Implications of the Biotech Boom on the Business and Science of R&D

Guest author Richard Pops

[Editor’s Note: This post was written by Richard Pops]

It is exciting to see the remarkable influx of capital into the biopharmaceutical industry over the past couple of years. More than just refilling depleted coffers, strategic investors are putting more money to work in excellent companies after a long period of relative scarcity.

Capital can favorably change the risk profile of a biopharmaceutical company through its effective deployment in two dimensions. The first and most commonly considered, is breadth. With additional resources, companies can increase the number of research programs and drug candidates in development. That’s important in an industry where so many drug candidates fail.

The second thing additional capital allows is greater depth in R&D.

I believe this may be even more important in increasing a company’s probability of success. By increasing the size, statistical power, and scientific resolution of the earlier stage studies of our drug candidates, companies can answer important new questions sooner. Getting that data early is helpful for making more informed go/no-go decisions, prior to kicking off large pivotal clinical trials. At Alkermes, we say that Phase 1 and 2 studies should be rigorous exercises in truth-seeking. If we do that correctly, then Phase 3 becomes an exercise in replication.

Goals in early development – beyond safety and efficacy

What are we seeking to learn in early development? Certainly more than just whether our drugs are safe and effective. We want to try to understand – to the extent we can – the role that a new medicine will play in a complex ecosystem, one that includes multiple stakeholders.

In many diseases, particularly non-orphan indications, a disparity clearly exists between the data needed by regulators to grant approval for a new medicine and the data needed by healthcare providers and payers to determine its appropriate use and real impact on the costs and effectiveness of healthcare delivery. This is absolutely the case in the large, chronic diseases of the central nervous system that Alkermes is addressing.

Two years ago, I was at a meeting with one of the country’s largest payers along with a number of biotech CEOs. We heard what, at the time, seemed to be a preposterous message. The payer’s medical director told us that new medicines would face a very difficult time gaining acceptance in their system unless one of two conditions were met: either there was a clear medical imperative for use of the new drug, or the medicine would save the payers money. As we inquired further, the message became even clearer. By medical imperative, he meant, for most diseases, that there was evidence supporting use well beyond the usual placebo-controlled studies to include real world comparisons versus current standards of care, ideally within their particular system. Many of the drugs serving as standards of care set a high bar in terms of cost-effectiveness, especially once they’ve gone generic. When asked if it would be attractive if a new branded medicine saves money over time by avoiding expensive complications or hospitalizations in future years, he almost laughed. No, a new branded drug needs to save money for the payer in its first year. Right away. And, to further complicate matters, economic data developed by the company sponsor would not carry much weight, at least when compared with data gathered by independent third parties.

Today, this point of view is not an outlier. It is something companies on the leading edge are integrating into their development plans and getting a sense of fairly early in their programs.

To gain regulatory approval, drug developers typically conduct randomized, placebo-controlled studies evaluating safety and efficacy in small populations of selected patients under carefully controlled conditions. Such studies are typically not designed to test usefulness in complex healthcare delivery systems, which are constrained by the realities of limited healthcare budgets, reimbursement restrictions, and existing, proven low-cost treatment options.

While one can only achieve a limited number of goals in early development, we are finding it useful to run larger studies earlier, often using novel design elements and active comparators. This can increase costs compared to simpler trials, but we believe that it actually saves money and time in the overall development program, and importantly, allows us to quickly stop expensive development plans for medicines that don’t provide a meaningful advance beyond the standard of care.

An example: earlier in January we announced positive results from a 300-patient, Phase 2 study of ALKS 3831, a new oral medicine we are developing for schizophrenia. This large study was designed to answer the key question early: does ALKS 3831 have favorable properties compared to a generic and arguably the most efficacious antipsychotic, olanzapine, as demonstrated in a large head-to-head study powered for statistical significance? The positive result provides a rich dataset that is propelling us into pivotal trials.

Another: We are currently in the process of completing a large Phase 1 study of ALKS 8700, a novel monomethyl fumarate (MMF) drug candidate for the treatment of multiple sclerosis. We call this a phase 1+ study, as we are testing multiple doses and multiple formulations of ALKS 8700 and including an active comparator – Biogen Idec’s FDA-approved dimethyl fumarate (Tecfidera). This large, multi-stage study includes over 100 subjects and will yield much more than the typical first-in-man safety information. It is designed to give us sufficient information to decide whether ALKS 8700 can be a competitive product in a therapeutic area with very good existing products.

This is the way drug development can, and should, work in a world where companies have greater resources at their disposal. Drug developers today can no longer just ask, “How can we get a new medicine through the regulatory approval process?” Companies need to go a step further, and also ask, “How can we ensure that our new drug is positioned for immediate and appropriate use?” Beginning to answer this question early in development is a smart use of new financial resources and may provide an excellent return on investment.