As regulators and payors around the world are demanding more evidence that healthcare products improve patient outcomes and save money, Roche this week attempted to reassure investors that its strategy to develop innovative products — with a strong focus on molecularly guided personalized medicines — will place it ahead of competitors.
Through several presentations during an investor day in London, Roche officials highlighted a number of drugs for cancer, neuropsychiatric conditions, and autoimmune diseases for which the company is investigating biomarkers that can help target treatment to specific groups of patients. The company said that more than 60 percent of the compounds in its drug pipeline are currently paired with a companion diagnostic and that it has more than 200 companion diagnostic projects underway across its pharma and diagnostic business groups.
Personalized medicines are not only a major part of Roche's plan for future growth, but they also represent a way for the company to differentiate its products from competitors. By setting its drugs apart from other me-too treatments in the marketplace, the company is hoping that its products won't be as heavily affected by the pricing pressures currently plaguing the pharma and biotech sectors.
"Yes, regulators are very stringent. But if I look back at our most recent launches, particularly in the US, if you have true medical innovation, then regulators are very willing to bring those medicines and novel diagnostics to the market," Roche CEO Severin Schwan said during the investor conference. He highlighted that the US Food and Drug Administration reviewed and approved the BRAF inhibitor Zelboraf for metastatic melanoma and its companion diagnostic in record time and that the recent approval of the HER2-targeted breast cancer drug Perjeta also occurred ahead of schedule (PGx Reporter 8/17/2011 and 6/13/2012).
"Likewise, if you look at the payors, there is cost pressure," Schwan reflected, but he noted that the "innovative nature" of its portfolio helps it to "negotiate better prices with payors."
Despite this optimistic forecast, Roche has experienced some pushback from cost-conscious national payors in Europe. For example, in June the UK's National Institute for Health and Clinical Excellence deemed Zelboraf, which costs more than $82,000 for a seven-month treatment, too pricey. Zelboraf, which Roche launched in the US market last year and in European countries earlier this year, netted the company around $97 million in revenue for the six months ended June 30.
In an effort to battle pushback from national payors, Roche is in discussions with European governments about value-based pricing schemes for several of its products. In this regard, high priced personalized medicine drugs are well suited to these types of arrangements. David Loew, chief marketing officer at Roche, told investors that governments are increasingly developing registries to track how individual patients are doing on various treatments. This information will help governments move from a volume-based pricing model for drugs to paying for them based on the drug's indication.
He noted that in Germany, for example, Roche has developed a payment scheme where in colorectal cancer, patients pay a certain amount for up to 10 grams of the oncologic Avastin, receive it for free for up to 12 months, and then the scheme repeats. For personalized medicines, such as Herceptin, Perjeta, T-DM1, and Zelboraf, "we will have to think about different ways of pricing those new combinations," Loew said.
Schwan highlighted that one of the major advantages for Roche in this difficult environment is that it has both drug and diagnostic capabilities in house. This, according to Schwan, enables Roche to have significant internal capabilities in early-phase research, and makes the company attractive for partnerships, as well. Roche currently has more than 70 new molecular entities in clinical development and since 2011 there have been 25 late-stage clinical trials that have yielded positive results. The firm plans to bring three more products into late-stage clinical trials by the end of the year and would like to move 10 products into late-stage development in 2013.
On the diagnostics side, newly hired chief operating officer Roland Diggelmann said that Roche is aiming to grow its presence in the testing market by becoming "the partner of choice" for developing companion assays and collaborating internally with Roche pharma to advance personalized medicine.
"We need to make sure that science translates into great medicines by designing trials that take smart risk into account, that really focus on ensuring that the molecules are being developed in the right diseases; to make sure we have the right dose; to make sure, whenever possible, we have the … companion diagnostic strategies," Chief Medical Officer Hal Barron said at the meeting. "This whole strategy needs to result in a higher probability of success so that the return on investment is above the cost of capital and an important driver for our business."
While Roche plans on identifying new product opportunities through a mix of its internal capabilities and external collaborations, growth through large mergers and acquisitions – a strategy that other large pharmaceutical companies have readily utilized to expand product portfolios – doesn't seem to be a priority at the company. Noting that there may be opportunities for smaller M&A deals, Alan Hippe, chief financial and information technology officer, noted that at Roche, "we are not big fans of big mergers and big M&A."
A large portion of Roche's personalized medicine strategy will be directed toward oncology, where the company has allocated 50 percent of its research and development budget.
In June, the FDA approved Perjeta in combination with Herceptin and decetaxel chemotherapy as a treatment for metastatic breast cancer patients whose tumors overexpress the HER2 protein. The agency simultaneously also approved two companion tests that can help doctors discern best responders to the treatment (PGx Reporter 6/13/2012).
Herceptin (trastuzumab), approved in 1998, still comprises a big chunk of Roche's therapeutics business, contributing 11 percent of the $18.2 billion the firm netted in overall drug sales in the first half of the year. Roche is hoping to preserve earnings from this blockbuster drug — often hailed as the first personalized medicine success story — by combining it with Perjeta and linking it with a derivative of the chemotherapy maytansine, DM1.
Recently, Roche announced data from a late-stage clinical trial called EMILIA that showed that advanced breast cancer patients receiving the antibody drug conjugate trastuzumab emtansine, or T-DM1, lived "significantly" longer than those treated with a combination of Genentech's Xeloda (capecitabine) and GlaxoSmithKline's Tykerb (lapatinib). The patients in EMILIA had to have progressed after initial treatment with Herceptin and taxane chemotherapy.
According to Loew, the company is currently conducting a study looking at T-DM1 as a potential option for first-line metastatic breast cancer patients. In addition, Roche is also studying T-DM1 as an adjuvant treatment in early-stage breast cancer patients with residual disease; comparing T-DM1 plus Perjeta against Herceptin plus Perjeta in the adjuvant early-stage breast cancer setting; and looking at T-DM1-based chemotherapy in the neoadjuvant setting.
"So if we are successfully delivering those results, I think the HER2-positive breast cancer space has been completely changed and redefined," Loew told investors.
At the end of the year, another study, called the Protocol of Herceptin Adjuvant with Reduced Exposure, or PHARE, is slated to report results, and the outcome could have a negative impact on Herceptin sales. PHARE is comparing whether patients given Herceptin for 12 months, which is currently the standard of care in the US, fare better than those given the drug for six months.
Industry observers have projected that Perjeta and T-DM1 could be a sufficient buffer against a scenario in which six months of Herceptin is found to be non-inferior to a year of the drug.
Barron noted that Roche is readily applying the strategy behind antibody-drug conjugates such as T-DM1 – where antibodies to attach to antigens on the surface of cancer cells to localize chemotherapy delivery and reduce adverse reactions – in 25 projects across its portfolio. He added that antibody-drug conjugates offer a promising mechanism for personalizing treatments.
In non-small cell lung cancer, Roche is studying MetMab (onartuzumab) in combination with Tarceva in patients with tumors that overexpress the Met protein. Data from this Phase III trial, called METLUNG, is expected in 2014. Data from a Phase II study looking at MetMab and Tarceva as a second-line NSCLC treatment yielded negative results when all comers were considered. However, the subgroup of patients who over-expressed Met had a "doubling" of progression-free survival and a "pronounced" effect on overall survival compared to the low-Met group.
Roche is also investigating MetMab in metastatic gastric cancer (Phase III), triple-negative breast cancer, (Phase II), metastatic colorectal cancer (Phase II), glioblastoma (Phase II), as well as in combination with Avastin in various cancer indications.
Other Areas of Personalization
Outside of oncology, Roche is exploring biomarker strategies to personalize drugs for Alzheimer's disease and schizophrenia. Phase I data from a study involving gantenerumab, a IgG1 monoclonal antibody, suggest that the drug could potentially reduce amyloid plaque in Alzheimer's patients' brains.
Investigational drugs targeting beta-amyloid, which many researchers believe to be involved in the pathogenesis of Alzheimer's disease, haven't fared well in clinical trials. Most recently, Johnson & Johnson/Pfizer's drug bapineuzumab, which also targeted the β-amyloid protein, failed to benefit Alzheimer's patients who were non-carriers of APOE4 gene variations.
Wall Street analysts are hoping that Roche's biomarker-driven strategy for gantenerumab will help it avoid a similar fate. The company is currently conducting a 770-patient trial called Scarlet Road, in which researchers will measure Tau/Aβ levels in study participants' spinal fluid to identify early onset or prodormal Alzheimer's patients and treat them with gantenerumab. Roche is developing a companion test to gauge Tau/Aβ levels in trial participants. Results from Scarlet Road are expected in 2015.
Roche subsidiary Genentech is testing another compound, crenezumab, to see if it can prevent Alzheimer's in a population genetically predisposed to getting the disease. Genentech, in collaboration with Banner Alzheimer's Institute and the National Institutes of Health, is conducting a Phase II trial investigating crenezumab in the residents of Medellin, Colombia, where people share a common ancestor and have a high prevalence of mutations in the presenelin 1 gene. Those harboring the dominant gene mutation will start to lose their memory in their mid-40s and their cognitive functions will deteriorate by age 50.
The five-year study will involve approximately 300 participants, of whom approximately 100 mutation carriers will receive crenezumab and another 100 mutation carriers will receive a placebo. In a third arm, approximately 100 participants who don't carry the mutations will receive a placebo. Study investigators will begin recruiting patients for this study next year.
In schizophrenia, Roche is exploring bitopertin, a glycine reuptake inhibitor, in six Phase III studies slated for completion next year. Three of these studies are looking at the drug's ability to control negative symptoms in schizophrenia, while the other three trials are studying the drug's impact on sub-optimally controlled disease symptoms. "A companion diagnostics assay is in development to validate the hypothesis for an exploratory biomarker predicting response to therapy with bitopertin," Roche said in a statement.
For lupus, Roche is conducting a proof of concept Phase II trial involving rontalizumab, an anti-interferon-alpha antibody, in which researchers are using a biomarker to identify patients most likely to respond to the drug. Data from this trial will be presented at a medical conference later this year.
Growing Role of Diagnostics
Daniel O'Day, who served as CEO of Roche Molecular Diagnostics until last week when he was appointed chief operating officer of the company's pharma division, valued the worldwide diagnostics market at $53 billion. "We represent 20 percent of that, or around 10 billion Swiss francs ($11 billion)," he said in his investor day presentation.
While molecular diagnostics promise to be a growing part of Roche's business in the coming years, these products currently only represent a single-digit percent of Roche's overall diagnostics business. For the first half of this year, molecular diagnostics comprised around 6 percent of Roche's diagnostics sales of $5.3 billion.
Roche's Ventana Medical Systems subsidiary will likely play a large role in advancing Roche's presence in the companion diagnostics space. This year, Ventana announced it was developing companion tests for a number of drug makers, including Aeterna Zentaris, Syndax Pharmaceuticals, Pfizer, and Bayer (PGx Reporter 1/18/2012).
In addition to these external collaborations, Roche officials highlighted the company's internal diagnostics capabilities as particularly advantageous for expanding its presence in the personalized medicine space. For example, Roche developed the BRAF companion test for Zelboraf. The company is also developing a companion EGFR-mutation test for its non-small cell lung cancer drug Tarceva in the first-line setting, and a test to gauge so-called "super-responders" to the investigational asthma drug lebrikizumab being developed by Genentech.
In terms of molecular diagnostics, O'Day highlighted a test that gauges the overexpression of the p16 gene in cervical Pap test samples to gauge whether women have precancerous lesions.
Additionally, the FDA this year approved the use of Ventana's INFORM HER2 Dual ISH DNA Probe cocktail on the BenchMark ULTRA automated slide staining platform, which allows labs to analyze fluorescent in situ hybridization and immunohistochemistry samples in one assay. According to O'Day, this test has been more successful than standard FISH tests in identifying HER2 status in difficult-to-diagnose patients. The company will be publishing data on this test soon, showing that it can "identify about 4 percent more [HER2-postiive patients] than FISH alone."
When it comes to molecular technologies, Roche, like other pharma and biotech players, appear to be sticking to tried and tested technologies, such as IHC, FISH, and PCR, and reserving whole-genome sequencing for research use. "Today, sequencing is predominantly a research tool. And it's a very valuable research tool in the future," O'Day said, estimating that sequencing-based tests will "go into the clinic" in the next half decade.