Life cycle management (LCM) is an expression that conjures up thoughts of price increases, “evergreening” and patent litigation – all of which carry negative connotations. But LCM is a fundamental part of every successful drug, with many separate strategies underpinning the growth profiles and longevity of the industry’s top-selling drugs.
Pipeline-in-a-pill is one such strategy, clearly evident with the 10 indications of Humira (adalimumab), or 100-plus pages that constitute Keytruda’s (pembrolizumab) US prescribing information. Its popularity is leading to saturation and creating opportunities for more nimble companies that are taking alternative approaches. In this article, we would like to introduce “pipeline-in-a-platform” and “pipeline-in-a-portfolio” as contrarian LCM strategies(see Exhibit 1), each with their own merits depending upon capital, expertise, appetite for risk and market conditions. Adopting the optimal tactic from the outset requires careful forward planning and clarity of thought around desired goals.
The term pipeline-in-a-pill remains a nebulous one, designed for the investment community to describe developmental strategy more than anything else. Assigning a definition would be arbitrary, but the general concept is to illustrate the broad therapeutic and commercial potential of a single drug or target. The concept is increasingly in vogue, cropping up in more and more investor call transcripts and analyst notes, particularly within the past few years (see Exhibit 2).
Five years ago, at the start of 2015, the average new molecular entity or biologic asset in Phase III development or beyond had 1.5 separate late-stage indications, with a total of 36 drugs having at least five different treatment settings. In 2020, while the typical indications per drug remains at 1.5, the corresponding number of 5+ indication drugs has expanded to 54, according to data from Biomedtracker. As the definition of pipeline-in-a-pill is extrapolated out to more extreme requirements, for example up to 10 separate indications, the expansion within the last five years has become more apparent, as Exhibit 3 shows. Many of the drugs in the 2015 dataset have received continued investment, while up-and-coming new entrants have joined the mix for 2020.
The attraction of a single pipeline asset that affords several developmental opportunities is undeniable. R&D spend can be allocated with high efficiency, creating discrete commercial opportunities without the additional discovery, preclinical and early clinical-stage development. Once on the market, promotional activities can have an amplifying effect across the entire product’s therapeutic potential, to be harnessed by a single dedicated sales force. Many of the highest-selling drugs can be deemed as pipelines in a pill, from Humira and the anti-TNF class, to targeted oncology mega-blockbusters such as Avastin (bevacizumab) and Imbruvica (ibrutinib), not to mention the immuno-oncology universe which includes the PD-1 inhibitors Keytruda and Opdivo (nivolumab).
Pipeline-in-a-pill also permeates the lower reaches of the industry, with countless examples across a range of therapy areas. In particular, it is a prudent development strategy for clinical-stage drug discovery companies seeking to utilize cash reserves as efficiently as possible, while still retaining considerable upside. Efficacy and regulatory validation in a proof-of-concept indication creates a highly valuable asset, which can then be fully developed within the pipeline of a larger organization. Such drugs routinely form part of pharma’s bolt-on acquisition strategy, with several of the largest transactions of 2020 justified by the long-term commercial potential of single assets. These include Gilead’s acquisitions of Immunomedics ($21bn) and Forty Seven ($4.9bn), the $6.5bn deal agreed by Johnson & Johnson for Momenta, and more recently Bristol Myers Squibb’s mavacamten-focused purchase of Myokardia for $13.1bn.
Focusing on such assets though does carry developmental risks for biotech, as failure in the primary indication can crater the overall value proposition, with the singular focus on a lead asset coming at the expense of overall pipeline diversity. Incyte’s failure with its IDO inhibitor epacadostat for solid tumors is a cautionary example, with the setback and accompanying R&D spend continuing to cast a shadow over the company’s current position. Furthermore, there are also notable commercial risks to concentrating resources around single assets, most notably through exposure to competition. Fast-followers in the same drug class can quickly saturate the market opportunity by showing a comparable clinical profile or leapfrogging timelines in untapped patient groups, while an unexpected patent ruling, such as that of Amarin’s Vascepa (icosapent ethyl), can prove disastrous and leave long-term LCM plans in tatters.
The oral JAK inhibitor market is hosting one of the most interesting dynamics today. Recent entrants such as Olumiant (baricinitib; Eli Lilly) and Rinvoq (upadacitinib; AbbVie) are aggressively expanding beyond an initial product opportunity within rheumatoid arthritis into other inflammatory conditions such as atopic dermatitis, psoriatic arthritis, ankylosing spondylitis, Crohn’s disease and ulcerative colitis, to name a few, very much adopting the pipeline-in-a-pill playbook. Gilead intends to add further competition with filgotinib and its broad late-stage clinical development program (see Exhibit 4). Pfizer, which was the first to create this market opportunity in 2012 through Xeljanz (tofacitinib), is attempting to minimize direct confrontation and is staking its future position in the market on a pipeline-in-a-portfolio approach. Rather than concentrating further resources in Xeljanz, which is unlikely to yield comparable return on investment with limited exclusivity remaining, the company is splitting its long-term LCM strategy between four separate pipeline assets with differentiated formulations and affinities against the JAK family of enzymes (JAK1-3, TYK2).
These candidates are abrocitinib, brepocitinib, ritlecitinib and PF-06826647, with their differentiated pharmacokinetics emphasized during Pfizer’s virtual investor event over 14-15 September 2020. JAK pathways play an important role in facilitating inflammatory processes involving over 50 different cytokines, so subtle differences in how JAK enzymes are targeted can translate into notably different clinical profiles in different disease settings. Atopic dermatitis for example is mediated by IL-4, IL-13, and IL-31, while psoriasis is additionally driven by IL-23-associated inflammation. As summarized by Richard Blackburn, president of Pfizer’s inflammation and immunology business, “Our approach is not one of developing a single molecule for multiple different indications. It's obviously unlikely that any medicine will represent a breakthrough option in six different diseases. Our approach is to purposefully match the right molecule to the disease where we believe it can make the most difference.” A further candidate, the IRAK inhibitor PF-06650833, will attempt to cement Pfizer’s existing leadership position within the JAK inhibitor class for rheumatoid arthritis via combination therapy.
Realistically, pipeline-in-a-portfolio is only accessible to companies with deep R&D pockets and an existing commercial presence within a therapy area to springboard from. In such a way, it is a lower-risk, defensive strategy that is unlikely to generate commercial rewards on the scale of a best-in-class pipeline-in-a-pill. It is the natural counter strategy to the pre-eminent position of market leaders such as Humira and Keytruda, for which no one single drug is likely to effectively compete. Rather, it is advisable to segment and decide which opportunities to enter. Unlike a pipeline-in-a-pill, the target product profile can be adapted for each opportunity, optimizing variables such as pharmacokinetics, dosing, formulation and pricing strategy to create the most compelling competitor.
The portfolio approach, in which multiple assets are available across the spectrum of a disease, also benefits from sales and marketing synergies, and commercial longevity. Using the example of Biogen’s position within multiple sclerosis – built-up over time with a combination of in-house drug discovery and external partnerships – the company can offer a range of therapeutic options to address many different clinical needs. Biogen markets a portfolio of injectable treatment options for relapsing multiple sclerosis with different risk/benefit profiles, while Tecfidera (dimethyl fumarate) leads the oral market segment and Fampyra (fampridine) can be prescribed for related spasticity symptoms. When a competitive threat emerges, even a new standard-of-care such as Ocrevus (ocrelizumab), the diversity and balance within Biogen’s portfolio have allowed overall revenues to remain resilient. With additional royalty revenues from Ocrevus, Biogen can defend its portfolio with a pipeline that includes next-generation BTK inhibitors and therapies with potential to induce remyelination and reversal of nerve damage.
The alternative developmental LCM strategy that focuses on efficiencies of scale, without venturing into therapeutic area specialism, is the so-called “pipeline-in-a-platform” approach. Particularly viable for biotech companies creating value at the discovery stage, it relies on considerable upfront execution and scientific expertise within a platform technology. Once a drug discovery platform is validated with a clinical proof-of-concept, then additional pipeline assets can be created from the template at scale, capitalizing on an increasing basic understanding of human disease. In particular, indications characterized by a known genetic or molecular component can be rapidly addressed via platforms. In 2020 this has been most evident in the rapid deployment of innovative vaccine technologies against the known sequence of SARS-CoV-2, but the same idea holds for a range of platforms, from gene therapies to RNA interference and antibody-drug conjugates (ADCs).
Alnylam Pharmaceuticals Inc. is one such biotech platform company attempting to make the transition from platform player into long-term profitability as an independent commercial entity, following in the footsteps of Regeneron. Its RNA interference technology, long shunned by the industry after initially failing to meet its therapeutic promise, has now resulted in two approved therapies in Onpattro (patisiran) and Givlaari (givosiran). Projects with large target populations such as inclisiran (dyslipidemia) and fitusiran (hemophilia) have been out-licensed to partners with broader commercial reach, while the company continues to advance its own pipeline against rare genetically validated diseases.
Lumasiran is the next likely approval in December 2020, while platform improvements will allow the company to address new targets outside of the liver, including central nervous system and ocular diseases. With a now-proven RNA interference backbone, such clinical work can be done with high likelihoods of success, meaning that the company can confidently progress 2-4 new IND-stage candidates through its pipeline each year. As demonstrated in Exhibit 5, Alnylam can reach industry-high levels for probability of success at each clinical stage, on the strength of its platform. Since the beginning of the last decade, Alnylam’s likelihood of approval for an asset entering Phase I testing has been 29.3%, versus an industry-wide benchmark of just 8.1%.
Tapping into the trend for pharma companies to be modality-agnostic as to how they attack a particular drug target, platform companies are increasingly becoming the source of big pharma’s most attractive, and valuable, pipeline assets. Novartis is one company taking the agnostic approach to the extreme, with internal or partner capabilities spanning all of the major advanced therapy types, including cell therapies, gene therapies, RNA interference and radiopharmaceuticals. Inclisiran, originally discovered by Alnylam, represents its first foray into RNA therapies, acquired at considerable cost from The Medicines Company for $9.7bn. One of the hottest targets in oncology, BCMA (B cell maturation antigen), is set to become a big pharma battleground for externally sourced drugs spanning cell therapies, bi-specific antibodies and ADCs.
On the topic of ADCs, recent months have seen a frenzy of deals as initial technological limitations have been overcome, resulting in improved antibody-to-drug ratios and therapeutic potency without systemic side effects. Gilead’s $21bn purchase of Immunomedics brings the TROP2 ADC Trodelvy, while Merck acquired developmental rights to ladiratuzumab vedotin, a LIV-1 ADC from Seattle Genetics for $1.6bn upfront.
Expect platform biotech companies to continue to enjoy favorable deal terms and reap the rewards of advances in the underlying technology, as they are also shouldering all of the developmental risk. Should the platform ultimately turn out to produce unviable treatments, the entire value proposition of a company is lost, and early pioneers also face existential threats if a newcomer tweaks and optimizes the technology enough to make prior versions redundant. Particularly in cell and gene therapy, with so many variables in the process, balancing refinement of the platform versus commitment to progressing clinical-stage assets is a daunting task.
This article is based on a series of presentations prepared by Ly Nguyen-Jatkoe, commercial strategy director, Pharma Intelligence and Christina Vasiliou, principal consultant, Informa Pharma Consulting in September and October 2020. Access the full recorded version of the presentation here. If you have any questions about any of the themes discussed in this article, or would like to learn further about Pharma Intelligence’s products and consulting offerings, please contact Ly or Christina.
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