Breast cancer drug everolimus 'biggest advance in years'

Maybe mTor therapies WILL have a big impact after all...

Breast cancer drug everolimus 'biggest advance in years'

telegraph.co.uk | Sep 7th 2012

Up to 8,000 women a year could benefit from everolimus, say specialists, after a trial indicated it could "stall" advanced cancer for about four months longer than persisting with the same treatment.
Three in four women with advanced breast cancer have a form of the disease that is spurred on by the female sex hormone oestrogen.
Many drugs try to block cancer cells from taking up oestrogen or lowering hormone levels, thereby slowing or stopping tumour growth.
However, in time cancer cells work out how to negate the effects of the drugs, become resistant, and tumour growth resumes. Chemotherapy, which can have extremely debilitating side-effects, is usually then the only option.
Everolimus, marketed by Novartis under the brand name Afinitor, is intended for post-menopausal women whose cancers have developed resistance to 'hormonal' treatments.
It works by targeting other proteins in cancer cell, which control how it works and grows.
The drug is so recent that trial results, comparing 485 women given the drug and 239 given a dummy pill, are still coming out. However, after 18 months the differences are already marked.
Among those given a dummy pill and exemestane, which helps prevent oestrogen uptake, tumour growth was stalled by 3.2 months on average. But among those given everolimus and exemestane, it was 7.8 months.
Professor Stephen Johnston of The Royal Marsden Hospital in London, said the impact was so large that it was "changing the natural history of the disease".
He described everolimus as potentially the most significant breakthough for advanced breast cancer since the discovery of drugs that lower oestrogen levels, in the mid 1990s.
Estimating it could help up to 8,000 women a year, he said: "Everolimus has the potential to redefine the way this common form of advanced breast cancer is treated, and importantly offers women an effective alternative to a chemotherapy regime".
There are possible side effects, notably inflammation of mouth tissue, rash, tiredness and diarrhoea.
But Dr Rachel Greig, of the charity Breakthrough Breast Cancer, said the drug was an exciting development.
She said: "Everolimus is one of the biggest advances in breast cancer treatment in many years.
"This drug could make a massive difference to thousands of patients with advanced breast cancer.
"While this is by no means a cure, it could give patients several extra months of good quality of life with their families.
"Everolimus needs to be assessed by Nice but we are strongly backing it to be made available for those who need it."

Original Page: http://www.telegraph.co.uk/health/healthnews/9548828/Breast-cancer-drug-everolimus-biggest-advance-in-years.html
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Back-seat driving AstraZeneca

Just for fun, here's some quick thoughts on how AZ can get back on track after the reign of CEO David Brennan, who announced his early retirement last week while being water boarded by the AZ BoD:

(btw: I really wanted to label Brennan's tenure as disastrous, but that's not fair. Compared to the return on the S&P 500 and PPH (a big pharma ETF) over Brennan's reign (Jan '06 to now), AZN was very bad, but not atrocious. Take a look:

Live link to chart.

During Brennan's tenure, (as of the day of Brennan's retirement announcement,) AZN was down 5.5%, vs +11.4% for the S&P and +6.8% for PPH. I expected the AZN relative performance to be much worse.

Comparable figures since the Astra-Zeneca merger in 1999:

AZN: -10.3% (total)
S&P: +8.2%
PPH: -14.4%

So, you could say that the AZN merger didn't destroy (relatively) as much value as the pharma industry did over the same time period, but I still can't bring myself to say that it was a worthwhile deal.

In case you're wondering, AZN is <5% of the composition of PPH.

Back to the backseat driving. Here's 8 ideas to get AZN back on track:


1. R&D strategy: go big, or go home. AZ's annual R&D spend is $4.5B, which is only ~40% of the amount AZ annually spends on SG&A. For all of AZN's problems, they still have $11B in cash on hand and throw off nearly $8B in annual operating cash flow. It is time for AZ to either double down on their R&D, or dismantle it.

Everyone knows AZ's pipeline is thin. If it is because the $4.5B of R&D is unproductive, shut down/shrink R&D.

For the last decade the trend in pharma has been to shrink R&D, but the only way that AZ is going to reverse their fate is swim against the tide and massively expand the R&D budget. This option is especially attractive to AZ because of the European R&D assets shuttered over the last decade, and now available for a song. For example, AZ could re-open Pfizer's former R&D facility at Sandwich, UK, attract a very talented team, and likely win government financial assistance in doing so.

There are two counter-arguments to "going big" in R&D - the fact that payoff from the increased R&D is years off, and the fact that EPS would take an immediate hit. I'd argue, though, that the benefit of the increased R&D investment would be felt pretty quickly, as much of the investment would be in downstream clinical development, and not necessarily in basic discovery.

As for EPS, yes, it would take a hit, though not as bad as the gross increase in R&D, as the tax authorities would be paying roughly a third of the gross increase. I'd also argue that perversely, the R&D spend would INCREASE the amount of economic value added annually by AZ, as you'd be replacing the meek interest income from the $11-19B cash on hand with (hopefully) dynamic returns from R&D.

2. Sell Iressa to NVS or another interested party. Iressa (EGFR inhibitor) probably never got enough corporate attention once it landed in regulatory limbo. There's still value to Iressa to to unlock, though, and I think NVS could make the most of the product amidst their other successful targeted cancer therapeutics. (Of which they lack an EGFR inhibitor.) I also think having a new set of eyes to look over Iressa's clinical results would be beneficial.

3. Focus the MedImmune/biotherapeutics group on biosimilars. The combined MEDI and Cambridge Antibody assets are formidable though underutilized engines, both in terms of capabilities and capacity. Why not leverage both in pursuit of biosimilars, as Pfizer is doing with some of their bio-production assets? This is an area where AZ could take the lead, based on their MEDI investment, and an area with a modest capital demand. It would certainly be cheaper to spend another $500M on additional MEDI R&D to develop saleable products than to spend $5-6B in capital to acquire Amylin - a good, though one-market (diabetes) company that doesn't match well with AZ's existing portfolio.

4. Seek more big-big partnering, as exemplfied by the deal with AMGN. (See "AMGN & AZN get creative.") Points #1 and #3 are all about refilling the product pipeline with internally developed "upside." Another route to the same outcome is to buy large chunks of upside to augment the weak AZ pipeline. Combining points 1, 3, and 4 would diversify the R&D risk for AZN and fatten the pipeline, with good cost control.

5. Avoid the urge to make late-stage acquisitions to fill the pipeline. Congrats on the Ardea deal, but please don't think a string of acquisitions is the cure for what ails AZ. Any acquisition right now would represent paying full price, as every other pharma company is shopping hard for late stage products. AZ isn't big enough to outbid PFE, not specialized enough to win many niche acquisitions, and is too desperate at this point to NOT overpay sooner or later. Instead:

6. Climb the risk curve and make early (-er) product development partnerships. Whereas EVERY big pharma has the financial wherewithal to make a bid for a late-stage clinical candidate, many pharmas are too risk-averse to pursue partnering early programs. This represents an opportunity for a big pharma willing to take on more risk AND represents the best return on R&D dollars. Why spend $5-6B on an acquisition like Amylin or $1.2B on a late-stage deal like Ardea when AZN can probably sign and fund 10 early stage partnerships for a fraction of these amounts?

One other consideration: AZ's new CEO probably has 3-4 years to make an impact at AZ, which is enough time that a Phase I lead gained through partnership now can become an exciting Phase III product.

7. Recognize that there is a historically massive opportunity for AZ, and concurrently cut the dividend. There has never been a better time to be in the drug discovery & development business. Incomes are rising around the world while populations are aging. At the same time, medical knowledge has exploded over the last decade, and emerging technologies (e.g. in silica screening) are making drug discovery easier, less costly, and less risky.

It has been a long time since AZ or most any pharma was a growth stock, but with the context above, why wouldn't you want to transform AZ into a growth stock, and increase investment in R&D, as funded by reducing or eliminating the dividend? Yes, changing the dividend will set off alarms in the financial community, but better to do it proactively as part of a growth strategy than reactively once everything goes off patent.

8. Quit pretending that AZ decisions aren't heavily influenced by geography and political concerns by relocating corporate HQ to……….Dubai. AZ's HQ is in London. Except R&D, which is based in Sweden. And except UK R&D, based in NW England. And except biologics, based in Maryland. And except their biggest office in their biggest market, in Delaware.

Some tech companies see geography as a competitive necessity, such as the growing big pharma labs in Cambridge, MA (PFE, MRK, NVS….) AZ goes so far in the other direction, that you wonder if they are intentionally avoiding tech hotspots. UK R&D in Cheshire, UK instead of Oxbridge? Swedish R&D not near the Karolinska Institute? Weird.

You just know that decisions aren't made at AZ solely on their merits and without considering the geo-political ramifications. One way to negate this is to relocate corporate HQ to a "neutral" territory, and publicly commit that future UK & Swedish investment will be tied to leading academic locations. I'm not saying that AZ's weak R&D productivity is due to their location in NW England, but I believe that one way to boost the R&D productivity is to gain more exposure to leading labs in Oxbridge and the Karolinska. Watch AZ's R&D be reinvigorated.

Dubai is a silly answer to "what's a neutral country roughly equidistant to the UK and Sweden?" but I'm sure Dubai or other countries would provide a huge economic incentive to support the corporate relo. Not only would Dubai or others pay a bounty for the influx of meaningful jobs, but you could probably find a country that would be convinced to pay BIG $$$ so that AZ could become the cornerstone of their nascent pharma industry. If Boeing could relocate their corporate HQ from Seattle to Chicago, AZ sure could move to Dubai, or Singapore, or Bangalore.

(not to mention that there could be a substantial savings in corporate taxes for AZ.)


So there's my quick, under-informed ideas to get AZ back on track. Unfortunately, to make real backseat driving recommendations, you have to ignore certain realities, such as the holiness of the EPS expectations, and the tax advantages of filling the pipeline via acquisitions rather than increasing the R&D cash expense. But, you read this far, which means that there's some value in my backseat-driving recommendations…….

Quick hits….

• Gleevec, is there anything that you can't do?  Gleevec and Tasigna may be effective against EBOLA! (NVS' finding: Abl regulates ebola viral reproduction. I wonder how many other viruses may rely on Abl.)

• 23andme & Muhammad Ali are partnering for Parkinson's research. I'm not an Ali fan (I think he is a product of some excellent p.r. over the years, covering up the fact that he was a tremendous a$$ when active as an athlete), but I'm very excited about any initiative that draws the general public's attention to genomics.

• Apparently the Affymetrix-eBioscience deal might not be happening. It looks like AFFX's disappointing 4Q2011 financial results is making the merger financiers think twice about underwriting the transaction.  (Tell me if this makes sense: acquirer AFFX enterprise value: ~$215M. target eBioscience purchase price: $330M (all cash). Debt financing required for the deal: $190M.) I still think this deal is driven by AFFX's desire to dilute their reliance on the microarray business and to buy some sales growth, as there's still only a tenuous topical connection between Affymetrix & eBioscience respective businesses. Such a deal makes sense at a bargain price, but it looks like the lenders are realizing it's actually a premium price. (Notice the roster of lenders are more merchant lenders than traditional bankers.) Also: if you're eBioscience intending to cash out @ a very rich 4.5X sales, you've got 2 questions to consider: 1) would you be willing to give a little on the terms to get the deal done? (I would), or 2) would you be interested in buying AFFX?

Who wins from DNA sequencing? (Multi-target drugs)

First came the notion of specific inhibitors of kinase signaling, and Gleevec was originally the embodiment of the idea of inhibiting just a single gene fusion - BCR-ABL. With the fine targeting came low financial expectations - I recall NVS predicting that Gleevec could have annual revenues of as much as $200M. (Actually Gleevec annual revenues for NVS are ~$4B, both because they had most expectations of the market, and because Gleevec isn't so specific, which is a good thing.)

Then, Exelixis introduced the idea of intentional multi-kinase inhibition, though some wondered if this was less of a design intention, and more of a tolerance of the notion that complete specificity may be impossible.

Last year saw the introduction of FDA approval of inhibitors not just for a single gene target, but a specific mutation of a specific gene (e.g. Zelboraf for BRAF V600E, though it comes with certain problems.)

It appears that the next wave is being unleashed by Foundation Medicine - DNA sequencing to match drug to cancer and suggest mixes of drugs, where appropriate.

The conclusions put forward by Foundation Med are not novel in theory, but a very exciting in practice.

What is also exciting is how use of DNA sequencing may unlock new markets for existing drugs. Big Pharma, I think, has generally worried that personalized medicine may result in lower revenue ceilings for new drugs, thus tilting the economics of drug discovery out of favor. (Because it generally costs about the same to develop a blockbuster as it does a niche drug.)

But if the Foundation Med results are indicative of future broader results, the economics may become even more favorable. Case in point is Pfizer's Sutent, FDA approved in 2006, and a $1B blockbuster as of 2010, based on its' application in renal cell carcinoma and GIST (specific stomach tumors).

Foundation Med's research is suggesting that Sutent could be very effective in about 2% of all lung cancer patients. What's that means to Pfizer?

US annual lung cancer incidences: ~225,000
Worldwide (rough): 675,000
Sutent-beneficial lung cancers: 13,500 (worldwide)
Sutent treatment cost (rough): $40,000 per patient
Sutent lung cancer "niche" market potential: $540,000,000.
Pfizer price/sales ratio: 2.43x
Implied increase in Pfizer's stock value from the new lung cancer "niche:" $1.3B or a stock price about $.17 higher.

Realistically, Pfizer & Sutent can't capture all of that market, but finding another half-a-billion dollar market - with the hope for more - has got to be exciting to Pfizer. It should also be exciting to other targeted drug makers and researchers.

Also exciting is the notion that Foundation's research results are the tip of the iceberg - we can expect tumor DNA sequencing research to reveal more mutations and drug gable opportunities. Let's just hope that the FDA becomes much more flexible in approving novel sequence-specific applications (or at least tolerating widespread off-label use).

R&D efficiency

Forbes' Matt Herper takes a look at the cost to develop a new drug, and now current estimates put that figure at $1B-$4B.

While the current estimate is newsworthy, folks at places like Tufts have been conducting this exercise for years, and the numbers are always eye-popping (and debatable.)

What makes this particular article interesting is how you can also use the analysis conducted by Herper to compare pharma productivity over the last 15 years. Take a look at the R&D productivity of the top 12 pharmas:

Here's my takeaways:

-There's two tiers of productivity in the analysis: the "productive" cluster (AMGN, NVS, BMS, MRK, ABT, and LLY) all cluster between $3.7B and $4.6B in cost per new drug, while the "less productive" ranged from $5.9B to 11.8B per drug. While half of the companies studied, the "productives" account for 66 of the 135 drugs (49%) these 12 companies introduced in the last 15 years. So you can't say that higher R&D productivity is also a factor of scale - the productive and less-productive companies produced roughly the same number of drugs. 

-The "less-productive" companies tend to be the product of mega-mergers. Each of these companies has done deals to one extent or another, but think of the "biggies" and you're generally thinking of the "less productive" group. Careful, though, when thinking about the time element here - MRK, for example, only did their big SGP acquisition in late 2009. This brings up the question: do mergers depress R&D productivity, or is it mostly companies with declining R&D productivity that have the urge to merge? (My guess: a bit of both, but considering that the 6 most productive companies are generally considered the least involved in the M&A game due to a bias towards internal efforts, it may be a moot point. M&A either distracts from focus, or results in sub-efficient R&D orgs.

(I'm being charitable to NVS, which is a product of a mega-merger (Sandoz and Ciba-Geigy), but that occurred in 1996 - prior to the analysis period. Either NVS did a much better job of integrating R&D, or it takes 15 years to overcome the M&A inefficiencies.)

-I think it would be appropriate to believe that these results also project future R&D efficiency and likely future stock performance.  (e.g. over the next 15 years, AMGN is likely to be much more productive than AZN.) The 15 year period (and $75B in R&D spend) should account for short-term spikes and likely demonstrates which companies have the best R&D people and organizations. I am especially impressed with Novartis (21 products over 15 years) and most disappointed by AstraZeneca (5 products over the same period.) Perhaps this reflects one company choosing easier/harder targets, but I think it more likely reflects capabilities.

-For all of the news and criticism, Pfizer's R&D isn't too bad. The criticism that failures like torcetrapib reflect diminished R&D productivity due to repeated mergers seems misplaced, as Pfizer was almost middle-of-the-pack in R&D efficiency over the last 15 years.

-You might expect that the broadest R&D portfolios would have the smoothest results (success in one area, say cancer, making up for failures in another, say neuroscience.) However, the more productive companies are to me the least broad. Rightly or wrongly, I think of BMS & AMGN biased towards cancer research, while GSK and JNJ are the most diversified. Does this mean that there is R&D value in specialization?

Any other insights to be gleaned from the Forbes analysis?

A couple of caveats to the analysis: 

-The best analysis would weight productivity with resulting product sales. (In other words: you'd accept lower R&D spending efficiency if the output were blockbusters.)

- I can't tell from the Forbes analysis exactly what is included in the figures. I suspect that Roche data includes historical Genentech R&D spending and output. I think DNA has been one of the most efficient AND effective R&D organizations, so I would be very curious to see DNA split out from pre-merger Roche.

"It's the greatest success of western medicine in our lifetime, and the success of HIV drugs is leading to its own demise."

...says Jacob Lalezari, an HIV clinical trials expert.

No rigorous analysis here, but I thought it worthwhile to post this story speculating that the efficacy of today's HIV drugs may impeded advances in fighting HIV.

I wish we having the same problem in all therapeutic areas!

Well, we have in at least one: CML (Chronic Myelogenous Leukemia). Gleevec is a very, very effective treatment, though not always effective against certain mutations (T315), and it seems that many patients may eventually relapse years later with a mutated form of the disease.

Still, Gleevec is to CML what Gilead's suite of HIV drugs are to HIV - very good treatments, not cures.

But, if CML is a guide, there is much to hopeful for among the HIV community. Even though Gleevec is an effective CML treatment, and addresses only about 5,000 new patients per year, two next generation drugs have been approved, with others in the pipeline. (NVS' Tasigna and BMS' Sprycel approved for second line use, even as researchers theorize that they may generate quicker responses than 1st line Gleevec.)

Considering Gleevec's total annual market is ~$2B, I would expect that there will be plenty of efforts to develop a cure for the $15B HIV market.