News
The Development of Personalised Medicine, Laurent Probst and Loic Kubitza
Issue 10 • IPLS 2009
Business Development
& Licensing Journal
For the Pharmaceutical Licensing Groups
Development of Personalised Medicine
Survival of the Fittest
Creating Value with Alliance Management
Difficult Negotiations with Difficult Negotiators
Pharma at the Crossroads
Business Development & Licensing Journal
The Development of Personalised Medicine
Personalised healthcare is rising up the agenda of pharmaceutical and diagnostics companies
and the growth of personalised medicine, which aims to better target treatments to patients, is
expected to increase the number of alliances between diagnostic and pharmaceutical businesses.
This trend is evidenced by Pfizer’s August 2009 collaboration with Abbott’s diagnostics division
to develop a test to screen non-small cell lung cancer tumours for gene rearrangements. Pfizer
has developed a novel investigational agent, PF-02341066, that selectively targets cancer-causing
genes implicated in the progress of many cancers. The test will be used for patient selection for
future clinical trials of the agent.
1. The future of pharma is
inextricably linked with smart
diagnostics
diagnostic were not designed to inform treatment
decisions for individual patients – one way of
defining a personalised medicine diagnostic – it
would not have much sense.
The molecular level of personalised
medicine
Companion diagnostics and the future
of pharma
Personalised medicine or the use of information
about a person’s genes, proteins, and environment
to prevent, diagnose, and treat disease has been
much talked about in recent years and some
observers are wondering what the excitement is
all about. In the words of Roche’s CEO, Severin
Schwann: “Personalised healthcare is nothing
new. Doctors have always tried to fit the therapy
to the patient if possible. But what’s happened
more recently is that we’ve begun to go a level
deeper (……). We’re now exploring the biology of
disease and treatment at the molecular level.”
The concept of companion diagnostic (CD),
and its role in the future of healthcare, was also
mentioned in Pharma 2020: Marketing the future,
a report published by PricewaterhouseCoopers
(PwC) in February 2009. This report discusses
the key forces reshaping the pharmaceutical
marketplace and the changes required to create a
sales and marketing model that is better adapted
to the stakeholder priorities expected for 2020.
Of particular relevance to the diagnostics industry
is the move from mass market therapies to
specialist therapies, which is highlighted in this
Pharma 2020 report. Many specialist therapies
are very costly (e.g. almost $300,000 annually for
Fabry’s or Gaucher’s disease) and are used to treat
smaller target patient populations with specific
disease subtypes. In this context, there is thus a
growing imperative, both clinical and budgetary,
to accompany therapies with diagnostic tools
of increasing sensitivity and specificity to better
enable the identification of those patients in the
relevant disease subtype and most likely to benefit
from the therapy. The marketing model foreseen
for most specialist therapies in 2020 will include a
companion diagnostic as a key component.
by Laurent Probst
and Loïc Kubitza,
PriceWaterhouseCoopers
Molecular medicine does not per se define
personalised medicine but molecular tools are
important as they should enable greater relevance
in the information provided by diagnostic tests.
Personalised medicine as a spectrum
As personalised medicine means different things
to different people, additional complementary
ways of characterising diagnostics may further
help distinguish different shades of grey in the
personalised medicine spectrum.
In the strictest sense, personalised medicine
diagnostics may consist exclusively of companion
diagnostics, which are by definition geared
towards supporting a therapy decision for a
particular drug, patient by patient. At the more
permissive end of the spectrum, personalised
medicine tests may include also early diagnostics,
prognostics and possibly all other types of
diagnostics. You may indeed argue that if a
2
Highlighting a movement towards personalised
medicine is not straightforward with a concept
that is so widely open to interpretation. It is
however important that we try as the response
rates on drugs are still unsatisfactory, varying
widely from “20% to 75% depending on the
drug and the disease”, as reported by Jürgen
Schwiezer, CEO of Roche Diagnostics.
Early diagnostics: diagnostic
products
permitting
the
detection of a disease at very
early stages of its development
thus giving more treatment
options (e.g. early lung cancer
detection allowing surgery).
Prognostics: diagnostics that
provide a prediction or estimate
the risk of developing a particular
condition based on
• phenotypic (e.g.
transcriptomic, proteomic or
metabolomic) parameters; or
• genomic (e.g. hereditary or
gene based) characteristics.
Issue 10 • IPLS 2009
2. Companion diagnostics
partnerships with the
pharmaceutical industry
Now, if diagnostics are so important to improving
the value of therapeutics to patients, we should
expect the pharmaceutical industry to be entering
significant CD partnerships with the IVD industry.
Is it the case today?
Diagnostics collaborations with pharma have
yet to become an established practice
Seven partnerships were announced in 2008
between
pharmaceutical
and
diagnostic
companies to develop a companion diagnostic.
This represents a significant drop from the 14
collaborations announced in 2007 but there is no
clear up or downward trend over the period 20042008, with annual deal numbers varying between
6 and 14 throughout. Companion diagnostics
partnerships with pharma have yet to become an
established industry practice.
Companion Diagnostics Partnerships with Pharma in 2004-2008
15
Number of deals
12
14
Three key themes were reflected in the
partnerships announced in 2008:
• Cancer attracted strong interest as the
disease area of choice for the development
of companion diagnostics. In 2008, all deals
focused on diagnostics for cancer.
• Big pharma was dominant as pharmaceutical
partner for collaborations with the diagnostics
industry. In 2008, all pharmaceutical
partners were top 20 companies by sales of
prescription pharmaceuticals (2008 ranking
from IMS health). OSI Pharmaceuticals was
the only exception but big pharma company
Roche was a co-partner in OSI’s collaboration
with Abbott’s diagnostics division to develop
a pharmacogenomic test to identify patients
most likely to respond to cancer drug Tarceva
(erlotinib) for non-small cell lung cancer. In
this study, we counted any deals involving
Genentech as a big pharma deal due to
Roche’s majority ownership in Genentech at
the time of the deal and which became a full
ownership during 2009.
12
9
6
6
6
7
3
0
Most 2008 deals focused on cancer and
involved a big pharma partner
2004 2005 2006 2007 2008
Source: Pricewaterhouse Coopers analysis using Windhover data
Companion Diagnostics Partnerships with Pharma Announced in 2008
• Niche specialists dominated as in vitro
diagnostics partner for collaborations with the
pharmaceutical industry. In 2008, Abbott was
the only IVD major involved in collaborations
with third-party pharmaceutical companies
for companion diagnostics. None of the
other diagnostics partners announcing deals
in 2008 – Aureon, Celera, Dako and DxS –
were ranked among the ten largest in vitro
diagnostics companies.
Diagnostics
Partner
Pharmaceutical
Partner
Deal Subject
Disease
Area
DxS
Amgen
Provide DxS’s TheraScreen K-RAS mutation kit as a companion diagnostic to Amgen’s colorectal
cancer therapeutic Vectibix (panitumumab) in the US, where the drug was awaiting approval.
Cancer
Dako
Genentech
Develop a new cancer diagnostic to be used as a companion product to an investigational drug
candidate being developped by Genentech.
Cancer
Dako
Bristol-Myers
Squibb
Use Dako’s pharmDx assays to design companion pharmacogenomics tests for BMS’s cancer drug
candidates.
Cancer
Celera
Abbott
Celera will help Abbott identify genetic markers for one of its candidates in development. Celera
also has the option to develop a companion diagnostic that comes out of the collaboration and
commercialize it with Abbott under an existing partnership between the two companies.
Undisclosed
Celera
Merck & Co
Using its proteomics platform Celera identified cancer targets that are over-expressed on certain
tumour cells. Merck will study up to ten of them for potential development as RNA-interferencebased drugs. celera retains rights to develop and sell companion diagnostics specific to Merck’s
resulting compounds.
Cancer
Abbott
OSI
Pharmaceuticals,
Genentech,
Roche
Abbott’s molecular diagnostics division is to develop a pharmacogenomic test to identify patients
most likely to respond to the non-small cell lung cancer drug Tarceva (erlotinib). Abbott will
use fluorescence in situ hybridization (FISH) techiniques to bind DNA probes to gene sequences
encoding epidermal growth factor receptor (EGFR). The test will determine if multiple copies of
the EGFR gene are present.
Cancer
Aureon
Laboratories
Pfizer
Aureon will apply its integrated systems pathology methods to Pfizer’s prostate cancer studies to
develop a test to predicts how individuals respond to hormone therapies. Aureon’s technology
integrates information about tissue morphometry, cell-type specific biomarkers, and in situ RNA
expression with clinical data from patients to determine therapeutic effectiveness.
Cancer
Source: PricewaterhouseCoopers analysis using Windhover data
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Business Development & Licensing Journal
Similar themes emerge when we analyse the
pharmaceutical and diagnostics partners involved
in companion diagnostics licensing deals over
2004-2008 in more detail.
2.1 The pharma partners
Roche, Pfizer and Merck were the most active
pharma partners over 2004-2008. Roche’s
pharmaceutical division, including Genentech,
stands out as the most active third-party
pharmaceutical licensing partner for the
diagnostics sector over 2004-2008 with ten
announced deals – an average of two deals per
annum. Pfizer, Merck and AstraZeneca followed
Roche with 6, 5 and 3 diagnostics partnerships
respectively over the same period. (See graph
below.)
Companion Diagnostics Partnerships by Pharma Partner in 2004-2008
10
10
9
6
6
5
4
2
2
2
2
2
2
Amgen
Biogen Idec
BMS
Ipsen
Lily
Schering-Plough
3
2
Single Deal Doers
AstraZeneca
Merck
Pfizer
0
Roche
Number of deals
8
• Medium sized players: Eisai and Organon
(prior to its 2007 acquisition by ScheringPlough from Akzo Nobel); and
• Emerging companies: Aphton, ARCA, Isis
and Keryx. OSI Pharmaceuticals’ 2008 deal
with Abbott was included under Roche’s
partnerships to avoid double counting this
deal.
Medium pharma pioneers
Biogen Idec and Ipsen were the most active
partners from medium pharma. Serial diagnostics
deal making by pharmaceutical partners was
mainly in the hands of big pharma. Only two
pharmaceutical companies beyond the top 20
announced at least two deals over 2004-2008.
Biogen Idec of the US and Ipsen of France,
respectively 44th and 69th by sales of prescription
drugs (2008 ranking from IMS Health), stood
out with two diagnostics licensing deals each
announced over 2004-2008.
In Ipsen’s case, the company’s CEO, Jean-Luc
Bélingard, has significant diagnostics industry
experience, being a former senior executive
of Roche Diagnostics and currently a board
member of a number of diagnostics companies.
Compared to other medium sized pharmaceutical
companies, Ipsen may thus be more aware of
when and how best to exploit the potential value
from companion diagnostics. In Biogen Idec’s
case, the antibody based technology used by the
company is typically conducive to strong synergies
with in vitro diagnostics applications.
Source: PricewaterhouseCoopers analysis using Windhover data
2.2 The diagnostics partners
The position of Roche as the leading
pharmaceutical partner for collaborations with
diagnostics companies is remarkable if we consider
that none of the other pharmaceutical companies
with a major IVD affiliate – Abbott, Bayer and J&J
– announced more than one partnership with a
third party diagnostics company over 2004-2008.
However, the full picture about these diagnostics
majors is not available as there is little visibility
about any intra-group diagnostics collaborations
with their respective pharmaceutical divisions.
Pharmaceutical companies announcing two
partnerships for companion diagnostics over
2004-2008 included:
• Large pharma companies: Amgen, BristolMyers Squibb, Eli Lilly and Schering-Plough;
and
• Medium sized players: Biogen Idec and Ipsen.
Nine other pharmaceutical companies announced
just one licensing deal for a companion diagnostics,
including:
• Large pharma companies: Abbott, Johnson &
Johnson and Takeda;
4
The most active diagnostics partners for deals with
pharma were all niche players. Serial deal making
for companion diagnostics was limited amongst
diagnostics companies. Only four diagnostics
companies announced at least two partnerships
with pharmaceutical companies over 2004-2008
and they were all niche diagnostic specialists:
Celera, Dako, Epigenomics and Perlegen. Dako
is the largest among these diagnostic companies
with $322 million of net sales reported in 2008.
Three observations follow from this analysis and
our discussions with selected industry players:
1. The pharmaceutical industry is not currently
a priority market for large diagnostics
companies. The development risk and time to
market associated with drug candidates make
the development of a companion diagnostic
significantly less attractive to major diagnostics
manufacturers than the revenues currently
available from its more traditional target
market of clinical laboratories.
Issue 10 • IPLS 2009
2. The limited deal flow by company suggests
that even for niche diagnostic companies,
the prospective economics of developing a
companion diagnostic may not always be
attractive. Key factors that impact the net
present value expected from companion
diagnostics projects include the strength
of the intellectual property, the pricing and
reimbursement coverage and the extent
of testing required by regulators to obtain
key marketing authorisations. Achieving a
positive net present value from a companion
diagnostics development project will be a
challenge unless some of these factors become
more favourable.
We expect the annual number of diagnostics
partnerships between pharmaceutical and
diagnostic companies to increase over the next
five years. A key factor will be increased pressure
on pharmaceutical companies from regulators
and payers to provide a diagnostic alongside
pharmaceuticals to guide their use.
3. For those diagnostic companies that do
target the pharmaceutical industry, some are
developing companion diagnostics without
entering a partnership with a pharmaceutical
company. When diagnostics companies have
the required funding and access to sufficient,
high-quality biological samples to conduct
such development work without partnering
with pharma, this approach can help keep
more of the value in-house. In due course,
however, it can be helpful to have some form
of public support from the targeted drug’s
marketer to underline the validity of the test as
a companion diagnostic for the drug.
The FDA recently started reporting a list of
genomic biomarkers that it considers valid to
guide the appropriate clinical use of approved
drugs. The list is being updated on a quarterly
basis and counted 32 valid genomic biomarkers
in mid September 2009.
Companion Diagnostics Deals by
Diagnostics Partner in 2004-2008
6
6
31
5
3
3
3
2
2
Single Deal Doers
Dako
Perlegen
0
Epigenomics
1
Celera
Number of deals
4
Source: Pricewaterhouse Coopers analysis using Windhover data
2.3 Outlook
Dako announced the first companion diagnostics
partnership with pharma of 2009. As part of the
deal, Dako will use its pharmDx line of kits to
develop a new cancer test to be used alongside
an OSI Pharmaceuticals drug.
Another CD deal announced during the year was
GlaxoSmithKline’s July 2009 deal with Enigma,
a British diagnostics company, to develop a new
test that can diagnose specific strains of influenza,
including swine flu, in just an hour.
3. Biomarker testing requirements
Drug approval agencies, including the FDA and
EMEA, are encouraging greater use of biomarkers
and diagnostics in drug development and
prescribing decisions, thus promoting the concept
of companion diagnostics for drugs.
Most drug labels in the list provide
pharmacogenomic information with no immediate
recommendation for genetic testing. However,
testing is “recommended” or “required” in a
few cases. At 20 March 2009, 4 biomarkers were
“required” to be tested for – three for cancer and
one for infectious disease indications.
Note: We show only one drug per biomarker,
using the drug presented as prototype by the
FDA. For each of the biomarkers reported above,
there may be other dr ugs for which prescribing
is affected in the same way as the representative
drug shown above.
We are still at the start of the process if we
consider that only 4 biomarkers are “required” to
be tested for. However, the FDA was prompted
to publish its list following a marked increase
over the last decade of approved drugs labels
containing pharmacogenomic information. The
FDA estimates that ten per cent of approved drug
labels now contain pharmacogenomic information
and this is expected to continue increasing.
The EMEA’s communication on the requirement
for biomarker testing is less transparent than the
FDA’s but its initiatives should not be overlooked.
For example, the European agency played a key
role in requiring biomarker testing for Amgen’s
Vectibix, following the FDA’s accelerated approval
without specific testing requirements. The EMEA
also has a larger number of drugs for which
biomarker testing is required – in mid 2009, we
counted at least 11 drugs with the requirement.
We expect greater harmonisation between
different regulatory agencies to develop over
time through greater consultation but also
following pressure from clinician communities as
stakeholders in one country push to implement
practices already included in drug labels in other
countries.
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Business Development & Licensing Journal
4. The collaboration options for
the pharmaceutical industry
• Fee-for-service: the pharma company
benefits from services provided by the IVD
specialist, in exchange for a fee. IP rights
in this case are not necessarily transferred.
One example for this type of collaboration
is Lab21’s September 2009 agreement with
AstraZeneca under which it will provide a
genetic testing service for oncologists in lung
cancer. The service funded by AstraZeneca
aims to allow oncologists in the UK National
Health Service to identify whether lung
cancer patients have activating mutations
in their tumours making them sensitive to
tyrosine kinase inhibitor drugs. The genetic
information gained from the service will
assist oncologists in determining the most
appropriate treatment choice for lung cancer
patients. The genetic test will be carried out
on samples of patients’ solid tumours at
Lab21’s laboratories in Cambridge with results
returned to oncologists within five working
days.
A pharmaceutical company has a number
of options to sponsor an IVD test offering to
accompany its drugs. Each option reflects a
different level of control over associated IP:
• Buy-in: the pharma company buys an IVD
business giving it full control of the IP. Solvay’s
$256 million acquisition of Innogenetics,
announced in 2008, is a recent example for
this case.
• Licensing: the pharma company licenses
some IP rights from the IVD company. The IP is
with the IVD company but the pharma partner
gets certain development or commercialisation
rights. This can be illustrated with DxS’s
September 2009 collaboration agreement
with Bristol-Myers Squibb and Lilly’s subsidiary
ImClone Systems to further develop a K-RAS
companion diagnostic for Erbitux (cetuximab)
in the US and Canada.
The Four Biomarkers Requiring Testing Prior to Deciding on the Drug Use
Biomarker
Representative Label
Indication
Drug
Drug Marketer
CCRS Chemokine
C-C motif
receptor
Selzentry, in combination with
other antiretroviral agents,
is indicated for treatmentexperienced adult patients
infected with only CCR5-tropic
HIV-1 strains resistant to
multiple antiretrovira.
Infectious
Diseases (HIV)
Selzentry
(maraviroc)
Pfizer
Epidermal
growth factor
receptor
(EGFR)
expression
Patients enrolled in the clinical
studies were required to
have immuno-histochemical
evidence of positive EGFR
expression using the
DakoCytomation EGFR
pharmDxTM test kit.
Cancer
(Colorectal)
Cancer
(cetuximab)
Bristol-Myers Squibb
Her2/neu
over-expression
Detection of HER2 protein
overexpression is necessary
for selection of patients
appropriate for herceptin
therapy. Herceptin should be
used in patients whose tumors
have been evaluated with an
assay validated to predict HER2
protein overexpression.
Cancer (Breast)
Herceptin
(trastuzumab)
Genentech
Philadelphia
chromosomepositive
responders
Dasatinib is effective for the
treatment of adults with
Philadelphia chromosomepositive acute lymphoblastic
leukemia (Ph+ ALL) with
Cancer
(Leukemia)
Sprycel
(dasatinib)
Bristol-Myers Squibb
resistance or intolerance to
prior therapy.
Source: PricewaterhouseCoopers analysis using data from the FDA’s website at 20 March 2009
6
Issue 10 • IPLS 2009
• In-house cooperation: the pharma
business is part of a group that also
includes a diagnostics division. We see
an increasing number of candidates who
may practise such cooperation where the
related IP stays in-house. Three obvious
examples to mention are Roche, J&J and
Abbott, as these groups include top five
IVD businesses. But other cases with
medium sized or emerging IVD businesses
exist including Fujirebio, Menarini, Solvay
and Novartis. As regards Novartis, in 2006
the company added a diagnostics business
through the acquisition of Chiron. More
recently, it decided to develop a diagnostics
division focused on molecular diagnostics.
The “in-house cooperation” case is the least
transparent type of collaboration for industry
observers. The potential for cooperation
between pharmaceutical and diagnostics
divisions is there but whether it actually takes
place is another matter and associated newsflow is scarce.
In any case, even if such intra-group
collaboration does take place, we foresee an
increase of the licensing and fee-for-service
models. Access to an in-house IVD capacity is
no guarantee for fit-for-purpose technology or
finding effective solutions in-house.
Some industry players clearly see value in the
companion diagnostics market opportunity,
as evidenced by Qiagen’s $95 million (plus
$35 million of milestone related payments)
acquisition of DxS announced on 22
September 2009. In a February 2009 article
in the Manchester Evening News, DxS was
forecasting £10 million of revenues for the
subsequent 12 months.
5. Moving towards personalised
medicine
Increasingly, pharmaceutical companies will
not move a drug candidate to the clinical
development stage without a clear biomarker
development program. These companies
understand the contribution of biomarkers
and diagnostics in improving the design
and probability of success of clinical trials. In
addition, pressure from healthcare payers is
putting more emphasis on the availability of
a companion biomarker test when deciding
on a drug’s reimbursement. These factors will
combine to accelerate the development of
new diagnostics for personalised medicine. We
anticipate that alliances and collaboration will
be inevitable as the market need expands.
Laurent Probst is the Partner leading
the pharmaceuticals and life sciences
practice of PriceWaterhouseCoopers in
Luxembourg. He specialised over the
last 5 years in economic development
particularly in developing strategic plans
and partnerships in life sciences and
financial ventures focusing on diagnostics
and theranostics. Laurent is currently
advising several international life sciences
companies and non-profit institutions
to develop activities and partnerships in
Europe and the US. Laurent is member of
the Advisory Board of the Fondation de
Luxembourg. Laurent can be contacted by
email: laurent.probst@lu.pwc.com
Loïc Kubitza is the Director leading the
pharmaceuticals and life sciences deal
advisory work at PriceWaterhouseCoopers
in Luxembourg. He moved from the UK
in 2008 following Luxembourg’s program
of diversification into life sciences. Loïc
is currently advising therapeutics and
diagnostics companies on fund raising
and licensing. Loïc worked in cancer
research at The MRC (Hammersmith
Hospital) and holds an MSc in Molecular
Medicine (Imperial) and an MSc in
Economics (Louvain). Loic can be reached
by email: loic.x.kubitza@lu.pwc.com.
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