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With increasing responsibilities and decision-making post-discovery, the traditional label of “biotech” is changing.
The growing need for a commercial mindset in scientific discovery
Call it the commercialization pivot. There comes a time when a biotech-which has 90% of its financial value in one candidate, has been vested in one indication, knows the science of that compound inside and out, and is singularly focused on that scientific execution-has to take the next steps and execute on clinical development, regulatory, and then, potentially, commercialization.
Chris Garabedian, chairman and CEO of Xontogeny, noted one of the key pieces missing for much of biotech is access to the right people to make drug development decisions. And that’s not just a plug for Xontogeny, which offers exactly those services. Ninety percent of all biotechs fail, but Garabedian doesn’t believe that they all fail because of technology risks; they fail because of the design, chosen endpoints, or short cuts in science. “There are three key challenges that have emerged in biotech,” he says. “There is a lack of sufficient drug development talent across biotech; there is a huge pile of intellectual property that needs to be developed and incubators create more and more IP, but there is no increase in turning that IP into a company.”
When Aevi Genomic Medicine’s President and CEO Mike Cola refers to the large number of talent still located in the PA-NJ area, he is specifically talking about those professionals with the knowledge of regulatory affairs, clinical development, GCP, market access, sales, and commercialization. Those same skills that Garabedian says are elusive in second- or third-tier innovation hubs, and, overall, small biotech are rife in PA and NJ. Besides the access to talent and other factors, FDA approval is the final key factor for regional innovation hub success. Garabedian noted that what separates the second-tier markets from the top ones is the commercial breakout. “You need a commercial success to form the backbone of the innovative hub,” he say. For Boston, the successes were Genzyme and Millennium. For Philadelphia, Spark Therapeutics can take home the trophy for a recent FDA win. For NYC, Synergy Pharmaceuticals recently gained an indication expansion approval for its drug Trulance.
To ensure their access to and ability to foster success in promising therapies is the reason behind many large pharma establishing innovation or incubation centers globally and in the US.
The first to land in the Boston/Cambridge area was Novartis, which established its Novartis Institutes for Biomedical Research (NIBR or “nibber”) there in the early 2000s. Dr. Stephen Moran, global head of strategy for Novartis, says, “It was a bold move to take R&D out of Switzerland. Cambridge wasn’t the big hub it is today, but [former CEO Daniel] Vasella had a vision and a philosophy.” Moran says NIBR’s fit in the current Novartis strategy is multi-faceted. With the explosion of scientific developments, such as gene therapy and CRISPR; platform technology for cell therapy and T-protein presentation, and additional
therapeutic areas, companies need diversity of science. “There is a fragmentation of sources of innovation…75% of new molecular entities approved by the FDA originated outside of the top 30 pharma companies last year.” Moran elaborates that big pharma largely missed the early days of biologics, “and we aren’t going to miss that again.”
He says that NIBR scientists are “pure of heart and mission,” and are directly tied to Phase I, II, and III clinical trials-or as Moran calls it, “the reality of medicine.” He says it’s still hard to make decisions, because scientific discovery isn’t linear. “Finding the balance between scientific and market decisions is a constant struggle of knowing what to prioritize and stop,” says Moran. Commercially, he explained, maybe the thought is to discontinue a program, but then a breakthrough is made. Or the breakthrough leads to a very small market for the drug, so then decisions around getting into a larger market come into play.
As Dr. Chandra Ramanathan, vice president and head of the East Coast Innovation Center at Bayer and member of the Pharm Exec Editorial Advisory Board, noted: “Innovation becomes meaningless if you can’t translate it to patient needs.”
At the Bayer innovation center, Ramanathan says they have a laser focus on identifying and cultivating partners that can address patient needs. From discovery, to development, to commercial, as long as the patient is at the center of the decisions, success will always come back to the patient, he believes. “In evaluating new collaboration opportunities, you have to ask, could the biology potentially translate into addressing unmet patient needs? If companies haven’t thought about that question, then they really need to rethink their strategy,” says Ramanathan.
The Bayer executive started his career as a genomic scientist doing research, then moved over to the commercial side, and is now leveraging the best of both experiences to guide companies to bring the next innovations to fruition. He says, “I love it. I went to the dark side and came back with better appreciation of customer insights. I help start-ups apply those insights-how to best leverage the biology to deliver the most value to the patients.”
Moran and Ramanathan note that being a part of a large pharma in a biotech-centered location can be challenging.“We want to be the partner of choice,” says Moran. To that end, Novartis has many collaborations, including academic-based with the University of Penn and Harvard, and digital collaborations with Pear Therapeutics and Google. Recently, NIBR has added its own partnering organization to extend the reach of those collaborations and facilitate growth. A sign of the times, as Moran explains, “Previously, we were a bit guarded. But we realized we need to open that up and make it a more
formal part of our strategy.” Moran notes these partnerships and collaborations enable Novartis to scale on three fronts-knowledge, platforms, and capabilities-to network across the ecosystem.
That Cambridge ecosystem, says Gary Nabel, chief scientific officer and head of the North America R&D hub for Sanofi, is one that people could take for granted. Nabel, whose college, medical school, and post-doctoral work were all conducted in Cambridge, says, “It’s like a garden. You have trees, flowers, bushes, animals, water, sun. But take one thing away, say bees, and the whole thing would collapse. With Cambridge, you don’t have to worry about sustaining the ecosystem.”
Like Novartis and Bayer, Sanofi had begun to launch global innovation hubs in the mid-2000s, but Nabel says the Genzyme acquisition really established the company as a leader and it is the number one life sciences employer in Massachusetts. Nabel, though, is very proud of the science that has come out of the Sanofi/Genzyme breakthrough labs. “I’m proud of our company partnering and looking for external partners. We get behind innovative approaches and take them across the finish line.”
In a recent webcast sponsored by IQVIA (register for free on-demand) titled “A Framework for Successful Biopharma Launches,” experts delved into the launch profiles and insights for emerging biopharma. For example, IQVIA data of 605 launches from 2007–2016 shows 40% were from top 25 pharma, 30% from medium, and 30% from emerging biopharma companies based on those who commercialized the product, not developed it. However, optimizing first-year sales presents challenges. Average first-year sales growth for large pharma was $114 million, $42 million for medium, and $28 million for emerging. This compares to the first-year promotional spend of $53 million, $36 million, and $17 million, respectively.
Further IQVIA data showed that emerging biopharma that partnered for larger investment appears to have little advantage from a revenue perspective. However, because of large pharma’s experience with access and payers, partnering does appear to positively affect market acceptance. When partnering with large pharma, prescription fill rates for the emerging biopharma increased 8% vs. going it alone. Promotional spend for emerging biopharma partnering vs. going it alone features a $32 million gap.
Out of 181 emerging biopharma launches examined by IQVIA, 8% were characterized by a high market need with a high product differentiation. Of those, 79% chose a go-it-alone strategy. IQVIA experts theorized that those companies knew the value and science of their drug, thus their decision.
While all product launches have challenges, IQVIA noted that the quality of pre-launch preparation-resources, alignment and processes-is a key factor for post-launch success. Therefore, they stress for the emerging biopharma, the need to hire the right people (or lean on vendor partners), have cross-functional visibility, and management and start preparation early.
John Furey, chief operating officer of Spark Therapeutics, and Pharm Exec Editorial Advisory Board member, joined the company from Baxalta (now part of Shire), prior to the approval of the gene therapy Luxterna, specifically to ready Spark for that pivotal step. He says, “The benefit of emerging biotech companies like Spark Therapeutics is that you can be nimble and act quickly as a cross-functional team to have a big impact. We leveraged every minute pre-launch to prepare for a historic and unique launch-the FDA approval and launch of the first gene therapy for a genetic disease in the US.”
Furey adds, “What are the core competencies of large pharma? Clinical design, regulatory, and commercialization.” Spark has a go-it-alone strategy for the US but has entered into a licensing agreement with Novartis to leverage its regulatory and commercial expertise non-US, when and if Luxterna is approved globally.
Nabel says, “The market forces in industry are ruthless. You have to pay attention to scientific rigor and market discipline. It forces you to create value for all the stakeholders. It has to be meaningful for patients and regulators, the costs to manufacture, as well as the payers.”
That complexity clearly drives some of the decisions around going it alone in commercial or partnering. Biotech, itself, has many exit strategies, of which FDA approval is but one, says Nabel. “The biotech model vs. the pharma model is that biotech has exits at any given stage to increase the overall value of the company, without ever having sold a product, “ he says. “Now, pharmaceuticals companies get very little credit and are only rewarded when a product gets into the market.
“I think it’s great that pharma-of all people-are taking up all the leads from academia and biotech and pulling it altogether for success.”
Lisa Henderson is Pharm Exec’s Editor-in-Chief. She can be reached at firstname.lastname@example.org