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
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August 20, 2008
Posted by Derek
Well, today’s subject isn’t a cheerful data set, but it certainly deserves some thought. Over at Pharmalot, Ed Silverman has some data from consulting firm AVOS Life Sciences, who have sat down to estimate how well various drug companies will do with revenue from new drugs over the next few years.
As of 2007, they have the industry average at about 77 cents coming from new products (defined as those launched within the previous five years) for every dollar lost from patent-expiring older ones. That doesn’t sound very good, but the average is a bit misleading, since it runs from the highs of Eli Lilly ($6.64/1), Amgen ($4.50/1) and Roche ($4.03/1) down to Sanofi-Aventis (11 cents new per dollar loss on the old). But it’s true that most everyone else is well under a dollar. It would be a lot of work, but it would be interesting to know (calculating by the same methods) how that ratio has changed over the last twenty years – that would give us some perspective on where we stand now.
But AVOS has gone out to estimate the picture in 2012, and it makes today’s numbers seem like a free buffet. Of the fourteen drug makers on their list, only Schering-Plough shows a robust increase in terms of how much it’s expected to make from new products versus its declining ones. GSK shows a modest improvement – and everyone else goes down.
That’s as in down, dooby doo, down down. The hardest-hit in terms of the actual numbers are Pfizer, AstraZeneca, Roche, and Sanofi-Aventis, all of whom are projected to be making pennies (or, gulp, nothing at all) from new products compared to what’s heading down the chute for them by then. In percentage terms, Roche and Eli Lilly are worst off – they look good now, as mentioned above, but the eventual losses of things like Zyprexa kick the ratios over good and hard. (Sanofi-Aventis goes down to zero, but only from that $0.11 figure, so it’s at least not going to be such an adjustment for them!)
As I say, I don’t have access to the underlying data, but the broad picture seems about right. There are a lot of big patent expirations coming up in the next few years, and not enough promising products coming on to replace them. According to AVOS, Roche and Sanofi-Aventis aren’t projected to have any new product launches at all between now and 2012, which can’t be good.
It’s worth remembering that figures like these are likely to show big swings even under normal conditions. Imagine a company with a big product that it launches, which gradually turns into a blockbuster. Near the end of its patent life, it launches another winner of the same type, which grows into another big seller. Everything’s fine! But the ratio of new revenue/expiring revenue is going to swing around a lot as you follow those sales numbers, sort of like derivatives in calculus, veering from too-high to too-low, although the company itself is sailing along pretty well. Let’s hope that this is some of the background for these numbers as well. The problem is, I don’t think that can explain all of them. . .
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July 24, 2008
Posted by Derek
I’m going to expand on one of the points brought up yesterday, about the reported drug industry executive who was confident that his company’s Alzheimer’s therapy was ready to go out and make billions of dollars. It was that word “confident” that set me off, I think.
Because that’s not a word that you hear much of in this industry. The strongest form that you’ll come across is something like “fairly confident”, which is how you feel when you send in a compound that’s a minor change off something that’s already active, or how you feel about screening a target that’s a close homologue of something you already have plenty of ligands for. You can be pretty sure in those cases that something’s going to hit – but you’ll note that both of those are pretty far upstream in the drug discovery process. As you move toward animals, that confidence begins to look pretty ragged, and depending on the disease, it can just flat-out evaporate.
Despite all our efforts to avoid the expensive little beasts, there is still no way to be sure about how your compound is going to act in an animal until you’ve put it into an animal. That goes for predicting its peak blood levels, its half-life, its metabolites, and the duration and degree of its efficacy. You can have your compounds all ranked in order of how you think they’ll perform, and that list will, every time, be reordered after a first round of animal testing.
And when you go further, you really have no idea. As I’ve said here before, if you don’t cross your fingers when you take a compound into two-week toxicity testing, you haven’t been doing this stuff very long. Despite all efforts to avoid this expensive step, two-week (and four-week and longer) tox testing in animals will always, always tell you things you didn’t know. (Most of the time it’ll tell you things you didn’t particularly want to hear). No one worth their salary will ever use the adjective “confident” before the first multiweek tox data come in.
So much for animals: how about people? Well, despite all our efforts, there are still surprises in Phase I dosing, the tip-toe clinical stage where you look for blood levels in healthy volunteers. The animal pharmacokinetic data tell you where to start the doses in humans, but you can still get ambushed. I worked on a receptor agonist project once where the human blood levels came back at just about 10% of what we’d predicted, so back to the drawing board we went. No, I’ve never heard anyone describe themselves as “confident” before Phase I.
And that’s an easy step compared to Phase II, where for the first time you put your drug into sick patients. The failure rate in Phase II is just abominable, and stands as an indictment of just how little we understand about the biochemistry of human disease and how to modify it. When you consider a central nervous system disease like Alzheimer's, the source of the "confident" quote that started this digression, the failure rate is over 90%. Our understanding of the causes and progression of Alzheimer's is very poor. That's as opposed to a more well-worked-out condition like, say, hypertension, where our understanding is merely quite inadequate.
But if you make it through that fine sieve, you move on to Phase III, a larger and more real-world look at the patient population. If your Phase II trial was designed to provide a robust test, rather than just to make you and your investors feel good, you can hope that your Phase III will work out. But the whole time it's going on, the prudent drug developer will remember that the biggest, most well-funded, and most competent research organizations in the world have all taken huge cratering dives in Phase III. You know a lot more about your compound by this stage, so these disasters don't happen as often - but that means that when they do, they rise right up out of the floor in front of you. No, you can feel better by Phase III, but "confident" is pushing it.
How about when your drug goes to the FDA? Try asking any drug company executive if they'd like to go on record as being "confident" of regulatory approval. And when your drug actually goes to market? Is anyone really confident about those projections from the people in marketing? Pfizer sure talked a good game about Exubera, remember. Don't forget, too, that nasty side effects can always be waiting out there in the larger patient population. Even after your drug goes out and starts earning a living, it can be completely torpedoed at any time. Baycol, Vioxx, Avandia - you can name more.
So that's the story: you can never kick back and relax in this business. For all the perception that some people have of the drug industry as a sure-fire money machine, it sure doesn't look that way from inside. Anyone who describes themselves as "confident" about their new experimental medication is trying to fool their listeners. Or themselves. Maybe both.
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July 7, 2008
Posted by Derek
I thought I’d start out the week by opening the mailbag for a recent reply to my posts about Pfizer’s research cutbacks. Here’s a perspective that you won’t get from me, at any rate:
You never surprise me of your uncanny ability to cast good news in a negative light.
Pfizer has been a bloated company following its acquisitions of Warner Lambert and Pharmacia & Upjohn. The company should have rationalized its workforce, including sales, marketing, and most especially R&D, a long time ago. So, hopefully, you are correct and there will be massive layoffs in R&D soon. Why should Pfizer spend all that money on high risk, low probability of success R&D projects?
Pfizer's belated cost-cutting will make it a leaner and more focused company. All the bad news is out there. Pfizer generates over $7 billion in free cash flow annually and pays a 7.4% dividend. Projected 2012 earnings per share (without Lipitor) are $2.05. So the stock is trading today fully discounting Lipitor and any possible good news the next 5 years. Does that really make sense to you?
So keep up your trash talk, so to speak. Pfizer today is money in the bank. The lower you can drive the stock price, the greater the future return. I just love folks like you who help to create great buying opportunities. Are you certain you're not buying Pfizer as you trash talk??
My response? Well, I can reply on several levels. I’m actually going to skip the outraged how-dare-you stuff about what a great thing it is that all those research people are losing their jobs, though. Let’s just take that as having been delivered, because I think a lot of good invective would just be wasted, anyway. We’ll keep this on a strictly business level, since my correspondent is nothing if not all business.
And from a business perspective, he has the beginning of a point. As many readers can attest, Pfizer’s in-house research productivity has not been good – at least, nowhere near as good as it’s had to be to sustain a company as huge as Pfizer. (There’s the problem, actually – as I’ve said before, the one thing that certainly doesn’t scale when a company gets larger is research productivity). So from my correspondent’s perspective, what do you do with the underperforming units of a company? You lop ‘em off, like pruning a shrub to get rid of unsightly branches.
Of course, one branch of a bush is pretty much like another as far as the survival of the whole plant goes, but cutting the R&D out of an R&D organization is not without risks. A Pfizer investor might be excused for forgetting that, since most of the company’s money has been made off the research of other labs, but the Lipitors do have to come from somewhere, eventually. And try as I might, I just can’t see Pfizer buying its way out of its current troubles. So, why should Pfizer spend its money on those "high risk, low probability of success R&D projects"? Because that's the only kind of R&D projects there are.
Now, as to whether all the bad news is already out there, I won't speculate. But I do know that if I had a dollar for every time someone proclaimed that all the bad news was already in some company's stock, I wouldn't have to work for a living. I invite my correspondent, though, to take a look at the company's history before sitting back and trusting those EPS numbers from the past. Let's take a trip down memory lane, back to the days of 2002, when the analysts said that it was going to earn about $1.60 per share for that year, $1.84 in 2003, and $2.14 per share in 2004. Watch it go! And after that, hey, who knew. . .well, reality intervened on those forecasts, but by 2005, now, double-digit growth was on the way.
Let's take a look at the company's actual financials and stock price over that period. It isn't inspiring. Click around on that chart: if you'd bought Pfizer ten years ago, you would have been flat with the index until early 2004, but since then it's been a disaster. Now, like my correspondent, you may be able to look at this and figure that hey, what could go wrong, and that all the bad news just has to be in by now, and that those earnings forecasts will finally start working out. Or. . .
So let's file that statement away for future reference: "Pfizer today is money in the bank". That's July of 2008, folks, and if you'd like to put some of your cash down on that statement, PFE is available during normal trading hours. I'll sit this one out.
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June 2, 2008
Posted by Derek
A longtime reader pointed me to this article from Business Week. Fuji Film of Japan, facing all kinds of problems like the other film makers of the world, has decided to put some of its money into a more exciting, profitable, high-margin business: pharmaceuticals! Back in February they made an offer for small-to-medium sized Toyama.
Readers who have been around the industry for a few years may shudder, remembering Kodak's disastrous experience with Sterling-Winthrop. (You couldn't have paid a gang of saboteurs to do a better - well, worse - job on Sterling and its employees; this PDF will give you some of the story). The details of the interview, which gets crazier as it goes on, do not inspire happy feelings. Well, unless schadenfreude counts as "happy", that is. Feast on this, for example, from Yuzo Toda, the company's VP for Life Sciences:
"The film in your camera is about 15 microns (one-thousandth of a millimeter) thick. Our color film has 17 different layers, each with a different function, and it contains nearly 100 different chemicals. Controlling the chemical reaction to develop these photos is extremely difficult. You have to start and stop the various chemicals at exactly the right time to make it all work. The trick is all in the conversion of chemicals. Drugs targeting a specific [organ or receptor in the body] work the same way. We have a chemical library of 200,000 compounds, which we think will help us with creating new compounds, and we have an expertise in nanotechnology. From our viewpoint, it's more a question of why not pharmaceuticals?"
Well, with a library of two hundred thousand compounds (cue Mike Myers as Dr. Evil, demanding his million dollars), I don't see what's going to hold them back. Considering the sorts of wonderfully druglike photosensitive absorbers and dye-coupling agents they're stocked up with, I'm sure the screening hit rates will be exciting, too. And yes, I am considering making "The trick is all in the conversion of chemicals" the new slogan of this blog, and I urge Fuji to make it the advertising tag line for their whole drug business.
But let's not pick on just one guy. Here's Toshio Takahashi, the company's CFO:
"Many drugs are made in higher dosages than we need. That's because they can't be fully absorbed by our bodies. It's a waste of resources, and it can have an adverse effect on organs such as the stomach and liver. We're researching compounds that will work in smaller doses because they will target a specific part of the body."
Now there's a thought. I wish Fuji luck with these innovative ideas, although I don't think I'm capable of delivering the quantities of luck that it appears they'll need. I assume that the people at Toyama don't talk this way, i.e., as if they'd just been beamed in from Neptune and then hit over the head, and for all I know they're burying their heads in their hands as they read this stuff, too. Who knows, maybe if Fuji can keep their hands off of them and not impart too many lessons from the film business, the deal could work.
But for now, check out the interview, and be glad it's not you. Sheesh.
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May 28, 2008
Posted by Derek
So Takeda has opened up its roomy wallet once again, and signed on with Alnylam for a nonexclusive partnership in oncology and metabolics. The InVivoBlog has all the details, but the main point is that Takeda had to put $100 million down at the beginning, with all the milestones, options, and extras coming after that. And Alnylam’s CEO seems to be saying that he’s not going to bother with any offers down in the mere double-digit millions, so don’t waste the man’s time. Roche didn’t – they signed a non-exclusive deal of their own with the company last year.
There are several interesting things about this. One is that Takeda is really in a deal-making mode, apparently, which (historically) has been unusual for a Japanese company. But no Japanese drug company has ever quite been in the position that they find themselves in – a big international player with patent expirations coming – so I guess we should expect something new. More remarkable, though, is the nonexclusive nature of all these deals that Alnylam is making. Other things being equal, of course, larger drug companies much prefer exclusive deals, or a complete buyout. That's what Merck did with Sirna in this same area, in what was no cheap deal, and one that led to Alnylam terminating their own Merck agreement. In this case, though, the amount of money for such terms has apparently been too much for anyone to handle, or Alnylam has perhaps just refused to go exclusive. It’s worth thinking about the position they feel they must be in, to make that stick.
The last time I can remember a situation like this was when the genomics frenzy was on. And I think the RNAi business is turning into something very similar, for very similar reasons: fear and greed, the two flywheels of the financial world. We'll take the greed as stipulated, since the whole purpose of modern capitalism is to harness its mighty and potentially destructive force. But the fear, in both cases, was the very real fear of being left behind when a rare landscape-altering technology is potentially coming on. If there really had been dozens of good ready-for-prime-time targets lurking out there in the genomic data, well, the companies that sewed them up would do very well, and the ones that didn’t would eat dirt. So better to spend the money, right? And so it is with RNA interference: if it really does work therapeutically, there are going to be a lot of previously-undruggable targets within reach, as well as a lot of new shots at the ones we already know. So. . .better to spend the money again?
I suppose there’s no way around it, even though I’m not convinced that RNAi is going to deliver any time soon (or at all?) After all, its difficulties seem (to me) very much like those of antisense DNA, subject of yet another train’s-leaving-the-station investing frenzy in the late 1980s and early 1990s. For one thing, delivering these oligonucleotides in a living human is definitely nontrivial, to use a word that scientists and engineers use to mean anything from “pretty damn hard” to “impossible at the present level of human civilization”. I don’t think that RNA therapy is in the second category, but I do think that it’s in the first category good and hard.
And there’s the whole question of off-target effects, which I’ve spoken about here before. These may not be show-stoppers, true, but the problem is that we don’t know if they are or not. At the very least, it’s a complicating factor, and a big one – and the fact that it’s out there makes you wonder what other interesting complications are yet to be discovered as we go into humans.
So no, RNAi is not going to remake the landscape later this year or anything. It’s going to be a long business, with (I feel sure of it) plenty of expensive head-slapping and hand-wringing along the way. But all that said, can a company like Takeda (or Roche, or Merck, or. . .) afford to ignore it? After all, by the time the kinks are worked out of the technology, it’s presumably going to be too late to buy into it. (Or if you can, it’s going to make the 2008 prices look like the discount rack). Perhaps it’s better to just decide that that’s what the money’s for, to buy into things that could pay off big, with the realization that most of those purchases are going to look idiotic in ten years. . .
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May 21, 2008
Posted by Derek
I’ve been in this business for almost 19 years now. That means that the drugs that were discovered during my first few years of work are now either on the market or expected to be there soon. Fine, I spent my first eight years at Schering-Plough, so what do I see when I look back? There’s ezetimibe, discovered by sheer chance (but developed by sheer determination, though) and the thrombin receptor antagonist, squirrelly chemical matter from a failed Alzheimer’s program, a compound that a lot of medicinal chemists wouldn’t have even made in the first place. Well, now.
This is not a whack at Schering-Plough. Far from it. These are compounds that any organization would have been glad to find, but they weren’t exactly found by direct routes. This is a general phenomenon. You’d think, surveying the industry, that a lot of drugs are discovered, at least partly, by outright luck. And as far as I can tell, you’d be right. Realizing that tends to bring on several different reactions, depending on your world view:
That can’t be right. I’ve seen this one mostly from people outside the immediate realm of drug discovery, well-meaning people who just can’t believe that this is how it works. The harm comes when these well-meaning folks decide that the problem is that the industry is just behind the times, and that we wouldn’t have to do it this way if we’d just adopt some modern management techniques – ISO whatever-thousand, umpteem-sigma, Quality Assurance Tiger Team Circle Continuous Improvement Metrics, or what have you. Harm generally ensues.
That shouldn’t be right. Some of the people in this category are actually offended by the sight of luck calling so many of the shots, while others are just hoping for a more productive way of doing things. A lot of computational approaches have come from this attitude: “We wouldn’t have to run around stumbling over stuff if we’d just turn on this great new flashlight that’s just been invented” Nothing’s quite illuminated the landscape in the way that people have hoped, though, although efforts continue, as they should.
OK, if we’re stumbling around, let’s stumble faster. This is the basic idea behind the improvements in high-throughput screening and combichem in the late 1980s and the 1990s. For a while, the more optimistic folks thought that this would be enough: just crank out millions of compounds, and the drugs would come – they’d have to. It didn’t work that way, partly because the space of usable chemical structures is much, much larger than we can usefully deal with. But that’s not to say that cranking out more compounds and screening them more quickly isn’t a good idea – it’s just not the good idea.
Well, stumble more purposefully, then. I think that this is where most drug discovery organizations are (or should be). You admit that luck has a big role to play, but you go for the “Fortune favors the prepared mind” approach. Don’t rely just on random runs of odd structures to fill your screening banks – but be sure to put some in, because you never know. Turn over every rock – but recognize that you can’t turn over every rock everywhere, so try to pick the most likely place to start.
The problem with this approach is that it doesn’t promise much, at least compared to the various You’re Doing It Wrong approaches, and it doesn’t make a very compelling PowerPoint slide. But although it’s the blood-toil-tears-and-sweat option, I think that for now it’s the right one. Until something better comes along, that is, and the fascinating problem is that something better is always coming along. Given this state of affairs, why shouldn’t it?
I have no room to talk, of course. I can be as much of a sucker as the next medicinal chemist for some new approach that’s going to change everything – mainly because I look around and realize that a lot of what we do would be better off changing. All the wasted effort. . .you can get downright melancholy if you look at the business from the saddest angles. For all my self-proclaimed realism, I probably have more of that second response in me than I like to admit. The idea is to keep trying for something dramatically better, while realizing that even a smaller improvement would still be worth a lot. . .
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May 8, 2008
Posted by Derek
Every few years, you hear talk of a renaissance in natural products-based drug discovery. Well, this news should postpone the next round of optimism for a bit longer: Merck is cutting their natural products program entirely. They've had a long history in that area, but no more. That C&E News item includes an interesting detail:
"The company disclosed that it would also be closing its 50-year-old natural products drug discovery operation based in Madrid after a Merck executive inadvertently included the plan in a PowerPoint presentation to an audience that included Merck employees."
Smooth move. I'm sure some interesting e-mails were exchanged around Rahway and Madrid after that one. When, when will we get the powerful regulatory oversight of PowerPoint technology that the masses have cried out for these many years?
The main thing I remember about Merck's operation in Madrid was when they made a big splash about ten years ago with a weird looking indole/quinone thing that directly activated the insulin receptor. It made the cover of Science and all sorts of press releases, and my biology colleagues starting pestering me immediately. "Hey, you chemists keep saying that there's no point in running a small-molecule screen against the insulin receptor!"
Well, as it turned out, we were right. I assured my co-workers on the next floor that the Merck compound was one of the least likely drug candidate structures I'd ever seen, and that I'd be intensely surprised if it went anywhere. In fact, I told them, seeing it on the cover of Science actually decreased the likelihood that it was anything useful. If Merck really had a small-molecule insulin mimetic, I reasoned, the program would be a real stealth bomber, for fear of sending all sorts of other companies into the same chemical space too quickly. This one had all the signs of the people involved saying "You know, the only thing this stuff is good for is getting on the cover of Science"
So it proved, eventually. The compounds never went anywhere. It looks like the most recent natural product-derived compound that Merck got onto the market was Cancidas (caspofungin), and that was seven years ago. Mevacor (lovastatin) will stand as the modern high-water mark of Merck's natural product work - presumably from now on.
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May 1, 2008
Posted by Derek
Drug Discovery Today has the first part of an article on the history of the molecular modeling field, this one covering about 1960 to 1990. It’s a for-the-record document, since as time goes on it’ll be increasingly hard to unscramble all the early approaches and players. I think this is true for almost any technology; the early years are tangled indeed.
As you would imagine, the work from the 1960s and 1970s has an otherwordly feel to it, considering the hardware that was available. And that brings up another thing common to the early years of new technologies: when you look back on them from their later years, you wonder how these people could possibly have even tried to do these things.
I mean, you read about, say, Richard Cramer establishing the computer-aided drug design program at Smith, Kline and French in nineteen-flipping-seventy-one, and on one level you feel like congratulating his group for their farsightedness. But mainly you just feeling like saying “Oh, you poor people. I am so sorry.” Because from today's perspective, there is just no way that anyone could have done any meaningful molecular modeling for drug design in 1971. I mean, we have enough trouble doing it for a lot of projects in 2008.
Think about it: big ol’ IBM mainframe, with those tape drives that for many years were visual shorthand for Computer System but now look closer to steam engines and water wheels. Punch cards: riffling stacks of them, and whole mechanical devices with arrays of rods to make and troubleshoot stiff pieces of paper with holes in them. And the software – written in what, FORTRAN? If they were lucky. And written in a time when people were just starting to say, well, yes, I suppose that you could, in fact, represent attractive and repulsive molecular forces in terms that could be used by a computer program. . .hmm, let’s see about hydrogen bonds, then. . .
It gives a person the shudders. But that must be inevitable – you get the same feeling when you see an early TV set and wonder how anyone could have derived entertainment from a fuzzy four-inch-wide grey screen. Or see the earliest automobiles, which look to have been quite a bit more trouble than a horse. How do people persevere?
Well, for one thing, by knowing that they’re the first. Even if technology isn’t what you might dream of it being some day, you’re still the one out on the cutting edge, with what could be the best in the world as it is. They also do it by not being able to know just what the limits to their capabilities are, not having the benefit of decades of hindsight. The molecular modelers of the early 1970s did not, I’m sure, see themselves as tentatively exploring something that would probably be of no use for years to come. They must have thought that there was something good just waiting right there to be done with the technology they had (which was, as just mentioned, the best ever seen). They may well have been wrong about that, but who was to know until it was tried?
And all of this – the realizations that there’s something new in the world, that there are new things that can be done with it, and (later) that there’s more to it (both its possibilities and difficulties) than was first apparent – all of this comes on gradually. If it were to hit you all at once, you’d be paralyzed with indecision. But the gap in the trees turns into a trail, and then into a dirt path before you feel the gravel under your feet, speeding up before you realize that you’re driving down a huge highway that branches off to destinations you didn’t even know existed.
People are seeing their way through to some of those narrow footpaths right now, no doubt. With any luck, in another thirty years people will look back and pity them for what they didn’t and couldn’t know. But the people doing it today don’t feel worthy of pity at all – some of them probably feel as if they’re the luckiest people alive. . .
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April 25, 2008
Posted by Derek
I don’t want to say that this is a trend, but I notice that GSK is saying that they’re going to leave Sirtris more or less alone as well (as Takeda has said they’ll do with Millennium). The researchers in both shops should feel good about that, and not only because they’ll be keeping their jobs. They’re getting a vote of confidence in the most meaningful way that a large company can give that to its employees: by paying you money and not messing with you.
Of course, these deals have two sides to them. I don’t know what it’s like in Takeda back in Japan – my contacts inside the Japanese pharmaceutical industry aren’t extensive. But I think that some of the people at GSK (where I do know a lot of people) are wondering just what motivated their company to spend $720 million on Sirtris rather than on them.
It’s a fair question, even though I don’t have a problem myself with the Sirtris deal (as I said yesterday). But the sirtuins themselves are targets that anyone can work on, and you’d assume that a big outfit like GlaxoSmithKline could, if they wanted to, make a big push into the area and find some interesting things. So why didn’t they? The most obvious reason would be Sirtris had already done a good deal of that work, and it was more economical for GSK to buy it than to redo it. Another possibility is that the chemical space for drug-like hits in that area may not be very spacious, and that Sirtris may have already carved out a good piece of that real estate.
There’s also a bit of Glaxo history to deal with. The company had already, about fifteen years ago, decided to make a great big push into a promising new research area: nuclear receptors. They set up a whole research institute and did a huge amount of good science trying to figure out how these things worked, what they were good for, and how to get drugs that affected them. I got interested in the field in the late 1990s, and it became clear to me very quickly that Glaxo’s effort was the most serious of the bunch (and that included some really substantial research going on at Merck, Lilly and some other outfits). The company had teams of people who seemed to do nothing else than study the structures of these things, generate reams of X-ray data, synthesize huge lists of ligand molecules of every kind you could want, and so on. Just run "Glaxo nuclear receptor" through PubMed to see what I mean.
And what did it get them? From what I can see, not much. Avandia (rosiglitazone) is a nuclear receptor ligand (for PPAR-gamma), but its activity had already been discovered, and it was in clinical trials without a known mechanism. Figuring out how it worked was one of the Glaxo team’s early triumphs. But Avandia has turned out to be famously troublesome, and no others have come to market, despite multiple tries in the clinic. The huge amount of time and money the company spent generated a lot of interesting science, but appears (at least to me) to have brought in not one dime of revenue. (No doubt someone from GSK will correct me if I’m wrong).
So you can see how the company might be wary of starting a big internal effort to explore a massive, complex, and risky new field of biology. Politically and psychologically, it’s probably easier for them to structure this in terms of an acquisition.
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+ TrackBacks (0) | Category: Aging and Lifespan | Business and Markets | Diabetes and Obesity | Drug Industry History
March 24, 2008
Posted by Derek
A colleague and I were talking the other day about the (long) list of drugs that have been left for dead at some point during their development. There are some famous cases – Lipitor, for example, which wasn’t thought by many at Warner-Lambert to have a business case worth even taking into the clinic. But these things are all over the place.
One that I know about was Claritin (loratadine). Schering-Plough worked on nonsedating antihistamines for a while, without too much success, and the whole program was eventually killed. The head of research at the time stated flatly: “There are no nonsedating antihistamines”. Of course, when the first one (Seldane) came on the market, that made everyone rethink a bit. In the interim, one of the chemists had continued making compounds, despite several (increasingly testy) warnings to stop.
As it turned out, he (Frank Villani) and one of his associates (Charlie Magatti) had made loratadine itself, the nonsedating antihistamine which helped to pay everyone’s salary at Schering-Plough through the 1990s. But by the time that was worked out, Villani himself had been eased out the door (or not eased while on his way out, depending on who you talk to), in good part due to his continued work on the compounds. That head of research, to his credit, actually referred ruefully later on to his own “no nonsedating antihistamines” comment – there are plenty of other people who would have just Never Said Such a Thing At All in that position.
You can find a lot of other examples, going back a long way. Many of these are medical and marketing arguments: ACE inhibitors weren’t necessarily going to be of that much use for hypertension (how many people had high blood pressure because of problems with their renin-angiotensin system anyway?) And the K/H ATPase compounds weren’t going to be of much use for acid reflux, because the H2 antagonists had the market covered (Prilosec and its progeny managed to carve out a little market share for themselves, though). The Lipitor-won’t-make-any-money mistake falls squarely into this category.
My theory is that it’s always possible to find a list of plausible reasons why a given project, or a given drug candidate, won’t work. Finding those things is (comparatively speaking) the easy part. The hard part is working out which of those things you’re wrong about, because you’re sure to be wrong about some of them. (Of course, thinking about this stuff makes you start to wonder about the drugs that never quite made it, but would have done well if they had. Most experienced development people have a list of might-have-beens that they still wonder about, but some of those would surely have also blown up disastrously even later in the process, taking even more money with them).
Further that’ll-never-work examples are welcome in the comments. I know there must be plenty of them out there. . .
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March 14, 2008
Posted by Derek
Registering some new compounds for testing, as I’ve been doing recently, has me thinking about how that was done when I started at my first company. This was in the fall of 1989, so while it’s not exactly the Ancient Old Days, it’s not last week, either. (There are plenty of readers here who go back further). But as far as the technology involved, it looked a lot closer to 1950 than it does to today.
For one thing, I saw the tail end of the Bare Desk Era: we didn’t have computers on our desks - at least, most of us didn’t. I found that a bit strange when I joined – not outrageous, as it would have been just two or three years later, but a little disappointing. Some scientists at the PhD level shared computers, but I started out not even doing that. In that company, in those days, those machines were Macs. (After a long PC interregnum, I’m working in a Mac environment again these days, which is fine by me). I didn’t even have a shared computer at first; when I finally got a part of one, it was a Mac IIcx, which these days hardly seems like something you could even use to archive your tuna salad recipes. Of course, you could wander around at that point and still see Mac SEs in use out in the biology labs, so everything was (is) relative. I thought the IIcx was a fine machine; even half of one was a lot better than a bare desk.
The lack of computers was official policy. The way I heard it put was that management wanted us in front of our hoods, not in front of our screens. Had they only known about web surfing, their fears would have been confirmed but good. They'd have needed a fortune teller, though, since there was no web to waste any time on in 1989. (I remember using Telnet from my home machine in late 1991 or early 1992 to go look at this hypertext thingie at CERN that I’d read about, and I distinctly remember the odd sensation when the welcome screen scrolled up, as if I’d suddenly traveled to Geneva).
No computers meant no e-mail, of course. That came along within a couple of years, but I got a similar brief exposure to the pre-electronic workplace, where those office mail slots down the hall were where you got printed notices of the meetings you needed to attend. Papers you needed to read or documents you needed to have came in those brown envelopes with the string closures, one of which now shows up in my current mail slot every three weeks or so. And no computers meant no online registration of new compounds. That you did with a paper form.
And not with just any form. This one had multicolored layers, and was made out of that pressure-sensitive paper with the odd feel to it. You pressed hard as you drew your structure with a ballpoint pen in the box provided – the yellow copy at the bottom of the stack was for your files, and you wanted to be able to read the thing if there was a problem with the registration. Below was an area with multiple check boxes for the different assays. That was a bit out of date even when I got there – the company had printed up piles of these things with all the assays that they typically ran, but as cloned receptors and the like became available, the assays were beginning to change faster than paper forms could keep up.
Then you took your forms and the corresponding vials and walked them over a couple of buildings to turn them in. In a few days, you’d get a printout of your compound by interoffice mail, with its structure now re-entered into some sort of mainframe database (probably with one of those Calcomp or Summagraphics drawing tablets). My first compound had a registration number in the high thirty-thousands; this in a company that had been around since the Second World War. By the time I left, eight years later, the registration numbers were over twice that figure and climbing fast, and that didn’t count the separate libraries that had been purchased along the way.
The project I was on generated a lot of data, but there was no central place for all of it. The people who ran the assays rated desktop computers of their own, and they kept the numbers there, in whatever format suited them. One biologist retired on us, and when we needed his assay data a few years later, it turned out that no one could put their hands on his files. Everyone, it seemed, had figured that someone else was taking care of that. In the end, a note went out for everyone to root out their old meeting handouts from 1990, since those had his presentations of the assay numbers – those would have to do until we could get the compounds re-run. Even at the time, it occurred to me that this was no way to handle data.
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March 10, 2008
Posted by Derek
There’s an article in the latest Nature Reviews Drug Discovery on recent drug attrition rates that caught my eye. The authors are looking over 2006-2007 trials and approvals, comparing the biotech industry with traditional pharma. ("Biotech" is defined as a company that's included in either the American Stock Exchange's biotech index and/or the NASDAQ's). In that period, the biotechs scored 47 FDA approvals (45% of the total approvals), but had 68 Phase III failures, which is 74% of that total. Pharma companies had only 5 Phase III failures during that stretch – the other 18 were biotech/pharma joint ventures, and those had a corresponding 16 approvals.
That’s food for thought, all right. The authors make much of the comparatively higher success rate for the biotech/pharma alliance compounds versus the biotechs that went it alone. I have to say, though, that the first explanation that came to my mind was one that they mention, but refer to as “cynical”: that the products which got partnered were disproportionately drawn from the list of those more likely to succeed in the first place.
But is “higher success rate for alliances” really the way to look at the data? Coming at the figures from another direction, I’d argue that “lower success rate for anything labeled biotech” would be a better fit. After all, the FDA approval/Phase III failure numbers are 47/68 for biotech, and 16/18 for biotech/pharma codevelopment, and I’d argue that those ratios are a lot closer to each other than either one is to the ratio for pure pharmaceutical companies, which was 36/5. Look at it this way: if the biotech-alone success rate was as good as the alliance one, you’d expect maybe 53 failures for those 47 successes instead of the 68 that really took place. But if biotech had the same success rate as pharma alone, those 47 winners would have been accompanied by only about 7 failures.
Cynics with a different orientation might wonder if the higher failure rate comes from a higher number of attempts on innovative drugs in biotech, as opposed to follow-ups and me-toos. But looking at another table in the same paper, where the authors split such compounds out, the me-too data in the pharma industry shows 15 FDA approvals versus 1 Phase III failure. The corresponding biotech figures show 20 approvals and 17 failures, so even the follow-on drugs have a harder time of it. (In case you're wondering, the figures from the opposite end of the spectrum, the new compound/new indication class, are 17 approvals versus 4 failures for pharma, as opposed to a toe-curling 9 approvals and 42 failures for biotech). Breaking down the numbers in another way, biotech companies had 37 out of 115 compounds in the me-too class (32%), while pharma had 16 out of 41 (39%), which isn't that big a difference.
This sort of thing is particularly interesting for someone of my age or older, because it brings back memories of the 1980s and the first big biotech boom, back when Genentech and Biogen went public and Cetus was still a going concern. The pitch back then was that biotech products were actually going to have a higher success rate, because they were, after all, mostly proteins that were already in use by the body, right? The definition of "biotech" has changed a lot since then, though - if you look at those companies in the two indices linked above, you'll notice that many of them don't work on biological products at all, but would be better classified as "small pharma". But I'm not sure if the general public appreciates that distinction. . .
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+ TrackBacks (0) | Category: Business and Markets | Clinical Trials | Drug Industry History
March 5, 2008
Posted by Derek
There’s an interesting article coming out in J. Med. Chem. on antibiotic compounds, which highlights something that’s pretty clear if you spend some time looking at the drugs in that area. We make a big deal (or have made one over the last ten years) about drug-like properties – all that Rule-of-Five stuff and its progeny. Well, take a look at the historically best-selling antibiotic drugs: you’ve never seen such a collection of Rule of Five violators in your life.
That’s partly because a lot of structures in that area have come from natural products, but hey, natural products are drugs, too. Erythromycin, the aminoglycosides, azithromycin, tetracycline: what a crew! But they’ve helped an untold number of people over the years. It’s true that the fluoroquinolones are much more normal-looking, but those are balanced out by weirdo one-shots like fosfomycin. I mean, look at that thing – would you ever believe that that’s a marketed drug? (And with decent bioavailability, too?)
No, you have to be broad-minded if you’re going to beat up on bacteria, and I think some broad-mindedness would do us all good in other therapeutic areas, too. I don’t mean we should ignore what we’ve learned about drug-like properties: our problem is that we tend to make allowances and exceptions on the greasy high-molecular weight end of the scale, since that’s where too many of our compounds end up. It wouldn’t hurt to push things on the other end, because I think that you have a better chance of getting away with too much polarity than you have of getting away with too little.
One reason for that might be that there are a lot of transporter proteins in vivo that are used to dealing with such groups. It’s easy to forget, but a great number of proteins are decorated with carbohydrate residues, and they’re on there for a lot of reasons. And a lot of extremely important small molecules in biochemistry are polar as well – right off the top of my head, I don’t know what the logD or polar surface area of things like ATP or NAD are, but I’ll bet that they’re far off the usual run of drugs. Admittedly, those aren’t going to reach good blood levels if you dose them orally; we’re trying to do something that’s rather unnatural as far as the body’s concerned. But we could still usefully take advantage of some of the transport and handling systems for such molecules.
But that’s not always easy to do. We all talk about making our compounds more polar and more soluble, but we balk at some of the things that will do that for us. Sure, you can slap a couple of methoxyethoxys on your ugly flat molecule, or hang a morpholine off the end of a chain to drag things into the water layer. But slap five or six hydroxyls on your molecule, and you’ll be lucky not to have the security guards show up at your desk.
There are, to be sure, some good reasons why they might. Hydroxyls and such tend to introduce chiral centers, which can make your synthesis difficult and dramatically increase the amount of work needed to fill out the structural possibilities of your lead series. That’s why these things tend to be (or derive from) natural products. Some bacterium or fungus has done most of the heavy lifting already, both in terms of working out the most active isomers and in synthesizing them for you. Erythromycin’s a fine starting material when you can get it by fermentation, but no one would ever, ever consider it if it had to be made by pure total synthesis.
There’s another consideration, which gets you right at the bench level. For an organic chemist, working with charged, water-soluble compounds is no fun. A lot of our lab infrastructure is built for things that would rather dissolve in ethyl acetate than water. A constant run of things with low logD values would mean that we’d all have to learn some new skills (and that we’d all probably have to spend a lot of time on the lyophilizer). Ion-exchange resins, gel chromatography, desalting columns – you might as well be a biochemist if you’re going to work with that stuff. But in the end, perhaps we might be better off, at least part of the time, if we were.
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+ TrackBacks (0) | Category: Drug Industry History | In Silico | Infectious Diseases
February 20, 2008
Posted by Derek
A recent item from InVivoBlog about Merck which brought up some interesting points. They aren’t cheerful ones. The article is largely about Merck’s reputation, which has taken some dents in recent years, to put it lightly. The Vioxx debacle is the main reason for this, but the hits have kept on coming, such as the latest controversy over the release of the disappointing Vytorin study data.
So, although this is a painful question, perhaps it needs to be asked: remember when Merck was above all that stuff? Maybe there should be a “seemed” in that sentence somewhere; that might take some of the sting away. But the company really did have a singular reputation at one time. Depending on your point of view, you could have used words like “insular” or “arrogant” to describe the culture over there, but they were distinctive.
Merck didn’t merge with anyone. They stuck with targets and projects for years and years if they thought something would come out of them. And (until Vioxx) they avoided the sorts of disasters that seemed to hit other companies. That’s gone. Not all gone – they still seem to run on longer timelines over there – but one of the most distinctive things about the company was how it guarded its reputation, and that seems to have slipped down the list. They didn't have to do ad campaigns like this one. The company's trying to convince people, or convince themselves, that things haven't changed, but they're wrong.
The other thing that struck me about the article was about the development of the company’s CB-1 antagonist. That’s the same mechanism as rimonabant, Sanofi-Aventis’s failed wonder drug for obesity. (OK, it’s on the market as Acomplia in several countries, but considering what people had thought it would do, it’s a failure, all right). I question Merck’s judgment in pushing another compound into that area, although these programs do take on a life of their own. And as the In Vivo post points out, Merck’s current reputation of pushing every drug as hard as possible won’t help it when it comes to getting the drug through the FDA.
The biggest problem with rimonabant was the comparison of its side effects to its efficacy. It does seem to help people lose weight, although not to any startling extent, but in a large patient population various psychiatric side effects showed up. Taranabant's side effect profile isn't yet clear. Merck is going to have to tread lightly, but can they? The situation is a bit too much like Vioxx, with a huge, lucrative market out there if you can just expand the patient population. And we can argue about just how bad Vioxx really was, and about its risk/benefit ratio, but that won't change the fact that it was a catastrophe for Merck. The last thing they need is another one. I don't think I would have picked this time to push another CB-1 antagonist forward, but I suppose we don't get to pick that sort of thing. . .
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+ TrackBacks (0) | Category: Diabetes and Obesity | Drug Development | Drug Industry History | The Dark Side
January 16, 2008
Posted by Derek
So Judah Folkman is no longer with us. He's considered to be the father of the idea that many tumors help to make their own blood supply, through angiogenesis, and that this could be a way to impede their growth. Since his first papers on the topic were published back in 1971, I think he does indeed get the credit. And he should not only get the credit for having the idea, but for publishing it and sticking with it. (Here's an interview with Folkman where he talks about this and much more).
Interestingly, it had been noted as long ago as 1941 that transplanted tumors in animals managed to link in to the existing blood supply through the formation of new vessels, but no one knew what to do with this result. (Here's a history of the field from a few years ago). It's not surprising that it took so long for the idea to catch on, though. It was by no means clear back in 1971, much less 1941, how blood vessels could be raised up by signaling from their target tissue. It wasn't until much later that the signaling pathways for blood vessel growth were discovered. Vascular endothelial growth factor, for example, was only found in 1983, and its functions didn't become clear until 1989 (timeline).
Folkman's death (which took place in the Denver airport, of all places) has brought back memories of the (in)famous Gina Kolata article on Folkman's work in the New York Times from 1998, a front-pager which featured James Watson's notorious quote about how Folkman was going to cure cancer in two years. I wrote about that one in the early days of my blog, and again here when Entremed finally gave up on the compounds that Kolata and the Times had hyped to the skies. The year 2000 came and went without a cancer cure, and many more years are going to go by as well. That's because, as I and many others never tire of pointing out, cancer isn't a single disease, and will never have a single cure. It's like looking for a cure for bad writing - it comes in so many different varieties, for so many different reasons, and therefore needs many different fixes.
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January 4, 2008
Posted by Derek
A reader sends along this article from the New York Times about Chris Kilham, an ethnobiotanist from U. Mass - Amherst looking for medicinally active plants in Peru. The article has lots of local Peruvian color, but it doesn’t neglect the money involved:
” Products that once seemed exotic, like ginseng, ginkgo biloba or aloe vera, now roll off the tongues of Westerners. All told, natural plant substances generate more than $75 billion in sales each year for the pharmaceutical industry, $20 billion in herbal supplement sales, and around $3 billion in cosmetics sales, according to a study by the European Commission.”
It’s worth noting, though, that none of those three once-exotic plants (exotic when – twenty-five years ago?) are the source of any major revenue for the pharmaceutical industry, unless you count aloe-vera sunscreen line extensions and the like. Kilham himself has some definite opinions on the value of plant-derived drugs:
Mr. Kilham believes multinational drug companies underutilize the medicinal properties in plants. They pack pills with artificial compounds and sell them at huge markups, he says. He wants Westerners to use the pure plant medicines that indigenous peoples have used for thousands of years.
“People in the U.S. are more cranked up on pharmaceutical drugs than any other culture in the world today,” Mr. Kilham said. “I want people using safer medicine. And that means plant medicine.”
Unpacking those statements is a chore, though. Just to pick a big one, “pure plant medicine” is a tricky concept, as any natural products chemist will tell you. Are we talking ground whole plants here (and if so, which parts, grown where?) Extracts (and if so, which fractions?) Purified single compounds?
Moving to the next difficulties, would these plant medicines somehow not be sold at such huge markups? Take a look at the herbal supplement industry for a reality check on that one. And if we in the drug industry could get such drugs with less trouble and effort than our “artificial” ones, why wouldn’t we do so – especially if they have fewer side effects? (Side effects cost us money, too, you know). Finally, are those natural compounds really safer than the nasty artificial ones? Not as far as I’ve ever seen – they come out the same in genotoxicity studies, for one thing. The whole “artificial” versus “natural” division is generally a sign of lazy thinking, in my experience. There’s no wholesome Gaia-derived goodness to be found in a plant-derived natural products, and they weren’t somehow made for us to use as medicines. Some are harmless, some are toxic – same as everything else.
Then there’s this interesting part:
“So-called bioprospectors can make their fortunes by bringing those advantages to the attention of companies who identify the plant’s active compound and use it as a base ingredient for new products that they patent.
Some 62 percent of all cancer drugs approved by the Food and Drug Administration come from such discoveries, according to a study by the United Nations University, a scholarly institution affiliated with the United Nations.”
Hmm. Examples? The only “bioprospector” that I can recall making a fortune in this way was Russell Marker, the founder of Syntex, who realized that Mexican yams contained an excellent starting material for steroid synthesis. Mind you, that was in 1944. If anyone has a more recent example of an Indiana Jones figure stumbling out of the jungle clutching a profitable wonder root, please do let me know. Whole companies have been founded on the idea of cashing in on active natural products and indigenous medicines. None of them, as far as I can tell, have made any fortunes yet, and some of them have done the reverse. Shaman Pharmaceuticals is the obvious example. I know someone who was right in the middle of their drug discovery effort. It wasn’t pretty, and it sure wasn’t profitable.
Besides, the Times reporter should have asked Kilham himself about cancer therapies. Here's a 2005 interview with him:
"I don't see the cancer herb category becoming a major category any time soon. I believe that the majority of people who get cancer are still going to turn to a conventional medical doctor. I think the greatest majority will. . ."
And that study by the UN doesn’t appear to have dug all that deeply. (It should be noted up front that oncology and anti-infectives are the two areas where natural product-derived compounds are by far the most well-represented). That 62 per cent figure for cancer drugs would seem to come directly from this 2003 paper in the Journal of Natural Products, from a group at the Natural Products branch of the National Cancer Institute. A closer look at the figures show that they list 140 drugs available over the years 1981-2003 (note that many of these are no longer first-line therapies). The 62% figure comes from excluding all the antibodies, proteins, and vaccines (10% of the total) and counting straight natural products (14%), semisynthetic compounds derived from them (26%) and synthetic compounds whose active pharmacophore came from a natural product lead (14%).
You can draw the line wherever you like, but by rigorously crunchy standards only that first 14% qualifies. If we’re going to draw some line between “natural” and “artificial”, everything else is on the other side of it. There’s no denying that natural products are and have been a great source of active compounds and structural leads, of course. But the vast majority of drugs come from us chemists, cranking out the man-made (and man-improved) structures.
The other problem with that number is that, if anything, it may represent a peak. The kinase inhibitors that have been approved in recent years are all completely synthetic compounds, and the antibody and vaccine ranks are swelling, too. Ranked by sales, there are 19 oncology drugs in the most recent top 200 list I can find, and only one of them is a straight natural product (taxol, at #169). Taxotere, at #37, is a semisynthetic derivative of taxol, and irinotecan at 122 is a semisynthetic as well. But to my eyes, that’s about it. Getting data by usage is harder (without paying for it!), but the older natural products would come out looking better ranked by total prescriptions filled. In most cases, though, they’re no longer first-line therapies.
So natural products aren’t dead, by any means. But they aren’t an untouched gold mine, either. Someone tell the Times.
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January 3, 2008
Posted by Derek
There are quite a few news items to catch up on after the break – I’ll start off with a note that John Lechleiter has become the CEO of Eli Lilly. The main reason this catches the eye (and the main reason it got e-mailed to me!) is that he’s a medicinal chemist who worked his way up the ranks.
And that doesn’t happen very much, which is a topic that came up around here a couple of years ago. There are several companies run by chemists, but most of them got there as founders. Going from the bench all the way up to the top of an organization, that’s taking the long route for sure, especially in a place the size of Lilly.
Is there a reason for that? The sample size of large drug company CEOs isn’t particularly large, so it feels risky to generalize, but it’s been my impression that in many companies the scientific talent is under-represented in the top executive ranks. (That would make business degree holders and lawyers over-represented, I suppose). If that’s true, there are several possible explanations.
One is that fewer scientists are willing to devote themselves totally to the job of climbing said ladder, as opposed to their regular work. Many go into research because they like to do research, and don’t have as much of a taste for managing. But if you’re on the business side of things, the climb is much more related to your job description to start with, I’d say. Starting at the bench means that at some point you’re going to have to completely drop the work you were first hired to do and start doing something different.
That’s not to say that there aren’t plenty of chemists (and biologists) who do just that, but they’re generally aiming at positions lower than CEO. Scientists who become managers usually end up managing other scientists, as section heads, associate directors, directors of research, and so on. That makes a lot of sense, because they understand the work that’s going on under them – you’re not going to import a lawyer to be Director of Translational Biology, right?
And that brings up another possible problem. Scientists, taken as a class, do not always turn into the best managers. No particular group produces a huge number of good managers, to be sure, but I’m pretty sure that researchers run on the low side. Putting it delicately, there are a number of personality types reasonably well-suited for science, but not so well-suited for supervising and developing other people. Such subsets exist in every other profession, but those categories are particularly roomy in the research labs. Ugly situations can ensue when these people are perforce given direct reports. It’s even worse in academia, where some truly borderline personalities are year after year turned loose on 22-year-old grad students.
But inter caecos regnat luscus, and if a scientist does have good skills as a manager or leader, then so much the better. These people will stand out all the more.
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December 18, 2007
Posted by Derek
The next few years don’t necessarily look good for several large drug companies, just because of the patents that will be expiring. King of them all is Lipitor, of course, the world’s biggest selling drug which will then become the drug industry’s single largest lost revenue stream. But if you dig back through the newspaper archives, you’ll find the “Big Patent Expirations Looming” story showing up year after year. It’s basically true every time.
And that illustrates a point that a lot of people from outside the drug industry forget when discussing our rapacious business models, obscene profits, and so on: more than almost any other industry, we’re built on a pile of wasting assets. And not just any old nonspecific wasting assets – our valuable drugs are ticking away with a specific timetable, at which time they turn generic and most of the revenue stream goes flooosh. There might as well be a big LED clock strapped to the things, counting backwards – but unlike a bad movie, there’s no sweating hero trying to figure out whether to cut the red wire or not. Put down those needlenose pliers, Buck or Jock or whatever your heroic name is, because nothing will help.
Nothing, that is, except having some other drugs coming down the chute to replace the ones that are blowing up. Oh, I know, I know, patent evergreening and so on. I agree that it’s a problem, but that stuff doesn’t work most of the time. And when it does, you can maybe wring a year or two out of the system. But the bells toll for all our drugs in the end, and we have to deal with that fact by cranking out new stuff as fast as we can.
In recent years, that hasn’t been fast enough. I worked for a company back in the early 1990s that had a big-selling drug which was headed for the patent cliff. Everyone knew it, everyone knew when it would happen, and everyone knew what we had to do about it: get more stuff into the pipeline to replace it. The company expanded its research department and built a whole new drug discovery building complex to put us all in. To no avail. The day came, and nothing significant had been found in the intervening years. The company’s earnings hopped into a handy handbasket and went to the usual destination, the stock fell off a cliff, and all sorts of people who’d been loading up on the shares during the glory years felt all kinds of pain.
This story has been repeated several times around the industry. We all know about the declining productivity story – it was one of the first things I blogged about back in 2002. But the back side of that story is the frantic activities to try to make it go away. Some of them aren’t too glorious – cherry-flavored line extensions, patent gimmickry – but a lot of the work is serious stuff. We know that our discovery and clinical success rates are too low, and we’re pouring all kinds of money into trying to fix them. So far, the successes haven’t been anything to jump around about, but the efforts continue.
There’s an exception: the biotechs. The FDA has been trying to get its regulatory head around the issue of biogeneric equivalency, but it isn’t easy (more on this in a separate post some time). What this means is that the likes of Amgen, Biogen, Genentech Genzyme et al. have had far fewer worries about some of their products expiring on them. If the FDA can’t certify that a generic version of a protein drug is the same as the original, and can’t agree on how to even do that in the first place, then no generic will appear. There are several companies that would like to do it, but they’ve been moving more slowly than they’d like to, since the regulatory environment is so unclear. Things are moving a bit more quickly in Europe, but the pace is still glacial compared to the situation over here in the traditional small-molecule world.
And that’s not doing the biotech industry any good. I realize that this sounds perverse, especially to the people at the companies involved. What do I mean, that it’s a bad thing that their drugs rake in billions year after year? What’s not to like? Well, what’s not to like is that this kind of thing slows down the need to come up with new products and new approaches. I know that the big biotechs are spending lots of money on research, but we’ll never know what things would have been like if the dogs had been at their heels more. Organizations get lazy in all kinds of almost imperceptible ways when there’s no reason to move quickly.
Having those incentives doesn’t mean that things will work out for you, of course – see that story a couple of paragraphs above. But I think it works out better for everyone if research organizations are kept on their toes, competing with each other, and competing with those big red digital countdowns. It’s no fun, but it’s the best way.
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+ TrackBacks (0) | Category: Business and Markets | Drug Industry History | Patents and IP
December 12, 2007
Posted by Derek
Yesterday’s Wall Street Journal ran a front-page article on the chemistry layoffs that have afflicted us in the drug industry. The piece (by Avery Johnson) focuses on a good example: Bob Sliskovic, the medicinal chemist who first synthesized Lipitor (as in largest-selling-drug-in-the-world Lipitor), and now finds himself laid off by Pfizer:
”Following that initial breakthrough some 20 years ago, Dr. Sliskovic worked on several other research projects, but none panned out. His losing streak mirrors the industry's. A byproduct of the late-19th-century chemical business, pharmaceutical research thrived for more than a century by finding chemical combinations to treat diseases. But after contributing substantially both to human health and drug-industry profits, it has failed to produce significant innovations in recent years.”
That’s a pretty harsh assessment, and I can’t say that I like seeing the past tense of “thrive”. But it’s true that the flow of new drugs has slowed, and now the arguments are all about why that’s happening (and what to do about it). These topics have come up more times than I can count on this site (and will again!), so I won’t go into them in any detail for the moment. But there are plenty of places to lay the blame: Easy drug targets all gone? Too much focus on molecular-level mechanisms and not enough on the end results? Bar now set too high for safety? Management too timid, or too afflicted by short-term thinking? Too much emphasis on blockbusters? Just not enough known about the diseases we’re now trying to treat?
The article makes grim reading for those of us who have been through a layoff or a site closure – I certainly didn’t enjoy mentally revisiting the period a year ago when I (as Sliskovic did) had to phone my wife and tell her that my job was disappearing. And outside of the immediate employment concerns, shutting down a lab is a very sad process:
”In August, Dr. Sliskovic's team stopped doing research and began transferring projects to other Pfizer sites. The labs are now being cleaned, inspected and sealed off. The 177-acre campus is a ghost town of empty rooms and boxed-up equipment.”
Boy, do I know what that looks like. The period before that is even less appealing, when they bring in shredder boxes for people to empty their office filing cabinets into. That’s when you see unusual stuff in the waste bins, such as small piles of plaques and awards that used to be on the desks and walls, since no one feels much like taking any of those home with them. No, I have no desire to relive any of that.
The article raises the question of how many chemists are employed in the drug industry. It’s hard to get a good read on that, but there’s a quote from the Bureau of Labor Statistic that the total number of chemists in the workforce went down from 140,000 to 116,000 over 2003-2006. That doubtless includes a lot of analytical chemists and researchers in other fields than pharmaceuticals, but it’s not a number than can be made to look good. I would think that the ACS would have more specific data, although I know that not all the readers here trust what the organization has to say about chemical employment.
What I can say is that almost all of my colleagues from the Wonder Drug Factory have been able to find jobs. The great majority of the chemists are still doing drug research. Some of them have, though, left the research end of the business, and are working for support companies and vendors. Others have moved over to clinical work or into the medical devices field. A substantial number have, like me, had to move to other parts of the country.
Unfortunately, I don’t see the wave of layoffs ending, although I can’t see them continuing at their current pace, either. There are more large drug companies with problems than there are large companies with secure positions. The WSJ article, for example, has a graph of total head count at Pfizer over the last few years – what’s that one going to look like after Lipitor goes off patent? But offsetting that, to some extent, will be the smaller companies. I continue to think that the pharma research workforce may be shifting away from the largest shops and toward younger companies. Perhaps that’s just because that’s the direction I’ve gone, but then again, I might just be a representative part of a trend. . .
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+ TrackBacks (0) | Category: Business and Markets | Closing Time | Drug Industry History
November 27, 2007
Posted by Derek
There’s an article in the latest Drug Discovery Today which takes off after the “Rule of Five” and its application to drug discovery. The author’s not saying anything that hasn’t been said before, though – first under the breath, then openly. But it bears repeating:
”The simplicity of these criteria to remove outlier molecules using software, made them very easy to implement. Thus, the Ro5 moved rapidly in the hierarchy of medicinal chemistry concepts from being a set of ‘alerting’ criteria in the minds of the medicinal chemists to a commandment engraved in the high altars of ‘do's’ and ‘don’ts’ of drug seekers. I am not a medical doctor nor am I a savvy drug-discoverer; I am just an apprentice. However, I suggest that ten years after the publication of the Ro5, it might be time for a collective reflection.
Currently, the Ro5 is used almost indiscriminately. I think that we should be very cautious about relying too heavily on these criteria, for two reasons. First, it is worth pointing out that there are examples of successful drugs (i.e. Lipitor™, Atorvastatin™) that are notable violators of the Ro5 and we and others should never underestimate the impact of the highly improbable event in our theories and preconceived notions. Second, it is well recognized in the drug discovery field that in spite of these magic rules, and the introduction of ingenious methods to discover new drugs, the number of new chemical entities reaching the market has remained constant or continued on a downward trend. One may ask: Where is the power of those magic rules? Are they helping us to focus on the right molecules? Or are they preventing us from discovering new opportunities? Do they represent something deep and profound about drug discovery? Or are they preventing us from a deeper understanding of the drug discovery variables?”
The problem is, this sort of article is coming along several years too late. I disagree with the word “indiscriminately”, for one thing. It’s actually my impression that Rule-of-Five dogmatism has been on the wane for a while now. I’d put the peak at about five to eight years ago, myself (anyone out there have the same experience?) Perhaps it’s the lack of any strongly noticeable increase in our success rates that’s calmed things down. Projects are still wiping out due to odd and unexpected pharmacokinetic problems, for example, where the more naïve (or hopeful) devotees of the rules might have looked for an improvement. (This would be a good place to note that Chris Lipinski himself never was as hard-core about his criteria as some of his followers, a pattern which is far from unknown).
So it’s clear that success can’t be ensured by just matching a few basic properties of drugs that have been successful in the past, not that this should be a surprise. People are always looking for the easy fix (who can blame them?). The Lipinski rules were a favorite among middle management, more than for the people at the bench, since they used measurable criteria to produce something else that could itself be measured. Nothing is dearer to a manager’s heart, and it’s too bad that the results haven’t been more exciting.
I liked better an analogy made later in the paper:
”I see the historical successes of our illustrious predecessors more like the discoveries of early sky watchers. They discovered the early stars and planets and through careful observations were able to trace their passages through the sky. Like them, we have discovered certain patterns in the firmament of drug discovery as they relate to various chemical entities with therapeutic properties, and characterized the molecules in the biological universe to which they relate. However, I would not go any further than that. In trying to understand the universe of drug discovery, I am not even ready to affirm whether we know with certainty if the system is geocentric (ligand at the center, as it would be suggested by medicinal chemists) or heliocentric (target in the center as proposed by biologist, macromolecular crystallographers or geneticists). Moreover, although we have a sense of what the forces that bring the two together are, robust calculations that can accurately predict how one relates to the other still elude us. We know there is a key parameter (i.e. Ki, their relative affinity) that connects this crucial pair but we cannot calculate it accurately. Consequently, the number of experimental observations (in vitro and in vivo) relating the two dominant poles of the drug-discovery universe is extensive and continues to grow in the existing databases (public and proprietary) at an exponential rate. All these measurements remind me of the careful observations made by Tycho Brahe (circa 1600) that were crucial for Kepler's insights.”
He’s right that in medicinal chemistry we’re still fundamentally an observational science. (That should have been obvious given how little math any of us need to know). We have broad theories, trends, rules of thumb – but none of it is enough to help us very much, and we’re constantly surprised by our data. That can be enjoyable, if you have the right personality type, but it sure isn’t restful, and a lot of the time it isn’t very profitable, either.
And as an amateur astronomer, I like the analogy, although it worries me a bit. Kepler (and Newton) did indeed break the impasse over the motion of the planets by explaining the available data through relatively simple (but still unexpected and non-obvious) mathematical theories. We’re not going to be so lucky, since the systems we’re studying are so much messier and subject to so many more influences. But there is room for some sense to be made out of what we’ve observed, more sense than we’ve made of it thus far, at any rate.
Understanding is not going to come down on us like a descent of holy fire, which must have been what the laws of gravity and planetary motion were like, but it won’t have to. I’m not expecting an airtight theoretical approach to predicting human blood levels or toxicity, not anytime soon. But considering that we lose amazing amounts of money because we can't predict that stuff at all, I think we're actually going to be pretty easy to impress.
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+ TrackBacks (0) | Category: Drug Development | Drug Industry History
November 9, 2007
Posted by Derek
I was reminded yesterday that today is the one-year anniversary of the day that we found out that the Wonder Drug Factory was being closed down. I remember that presentation rather well. I was one of the more optimistic ones, thinking until the last that we had about a 50/50 chance of the ax, but by the time the meeting began everyone had heard what was really coming.
Unpleasant, that was, and it did extend a cloud over the following holiday season. The job-searching period that followed wasn't anything I'm looking to relive, either, although my severance pay kept it from being anywhere near as bad as it could have been. And in the end, things worked out well. I thought they would, but as my wife pointed out to me at the time, I generally think that things will work out well, so that isn't as good an indicator as it might otherwise be.
But the whole thing was a useful reminder: no one's sitting back in a comfortable chair in this industry. You're riding a wild animal, instead. Working at a smaller company makes it easier to remember that, as many people here around the Boston/Cambridge area know, but there's no drug company so large or so profitable that it can make any guarantees to anyone. Patents expire, companies get taken over, drugs drop out of clinical trials or get pulled off the market.
But on the flip side, discoveries get made. Things make it through trials even though no one thought they might. New ideas get tried out, and given how little we know, just about anything has a chance of improving our lot in research. That's the thing about science: we don't have to be stuck where we are; we can invent doors and walk out of them into something new.
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+ TrackBacks (0) | Category: Drug Industry History | Who Discovers and Why
November 7, 2007
Posted by Derek
OK, now that we’ve thought over the Hollywood analogy to drug discovery, what about other industries? And if none of them fit, what is it about the pharmaceutical world that makes us so different?
Wildcatting for oil has come up in the comments, and that’s a pretty good one. The ratio of dry holes to gushers is probably pretty similar, and using geology to figure out where to drill isn’t that much different than trying to figure out what screening hit to start a new drug program with. The lead time between discovering something and making money off of it (and the amount that has to be spent first) also lines up pretty closely.
One difference, though, is that all oil wells yield the same thing (oil!), while drug discovery comes up with all sorts of things. The variety of our products can make it hard to do good comparisons. We can find exactly what we’re looking for, sometimes, and still lose our shirts because no one turned out to want it (Exubera!) or because the competition got there first. By contrast, everyone wants oil. That also means that the competition is much more direct in the petroleum business than across pharma. Light sweet crude, once it’s on the tanker, might as well be from anywhere, and will trade wherever you can dock and pump.
It goes for fluctuating prices, to be sure, which isn’t something that we worry about day to day over here. Our prices follow a more discontinuous model – as high as we can make them during the lifetime of the patent, and then down to a mere fraction once it expires. Patents are the very definition of wasting assets, and that’s another difference that makes many of these analogies break down. Not as many other industries have big ticking Jame-Bond-villain-style clocks sticking to the sides of their moneymaking products, counting down the days until they lose most of their value. (Fashion and food are two that I can think of, and cars to some extent).
Finally, we have the regulatory aspect, and that really sinks a lot of industry-to-industry analogies, as many people pointed out in the comments to the Andy Grove post. Intel does not have to submit its new designs and its test data to the Federal Chip Administration for approval, and its chips, if they behave in unexpected ways, are still unlikely to directly sicken or kill their users. The closest analogs I can think of are the aircraft and auto industries, particularly the former, since trouble with FAA certification has wiped out many new plane designs and sometimes the associated companies as well.
So, imagine drilling for oil. . .but instead of oil, you’re looking for something a bit different each time you drill, often something that no one’s ever looked for before. And if you manage to find it, you have to make sure, as much as you can, that it doesn’t harm or even kill your customers, because you never know, and satisfy a very hard-edged government agency of that before you can go to market. And after a set number of years, you don’t own it any more.
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