.
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April 11, 2011
Posted by Derek
Now here's a piece that I'm looking for good reasons to dismiss. And I think its author, Jim Edwards, wouldn't mind some, too. You've probably heard that Valeant Pharmaceuticals is making a hostile offer for Cephalon, a company that's dealing with some pipeline/patent problems (and, not insignificantly, the recent death of their founder and CEO).
Valeant's CEO, very much alive, is making no secret of his business plan for Cephalon should he prevail: ditch R&D as quickly as possible:
“His approach isn’t one that most executives in the drug business take,” (analyst Timothy) Chiang said in telephone interview last week. “He’s even said in past presentations: ‘We’re not into high science R&D; we’re into making money.’ I think that’s why Valeant sort of trades in a league of its own.”
. . .Pearson’s strategy and viewpoint on research costs have been consistent. When he combined Valeant with drugmaker Biovail Corp. in September, he cut about 25 percent of the workforce, sliced research spending and established a performance-based pay model tied to Valeant’s market value.
“I recognize that many of you did not sign up for either this strategy or operating philosophy,” Pearson wrote in a letter to staff at the time. “Many of you may choose not to continue to work for the new Valeant.”
Valeant does, in fact, make plenty of money. But my first thought (and the first thought of many of you, no doubt) is that it's making money because other people are willing to do the R&D that they themselves are taking a pass on. In other words, there's room for a few Valeants in the industry, but you couldn't run the whole thing that way, because pretty soon there'd be nothing for those whip-cracking revenue-maximizing managers to sell. Would there?
But we don't have to go quite that far. Edwards, for his part, goes on to wonder (as many have) whether the drug industry should settle out into two groups: the people that do the R&D and the people that sell the drugs. This idea has been proposed as a matter of explicit government policy (a nonstarter), but short of that, has been kicked around many times. Most of the time, this scheme involves smaller companies doing the research, with the big ones turning into the regulatory/sales engines, but maybe not:
If you agree that there ought to be a division of labor in the pharma business — that some companies should develop drugs and then sell those products to the companies that have the salesforces to market them — then this says some interesting things about recent corporate strategy moves among the largest companies. Pfizer (PFE) is downsizing its R&D operations and Johnson & Johnson (JNJ) is said to be on the prowl for a ~$10 billion acquisition.
Merck, on the other hand, is doubling down on its own research and stopped giving Wall Street guidance in hopes of lessening the scrutiny paid to its R&D expense base..
The heralds of this restructuring of the industry haven't quite called it this way, but instead splitting from each other, perhaps the big companies will divide into two camps (Merck vs. Pfizer) and the smaller ones, too (Valeant vs. your typical small pharma). Prophecy's not an exact science - Marx thought that Germany and England would be the first countries to go Communist, you know.
For my part, I think that there are game-theory reasons why a big company won't explicitly renounce R&D. As it is, a big company can signal that "Yes, we'd like to do a deal for your drug (or your whole company), but you know, there are other things for us to do with the money if this doesn't work out." But if you're only inlicensing, then no, there aren't so many other things for you to do with the money. Everyone else can look around the industry and see what's available for you to buy, and thus the price of your deals goes up. You have no hidden cards from your internal R&D to play (or to at least pretend like you're holding). This signaling, by the way, is directed to the current and potential shareholders as well: "Buy our stock, because you never know what our brilliant people are going to come up with next". That's a more interesting come-on line than "Buy our stock. You never know who we're going to buy next." Isn't it?
And that's a separate question from the even bigger one of whether there are enough compounds out there to inlicense in the first place. No, I think that big companies will hold onto their own R&D in one form or another. But we'll see who's right.
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April 7, 2011
Posted by Derek
Update: link fixed!
Anthony Nicholls over at OpenEye really unburdens himself here, in a post that I recommend to anyone in the business (or anyone who wants to see what some of our problems are). Some highlights:
I have come to believe (and I admit that this is only a theory) that as more and more of pharma’s budget was funneled into advertising and direct marketing to both the general public and to doctors themselves, the path to the top in pharma ceased to be via the lab bench and instead was by way of Madison Avenue. . .
. . .I want to end with one of my favorite management insanities- the push within big pharma to remake themselves in the image of biotechs—the reasoning being that biotechs “get things done” and are more productive. Leaving aside the fact that over its history, biotech as a whole has mostly lost money (with only two years of profit in the last twenty-five), I wonder if it occurs to upper management that the principal difference between big pharma and biotech is simply much less upper management. If they are truly serious about making pharma like biotech, then upper management should simply resign. I’m confident that one step would do wonders for innovation.
There's a lot of good stuff in there, on management fads, dealing with the scientific staff, bean-counting, and more. Regular readers of this blog (and its comments section) will find a lot of their opinions reflected, for sure. . .
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March 28, 2011
Posted by Derek
A friend on the computational/structural side of the business sent along this article from Nature Reviews Drug Discovery. The authors are looking through the Thomson database at drug targets that are the subject of active research in the industry, and comparing the ones that have structural information available to the ones that don't: enzyme targets (with high-resolution structures) and and GPCRs without it. They're trying to to see if structural data is worth enough to show up in the success rates (and thus the valuations) of the resulting projects.
Overall, the Thomson database has over a thousand projects in it from these two groups, a bit over 600 from the structure-enabled enzymes and just under 500 GPCR projects. What they found was that 70% of the projects in the GPCR category were listed as "suspended" or "discontinued", but only 44% of the enzyme projects were so listed. In order to correct for probability of success across different targets, the authors picked ten targets from each group that have led, overall, to similar numbers of launched drugs. Looking at the progress of the two groups, the structure-enabled projects are again lower in the "stopped" categories, with corresponding increases in discovery and the various clinical phases.
You have to go to the supplementary info for the targets themselves, but here they are: for the enzymes, it's DPP-IV, BCR-ABL, HER2 kinase, renin, Factor Xa, HDAC, HIV integrase, JAK2, Hep C protease, and cathepsin K. For the receptor projects, the list is endothelin A receptor, P2Y12, CXCR4, angiogensin II receptor, sphingosine-1-phosphate receptor, NK1, muscarinic M1, vasopressin V2, melatonin receptor, and adenosine A2A.
Looking over these, though, I think that the situation is more complicated than the authors have presented. For example, DPP-IV has good structural information now, but that's not how people got into the area. The cyanopyrrolidine class of inhibitors, which really jump-started the field, were made by analogy to a reported class of prolyl endopeptidase inhibitors (BOMCL 1996, p. 1163). Three years later, the most well-characterized Novartis compound in the series was being studied by classic enzymology techniques, because it still wasn't possible to say just how it was binding. But even more to the point, this is a well-trodden area now. Any DPP-IV project that's going on now is piggybacking not only on structural information, but on an awful lot of known SAR and toxicology.
And look at renin. That's been a target forever, structure or not. And it's safe to say that it wasn't lack of structural information that was holding the area back, nor was it the presence of it that got a compound finally through the clinic. You can say the same things about Factor Xa. The target was validated by naturally occurring peptides, and developed in various series by classical SAR. The X-ray structure of one of the first solid drug candidates in the area (rivaroxaban) bound to its target, came after the compound had been identified and the SAR had been optimized. Factor Xa efforts going on now also are standing on the shoulders of an awful lot of work.
In the case of histone deacetylase, the first launched drug in that category (SAHA, vorinostat) has already been identified before any sort of X-ray structure was available. Overall, that target is an interesting addition to the list, since there are actually a whole series of them, some of which have structural information and some of which don't. The big difficulty in that area is that we don't really know what the various roles of the different isoforms are, and thus how the profiles of different compounds might translate to the clinic, so I wouldn't say that structural data is helping with the rate-determining steps in the field.
On the receptor side, I also wouldn't say that it's lack of structural information that's necessarily holding things back in all of those cases, either. Take muscarinic M1 - muscarinic ligands have been known for a zillion years. That encompasses fairly selective antagonists, and hardly-selective-at-all agonists, so I'm not sure which class the authors intended. If they're talking about antagonists, then there are plenty already known. And if they're talking about agonists, I doubt that even detailed structural information would help, given the size of the native ligand (acetylcholine).
And the vasopressin V2 case is similar to some of the enzyme ones, in that there's already an approved drug in this category (tolvaptan), with several others in the same structural class chasing it. Then you have the adenosine A2A field, where long lists of agonists and antagonists have been found over the years, structure or not. The problem there has been finding a clinical use for them; all sorts of indications have been chased over the years, a problem that structural information would have not helped with in the least.
Now, it's true that there are projects in these categories where structure has helped out quite a bit, and it's also true that detailed GPCR structures would be welcome (and are slowly coming along, for that matter). I'm not denying either of those. But what does strike me is that there are so many confounding variables in this particular comparison, especially among the specific targets that are the subject of the article's featured graphic, that I just don't think that its conclusions follow.
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March 21, 2011
Posted by Derek
Here's a fascinating post from Bruce Booth on the R&D numbers for Big Pharma versus everyone else. If you had to guess, how much would you put big-company spending up against all the privately-financed startups? How many Lilliputians does it take to outweigh Gulliver?
Well, it turns out that the top 20 pharma companies spend about 26 times the budget of all the venture-backed companies put together. In fact, just comparing Pfizer's R&D budget alone to the universe of privately financed companies suggests that one Pfizer equals about 1000 small biotechs, or about 2-and-a-half times the number that exist today. Sheesh.
There are a lot of other interesting numbers to be found in that post - for example, given reasonable assumptions about facility costs, Big Pharma probably spends as much on its utility bills and building maintenance to fund the entire universe of VC-backed companies today. The whole thing looks very much like a steep power-law distribution to me, and that raises the question that Booth raises himself: how much more bang for the buck are we getting from the small companies, relative to the larger ones?
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March 15, 2011
Posted by Derek
As everyone who follows the industry knows, Pfizer has spent the last twenty years just getting bigger and bigger. Not that they haven't shed people, buildings, and whole research sites - have they ever - but they've shed those resources after buying them first. And as everyone who follows the industry knows, Pfizer's own labs have, either through bad luck or something more systemic, been rather unproductive during that same period. And now Lipitor moves ever closer to its patent expiration. What to do?
Well, this post by Matthew Herper at Forbes has one analyst's answer, and it might just be what Pfizer's CEO is thinking as well. It's something new, all right: get smaller.
Bernstein Pharmaceuticals analyst Tim Anderson has a note out this morning suggesting that Pfizer could sell, spin off, or otherwise divest divisions accounting for $32 billion of its $67 billion in sales, reinventing itself as a pure pharmaceutical research firm like Eli Lilly, Bristol-Myers Squibb, or AstraZeneca.
“We recently met with Pfizer’s new CEO Ian Read, and had we not heard it firsthand, we might not have appreciated just how serious he is about potentially splitting up the company,” Anderson writes. He goes on to say that Pfizer may shrink its revenue base by 40%, leaving behind only what Read calls the “innovative core."
The more cynical among you might be saying "Where this innovative core, eh?", but hear the guy out. He's talking about ditching all of Pfizer's non-pharma assets, and cutting back to. . .discovering drugs. Combine that with the recent cutbacks in various therapeutic areas, and you have a Pfizer that's actually turning its back on the strategy of the last two decades. Bigger, as it turns out, has not been better. Who knew?
Well, a lot of people, for sure. I've been complaining about it, genius that I am, for years now, but I'm sure not alone. It's interesting to see someone at the top, though, who's willing to admit this and to act on it. If he does, though, it'll be impossible not to wonder what might have been if the company hadn't made the big round trip through all those acquisitions. The core pharma assets that they're thinking about cutting back to are the pieces and hunks of a lot of other companies, whose people and departments have been shaken and jerked around something fierce. What shape would they be in if they hadn't been Pfizerized? We'll never know.
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March 7, 2011
Posted by Derek
Note: a follow-up post to this one can be found here.
I've had a deluge of emails asking me about this article from Slate on the costs of drug research. It's based on this recent publication from Donald Light and Rebecca Warburton in the London School of Economics journal Biosocieties, and it's well worth discussing.
But let's get a few things out of the way first. The paper is a case for the prosecution, not a dispassionate analysis. The authors have a great deal of contempt for the pharmaceutical industry, and are unwilling (or unable) to keep it from seeping into their prose. I'm tempted to reply in kind, but I'm supposed to be the scientist in this discussion. We'll see how well I manage.
Another thing to mention immediately is that this paper is, in fact, not at all worthless. In between the editorializing, they make some serious points, and most of these are about the 2003 Tufts (diMasi) estimate of drug development costs. This is the widely-cited $802 million figure, and the fact that it's widely cited is what seems to infuriate the authors of this paper the most.
Here are their problems with it: the Tufts study surveyed 24 large drug companies, of which 10 agreed to participate. (In other words, this is neither a random nor a comprehensive sample). The drugs used for the study numbers were supposed to be "self-originated", but since we don't know which drugs they were, it's impossible to check this. And since the companies reported their own numbers, these would be difficult to check, even if they were made available drug-by-drug (which they aren't). Nor can anyone be sure that variations in how companies assign costs to R&D haven't skewed the data as well. We may well be looking at the most expensive drugs of the whole sample; it's impossible to say.
All of these are legitimate objections - the Tufts numbers are just not transparent. Companies are not willing to completely spread their books out for outside observers, in any industry, so any of these estimates are going to be fuzzy. Light and Warburton go on to some accounting issues, specifically the cost-of-capital estimate that took their estimated cost for a new drug from 400 million to 800 million. That topic has been debated around this blog before, and it's important to break that argument into two parts.
The first one is whether it's appropriate to consider opportunity costs at all. I still say that it is, and I don't have much patience for the "argument from unfamiliarity". If you commit to some multi-year use of your money, you really are forgoing what you could have earned with it otherwise. You're giving it up - it's a cost, whether you're used to thinking of it that way or not. But the second part of the argument is, just how much could you have earned? The problem here is that the Tufts study assumes 11% returns, which is just not anywhere near realistic. Mind you, it's on the same order of fantasy as the returns that have been assumed in the past inside many pension plans, but we're going to be dealing with that problem for years to come, too. No, the Tufts opportunity cost numbers are just too high.
Then there's the tax situation. I am, I'm very happy to say, no expert on R&D tax accounting. But it's enough to say that there's arguing room about the effects of the various special tax provisions for expenditures in this area. And it's complicated greatly by different treatment in different part of the US and the world. The Tufts study does not reduce the gross costs of R&D by tax savings, while Light and Warburton argue otherwise. Among other points, they argue that the industry is trying to have it both ways - that cost-of-capital arguments make R&D expenditures look like a long-term investment, while for tax purposes, many of these are deductible each year as more of an ordinary business expense.
Fine, then - I'm in agreement, on general principles, with Light and Warburton when they say that the Tufts study estimates are hard to check and likely too high. But here's where we part company. Not content to make this point, the authors turn around and attempt to replace one shaky number with another. The latter part of their paper, to me, is one one attempt after another to push their own estimate of drug R&D costs into a world of fantasy. Their claim is that the median R&D cost for a new drug is about $43 million. This figure is wrong.
For example, they have total clinical trial and regulatory review time dropping (taken from this reference - note that Light and diMasi, lead author of the Tufts study, are already fighting it out in the letter section). But if that's true why isn't the total time from discovery to approval going down? I've been unable to find any evidence that it is, and my own experience certainly doesn't make me think that the process is going any faster.
The authors also claim that corporate R&D risks are much lower than reported. Here they indulge in some rhetoric that makes me wonder if they understand the process at all:
Reports by industry routinely claim that companies must test 5000-10000 compounds to discover one drug that eventually comes to market. Marcia Angell (2004) points out that these figures are mythic: they could say 20,000 and it would not matter much, because the initial high-speed computer screenings consume a small per cent of R&D costs. . .
The truth is, even a screen of 20,000 compounds is tiny. And those are real, physical, compounds, not "computer screenings". It's true, though, that high-throughput screening is a small part of R&D costs. But the authors are mixing up screening and the synthesis of new compounds. We don't find our drug candidates in the screening deck - at least, not in any project I've worked on since 1989. We find leads there, and then people like me make all kinds of new structures - in flasks, dang it, not on computers - and we test those. Here, read this.
The authors go on to say:
Many products that 'fail' would be more accurately described as 'withdrawn', usually because trial results are mixed; or because a company estimates that the drug will not meet their high sales threshold for sufficient profitability. The difference between 'failure' and 'withdrawal' is important, because many observers suspect that companies withdraw or abandon therapeutically important drugs for commercial reasons. . .
Bring out some of those observers, then! And bring on the list of therapeutically important drugs that have been dropped out of the clinic just for commercial reasons. Please, give us some examples to work with here, and tell me how the disappointing data that the companies reported at the time (missed endpoints, tox problems) were fudged. Now, I have seen a compound fall out of actual production because of commercial reasons (Pfizer's Exubera), but that was partly because it didn't turn out to be as therapeutically important as the company convinced itself that it would be.
And here's another part I especially like:
Company financial risk is not only much lower than usually conveyed by the '1 in 5000' rhetoric, but companies spread their risks over a number of projects. The larger companies are, and the more they merge with or buy up other companies, the less risk they bear for any one R&D project. The corporate risk of R&D for companies like Pfizer or GlaxoSmithKinen are thus lower than for companies like Intel that have only a few innovations on which sales rely.
Well, then. That means that Pfizer, as the biggest and most-merged-up drug company in the world, must have minimized its risk more than anyone in the industry. Right? And they should be doing just fine by that? Not laying people off right and left? Not closing any huge research sites? Not wondering frantically how they're going to replace the lost revenue from Lipitor? Not telling people that they're actually ditching several therapeutic areas completely because they don't think than can compete in them, given the risks? Not announcing a stock buyback program, because they apparently (and rather shamefully) think that's a better use of their money than putting it back into more R&D? I mean, how can Intel be doing better than that? It's almost like chip design is a different sort of R&D business entirely.
Well, this post is already too long, and there's more to discuss in another one, at least. But I wanted to add one more argument from economic reality, an extension of those little questions about Pfizer. If the cost of R&D for a new drug really were $43 million, as Light and Warburton would have it, and the financial and tax advantages so great, why isn't everyone pouring money into the drug industry? Why aren't VC firms lining up to get in on this sweet deal? I mean, $43 million for a drug, you should be able to raise that pretty easily, even in this climate - and then you just stand back as the money gushes into the sky. Don't you?
Why are drug approval rates so flat (or worse?) Why all the layoffs? Why all the doom and gloom? We're apparently doing great, and we never even knew.
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February 11, 2011
Posted by Derek
There's no shortage of "What's Wrong With the Drug Industry" article these days. I wanted to call attention to another one that's just appeared in JPET. I don't agree with all of it, but it does make some important points.
If I had to give a one-line summary of its thesis, it would be "Drug discovery forgot pharmacology and lost its way". The author, Michael Williams of Northwestern (and of 35 years at Merck, Novartis, Abbott, and Cephalon) is a pharmacologist himself, and feels that the genomics era (and indeed, the whole target-driven molecular biology era) has a lot to answer for. He also thinks that people have become seduced by technology:
Rather than creating synergies by using multiple complementary
technologies to find answers to discrete questions in a focused and coherent manner, technology-driven drug discovery has become a discipline that justifies its existence by searching for questions. An example of this is the proteomics approach to target validation, where the intrinsic complexity of the protein component of a cell or tissue necessitates a reductionistic approach where experimental samples must be separated into bins to facilitate analysis with timelines for data generation that can stretch into months or years.
To those with a technology bent, new iterations on a technology, regardless of its utility, inevitably become “must haves,” with acquisition and implementation becoming ends unto themselves. . .
One place I disagree with him is in his assertion that "Implicit in the HTS/combinatorial chemistry paradigm was/is that each target was equally facile as a starting point for a drug discovery project". That hasn't been my experience at all - there's always been a lot of arguing about which targets should be taken to screening and of what kind (how many GPCRs versus enzymes versus what-have you). Williams makes his point in the context of the genomics frenzy, when it was thought that all kinds of targets would be emerging. But at least where I worked, the hope was that genomics would provide a lot of good, tractable target that we hadn't known about, rather than just a long list of orphan receptors and whatzitases. (Mind you, that list is exactly what we ended u with).
Williams then discusses the problem of whether some targets are, in the end, truly intractable. The "just one more whack at it, and we'll get there" approach sometimes works, but it does try the patience:
Drugs active at opioid receptors remain the gold standard of analgesic care and include morphine, codeine, and oxycodone. With the discovery of the mu, delta, and kappa receptor subtypes in the 1970s, it was anticipated that development of selective agonists for these receptors would result in drugs that had a reduced liability for the respiratory depression, tolerance, constipation, and addiction associated with classical opioids. Some 40 years later, despite considerable efforts in medicinal chemistry and molecular biology to refine/define the structural characteristics of receptor-selective NCEs, the ”holy grail” of side effect-free opioids appears as elusive as ever, with a multitude of compounds showing compelling preclinical data but failing to demonstrate these properties in the clinic. . .
Another of his examples in this line are the muscarinic ligands, which I know from personal experience, as a search of my name through the literature and patent databases will show. And although GPCRs are among the most valuable target classes of all, we still have to face up to some disturbing facts about them:
Thus, for both of these G protein-coupled receptor families, a major question is whether their function is so critical, nuanced, and complex as to preclude advances based on the molecular approaches currently being used that may lack the necessary heuristic relationship to the complexity/redundancies of the systems present in a more physiological or disease-related milieu. Based on progress over the past 40 years, it may well be concluded that the opioid and muscarinic receptor families represent intractable targets in the search for improved small-molecule therapeutics. But maybe the next NCE….???
At the end of the article is a table of possible approaches to get out of the preclinical swamp. Interestingly, it's noted that it was "generated at the request of one of the reviewers", who probably asked what the author proposed to do about all this. I won't reproduce it all here, but it boils down to being more rigorous about data and statistics, using the hardest, most real-world models, and giving people the time to pursue these approaches even if they're going against the crowd while doing so. I don't see any his recommendations that I disagree with, but (and this isn't his fault), I don't see any of them that I haven't seen before, either. There needs no ghost, my lord, come from the grave, to tell us this.
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February 10, 2011
Posted by Derek
If you haven't seen the "Top 200 Drugs" posters, available as PDFs from this group at the University of Arizona, then give them a look. It's good to have this information in graphical form, with chemical structures attached.
One thing that stands out as you browse through the table is the number of compounds that make you say "Hold it - that's a drug?" I think that's one of the most valuable things about the poster, actually. It's worth seeing how simple some useful compounds are (valproic acid, anyone?), or what functional groups have made it through. The next edition of the poster will surely feature Gilenya (fingolimod), whose structure baffles and offends almost every chemist at first glance.
It's a dose of humility, seeing these things. And while it's true that we get regular doses of humiliation in the research business, our pride is pretty resilient, too.
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February 8, 2011
Posted by Derek
We've talked a lot about outsourcing on this blog, since it's been one of the biggest features of life in this industry over the last few years.
It's not hard to see why. Costs. We spend too much money finding drugs (which don't always make it back even when they succeed). Anything that cuts costs more than it cuts productivity is going to be tried.
But any idea can be taken too far. Here's Boeing's current CEO, talking about the cost overruns on the 787 Dreamliner project, and how they were made worse by overzealous outsourcing:
. . .the 787's global outsourcing strategy — specifically intended to slash Boeing's costs — backfired completely.
"We spent a lot more money in trying to recover than we ever would have spent if we'd tried to keep the key technologies closer to home," Albaugh told his large audience of students and faculty.
Boeing was forced to compensate, support or buy out the partners it brought in to share the cost of the new jet's development, and now bears the brunt of additional costs due to the delays.
Read the whole article; it's extremely interesting, and especially so for those of us in the drug industry. There was a Boeing employee who specifically criticized this process some years ago, and the whole return-on-net-assets view of the business world, and the company seems (belatedly) to be giving him his due. His line about how the biggest return would come from having someone else build the plane and then slapping a tiny Boeing decal on the nose is funny, but in a painful way.
So here's the question: have companies in our industry reached this point? And if so, which ones? Reports like this one make me think that some organizations have crossed that invisible line, and will regret it. I think that "zero outsourcing" is probably a bad idea. But "way too much outsourcing" could be worse. . .
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February 4, 2011
Posted by Derek
Here's an interesting contrast after all the Pfizer discussion here over the last few days. Merck's CEO, Ken Frazier, has actually pulled the firm's earnings-per-share guidance, saying that the recent trouble with vorapaxar and regulatory concerns in general make it impossible to say for certain what EPS growth will be. He also says that he'd rather have a freer hand to pay for both sales and research, in the interest of long-term growth.
Not everyone's buying it:
Analysts on Merck’s conference call were skeptical about the reasoning behind the guidance change. Catherine Arnold of Credit Suisse, who called the change “befuddling” in her note to investors, told Frazier that investors expected Merck to “share the pain” of shareholders and noted that vorapaxar, launching in 2012, should have been a “drag on earnings, not a positive.” Frazier replied that Merck’s cost-cutting efforts were ahead of schedule, but that he was faced with a decision to either withdraw guidance or commit to cutting projects that could make money in the future. He also argued that because Merck’s sales reps already visit cardiologists to sell heart drugs, selling vorapaxar, too, would not cost much more.
Well, if he's sincere in this, I have to salute the guy. I don't think that the Schering-Plough merger was a good thing, and Merck has certainly laid off people and disrupted a lot of things because of it. But if they're not going to pull a Pfizer - which I will define for now as "Keep cutting to make the numbers, and when you can't do that any more, then go out and buy someone else who has things to sell and then cut them" - then good for Merck. This topic came up explicitly during the earnings conference call:
Jami Rubin - Goldman Sachs Group Inc.: More of a strategic question. Just given the setback that you've faced with vorapaxar, I'm just wondering if you can provide us with your view of the research model going forward? I mean, might it make sense for some of these the very large, very expensive, very risky outcomes trial such as vorapaxar, how do you buffer these trials? I mean, might it have made sense to isolate some of these subgroups before pursuing a large trial, and I know that it's obviously what's happening with anacetrapib. Maybe if you could talk just in terms of how you see the R&D spend going forward. Also, it's interesting that yesterday or the day before Pfizer announced a significant cut to its R&D. And I'm just wondering if you can talk about your R&D spend going forward, and if you see opportunities to really rethink that budget and to improve the R&D output. . .
Kenneth Frazier You asked some very typical questions in that set of questions. Let me start with vorapaxar. So I assume that what you're essentially asking is in hindsight, could we have done two separate trials. One in the ACF population, one with essentially the prevention population. I can't comment on the trial design. It was so long ago, but what I can say is that as we, as a committee with Peter and Adam and Peter Kellogg and myself, what we do regularly in the company is try to assess all the programs that we're relying on. We try to look at them from a science and technical and medical standpoint. We also try to look at them from a commercial standpoint. So we try to engage each program one by one, in addition to having the kinds of tough metrics we have in place around ROI and value creation in the pipeline. What I would also say is that we recognize that our strategy comes with it a certain amount of complexity, lengthiness and unpredictability because we are seeking innovative medically important therapies. And with vorapaxar, we know the risk of trying new mechanisms and approaches. I still continue to have optimism because the DSMB continued in 2P, we will see what the data shows. If the data shows a benefit to that population, this could still be a very important drug going forward.
On the Pfizer question, obviously, I can't comment on anyone else's view of their particular pipeline or the investment requirements that they face at this time. But I will tell you that we are mindful of the need to drive productivity, greater productivity in our R&D program. Peter Kim and his colleagues understands that we are focused on it. We are trying to take cost out. We're trying to increase the probability of success as we go forward. But as a company, I think we are saying that we are committed to innovation as a strategy, and we believe that over the long term it will pay off. And if you'll indulge me one minute, last week I attended the funeral of John Horan, who was the CEO of Merck a number of years ago before Roy Vagelos. One of the things he was proud us of was that he kept the focus on research during a fallow period for Merck Research in the 70s, and that's exactly what led to a state of innovation that has made the modern-day Merck. So I am not blind to what investors want us to do. They want us to invest in prudent ways and ways that actually drive ROI and productivity. But we, as a company, believe that the only sustainable strategy in the health care environment that we're in is real innovation that makes the difference to patients and payers. . .
As I said above, I can disagree with some of the ways that Merck is trying to run its R&D business, not that they're asking for advice from me. But it at least appears as if their heart - and their head - might be in the right place. Or they at least want to make it appear as if they're in the right place. And that they're willing to tick off some Wall St. analysts in order to be seen to be doing that. Which should count for something - you'd think.
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February 1, 2011
Posted by Derek
I've been meaning to comment on the NIH's new venture into drug discovery, the National Center for Advancing Translational Sciences. Curious Wavefunction already has some thoughts here, and I share his concerns. We're both worried about the gene-o-centric views of Francis Collins, for example:
Creating the center is a signature effort of Dr. Collins, who once directed the agency’s Human Genome Project. Dr. Collins has been predicting for years that gene sequencing will lead to a vast array of new treatments, but years of effort and tens of billions of dollars in financing by drug makers in gene-related research has largely been a bust.
As a result, industry has become far less willing to follow the latest genetic advances with expensive clinical trials. Rather than wait longer, Dr. Collins has decided that the government can start the work itself.
“I am a little frustrated to see how many of the discoveries that do look as though they have therapeutic implications are waiting for the pharmaceutical industry to follow through with them,” he said.
Odd how the loss of tens of billions of dollars - and vast heaps of opportunity cost along the way - will make people reluctant to keep going. And where does this new center want to focus in particular? The black box that is the central nervous system:
Both the need for and the risks of this strategy are clear in mental health. There have been only two major drug discoveries in the field in the past century; lithium for the treatment of bipolar disorder in 1949 and Thorazine for the treatment of psychosis in 1950.
Both discoveries were utter strokes of luck, and almost every major psychiatric drug introduced since has resulted from small changes to Thorazine. Scientists still do not know why any of these drugs actually work, and hundreds of genes have been shown to play roles in mental illness — far too many for focused efforts. So many drug makers have dropped out of the field.
So if there are far too many genes for focused efforts (a sentiment with which I agree), what, exactly, is this new work going to focus on? Wavefunction, for his part, suggests not spending so much time on the genetic side of things and working, for example, on one specific problem, such as Why Does Lithium Work for Depression? Figuring that out in detail would have to tell us a lot about the brain along the way, and boy, is there a lot to learn.
Meanwhile, Pharmalot links to a statement from the industry trade group (PhRMA) which is remarkably vapid. It boils down to "research heap good", while beating the drum a bit for the industry's own efforts. And as an industrial researcher myself, it would be easy for me to continue heaping scorn on the whole NIH-does-drug-discovery idea.
But I actually wish them well. There really are a tremendous number of important things that we don't know about this business, and the more people working on them, the better. You'd think. What worries me, though, is that I can't help but believe that a good amount of the work that's going to be done at this new center will be misapplied. I'm really not so sure that the gene-to-disease-target paradigm just needs more time and money thrown at it, for example. And although there will be some ex-industry people around, the details of drug discovery are still likely to come as a shock to the more academically oriented people.
Put simply, the sorts of discoveries and project that make stellar academic careers, that get into Science and Nature and all the rest of them, are still nowhere near what you need to make an actual drug. It's an odd combination of inventiveness and sheer grunt work, and not everyone's ready for it. One likely result is that some people will just avoid the stuff as much as possible and spend their time and money doing something else that pleases them more.
What do I think that they should be doing, then? One possibility is the Pick One Big Problem option that Wavefunction suggests. What I'd recommend would also go against the genetic tracery stuff: I'd put money into developing new phenotypic assays in cells, tissues, and whole animals. Instead of chasing into finer and finer biochemical details in search of individual targets, I'd try to make the most realistic testbeds of disease states possible, and let the screening rip on that. Targets can be chased down once something works.
But it doesn't sound like that's what's going to happen. So, reluctantly, I'll make a prediction: if years of effort and billions of dollars thrown after genetic target-based drug discovery hasn't worked out, when done by people strongly motivated to make money off their work, then an NIH center focused on the same stuff will, in all likelihood, add very little more. It's not like they won't stay busy. That sort of work can soak up all the time and money that you can throw at it. And it will.
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January 31, 2011
Posted by Derek
A query from a reader prompts me to ask this question, in preparation for a rather long post in the new future. What do you think is the most worthwhile new pharmaceutical brought to market since 1990? That's an arbitrary cutoff, but twenty years is a reasonable sample size. And I'll let everyone define "worthwhile" as they see fit - improvement over existing drugs, opening new therapeutic areas, cost-effectiveness, what have you. Just be sure to make your case, briefly, when you nominate a candidate. Let's see, first off, if it's a topic that can be agreed on at all.
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January 5, 2011
Posted by Derek
Here's a business idea for a nonprofit drug company, sent along by reader and entrepreneur Matt Grosso. I don't necessarily think that it would work (see below), but it's worth talking about, since some of its features are worthwhile. Others, though, illustrate what may be some common misperceptions of how drug development works. Here's the key feature:
The idea here is to create a non-profit which would accept contributions for testing and bringing to market specific drugs. . .Members would vote with their contribution dollars for specific drugs. Paid staff would curate a wiki that supported periodic comparisons between various candidates approaching readiness for a specific market, which would ensure that that member votes had the benefit of the best available information and expert opinion.
This could create an alternate route for drug startups focused on particular compounds to get their product to market.
I think that the ability to specifically take in contributions is a good one - people and organizations are more likely to fund defined aims that they agree with. One big problem, though, is that there's a limit to which we can define such things in this business. And that might make the whole idea break down.
To be honest, if a nonprofit really took in contributions for the development of specific drugs, they'd run a great risk of disappointing and enraging their donation base. That's because the honking huge majority of specific drugs in development never make it. The success rates in the clinic are pretty well known: roughly 90% of everything that goes into clinical trials never makes it to market. That's a hard sell for contributors! And if you moved the point at which you asked for donations back into the preclinical stage, the situation would get much, much worse. At the "Hey, we just thought of a neat new target" step, you'd be offering your contributors worse odds and payoffs than they could get in the state lottery.
For new compounds and new modes of action, the risks decrease in roughly the following order. At the same time, the time it takes to get an answer increases in the roughly the same way:
1. Specific single compound with a defined mechanism. Hold your breath, and good luck!
2. Defined chemical class of compounds targeting the same mechanism. Now you've got some fallback, although it might not be enough to help in case of trouble.
3. Specific mechanism, with several chemical series. This gives you several shots, although if your mechanism of action is off, all will still be in vain.
4. Phenotypic readout with a range of compounds (that is, they seem to do the right thing, but you're not sure how). Risk varies according to how realistic your assays are, and how many different compounds you've picked up.
5. Targeting a broad class of related mechanisms - for example, "reduce LDL", "disrupt bacterial membranes", "interrupt inflammatory cascade". Note that we're now getting farther and farther away from individual compounds.
6. Targeting one specific therapeutic area: antivirals, Alzheimer's, osteoporosis, etc.
7. Trying to balance things out with several therapeutic areas, with projects in each one at varying levels of risk.
Note that we've also illustrated the progression from "wing and a prayer startup" to "fully integrated drug company". That follows exactly from the levels of risk involved, which correlates with the amount of money on the table as well, in exactly the way the ranking of poker hands correlates with how likely they are to occur. Note also that even in that final stage, we apparently still have not mitigated the risks enough, given our cost structure. (Look at the state of the industry).
To get back to the nonprofit idea, another thing that might work out less well in practice than it does in principle might be that wiki for the potential investors/donors. This is what companies try to do internally: comparing their programs by the same criteria, head to head, then determining how to resource them. 'Taint easy. I don't know of any organization that truly thinks that they do as well at this as they should. Even a bunch of perfectly clear-headed and honest assessments (which, by the way, cannot be universally assumed) are still complicated by unquantifiable risks. I think that people might be alarmed by the number of times you just have to push things ahead to see what's going to happen.
Even after all these qualifications, though, I think that there's merit in the idea of breaking out individual drug development programs. I've long kicked around the idea of whether a company could fund programs by essentially selling shares in its various clinical candidates, with a cut of the profits coming if things work out. It would be an accounting mess, and everyone would have to keep those failure rates in mind, but there are still people who'd be willing to take a crack at it, for a given level of possible return. Those donors/investors might even be less put out than the charitable/nonprofit ones - everyone's had investments go bad, but no one wants to feel like their charitable donation was wasted. Thoughts?
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January 3, 2011
Posted by Derek
So, let's get things underway around here: 2010 was, as has been the rule, Not A Good Year for the drug industry. But overall, I think it did break the pattern that had been going since about 2006, of each year being worse than the one before. That's just an impression, mind you, but perhaps some sort of bottom has been reached?
We'll find out. My guess is that 2011 will end up looking more like the prelude to 2012. We have a number of patent expirations coming up (with Lipitor, late this year, as the marquee event), but they'll probably affect next year's earning's more than this year. (Note that if you're a research-driven drug company, these things are bad news, but if you're a generic company (or a drug store chain), the picture is much rosier.
Predictions for this year can be entered in the comments section. Which company looks to have the best time of it, and which the worst?
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December 13, 2010
Posted by Derek
Talking about Pfizer's stock price the other day let several people to note in the comments that it's not just PFE stock that's had a bad ten years: a lot of other big drug companies have, too, including some (like Lilly) that have very much declined to grow by merging. And it's true, as this chart will show.
This is a sampling of some big US-based pharma companies that have been around during the whole ten-year span. Note that J&J is actually ahead of the index (in red), and it and Abbott are the only two that can claim that distinction. (They're also the only two on the list with a significant medical devices/diagnostics presence - coincidence?)
The pure drug plays have all been pretty rough. Merck, Bristol-Myers Squibb, and Lilly are right down there with Pfizer. What I was trying to get across the other day, though, was not that Pfizer had been awful relative to its peers, but that it's been just as bad. All that merger activity, all that turmoil, has come down to this: same lousy performance as the other big companies. What, from an investing standpoint, has it done for anyone?
Now (as was also pointed out in the comments last week), these charts neglect reinvested dividends, but an S&P index fund's performance would also show some effect from that, too (although not as large as for some individual stocks, for sure). Another big point: we'll never be able to run the control experiment of dialing back the time machine and letting Pharmacia/Upjohn, Warner-Lambert, and Wyeth all stay un-Pfizered. (Not to mention what Pfizer might be were it to have remained un-super-sized). There are too many variables. All we can say is that there's no evidence that any of the big boardroom-level strategies have been superior to any other.
But given the way drug discovery has been going the last ten or fifteen years, it's hard to see anything making such charts look good, mergers or no mergers. That brings up a causality problem, too - it's important to remember that while mergers don't seem to have been doing any favors for drug research, the existing problems of drug research are what have led to many mergers. What was it that David Foster Wallace once said - that the definition of a harmful addiction is something that presents itself as the cure for the problems it's causing?
Update: in case you're wondering if this is just an effect of starting ten years ago (when the market was much livelier), you can use that Google Finance link to move the starting point back. From what I can see, you have to go back to 1994 or 1995 to find a point at which most of the drug stocks would have outperformed the S&P 500 (and as that last-ten-year chart shows, all of that happens early). Merck lags for a long time, and Bristol-Myers Squibb and Lilly still aren't above the line even if you start in the mid-1980s.
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December 10, 2010
Posted by Derek
It's taken a while, but have Pfizer's long-suffering investors finally had enough? FiercePharma has a roundup of stories that suggest that some of the institutions are upset over the abrupt departure of Jeffrey Kindler this past weekend. The quote that leaps out is one from an unnamed hedge fund manager who calls the current board "value destroyers".
Who'd disagree? But who would think that it would take this long for such people to realize the value that's been shredded over the years by Pfizer's acquire-acquire-acquire strategy? Here's ten years of Pfizer versus the S&P500. Up until 2004, with a couple of brief excursions, Pfizer stock basically tracks the index. After that, it lags badly. Over a decade of hard work on Wall Street, analyzing Pfizer's prospects, peering into their books, assessing their portfolio, weighing the chances for each drug, the ramifications of each acquisition: in vain. All in vain, because you'd have done far, far better with the money by parking it in an index fund and walking away to do something more meaningful with your time. Not that you wouldn't have lost money doing that; the S&P 500, damn it all, is down over a ten-year span. But you'd have lost a lot more if you'd listened to Pfizer's press releases or anyone who recommended that you buy their stock.
I've been complaining here about Pfizer's strategy since at least 2003, but it's not like I'm happy about being right. So many people have had their lives disrupted by Pfizer's acquisitions, and there's been so little return on all of it that it's hard to feel good about anything associated with the company's recent history.
And now that all these gigantic deals have been done, the employees have been jerked around, and the facilities closed, what are these big investors proposing to do about it? An angry committee has been formed to discuss strategic barn-door-closing initiatives, but the horses are over the horizon.
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November 30, 2010
Posted by Derek
Andrew Witty of GSK has a one-page essay in The Economist on the problems of the drug industry. None of the background he gives will be news to anyone who reads this site, as you'd imagine - lower rates of success in discovery, higher costs, patent expirations, etc.
Here's his take on research and development:
. . .it is clear that the size of the industry will continue to contract in the drive for efficiency. For some players, more mergers and acquisitions are likely, but others will plan to shrink, and all parts of the value chain from R&D through to production and sales and marketing will be affected. . .
. . .In the past the problem of R&D in big pharmaceutical companies has been “fixed” by spending more and by using scale to “industrialise” the research process. These are no longer solutions: shareholders are not prepared to see more money invested in R&D without tangible success. If anything, based on a rational allocation of capital, R&D should now be consuming less resource.
Yikes. I'm not sure where that last sentence comes from, to be honest with you. Does Witty think that we now know so much about what we're doing that it shouldn't cost so much for us to do it? Or that it shouldn't cost so much to comply with the regulatory authorities, for some reason? I'm a bit baffled, and if someone can explain that "rational allocation" that he speaks of, I'd be grateful.
And I'd like to say that the rest of the piece advances some useful ideas, but I can't do that with a straight face. (To be fair, if Andrew Witty has some great ideas for making GSK more productive, he's most certainly not going to lay them out for everyone in The Economist). So it's all innovative business models, dynamic partnerships, recapturing creative talent in the drug labs, and so on. That last line will no doubt inspire a lot of bitter comment, considering what things have been like at GSK in the last few years.
His main pitch seems to be that drug companies need a "fair reward for innovation", and that's one of those things that's hard to disagree with on the surface. But unpacking it, that's the tough part, because everyone involved will start disagreeing on what's innovative, what might constitute a reward, and (especially) what's fair. Witty has been giving speeches on this for a while now, and I'd say that this latest article is just the condensed version.
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November 23, 2010
Posted by Derek
We talked a little while back here about "Lean Six Sigma" as applied to drug discovery organizations, and I notice that the AstraZeneca team is back with another paper on the subject. This one, also from Drug Discovery Today, at least doesn't have eleventeen co-authors. It also addresses the possibility that not everyone in the research labs might welcome the prospect of a business-theory-led revolution in the way that they work, and discusses potential pitfalls.
But I'm not going to discuss them here, at least not today. Because this reminds me of the post last week about the Novartis "Lab of the Future" project, and of plenty of other initiatives, proposals, alliances, projects, and ideas that are floating around this industry. Here's what they have in common: they're all distractions.
Look, no one can deny that this industry has some real problems. We're still making money, to be sure, but the future of our business model is very much in doubt. And those doubts come from both ends of the business - we're not sure that we're going to be able to get the prices that we've been counting on once we have something to sell, and we're not sure that we're going to have enough things to sell in the first place. (There, that summarized about two hundred op-ed pieces, some of them mine, in one sentence. Good thing that I'm not paid by the word for this blog.) These problems are quite real - we're not hallucinating here - and we're going to have to deal with them one way or another. Or they're going to deal with us, but good.
I just don't think that tweaking the way that we do things will be enough. We're not going to do it by laying out the labs differently, or putting different slogans up on the walls, or trying schemes that promise to make the chemists 7.03% more productive or reduce downtime in the screening group by 0.65 assays/month. This is usually where people trot out that line about rearranging deck chairs on the Titanic, but the difference is, we don't have to sink. The longer things go on, though, the more I worry that incremental improvements aren't going to bail us out.
This is a bit of a reversal for me. I've said for several years that the low success rates in the industry mean that we don't necessarily have to make some huge advance. After all, if we made it up to just 80% failure in the clinic, that would double the number of drugs reaching the market. That's still true - but the problem is, I don't see any signs of that happening. If success rates are improving anywhere, up and down the whole process from target selection to Phase III, it's sure not obvious from the data we have.
What worries me is that the time spent on less disruptive (but more bearable) solutions may be taking away from the time that needs to be spent on the bigger changes. I mean, honestly, raise your hands: who out there thinks that "Lean Six Sigma" is the answer to the drug industry's woes? Right. Not even all the consultants selling this stuff could get that one out with a straight face. "But it'll help!" comes the cry, "and it's better than doing nothing!". Well, in the short term, that may be true, although I'm not sure if there is a "short term" with some of these things. If it gives managers and investors the illusion that things are really being fixed, though, and if it takes mental and physical resources away from fixing them, then it's actually harmful.
What would it take to really fix things? Everyone knows - really, everyone does. Some combination of progress on the following questions would do just fine:
1. A clear-eyed look at target-based drug design, by which I mean, whether we should be doing it at all. More and more, I worry that it's been a terrible detour for the whole project of pharmaceutical research. There have been successes, of course, but man, look at the failures. And the number of tractable targets (never high) is lower than ever, as far as I can tell. If we're going to do it, though, we need. . .
2. The ability to work on harder target classes. The good ol' GPCRs and the easy-to-inhibit enzyme classes are still out there, and still have life in them, but the good ideas are getting thinner. But there are plenty of tougher mechanisms (chief among them protein-protein interactions) that have a lot of ideas running around looking for believable chemical matter. Making some across-the-board progress in those areas would be a huge help, but it would avail us not without. . .
3. Better selection of targets. Too many compounds fail in the clinic because of efficacy, which means that we didn't know enough about the biology going in. Most of our models of disease have severe limitations, and in many cases, we don't even know what some of those limitations are until we step into them. Maybe we can't know enough in many cases, so we need. . .
4. More meaningful clinical trials. And by that I mean, "for a given cost", because these multi-thousand-people multi-year things, which you need for areas like cardiovascular, Alzheimer's, osteoporosis, and so on, are killing us. We've got a terrible combination of huge potential markets in areas where we hardly know what we're doing. And that leads to gigantic, expensive failures. Could they somehow be less expensive? One way would be. . .
5. A better - and that means earlier - handle on human tox. I don't know how to do this one, either, but there are billions of dollars waiting for you if you can. Efficacy is the big killer in the late clinic these days, but that and toxicity put together account for a solid majority of the failures all the way through. (The rest are things like "Oops, maybe we should sell this program off" kinds of decisions).
There are plenty of others, but I think that improvements in those would fix things up just fine. Don't you? And maybe I'm just slow-witted, but I can't see how changing the way the desks face, or swapping out all the business cards for new titles, or realigning the therapeutic area teams - again - are going to accomplish any of it. At best, these things will make the current process run a bit better, which might buy us some more time before we have to confront the big stuff anyway. At worst, they'll accomplish nothing at all, but just give the illusion that something's being done.
To be fair, there are some initiatives around the industry that address these (and the other) huge problems. As I said, it's not like no one knows what they are. And to be fair, these really are difficult things to fix. Saying that you want to get a better early read on human tox in the clinic, the way I just did so blithely, is easy - actually doing something about it, or even finding a good place to start doing something about it, is brutally hard. But it's not going to be as brutal as what's been happening to us the last few years, or what's we're headed for if we don't get cracking.
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November 18, 2010
Posted by Derek
The FDA has approved Eisai's Halaven (eribulin) for late-stage breast cancer. As far as I can tell, this is now the most synthetically complex non-peptide drug ever marketed. Some news stories on it are saying that it's from a marine sponge, but that was just the beginning. This structure has to be made from the ground up; there's no way you're going to get enough material from marine sponges to market a drug.
If anyone has another candidate, please note it in the comments - but I'll be surprised if there's anything that can surpass this one. There have been long syntheses in the industry before, of course, although we do everything we can to avoid them. Back when hydrocortisone was first marketed by Merck, it had a brutal synthetic path for its time. (That's where a famous story about Max Tishler came from - one of the intermediates was a brightly colored dinitrophenylhydrazone. Tishler, it's said, came into the labs one day, saw some of the red solution spilled on the floor, and growled "That better be blood") And Roche's Fuzeon is a very complicated synthesis indeed, but much of that is repetitive (and automated) peptide coupling. It took a lot of work to get right, but I'd still give the nod to eribulin. Can anyone beat it?
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November 11, 2010
Posted by Derek
From reader Jose, in the comments thread to the most recent post:
"Published I find it ironic that so many pharma sites who hired hotshot architects to design labspaces that foster as much personal interaction as possible, are now pumping the virtues of collaborations across 10 time zones."
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November 9, 2010
Posted by Derek
The same paper I was summarizing the other day has some interesting data on the 1998-2007 drug approvals, broken down by country and region of origin. The first thing to note is that the distribution by country tracks, quite closely, the corresponding share of the worldwide drug market. The US discovered nearly half the drugs approved during that period, and accounts for roughly that amount of the market, for example. But there are two big exceptions: the UK and Switzerland, which both outperform for their size.
In case you're wondering, the league tables look like this: the US leads in the discovery of approved drugs, by a wide margin (118 out of the 252 drugs). Then Japan, the UK and Germany are about equal, in the low 20s each. Switzerland is in next at 13, France at 12, and then the rest of Europe put together adds up to 29. Canada and Australia put together add up to nearly 7, and the entire rest of the world (including China and India) is about 6.5, with most of that being Israel.
But while the US may be producing the number of drugs you'd expect, a closer look shows that it's still a real outlier in several respects. The biggest one, to my mind, comes when you use that criterion for innovative structures or mechanisms versus extensions of what's already been worked on, as mentioned in the last post. Looking at it that way, almost all the major drug-discovering countries in the world were tilted towards less innovative medicines. The only exceptions are Switzerland, Canada and Australia, and (very much so) the US. The UK comes close, running nearly 50/50. Germany and Japan, though, especially stand out as the kings of follow-ons and me-toos, and the combined rest-of-Europe category is nearly as unbalanced.
What about that unmet-medical-need categorization? Looking at which drugs were submitted here in the US for priority review by the FDA (the proxy used across this whole analysis), again, the US-based drugs are outliers, with more priority reviews than not. Only in the smaller contributions from Australia and Canada do you see that, although Switzerland is nearly even. But in both these breakdowns (structure/mechanism and medical need) it's the biotech companies that appear to have taken the lead.
And here's the last outlier that appears to tie all these together: in almost every country that discovered new drugs during that ten-year period, the great majority came from pharma companies. The only exception is the US: 60% of our drugs have the fingerprints of biotech companies on them, either alone or from university-derived drug candidates. In very few other countries do biotech-derived drugs make much of a showing at all.
These trends show up in sales as well. Only in the US, UK, Switzerland, and Australia did the per-year-sales of novel therapies exceed the sales of the follow-ons. Germany and Japan tend to discover drugs with higher sales than average, but (as mentioned above) these are almost entirely followers of some sort.
Taken together, it appears that the US biotech industry has been the main driver of innovative drugs over the past ten years. I don't want to belittle the follow-on compounds, because they are useful. (As pointed out here before, it's hard for one of those compounds to be successful unless it really represents some sort of improvement over what's already available). At the same time, though, we can't run the whole industry by making better and better versions of what we already know.
And the contributions of universities - especially those in the US - has been strong, too. While university-derived drugs are a minority, they tend to be more innovative, probably because of their origins in basic research. There's no academic magic involved: very few, if any, universities try deliberately to run a profitable drug-discovery business - and if any start to, I confidently predict that we'll see more follow-on drugs from them as well.
Discussing the reasons for all this is another post in itself. But whatever you might think about the idea of American exceptionalism, it's alive in drug discovery.
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November 4, 2010
Posted by Derek
We can now answer the question: "Where do new drugs come from?". Well, we can answer it for the period from 1998 on, at any rate. A new paper in Nature Reviews Drug Discovery takes on all 252 drugs approved by the FDA from then through 2007, and traces each of them back to their origins. What's more, each drug is evaluated by how much unmet medical need it was addressed to and how scientifically innovative it was. Clearly, there's going to be room for some argument in any study of this sort, but I'm very glad to have it, nonetheless. Credit where credit's due: who's been discovering the most drugs, and who's been discovering the best ones?
First, the raw numbers. In the 1997-2005 period, the 252 drugs break down as follows. Note that some drugs have been split up, with partial credit being assigned to more than one category. Overall, we have:
58% from pharmaceutical companies.
18% from biotech companies..
16% from universities, transferred to biotech.
8% from universities, transferred to pharma.
That sounds about right to me. And finally, I have some hard numbers to point to when I next run into someone who tries to tell me that all drugs are found with NIH grants, and that drug companies hardly do any research. (I know that this sounds like the most ridiculous strawman, but believe me, there are people - who regard themselves as intelligent and informed - who believe this passionately, in nearly those exact words). But fear not, this isn't going to be a relentless pharma-is-great post, because it's certainly not a pharma-is-great paper. Read on. . .
Now to the qualitative rankings. The author used FDA priority reviews as a proxy for unmet medical need, but the scientific innovation rating was done basically by hand, evaluating both a drug's mechanism of action and how much its structure differed from what had come before. Just under half (123) of the drugs during this period were in for priority review, and of those, we have:
46% from pharmaceutical companies.
30% from biotech companies.
23% from universities (transferred to either biotech or pharma).
That shows the biotech- and university-derived drugs outperforming when you look at things this way, which again seems about right to me. Note that this means that the majority of biotech submissions are priority reviews, and the majority of pharma drugs aren't. And now to innovation - 118 of the drugs during this period were considered to have scientific novelty (46%), and of those:
44% were from pharmaceutical companies.
25% were from biotech companies, and
31% were from universities (transferred to either biotech or pharma).
The university-derived drugs clearly outperform in this category. What this also means is that 65% of the pharma-derived drugs get classed as "not innovative", and that's worth another post all its own. Now, not all the university-derived drugs showed up as novel, either - but when you look closer, it turns out that the majority of the novel stuff from universities gets taken up by biotech companies rather than by pharma.
So why does this happen? This paper doesn't put it one word, but I will: money. It turns out that the novel therapies are disproportionately orphan drugs (which makes sense), and although there are a few orphan-drug blockbusters, most of them have lower sales. And indeed, the university-to-pharma drugs tend to have much higher sales than the university-to-biotech ones. The bigger drug companies are (as you'd expect) evaluating compounds on the basis of their commercial potential, which means what they can add to their existing portfolio. On the other hand, if you have no portfolio (or have only a small one) than any commercial prospect is worth a look. One hundred million dollars a year in revenue would be welcome news for a small company's first drug to market, whereas Pfizer wouldn't even notice it.
So (in my opinion) it's not that the big companies are averse to novel therapies. You can see them taking whacks at new mechanisms and unmet needs, but they tend to do it in the large-market indications - which I think may well be more likely to fail. That's due to two effects: if there are existing therapies in a therapeutic area, they probably represent the low-hanging fruit, biologically speaking, making later approaches harder (and giving them a higher bar to clear. And if there's no decent therapy at all in some big field, that probably means that none of the obvious approaches have worked at all, and that it's just a flat-out hard place to make progress. In the first category, I'm thinking of HDL-raising ideas in cardiovascular and PPAR alpha-gamma ligands for diabetes. In the second, there are CB1 antagonists for obesity and gamma-secretase inhibitors in Alzheimer's (and there are plenty more examples in each class). These would all have done new things in big markets, and they've all gone down in expensive flames. Small companies have certainly taken their cuts at these things, too, but they're disproportionately represented in smaller indications.
There's more interesting stuff in this paper, particularly on what regions of the world produce drugs and why. I'll blog about again, but this is plenty to discuss for now. The take-home so far? The great majority of drugs come from industry, but the industry is not homogeneous. Different companies are looking for different things, and the smaller ones are, other things being equal, more likely to push the envelope. More to come. . .
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+ TrackBacks (0) | Category: Academia (vs. Industry) | Business and Markets | Drug Development | Drug Industry History | Who Discovers and Why
October 13, 2010
Posted by Derek
In response to a reader query in the comments to yesterday's post on scenic research sites, I guess we should explore the other end of the scale. Nominations for the ugliest/most depressing research site are now open. This is physical surroundings, folks, not mental atmosphere, not that that can't get oppressive at times. We're looking for things that can be captured by a camera. There can be a connections, though - as Kingsley Amis put it ("Aberdarcy, Main Square"):
The journal of some bunch of architects
Named this the worst town center they could find
But how disparage what so well reflects
Permanent tendencies of heart and mind?
Looking back, Schering-Plough's old Bloomfield site was not exactly a sweeping vista of loveliness, but (to be fair) it did look better than some of the rest of the neighborhood, and the Home Depot and parking lot that replaced it during the 1990s have probably never made anyone's heart leap, either. Sticking with the N. New Jersey sites, some of which are going to be strong contenders in this category, it's unlikely that either Merck's buildings in Rahway or Roche's in Nutley have inspired much lyric poetry. Other nominations?
Note: in the spirit of that Amis reference, those who find themselves affected by nasty industrial landscapes might want to cheer along with John Betjeman's "Slough".
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October 12, 2010
Posted by Derek
I'm sitting in my conference, listening to a guy from Emerald Biostructures, the former deCODE. They're in a site out on Bainbridge Island near Seattle - I've talked with several people from out there, and they all talk about riding the ferry out in the morning, etc. Now, Cambridge is OK, but it ain't Bainbridge Island as far as scenery goes. (However, as someone who used to life and work in northern NJ, I have to be happy with what I have!)
So here's my question: what's the most scenic, envy-inducing location for a biopharma research site? For these purposes, we'll rank by natural beauty - if there's some biotech that's leasing the top floors of the Chrysler Building, and I sure don't think that there is, we'll take them up as a separate category. Nominations?
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Posted by Derek
One of the speakers here yesterday recommended Walter Sneader's Drug Discovery: A History , which I haven't read. It looks good, though, for a look back on how we got here. He also showed some drug structure "family trees" from Sneader's earlier book, Drug Prototypes and Their Exploitation . I haven't seen a copy of that one in quite a while, and no wonder: the only copy shown on Amazon is used, for $500. Sheesh.
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+ TrackBacks (0) | Category: Book Recommendations | Drug Industry History
October 11, 2010
Posted by Derek
So I believe that they're moving into the new chemistry building at Princeton, which is a mighty glass whopper. In light of some of the past discussions we've had around here about lab design, I'd be interested in hearing from anyone with personal experience of the building. I can't really get a good sense of the layout from the pictures I've seen, just that there sure seem to be a lot of glass walls. And those aren't necessarily bad; it's the way the labs are put together and their relationship the desks and offices.
Interestingly, much of the money for its construction seems to have come from the university's royalties on Alimta (pemetrexed), a folate anticancer drug discovered by Ted Taylor's group there in the early 1990s and developed by Lilly. (Taylor, a heterocyclic chemistry legend, worked on antifolates for many, many years, and contributed a huge amount to the field).
Here's more on the building, and here are some photos, and here are some architectural renderings, for what those are worth. Any comments from folks on the ground?
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September 24, 2010
Posted by Derek
I came across this book the other day, and bought it on sight: Happy Accidents: Serendipity in Modern Medical Breakthroughs . From what I've read of it so far, it's a fine one-stop-reference for all sorts of medical discoveries where fortune favored the prepared mind (as Pasteur put it). There are drug discovery tales, surgical procedures, medical devices, and more.
Even the stories I thought I knew well turn out to have more details. Albert Hoffman's famous discovery of LSD, for example - what I hadn't known was that some of his colleagues didn't believe him when he said he'd taken only 0.25mg of a compound and hallucinated violently for hours. (From what we now know, that was actually a heck of a dose!) So Ernst Rothlin, Sandoz's head of pharmacology, and two others tried it themselves. "Rothlin believed it then", Hoffman noted. Those days will never come again!
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Posted by Derek
So now Avandia (rosiglitazone) looks to be withdrawn from the market in Europe, and heavily restricted here in the US. This isn't much of a surprise, given all the cardiovascular worries about it in recent years, but hindsight. Oh, hindsight: all that time and effort put into PPAR ligands, back when rosi- and pioglitazone were still in development or in their first few years on the market. Everyone who worked on metabolic diseases took a swing at this area, it seems - I spent a few years on it myself.
And to what end? Only a few drugs in this class have ever made it to market, and all of them were developed before we even knew they they hit the PPAR receptors at all. The only two that are left are Actos (pioglitazone) and fenofibrate, which is a PPAR-alpha compound for lack of any other place to put it. Everything else: a sunk cost.
Allow me to rant for a bit, because I saw yet another argument the other day that the big drug companies don't do any research, no, it's all done at universities with public funds, at which point Big Pharma just swoops in and makes off with the swag. You know the stuff. Well, I would absolutely love to have the people who hold that view explain the PPAR story to me. I really would. The drug industry poured a huge amount of time and money into both basic and applied research in that area, and they did it for years. No one has to take my word for it - ask any of the academic leaders in the field if GSK or Merck, to name just two companies, managed to make any contributions.
We did it, naturally, because we expected to make a profit out of it in the end. The whole PPAR story looked like a great way to affect metabolic disorders and plenty of other diseases as well: cancer, inflammation, cardiovascular. That is, if we could just manage to understand what was going on. But we didn't. Once we all figured out that nuclear receptors were involved and got busy on drug discovery on that basis, we didn't help anyone with any diseases, and we didn't make any profits. Big piles of money actually disappeared during the process, never to be seen again. You could ask Merck about that, or GSK (post-rosiglitazone), or Lilly, or BMS, or Bayer, and plenty of other players large and small.
No one hears about these things. We're understandably reluctant to go on about our failures in this industry, but the side effect is that people who aren't paying attention end up thinking that we don't have any. Nothing could be more mistaken. And they aren't failures to come up with a catchy slogan or to find a good color scheme for the packaging - they're failures back at the actual science, where reality meets our ideas about it, and likely as not beats them down to the floor.
Honestly, I don't understand where these they-don't-do-any-research folks get off. Look at the patent filings. Look at the open literature. Where on earth do you think all those molecules come from, all those research programs to fill up all those servers? There are whole scientific journals that wouldn't exist if it weren't for a steady stream of failed research projects. Where's it all coming from?
Note: previous posts about PPAR drug discovery can be found here, here, and here. Previous posts (and rants) about research in the drug industry (and academia, and the price of it all) can be found here, here, here, here, here, here, here, here, and here.
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September 7, 2010
Posted by Derek
Nature Reviews Drug Discovery has an article on behavior in large drug organizations, which they put together after interviewing a long list of current and former R&D heads. Many of the recommendations are non-startling (find ways to reward people who are willing to take calculated risks, encourage independent thinking, all those things that are easy to write down and hard to implement). One part near the end caught my eye, though:
Companies should examine what we term the 'columns outside the doors' phenomenon and the subtle impact that this form of recognition might have on entrepreneurial behaviour. Smith described this phenomenon, which occurs across the world: as start-up companies become successful, they are relocated from humble laboratories to grander buildings with columns outside their doors. Interestingly, such edifices often violate the observed inverse square relationship between communication among scientists in laboratories and the distance between these laboratories. We offer this insight more as a provocative thought than as a firm recommendation.
And what what reminded me of was a very similar observation by C. Northcote Parkinson, of Parkinson's Law fame:
The outer door, in bronze and glass, is placed centrally in a symmetrical facade. Polished shoes glide quietly over shining rubber to the glittering and silent elevator. The overpoweringly cultured receptionist will murmur with carmine lips into an ice-blue receiver. She will wave you into a chromium armchair, consoling you with a dazzling smile for any slight but inevitable delay. Looking up from a glossy magazine, you will observe how the wide corridors radiate toward departments A, B, and C. From behind closed doors will come the subdued noise of an ordered activity. A minute later and you are ankle deep in the director’s carpet, plodding sturdily toward his distant, tidy desk. Hypnotized by the chief’s unwavering stare, cowed by the Matisse hung upon his wall, you will feel that you have found real efficiency at last.
In point of fact you will have discovered nothing of the kind. It is now known that a perfection of planned layout is achieved only by institutions on the point of collapse. . .
It is by no means certain that an influential reader of this chapter could prolong the life of a dying institution merely by depriving it of its streamlined headquarters. What he can do, however, with more confidence, is to prevent any organization strangling itself at birth. Examples abound of new institutions coming into existence with a full establishment of deputy directors, consultants and executives; all these coming together in a building specially designed for their purpose. And experience proves that such an institution will die. . .
Readers may have a few examples in mind from the drug industry. (The freshly constructed labs at Sterling, for example, completed around the time that Kodak was wiping the place out, are well spoken of). So, those of you in temporary quarters, jammed into buildings that don't quite work, may not be as bad off as you might think.
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August 20, 2010
Posted by Derek
A reader at one of the big pharma companies sends along this note:
. . .Over my 10 years or so of experience, I have seen a severe decline in risk tolerance at my company, and other large companies as well. When we put a project forward, we are told that either: (a) There are too many unknowns, the target is not well established, and therefore the risk in putting forward the large sums of money required for development are too high; or (b) There are too many other players in the market already and we would never be able to capture enough market share to justify the investment required to go forward. The band considered acceptable in the risk/benefit spectrum has become so narrow that it is like threading a needle with your feet.
I believe that this risk aversion is due to the escalating cost of developing new drugs. Big Pharma has invested such a tremendous amount of money into the infrastructure they deemed necessary to increase project turnaround time that any drug that hoes forward has to be seen as a guaranteed blockbuster or it is considered a failure.
Film buff that I am, I use a Big Studio Production vs. Independent Film analogy when I discuss this with people outside the profession. For example, the film Avatar cost about 300 million to make. That means that if it brings in a mere 50 million in ticket sales, it is a catastrophic failure for the studio. Paranormal Activity on the other hand cost a few tens of thousands of dollars to make. Bringing in 50 million dollars in ticket sales would exceed the filmmakers wildest dreams of avarice.
The end result is that the Big Studio has to KNOW that Avatar will bring in greater than 300 million dollars in ticket sales or it cannot take the risk. Therefore only tried and true box office magic directors like James Cameron are given the opportunity to work at that level. On the other end of the spectrum, an independent film distribution company is willing to take on a high risk project like Paranormal Activity because even a failure will not destroy the comany, and the rewards of success (even if moderate by Big Studio standards) is very high.
So, has Big Pharma doomed itself by massively inflating its drug discovery infrastructure in a misguided attempt to stregnthed its pipeline (which was clearly a failure)? Or is it the regulatory agencies that require such vast and expensive trials that are the cause of this risk aversion? Is there a solution?
Well, the Hollywood analogy has been made before, but that's because it's a pretty good one. There are a few places where it breaks down, though. Some of these are unfavorable to the drug business:
1. Copyright. It lasts a lot longer than patent rights. I think that copyright has been extended to ridiculous levels in the US, but it's always been significantly longer than patent terms. So a studio has a much longer time to makes its money back.
2. Regulatory affairs. There's no FDA approval process for a new film. You think it up, you get it shot and produced, you release it, and good luck to you. The drug industry hasn't worked that way since the 1930s.
3. Cycle time. It takes a lot longer to get a drug project through than it takes to get a movie done. And since time is most definitely money, this hurts.
4. Toxicity and liability. While it's true that a bad film might make you feel sick, it's not going to lead to anything actionable in court. Bad news on a new drug's side effects or performance most definitely will, though. And how.
5. Costs and benefits. A movie, from the consumer's standpoint, is a momentary purchase, made with a small amount of discretionary income. If it delivers, great - if not, no harm done, other than some wasted time and a bit of cash. Drugs, of course, are a much more high-stakes business, both in their pricing and in their utility. And they affect a person's health, which is about as fundamental a thing as you can mess with, and moves any transaction up into a whole new spotlight.
On the other hand, there are some problems that the studios face that we don't:
1. Limits of copyright. While copyright goes on next to forever, it's still easy to move a new film or book right up next to an existing work. Movies get ripped off much more quickly than drugs can be, and often more blatantly. That shorter cycle time cuts both ways.
2. Easier copying. You can find pirated versions of first-run movies pretty quickly - they're not always great, but there's a market. Lots of free stuff gets tossed around in digital formats, too. Drugs are much harder to truly copy, and an inferior version is much, much less attractive.
3. Fashion. An antihypertensive drug from thirty years ago doesn't wear funny-looking retro clothes or pick up a mobile phone the size of a loaf of bread. It lowers your blood pressure, same as always. There may be better ones around now, but it'll still work exactly as it did when it came on the market.
All that said, I think that the key point here is that there's no equivalent in the drug industry to indie filmmaking, which is too bad. Our fixed costs are much, much, higher due to the field we operate in - human health and the regulations around it. My question is - is there any way to bring these down? Of course, that's what everyone in the business has been asking for some time now.
Because if we can't, we're going to see even more of the behavior that my correspondent noted. Risk aversion, I might add, can be fatal to research-driven companies. Our whole business is founded on taking risks, and if the costs are pushing us to deny that, we have a huge conflict right at the center of the whole enterprise. . .
And yeah, I realize that this doesn't help too much with the "less depressing" promise I made for this week!
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August 19, 2010
Posted by Derek
All right, given the way things have been going the last few years, it's easy to wonder if there's a place for medicinal chemistry at all - even if there's a place for drug discovery. There is. People are continuing to get sick, with diseases that no one can do much about, and the world would be a much better place if that weren't so. I also believe that such treatments are worth money, and that the people who devote their careers to finding them can earn a good living by doing so.
So why are fewer of us doing so? Because - and it needs no ghost come from the grave to tell us this - we're not finding as many of them as we need to, and it's costing us too much when we do. That's not sustainable, but drug discovery itself has to continue. We can't go on, we'll go on. But what we have to do is find new ways of going on.
I refuse to believe that those ways aren't out there somewhere. We do what we do so poorly, because we still understand so little - I can't accept that this is the best we're capable of. It won't take miracles, either. Think of the clinical failure rates, hovering around 90% in most therapeutic areas. If we only landed flat on our faces eight out of ten times in the clinic, we'd double the number of compounds that get through.
I think that we're in the worst stage of knowledge about disease and the human body. We have enough tools to get partway into the details, but not enough to see our way through to real understanding. Earlier ages were ignorant, and (for the most part) they knew it. (Lewis Thomas's The Youngest Science
has a good section on medicine as his own father practiced it - he was completely honest about how little he could do for most of his patients and how much he depended on placebos, time, and hope). Now, thanks to advances in molecular and cell biology, we've begun to open a lot of locked boxes, only to find inside them. . .more locked boxes. (Sorry about all these links. For some reason literature is running away with me this morning). We get excited (justifiably!) at learning things that we never knew, uncovering systems that we never suspected, but we've been guilty (everyone) of sometimes thinking that the real, final answers must be in view. They aren't, not yet.
Pick any therapeutic area you want, and you can see this going on. Cancer: it starts out as dozens of dread diseases, unrelated. Then someone realizes that in each case, it's unregulated cell growth that's going on. The key! Well, no - because we have no idea of how unregulated cell growth occurs, nor how to shut it off. Closer inspection, years and years of closer inspection, yields an astonishing array of details. Growth factor signaling, bypassed cell-death switches and checkpoints, changes in mitotic pathways, on and on. Along the way, many of these look like The Answer, or at least one of The Answers. Think about how angiogenesis came on as a therapeutic idea - Judah Folkman really helped get across the idea that some tumors cause blood vessels to grow to them, which really was a startling thought at the time. The key! Well. . .it hasn't worked out that way, or not yet. Not all tumors do this, and not all of them totally depend on it even when they do, and the ones that do turn out to have a whole list of ways that they can do it, and then they can mutate, and then. . .
There, that's where we are right now. Right in the middle of the forest. We know enough to know that we're surrounded by trees, we know the names of many of them, we've learned a lot - but we haven't learned enough yet to come out the other side. But here's the part that gives me hope: we keep on being surprised. Huge, important things keep on being found, which to me means that there are more of them out there that we haven't found yet. RNA! There's one that's happened well in the middle of my own professional career. When I started in this business, no one had any clue about RNA interference, double-stranded RNAs, microRNAs, none of it. All of it was going on without anyone being aware, intricate and important stuff, and we never knew. How many more things like that are waiting to be uncovered?
Plenty, is my guess. We keep pulling back veils, but the number of veils is finite. We're still ignorant, but we're not going to remain ignorant. We will eventually know the truth, and it'll do what the truth has long been promised to do: make us free.
But we don't have to wait until we know everything. As I said above, just knowing a bit more than we do now has to help. A little more ability to understand toxicology, a better plan to attack protein-protein targets, more confidence in what nuclear receptors can do, another insight into bacterial virulence, viral entry, cell-cycle signaling, glucose transport, lipid handling, serotonin second messengers, bone remodeling, protein phosphorylation, immune response, GPCR mechanisms, transcription factors, cellular senescence, ion channels. . .I could go on. So could you. The list is long, really long, and any good news anywhere on it gives us something else to work on, and something new to try.
So this is a rough time in the drug industry. It really is. But these aren't death throes. They're growing pains. We just have to survive them, either way.
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July 29, 2010
Posted by Derek
The topic of "open-source" drug discovery is an interesting (and potentially important) one. It just keeps coming up, but one of the problems with it is that it presents a terrible opportunity for vagueness. Too much of what I've read on the subject is hand-waving.
I'm afraid that the key parts of this column fall into the same category. It's by Jackie Hunter, formerly of GlaxoSmithKline. The lead-up parts of the piece are fine, where she lays out some of the problems facing the industry. But then we get this vision:
In the future, the most effective pharmaceutical companies will be hubs at the center of a network of collaborators and suppliers, focusing internally on their core competencies, which might include medicinal chemistry, execution of clinical trials, or sales and marketing. They will facilitate interactions across their network to stimulate the development of innovation ecosystems.
The resulting opportunities to expand beyond traditional products and markets will enable pharmaceutical companies to evolve into companies that offer a range of health-care solutions. These will include not only prescription medicines, but also diagnostics, branded generics, and technologies that support personalized medicine, as well as so-called “neutraceuticals” and other “wellness options.”
And that's it; that's the payoff. We'll all just hop to it, enabling and facilitating, expanding and evolving, stimulating and focusing. None of those are concrete verbs suggesting real courses of action. Whenever you see someone slip into that sort of talk, you can be sure that (at the very least) they have difficulty communicating whatever specific ideas they have. Or (more likely) that they don't have any specific ideas to tell you about at all.
Not that I can blame Jackie Hunter. I don't have a lot of good suggestions at the moment, either. But if you read that column closely, it says (on the one hand) that the problems of the industry are so large that single drug companies probably can't deal with them. Fine. Then it goes on to say that dealing with them will probably reduce the size of drug company R&D organizations. The connection between those two ideas is presumably hidden in that ball of fuzz I quoted above.
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July 12, 2010
Posted by Derek
Stuart Schreiber and Paul Clemons of the Broad Institute have a provocative paper out in JACS on natural products and their use in drug discovery. As many know, a good part of the current pharmacopeia is derived from natural product lead structures, and in many other cases a natural product was essential for identifying a target or pathway for a completely synthetic compound.
But are there as many of these cases as we think - or as there should be? This latest paper takes a large set of interaction data and tries to map natural product activities on to it. It's already know that there are genes all up and down the "interactome" spectrum, as you'd expect, with some that seem to be at the crossroads of dozens (or hundreds) of pathways, and others that are way out on the edges. And it's been found that disease targets tend to fall in the middle of this range, and not so much in the too-isolated or too-essential zones on either side.
That seems reasonable. But then comes the natural product activity overlay, and there the arguing can start. Natural products, the paper claims, tend to target the high-interaction essential targets at the expense of more specific disease targets. They're under-represented in the few-interaction group, and very much over-represented in the higher ones. Actually, that actually seems reasonable, too - most natural products are produced by organisms as essentially chemical warfare, and the harder they can hit, the better. Looking at subsets of the natural product list (only the most potent compounds, for example) did not make this effect vanish. Meanwhile, if you look at the list of approved drugs (minus the natural products on it), that group fits the middle-range interactivity group much more closely.
But what does that mean for natural products as drug leads? There would appear to be a mismatch here, with a higher likelihood of off-target effects and toxicity among a pure natural-product set. (The mismatch, to be more accurate, is between what we want exogenous chemicals to do versus what evolution has selected them to do). The paper ends up pointing out that additional sources of small molecules look to be needed outside of natural products themselves.
I'll agree with that. But I suspect that I don't agree with the implications. Schreiber has long been a proponent of "diversity-oriented synthesis" (DOS), and would seem to be making a case for it here without ever mentioning it by name. DOS is the idea of making large collections of very structurally diverse molecules, with an eye to covering as much chemical space as possible. My worries (expressed in that link above) are that the space it covers doesn't necessarily overlap very well with the space occupied by potential drugs, and that chemical space is too humungously roomy in any event to be attacked very well by brute force.
Schreiber made a pitch a few years ago for the technique, that time at the expense of small-molecule compound collections. He said that these were too simple to hit many useful targets, and now he's taking care of the natural product end of the spectrum by pointing out that they hit too many. DOS libraries, then, must be just in the right range? I wish he'd included data on some of them in this latest paper; it would be worthwhile to see where they fell in the interaction list.
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July 1, 2010
Posted by Derek
The Wall Street Journal is out today with a big story on GlaxoSmithKline's current research structure. The diagnosis seems pretty accurate:
Glaxo's experiment is a response to one of the industry's most pressing problems: the failure of gigantic research staffs, formed through a series of mega mergers, to discover new drugs. The mergers helped companies amass potent sales-and-marketing arms, but saddled their R&D with innovation-stifling bureaucracy. . .
The company's current strategy is to break things down into even smaller teams (often with their own names and logos) and to try to apply small-company incentives to them. That goes for both the positive and negative incentives:
The scientists in Glaxo's new biotech-esque groups know the clock is ticking. Called discovery performance units, or DPUs, the groups are about halfway through the three-year budgets they were given in 2008. Glaxo has made it clear that if the team members don't produce, they could get laid off. . .(the company also) says it's trying to get closer to the financial rewards of biotech. In some cases, it is setting aside "a pool of money" for scientists involved in a certain project. . .each time their experimental drug clears a certain hurdle, they get part of the money. . .
Of course, as the article also makes clear, the company has been through supposed newer-and-better re-orgs before. And that included schemes to break the company's research into more independent units. Those "Centers of Excellence in Drug Discovery" were supposed to be the last word eight or ten years ago, but apparently that didn't quite work out. The current philosophy seems to be that the idea didn't go far enough.
True or not? History doesn't give a person much reason for optimism when a large company says that it's going to get more nimble and less bureaucratic. You can make a very good living printing up the posters and running the training seminars about that stuff, but actually getting it to work has been. . .well, has anyone gotten it to work? Andrew Witty, the company's CEO says in the article that he doesn't see any contradiction in having "hugely successful entrepreneurial innovation" inside a big company, but real examples of that are thin on the ground - especially compared to the number of examples of such innovation being fought to the ground when it attempts to spring up.
That's not to say that this approach can't improve things at GSK. I think it's bound to be a good thing to turn people loose to make more of their own decisions, without feeling as if there's someone hovering over their shoulder all the time. But I don't know if it's going to be the revolution that they're hoping for (or the one that they might need).
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June 18, 2010
Posted by Derek
Here's something that oddly ties together the last couple of days of posting around here: the failure of the Human Genome Project to jump-start drug discovery as the "most significant economic event of the past decade". (Thanks to Jonathan Gitlin for the tip).
I have to say, I hadn't thought of it in those terms. My first thought is that this is a negative event, something that didn't happen, so it's pointless to speculate about what might have been. But the author, Mike Mandel, is also talking about the opportunity cost of all the genomics frenzy, which is a real consideration. That time and money could have been spent somewhere else, doing something more useful. Where would we be then?
I've wondered about that myself, having seen first-hand what happened. Many companies really did cut a deep notch in their development pipelines during that era, abandoning (to one degree or another) their traditional approaches while piling resources into the genomics gold rush. (The current economic environment is cutting a similar gouge into the list of start-up companies - many of the ones that "normally" should have formed during the last couple of years just haven't happened).
Mandel's larger point, though, is something I'm not so sure about. He's talking about all the manufacturing jobs that haven't been created by the basic research, holding that these are the ones with real economic effect. But even if the genomics era had been wildly successful, we wouldn't have seen manufacturing jobs picking up from it for some years - 2008, maybe? His charts, which tend to cover from the early 1990s to date, are reflecting other issues entirely.
Then the talk turns to balance of trade:
Now let’s turn to trade. China, India, and the rest of the developing countries sell the U.S. an increasingly diverse array of goods and services. What does the U.S. provide in return? There’s the usual list of suspects, such as commercial aircraft (which is increasingly drawing on parts made outside of the country). But they are not enough to avoid a huge trade deficit, even now.
The logical candidate for the next wave of U.S. exports should have been biotech products and knowledge. The U.S. is the acknowledged world leader; the research is expensive and lengthy; the production processes are complicated, delicate, require skilled technicians, and cannot be easily offshored. And the category–treatments to deal with major medical problems–is something that everyone wants.
But what happened? Without compelling new biotech products, the big pharma companies were “me-tooed” to death. In fact, pharma trade went from roughly balanced to a big deficit.
That's illustrated by another chart from 1994 on. But what it's showing isn't what he thinks it's showing. It illustrates the move to less costly manufacturing sites, which would have taken place whether genomics would have delivered or not. The only mitigating factor is that any big protein-based biologics would have had a better chance of being produced domestically, but production of all the small-molecule drugs that might have come out of the genomics frenzy would have migrated offshore just like everything else.
And what if the genomics revolution had delivered? We'd have a lot more drugs on the market, none of which would be selling cheaply, you can be sure - and there would be even more anxiety over the amount of our GDP going to health care. (Never mind that some of these drugs would, one hopes, be keeping people from going into even more expensive therapies later - people don't seem to pay attention to that, either). So overall, I take the point about opportunity cost. But his broader economic implications, as least as regards the US economy alone, don't seem to me to hold up.
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June 14, 2010
Posted by Derek
The New York Times reminded its readers the other day about something that people in medical research have known for quite some time: the human genome has not exactly turned out to be an open book full of readily usable data about human diseases.
It does make a person cringe to go back and read the press releases and speeches that were made back when the genome was first announced. How about Bill Clinton's statement that the genome sequence would "revolutionize the diagnosis, prevention and treatment of most, if not all, human diseases"? Or Francis Collins, predicting "a complete transformation in therapeutic medicine"? He's got about five more years on that one, but I'm not holding my breath.
As I've written here before, though, there was already a deep sense of nervousness among the people searching the sequences for disease clues - not to mention the nervousness among the people who had given them huge piles of money to do so. When the total estimated number of genes came out far lower than most people expected, there was a collective "Hmmm. . ." across the field. That number meant that the simpler possibilities for gene sequence-protein-disease linkage could already be ruled out - complicated things were clearly going on in transcription, translation, and further downstream.
That certainly doesn't mean that genomic sequencing has been a waste of time. It's been a tremendous boon, actually, because this complexity was out there waiting to be uncovered and understood. It's no one's fault that it hasn't led to speedy drug discovery; biology isn't set up for our convenience. And the further improvements that we've seen in sequencing speed and accuracy are going to be crucial if we're to have any chance of figuring out what's going on.
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June 11, 2010
Posted by Derek
It's no secret that Alzheimer's disease has been a disastrous area in which to do drug discovery. Every large drug company has had failures in the area, and many smaller ones have gone out of business trying their hands. (I had several years in the field myself earlier in my career, trying three different approaches, none of which panned out in the end).
Now the Coalition Against Major Diseases has announced an open-access database of clinical trial results from failed drug candidates in the area. J&J, GlaxoSmithKline, Abbott, SanofiAventis, and AstraZeneca have contributed data from 11 failed drug candidates, and more look to be on the way from other companies. I hope that Eli Lilly, Merck (their own compounds and those from Schering-Plough), and Pfizer all join in on this - right off the top of my head, I can think of failed drugs from all of them, and I know that there are plenty more out there. (Pfizer seems to have dodged a question about whether or not they're participating, to judge from that Wall Street Journal article linked to above).
It'll be difficult to comb through all this to extract something useful, of course. But without sharing the data on these compounds, it would be utterly impossible for anything to come out of their failures. I think this is an excellent idea, and well worth extended to other therapeutic areas.
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June 8, 2010
Posted by Derek
Here's a good piece from Megan McArdle on the pipeline problem in the drug industry. It'll be familiar ground to many readers of this blog (and not just because I was a source for the piece), but it's good to get the word out on these things to as wide an audience as possible.
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May 12, 2010
Posted by Derek
Well, you have to go back to the early days of this blog to find it, but I wrote here about insulin degrading enzyme. The name tells you some of what you need to know about it, for sure - it degrades insulin, so if you could stop that, insulin would probably hang around longer in the bloodstream. There's more to it - it's also been thought to be a way that insulin might be broken up inside cells as well, for one thing - but that's the elevator pitch for it.
And it has indeed been a diabetes target through the years. No one's come up with any really good inhibitors of it, although in vitro studies have been done with things like bacitracin and thioesters. Now a large multicenter academic team, led by the Mayo people from Florida, report some compounds that seem quite potent. (It's worth noting that these inhibitors are somewhat old news if you follow the patent literature).
The structures are not lovely, but there are a lot worse compounds in the protease inhibitor world. One thing that every experienced medicinal chemist will quickly notice about these is that they're hydroxamic acids. Those are compounds with a very spotty past in the business (although there is vorinostat (SAHA) out there on the market). Hydroxamates can be very potent inhibitors of metalloenzymes, and every time you target one they're always out there as a temptation, but the ugly clinical failures in that structural class tend to give people pause. Or was it just the targets (chiefly matrix metalloproteases) that the hydroxamates were aimed it? Have they been unfairly maligned? The arguments continue, and these compounds are unlikely to settle them.
Unless, of course, they go to the clinic and make a big success. I wonder if that's going to happen, though - the "go to the clinic" part, that is. This new paper is an interesting piece of work, and has a lot to say about the strange workings of IDE (which go a ways to explaining why there hasn't been much success targeting it - I was once involved briefly in the area myself). But it has nothing to say about whether these compounds have any exposure in any sort of animal, and that's the beginning of the really tricky part. These new compounds, in addition to be hydroxamic acids, are retro-inverso peptides. That's an old trick in the protease inhibitor world where you flip a natural sequence around and use the unnatural (D) amino acids to build it as well. Off the top of my head, I don't know of any retro-inverso compounds that have actually made it to market, although I'd be glad to be corrected on this.
The other complication will be IDE itself. One reason that no company has made a massive push on the target is that the enzyme is known to be multifunctional, as in "doing totally unrelated things all over the darn place", which makes one nervous about an inhibitor. Foremost among the off-target effects would be the beta-amyloid story (which is what led me to write about the enzyme back in 2003). IDE looks as if it could be one clearance mechanism for beta-amyloid (and perhaps for other easily-aggregating peptides), which has prompted people to think of actually trying to enhance its activity as an Alzheimer's therapy. One group that's tried this is, in fact, the same team that's now reporting the inhibitors (see this paper from 2009).
So I think these compounds will prove useful to figure out what IDE is doing, and that's a worthwhile goal. But I don't see them as drugs, no matter what the press release might say.
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May 10, 2010
Posted by Derek
The folks at the New Yorker sent along this link to a new article by Malcolm Gladwell about Synta and their attempts to get elesclomol (STA-4783) to work as a melanoma therapy. (If you don't know how this one turns out, you might want to read the article before clicking on that second link).
Update: didn't realize that the full article was subscriber-only at the New Yorker site. Not sure if there's anything to be done about that, but I've dropped them a line. . .
Gladwell (an occasional reader of this blog) often takes some hits from experts in the fields he writes about, but after reading the article this morning, I think he's done a fine job of showing what drug discovery is like. His division between screening and rational drug design is a bit too sharply defined, to my eyes, but he gets all the important stuff right - namely, just how hard a business this is, how much luck is involved, and how much we don't know. Those are messages that a lot of people need to hear, and I hope that this piece helps get them out to a wide audience.
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May 3, 2010
Posted by Derek
Here's something a bit out of our field, but it might be disturbingly relevant to the drug industry's current situation: Clay Shirky on the collapse of complex societies. He's drawing on Joseph Tainter's archaeological study of that name:
The answer he arrived at was that (these societies) hadn’t collapsed despite their cultural sophistication, they’d collapsed because of it. Subject to violent compression, Tainter’s story goes like this: a group of people, through a combination of social organization and environmental luck, finds itself with a surplus of resources. Managing this surplus makes society more complex—agriculture rewards mathematical skill, granaries require new forms of construction, and so on.
Early on, the marginal value of this complexity is positive—each additional bit of complexity more than pays for itself in improved output—but over time, the law of diminishing returns reduces the marginal value, until it disappears completely. At this point, any additional complexity is pure cost.
Tainter’s thesis is that when society’s elite members add one layer of bureaucracy or demand one tribute too many, they end up extracting all the value from their environment it is possible to extract and then some.
Readers who work in the industry - particularly those at the larger companies - will probably have just shivered a bit. To my mind, that's an eerily precise summation of what's gone wrong in some R&D organizations. Shirky talks about internet hosting companies and the current dilemmas of the large media organizations, but there's plenty of room to include the drug industry in there, too. Look at the way research has been conducted over the past thirty years or so: we keep adding layers of complexity, basically because we have to - more and more assays and screens. It used to be (so I hear) all about dosing animals. Then you had cell cultures, then cloned receptors and enzymes came along (we're heading out of the 1970s and well into the 1980s now, if you're keeping score at home). Outside of target assays, the Ames test came along in the 1970s, and there were liver microsomes and isolated P450 enzymes for stability, Caco-2 cells for permeability, hERG assays to look out for cardiac tox, et cetera. You can do the same thing for the development of animal models - normal rodents, then natural inbred mutations, then knockouts, humanized transgenics. . .you get the picture.
As I say, we have very little choice but to get more complicated, because our knowledge of biology keeps expanding. But while this is going on, everyone keeps thinking that all this new knowledge is (at some point) going to start making things easier - a future era known, informally, as "when we really start figuring all this stuff out". It hasn't happened yet. If you're someone like Ray Kurzweil, you expect this pretty soon. I don't, although I hold out eventual long-term hope.
Shirky's message for the media companies is that their high-value-added lifestyles are being fatally undermined. We're not facing the same situation in this industry - there's no equivalent of free YouTube stuff eating our lunch, and I'm not expecting anything in that line for a long time, if ever. But the complexity-piling-on-complexity problem is real for us, nonetheless. If the burden gets too heavy, we could be in trouble even without someone coming along to push us over.
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April 21, 2010
Posted by Derek
I note that one of the biggest topics in the "What To Tell the C&E News People" comment thread is chemical employment. And it should be - there are far fewer med-chem jobs out there today than there were five years ago, and it's getting harder and harder to imagine things coming back to the way that they once were.
In fact, I don't see any way that they can, at least if by "the way they once were", you mean the number of well-paid US-based positions at large pharma companies. I hate to sound like this, but I think there's been too much of a shift in recent years for anything to undo it. Costs have gone up, drug-development success rates have (at best) not increased, and there are cheaper ways to get a good amount of work done which used to cost more. Which of these things are going to change back, and how?
We can argue about how effective some outsourcing is, but it's definitely not worthless. And we can certainly argue about whether companies have cut too far back in the current downturn. But (and I've said this before around here), what I really have trouble with are two solutions that get proposed every time this topic comes up.
The first of these is "Cut back on work visas". Well, that's the milder form of it - this point of view has a way of slipping down to "Ship 'em all back" sometimes. Either way, what people who advocate this seem to believe is that companies will gladly hire American-based scientists if they're just, you know, forced to. I can't see it. And as I've said here before, I'm not particularly focused on bettering the lives of American scientists as opposed to those coming in from other countries. Many of them become Americans themselves, and I'm glad to have them. We can use all the intelligent, resourceful, hard-working people here that we can get.
The second solution that gets aired out is "Form a Union!" And I have to say that I have even less patience for this one. I'm not a big union fan in general, actually, and I think that in this case it's an even worse idea than usual. What leverage do employees have? Here's the problem that sinks many such ideas: the US is not an island nation, in any sense of the word. If you force the cost of doing business here up even higher, the jobs will leave even faster. There are now places for them to go, which is the biggest change of the last ten or twenty years. Those places are often not quite as good in some ways (for now), but they're a lot less expensive, and that's where the money will flow if the deal looks reasonable. The only thing that will slow this down is if things get cheaper here (which isn't too likely), or if they get more expensive over there (which is quite likely indeed, actually - a topic for another day).
So to me, both of these proposals boil down to forcing companies to pay more for what they can get elsewhere. In my opinion, they're both unworkable and likely to make the situation deteriorate even faster than it is already.
Update: fixed typos, I think. Views remain the same! As to the "scientist shortage" talk that keeps popping up, I agree with the people who are ticked off about that one. We clearly have no great shortage of scientists at the moment in the fields that I have personal experience of. But this is (or ideally should be) something of a separate topic from immigration, and will be the topic of a future post. . .
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April 14, 2010
Posted by Derek
We all hear about the new drugs that have just been approved, and we all keep track of the drugs that are coming off patent. But what about the really old ones, the drugs that made it to the market long before today's regulatory framework? There have long been medicines that are generally recognized as reasonably safe and effective, but have never been through much of the modern process.
The FDA has, for the last few years, been trying to catch up on these things, and has offered exclusivity to any manufacturers who are willing to run clinical trials on older medicines. But this hasn't always worked out the way that it was intended - witness the case of colchicine, a well-known natural product drug that's used for some inflammatory diseases (and used to be a chemotherapy agent, too). The Wall Street Journal has a good story on this.
URL Pharma, a generic manufacturer, took the time and trouble to get fresh data on colchicine for gout attacks, and was granted a three-year marketing exclusivity period. So far, so good - but they then turned around and ran the price up by a factor of fifteen. They also filed suit against other small companies that were selling colchicine in the generic market, with the result that other domestic sources of the drug might dry up (four of the other companies are fighting back in court).
So is this the advent of evidence-based medicine, coming to an area that had little of it before, and therefore a good thing? Is it an abuse of the system by a company that saw an opportunity to suddenly acquire pricing power? Is it just what the FDA should have expected, given that three years of marketing rights have to make up for the cost of the clinical work, with the profits likely to disappear immediately afterwards? I think it's going to be hard to have it both ways. If you expect companies to go back and fill in the clinical profile of older drugs, you do need give them some incentive to do it. But then what's to keep them from pounding that incentive in good and hard, as seems to be happening here?
I'm not sure how to split that difference, especially not with any general rule, because each case will probably be different. The new clinical trials might, in fact, uncover something really useful that was previously unknown - or they might just confirm that the way the drug was being dosed was, in fact, just the way it should be dosed. One of those seems more deserving of compensation than the other, but there's no way of knowing which result you're going to get a priori. I have an aversion to telling a company how much it can charge for a drug, but it's not like URL Pharma discovered colchicine, or had to do any of the risky early-stage work on it. I can justify some pricing moves (although not all of them) by companies that are doing discovery research, because so much of that doesn't lead to anything marketable. (Take, for example, virtually everything I've worked on my whole career). But a generic company that's coming in to dot the Is and cross the Ts on the FDA paperwork is something else again.
Perhaps if the FDA really feels that backfilling the regulatory work on drugs that no one owns in particular is important enough, they should fund the work themselves. But that opens up issues of its own, too.
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April 13, 2010
Posted by Derek
The Tech, the MIT newspaper, has a very interesting account from one of its recent graduates about a stint he did with the Boston Consulting Group in Dubai. It's partly a look at how different the real world is from taking a whalloping course load at MIT (answer: quite different indeed). But it's also a look at how all too many consulting firms end up doing their work. This is only partly the fault of the consultants:
Despite having no work or research experience outside of MIT, I was regularly advertised to clients as an expert with seemingly years of topical experience relevant to the case. We were so good at rephrasing our credentials that even I was surprised to find in each of my cases, even my very first case, that I was the most senior consultant on the team.
I quickly found out why so little had been invested in developing my Excel-craft. Analytical skills were overrated, for the simple reason that clients usually didn’t know why they had hired us. They sent us vague requests for proposal, we returned vague case proposals, and by the time we were hired, no one was the wiser as to why exactly we were there.
I got the feeling that our clients were simply trying to mimic successful businesses, and that as consultants, our earnings came from having the luck of being included in an elaborate cargo-cult ritual. In any case it fell to us to decide for ourselves what question we had been hired to answer, and as a matter of convenience, we elected to answer questions that we had already answered in the course of previous cases. . .
I can't imagine that the BCG people are very pleased about this series of articles, but I don't think there's much they can do about it. As the author details) he walked away from an end-of-employment payment by refusing to sign a nondisclosure agreement. And not to pick on BCG particularly - because there are plenty of other people in this game - I note that they do advise the pharmaceutical industry from time to time. We are, fortunately, not quite Dubai. But here's a description (their own) of some of their work, and I'll leave it up to the reader to decide if it's an inspiring story of teamwork or an example of cargo-cult self-delusion.
At the onset, the BCG team helped provide structure and facilitation for our client's deep content knowledge, then helped them focus on the most important issues. We worked together to develop critical insights about the current and potential marketplace and the roadmap to success, then created and launched an execution plan that rallied the organization around that roadmap and started them down that path.
You might also want to speculate about how many times those phrases have been cut and pasted before.
Update: fixed with link to the story!
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March 26, 2010
Posted by Derek
As we slowly attack the major causes of disease, and necessarily pick the low-lying fruit in doing so, it can get harder and harder to see the effects of the latest advances. Nowhere, I'd say, is that more true than for cardiovascular disease, which is now arguably the most well-served therapeutic area of them all. It's not that there aren't things to do (or do better) - it's that showing the benefit of them is no easy task.
Robert Fortner has a good overview of the problem here. The size of the trials needed in this area is daunting, but they have to be that size to show the incremental improvements that we're down to now. He also talks about oncology, but that one's a bit of a different situation, to my mind. There's plenty of room to show a dramatic effect in a lot of oncology trials, it's just that we don't know how to cause one. In cardiovascular, on the other hand, the space in which to show something amazing has flat-out decreased. This is a feature, by the way, not a bug. . .
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Posted by Derek
The discussion of "privileged scaffolds" in drugs here the other day got me to thinking. A colleague of mine mentioned that there may well be structures that don't hit nearly as often as you'd think. The example that came to his mind was homopiperazine, and he might have a point; I've never had much luck with those myself. That's not much of a data set, though, so I wanted to throw the question out for discussion.
We'll have to be careful to account for Commercial Availability Bias (which at least for homopiperazines has decreased over the years) and Synthetic Tractability Bias. Some structures don't show up much because they just don't get made much. And we'll also have to be sure that we're talking about the same things: benzo-fused homopiperazines (and other fused seven-membered rings) hit like crazy, as opposed to the monocyclic ones, which seem to be lower down the scale, somehow.
It's not implausible that there should be underprivileged scaffolds. The variety of binding sites is large, but not infinite, and I'm sure that it follows a power-law distribution like so many other things. The usual tricks (donor-acceptor pairs spaced about so wide apart, pi-stacking sandwiches, salt bridges) surely account for much more than their random share of the total amount of binding stabilization out there in the biosphere. And some structures are going to match up with those motifs better than others.
So, any nominations? Have any of you had structural types that seem as if they should be good, but always underperform?
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March 24, 2010
Posted by Derek
Here's a new article on the concept of "privileged scaffolds", the longstanding idea that there seem to be more biologically active compounds built around some structures than others. This doesn't look like it tells me anything I didn't know, but it's a useful compendium of such structures if you're looking for one. Overall, though, I'm unsure of how far to push this idea.
On the one hand, it's certainly true that some structural motifs seem to match up with binding sites more than others (often, I'd say, because of some sort of donor-acceptor pair motif that tends to find a home inside protein binding sites). But in other cases, I think that the appearance of what looks like a hot scaffold is just an artifact of everyone ripping off something that worked - others might have served just as well, but people ran with what had been shown to work. And then there are other cases, where I think that the so-called privileged structure should be avoided for everyone's good: our old friend rhodanine makes an appearance in this latest paper, for example. Recall this this one has been referred to as "polluting the literature", with which judgment I agree.
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February 10, 2010
Posted by Derek
We've been talking a lot around here about small companies versus large ones, the merits of different therapeutic areas, and so on. So here's a question: if you were starting a small drug company today, where would you concentrate its efforts?
Oncology? Ten years ago, you could make that case, I think. But now everyone's piled into the area, so you'd have to have a real edge to make a go of it. For one thing, finding patients for clinical trials is a major problem. Your best shot here would be really obscure varieties of cancer, I'd think, unless you've got something really major. And how do you ever know if you've got something really major or not in this area until you get to the clinic, anyway?
Anti-infectives? There's certainly room for some new niche products here, but that's what they're going to be. And this is a surprisingly difficult area to make headway in, if you haven't worked in it before. Nothing's going to be an almighty blockbuster here (because nothing new is going to be a frontline therapy), but there is money to be made.
Cardiovascular and metabolics? I don't see how, and I barely see why, unless you've got the miracle HDL-raising pill up your sleeve. Diabetes, for its part, has been a fine area over the last ten or twenty years, but the safety criteria for a new therapy are now very stiff (and the market is pretty well covered, from several different angles). Not recommended, I'd say.
Alzheimer's? Good luck! Man, is there ever an unserved market here, but it's unserved for a lot of damned good reasons. The same goes for a number of other CNS indications. This whole area is a tightrope of risk and reward. Both are huge.
Or would you go the Genzyme route, making huge amounts by helping out people (a few people) that no one else can help at all? Again, this presupposes that you have some really good idea about how to approach these orphan diseases, and it's going to be tough to make a whole company out of them (since they're spread over such disparate therapeutic specialties). But this would seem to be feasible, with some luck.
Suggestions are welcome in the comments. I'm definitely not planning on starting a company myself, but I think that we need as many as possible, and perhaps some ideas will trigger something for someone in a position to act. . .
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February 9, 2010
Posted by Derek
Friday's post has brought in a lot of comments, and they're still piling up. I wanted to address a few of the more frequent ones, though, out here on the front page.
First off, the idea that a bunch of stock analysts could have a useful opinion on a pharma company's return on investment doesn't seem to strike many people as plausible. Variations on "What do they know about this business?" and "Aren't these the same geniuses that wiped out the mortgage bond market?" have come up numerous times. My answer to the latter is no, they aren't. The stock and industry analysts are a different bunch entirely. That's not to say that they can't be stupid, or make mistakes (they do!) But these aren't the people who thought that they had all the risks figured for interest-rate swaps and collateralized debt obligations. If you have disagreements with industry analysts, then you should fight in their territory.
There's more substance to the "What do they know" objection, but still (in my view) not enough. What they know is what's been made public, of course, and as we in the industry know, that's not everything. But that doesn't make Wall Street's case any weaker this time, as far as I can tell. Morgan Stanley and their ilk are not missing any of the successful projects from inside big pharma - those all get aired out thoroughly. If they're short on data, it's on how many projects fail, and how much they cost, and those numbers aren't going to make the ROI look any better. Meanwhile, most all the inlicensed compounds actually get announced, since they're material transactions for someone, so far fewer of those escape notice. I don't like the Morgan Stanley point of view, not at all, but dislike is not a refutation.
Another thing to remember is that the people with the best figures on ROI are the upper management of the companies involved, and these are the people who are slashing head count and outsourcing wherever they can. And we have to make a distinction here, between diagnosis and treatment. We can disagree on whether this is the proper response (although I'm kind of stuck for alternatives), but is it still possible to argue that these CEOs and the like are reacting to something that isn't there? Something is precipitating a lot of large, painful, and nasty decisions, and I think that it's probably the very concerns about cost that we've been talking about. We need to separate the argument about whether those figures are real from the argument about what's been done in response.
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February 8, 2010
Posted by Derek
There's an article out from a group in Australia on the long-standing problem of "frequent hitter" compounds. Everyone who's had to work with high-throughput screening data has had to think about this issue, because it's clear that some compounds are nothing but trouble. They show up again and again as hits in all sorts of assays, and eventually someone gets frustrated enough to flag them or physically remove them from the screening deck (although that last option is often a lot harder than you'd think, and compound flags can proliferate to the point that they get ignored).
The larger problem is whether there are whole classes of compounds that should be avoided. It's not an easy one to deal with, because the question turns on how you're running your assays. Some things are going to interfere with fluorescent readouts, by absorbing or emitting light of their own, but that can depend on the wavelengths you're using. Others will mung up a particular coupled assay readout, but leave a different technology untouched.
And then there's the aggregation problem, which we've only really become aware of in the past few years. Some compounds just like to stick together into huge clumps, often taking the assay's protein target (or some other key component) with them. At first, everyone thought "Ah-hah! Now we can really scrub the screening plates of all the nasties!", but it turns out that aggregation itself is an assay-dependent phenomenon. Change the concentrations or added proteins, and whoomph: compounds that were horrible before suddenly behave reasonably, while a new set of well-behaved structures has suddenly gone over to the dark side.
This new paper is another attempt to find "Pan-Assay Interference" compounds or PAINs, as they name them. (This follows a weird-acronym tradition in screening that goes back at least to Vertex's program to get undesirable structures out of screening collections, REOS, for "Rapid Elimination of, uh, Swill"). It will definitely be of interest to people using the AlphaScreen technology, since it's the result of some 40 HTS campaigns using it, but the lessons are worth reading about in general.
What they found was that (as you'd figure) that while it's really hard to blackball compounds permanently with any degree of confidence, the effort needs to be made. Still, even using their best set of filters, 5% of marketed drugs get flagged as problematic screening hits - in fact, hardly any database gives you a warning rate below that, with the exception of a collection of CNS drugs, whose properties are naturally a bit more constrained. Interestingly, they also report the problematic-structure rate for the collections of nine commercial compound vendors, although (frustratingly) without giving their names. Several of them sit around that 5% figure, but a couple of them stand out with 11 or 12% of their compounds setting off alarms. This, the authors surmise, is linked to some of the facile combinatorial-type reactions used to prepare them, particularly ones that leave enones or exo-alkenes in the final structures.
So what kinds of compounds are the most worrisome? If you're going to winnow out anything, you should probably start with these: Rhodanines are bad, which doesn't surprise me. (Abbott and Bristol Myers-Squibb have also reported them as troublesome). Phenol Mannich compounds and phenolic hydrazones are poor bets. And all sort of keto-heterocycles with conjugated exo alkenes make the list. There are several other classes, but those are the worst of the bunch, and I have to say, I'd gladly cross any of them off a list of screening hits.
But not everyone does. As the authors show, there are nearly 800 literature references to rhodanine compounds showing biological effects. A conspicuous example is here, from the good folks at Harvard, which was shown to be rather nonspecifically ugly here. What does all this do for you? Not much:
"Rather than being privileged structures, we suggest that rhodanines are polluting the scientific literature. . .these results reflect the extent of wasted resources that these nuisance compounds are generally causing. We suggest that a significant proportion of screening-based publications and patents may contain assay interference hits and that extensive docking computations and graphics that are frequently produced may often be meaningless. In the case of rhodanines, the answer set represents some 60 patents and we have found patents to be conspicuously prevalent for other classes of PAINS. This collectively represents an enormous cost in protecting intellectual property, much of which may be of little value. . ."
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February 5, 2010
Posted by Derek
I hate to do another post on this subject, after a good part of the week has been devoted to layoff news and the like, but this one is too much to ignore. A reader sent along this link, which quotes a Morgan Stanley appraisal of the pharma industry as an investment. Here's what they're telling their clients:
". . .Still significant value in Pharma - we see material upside to ROIC [return on invested capital], earnings and multiples as Pharma withdraws from most internal small-molecule research and reallocates capital to in-licensing and other non-pharma assets. Worsening generic pressure and R&D management changes lead us to expect material cuts to internal small research spend (~40% total R&D) in 2010/11, after a decade of dismal internal R&D returns. We expect AstraZeneca and Sanofi-Aventis to be among the leaders in externalizing research, and this is a key driver of our upgrade of AstraZeneca today to Overweight.
Reinvestment of internal research savings into in-licensing will yield three times the likely return, we calculate. Under in-licensing deals, downside risk for pharma companies is currently materially lower than for internally developed drugs. Although upside is also capped by pay-aways and milestone obligations, the net present value of these payments is more than offset by the lower risk-adjusted invested capital. Over one-third of pharma R&D spend is in pre-phase II, where the probability of reaching the market is <10%. our proprietary analysis indicates that, unless the probability of an in-house molecule reaching the market is 30% or more, the risk-adjusted economic value added, or eva, is three times higher under the external research model, with a greater predictability."
It could be said in fewer words, but it's all there. If you're looking for the reason the big companies are doing what they're doing, look no further. Agree with it or not, there's a case to be made - and there's Morgan Stanley, making it - that the cost of running new drug projects in big pharma is just too high relative to the risks of failure. Those returns, in fact, are calculated to be off by a factor of three.
You may not believe that factor, and I have to say, I found it hard to believe myself. But let's say the Morgan Stanley folks have their numbers off. Perhaps it's only twice as profitable to bring in outside drugs as it is to develop them internally. Don't believe that one, either? Maybe it's only 25% more profitable - can you imagine making a move that would increase your company's return on investment by 25%? Industries get remade by such changes at the margin, and this one is remaking ours. Why do we have any internal R&D left at all, if those figures are anywhere near right?
Well, no one's tried to run a large company entirely by in-licensing, and I think that there are a lot of reasons why that wouldn't work. (For one thing, I don't think that there are enough things to in-license, and if one or more large companies announced that they were doing that exclusively, the price of each deal would go right up). And there needs to be some internal expertise left, if only to evaluate those external drug candidates to make sure you're not being taken. But still. All this means is that internal R&D will stay around, but it has to get cheaper and will very likely get smaller.
We can argue about the assumptions behind all this, but there's no doubt that a compelling business case can be made for this world view. Anyone who wants to argue differently - and a lot of us do - will have to come up with solid numbers and reasoning for why it just ain't so. I'm not sure such numbers exist.
There are many corollaries to this line of thought. One of them - and I hate to bring this up, considering all the horrible layoff news recently - is that one of the most psychologically comforting theories that we in R&D have for our present fix is likely wrong. I refer to the "Evil Clueless MBA CEO" theory, which has its satisfactions, but is a hazardous way to think. It is always dangerous to assume that people who do things you disagree with are doing them because they're just idiots or because they're innately malicious. In general, I'd say that the first explanation to jettison is malice, followed by stupidity (Hanlon's Razor). What that leaves you with is that these actions, stupid and malicious though they may appear, are probably being done for reasons that appear valid to the people doing them. I know, I know - some of these reasons are things like "So I can keep my high-paying CEO job", and we can't ignore that one. But a good way to lose a high-paying CEO job is to try to tell your board of directors (and your shareholders) why you're going to pass up an opportunity to get three times your ROIC.
Another thing to think about is, if these cost estimates are right, how did we get here? The best reason I can think of for such a disparity is that small companies (the source of these in-licensed drugs and projects) are often betting their entire existence on these ideas. They are very strongly motivated to do whatever they can do to get them to work (sometimes a bit too motivated, but that risk is already factored in), and if things don't pan out, they usually disappear. Basically, the in-licensing world unloads the risk from the large pharma company (and its shareholders) onto the investors in the smaller ones. The cost disparity will exist for as long as people are willing to back smaller companies. Now, this isn't to say that the big companies are always going to do a great job picking what to bring in. We've been talking a lot, for example, about the GSK-Sirtris deal, and that one may or may not work out. But the idea of doing big in-licensing deals in general - that's a different story, no matter how any individual company manages to execute it.
What that also means is that more of us are going to end up working for those smaller companies (which is something that I, and several commenters around here, have been saying for a while). If the large pharma outfits are going to devote more money to in-licensing, there will then be more opportunities for people developing things for them to in-license. The rough part is that all these structural changes in the drug industry are taking place (largely by coincidence, I think) during economic conditions which make funding such companies difficult.
And then there's the internal cost-cutting, for the R&D that's actually staying at the big companies. That, of course, generally means sending a lot of it to China, or wherever else it can be done more cheaply. And that's going to continue as long as it can indeed be done more cheaply, which means "not forever". Costs are already rising in China and India, although they have a good ways to go before they catch up to the US and Europe. I know that we can argue about how well that whole idea is going to work - there are clearly inefficiencies to doing a lot of your work through outsourcing, but as long as those don't eat up all the cost savings, it's still going to keep happening.
This, as a side note, is why I think that one of the suggestions that gets floated here in the comments from time to time, the idea of forming a "medicinal chemist's union", is completely useless. Unions form when workers have the leverage to preserve a higher-cost business model. In the end, the big industrial concerns of the early 20th century had to have workers, and they had to have them in certain locations, so the unions always had the threat of going on strike. At attempt to lower the boom under these conditions would result in everything going to China, and damned quickly.
So. . .what's happening to us, and to our industry, is not really mysterious. Our cost structure does not look to be supportable, and since there are cheaper alternatives that appear to be feasible, those will get tried. The disruption and destruction that all this is causing is real, of course. But the best I can offer is to try to understand what's driving all this upheaval, because that might help people to figure out how to protect their own jobs or where to jump next. Everyone has to give this some serious thought, because I don't see any reason why all this won't keep going on for some time to come.
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January 4, 2010
Posted by Derek
The folks over at the In Vivo Blog will soon be announcing their "Deal of the Year" in the biotech/pharma sector (you can scroll back over there to see the various nominees). But they could just as well run the competition in reverse, and award some retroactive Bad Deal statues based on what's been happening recently.
One of those might well go to the 2003 deal in which Pfizer paid over a billion dollars in to acquire Esperion and their Apo-A1 Milano lipoprotein. If you've been following the cardiovascular field for a few years, you'll remember the big press that this got. The Milan variant of the protein seemed to be quite effective at reverse cholesterol transport - just typing that phrase takes me back a few years, to be honest. The hope was that periodic treatments might flush the arteries out and avert atherosclerosis.
And there things seemed to stay, hung up in that "promising therapy" zone. At the time, Pfizer was going to be the biggest thing ever in cardiovascular, what with Lipitor, with their CETP inhibitor torcetrapib, and with Apo-A1 Milano coming along at the same time. That dream is a pile of wreckage now, of course - Pfizer has de-emphasized the whole area. Esperion itself was spun back out in 2008 as a much smaller operation, minus the lipoprotein it came in with, and now Apo-A1 Milano itself has been sold off to The Medicines Company. For $10 million up front.
Yep, Pfizer gets $0.01 billion back from its $1.25 billion investment - well, more if things work out, but you'd have to think that most of that money is just gone. But I can't really say that this is just Pfizer's own problem, or just their own folly. This sort of thing can happen to any organization, and the larger it is, the more likely it is to make some sort of Big Move which then sends it falling down the stairs. After all, if you're trying to affect the future of a huge company, you have to do huge things, right? And these huge things take on a momentum of their own - witness another Pfizer disaster, Exubera. That inhaled insulin was going to be a billion-dollar drug, no question about it, and no one could tell the company any different. Well, except their customers.
But again, I don't see these things as coming from some particularly Pfizery mindset. Any other drug company of that size would probably have done things equally catastrophic, and as they get larger, the others surely will find their own open manholes to step confidently into. Since this is the first post of the new year, here's a resolution I wish the industry would consider: no big mergers in 2010. No gigantic sense-of-urgency do-this-deal-now productions, please. Let's try to do what we do better, rather than just do more of it.
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December 14, 2009
Posted by Derek
I'm continuing my look at Bernard Munos' paper on the drug industry, which definitely repays further study (previous posts here, here, and here). Now for some talk about money - specifically, how much of it you'll need to find a new drug. The Munos paper has some interesting figures on this question, and the most striking figure is that the cost of getting a drug all the way to the market has been increasing at an annual rate of 13.4% since the 1950s. That's a notoriously tough figure to pin down, but it is striking that the various best estimates of the cost make an almost perfectly linear log plot over the years. We may usefully contrast that with the figures from PhRMA that indicate that large-company R&D spending has been growing at just over 12% per year since 1970. Looking at things from that standpoint, we've apparently gotten somewhat more efficient at what we do, since NME output has been pretty much linear over that time.
But that linear rate of production allows Munos to take a crack at a $/NME figure for each company on his list, and he finds that less than one-third of the industry has a cost per NME of under $1 billion dollars, and some of them are substantially more. Of course, not every NME is created equal, but you'd have to think that there are large potential for mismatches in development cost versus revenues when you're up at these levels. Munos also calculates that the chance of a new drug achieving blockbuster status is about 20%, and that these odds have also remained steady over the years - this despite the way that many companies try to skew their drug portfolios toward drugs that could sell at this level.
How much of these costs are due to regulatory burden? A lot, but for all the complaining that we in the industry do about the FDA, they may, in the long run, be doing us a favor. Citing these three studies, Munos says that:
. . .countries with a more demanding regulatory apparatus, such as the United States and the UK, have fostered a more innovative and competitive pharmaceutical industry. This is because exacting regulatory requirements force companies to be more selective in the compounds that they aim to bring to market. Conversely, countries with more permissive systems tend to produce drugs that may be successful in their home market, but are generally not sufficiently innovative to gain widespread approval and market acceptance elsewhere. This is consistent with studies indicating that, by making research more risky, stringent regulatory requirements actually stimulate R&D investment and promote the emergence of an industry that is research intensive, innovative, dominated by few companies and profitable.
But this still leaves us with a number of important variables that we don't seem to be able to push much further - success rates in the clinic and in the marketplace, money spent per new drug, and so on. And that brings up the last part of the paper, which we'll go into next time: what is to be done about all this?
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December 11, 2009
Posted by Derek
Eric Milgram over at PharmaConduct has an excellent post up on the same paper I've been discussing this morning. As another guy who's been around the block a few times in this industry, he's struck by many of the same points I am (to the point of also linking to Wikepedia's page on Poisson distributions!)
And he has some interesting data of his own to present, too - well worth checking out.
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Posted by Derek
So that roughly linear production of new drugs by Pfizer, as shown in yesterday's chart, is not an anomaly. As the Bernard Munos article I've been talking about says:
Surprisingly, nothing that companies have done in the past 60 years has affected their rates of new-drug production: whether large or small, focused on small molecules or biologics, operating in the twenty-first century or in the 1950s, companies have produced NMEs at steady rates, usually well below one per year. This characteristic raises questions about the sustainability of the industry's R&D model, as costs per NME have soared into billions of dollars.
What he's found, actually, is the NME generation at drug companies seems to follow a Poisson distribution, which makes sense. This behavior is found for systems (like nuclear decay in a radioactive sample) where there are a large number of possible events, but where individual ones are rare (and not dependent on the others). A Poisson process also implies that there's some sort of underlying average rate, and that the process is stochastic - that is, not deterministic, but rather with a lot of underlying randomness. And that fits drug development pretty damned well, in my experience.
But that's just the sort of thing, as I've pointed out, that the business-trained side of the industry doesn't necessarily want to hear about. Modern management techniques are supposed to quantify and tame all that risky stuff, and give you a clear, rational path forward. Yeah, boy. The underlying business model of the drug industry, though, as with any fundamentally research-based industry, is much more like writing screenplays on spec or prospecting for gold. You can increase your chances of success, mostly by avoiding things that have been shown to actively decrease them, and you have to continually keep an eye out for new information that might help you out. But you most definitely need all the help you can get.
As that Pfizer chart helps make clear, Munos is particularly not a fan of the merge-your-way-to-success idea:
Another surprising finding is that companies that do essentially the same thing can have rates of NME output that differ widely. This suggests there are substantial differences in the ability of different companies to foster innovation. In this respect, the fact that the companies that have relied heavily on M&A tend to lag behind those that have not suggests that M&A are not an effective way to promote an innovation culture or remedy a deficit of innovation.
In fact, since the industry as a whole isn't producing noticeably more in the way of new drugs, he suggests that one possibility is that nothing we've done over the last 50 years has helped much. There's another explanation, though, that I'd like to throw out, and whether you think it's a more cheerful one is up to you: perhaps the rate of drug discovery would actually have declined otherwise, and we've managed to keep it steady? I can argue this one semi-plausibly both ways: you could say, very believably, that the progress in finding and understanding disease targets and mechanisms has been an underlying driver that should have kept drug discovery moving along. On the other hand, our understanding of toxicology and our increased emphasis on drug safety have kept a lot of things from coming to the market that certainly would have been approved thirty years ago. Is it just that these two tendencies have fought each other to a draw, leaving us with the straight lines Munos is seeing?
Another important point the paper brings up is that the output of new drugs correlates with the number of companies, better than with pretty much anything else. This fits my own opinions well (therefore I think highly of it): I've long held that the pharmaceutical business benefits from as many different approaches to problems as can be brought to bear. Since we most certainly haven't optimized our research and development processes, there are a lot of different ways to do things, and a lot of different ideas that might work. Twenty different competing companies are much more likely to explore this space than one company that's twenty times the size. Much of my loathing for the bigger-bigger-bigger business model comes from this conviction.
In fact, the Munos paper notes that the share of NMEs from smaller companies has been growing, partly because the ratio of big companies to smaller ones has changed (what with all the mergers on the big end and all the startups on the small end). He advances several other possible reasons for this:
It is too early to tell whether the trends of the past 10 years are artefacts or evidence of a more fundamental transformation of the drug innovation dynamics that have prevailed since 1950. Hypotheses to explain these trends, which could be tested in the future, include: first, that the NME output of small companies has increased as they have become more enmeshed in innovation networks; second, that large companies are making more detailed investigations into fundamental science, which stretch research and regulatory timelines; and third, that the heightened safety concerns of regulators affect large and small companies differently, perhaps because a substantial number of small firms are developing orphan drugs and/or drugs that are likely to gain priority review from the FDA owing to unmet medical needs.
He makes the point that each individual small company has a lower chance of delivering a drug, but as a group, they do a better job for the money than the equivalent large ones. In other words, economies of scale really don't seem to apply to the R&D part of the industry very well, despite what you might hear from people engaged in buying out other research organizations.
In other posts, I'll look at his detailed analysis of what mergers do, his take on the (escalating) costs of research, and other topics. This paper manages to hit a great number of topics that I cover here; I highly recommend it.
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+ TrackBacks (0) | Category: Business and Markets | Drug Development | Drug Industry History | Who Discovers and Why
December 10, 2009
Posted by Derek
Courtesy of Bernard Munos, author of the Nature Reviews article that I began blogging about yesterday, comes this note about Pfizer's track record with new molecules. His list of Pfizer NMEs since 2000 is Geodon (ziprasidone, 2001), Vfend (voriconazole, 2002, from Vicuron - whoops, not so, this one's Pfizer's), Relpax (eletriptan, 2002), Somavert (pegvisomant, 2003, from Pharmacia & Upjohn), Lyrica (pregabalin, 2004, from Warner Lambert), Sutent (sunitinib, 2006, from Sugen/Pharmacia), Chantix (varenicline, 2006), Selzentry (maraviroc, 2007), and Toviaz (fesoterodine, 2008, from Schwarz Pharma). There are some good drugs on that list, but considering that even just five years ago, the company was claiming that it had 101 NMEs in development, and was going to file 20 NDAs by now, it might seem a bit thin.
It might especially seem that way when you look over this graph, also provided by Munos (but not used in his recent article). You can see that Pfizer's R&D spending has nearly tripled since the year 2000, but that cumulative NME line doesn't seem to be bending much. And, as Munos points out, two (and now three) productive research organizations have been taken out along the way to produce these results. It is not, as they say, a pretty picture.
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December 9, 2009
Posted by Derek
There's a data-rich paper out in Nature Reviews Drug Discovery on the history of drug innovation in the industry. I'll get to its real conclusions in another upcoming post, but some of the underlying data are worth a post of their own.
The author (Bernard Munos of Lilly) looks at new drug approvals (NMEs) since 1950, and finds:
At present, there are more than 4,300 companies that are engaged in drug innovation, yet only 261 organizations (6%) have registered at least one NME since 1950. Of these, only 32 (12%) have been in existence for the entire 59-year period. The remaining 229 (88%) organizations have failed, merged, been acquired, or were created by such M&A deals, resulting in substantial turnover in the industry. . .Of the 261 organizations, only 105 exist today, whereas 137 have disappeared through M&A and 19 were liquidated.
At the high end of the innovation scale, 21 companies have produced half of all the NMEs that have been approved since 1950, but half of these companies no longer exist. . .Merck has been the most productive firm, with 56 approvals, closely followed by Lilly and Roche, with 51 and 50 approvals, respectively. Given that many large pharmaceutical companies estimate they need to produce an average of 2–3 NMEs per year to meet their growth objectives, the fact that none of them has ever approached this level of output is concerning.
Indeed it is - either those growth targets are unrealistic, or the number of new drugs thought to be needed to support them has been overestimated, or we're all in some trouble. Speculation welcomed - I lean toward the growth targets being hyped up to please investors, but I'm willing to be persuaded.
And the fact that most of the new drugs come from a much smaller list of companies should be no surprise - that looks like a perfect example of a power law (aka "long tail") effect. Given the way research works, I'd actually be surprised if it were any other way.Now about that figure of 4,300 companies, though: what could possibly be on it? All sorts of startups that I've never heard of, of course - but how can that account for such a large number?
It appears to come from this PDF, where it appears on slide 114 (whew). There's no listing, just a breakdown of 1450 companies in the US, 450 in Canada, 1600 in Europe, and 740 in the Asia/Pacific region. Anyone want to hazard any guesses about how real those numbers are?
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December 7, 2009
Posted by Derek
Almost all of the drugs on the market target one or more small-molecule binding sites on proteins. But there's a lot more to the world than small-molecule binding sites. Proteins spend a vast amount of time interacting with other proteins, in vital ways that we'd like to be able to affect. But those binding events tend to be across broader surfaces, rather than in well-defined binding pockets, and we medicinal chemists haven't had great success in targeting them.
There are some successful examples, with a trend towards more of them in the recent literature. Inhibitors of interactions of the oncolocy target Bcl are probably the best known, with Abbott's ABT-737 being the poster child of the whole group.
But even though things seem to be picking up in this area, there's still a very long way to go, considering the number of possible useful interactions we could be targeting. And for every successful molecule that gets published, there are surely an iceberg of failed attempts that never make the literature. What's holding us back?
A new article in Drug Discovery Today suggests, as others have, that our compound libraries aren't optimized for finding hits in such assays. Given that the molecular weights of the compounds that are known to work tend toward the high side, that may well be true - but, of course, since the amount of chemical diversity up in those weight ranges is ridiculously huge, we're not going to be able to fix the situation through brute-force expansion of our screening libraries. (We'll table, for now, the topic of the later success rate of such whopper molecules).
Some recent work has suggested that there might be overall molecular shapes that are found more often in protein-protein inhibitors, but I'm not sure if everyone buys into this theory or not. This latest paper does a similar analysis, using 66 structurally diverse protein-protein inhibitors (PPIs) from the literature compared to a larger set (557 compounds) of traditional drug molecules. The PPIs tend to be larger and greasier, as feared>. They tried some decision-tree analysis to see what discriminated the two data sets, and found a shape description and another one that correlated more with aromatic ring/multiple-bond count. Overall, the decision tree stuff didn't shake things down as well as it does with data sets for more traditional target classes, which doesn't come as a surprise, either.
So the big questions are still out there: can we go after protein-protein targets with reasonably-sized molecules, or are they going to have to be big and ugly? And in either case, are there structures that have a better chance of giving us a lead series? If that's true, is part of the problem that we don't tend to have such things around already? If I knew the answers to these questions, I'd be out there making the drugs, to be honest. . .
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November 11, 2009
Posted by Derek
With the waves of layoffs going on, and all the nasty structural changes we're seeing in this business, it's easy to start feeling a toxic combination of fear and despair. And while I understand that, I'm going to try to briefly argue against it.
(1) I think that, in the years to come, that people are most definitely going to need medicines. And by that, I mean new ones, because there are a lot of conditions out there that we can't treat very well. As the world gets (on the average) older and wealthier, this need will do nothing but increase. In many cases, pharmaceutical treatment is cheaper than waiting and having surgery or the like, so there's a large scale cost-saving aspect to this, too.
(2) I also think that many of these medicines are still going to be small molecules. Now, biological products can be very powerful, and can do things that we can't (as yet) do with small molecules - mind you, the reverse is true, too. And I think that biologics will gradually increase their share of the pharma world as we find out more about how to make and administer them. But it is very hard to beat an orally administered small molecule for convenience, cost, and patient compliance, and those are three very big factors.
(3) What we're witnessing now is a huge argument about how we're going to make those small molecule drugs, where we're going to make them, and who will do all those things. And it's driven by money, naturally. We don't have enough new products on the market, which means that we have to sell the ones we have like crazy (which leads to all sorts of other problems, legal and otherwise). At the same time, we're having to spend more and more money to try to get what drugs we can through the whole process. These trends appear unsustainable, especially when running at the same time.
(4) But as Herbert Stein used to say, if something can't go on, then it won't. Right now, the only way out that companies can see is to cut costs as hard as possible (and market as hard as possible). Those both bring in short-term results that you can point at. Long-term, well. . .probably not so good. But in that same long term, we're going to have to find better ways of discovering and developing drugs. If we can improve that process, the fix can come from that direction rather than from the budget-cutting one.
(5) And those improvements don't have to be incredible to make a big difference. We have a 90% failure rate in the clinic as it stands. If we could just work it to where we only lose 8 out of 10 drug candidates, that would double the number of new drugs coming to the market, which would cheer everyone up immensely.
(6) The questions are: can we improve R&D in time? Can we improve it with the resources we have? I think that the demand (and thus the potential rewards) is too great for a solution not to be found, if there's one out there. And we still know so little about what we do that I can't imagine that answers aren't out there somewhere. Who's going to find them? How long will it take? Where are they? I've no clue. But that looks like the way out to me.
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November 6, 2009
Posted by Derek
So what are we up to now, Day Three of Greater Merck? The merger with Schering-Plough went through earlier this week, and you won't get any more numbers by searching the stock tickers for SGP.
I find that weird, since I started my career there in the late 1980s/early 1990s. But while I was there, it seemed like there were mergers and rumors of mergers every few weeks. That's no doubt a hindsight-enhanced picture I have, but it's safe to say that I heard about S-P merging (or being purchased by) every single major player in the business during my years there. And it didn't happen (not then, at any rate).
My favorite moment came in about 1992 when a colleague came to my office one afternoon saying "It's us and Upjohn. Announced after the close of business on Friday. All of CNS is going to Kalamazoo". I hardly even looked up, uttering a one-word reply that compared this news flash to bovine waste.
"Why do you say that?", he replied. "You don't think it could happen?" "Of course I thing it could happen", I said. "But I'll bet against any specific prediction of when and who. Got any money on you?" "Why don't you think this is the real thing?" he asked again, to which I replied "Because I don't think that any deal this size, set to be announced on Friday, could be so screwed up that you and I would know about it on Tuesday afternoon".
"Well, I kind of see your point there. . .", he began. And of course that particular deal never happened. But I'm sure that there were others that nearly did. That's one of the things that goes on in the background of this industry - there are a lot of tentative discussions and what-if ideas that get looked at briefly (or sometimes not so briefly) which people outside of upper management never hear about. This stuff generally starts to leak (if it does) once it gets closer to really happening, and for every one that happens, there are several that get thought about but never quite work.
Of course, I'm using "work" in the sense of "get completed", not in the sense of "works out in the long run to the benefit of everyone involved". I'm not convinced that many drug company mergers fall into that latter category at all, and that goes for the Merck/Schering-Plough one, too. There don't seem to be any dramatic announcements coming out of the deal so far, and that probably means that the changes (which are, and have to be, coming) will just be delayed while the company takes stock of what it now has, and what it now is.
But, as someone from another company was saying to me last night, the bigger you are, the harder it is to do that. It takes longer before you feel that there's enough information to make a good decision, which is probably why Pfizer's current rearrangements are taking so agonizingly long to make themselves clear. That same decision-making extends, I think, to drug discovery and development issues, which is one reason I don't like the whole mega-company idea to start with.
There's also the groupthink problem. Pfizer, for example, was able to convince itself that inhaled insulin was going to be a big winner, even as people outside the company wondered if that could be quite right. (And not only was it not a big seller, it was an unprecedented disaster). I don't believe that people get any smarter in large groups. Quite the contrary. All that "wisdom of crowds" stuff, as I understand it, is about consulting large numbers of individual thinkers, not getting them all into one room and having them agree on something. Especially if some of the people in the room can decide the salaries and promotions of the rest of the crowd.
I wish both the Merck people and the Schering-Plough people well, and the combined company good fortune, and that's not just because I find myself a stockholder of it. But I wish it hadn't come to this, and I wish it wouldn't keep coming to this, either.
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November 2, 2009
Posted by Derek
There's a constant running battle in the drug industry between the two kinds of pharmaceutical companies: the ones who discover the drugs first, and the ones who sell the drugs cheaply after the patents have expired. It surprises me still how many people I run into (outside my work) who don't make that distinction, or who don't even realize that there is one.
But the generic industry is a very different place. Their research budgets are far smaller than the ones at the discovery companies, since they're only dealing with drugs that everyone knows to already work. Their own research is directed toward satisfying the regulatory requirements that they're making the equivalent substance, and to finding ways to make it as cheaply as possible. And some of them are very good at it - some ingenious syntheses of marketed drugs have come out of the better generic shops. Of course, some real head-shaking hack work has, too, but that you can find everywhere.
The tension between the two types of company is particularly acute when a big-selling drug is nearing its patent expiration. It's very much in the interest of the generic companies to hurry that process along, so often they challenge the existing patents on whatever grounds they can come up with, figuring that the chances of success jutify the legal expenses. Since the 1984 Hatch-Waxman act, there's been an even greater incentive, the so-called "Paragraph IV" challenge. A recent piece in Science now makes the case that this process has gotten out of control.
After four years of a drug's patent life, a generic company can file an Abbreviated New Drug Application (ANDA) and challenge existing patents on the grounds that they're either invalid or that the ANDA doesn't infringe them. (This, for example, is what happened when Teva broke into Merck's Fosamax patent, taking the drug generic about four years early). If the challenge is successful, which can take two or three years to be resolved, the generic company gets an extra bonus of 180 days of exclusivity. The authors of the Science piece say that this process is tipped too far toward the generic side, and it's cutting too deeply into the research-based companies. (As noted here, that's rather ironic, considering the current debate about such provisions for biologic drugs, where some parties have been citing the Hatch-Waxman regime as a wonderful success story in small molecules).
This all took a while to get rolling, but the big successes (such as the Fosamax example) have bred plenty of new activity. There are now five times as many Paragraph IV challenges as there were at the beginning of the decade. Teva, for example, which is one of the big hitters in the generic world, had 160 pending ANDAs in 2007, of which 92 were running under Paragraph IV. Here's a look at some recent litigation in the area, which has certainly enriched various attorneys, no matter what else it's done.
Under Hatch-Waxman, a new drug starts off with five years of "data exclusivity" during which a generic version can't be marketed. The Science authors argue that the losses from Paragraph IV now well outweigh the gains from this provision, and that the term should be extended (which would put it closer to those found in Europe, Canada, and Japan. They also bring up the possibility of selectively extending data exclusivity case-by-case or for certain therapeutic areas, but I have to say, this makes me nervous. There are too many opportunities for gamesmanship in that sort of system, and I think that one goal of a regulatory regime should be to make it resistant to that sort of thing.
But I do support the article's main point, which is that the whole generic industry depends on someone doing to the work to discover new drugs in the first place, and we want to make sure that this engine continues to run. Politically, though, anything like this will be a very hard sell, since it'll be easy to paint it as a Cynical Giveaway to the Rapacious and Hugely Profitable Drug Companies. But speaking as someone working for the RHPDCs, I can tell you that we are indeed having a tougher time coming up with the new products with which to exploit the helpless masses. . .
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October 30, 2009
Posted by Derek
Here's a most interesting graph from the latest issue of Nature Reviews Drug Discovery. It's from an article on trying to discern trends from broad-scale literature analysis, and it's worth a separate blog post of its own (coming shortly). But after yesterday's discussion of whether there are too many graduates in science and engineering, this looked useful.
Note, for example, the ramp up in NIH funding in the late 1950s/ early 1960s (a very large change in percentage terms), which was followed by a similar surge in doctorates granted. The late-1990s funding increases seem to be having a similar effect near the end of the chart.
Note also the well-publicized drug drought - but the historical perspective is interesting. We've clearly fallen off the 1970-2000 trend line of increasing drug approvals, but we seem to be stabilizing at roughly a 1980s level. The argument is whether that's where we should be or not. We have all these new tools, but all these new worries. Lots of new targets, but fewer good ones like the old days. Many new tools, but plenty of difficult-to-interpret data generated from them. And so on. But 1985 is apparently about where the balance of all these things is putting us.
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October 28, 2009
Posted by Derek
Johnson & Johnson's CEO has given an interview to the Financial Times explaining his company's strategy with acquisitions. And right now, that strategy is. . .not to make acquisitions. They see partnerships as making a lot more sense:
“The cost of developing compounds has become so high and become so risky that we are looking to share the risks and opportunities and find more and more partnerships.”
J&J has been putting this into practice recently, taking equity stakes in several different companies. In the case of Elan and Crucell, interestingly, the company has agreed to standstill provisions, in order to make it clear that they're not just on the first step to an outright acquisition any time soon. It's interesting that this would be coming from Johnson & Johnson, since in many cases they've been one of the less destructive acquirers in the business already. (Well, with some exceptions, like when they took over Scios).
The temptation to compare this policy with Pfizer's is almost overwhelming, but the two companies are in very different positions. For one thing, J&J has their medical devices and diagnostics businesses, which are both profitable and run on different rhythms than their pharma side. Even more importantly, they also aren't locked into a grow-or-die situation, needing larger and larger infusions of revenue to meet the expenses which get larger every time they go out and buy those revenue streams, which mean that they need to go buy some more and then. . .
The article says that J&J has no deals under consideration right now, but that this style of deal-making is definitely how the company plans to operate. There's definitely enough risk to be spread around - I just hope that there's enough reward for everyone, too.
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October 21, 2009
Posted by Derek
Steve Usdin at BioCentury sent along a reprint of the newsletter's annual "Back to School" issue from last month (available for open access here) in response to my note about "micropharma" the other day. And it's clear that he's been thinking along the same lines. Whether or not this model is going to work is another question, but that looks like something that we're going to be finding out.
As the issue notes, in a pithy quote from Mike Powell of Sofinnova, the key problem is "how to restructure an industry where it costs $100 million to answer a question but people are only willing to pay you $50 million for the answer." Since the amount of money being handed out is probably not going to increase any time soon, the only way out of that dilemma is to find some way for that first figure to go down.
One of the groups that won't be happy about that process are academic centers that are used to seeing their intellectual property as a potentially lucrative source of funds. The strike-it-rich days do not look to be coming back any time soon. Instead, BioCentury advises universities to get ready to adopt a "non-ROI" approach to developing their ideas, by use of grants, public-private consortia, and help from foundations and other nonprofits. (Perhaps a name like "delayed ROI" or, if you're being especially weasely about it, "enhanced ROI", might help that concept go down a bit smoother).
CRO firms are almost certainly going to have to be part of that process, since there are plenty of skills needed to push a drug target or molecule along that are not found in most universities. That, to me, would indicate a real market for a low-cost CRO outfit targeting academia. I'm not sure if anyone is serving that market, or trying to, but it would seem to have some potential in it. Anyone who can help to run should-we-kill-this experiments, without spending too much money getting the answer, will have something that looks to be in demand.
In general, this landscape would mean that ideas will go longer before companies are formed around them, with the idea that they can be tested out a bit without having to build new corporations to do it. (As another quote from the article had it, "The unmet need in the industry is drugs, not companies".) Payoffs will be slower, and they won't be as large when they come, either. Venture capital investors will be asked to have more patience under this model, and that's not something that they're necessarily noted for. And someone's going to have to have the money (and nerve) to form mid-sized organizations that will pick up the best of the things coming out of academia, since many of them still won't be quite ready to go right into a big organization. The non-humungous companies that have survived to this point might step up and fill this role, and BioCentury also suggests that Japanese and Indian companies might fill this space as well.
The big question is: will people be able to put up with this, or not? After all, no one's envisioning failure rates going down, they're just hoping that the failures will happen sooner and cost less money. Will they? It's not like "fail quickly" hasn't been a goal of companies in the business for years now. But sometimes it's hard to fail any other way than slowly (and expensively).
Well, the common theme to all this (and to most of the other crystal-ball reading going on these days) is that the industry isn't going to be able to go on in the way it's been accustomed to. If you ask a hundred people in this business what it's going to look like ten or fifteen years from now, the only thing you could probably get them to agree on is "Not like it does today". We'll just have to wait to see if they're all playing "Cheat the Prophet" or not. . .
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October 15, 2009
Posted by Derek
A couple of articles have come together and gotten me to thinking. Back during the summer, long-time medicinal chemist Mark Murcko published a short editorial in Drug Discovery Today comemmerating the Apollo 11 moon landing's 40th anniversary:
"People like me, who are old enough to actually remember the events of July 1969, are instantly assailed with powerful and reflexive emotions when we think back to the effect Apollo had on us: the excitement, awe and wonder. My family, like so many others, was obsessed with space exploration. The walls of our den were covered with NASA photos, diagrams and technical bulletins – anything we could get them to send us. Models of rockets hung from the ceiling by fishing line. . .We soaked it all in, and the events of that day remain a seminal memory of my childhood. It was glorious; nothing could possibly be more exhilarating.
And yet...there are some interesting parallels to what all of us, engaged in the roiling tumult of biomedical research, do here and now. Our mission – to invent new therapies that transform human health and alleviate suffering – captures the imagination as profoundly as did Apollo. Our efforts once were regarded with the same admiration as the NASA breakthroughs (and while public perceptions may be different today, our mission has not wavered). We are attempting, one could argue, even more complex technical achievements. . . ."
And just the other day I came across this piece in The New Atlantis entitled "The Lost Prestige of Nuclear Physics". (Via Arts and Letters Daily). Its thesis, which I think is accurate:
"The story of nuclear physics is one of the most remarkable marketing disasters in intellectual history. In the space of a few decades, the public perception of the atom’s promise to serve humanity, and the international admiration that surrounded the many brilliant people who unraveled the mysteries of matter, had collapsed. So pronounced was the erosion of attitudes toward nuclear physics that, by the late 1990s, several European physicists felt it necessary to establish an organization called Public Awareness of Nuclear Science for the explicit purpose of improving the public image of their discipline."
Of course, in that case, there was that little matter of the atomic bomb and the subsequent arms race) to contrast against the excitement of the scientific discoveries and their peaceful uses. One might argue that for the general public, it was all very admirable to be able to figure out the forces that kept atoms together, but when these forces turned out to have such alarming and immediate real-world consequences, the backlash was profound. And while I sympathize with the nuclear physicists, I have to only wish them luck in their attempts to regain a good public image. That's because those consequences are still very much with us, as a glance at the news will show.
But the fall from grace of drug research has been almost as profound, and we've never developed an equivalent of nuclear weapons, have we? In our case, I think the problem has been that we're a business. We bill people for our discoveries when they work. And as I've argued here, people will always have a much more emotional response to any issue that affects their physical health, and can quickly come to resent anyone that charges them money to maintain it. (Doctors, though, benefit from the one-on-one patient relationship. People hate hospitals, hate health insurance companies, and hate drug companies, but still respect their own physicians). This, as manifested by complaints about drug prices, uneasiness about hard-sell advertising, and suspicion about our motivations and our methods, seems to be what's sent public opinion of us into the dumper.
But in the end, Murcko has a point. We really are doing something good for humanity by working on understanding diseases and trying to find treatments for them. Not everything about the process is optimal, for sure, but can anyone argue that the broad effort of pharmaceutical research has been a bad thing? The problem is, it's easy to look around, and slide from there into self-pity. But moaning about how no one appreciates us is a waste of time. The best cure is, as far as I can see, to give people reasons to realize what we're worth.
People who've been pulled back from the brink of death from infectious disease or cancer already have those reasons. But there are so many terrible unmet medical needs still out there, which means that there's plenty of room for us both to do good and to show that we can do good. Yes, it will cost a lot of money to do that, which means that what cures will come will also cost money. But with the partial exception of air to breath, most of the necessities of life tend to involve money changing hands. That's not a disqualification.
So to the readers out there in the industry - go do some good work today. Don't spend too much time in your more useless meetings. Stand up in front of your fume hood or sit down in front of your keyboard and do something worthwhile. It's a worthwhile job, even if some people don't realize that yet.
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September 17, 2009
Posted by Derek
One of this blog's regular correspondents has just been attending a chemistry outsourcing conference (program here), and heard a very interesting talk from Stefan Loren of a Baltimore investment advisory firm, Westwicke Partners. Loren's a product of the Sharpless lab, who went on to Abbott, then Wall Street (Legg Mason and into the hedge fund business), and had some very provocative things to say about our industry:
His talk, "The Pharma Titanic: It's Time to Root for the Iceberg" presented a sobering view of the challenges that big pharma will have to deal with if it wants to survive.
Loren opened with an overview of the US national health care debate. Regardless of the ultimate form that a national system takes, he believes we'll see mandatory insurance; this will be good for big pharma. He also believes that there will be strong pressure for mandatory comparative effectiveness testing...probably not good for big pharma. Who will pay for this and what resources this would require is another matter. Wearing his investment advisor glasses, he sees global pharma sales declining, led by North America, with future growth coming in Asia and Latin America. He also sees evidence of healthcare avoidance in the US: unfilled prescriptions, unfinished courses of prescriptions, and people just not visiting medical and dental practitioners - not a good trend.
The coming wave of patent expirations of the top 10 drugs will hit big pharma hard. Generics will grow: In 5 to 10 years, he predicts that 80 percent of ALL prescriptions will be generic. When coupled with the meager investments in bow wave research over the past 15+ years, as measured by IPOs, there's trouble ahead. Global biotech IPOs are in the toilet and the US is no longer viewed by the investment community as the global leader in biotech. There have been an unprecedented number of bankruptcies in biotech. There is going to be a huge oversupply of production capacity for small molecule manufacturing. ROIs for pharma and biotech are largely negative...it gets worse. He calls this the "death spiral."
Pharma pipelines are seen as very poorly run and wasteful. Poor projects linger far longer than they should. Too much emphasis is placed on me-too and line extensions. Too much emphasis is placed on acquisitions and licensing rather than innovation. Here it comes: he says "I have NEVER seen a merger that worked" We were then entertained by a chart showing Pfizer's stock market performance over the period of time from pre-WLA, through Pharmacia-Upjohn, and now Wyeth...you would not be a happy camper if you had put your retirement account in Pfizer management's hands and their merger mania. Wall Street has a saying "Two dogs don't make a kennel." Of course, what we hear is "this time it's different" along with the usual happy talk about synergies. Loren does believe that mergers can work and can be synergistic if the two companies merging are small...large mergers just don't work and large companies get paralyzed by bureaucratic inertia.
His solution? Break up large pharma into therapeutic areas and build shared networks between distinct entities. Small organizations can operate far more efficiently in decision making about research directions - use the network to maintain manufacturing efficiencies. Small focused companies will revitalize the industry and offer opportunities for scientists coming out of academia. In response to a question from the audience regarding Merck's ambitions to adopt this networked architecture, he doesn't believe they can make it work.
He does see light at the end of the tunnel with respect to supply chain assurance driving a return to sanity. The heparin, glycerin, and melamine disasters have awakened people and the cost of securing global supply chains is going to make US industry much more competitive. It also will focus serious scrutiny on big pharma. The "next heparin" case will have serious personal consequences for big pharma managers. . ."
Well, a good amount of this I agree with, but some of it I'm not sure about. Taking things in order, I don't know about a decline in US sales, but Asia is most definitely where a lot of companies are expecting growth. (And for "Asia", you could substitute "China" and be within margin of error). And his generic prescription figures may not be right on target, but the trend surely is. We've discovered a lot of useful drugs over the years, and anything new we find has to compete against them. The only way to break out of that situation is to find drugs in new categories entirely, and we all know how easy that is.
But as for the US not being the global leader in biotech - well, if we aren't, then who is? You could possibly make a case for "no clear leader at all, for now", but I think that's as far as I can go. And that coming oversupply of manufacturing for small molecule drugs, which may well be real, will be bad news for the companies that have already invested in that area, of course, but good news for up-and-comers, who will be able to pick up capacity more cheaply.
But Loren's comments about mergers I can endorse without reservation. I've been saying nasty things about big pharma mergers since this blog began, and nothing in the last seven years has changed my mind. And I certainly hope that his idea of smaller companies coming along to revitalize the industry is on target, because it's sure not going to be revitalized by (for example) Pfizer buying more people. I've made that Pfizer stock-chart point of his here, as well - like the rest of the industry, PFE stock had a wonderful time of it in the 1990s, but this entire decade it's been an awful place to have your money.
I expect these comments to bring in a lot of comments of their own - so, how much of this future are you buying?
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September 4, 2009
Posted by Derek
Well, I didn't see this one coming. Dainippon Sumitomo has announced that they're buying Sepracor. My first thought on reading this was "Are they sure they want to do that?"
I say that because the ostensible reason that the Japanese company is pulling out their wallet is that they're looking to replace declining revenues at home. In that case, why are they buying declining revenues over here? Their flagship product (Lunesta) is going to be going off patent in the not-too-distant future, and they don't have a gigantic pipeline of stuff behind it.
The answer seems to be a deficiency that many Japanese firms have felt: a lack of boots-on-the-ground sales staff over here. The US is the biggest single profit center for the worldwide drug industry, and it's impossible for a big company to ignore that. But realizing all those potential profits isn't easy, if you're coming in from a standing start. (It's not like Dainippon Sumitomo has a big profile over here). Says the Boston Globe:
In a note to investors on the sale, Credit Suisse analyst Scott Hirsch said the deal made sense for Sepracor. He noted that the company is generating $300 million to $400 million in cash a year but has a limited pipeline of new drugs in development and its existing products will face competition from generic drugs in coming years. Hirsch also doubted another suitor would step forward with a better bid.
“In our view, if a US firm wanted Sepracor, that likely would’ve happened already, as there have been plenty of lookers over the years,’’ said Hirsch, who has a neutral rating on the stock. “We think Dainippon Sumitomo is more interested in the sales platform and operating leverage than the revenue stream.’’
So where does that leave Sepracor's research operations? It's true that Takeda has apparently been very kind to Millennium's research staff, but that was a more research-driven deal than this one seems to be. I'm sure the folks at Sepracor are looking for a little more clarity on that question. The problem is, the company's revenues have come almost entirely from clever (albeit irritating) patent-busting moves (active metabolites, pure enantiomers, and so on), but these strategies ran out of gas some time ago as the rest of the industry tightened up its IP protection. Rightly or not, Sepracor doesn't have a reputation as an outfit with a lot of great in-house research ideas. Outside of a ready-made sales force, what exactly do they have to offer?
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August 27, 2009
Posted by Derek
Here's an interesting paper that some of you may have seen in J. Med. Chem.: "Heteroaromatic Rings of the Future". That's an odd title, but an appropriate one.
For the non-chemists in the crowd who made it to this paragraph, heteroaromatic rings are a very wide class of organic compounds. They're flat cyclic structures with one or more nitrogen, oxygen, or sulfur atoms in the ring - I'll leave out explaining the concept of "aromaticity" for now, but suffice it to say that it makes them flat and gives them some other distinct properties. These structures are especially important in medicinal chemistry. If you stripped out all the drugs that contain something from this class, you'd lose a bit under half of the current pharmacopoeia, and that share has lately been increasing.
The authors have sat down and attempted to work out computationally all the possible heteroaromatic systems. If you include a carbonyl group as a component of the ring, you get 23,895 different scaffolds (and only 2986 if you leave the carbonyl out of it). Their methods to define and predict that adjective "possible" are extensive and worth reading if you're curious; they did put a lot of effort into that question, and their assumptions seem realistic to me. (For example, right off, they only considered mono- and bicyclic systems, 5- and 6-membered only, C, H, N, O and S).
At any rate, only 1701 of those 23,985 have ever been reported in the literature. And it looks as if reports of new ring systems reached a peak in the late 1970s, and have either dropped off or (at the very least) never exceeded those heights since then. The authors estimate that perhaps 3,000 of their list are synthetically feasible, with a few hundred of them being notably more likely than the rest. Their paper, in fact, seems to be a brief to alter that publication trend by explicitly pointing out unexplored synthetic territory. It wouldn't surprise me if they go back in a few years to see if they were able to cause an inflection point.
I hope they do. I'm a great believer in the idea that we medicinal chemists need all the help we can get, and if there are reasonable ring systems out there that we're not exploiting, then we should get to them. Adventurous chemists should have a look.
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August 26, 2009
Posted by Derek
So, if you're a patient with a rare disease (or a relative of a patient with one), and you have an idea for repurposing an old drug for treatment. . .and you get a company interested, and it actually works. . .works to the point that the company takes in a billion or two dollars a year. . .what then?
Some readers will have guessed that I'm talking about thalidomide and Celgene, and right they are. Beth Jacobsen is the person involved - her husband died of multiple myeloma, but her medical sleuthing had turned up the idea of using thalidomide as a therapy for the disease, and she kept up the pressure to have the idea tried out. Celgene's mentioned her in annual reports, and she's been thanked by name in a publication on the clinical results.
But now she's suing Celgene, saying that they misappropriated her idea. Complicating the issue is the question of whether the late Judah Folkman was really the source of the inspiration, in a phone conversation with Jacobsen (earlier versions of the story have it that way, but the lawsuit apparently tells it differently). Which way did it happen? Is Jacobsen indeed owed compensation? And whether she is or not, will she be able to convince a court? Matt Herper has the story at Forbes.
I'll defer my own comments until I know a bit more about the case, but this is definitely an interesting one. I can add something that might be of relevance, though: a search in PubMed for "thalidomide myeloma" turns up 64 pages of references, almost all of them post-1999. But there is this one, from Italy in 1963. Has the idea been around for that long? Someone who can track down that journal can tell us. . .
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August 19, 2009
Posted by Derek
There's an interesting article up over at InVivoBlog, and I wanted to see what the readership here thought of its main premise. Subtracting out the cute ecological analogies (Big Pharma as polar bears, for example), you get to this:
. . .For example, AstraZeneca, Novartis, and Bristol-Myers, all operate in the fields of neuroscience, oncology, and cardiovascular health. While some pharmas involve themselves in nutritionals, animal health, infectious disease, and other fields, all of these companies also engage with a mixing pot of therapeutic areas.
The relative strategic uniformity isn’t generally the case with the leading companies in other industries. In the high-tech industry, for example, there is a much higher level of specialization. Google is mainly in the advertising business; Microsoft, software; Research in Motion, in wireless solutions. You aren’t likely to see Facebook manufacturing semiconductors any time soon. (Yes we are aware of Microsoft’s Bing search engine and the new Google Chrome OS, but still.)
It is likely that health care businesses will evolve in a similar fashion. The leaders of the future will be those with unique and complex models which sub-speciate into differentiated forms. Companies will focus nearly all of their efforts on a single therapeutic area, becoming “immunology companies” or “cancer companies”. These companies will also become more integrated across sectors. A cardiology company will sell diagnostics, devices, and therapeutics pertaining to cardiovascular health.
I'm not so sure, myself. I can see reasons for this to happen, but I can also see forces that will pull in other directions. For one thing, I'm not sure if there are enough targets in some of these therapeutic areas to keep even a medium-sized company running. The host-of-smaller-companies model, each of them trying to hit it big, seems like a better fit, as long as they can share an ecosystem (there I go, too) with the larger deep-pocketed multi-area players.
Another problem is that I think the barriers to, say, a cardiovascular drug company becoming also a cardiovascular device company are higher than the ones to it becoming a cardiovascular-and-diabetes drug company. Moving into another drug discovery area at least lets you use some of your existing staff and resources, while heading out into diagnostics or devices will probably take you into territory that you don't know so well.
And besides, I think that the analogy with other industries doesn't hold up very well. The authors list off a few software and hardware companies, but don't Google and Microsoft have their hands in a lot of different areas? And have car makers (domestic or foreign) settled down into making only SUVs, only pickup trucks, or only sedans? Not that I've seen. Know of any movie studios making nothing but adventures or romantic comedies? Or any grocery chains that only sell vegetables, but not fruit?
In all those cases, the existing infrastructure lets such companies expand, at relatively lower cost, into related areas that will diversify their customer base. Medical devices and diagnostics may look like a similar situation, but I really don't think it is.
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August 14, 2009
Posted by Derek
I do a lot of talking around here about how the general public doesn't really have a good idea of what goes on inside a drug company. But a conversation with a colleague has put me to thinking that this might be largely our own fault.
Consider the public face that our industry projects. Look at the press releases and the advertisements - what's the impression that you get? That there is a defined process for discovering drugs, for one thing, and what's more, that we are the master of it. Now, I know that we don't always send out that message. There are attempts to tell people about how many compounds have to be made, how many projects end up failing. But for the most part, we don't press-release that stuff.
No, the press releases are for the investors, and for them, we want to project that we're productive, confident, resourceful. . .in short, that we've got things under control. The last thing Wall Street wants to hear about is that you don't always know which drug targets are the right ones to work on, that you're not quite sure of the best way to prosecute them, and that (despite continuing efforts) these conditions look to obtain for quite a while to come.
And this attitude is one of the things that seeps out into the general public consciousness. That, I think, is why you get people who are convinced that we could cure a lot of these diseases, but that we just don't - you know, for all sorts of evil and profitable reasons. They've bought into our hype. If we haven't cured the common cold, that must be because we make a lot more money selling people stuff for it, not because antiviral drug development is flippin' difficult. (Especially for something like the common cold, but that's another story).
Now, to some extent, there is a defined process for discovering drugs - well, several defined processes. It's just that it doesn't work all that well, not on the absolute scale. No one could look at clinical failure rates of around 90% and say that we've got everything covered. Weirdly, that's one of the things that gives me hope for the industry, that even small improvements would make a big difference. What if only 80% of all the compounds we took into the clinic crashed and burned? That would be great! It would double our success rate!
But when I mention that 90% problem to people outside the drug industry, they usually have no idea. All they hear about are the successes. Perhaps it would do us some good to mention the failures once in a while?
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August 10, 2009
Posted by Derek
There's a recent article in Nature Reviews Drug Discovery that has some alarming figures in it. This is yet another look at the industry from McKinsey, and we'll get to their McKinseyish solutions in a moment. But first, some numbers:
They calculate that the return on investment (ROI) from small-molecule drug research was nearly 12% during the late 1990s, but since 2001 it's been more like 7.5%. If true, that's not a very nice number at all, because their data indicate that most companies assume a capitalization rate of between 8.5 and 11% - in other words, internal industry estimates of what it costs to develop a drug over time now run higher, on average, than the actual returns from developing one.
Another alarming bit of news is their analysis of Phase III failures. From 1990 to 2007 there were 106 of those nasty, expensive events. But the McKinsey figures are that 45% of those failures were due to insufficient efficacy versus placebo - which, in theory, is the sort of thing you're supposed to be rather more sure about by that point, what with having run Phase II trials for efficacy and all. (I'd like to know how many Phase III trials succeeded over that time period as well - what's the overall percentage of failure at that point?) Another 24% of the failures were due to insufficient efficacy versus the standard of care, which is at least a bit more understandable. But together, nearly 70% of all Phase III failures aren't due to tox, they're because the drugs just didn't work as well as their developers thought.
Back to those ROI figures, though. Either those numbers are wrong, or we're in quite a fix. (Of course, since the authors are consultants, their viewpoint is likely that those numbers are the best available, that all of us are indeed in a fix, and that if we pay them money they'll help us out of it). The paper does have some recommendations, to wit:
1. Cut costs, but not the obvious stuff that companies have been doing. Instead, they suggest broader strategies such as considering whether a company's clinical trials are consistently over-powered, and to not do quite as much "planning for success", since most development programs fail. That is, don't automatically gear up for a full overlapping development workup for every compound in the pipeline, but consider staging things so you won't waste as much effort if (or when) they crash out. And naturally, they also suggest outsourcing whatever "non-core" functions there are available.
2. Work faster. I have to say, though, that if I got paid every time I heard this one, I wouldn't have to work. The authors point out, correctly, that delays in getting a compound to market are indeed hideously costly, but on-the-other-hand it by saying that "Of course, gains in speed cannot come from short cuts: the key to capturing value from programme acceleration is choosing the right programmes to accelerate". And that leads into their third category, which is. . .
3. Make better decisions. This isn't quite a much of an eye-roller as it might seem, because this is where they bring in those Phase III numbers above. Such failures suggest some deeper problems:
"In our experience, many organizations still advance compounds for the wrong reasons: because of momentum, 'numbers-focused' incentive systems or through waiting too long to have tough conversations about the required level of product differentiation."
And I have to say, they have a point. People who've been in the industry for some years will have seen all of those mistakes made. for sure. But figuring how to stop those things from happening is the tough part, and presumably that's one of the things that McKinsey is selling.
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July 31, 2009
Posted by Derek
I linked yesterday to a post by Megan McArdle about health care reform. And while I realize that everyone got into a shouting match in the comments to my own post on the subject - and people sure did in the comments to hers; it's endemic - I wanted to quote a section from her on drug discovery:
Advocates of this policy have a number of rejoinders to this, notably that NIH funding is responsible for a lot of innovation. This is true, but theoretical innovation is not the same thing as product innovation. We tend to think of innovation as a matter of a mad scientist somewhere making a Brilliant Discovery!!! but in fact, innovation is more often a matter of small steps towards perfection. Wal-Mart’s revolution in supply chain management has been one of the most powerful factors influencing American productivity in recent decades. Yes, it was enabled by the computer revolution–but computers, by themselves, did not give Wal-Mart the idea of treating trucks like mobile warehouses, much less the expertise to do it.
In the case of pharma, what an NIH or academic researcher does is very, very different from what a pharma researcher does. They are no more interchangeable than theoretical physicists and civil engineers. An academic identifies targets. A pharma researcher finds out whether those targets can be activated with a molecule. Then he finds out whether that molecule can be made to reach the target. Is it small enough to be orally dosed? (Unless the disease you’re after is fairly fatal, inability to orally dose is pretty much a drug-killer). Can it be made reliably? Can it be made cost-effectively? Can you scale production? It’s not a viable drug if it takes one guy three weeks with a bunsen burner to knock out 3 doses.
I don't think a lot of readers here will have a problem with that description, because it seems pretty accurate. True, we do a lot more inhibiting drug targets than we do activating them, because it's easier to toss a spanner in the works, but that's mostly just a matter of definitions. And this does pass by the people doing some drug discovery work in academia (and the people doing more blue-sky stuff in industry), but overall, it's basically how things are, plus or minus a good ol' Bunsen burner or two.
But not everyone's buying it. Take this response by Ben Domenech over at The New Ledger. We'd better hope that this isn't a representative view, and that the people who are trying to overhaul all of health care as quickly as possible have a better handle on how our end of the system works:
. . .But needless to say, this passage and the ones following it surprised me a great deal. Working at the Department of Health and Human Services provided me the opportunity to learn a good deal about the workings of the NIH, and I happen to have multiple friends who still work there — and their shocked reaction to McArdle’s description was stronger than mine, to say the least.
“McArdle clearly doesn’t understand what she’s writing about,” one former NIH colleague said today. “Where does she think Nobel prize winners in biomedical research originate, academic researchers or in Pharma? Our academic researchers run clinical trials and develop drugs. I’m not trying to talk down Pharma, which I’m a big fan of, but I don’t think anyone in the field could read what she wrote without laughing.”
Well, I certainly could make it through without a chuckle, and I'll have been doing drug discovery for twenty years this fall. So how does the guy from HHS think things go over here?
To understand how research is divided overall, consider it as three tranches: basic, translational, and clinical. Basic is research at the molecular level to understand how things work; translational research takes basic findings and tries to find applications for those findings in a clinical setting; and clinical research takes the translational findings and produces procedures, drugs, and equipment for use by and on patients. . .
. . .The truth, as anyone knowledgeable within the system will tell you, is that private companies just don’t do basic research. They do productization research, and only for well-known medical conditions that have a lot of commercial value to solve. The government funds nearly everything else, whether it’s done by government scientists or by academic scientists whose work is funded overwhelmingly by government grants.
Hmm. Well-known with a lot of commercial value. Now it's true that we tend to go after things with commercial value - it is a business, after all - but how well-known is Gaucher disease? Or Fabry disease? Mucopolysaccharidosis I? People who actually know something about the drug industry will be nodding their heads, though, because they'll have caught on that I'm listing off Genzyme's product portfolio (part of it, anyway), which is largely made up of treatments for such things. There ar many other examples. Believe me, if we can make money going after a disease, we'll give it a try, and there are a lot of diseases. (The biggest breakdown occurs not when a disease affects a smaller number of people, but when almost no one who has it can possibly pay for the cost of developing the treatment, as in many tropical diseases).
But even taking Domenech's three research divisions as given - and they're not bad - don't we in industry even get to do a little bit of translational research? Even sometimes some basic stuff? After all, in the great majority times when we start attacking some new target, there is no drug for it, you know. We have to express the protein in an active form, work up a reliable assay using it, screen our compound collections looking for a lead structure, then work on it for a few years to make new compounds that are potent, selective, nontoxic, practical to produce, and capable of being dosed in humans. (Oh, and they really should be chemical structures that no one's ever made or even speculated about before). All of that is "productization" research? Even when we're the first people to actually take a given target idea into the clinic at all?
That happens all the time, you know. The first project I ever worked on in this industry was a selective dopamine antagonist targeted for schizophrenia. We were the first company to take this particular subtype into the clinic, and boy, did we bomb big. No activity at all. It was almost as if we'd discovered something basic about schizophrenia, but apparently that can't be the case. Then I worked on Alzheimer's therapies, namely protease inhibitors targeting beta-amyloid production, and if I'm not mistaken, the only real human data on such things has come from industry. I could go on, and I will, given half a chance. But I hope that the point has been made. If it hasn't, then consider this quote, from here:
“. . .translational research requires skills and a culture that universities typically lack, says Victoria Hale, chief executive of the non-profit drug company the Institute for OneWorld Health in San Francisco, California, which is developing drugs for visceral leishmaniasis, malaria and Chagas' disease. Academic institutions are often naive about what it takes to develop a drug, she says, and much basic research is therefore unusable. That's because few universities are willing to support the medicinal chemistry research needed to verify from the outset that a compound will not be a dead end in terms of drug development."
The persistent confusion over what's done in industry and what's done in academia has been one of my biggest lessons from running this blog. The topic just will not die. A few years ago, I ended up writing a long post on what exactly drug companies do in response to the "NIH discovers all the drugs" crowd, with several follow-ups (here, here, and here). But overall, Hercules had an easier time with the Hydra.
Now, there is drug discovery in academia (ask Dennis Liotta!), although not enough of it to run an industry. Lyrica is an example of a compound that came right out of the university labs, although it certainly had an interesting road to the market. And the topic of academic drug research has come up around here many times over the last few years. So I don't want to act as if there's no contribution at all past basic research in academia, because that's not true at all. But neither is it the case that pharma just swoops in, picks up the wonder drugs, and decides what color the package should be.
But what really burns my toast is this part:
So Pharma is interested in making money as their primary goal — that should surprise no one. But they’re also interested in avoiding litigation. Suppose for a moment that Pharma produces a drug to treat one non-life threatening condition, and it’s a monetary success, earning profits measured in billions of dollars. But then one of their researchers discovers it might have other applications, including life-saving ones. Instead of starting on research, Pharma will stand pat. Why? Because it doesn’t make any business sense to go through an entire FDA approval process and a round of clinical trials all over again, and at the end of the day, they could just be needlessly jeopardizing the success of a multi-billion dollar drug. It makes business sense to just stand with what works perfectly fine for the larger population, not try to cure a more focused and more deadly condition.
Ummm. . .isn't this exactly what happened with Vioxx? Merck was trying to see if Cox-2 inhibitors could be useful for colon cancer, which is certainly deadly, and certainly a lot less common than joint and muscle pains. Why didn't Merck "stand pat"? Because they wanted to make even more money of course. They'd already spent some of the cash that would have to have been spent on developing Vioxx, and cancer trials aren't as long and costly as they are in some other therapeutic areas. So it was actually a reasonable thing to look into. If you're staying in the same dosing range, you're not likely to turn up tox problems that you didn't already see in your earlier trials. (That's where Merck got into real trouble, actually - the accusation was that they'd seen signs of Vioxx's cardiovascular problems before the colon cancer trial, but breezed past them). But you just might come up with a benefit that allows you to sell your drug to a whole new market.
And that might also explain why, in general, drug companies look for new therapeutic opportunities like this all the time with their existing drugs. In fact, sometimes we look for them so aggressively that we get nailed for off-label promotion. No, instead of standing pat, we get in trouble for just the opposite. Your patented drug is a wasting asset, remember, and your job is to make the absolute most of it while it's still yours. Closing your eyes to new opportunities is not the way to do that.
The thing is, Domenech's heart seems to be mostly in the right place. He just doesn't understand the drug industry, and neither do his NIH sources. Talking to someone who works in it would have helped a bit.
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