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Five Captains of Industry Discuss Drugs, Diagnostics, and Co-Developing Companion Products

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Name: Richard Gill

Position: President and CEO, Signet Laboratories, 2004

Background: President and CEO, AnVil, 2002-2004

CEO, ActiveCyte, 2001-2002

Education: PhD, Endocrinology, Reading University, United Kingdom


Name: Marion Howard

Position: Principal and Founder, Cambridge BioStrategies

Background: Head of Corporate Development, Nephros Therapeutics

Corporate Development, Genzyme General

Education: MD/PhD, University of Mainz, Germany; MBA, Manchester University, United Kingdom


Name: Kevin Krenitsky, MD

Position: Senior Vice President, Business Development,

Genomics Collaborative, Inc., 2000

Background: Biobanking consultant

Education: MD, Thomas Jefferson University


Name: Richard Morris

Position: CEO, PharmaSeq, 2002

Background: President of Enterprise Products and Chief Marketing Officer, CambridgeSoft, 2000-2002

President, Sigma Aldrich Research, 1995-2000

Education: PhD, Biochemistry, University of California, Riverside, 1976


Name: Timothy Noonan

Position: Vice President, Operations and Business Development, Clinquest, 2004

Education: PhD, Medicinal/Organic Chemistry, Clark University


Earlier this year, anticipating the release by the FDA of its drug-test co-development draft guidance, Pharmacogenomics Reporter held a roundtable discussion to hear about the expectations, hopes, and anxieties provoked by that pending US Food and Drug Administration release. We invited: Richard Gill, CEO of Signet and biomarker and diagnostics company focused on neuroscience and immunohistochemistry; Marion Howard, principal of Cambridge BioStrategies, a life-science consultancy; Kevin Krenitsky, senior vice president of Genomics Collaborative, a biobanking and target validation services company; Richard Morris, CEO of PharmaSeq, a biotechnology company focused on genomics, proteomics and cell-based assay instruments; and Timothy Noonan, vice president of operations and business development at Clinquest, a product and services development firm for the health sector.

The draft, it turns out, will probably not arrive until at least the fall, and the FDA has in the meantime released a pre-draft "concept paper" on therapeutic-diagnostic companion products that is nearly as appropriate.

 

What do you think is driving the FDA's thinking on the development of the drug-diagnostic companion guidance?

Noonan: It's not to say that the agency certainly is in place for the betterment of mankind, so to speak, but I think their number one charter is protection of the patients. But certainly they want to see new and efficacious compounds approved.

Gill: So how much are the insurance companies going to drive this [policy-making]? Because they certainly want to be involved. Not in writing it, but they have a vested interest, because…

Morris: I divide it into three different barriers, there is the technical stuff, there is the economic stuff, and then there is also the political stuff.

Gill: You have the Aetnas of this world presenting themselves as disease management companies. So if they're managing a disease, they probably are going to advocate the use of diagnostics and prognostics even more than the pharma industry today.

Noonan: Probably, like many shifts within the industry, you'll see a proof of principle and a proof of concept — from the financial point of view — proven overseas first.

Gill: So what will [drive the adoption of drug-test combinations]?

You [need to] put a diagnostic in the hand of the insurance provider. Their biggest cost of use right now is prescriptions. So they want to be sure that the drug is working even more than you do, or the patient. You want it to work because you want it to work, because you want to get better or get your kids better, or get your parents better.

Noonan: It's easy enough to do the financial analysis. You've got the historical data. Say a patient progresses into acute renal failure. [You know] what it costs because of that — and what it costs if you can intervene and treat your patient before they get into that state.

Gill: You've got that number on your fingertips, [anyone]?

(laughter)

Noonan: You don't have to be an accountant to realize there is going to be a cost.

Krenitsky: I think you have to realize that the medications that we are talking about, for the most part, [with] tightly linked companion diagnostics, are going to be expensive medications. They can be molecular-based medications — [and] they are going be expensive. That, in and of itself, makes it almost a requirement from an insurance company's standpoint, that you want to run a diagnostic on anyone who is going to potentially take the medication. I would imagine they are going to fight tooth and nail as long as they can to continue on their formulary of older, generic medications as they do now. I think you're going to have to see a very clear cost-benefit analysis before they are putting these things on their formulary — in tandem, or without the diagnostic being required. I think it's just [that these are] expensive medications.

Morris: As well as some particular drug classes, for instance, the conjugates — monoclonals conjugated with a cytotoxic or something — it's kind of a no-brainer, especially if it's directed toward the epitope that's to be used to deliver that agent. It should have the diagnostic, because if the epitope is not there, the drug's not going to work. And then you've already really done the work anyway — you've got the monoclonal, just tie it [in].

Krenitsky: That goes back to Gleevec, you wouldn't give it to someone who couldn't have a positive test.

Morris: There are a number of compounds in the clinic now that are conjugates with cytotoxics. To the best of my knowledge, because I have worked on three of those programs, they are not developing diagnostics for them.

Gill: So, the legislation might aid and abet them to do that, because I make the rash assumption that they are not developing them because there is not any economic benefit to them. It's a rash assumption, but it might be the right one.

Noonan: I think it's a combination of things, some of them are biotechs, so they are just purely naïve. Others are big pharma, and there is no economic incentive for them to do it at this point in time.

Gill: So we're back to regulation for benefit.

Morris: Well, perhaps a proven diagnostic company would screen that disease indication, and if you can prove that epitope is not ubiquitous across that disease state, then you have a strong argument to do a partnership with that company.

Gill: Particularly if you file on the combination … the intellectual property is important here as well.

 

What do each of you hope to see from these guidelines? Where are your primary interests?

Gill: For us, we are trying to build an evidence-based medicine proposition. From that point of view, we would like to see [rules] in place that required a diagnostic where you have an unmet medical need and for which there is currently no treatment.

Now, let me exemplify that a little further. Some of the discussion I walked into is about having molecular connections between a diagnostic and a therapeutic. Clearly, that is beneficial, but there are a number of spaces, like acute renal failure, where there is currently no treatment. So you actually want a diagnostic merely so you can manage the patient more quickly, more beneficially, and then you come in with a therapeutic afterwards. So, the therapeutic needs development.

We happen, in that space, to have both. But I think there is an argument for diagnostics in a number of areas where there's medical need, even there isn't a molecular connection to the potential therapeutic.

Morris: That's an interesting point we were discussing earlier before you got here. In yesterday's [Wall Street Journal], Harvard [researchers] had discovered, through a diagnostic, that in pre-eclampsia in pregnancy there is very low level of placental growth factor. So now, there's no treatment for pre-eclampsia. So now you've got a diagnostic …

Gill: … but you've got to find a treatment. I'll take it even further: Maybe there is an orphan diagnostic status here.

(laughter)

Gill: If there is no R&D tax benefit towards doing it, then your biotech company would stop being naïve pretty quickly, because they'd have a financial incentive. The issue has always been that there hasn't been a financial incentive to develop a diagnostic.

It may be different if it's differentiating a small subset from a large group, go back to the Vioxx example. That diagnostic probably will be developed because you've got enough volume, because you're going to diagnose all the people that are probably going to be OK.

Krenitsky: Marion mentioned before about using massive clinical stratification with the APACHE scores [regarding sepsis]. That's a perfect example. They may have a strong incentive for a molecular diagnostic that hopefully spans the scope of the drug. It's probably reasonable to assume that there is a number of patients that might not meet the exact clinical criteria of the APACHE score, et cetera, that might benefit from the drug. Once again, it's an extremely expensive drug and if they had a molecular diagnostic that could expand the potential guidelines for use, they would clearly be happy to use it.

Howard: I am not sure what the recommendations should be in terms of structuring the whole regulatory process. For drugs, it's very well defined — it's pre-clinical, phase I, II, and III. There should be something similar in place for diagnostics or theranostics.

Noonan: There is for diagnostics.

Howard: Yeah, there is, but not for theranostics. I think there should be a timeframe also attached to it. How long do patients have to take a certain treatment before they experience, for example, serious side effects? And is that also covered by the whole procedure? What is the post-marketing observation period?

Noonan: I suppose it depends on what information are they trying to derive from that theranostic, because it should be validated just like a diagnostic. Because, if you get a false positive, and the clinician makes a decision based on the false positive or a false negative, then that has a detrimental effect on the patient — whether you do or don't treat them. Certainly if you had something that was an indicator of acute renal failure, and you've got a false negative, then that patient would probably die because of that.

Gill: It needs to be regulated, which it is. It's that combination again that's the valuable piece, isn't it? You can capture the combination with intellectual property, but unless you're able to license it to a big pharma — your suggestion — you're in a position where it is difficult for a smaller company to develop.

How did Genzyme start? It started with a few orphan-drug indications, and now it's becoming a mainline pharma company because it's developed sufficient profit to step back into the major markets.

Morris: But I think that like anything in the industry, there's always that grey area. For instance, the Herceptin diagnostic. If it says, "this patient is Herceptin negative," it doesn't mean that that response is necessarily going to translate into an adverse effect for the patient. They're still going to use a different treatment regimen on the patient.

So that's kind of a grey area. For instance, someone's got a prostate-specific antibody, and if you test, they don't know, but if you test it for that epitope, and it gives a false negative, you still wouldn't say, "well, we can't treat you with this drug, go home." We are going to treat you with something else.

Howard: We really have to look at each class individually. Prognosis and treatment…

Morris: Maybe with something like the antivirals, that you can do arrays [with], where you're coming at it from parallel [approaches].

It would be very hard to get a false negative across an array.

Krenitsky: I think the one thing you don't want to see is a disruption of free market forces. You don't want to see the FDA come in and mandate that a pharmaceutical company, let's say, that is developing a therapeutic, is required to develop — or attempt to develop — a companion diagnostic with it up front.

 

Because it's not always useful?

Krenitsky: Not only because it's not always useful, but because it's not always technically achievable at this point. We are talking about, in the pure sense of theranostics, the Gleevecs and the Herceptins, we are talking about very, very clear diagnostics related to disease entities with a therapeutic in play.

Howard: That's almost like saying you wouldn't give statins if you don't have too much cholesterol. So you wouldn't give Herceptin unless you have the target — that's the same level. It's just a test that's done at the molecular level, but it's the same kind of relationship.

Krenitsky: You want to be able to have — Richard at his diagnostic company, for example — to have the entrepreneurial freedom to develop whatever diagnostic he wants, regardless of whether or not there is a therapeutic associated with it, and the same thing should apply to the therapeutic providers. I don't think we are anywhere near that level of regulation, but ultimately, as we see more clear combinations of diagnostics and therapeutics that are linked, that, I think, will be a concern that exists.

Howard: We also want to preserve the entrepreneur's position. He wants to exercise his right in what type of diagnostic he's working on for the patient, and he or she doesn't want to be completely regulated by the payors or the FDA.

Noonan: Although I could envision the FDA requiring a diagnostic if it's a preventative treatment or a predictive treatment.

Howard: Yes. For individual cases. Yes, I mean you have a requirement for diagnostics for genetic diseases when a child is born, and if you don't do that, you can assume [it will not occur as often as necessary]. So, for certain instances it makes sense.

 

What do you hope to see from the guidelines?

Morris: I was just thinking, that what will probably happen is that there will be these two major classes. This is what we want for the future, global things that are used to treat whole populations, and local things that are individually specific. It would be based upon some sort of molecular indicator, I am not sure what that is it could be genetic, it could be something we don't know yet. But I think that's where we're going toward. It might happen, and [we'll] figure out what the markers are after [the drugs]. But you'll eventually have the diagnostic test.

Sometimes that happens, where you have something that works and you use it, and you wait around before you figure out what it is and build a test that's based around that.

But I'm a biochemist, so I tend to look for that thing, that molecule that is indicative of it, or molecules — it could be several things at once.

Once you understand fundamental pathways, that's what Kevin's been saying, and you understand all the other implications in complex systems, everything's attached to everything else — when you really have something that's definitive, you glom onto it.

Gill: There was a good example as I was driving on the radio this morning, they are now claiming that C protein is a good predictor of whether a statin is actually working or not.

I was thinking, 'Have they really?' Because you know that it's going to be three, four, five years before they actually develop sufficient data to prove that it is predictive. It's actually a heck of a shame.

Morris: The guy who discovered it actually has his own company.

Gill: He's showing less incidence of heart attacks for patients on statins who have low CPC, is that right?

Morris: High.

Gill: High CPC.

Noonan: They're saying high C-reactive protein levels are indicative that if a person is treated with statins that they'll have a better outcome?

Morris: No, they don't know if it's causative — that's the issue.

Noonan: That's the issue.

Gill: So now it's not just two levels of cholesterol, it's this as well.

 

Have I heard all of what you hope to see from the FDA?

Noonan: I'll tell you what I hope not to see — and from my perspective, that's probably sufficient. I hope they're not too over burdensome on this. I don't think they will be either. I think as with that agency in a lot of things, such as Part 11, where if they don't understand everything they don't fully enforce it.

So I think they're going to take some time — they did it with genetic medicines too, and they kind of stand back. And part of it is the industry teaching the agency, because they don't know enough to enforce something. They know historically that mandates don't work. They also find out the industry has a fairly strong lobbying arm too, from the political side.

What I hope to see is that they're collaborative with the industry. Clearly, there are probably some areas where there needs to be regulation. There are other areas where a mandated regulation is not required, but there may be some other incentive to get people involved, because all in all, when they are truly realizing the benefits of it, it's the patients who will do better.

Gill: The fascinating thing is that [we are having] this conversation, because three years ago, the industry was still in denial. There were plenty of us who were advocating the need for sub-populations, personalized medicine, evidence-based medicine, based on diagnostics or not.

Noonan: I think it's short-sighted to say that it's going to affect your revenues. Short-sighted, it may be in fact, because there may be no more such thing as a blockbuster. But instead of one drug for an indication, you may have three, and they all might do half a billion [in sales]. So, you're still getting your billion and a half in revenues, it's just not from a single entity.

Gill: The cost of goods should be lower and the risk …

Howard: And the development…

Noonan: The development cost should be much, much lower.

Howard: And there won't be that much for marketing.

Noonan: The marketing will never go below 70 percent.

Gill: We all recognize that the major pharmaceutical companies were working on diagnostics in the background. George Poste was advocating it 20 years ago, isn't it? Fifteen years ago? I certainly believe there is going to be an inflection curve, and it's going to be pretty fast — being two to five [years] and this will be in place. And you're going to be seeing a huge number of diagnostics approved with a therapeutic or without a therapeutic, that weren't approved before.

Noonan: We all have our individual interest, but certainly being a service provider in management of clinical trials, it's in my best interest if they use it as drug-development tool, whereas, depending on whose study you look at anywhere between eight and 12 percent of drugs actually succeed through clinical trials, and they fail for two reasons, lack of efficacy or toxicity. If I have a much higher percentage of drugs making it through to the clinic, that's good for my industry, because less are going to fail at Phase II and I'm going to be able to carry them through to launch.

Gill: In a way, you're insuring that you're using patients who are positive controls, which is what you want to do. If you can focus in on positive controls, and the drug doesn't work, it's really dead. That's it. Gone. No point in messing. And that's valuable as well, because it saves time and money.

 

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