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With Appointment of Genetics Expert as R&D Head, Teva May Be Eyeing Personalized Rx Market

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The appointment of genetics expert Michael Hayden as Teva Pharmaceutical's president of global R&D has some industry observers speculating that the generic drug giant is eyeing the personalized medicine market as part of its future growth strategy.

Hayden, who will also serve as the company's chief scientific officer, is professor of medical genetics at the University of British Columbia and Canada Research Chair in human genetics and molecular medicine. He founded the Center of Molecular Medicine and Therapeutics at the university.

In a statement announcing Hayden's appointment, Teva lauded him as "a preeminent expert in genetics and personalized medicine and … [as] one of the world’s leading experts on Huntington’s disease."

Following a recent presentation by CEO Jeremy Levin at an investor conference, Harel Finance analyst Steven Tepper said in a note that Hayden's hiring hints that Teva "will enter the personalized medicine field." In Tepper's view, the personalized medicine market will provide Teva "high efficiency to cost ratios, albeit limited market segments."

Teva is currently in the midst of reassessing its R&D strategy. Noting macroeconomic shifts and healthcare reform changes, Levin last week said during a call with analysts that Teva is "taking a hard look at all our assets, core capabilities, R&D programs, and overall business strategy." The company said it will present a fully fleshed out R&D plan by year end.

The R&D reorganization comes as Teva expects to see a significant dip in its future revenues. The company's multiple sclerosis drug Copaxone ─ accounting for approximately half, or $3.6 billion, of its worldwide revenues of $6.5 billion from branded drugs in 2011 ─ is slated to lose patent protection in 2014.

Amid these changes, it may be a good time for Teva to explore how it can capitalize on the personalized medicine space. Using genomic approaches to personalize generic drugs isn't a strategy that has been embraced by many drug developers, but if done right, could offer a significant source of revenue as more branded drugs lose patent protection.

Personalized medicine-focused consulting firm Diaceutics advises its pharma clients that "companion diagnostics can and should form part of their [drug] lifecycle management strategies where new indications or pairing of proprietary tests with generic therapies are likely to add value," CEO Peter Keeling told PGx Reporter.

For example, personalized generic treatments might become more common as more brand-name drugs lose patient protection and, in response, pharma companies start developing so-called "branded generics." For example, Abbott Laboratories earlier this year reported that its branded generics business was one of its fastest growing segments, netting $5.4 billion last year, a 20 percent year-over-year increase.

Novartis, with both a molecular diagnostics unit and a generic drugs business in-house, could also benefit from developing PGx-guided off-patent drugs. For example, when Gleevec, a drug for the treatment of Philadelphia chromosome-positive chronic myelogenous leukemia, eventually goes off patent in 2015, "Novartis is likely to ensure it is linked in some way to their Cepheid Bcr-Abl investments to help them continue to be market leaders there," Keeling observed.

Cepheid and Novartis are developing a test for monitoring Bcr-Abl gene transcripts, which will help doctors more reliably manage Ph+ CML treated with Gleevec (PGx Reporter 10/30/2010).

For Teva and other generic drug developers, an opportunity to enter the personalized medicine space may have already opened up. With Sanofi Aventis' antiplatelet drug Plavix (clopidogrel) losing patent protection this month, Teva introduced a generic version of the drug. The US Food and Drug Administration added a "black box" warning to the drug's label in 2010 to highlight that patients with the CYP2C19*2/*2 genotype "exhibit higher cardiovascular event rates following acute coronary syndrome or percutaneous coronary intervention than patients with normal CYP2C19 function" (PGx Reporter 3/17/2010).

Following this labeling change, pharmacy benefit manager Medco initiated a study to compare outcomes of patients given Plavix with the help of a genetic test against patients prescribed the brand name drug Effient, which doesn't require a genetic test to identify best responders. Medco was also offering its customers pharmacogenetic testing services to identify best responders to Plavix treatment as part of its larger personalized medicine program. After being acquired by Express Scripts, it is uncertain whether PBM customers will be offered genetic testing for Plavix.

Although there is data suggesting that poor metabolizers of Plavix with acute coronary syndrome or a stent procedures are at higher risk of cardiac events following treatment with the drug, the totality of evidence hasn't convinced many physicians that genetic testing is a clinically useful intervention when administering clopidogorel (PGx Reporter 3/28/2012). As such, there may be a role for Teva and other sponsors of generic clopidogrel to conduct the necessary comparative effectiveness studies to gauge when it will be cost-effective and more beneficial to prescribe clopidogrel with the aid of a PGx test.

Such data could be useful in driving generic sales of clopidogrel through CVS Caremark's personalized medicine program, which offers genetic testing and pharmacist services to help guide physicians' decisions about whether their patients will respond to generic clopidogrel or will need more expensive branded treatments. "Payors, in particular, could be a big partner at the table for [generic drug developers]," Keeling observed.

He noted, however, that since off-patent drugs are generally considered a "low-price business," few generic drug makers will invest in the R&D necessary to advance such treatments with companion molecular diagnostics. Still, "the opportunity to link investment in diagnostics to open either new indications or offer treatment-monitoring packages, particularly for biologics where there is likely to be less dramatic price erosion coming from biosimilars, opens up many opportunities in this area," Keeling said.

Beyond the generic market, Teva also markets branded drugs, which also may offer numerous opportunities for applying personalized medicine strategies. Teva did not respond to questions about its personalized medicine plans.

For the first quarter of 2012, Teva reported net revenues of $5.1 billion, a 25 percent increase over $4.1 billion in the first quarter of 2011. Of these revenues, generic products brought in $2.6 billion, branded products netted $2.1 billion, over-the-counter products accounted for $196 million, and revenues from other drugs, such as distribution of third-party products, comprised $215 million.

The company forecasts between $20 billion and $21 billion in net sales for full-year 2012. Levin said the company plans to commit between 6.8 percent and 7.2 percent of net sales to support clinical trials for 30 late-stage drug candidates in Teva's pipeline.

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