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Death of the Blockbuster Drug

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Things, they are a changing

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This article is both a summary and an extension to the presentation I gave Saturday morning at the First Annual Minyanfest in Crested Butte, CO.

A blockbuster drug is one that sells over a billion dollars each year. These drugs are the backbone of the pharmaceutical industry. Creating one is the gleam in the eye of every biotech entrepreneur and pharmaceutical executive. Biotech and healthcare analysts go to great pains in trying to predict in advance which drugs will get to that lofty level, because investing in a company that creates a blockbuster drug can be very lucrative. Heretic that I am, I based my presentation on the idea blockbuster drugs will eventually disappear.

Nothing in biotech ever happens without good science to back it up. The trend away from blockbuster drugs is no exception, so we'll start with the science first.

The science behind why blockbuster drugs will disappear is contained in an article I wrote in early July called "A Trip Inside the Science of Cancer." It's probably worth your while to review that article as I only summarize it below.

Personalized medicine

In the not-to-distant past, diseases were rather monolithic. You had breast cancer. You had heart disease. You had schizophrenia. Everyone else with breast cancer, heart disease, or schizophrenia was considered to have the same disease you did.

Science has disabused us of this notion, even if doctors in clinics haven't caught up to that reality. Line up a dozen breast cancer patients and you are likely to find at least six different types of breast cancer. Same with nearly any other disease you can think of. Each disease has its own specific set of markers at the protein, molecular, and/or genetic level that differentiates one patient from another.

We are not too far from the day when you will be given highly specialized tests to determine the exact specifics of your disease. Once those specifics are known, a personalized treatment regimen can be created. In the world of personalized medicine, cure and remission rates will be higher and side effects will be fewer. Personalized medicines, in other words, will carry much higher therapeutic indexes than the medicines in use today.

Barriers

Clinical practice, unfortunately, has not caught up with the science. We have a laundry list of what we expect are excellent targets for personalized medicine, but few approved medicines to use.

Part of the blame goes to the companies developing these drugs. One glance at pipelines - particularly in the oncology space - and it's obvious targeted drugs are the future. Oddly, however, companies developing these personalized drugs insist on using them on the entire patient population. Why? Because it is a bigger market and faster to enroll clinical trials. If you automatically restrict your drug to the percentage of people with the specific marker, your clinical trials will enroll more slowly and your sales potential will be that much smaller.

A good example of this is Genentech's (DNA:NYSE) Herceptin. This monoclonal antibody targets a protein called her2-neu. Scientists knew only 25% of breast cancer patients expressed (had present on their tumors) the her2-neu protein marker. In their initial Phase II trials, however, they enrolled all breast cancer patients. The drug failed, of course, because an automatic 75% of the patients enrolling in the trial had no chance of responding to the drug since they didn't have the protein marker.

Genentech had to validate a marker test for the her2-neu protein. Then it enrolled a Phase II trial with only her2-neu+ patients. The clinical program was a success and now Herceptin is one of the more important drugs for the treatment of breast cancer.

A second barrier is the FDA. Current rules regarding trial size, endpoints, and threshold levels of statistical significance are not amenable to an era of personalized medicine. Trials will take too long to enroll the large numbers the FDA likes to see. Endpoints like objective response rate (ORR, or tumor shrinkage) do not apply to many personalized therapies. And the arbitrary setting of the confidence rate for a trial of 95% may be too high if our real goal is to improve patient lives.

Blockbuster drugs

In this era of personalized medicine, very few drugs will be useful across an entire patient population. In cancer, there might be three or four dozen drugs for each type of cancer. My view that the death of the blockbuster drug is heralded by the advent of personalized medicine is simply a matter of simple division.

If breast cancer is a $20B potential market, under current one-size-fits-all treatment methodologies it is logical there will be a couple of blockbuster drugs. Under a market dominated by three of four dozen personalized medicines, no single patient group is likely to be large enough to make a drug a billion-dollar seller. Simple math.

Blockbuster platforms

What we will see instead is the rise of the blockbuster platform. Smart scientists are already building core technologies to serve as carriers for the new class of personalized medicines. When a new protein, molecule, or gene is found that can act as a target for a particular disease, these scientists will "merely" plug that target into their core technology to create the drug.

This is harder than one might expect. Science has been taking the last 15 years to try and figure this out with not much in the way of success. Over the next 12-18 months, however, I believe we'll see irrefutable evidence from pivotal Phase III trials demonstrating targeted therapies based upon core platform technologies work.

In some ways, the burgeoning success of monoclonal antibodies is a testament to this idea. While few of these drugs are being used in a personalized fashion, the model is nearly the same.

Road signs

My pet peeve when I watch presentations about "the future" is when the presenter gives me no road signs to watch for. Perhaps that's the communications professor in me coming out, but I can't help it. So here are some road signs to help you understand when the market will be transitioning away from blockbuster drugs to blockbuster platforms.

Company attitudes: Companies want to create blockbuster drugs because the ROI is higher. Personalized drugs will be no cheaper to create, except for the fact that acknowledging they are personalized earlier in the development process will mean fewer failed trials. When you commonly see enrollment criteria for clinical trials exclude patients who test negative for the target, this signpost has been met.

Immunotherapy trial success: Immunotherapy has a bad name because early tries were failures. That should change with data available in 2H-2005. When other companies see a success, they will imitate it. If you see positive Phase III clinical trial data from personalized medicines, this signpost has been met.

Narrowing of current biologics: Biologics are drugs with a "live" component. Nearly all of them are targeted, but very few of them are used only in patients with that target. When you see currently approved drugs being used only in patients with the target present, you'll know this signpost has been met. This change in current behavior is likely to be driven by insurance company reimbursement.

Change in FDA behavior: To avoid drowning this important advancement before it really begins, the FDA is going to have to make adjustments to the way it approves these drugs. When the FDA adopts new rules specifically to ease approval of targeted medicines, this signpost has been met.

Signpost progress

The presentation I made in Crested Butte was based upon the Main Story in our June 2004 newsletter. I wrote that research note after returning from the ASCO 2004 oncology meeting in New Orleans. It was a summary of a theme our research team had been working on for some time. Since that newsletter was published, and even since my presentation in Crested Butte, we have seen some progress towards our signposts (not claiming causation here, just chronology).

In the current issue of the Journal of Clinical Oncology, a member of the FDA division that reviews and approves cancer drugs had this to say:

"As knowledge increases, educated patients will likely request analysis of their DNA so they and their tumors can be treated individually. Physicians, rather than choosing one-size-fits-all, poorly-evaluated drugs, will choose DNA-directed drugs given at individualized doses. We will move away from the treatment of groups and toward the treatment of individuals. In oncology, with access to tumor DNA and drugs with steep dose-response and dose-toxicity curves, we are well positioned to lead the way to this goal. Our challenge is to provide leadership, infrastructure, funding, and a regulatory environment that will encourage correlative studies during early drug development and facilitate optimal treatment of individuals with cancer."

The fact the FDA recognizes they need to make changes does not satisfy the signpost, but is certainly motion in the right direction.


On a separate note: Attendees of the Minyanfest received a $100 certificate for a free copy of our 150-page Anniversary Issue. In it, we examine the outlook of all 21 companies in our coverage universe. I've already sent out the first set. Make sure to return those postcards if you want your copy.
No positions in stocks mentioned.

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