Biopharmconsortium Blog

9 December 2010

Third time’s a charm–FDA Advisory Panel endorses Orexigen’s weight-loss drug Contrave

By Allan Haberman, Ph.D|2018-12-29T21:35:06+00:00December 9, 2010|Drug Development, Metabolic diseases, Strategy and Consulting|

Naltrexone

Bupropion

As many of you know, this blog has been covering the review of preregistration antiobesity drugs by the FDA’s Endocrinologic and Metabolic Drugs Advisory Committee and by the FDA itself. 2010 was supposed to be the year in which one or more new obesity drugs would be approved by the FDA and reach the market. Three new drugs developed by small California companies–Vivus Pharmaceuticals’ Qnexa, Orexigen Therapeutics’ Contrave, and Arena Therapeutics’ lorcaserin, were up for FDA review this year. This follows a long hiatus, since the FDA has approved no antiobesity drug since 1999.

So far, the Advisory Committee–and later the FDA itself–has rejected approval of two of these drugs–Qnexa and lorcaserin. At the same time, the marketed antiobesity drug sibutramine (Abbott’s Meridia) was withdrawn from the market at the FDA’s request.

The third preregistration antiobesity drug, Orexigen’s Contrave, was scheduled for review by the Endocrinologic and Metabolic Drugs Advisory Committee in December 2010, and the review was held on December 7th. Most industry experts expected that the Advisory Committee would reject Contrave as well. But, surprisingly, the Committee recommended that the FDA approve Contrave (naltrexone sustained release [SR]/bupropion SR), by a vote of 13-7, for long-term use by certain obese and overweight patients.

The FDA usually follows the advice of its advisory panels, but does not always do so.

Contrave is a combination of long-acting formulations of two FDA-approved drugs–naltrexone and bupropion. Orexigen designed Contrave to have a dual effect on pathways within the hypothalamus of the brain that control energy balance–increasing anorexia and inhibiting the reward effects of food. The company also believes that Contrave may block the body’s compensation for weight loss–i.e., decreased energy use and increased feeding. For additional details, see our 2008 book-length obesity report, published by Cambridge Healthtech Institute.

The Advisory Committee, although they voted positively, did not do so with much enthusiasm, since Contrave just barely met the FDA’s criteria for efficacy. The drug enabled a majority of patients to lose about 5% of their body weight. Despite the drug’s minimal efficacy, a 5% loss in body weight can have significant health effects, such as helping patients to prevent diabetes and heart disease and to control their blood pressure. Some panelists were concerned that there is no data on the drug’s efficacy or safety beyond one year of treatment. Obesity is a long-term condition, and most patients would probably require long-term treatment with Contrave if it is approved.

However, as in the previous reviews by the Advisory Committee of Qnexa and lorcaserin, the main emphasis of the discussion was on safety. Clinical trials indicate that Contrave treatment can result in elevated blood pressure in some patients. Some panelists were also concerned about the risk of seizures, which have been seen with one of the components of Contrave, bupropion. Especially because of the adverse effect on blood pressure, some panelists expressed concern that Contrave, once approved, might suffer the same fate as Meridia, which at the time of its approval was also known to cause elevated blood pressure in some patients. The reason for this year’s withdrawal of Meridia was its increased risk of cardiovascular events.

As a result of these safety discussions, the panel voted 11-8 to require Orexigen to conduct a long-term study of the effects of Contrave on cardiovascular health. However, they concluded that that study could be done post-marketing rather than requiring the company to conduct the study in order to gain approval.

Overall, the Advisory Committee concluded that physicians and patients need additional options to treat obesity, and that the risk-to-benefit ratio for Contrave falls on the side of benefits. Although that was the general conclusion of the panel, some members did not agree.

When the FDA conducts its own review of Contrave, it not only must decide on whether to approve the drug, but also on the drug’s label and on requirements for post-marketing studies. FDA action is expected by the end of January 2011.

As we discussed in a previous blog post, Takeda is Orexigen’s commercialization partner for Contrave. Under their agreement, Orexigen granted Takeda North American (U.S, Mexico, and Canada) marketing rights for Contrave; Orexigen retains copromotion rights in the United States. Takeda paid Orexigen $50 million upfront, and will pay (upon FDA approval) tiered double-digit royalties (starting at 20% and increasing to 35%) on any net sales of Contrave. The deal is estimated to be worth a potential $1 billion. Takeda will also share the costs of further development of these drugs, presumably including any post-marketing studies.

As we also discussed in the same article, Takeda also has an agreement with Amylin to develop earlier-stage antiobesity drugs, with the potential for greater efficacy than drugs that address appetite-control pathways in the CNS that involve common neurotransmitters.

The approval of Contrave (if the FDA goes along with its Advisory Committee’s recommendations) may affect the strategy of Vivus and Arena as they work with the FDA to obtain reconsideration for approval of Qnexa and lorcaserin, respectively. And it might restart research on early-stage antiobesity drugs, which has been largely on hold as the pharmaceutical/biotechnology industry and the medical and financial communities awaited approval of one or more of the three drugs being reviewed by the FDA in 2010. And–by lifting the “pall of gloom” over the antiobesity drug field–it might improve funding and partnering prospects for such early-stage obesity specialist companies as Zafgen and Energesis, which we discussed in an earlier blog post.

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As the producers of this blog, and as consultants to the biotechnology and pharmaceutical industry, Haberman Associates would like to hear from you. If you are in a biotech or pharmaceutical company, and would like a 15-20-minute, no-obligation telephone discussion of issues raised by this or other blog articles, or of other issues that are important to your company, please click here. We also welcome your comments on this or any other article on this blog.

3 December 2010

GlaxoSmithKline CEO Witty sees the need for smarter R&D innovation

By Allan Haberman, Ph.D|2018-09-14T21:52:03+00:00December 3, 2010|Drug Development, Drug Discovery, Haberman Associates, Strategy and Consulting|

Source: Calvero. http://bit.ly/dGrWW3

In a one-page article entitled “Research and develop” in The Economist’s publication “The World in 2011”, GlaxoSmithKline (GSK) CEO Andrew Witty outlined the challenges facing the pharmaceutical industry today, and what to do about them.

Mr. Witty began with a familiar catalogue of challenges, including patent expiries and competition from generics, pricing pressure due to government health care policy changes, and increasing caution by regulatory agencies such as the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMEA).

At the same time as marketed drugs–especially blockbuster drugs that Big Pharmas have been depending on for much of their revenue–have been losing patent protection, the productivity of pharmaceutical R&D has been declining. Mr. Witty observes that as long as there is a gap between the number of marketed drugs that go off-patent and the number of new drugs coming out of R&D, the size of the pharmaceutical industry will continue to diminish.

This is being accomplished via mergers and acquisitions, as well as severe cuts in budgets and in workforces. These cuts have been affecting all functions of pharmaceutical companies, from R&D through manufacturing, marketing, and sales. Pharmaceutical mergers and acquisitions were much in the news in 2009, while budget cuts and layoffs have been prominently features of pharma industry news in 2010.

Mr. Witty said that going forward it will be critical to “get R&D right”–reverse the decline in productivity, improve success rates for regulatory approval, and to launch drugs that will have major impacts in treating disease, rather than just incremental improvements.

While the numbers of approved new molecular entities (NMEs) and novel biologics–especially breakthrough drugs–that have been launched onto the market has declined, the cost of R&D has been going up. The dramatic rise in R&D spending between 2001 and 2008 or so has been mainly due to the industrialization of drug discovery–the attempt to use genomics, proteomics, combinatorial chemistry, high-throughput screening, and other technologies to create large-scale, automated platforms for discovering drugs. Some large pharmaceutical companies even established what they called “drug discovery factories” during the heyday of technology-driven drug discovery. And one prominent genomics-based biotechnology company claimed that they were “industrializing biology”.

According to Mr. Witty, shareholders no longer will support additional monies invested in R&D without commensurate increases in productivity. Based on a rational allocation of resources, R&D should instead be cut. This, in fact, is what has been happening in much of the industry.

Mr. Witty sees two solutions to this dilemma. The first is to “create an environment in the labs that reflects the fact that discovering a drug is as much an art as it is a process”, and to combine this approach with the allocation of resources “only to where the prospects for success are greatest”. This would be combined with streamlining of drug development, especially by ending the development of “drugs which do not offer the prospect of being truly distinctive” (and, presumably, drugs that are likely to fail in late-stage clinical trials) early.

The second is to implement more innovative R&D partnerships, including with small biotech firms and academia, and such Big Parma-Big Pharma collaborations as the specialized HIV company VIV Healthcare, which was created by GSK and Pfizer.

Presumably, the various precompetitive collaborations between Big Pharmas, such as Boston-based Enlight Biosciences, would also be included under the category of innovative collaborations between Big Pharmas. Enlight was founded by venture capital firm PureTech Ventures, in partnership with Merck, Pfizer, Lilly, Johnson & Johnson, Novartis, and Abbott. Enlight’s goal is to “develop breakthrough innovations that will fundamentally alter drug discovery and development”.

Our take on Andrew Witty’s article

Anyone familiar with our consulting group, Haberman Associates, our publications (going back to 1999), or this blog, is no stranger to the type of solutions set forth in Mr. Witty’s article. In particular, see our 2009 article, “Overcoming Phase II Attrition Problem”, and our blog posts of February 19, 2010 and of July 20, 2009. For a more in-depth presentation, see our 2009 book-length report Approaches to Reducing Phase II Attrition.

The basic problem with “industrialized drug discovery” is not so much that it is expensive, but that it does not work. The reason for this is that a genomics-based “numbers game” approach does not give the fundamental understanding of disease biology, and the role of a target in a disease, that is needed for effective drug discovery. This is compounded by the usual mismatch between compounds created by combinatorial chemistry (another “numbers game”) and disease-relevant targets.

One needs to instead identify those targets and drugs that have the best chance of success in the discovery phase, mainly via focusing on biology-driven drug discovery (i.e., strategies based on understanding of disease mechanisms), coupled with smart (and target-focused) chemistry, whether based on traditional medicinal chemistry, natural products, or some of the newer chemical technologies that we have discussed in several articles on this blog. Even during the era of industrialized drug discovery, most successful discovery of breakthrough drugs has been via biology-driven drug discovery.

These approaches to drug discovery should then be extended into early-stage development, via employing early stage proof-of-concept (POC) clinical trials to weed out drugs and targets that do not achieve POC. In addition to discussions of POC clinical trials in our 2009 publications, we have outlined specific, sophisticated examples of this strategy in oncology, in our blog posts of October 13, 2010 and of October 25, 2010.

If a company moves toward a strategy of this type, it should not only result in improved effectiveness, but also in very significant cost savings. Moreover, the company should be likely to keep its best researchers, and to motivate them to do their best work and to learn and apply new ways of doing things, in collaboration with biotech and academic partners. However, if the company starts with an emphasis on cost savings and across-the-board R&D workforce reductions without considering R&D and partnering strategies, it will not have solved the R&D productivity problem. That was the main point of our February 19, 2010 blog post.

It is great to outline strategies that appear to be congruent with what has worked in drug discovery in recent years (e.g., biology-driven drug discovery, “drug discovery as an art”), and with some of the best thinking in biotech/pharma companies and of science and technology consultants such as ourselves. However, especially in the case of a strategy that can be outlined in a one-page article (even though we are sure that the article is based on more extensive strategic thinking at GSK), fleshing out and implementing the strategy is easier said than done.

Fostering a pro-innovation environment

Mr. Witty ends his article by saying that the pharmaceutical industry will look very different in five years than it does today. It “will need to put a premium on management and human capital, while operating in an increasingly complex social, legal, scientific and political environment”. Mr. Witty then calls on governments to ensure that pharmaceutical companies can receive a fair reward for innovation, so that they can produce the new breakthrough drugs that patients and physicians need.

This scenario echoes–at least to some extent–a recent speech by Lilly CEO John C. Lechleiter, Ph.D., which we discussed in earlier blog posts. In that speech, Dr. Lechleiter outlined the components of an environment that supports medical innovation. Among these components is what Dr. Lechleiter called “a larger ‘ecosystem’ that allows innovation to flourish”. Such an ecosystem would include an “atmosphere” that allows innovation to thrive, “nutrients” in the form of monetary investments, and the “seeds” of human talent in relevant scientific disciplines.

In his speech, Dr. Lechleiter called for “public policies that enable and reward medical innovation”. These policies would include those pertaining to benefit/risk assessments, reimbursement decisions, and prescribing guidelines. They would also include “creation of a systematic and transparent regulatory approach to assessing the benefits and risks of new medicines.” Dr. Lechleiter noted the ongoing discussions with the FDA on the Prescription Drug User Fee Act, which is up for reauthorization in 2012. He sees these discussions as offering an opportunity for a “real victory for innovation and for patients.”

In the United States in particular, pharmaceutical and biotechnology companies, working individually and through such industry groups as The Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Industry Organization (BIO), as well as other stakeholders such as universities, “disease organizations”, and patient advocates, need to advocate more effectively through the political process for policies that foster and reward innovation. This should be based on demonstrating to government officials and the public that the industry is making real efforts to improve the productivity of R&D to address medical needs.

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1 December 2010

GlaxoSmithKline stops development of resveratrol drug SRT501

By Allan Haberman, Ph.D|2010-12-01T00:00:00+00:00December 1, 2010|Anti-Aging, Cancer, Drug Development, Drug Discovery, Metabolic diseases|

Resveratrol

In statements to Fierce Biotech and to the Myeloma Beacon, GlaxoSmihtKline (GSK) said that it has stopped all development of its proprietary resveratrol formulation SRT501. Thanks also to the “In the Pipeline” blog for the information on the Myeloma Beacon statement.

As you all may recall, GSK acquired the sirtuin-pathway specialty company Sirtris (Cambridge, MA) for $720 million in June 2008. This gave GSK ownership of Sirtris’ sirtuin modulator drugs, including SRT501. GSK also appointed Christoph Westphal, then CEO of Sirtris, as the Senior Vice President of GSK’s Centre of Excellence in External Drug Discovery (CEEDD), and Michelle Dipp, then vice president of business development at Sirtris, as Vice President and the head of the US CEEDD at GSK.

According to the Fierce Biotech article, the precipitating factor in GSK’s decision to halt development of SRT501 was the result of a Phase 2a study of the drug in advanced multiple myeloma. The company suspended the study after several patients developed kidney failure. GSK said that in its analysis, the company concluded that SRT501 “may only offer minimal efficacy while having a potential to indirectly exacerbate a renal complication common in this patient population.” It then said that the company has “no further plans to develop SRT501.”

Instead, GSK intends to focus on development of Sirtris’ non-resveratrol synthetic selective sirtuin 1 (SIRT1) activators, which in addition to their greater potency, have more favorably drug-like properties. In its statement to the Myeloma Beacon, GSK in particular mentioned SRT2104 and SRT2379 as the focus of its continuing activity. According to the Sirtris website, SRT2104 is in Phase 2 studies in metabolic and cardiovascular disease, and SRT2379 is in Phase 1 studies in healthy volunteers. Neither compound is currently being tested in cancer.

We discussed Sirtris’ SIRT1 activators in the context of the anti-aging biology field, in a February 10, 2010 blog post. In summary, the mechanism of action of reseveratrol and of Sirtris/GSK’s sirtuin activators is unclear. They apparently activate multiple targets, and they may not be direct SIRT1 activators at all. Nevertheless, Sirtris’ studies of these compounds in mice indicate that they have efficacy in treatment of metabolic diseases. The Phase 2 clinical trials in humans are still ongoing.

To complicate matters further, a study published in the journal Diabetes in March 2010 by NIH researcher Jay H. Chung and his colleagues indicates that resveratrol works indirectly, via the energy sensor AMP-activated protein kinase (AMPK), to activate sirtuins. Since activation of AMPK increases fatty acid oxidation and upregulates mitochondrial biogenesis, the effect of resveratrol on AMPK may be more important than its more indirect activation of sirtuins, at least in the case of metabolic diseases.

Thus Sirtris/GSK’s “sirtuin activators” are under a cloud.

However, as we discussed in our blog posts of November 8, 2009 and February 10, 2010, basic research on anti-aging biology has yielded ample material for drug discovery which may eventually lead to novel treatments for metabolic diseases, and perhaps for other conditions such as various cancers. For example, several companies are developing AMPK activator drugs. Thus there are other avenues for harnessing basic research on anti-aging pathways to discover and develop novel drugs for multiple conditions, even if the Sirtris compounds prove to be a dead end.

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24 November 2010

Roche cuts workforce, and drops RNAi R&D

By Allan Haberman, Ph.D|2018-12-03T23:50:26+00:00November 24, 2010|Drug Development, Drug Discovery, Haberman Associates, RNAi, Strategy and Consulting|

An early example of RNA interference. Source: http://bit.ly/gbXhli

As the author of the recently published book-length report RNAi Therapeutics: Second-Generation Candidates Build Momentum (Insight Pharma Reports, Cambridge Healthtech Institute), in addition to my other involvements with the RNAi therapeutics R&D community, I feel an obligation to comment on the recent announcement from Roche.

As many of you already know, on November 17, 2010, Roche announced that it would cut 4800 jobs (about 6% of their workforce), as part of a $2.4 billion cost-reduction plan. The company also plans to transfer 800 jobs internally, and 700 jobs “to third parties”.

Most of the positions to be cut will be in sales, marketing and manufacturing (especially in Roche’s primary care sales organization) in the United States. However, in R&D, Roche plans to discontinue development of some preclinical drugs. And, most notably for the RNAi research community, Roche will discontinue R&D in RNAi therapeutics, including its RNAi research center in Kulmbach, Germany.

Roche attributed its need to make the cuts to several setbacks in its drug development programs, as well as effects of government health care policy changes in the United States and Europe. The company has also been hit by a drastic falloff in demand for its influenza treatment Tamiflu. Roche is outsourcing sales of Tamiflu to a contract sales organization.

Among Roche’s drug development setbacks have been delays in development of its antidiabetic taspoglutide and its breast cancer drug T-DM1, as well as late-stage clinical failures in studies of its best-selling cancer drug Avastin in prostate, stomach, and early colorectal cancers.

Taspoglutide is a glucagon-like peptide-1 (GLP-1) analog, which Roche has been co-developing with Ipsen. In September 2010, the companies suspended Phase 3 clinical trials due to unexpected adverse effects. in August 2010, the FDA rejected an application for Accelerated Approval of T-DM1, which Roche has been codeveloping with ImmunoGen. The companies will have to complete Phase 3 trials before resubmitting the drug to the FDA, and plan to do so in 2012.

As we said in a February 2010 blog post, Roche (as well as Novartis), unlike most Big Pharmas, had not been emphasizing layoffs and R&D cuts up to that time. However, because of the above setbacks, Roche now sees the need for large reductions in their workforce. Nevertheless, Roche’s R&D cuts appear to be much more selective than those of other Big Pharmas, including those which like Roche have undertaken large acquisitions in 2009, such as Pfizer and Merck.

RNAi therapeutics R&D

Roche’s exit from RNAi therapeutics R&D comes despite the company’s strategic platform alliance with RNAi therapeutics sector leader Alnylam Pharmaceuticals (Cambridge, MA), which was initiated in 2007. That agreement included $313 million in up-front payments, and the purchase of Alnylam’s European research site in Kulmbach, Germany. This site became Roche Kulmbach GmbH, Roche’s Center of Excellence for RNAi therapeutic research, which Roche now plans to close. Roche also had an alliance with RNAi delivery platform company Tekmira Pharmaceuticals (Burnaby, British Columbia, Canada), which also partners with Alnylam to develop and manufacture delivery vehicles for several of Alnylam’s drug candidates.

The withdrawal of Roche from therapeutic RNAi research is the second blow to Alnylam’s alliance strategy this fall. In September 2010, Novartis decided to end its 5-year partnership with Alnylam. As the result of Novartis’ decision, Alnylam carried out a corporate restructuring, including an approximately 25-30% reduction in its workforce. However, Novartis remains very much in the therapeutic RNAi field, as the result of the technology and the rights that it acquired as the result of its partnership with Alnylam. And Alnylam is entitled to receive milestone payments for any RNAi therapeutic products that Novartis develops based on the 31 targets that it has acquired exclusive development rights to from Alnylam.

According to Alnylam’s CEO, John Maraganore, Alnylam was surprised to hear about Roche’s decision to exit therapeutic RNAi. He said, however, that the Roche move would not materially affect Anylam’s financial position or its future plans.

Tekmira’s CEO, Dr. Mark J. Murray, said in a press release that it does not expect Roche’s decision to have a substantive impact on their business. The majority of Tekmira’s revenue comes from its exclusive manufacturing relationship with Alnylam, and its growing relationship with the U.S. government’s Transformational Medical Technologies (TMT) program. This refers to the $140 million contract awarded to Tekmra by the TMT Program, to develop an RNAi-based product for protection against infection with the deadly Ebola virus. Tekmira expects these programs to be its main sources of revenue through 2011, together with its ongoing R&D collaborations with Pfizer, Takeda and Bristol-Myers Squibb (BMS).

As a result of Roche’s exit from RNAi therapeutics R&D, several commentators have been speculating on what other Big Pharmas with internal RNAi programs and/or RNAi alliances (e.g., Pfizer, Merck, BMS, Takeda, Novartis, GlaxoSmithKline, AstraZeneca) might do, and on whether Roche’s move might dampen the prospects for funding of smaller RNAi companies. Others speculate that Roche’s move may simply open up the RNAi market for other competitors. However, this early after Roche’s move, no one knows how valid any of this speculation might be.

As we discussed in our July 13, 2009 blog post, and in more detail in our RNAi Insight Pharma Report, the therapeutic RNAi (and microRNA) field represents an early-stage area of science and technology, with not one drug that has successfully gotten beyond Phase 2 of clinical development. The field may even be technologically premature, as was the monoclonal antibody (MAb) drug field in the 1980s. There are still knowledgeable analysts and industry researchers and executives who believe that RNAi will never yield marketable drugs, or that marketable drugs will be few in number (as is the current situation with antisense and aptamer drugs) and/or be decades away. This is despite the apparent progress in overcoming hurdles to therapeutic RNAi development, and in developing specific drug candidates, as outlined in our report.

In the case of MAb drugs, in the 1980s and early 1990s researchers developed enabling technologies that made it possible for companies to overcoming the hurdles to successful development of marketable products. As a result, in the late 1990s the MAb drug field took off, and is now one of the most successful areas of pharmaceutical development. RNAi companies have been developing enabling technologies (e.g., delivery vehicles, new oligonucleotide structures with greater potency or self-delivering properties) to overcome hurdles to successful RNAi therapeutic development. However, it remains to be seen whether and when such technologies will enable the RNAi therapeutics field to take off the way that MAbs did in the late 1990s.

Why would Big Pharma be interested in getting into such an early-stage and perhaps premature field as RNAi therapeutics? We discuss this issue in detail in our Insight Pharma Report. Among these reasons are the need to fill weak pipelines, and the desire to stake out a commanding position in the RNAi field once it becomes successful, by getting into it early. Big Pharma is trying to avoid repeating its experience with MAb drugs, where it failed to get into the field early, considering it too high-risk. When the MAb sector became highly successful, it was expensive for large pharmaceutical companies to acquire a major stake in it.

Roche, because of its relatively early purchase of a stake in MAb leader Genenetech, and its acquisition of Genentech in 2009, and its strategy to integrate itself with Genentech so as to become essentially a large biopharmaceutical company, may feel less of a need to have internal programs and large alliances in RNAi therapeutic research than other Big Pharma companies. Roche/Genentech currently has a rich pipeline of biologics and small-molecule drugs in clinical development, and in particular continues to develop innovative MAb drugs. For example, the FDA approved Roche/Genentech’s Actemra (tocilizumab) for the treatment of moderate to severe rheumatoid arthritis in January 2010. Actemra is the first interleukin-6 (IL-6) receptor-inhibiting MAb approved for that indication. With its leading position in the MAb/biologics field (including already approved Roche/Genentech blockbusters trastuzumab [Herceptin], bevacizumab [Avastin], and rituximab [Rituxan]), Roche may consider RNAi R&D a “nice to have” instead of a “must have”. Thus, faced with the setbacks that it has experienced in 2010, Roche may feel that it was in its best interests to drop RNAI therapeutics R&D. Other Big Pharma companies with different circumstances may continue with their RNAi internal operations or alliances as part of their long-term pipeline strategies.

Moreover, Roche may have left itself a means to continue to participate in the therapeutic RNAi field without the need to manage internal operations and/or alliances in that area. Roche has a history of spinning off some of its discontinued internal operations as independent companies, while retaining a stake in these entities or options on outlicensed products, and/or collaborating with the spin-offs on newer products. For example, in 1997 Roche researchers started Actelion Ltd., to continue a research program on endothelin receptor antagonists which they had been working on but which Roche decided to discontinue because the projected market was too small for Roche. The spin-out was financed by the venture capital firms Atlas Venture and Sofinnova Partners, which together contributed about $11 million to Actelion’s Series A round. Today Actelion is Switzerland’s largest biotech company (with a U.S. subsidiary), and one of its products, Tracleer (bosentan) for treatment of pulmonary arterial hypertension, has annual sales of more than $1 billion.

In 2000, Roche spun off Basilea Pharmaceutica Ltd. in 2000 to pursue antibiotic and antifungal R&D when Roche decided to exit that area. Basilea was formed by about 50 Roche scientists and executives, with five experimental compounds and 206 million Swiss francs ($214 million) in funding from Roche. Although 51% of the company was sold to private investors, Roche kept options on some of the experimental drugs. Today, Basilea markets Toctino (alitretinoin), a retinoid compound for treatment of severe chronic hand eczema (CHE) which does not respond to the standard topical corticosteroids. It also has a pipeline of antibacterial and antifungal compounds, and conducts earlier-stage research in anti-infectives and oncology. By spinning out Basilea, Roche was able to recoup its investment in anti-infectives.

According to Roche CEO Severin Schwan, Roche might spin off or find partners for its discontinued RNAi therapeutics operations.

We believe that Roche Kulmbach GmbH, Roche’s Center of Excellence for RNAi therapeutic research, might be a good potential candidate for a spin-off. The Kulmbach facility started in 2000 as an independent biotech company, Ribopharma AG. Ribopharma, a spin-off of the University of Bayreuth in Germany, claimed to be the first company to focus on RNAi therapeutics. Alnylam acquired Ribopharma in 2003, and Roche acquired the facility in 2007 as part of its agreement with Alnylam. Might the Kulmbach Center of Excellence become an independent company again as the result of a spin-out? Roche is also planning to close its Madison, Wisconsin facility, which has been conducting therapeutic RNAi R&D. That facility was also once an independent company, Mirus Bio; Roche acquired Mirus Bio in 2008. Roche RNAi researchers in Kulmbach and Madison had collaborated closely. Might Roche/Madison also be a spin-out candidate, either as a stand-alone operation or as part of a combined organization with Kulmbach? At this point, this is all speculation.

If Roche spins out one or more RNAi operations, and retains a stake in these companies, this might provide a way for Roche to participate in the therapeutic RNAi area, without having to manage day-to-day operations. And it might give Roche an opportunity to participate more actively in the field, especially as RNAi-based drugs advance toward market entry. Currently, Roche collaborates with its spin-out company Actelion on development of the selective S1P1 receptor agonist ACT-128800/RG3477 for treatment of multiple sclerosis. In the future, Roche could enter into similar collaborations with any RNAi companies that it might spin out in 2010/2011.
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As the producers of this blog, and as consultants to the biotechnology and pharmaceutical industry, Haberman Associates would like to hear from you. If you are in a biotech or pharmaceutical company, and would like a 15-20-minute, no-obligation telephone discussion of issues raised by this or other blog articles, or of other issues that are important to your company, please click here. We also welcome your comments on this or any other article on this blog.

18 November 2010

Entrepreneurs and venture capitalists–piercing the “pall of gloom” over obesity drugs

By Allan Haberman, Ph.D|2019-04-16T21:58:26+00:00November 18, 2010|Drug Discovery, Metabolic diseases, Strategy and Consulting|

Brown fat deposits in a young woman. Source: Hellerhoff. http://bit.ly/9RNG69

As we said in our November 3, 2010 blog post, “The withdrawal of Meridia from the market, coupled with the FDA rejections of lorcaserin and Qnexa, has cast a pall of gloom on the obesity drug market. Some commentators have declared the field to be dead….”

Nevertheless, a few hardy entrepreneurs and venture capitalists continue to found and fund start-ups, whose goal is to discover and develop truly innovative classes of drugs for obesity and metabolic disease.

A November 3, 2010 Xconomy article focused on the Cambridge, MA startup biotech firm Energesis Pharmaceuticals. Energesis was confounded by Olivier Boss, PhD (formerly of Sirtris Pharmaceuticals), Brian Freeman, MD (former Venture Partner at GreatPoint Ventures), and Jean-Paul Giacobino, MD (Professor Emeritus, University of Geneva Medical School, Switzerland). Dr. Boss serves as Energesis’ Chief Scientific Officer, and Dr. Freeman as its Chief Operating Officer.

Energesis focuses on the discovery and development of drugs for the treatment of obesity, diabetes, and related metabolic diseases. The company plans to develop therapeutics that work by increasing energy expenditure, rather than the usual approaches of decreasing appetite or blocking absorption of fat in the gut. Energesis researchers intend to discover and develop drugs that increase the amount and/or activity of brown adipose tissue (BAT) to combat obesity and other metabolic diseases. BAT is a type of mitochondria-rich adipose tissue that burns fat and dissipates the energy as heat rather than storing it. The mitochondrial protein UCP1 (uncoupling protein 1) is the key biomolecule that makes this process possible. BAT has long been known to be central to non-shivering thermogenesis in rodents, for example to maintain body temperature when they are exposed to cold.

Until recently, researchers believed that in humans, significant populations of BAT cells were found only in infants. However, in recent years researchers found that adult humans possess reservoirs of brown fat in the neck region and other areas of the upper body as well as in skeletal muscle. (See the figure above.) Adult human BAT can be stimulated by acute exposure to cold and via the sympathetic nervous system, and by various pharmacological agents. Energesis’ drug discovery technology is based on the use of brown fat stem cells. The company has provided few details on its technology in published sources.

In October 2010, Energesis was named as one of the winners of the 2010 MassChallenge Global Startup Competition, where it was the top life sciences company. In that competition, Energesis was also one of the top 111 entrants that were invited to participate in a 3-month accelerator program. This provided intensive mentoring, and access to such resources as office space, legal counsel, and introductions to funding sources. Energesis, which has temporary office space in the Cambridge MA incubator Dogpatch Labs (created by venture capital firm Polaris Ventures), is now seeking additional seed-stage funding.

Brian Freeman is key to Energesis’ financing strategy. As a Venture Partner at GreatPoint Ventures, Dr. Freeman cofounded another Cambridge MA company that focuses on obesity, Zafgen. Zafgen was founded in 2005. We discussed Zafgen briefly in an earlier blog post. Zafgen’s drug discovery and development profile is based on targeting the vasculature of adipose tissue, similarly to targeting tumor angiogenesis. Zafgen already has a compound, ZGN-433 (which is a methionine aminopeptidase inhibitor), in Phase I development, and is working on earlier-stage compounds. Thus, like Energesis, Zafgen targets a novel weight-control mechanism that does not involve appetite control in the CNS or fat absorption in the gut.

Zafgen has venture funding not only from GreatPoint, but also from Atlas Ventures and Third Rock Ventures. It was named as one of the “Fierce 15” leading biotechnology companies of 2009 by FierceBiotech.

Meanwhile, another Cambridge MA biotech company, Acceleron Pharma, discovered a compound, ACE-435, which targets BAT. ACE-435 inhibits signaling of members of the TGF-beta protein superfamily. in preclinical studies in obese animals, ACE-435 increased brown fat, decreased white fat, increased skeletal muscle, and dramatically lowered serum cholesterol and triglyceride levels. Acceleron is developing ACE-435 for treatment of metabolic diseases. The company was named as one of the “Fierce 15” biotech companies in 2010.

Acceleron, which was founded in 2004 and has three products in the clinic, has raised three rounds of venture capital, and has a major corporate alliance with Celgene. In September 2010, it also signed a $498 million agreement with Shire to develop muscular dystrophy drugs. Acceleron is thus a more mature company than Zafgen or Energesis. Unlike Zafgen and Energesis, Acceleron works in several therapeutic areas, not just obesity and metabolic diseases.

The entrepreneurs who founded obesity specialists Zafgen and Energesis–as well as the venture capitalists who funded Zafgen, and the executives and researchers at Acceleron who have been developing ACE-435–are working on obesity drug development despite the pall of gloom caused by the failures of nearly every antiobesity drug, and the increasing currency among leaders of health insurance companies and health care providers of the old idea that obesity is entirely the fault of the obese, due to “lack of personal responsibility” or “food addiction”. This is despite the abundant evidence that obesity is a complex disease with a large genetic component. Health care leaders, as well as obese people themselves, are frustrated with the lack of solutions to the growing obesity problem, and thus may be tempted to fall back on old, discredited explanations.

The entrepreneurs, researchers, and venture capitalists behind Energesis, Zafgen, and Accleron, however, see the failure of most antiobesity drugs as an opportunity. The failed drugs target common neurotransmitter receptors in the CNS, and thus would be expected to have serious adverse effects, since these receptors are involved in multiple physiological processes in the CNS and elsewhere in the body. Drugs that target physiological pathways other than appetite control in the CNS, and which are based on superior biology-driven drug discovery strategies, may avoid the safety problems of the CNS-acting drugs, as well as exhibiting much greater efficacy. Such drugs may fulfill the major unmet medical need in the obesity area, where there are currently no good solutions.

The founding of Zafgen and Energesis also flies in the face of the current negative situation in the venture capital and credit markets, and in the economy in general. Small companies (especially including startups) continue to find it difficult to raise cash. More established biotech companies, as well as pharmaceutical companies, also feel the need to cut budgets and especially to cut their workforces to save cash. In the Boston area, Big Biotechs Genzyme (which has been facing a hostile takeover from Sanofi Aventis, and which is in discussions to sell itself to Takeda) and Biogen Idec have slashed workforces and budgets, as has contract research firm and animal model supplier Charles River Laboratories. Acceleron also cut its workforce in November 2010.

Nevertheless, both Acceleron and Zafgen (the latter under the leadership of Brian Freeman) have managed to raise significant amounts of venture capital in this tough market. In the case of Zafgen, this is despite the generally gloomy prospects for antiobesity drugs, which are its dedicated focus. We hope that Energesis, in Dr. Freeman’s capable hands, will also be able to bring in Series A venture funding.

The type of entrepreneurial innovation shown by Energesis, Zafgen, and Acceleron has implications beyond the obesity area. In a recent speech, the CEO of Lilly, John C. Lechleiter, Ph.D. outlined the components of an environment that supports medical innovation. (We citied Dr. Lechleiter’s speech in an earlier blog post on the obesity drug market.) Among these components is what Dr. Lechleiter called “a larger ‘ecosystem’ that allows innovation to flourish”. Such an ecosystem would include an “atmosphere” that allows innovation to thrive, “nutrients” in the form of monetary investments, and the “seeds” of human talent in relevant scientific disciplines.

The development of Zafgen and Energesis illustrates the importance of the Boston area biotech and pharmaceutical innovation hub in fostering the initiation and growth of biotech companies with innovative strategies that are potentially game-changing, by providing such an ecosystem. This has included entrepreneurial researchers with innovative ideas and intellectual property, lead venture capitalists willing to back their ideas (and, as in the case of Brian Freeman, to leave their venture capital firms and to join with the researchers in a start-up), universities such as Harvard, MIT, Tufts, and Boston University, the large numbers of biotech companies, both large and small, in greater Boston, the presence of Big Pharma facilities including Novartis’ R&D world headquarters, incubators such as Dogpatch Labs, and entrepreneurship competitions such as the MassChallenge and the MIT Enterprise Forum’s 100K competition.

The United States has other biotech/pharma innovation hubs as well, most notably the San Francisco Bay area and greater San Diego. As shown by the example of ZymoGenetics (see our November 11, 2010 blog post), Greater Seattle has been such an innovation hub, although biotech leaders in Seattle are afraid that their hub has been eroded by acquisitions such as that of ZymoGenetics by Bristol-Myers Squibb and the earlier Amgen-Immunex merger, with the resulting substantial layoffs. Other major U.S. biotech/pharma hubs include the Research Triangle Park area of North Carolina and greater New York/New Jersey/Philadelphia. Canada and several Western European countries also have biotech/pharma innovation hubs.

Various other cities and states in the U.S., as well as cities and countries in Europe and South and East Asia, are working to build new biotech hubs to bolster their economies. Big Pharma companies, with their massive need to acquire or partner for new, innovative drugs, must also develop strategies to foster ecosystems for innovation, both within their own organizations and in seedbeds for potential partners such as existing and emerging biotech hubs. The example of the role of the greater Boston area in spawning such companies as Energesis, Zafgen, Acceleron, and several others that have been covered in this blog may provide case studies to help Big Pharmas in formulating new strategies to foster innovation.

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As the producers of this blog, and as consultants to the biotechnology and pharmaceutical industry, Haberman Associates would like to hear from you. If you are in a biotech or pharmaceutical company, and would like a 15-20-minute, no-obligation telephone discussion of issues raised by this or other blog articles, or of other issues that are important to your company, please contact us. We also welcome your comments on this or any other article on this blog.

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