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Diaceutics Report Sheds Doubt on Pharmas' Personalized Medicine Preparedness


Originally published June 14.

By Turna Ray

Researchers in R&D divisions at top drug companies may believe that personalized medicine is the future of therapeutic development, but that sentiment isn't necessarily shared by pharmaceutical execs — a state of affairs that is impeding the investment and infrastructural changes needed to advance the field, a report by Diaceutics has found.

Diaceutics, a consulting firm that advises biopharmaceutical companies on how to capitalize on targeted drug development, surveyed ten industry players that had at least one targeted therapeutic on the market and assessed their ability to capture a significant share of the personalized medicine market. The companies involved in the study were Amgen, AstraZeneca, Bristol-Myers Squibb, Eli Lilly, GlaxoSmithKline, Merck, Novartis, Pfizer, Roche, and Sanofi-Aventis.

According to the report, "only a small number of companies are likely to upset the traditional competitive landscape within the next five to 10 years on the basis of their ability to successfully commercialize personalized medicine assets."

Among the handful of firms that are prepared for personalized drug development, some could potentially "dominate in specific therapy areas within the next three to five years," the report states.

Diaceutics' analysis was informed by publicly available data on the firms, interviews with industry leaders, and internal evaluations of the companies. For the report, Diaceutics reviewed the companies' corporate structure, leadership, R&D structure, Phase III pipeline, management and marketing of currently marketed products, as well as collaborations and partnerships.

Based on this information, Diaceutics ranked the 10 companies in one of three categories: disruptors, or those who are actively reshaping current drug development paradigms via personalized medicine strategies; breakaway companies, or those firms that have made carefully vetted investments in the field; and followers, or those that are making personalized medicine investments based on what the leading firms are doing.

Only Roche and Novartis were ranked in the disruptor category; AstraZeneca, Eli Lilly, BMS, and Pfizer fell into the breakaway category due to recent investments they have made in the field; while GSK, Sanofi-Aventis, Amgen, and Merck were deemed to be followers who are "more likely to strive to maintain their existing operating models, rather than adapt them for personalized medicine," the report stated.

"Most pharmaceutical companies say they are ready for personalized medicine, and their development pipelines are filling up with personalized medicine opportunities, but they may not fully understand the commercial ramifications of this technological shift," the report states. "While some studies suggest that only 10 percent of therapies in Phase III pipelines are potential personalized medicine/targeted therapies, Diaceutics' analysis found that fully 46 percent of Phase III therapies in the pharmaceutical pipelines might benefit from a personalized medicine strategy."

Some of the barriers to personalized medicine adoption identified by the report are those that have been previously cited by industry observers, such as a lack of commitment and resources from top pharma execs, continued support of old drug development paradigms and the blockbuster model, and a limited understanding of how diagnostics can be used to improve the development process and increase the value of a drug by identifying best responders.

The Diaceutics report follows comments made by John Castellani, CEO of the Pharmaceutical Research and Manufacturers of America, who last week said that biopharma's commitment to personalized medicine is growing despite regulatory and reimbursement barriers and a challenging economic environment (PGx Reporter 06/08/2011). In a speech before the Personalized Medicine Coalition last week, Castellani cited old personalized medicine success stories, such as Herceptin and Gleevec, but noted that drug developers are "heavily invested" in bringing to market new genomically targeted products.

While Diaceutics' findings aren't at odds with Castellani's message, the report does show that there are internal forces within drug companies that may be abating industry's focus on the discipline. "R&D teams are committed to a personalized medicine future, but their commitment is generally not matched by the significant investment required to optimize future targeted therapy portfolios," Diaceutics found. "Many pharmaceutical industry boardrooms don't prioritize personalized medicine as a future paradigm for organizational reengineering."

Several surveys attempting to assess where drug developers stand on personalized medicine have painted slightly different pictures of industry's commitment to the field. Before Diaceutics' report on drug developers' preparedness in personalized medicine, the Tufts Center for the Study of Drug Development surveyed industry players and found that around 80 percent of pharmaceutical firms are working with academic medical centers, research institutions, and healthcare practitioners on personalized medicine projects. Within the 21 pharma and biotech companies interviewed in the survey, Tufts found that between 12 percent and 50 percent of their current clinical development pipelines involve personalized medicines (PGx Reporter 11/21/2010).

Blockbuster Personalized Rx

Although drug developers speak enthusiastically of supporting personalized medicine, Diaceutics' assessment shows that these companies' internal capabilities are still tied to the traditional drug development model and they are still hoping for blockbuster hits.

"The bottom line … is that the transformational nature of personalized medicine from an R&D perspective does not seem to be matched with a similar commercial vision," Sanna Paakkonen, head of research at Diaceutics, told PGx Reporter via e-mail. "It is primarily the commercial vision that most pharma CEOs relate to."

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Paakkonen gave several reasons for the gap in vision between R&D groups and drug company execs when it comes to PGx-guided drug development. First, personalized medicine is internally thought of at many biopharmas as a "futuristic productivity enhancement" most appropriate for oncology drugs, rather than a strategy that will impact near-term revenues, Paakkonen observed.

Second, most drug developers still view personalized medicine as a niche business that comprises 10 percent of their pipelines. "Many of the companies analyzed are likely to prioritize potential blockbuster launches over personalized medicine launches in the next few years," Paakkonen said. "This prioritization of resources towards a declining operating model in hopes of a 'blockbuster winner' is a huge barrier within companies for changing the existing operating model, especially so when close to 40 percent of the therapies in Phase III of the pharmaceutical companies analyzed for this report are existing therapies seeking new indications."

Meanwhile, the report contends that there is a strong economic argument for drug developers to abandon the misconception that personalized medicine strategies cannot lead to blockbuster products.

"In contrast to the belief held by many pharmaceutical companies that personalized medicine will create smaller markets or less revenue, about half of the companies assessed in the report have a personalized therapy currently on the market that is near or above blockbuster-level sales of $1 billion," Diaceutics reported.

Paakkonen cited Crestor and Plavix as personalized treatments that fall into the blockbuster category. Although the emergence of blockbuster personalized medicine products challenges the conventional wisdom that pharmacogenomics strategies shrink patient populations, some of the first marketed theranostics products yielded sales below analyst expectations, which may have engendered the perception within industry that PGx strategies means smaller markets and lower sales. Impacting the market performance of many earlier personalized medicine products, such as Pfizer's Selzentry, is the fact that a few years ago drug developers had no historical examples of successful Rx/Dx partnerships, regulatory pathways for combination products, or reimbursement strategies.

"Pfizer had forecast Selzentry’s year-one revenue at $150 million prior to launch, but in fact it was close to $40 million," she said. "Of course, multiple factors affect a therapy’s market performance, the size of the target population not the least." Indeed, Pfizer's experience with Selzentry was impacted by the lack of a broadly available companion test that would have identified those patients most likely to respond to the drug (PGx Reporter 03/03/2010).

However, certain drug developers who are leading the personalized medicine field are learning to opportunistically use companion diagnostics to increase profits for existing blockbuster drugs. As previously reported by PGx Reporter, Roche and Genentech presented data at this year's American Society of Clinical Oncology meeting showing that non-small cell lung cancer patients with EGFR mutations who received Tarceva lived twice as long without disease progression compared to patients who received platinum-based chemotherapy — potentially extending Tarceva's indication into first-line therapy (PGx Reporter 06/08/2011).

Another reason that pharma execs are reluctant to embrace personalized medicine, according to Paakkonen, is that PGx strategies and Rx/Dx co-development are certain to shake up the traditional business model and pricing structures of treatments.

"Implicit in a personalized medicine approach are elements of profound change to the pharma business model. For example, pricing of therapies could fundamentally shift under a PM future," Paakkonen said. "Resistance to disruptive change always slows incumbent companies' reactions."

Coloring many drug firms' opinion of personalized medicine's market potential is their very "narrow" definition of personalized medicine, Diaceutics found. For the purposes of the report, Diaceutics considered personalized medicine products to be those drugs that were developed with a PGx strategy from the start, as well as those drugs that had a companion diagnostic added to their indication in the post-market setting.

According to Paakkonen, "the majority of the companies mentioned in [Diaceutics'] report may not consistently regard therapies targeted post-launch by a diagnostic as personalized medicine." In the report, however, Diaceutics doesn't differentiate between products that were proactively developed with a PGx strategy from those that had a companion test added later, since therapy sales "behave in exactly the same way" in either setting.

PM Preparedness Rankings

In its report, Diaceutics identified several factors that will enable drug companies to handle the changes associated with personalized medicine: they need to have strategic partnerships with diagnostics developers; a process in place to develop and commercialize Rx/Dx products; and a focus on integrated personalized Rx development across their pipelines.

However, most drug developers fall short of meeting these criteria. According to the report, most pharmas appear to be reacting to marketing events, instead of shaping them. Also, drug companies underestimate the potential for diagnostics to add value to their therapeutics, Diaceutics found.

Out of the 10 firms surveyed for the report, Diaceutics identified GSK, Sanofi-Aventis, Amgen, and Merck as "followers … most likely to respond to the action of other companies." These four firms have "so far very few commercial successes" in the personalized medicine space.

For example, Sanofi announced earlier this year that a Phase III trial for iniparib, an investigational PARP inhibitor for triple-negative breast cancer, failed to meet the pre-specified criteria for overall survival and progression-free survival. Other developers of PARP inhibitors, Abbott and AstraZeneca, are applying a PGx strategy with a companion BRCA mutation test to direct therapy to best responders in clinical trials. Sanofi did not use a companion diasgnostics strategy for iniparib, which raised questions among industry observers as to whether the company could have avoided this late-stage set back with a PGx strategy (PGx Reporter 02/02/2011).

At the ASCO meeting earlier this month, however, a researcher involved with iniparib's clinical development program said that Sanofi is now exploring whether the drug is more efficacious in certain molecularly-defined subpopulations of patients (see related article, in this issue).

Among the "followers," Diaceutics found that GSK and Sanofi were "slightly ahead" of others in the category in terms of their ability to commercialize targeted therapies. However, Diaceutics identified Amgen as having the best corporate structure out of the four firms to facilitate drug/diagnostic combination products. Amgen's recent experience updating its colorectal cancer drug Vectibix with pharmacogenomics data has likely taught the company to ink Rx/Dx partnerships earlier in the development of the drug (PGx Reporter 02/24/2010).

Merck, meanwhile, fell to the bottom of the list, ranking 10th in terms of its preparedness to engage in personalized drug development. "It did not have a noteworthy dedicated internal personalized medicine team in place at the end of 2010, and showed little focus on personalized medicine in its clinical pipeline," the report stated.

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In contrast, Roche and Novartis are the only firms that Diaceutics found to be not only prepared to develop and commercialize personalized medicine products, but able to shape the healthcare system enabling disruptive innovation. Falling into the "disruptor" category, these two firms, according to the report, "are poised to become leaders" in personalized medicine, since they have the capacity to influence and reconstruct the scientific, regulatory, and reimbursement disincentives identified by PhRMA's Castellani and other industry observers.

Diaceutics did not analyze reimbursement or regulatory barriers specifically for the report, but Paakkonen noted that many drug developers are readying themselves for major changes in these areas. "Many pharmaceutical companies have begun preparing for a future where a condition for reimbursement is proof that the therapy can be predicted to produce a positive patient outcome," she observed. "Not all pharmaceutical companies, however, agree with this judgment, and those that do not [agree] are unlikely to treat it with equal urgency."

Novartis and Roche received high marks from Diaceutics for their "capacity to upset normal competitive dynamics in a specific therapy area by shaping payors', regulators', and physicians' expectations of value," the report states. Specifically, Diaceutics highlighted Roche's innovative capacity and Novartis' recently formed internal molecular diagnostics shop as competitive advantages.

Diaceutics ranked AstraZeneca, Eli Lilly, BMS, and Pfizer in the "breakaway" category, since these companies have made "selected, proactive investments" in personalized medicine and have made changes to their corporate structures in order to facilitate commercialization of these treatments.

"All four [drug developers] … have roughly equal potential to commercialize targeted therapies, although AstraZeneca, Lilly, and BMS, with their internal personalized medicine strategy teams, will likely be better organized internally to develop potential therapies and companion diagnostics," Diaceutics reported. "Pfizer, on the other hand, has a promising clinical pipeline for personalized medicine."

At ASCO's annual meeting, Pfizer presented interim progression-free survival data for patients with ALK-positive advanced non-small cell lung cancer treated with an investigational ALK inhibitor, called crizotinib. The ongoing, open-label, multi-center, Phase I trial of 116 crizotinib-treated patients showed that study participants with ALK-positive NSCLC had a preliminary median progression-free survival of 10 months. Crizotinib is currently under priority review at the US Food and Drug Administration. Simultaneously, the agency is also reviewing a companion diagnostic, developed by Abbott, that picks out best responders to crizotinib (PGx Reporter 06/08/2011).

Have topics you'd like to see covered in Pharmacogenomics Reporter? Contact the editor at tray [at] genomeweb [.] com.