Advances in Oncology Drug Discovery – Sachs Conference Talk by Roche pRED Head of Oncology DTA, William Pao

9762765983_26a72a44fd_b

A fascinating talk about cancer drug discovery was given by Dr. William Pao, Head of Oncology Discovery and Translational Area (DTA) at Roche Pharmaceutical Research and Early Development (pRED) during the Sachs 16th Annual Biotech in Europe Forum.

He started to explain what is cancer, for us to gain more insights:

  • cancer is a genetic disease: tumors can harbor over 400 somatic mutations
  • cancer is heterogenous: there are more than 200 types of cancers and a single patient tumor displays intra and inter-tumoral heterogeneity
  • cancer can metastasize: once spread, it is virually incurable. Metastatic cancer survival at 5 years is extremely low (between 4 and 28%)

Based on those considerations, treatment is becoming much more complex today with a blend of chemotherapy, targeted medicines and immunotherapies. A right combination could extend survival by several months.

But how to develop drugs with increased efficacy against the smart strategies used by the disease (such as tumor angiogenesis)? According to Dr. Pao, 3 elements are necessary:

  • understanding disease biology as well as druggable targets in the complexity of cancer molecular pathways
  • developing fit-for-purpose molecules allowing to create the right drug with the right format against the right target
  • personalizing healthcare with the administration of the right drug to the right patient at the right time

Beyond a better understanding of the disease, using more than a single strategy to target the cancer:

  • Host directed with cancer immunotherapy. This approach is particularly challenging as some patients do not respond to it (innate or acquired immune escape) and other patients may fully benefit with long term survival
  • Tumor directed with targeted medicines

External innovation, collaborations and partnerships, is fully leveraged in order for Roche to complement existing capabilities in the field (immunotherapy examples: CuraDev, Pieris, BluePrint; targeted medicines: Tensha, C4Therapeutics).

As a conclusion, Roche is well positioned to address the cancer challenges and, since the beginning of innovative cancer treatments, the company has always been perceived as the leader of the therapeutic area.

addressingcancerchallenge

Missing points in his talk were considerations of patient’s quality of life (extending life does not always go with good quality of life because of treatment’s side effects) and drug pricing (adding more and more drugs to the treatment cocktail costs a lot of financial resources, not only paid by the health insurance but also by the patient).

 

Image source

DNA methyltransferase 1 has a role in the establishment and regulation of tissue-specific patterns of methylated cytosine residues. Aberrant methylation patterns are associated with certain human tumors. www.enzymlogic.com. Work done with the molecular visualization VMD program developed at the University of Illinois: www.ks.uiuc.edu/Research/vmd/

Theranos – A recipe for disaster?

slippery

A lot has been said and written about Theranos. My goal in this blog post is not to reinvent the wheel but to guide the reader toward meaningful and relevant web content about this story.

Like everybody else I was fascinated by the rise of Elizabeth Holmes without questioning the technology itself. Why? First, at that time, it was not one of the company I was considering for analysis (and investment opportunity) and, second, because sometimes technical words and concepts are difficult to understand and you do not have the time to dig further.

Needless to say that my interest grew stronger when I saw that the company and its technology as well as its founder were under scrutiny… As I’m very curious I tried to understand.

My first objective was to find the timeline of the events. Interestingly, the fall started in October (2015) like the majority of stock market crashes… Autumn may be the season for distrust or maybe mistrust… (in this case for good reasons!).

Beyond what has been shown and written in the media, it is key to understand the path that led the company in this situation and the potential mistakes made so far. It seems that more experience on board could have helped and maybe avoided misdirection.

Management errors could have doomed the company but the most problematic issue may well be the reputation: not only the company’s one but also the ones of all the other diagnostic start-ups in US and Europe. Investors will be much more skeptical. On the other hand, it also shows that due diligence and analysis (not only financial but mostly technical and scientific) must be done before investing in order to limit and frame the risk.

The media obviously played a significant role in pushing, developing and supporting the hype behind Theranos. The reality of media pressure and the underlying celebrity fame are far from innocent.

Another point, which should have made us raised a red flag, is the fact that none of the big names in biotech investing took a single share of Theranos capital. Well-known investors are generally an excellent benchmark even if they are not immune to failure.

This story is really amazing and I will update this blog post each time I have relevant material to make it easy to follow the case.

So, stay tuned!

 

Relevant sources and articles:

The rise and fall of Theranos – A cartoon history – July 2016

Theranos Doomsday Clock – MedCityNews – February 2016

What Theranos and Elizabeth Holmes Have Always Misunderstood – INC – April 2016

Theranos debacle may scare investors away from diagnostic technology – STAT – April 2016

Theranos’ Lab Problems Go Way Deeper Than Its Secret Tech – Wired – April 2016

The secret culprit in the Theranos mess – Vanity Fair – May 2016

The Theranos Scandal Is Just The Beginning – Fast Company – May 2016

Theranos’ Voided Tests Could Make It a Magnet for Lawsuits – Wired – May 2016

 

Image Source

Top 15 Pharma companies – 2015 performance

Oldremedies

Nearly all of the companies already published their 2015 financial results. Performances varied widely and some clearly outperformed others as in any industry.

The 2015 best company is Gilead: what an amazing performance! In less than 2 years, it reached the Top 15 Pharma companies. More than USD 19 billion of sales had been generated from Harvoni and Sovaldi, both disruptive drugs against hepatitis C. 58% of 2015 sales came from those 2 products. Diversification will be the next challenge for the company.

The table below summarizes the main financial data points for 2015:

2015_Top15Pharma

Teva has not yet published its results at the time of my post. I’ll update it later on.

*For Takeda, the company released only its 9-month results and for comparison purposes I extrapolated the 9-month into a 12-month period.

After populating the table, 2 aggregates have been computed:

  • Total sales in 2015 from Top 15 Pharma companies: USD 487 billion
  • Total R&D expenditures in 2015 from Top 15 companies: USD 82.5 billion

All in all, the big names of the industry spent close to 17% of their sales in research and development.

When we look at the 4th column in the table, year over year growth in constant currencies is between 0 and 8% apart for 2-3 companies like AbbVie (linked to the Pharmacyclics acquisition in May 2015), Bristol-Myers Squibb and Lilly.

Generally speaking, the pharmaceutical industry is still a cash-rich and good performing industry. More challenges will probably come from pricing pressures around the world (and this time not only Europe or Japan, but also from the USA).

 

Image Source

Connecting Innovators in Life Sciences and Information Technologies – Lift Basel Conference 2015 – Day 1

LiftBadge

I had the fantastic opportunity to attend the annual Lift Basel Conference at the end of October. The topics covered as well as the speakers were amazing.

I must admit, it is always refreshing to have access to all those passionate people with jaw-dropping experiences, new companies, innovative business models, renewed thinking (totally out of the box! even without the box!!)…

I really appreciated it and I’m delighted to share the main points with you, one talk at a time with added references on the discussed topic. I hope you’ll enjoy the first day! The second one is coming soon.

 

Synthetic biology today and tomorrow

Rob Carlson
Visions of the bioeconomy

Rob Carlson is interested in the future role of biology as a human technology. He has worked to develop new biological technologies in both academic and commercial environments, focusing on molecular measurement and microfluidic systems. He has also developed a number of new technical and economic metrics for measuring the progress of biological technologies.

Rob Carlson has been precisely predicting exponential drops in the costs of DNA sequencing and synthesis (reading and writing DNA), and resulting impacts on the global economy. The Economist magazine in 2006 identified this as the biotechnological equivalent of Moore’s Law, and named it the Carlson Curve after Rob.

Carlson_Price_Seq_Synth_Feb2014

Source

It was extremely interesting to see him explaining that, in biology, every piece has its purpose and, then, it can be repurposed. Needless to say, synthetic biology has evolved fantastically over time, from a single gene in a single cell to cell-grown organs as shown in the Nature chart below.

History_Synthetic_Biology

Source

Biotechnology will soon take over the other segments of the economy, like chemicals, energy generation,… Biochemicals are already competing today with oil chemicals. According to the last numbers recently published, biotechnology is the fastest growing field in the US economy. Economics are at the center as they are really driving the adoption of those technologies.

For more on Synthetic Biology, have a look at this article written by Tim Gardner: Synthetic Biology: from hype to impact (quote below).

“The promise of synthetic biology lies in its engineering roots. Engineers are trained to define, modularize, stan-dardize, characterize, specify, optimize, and control physi-cal systems in order to deliver reliable, repeatable outcomes. When such approaches are applied to biological experimentation, the results can be marvelous. When measurement systems and data are standardized and qualified, then biological knowledge can be stacked upon other knowledge in an information supply chain distributed across hundreds of thousands of people. If we standardize and improve the quality of biological characterization, then the tools for efficiently designing and building ever more complex systems will soon follow.”

 

Neil Goldsmith
New food ingredients into custom-built organism

Nature has treasures but sometimes we need huge amounts of raw materials to extract flavors or fragrances in tiny quantities. For example, vanilla is regularly made from petrochemicals and rarely extracted from vanilla seed pods as demand is far larger than supply.

Evolva developed a revolutionary technology to brew flavors from yeast.

For example, to manufacture Stevia, a natural sweetner, Evolva takes the genes the plant uses to make that molecule and put those genes into the yeast so it can make the molecule. They then ferment the yeast by brewing, just like with beer. The yeast takes up the sugar, turns it into Stevia and pumps it out; the yeast is filtered off and Stevia is in the «broth» which can be purified out.

Synthetic biology is an iterative process. It is not smooth, you need to go back and forth at each step. However, it has and will lead transformational changes on today’s science.

For more on Food Ingredients:

Synthetic-biology firms shift focus – Erika Check Hayden – Nature 2014

Synthetic biology is cheaper, faster and more sustainable – Elaine Watson – Food Navigator 2014

Widen everyone’s vision of what you can do with biology – Stephan Emmerth – i-net 2015

 

Xavier Duportet
Programmable biological agents

According to Xavier Duportet, editing DNA has become as simple as editing a newspaper. It is now possible to modify the DNA with a repair template.

That’s exactly what he’s doing: using CRISPR/Cas for the microbiome engineering. As we all know, antibiotics are not an adequate solution as they kill all the bugs… Bad and good ones. Eligo Bioscience, founded in May 2014 by Xavier Duportet as well as scientists and professors from the Rockefeller University and the Massachusetts Institute of Technology (MIT), found a fantastic way to tackle this issue: hijack the CRISPR/Cas system of the bacteria. Below a video (in French) explaining the technology.

Their “synthetic biology platform, which combines CRISPR/Cas system with engineered phage capsids, develops “eligobiotics”: a new generation of highly precise antimicrobials. They can program the eligobiotics to eliminate bacteria based on the genetic sequences they carry in their genome. As opposed to traditional antibiotics, their sequence-specific antimicrobials can therefore discriminate between close bacterial strains and selectively eradicate harmful bacteria from the microbiome while sparing the beneficial ones.”

Eligo Bioscience is also working on other diseases such as inflamatory bowel disease, acne. The company owns an exclusive license for the use of CRISP in the antibacterials field.

For more on CRISP/Cas:

Blog entry on CRISP/Cas

For more on Eligo Bioscience:

Xavier Duportet, le défricheur interactif – Laure Belot – Le Monde 2015

Xavier Duportet, « innovateur français de l’année » pour le MIT – Perrine Créquy – La Tribune 2015

Eligo Bioscience Raises €2M to Develop CRISPR Antimicrobials – Conor McClune – Synbiobeta 2015

 

The future of food and beverage

Reto Schnyder
Challenging the cash cows of Big Food

Reto Schnyder expects major disruption in food, especially in the field of business models.

We spend a lot of money on food. The consumer behavior is really changing. More and more online grocery shopping is used, as demonstrated by huge growth rates as well as booming household penetration rates.
Companies are trying hard to stimulate purchases and expand their reach. AmazonDash on AmazonFresh is a wonderful example of what can be done.


Amazon is definitely good at understanding big data and will not put somthing stupid in your basket, it will always suggest you new products to try.

Several other examples help us to understand the changes taking place in the food industry such as HelloFresh, June Intelligent Oven,…

Cooking good food is easier and easier. And this is just the beginning.

Before the food industry structure was: brands – shop – cook.
But now the ranking has changed: cook – shop – brands!

In the cosmetics and toiletries industry, the shaving blades domain has been completely shaken by outsiders, like Dollar Shave Club and Harry’s Blades. They put in place subscription services and Dollar Shave Club took over 10% market share in units in USA.

Lesson learned: easy to attack global power brands as they are not invincible.

Wisdom: how can we make our cash cow irrelevant? Disrupt the market before other companies do it.

More on disruption:

Break Through Ventures

10 Disruptive Business Models – Slideshare – Ouke Arts – 2013

 

Ralph Schmidthalter
Precision agriculture

How can drones can provide wings to farmers? The use of drones, coupled with analytical tools, could help farmers make better decisions.

Field analysis on foot is only giving a partial view of the crops. With a new software technology, Pix4D, it is possible to “automatically process terrestrial and aerial imagery acquired by light-weight drones or aircraft based purely on image content. This desktop software converts images into highly precise, timely and customizable results for a wide range of GIS and CAD applications.”

Experiments and tests are implemented in order to optimize yields. The systems are also helping to decide when and where to start the harvest.
Moreover, it is incredibly useful to detect diseases early by identifying spectral signatures. With the use big data and re-engineering, close monitoring is now feasible. Flight plan is defined in advance in order to optimize which data to record.
Sensefly is targeting multiple industries like agriculture, mining, humanitarian, environmental protection. Vitiscan is fully dedicated to vineyards.

Those technologies and their applications will lead to more transparency on which species to seed, which and how much fertilizers allowing for better quality and quantity of crops as well as improved variety.

More on precision agriculture with drones:

Why 2015 is the year agriculture drones take off – Clay Dillow – Fortune 2015

Drones and driverless tractors – is this the future of farming? – Peter Moore – The Guardian 2015

Bin Bin Pearce
Transdisciplinarity and design thinking

There are two broad schools of thinking: Design Thinking and Scientific Method.

Design thinking

DesignThinking

Source

“Design Thinking is a human-centred approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.”

Tim Brown, president and CEO, IDEO

There is no need to say more than the definition given by Tim Brown. It is really self-explanatory.

When it comes to scientific method, the approach is different.

steps-of-the-scientific-method

Source

In this way of thinking, you try to understand first, then hypothetize and start data collection, once it’s done you can analyze data and select some criteria. Ultimately, you can ask for peer review and then publish your work.

Neither of these methods serve as a path for the solution to more societal problems. It is then fundamental to combine both of them with system thinking and action. Transdisciplinarity is another crucial component toward solutions.

The main message of the talk was: “Whatever you produce and send to the society has an impact on the society itself. It is crucial to develop self-awareness and impact analysis of actions on society.

More on design thinking:

Design Thinking – Tim Brown – Harvard Business Review 2008

What is Design Thinking? – University of St-Gallen

Design Thinking… What is That? – Fast Company 2006

More on transdisciplinarity:

The Potential of Transdisciplinarity – Helga Nowotny

Foundations of transdisciplinarity – Manfred A. Max-Neef – Ecological Economics 2005

Alphabet (ex-Google) is the next big thing in Life sciences

A lot is currently written about the initiatives launched by Alphabet (Google) in the life sciences field.

I had the wonderful opportunity to have a look at the report written by the internet analyst, John Blackledge, from Cowen and I must say that he’s very smart at showing the huge potential of the life sciences at the core of Alphabet (Google).

This report is amazing as it allows you to have a better understanding of what’s happening now inside Alphabet (Google). I summarized the key points/quotes from the report below and I added other articles at the end of this blog post. Moreover, I will update it frequently as the news come in. This is a fascinating topic, I really hope Alphabet (Google) would be able to replicate the same success it has built with its search engine.

Key quotes & comments from the report:

  • Expansion into health care and related segments allows Google to leverage its core competencies in Internet communications technology, data structuring and analysis, and fundamental process reinvention.

 

  • Specific areas of focus in healthcare include:
    (1) the sequencing the human genome and the rise of precision medicine: despite the monumental significance of mapping the human genome and the implications for drug discovery, this was but one step in a long journey that continues to this day. Moreover, genes are but one factor in disease, and little is known about what role environment and lifestyle play.
    (2) the digitization of health data is exploding, with a virtually endless list of sources that can offer insight into clinical data, drug studies and more. As more data is digitized, there will be a profound impact on how patient care is administered, how therapies are researched, and how drugs are tested. EHRs (Electronic Health Records) are crucial but implementation is very challenging. Harmonization and data aggregation need to find their way. Wearables are another interesting topic in the digitization of health data. Social media and discussion boards as well as patients website are essential parts of the system that must be closely monitored as more and more patients use those communication channels in order to provide feedback and comments on treatments and daily struggles with healthcare providers.
    (3) the shift to value-based care, where payments are based on the value of care, is driving a change in how services are delivered and how much consumers engage in the process. From a provider perspective, doctors are incentivized to manage patients to the best possible health outcome at the lowest cost. From a patient perspective,
    consumers are being empowered to take a more active role in their own health care.
    These health care trends are being accommodated by technology advances in areas such as social, mobile, analytics and cloud computing, all areas of Google expertise.

 

  • Alphabet invests in health in five different ways:
    (1) Google Life Sciences originated in Google[x], a research lab within Google that was funded by the company’s board of directors in January 2010 to pursue “moonshots”—audacious new projects that have a low probability of succeeding, but could be truly revolutionary if they do. The company views moonshots as critical in driving the true innovation required to affect revolutionary change and avoid the “incrementalism” or evolutionary change that tends to lead to corporate irrelevance over time. The Life Sciences team is responsible for such innovations as glucose monitoring smart contact lenses. With an expanding list of intellectual property, Life Sciences has begun to accelerate its collaborative efforts with third parties. The company is aggressively partnering with leading players in the health care space on a growing number of programs.
    (2) Calico’s mission is to harness advanced technologies to increase understanding of the biology that controls lifespan. Calico was originally conceived by Google Ventures President and General Partner, Bill Maris, who observed that most companies seek to find treatments for disease and associated symptoms, but that none address the root cause of disease and death. He wondered if studying the impact of aging on genetic material could lead to the discovery of drugs that could address many age-related diseases and significantly extend the human life span.
    (3) Google Ventures has provided seed, venture and growth stage funding to a host of companies in diverse fields, but its stated focus is machine learning and life science investing.
    (4) Google Capital was formed to invest in later-stage technology companies with a focus on emerging technology leaders and potential disruptors. Unlike the earlier stage companies in Google’s other investment vehicles, the later stage companies in Google Capital tend to be fairly common household names. Although the stated focus of Google Capital is on technology companies, the collision of technology and health care is blurring the lines of what a traditional “technology” company looks like.
    (5) Google Core: Over time, Google has invested in numerous health-related initiatives within its main corporate division. These have tended to be very closely linked to the company’s core businesses, such as Search. Earlier this year, the company announced that it will add health information that has been fact-checked by physicians directly to search results. The company is also talking to the FDA about using search query data to identify adverse drug reactions.

 

  • Google’s Health-Related Focus Areas: regardless of where they are housed within Google’s corporate structure, most of Google’s health-related endeavors share common characteristics.
    (1) Longevity
    (2) Genetics and Chronic Care
    (3) Diagnostics
    (4) Diabetes/Digital Health
    (5) Medical Devices
    (6) Telehealth/Digital Health
    (7) Wearables/Fitness

 

  • Google’s health endeavors fit with the company’s goals of “making the world’s information useful” and helping millions of people. Indeed, Google believes that many of the same principles, techniques and problem solving capabilities employed by its software developers can be applied to the massive inefficiencies that exist in health care to create transformational solutions and medical breakthroughs that help people live longer, healthier lives. Health care ambitions can be summarized as:
    (1) Analyze: Analytics to inform decision-making and provide business insight
    (2) Attract: Attract health care constituents to platforms and solutions that drive engagement
    (3) Aggregate: Aggregate data from disparate sources onto the Internet or GCP

 

Additional resources:

Alphabet to help researchers predict disease – Financial Times – April 2017

Google Life Sciences Exodus – STAT – March 2016

Verily, Google’s Health Gambit, Is Stacked With Scientists. Now It Needs to Build a Business – ReCode – December 2015

Google hires mental health expert to lead new life sciences unit – Financial Times – September 2015 (Subscription required)

Head of Mental Health Institute Leaving for Google Life Sciences – The New York Times – September 2015

Google Bets on Insurance Startup Oscar Health – WSJ – September 2015

Is Health Care Google’s Next Big Business After Search? This Investment Bank Thinks So – Re/Code – September 2015

Why Google Is Going All In On Diabetes – NPR – September 2015

Google’s health startup, AbbVie team up on drug research – Chicago-Sun Times – September 2015

Google Life Sciences Company Has New Deal, Official Nemesis in Diabetes – Re/Code – August 2015

Alphabet Breathes New Life, Resources Into Google’s Health Care Projects – iHealthBeat – August 2015

Google Health – Easy as ABC. Alphabet, Calico and the Aging of Humanity – What on Earth are they doing? – Digital Intervention – August 2015

 

Image Source

Open innovation – Is the pharmaceutical industry ready?

Open innovation is a fascinating topic. According to Dr. Henry Chesbrough, who is the co-founder of the Open Innovation Community, “Informally, open innovation is the idea that companies should make greater use of external ideas and technologies in their own business, and allow unused internal ideas to flow out to others for use in their business. It is the antithesis of a closed innovation process which relies on internal R&D and deep vertical integration.”

The traditional business model of pharma (based on blockbuster multi-billion sales generating products) has shown its weaknesses and is today doomed to fail. The industry must reinvent itself and open innovation is thought as one tool among others to help reconnect with R&D productivity and profitability.

What could be the advantages of open innovation for pharma?

  • go beyond the closed model of innovation. Collaborate and try to find the best companies for each project instead of the companies focusing on the same targets with differentiated successes…
  • focus on what you do best. The cost of R&D will thus not be duplicated and will be dramatically lower. It will benefit the industry as a whole.
  • concentrate on specific markets and sell the IP for the other ones.
  • open your R&D to other industries and take a look at them too as cross-fertilization could lead to fantastic and awesome ideas.
  • expand your network to exchange ideas and challenge your own ones.
  • use crowdsourcing when you are stuck. Somebody in the world has maybe already encountered such an issue or the wisedom from the crowds could help you.

Companies like AstraZeneca and Eli Lilly have already started their own transformation by opening up to the external world. They are not alone and the transformation is on track…

As a conclusion, I propose you to watch an pretty old but excellent TED Talk on the subject, not dedicated to the pharmaceutical industry. He talks about the role of consumers and end users but also about the fact that creativity is both collaborative and interactive. The pharma industry absolutely needs (an it has already started to do it!) to think out of the box. It has definitely to look toward other industries to learn from them. Another point highlighted by the speaker is the fatal error of looking for incremental innovation instead of striking/disruptive innovation because of the perceived risk. We know that big companies are far more risk averse that smaller ones. Attitude has to change.

Additional resources:

Measuring Open Innovation_Creativity_Innovation_Management_2015 – A brilliant article on how to measure open innovation

Open Innovation in Pharmaceutical Industry: A case study of Eli Lilly – Master of Sciences Thesis by Borja Hernandez Raja & Priyadarsini Sambandan – 2015

Managing innovation in Pharma – PriceWaterhouseCoopers – 2014

Restructuring The Pharma Industry Mizuho 2014 – On page 30, the open innovation model is compared to the traditional model. This report brings to light which company leads the way when it comes to open innovation.

Connecting Knowledge: How big pharmaceutical companies invest in Open Innovation? – Futuribles – 2014

Models for open innovation in the pharmaceutical industry – Drug Discovery Today – 2013

Pharmaceutical Innovation Hits the Wall: How Open Innovation Can Help – Forbes – 2011

JNJ_Open Innovation An Imperative for the Pharma Industry_BIF_Spring_2010 – An excellent presentation by the head of external research at JNJ

Is open innovation the way forward for big pharma? – Nature Reviews Drug Discovery – 2010 (subscription required)

Future of OI – R&D Management – 2010

Pharma 2020: Challenging business models – PriceWaterhouseCoopers – 2009

Image Source

A Better Understanding of the US Drug Pricing Landscape and Financial Risks Associated – Health Affairs Blog

An excellent article posted on the Health Affairs blog takes a step back regarding US drug pricing and the financial risks associated with drug development well beyond the clinical trials stage.

Key quotes from the article:

  • It may be helpful for the policy discussion to think of a drug’s value as the clinical performance and patient outcomes, while the price reflects both the value and the growing uncertainty around in-market risks of market consolidation and restricted access, branded therapeutic competition, mandatory discounts, and restrictive coverage policy.
  • As competition heats up, each sector and each entity strives to reduce input costs and maintain or improve prices — and consolidation can be an important tool to accomplish these goals. Specific to biopharma, consolidation strengthens payers’ and providers’ ability to press for drug discounts that are contractual, proprietary, and confidential.
  • Net lifetime revenues of new biopharma therapies declined from profitability in the late 1990s to slightly negative profitability by the end of the first decade of 21st century.
  • In addition to cross-sector market competition through payer and provider consolidation, there is growing intra-sectorial competition among generics, biosimilars, and branded therapeutic alternatives.
  • We should not underestimate the potential effect of mandatory price discounts on drug launch prices.
  • In-market risks for biopharma are very significant today. Because of rapid changes in the market environment, revenue expectations established when the decision is made to proceed with product development can be very different than actual revenue several years later when a product is launched.

 

Additional Resources

When Is a Virtual Business Model Suitable for Biopharmaceutical Companies? – BioProcess International – 2015

Understanding the pharmaceutical value chain – IMS Institute for Healthcare Informatics – 2014

Innovative Business Models in the Pharmaceutical Industry: A Case on Exploiting Value Networks to Stay Competitive – International Journal of Engineering Business Management – 2014

The Real Cost of “High-Priced” Drugs – Harvard Business Review – 2014

Rapid growth in biopharma: Challenges and opportunities – McKinsey – 2014

 

Image Source

Google Willingness to Help Life Sciences – Wired

Google, or Alphabet, wants biomedical research and life sciences to be more than just side projects.

Several years ago, its efforts under way in that field were probably not considered seriously by the industrial stakeholders like Big Pharma and biotech companies.

Today it is different after several investments commited lately.

Discover more in the Wired article

 

Additional Resources

4 of the biggest healthcare challenges Google is tackling – HealthcareDIVE – August 2015

Here’s why Google Ventures invests so much money in life-science companies – Business Insider – May 2015

Andrew Conrad – Google Life Sciences – The 25 most influential people in biopharma in 2015 – FierceBiotech – May 2015

Google Continues To Build Upon Its Life Sciences Ecosystem – Forbes – September 2014

Meet the Google X Life Sciences Team – WSJ – July 2014

 

 

Image Source

Allergan & Teva – Two sides of one table

Deals

Allergan (former Actavis) is restructuring its operations with the divestment of its generics business to Teva for approximately USD 41 billion in cash and stock ($33.75 billion in cash and Teva shares valued at $6.75 billion, giving it a 10% stake in Teva).

But it’s not done. According to an interview with the Financial Times, the CEO, Brent Saunders, is eager to sign another mega deal with the proceeds from the sale mentioned above. Allergan can then be put on the list of serial deal makers.

On the other side of the table, Teva is about to join the club of the biggest pharmaceutical companies. According to a Business Insider UK article, “Allergan’s generic business is generally seen as a better fit than Teva’s previous target Mylan because it will improve Teva’s distribution channels and because Allergan is strong in so-called biosimilar drugs.”

In the generics market, Teva will stay one step ahead of Novartis Sandoz division (estimated proforma 2014 sales of USD 15.7 billion for Teva-Allergan vs. USD 8.5 billion for Novartis Sandoz division).

In this context, Teva will probably drop its pursuit of rival Mylan, which in turn will be able to focus on buying Perrigo.

Additional links:

Allergan signals appetite for new mega deal after $41bn disposal – Financial Times (Subscription required)

A $40.5 billion deal with Allergan will make Teva one of the biggest drug companies on the planet – Business Insider

Teva to Buy Allergan Generics for $40.5 Billion – WSJ

The Last-Minute Phone Call That Spurred Teva-Allergan Deal – Bloomberg

Image Source

With Big Data & Digital Health – New Collaborations are Emerging in the Pharma Industry – PWC

TeamWork

A newly published report by PWC reveals novel collaboration models for improved value of medicines

“Driven by empowered consumers and connected technology, the New Health Economy is shifting business incentives from volume to value with a focus on health outcomes beyond the clinic.”

Big data together with EHR (electronic health records) and wearables drive patient empowerment. Today, more and more, people have their say in treatment choices. Actually, health benefits and prices are crucial criteria for decision, especially as patients face today higher out-of-pocket expenses than ever before. We all well know that expensive treatments are financially disastrous for patients as mentioned in one of my previous posts.

Currently, increased focus is put on drug cost effectiveness as we switch progressively from a fee-for-service to an outcome-based world. Every treatment should be precisely calculated in order to be sure that it is optimized for all stakeholders from all points of view. In this context, already last year, PWC highlighted the beginning of a new system: the New Health Economy, where outcomes and quality are rewarded (instead of volume). It is the continuum of what has been started by Michael E. Porter several years ago.

All these changes have essential meanings. Therefore business models need to adapt to current trends: digital is unavoidable; purchaser perspective is necessary; patients need to become partners; regulatory changes have to be anticipated.

Adapting business models is fantastic but not sufficient. Novel collaborations are needed to optimize them for long-term success. All the stakeholders have to be integrated and blended by the biopharma companies: government agencies, insurers (payers as a whole), new entrants, consumers. Beyond collaborations, a consensus on the value of new medicines should be agreed on. Additionally, consumer and patient health information should be leveraged to improved personalization and precision of treatments.

In one word, several changes will flow the industry and challenges will pave the way to success. But it will become much more exciting to develop drugs in this context than ever before!

Report: PWC-21st-century-pharmaceutical-collaboration-July2015

 

Image Source

Partnering with patients in the development and lifecycle of medicines – TIRS

Infusion

A wave of new articles on patient-centric drug development flooded the news during the last weeks

It is not a new concept. A task force was started back in 2003 by ISPOR on this topic and several thinkers proposed this vision even before.

One of the more comprehensive article on this topic is the Call for Action written by several experts in the field both in the industry and academia as well as people coming from patient associations, together for the development of a master framework for systematic patient involvement.

Several stakeholders are committed to the success of a specific medicine: researchers, developers, industrials, regulators, insurers, doctors,… but very often they all forget about the main and the most important among them: the patient. He or she is the one taking the drug, benefiting from care or even cure in some cases but also suffering from side effects.

At each stage of development, involving and engaging the patient will bring advantages (pages 8 and 9 of the article gave great figures about them):

– Early research: better prioritization, improved resource allocation, clinical trial protocols reflecting patient needs, superior recruitment rates.

– At launch and beyond: more appropriate benefit-risk assessment, focus on drugs of value to patients, improved treatment adherence.

A part from e-patients blogs, dedicated societies emerge in order to make coordination effort toward common goals like the Society for Participatory Medicine: “Participatory Medicine is a model of cooperative health care that seeks to achieve active involvement by patients, professionals, caregivers, and others across the continuum of care on all issues related to an individual’s health. Participatory medicine is an ethical approach to care that also holds promise to improve outcomes, reduce medical errors, increase patient satisfaction and improve the cost of care.”

In conclusion: “It is essential that all stakeholders participate to drive adoption and implementation of the Framework and to ensure that patients and their needs are Embedded at the heart of medicines development and lifecycle management.”

 

You probably remember the fascinating talk given by e-patient Dave in 2011 during TEDxMaastricht. Dave deBronkart said as an introduction that patients need to be much more involved in order to drive better healthcare as well as superior patient outcomes. The future is now!

 

Additional material

What’s Next for Patient-Focused Drug Development? FDA Announces Final PFDD Meetings, and BIO Recommends Broader Use of the Benefit-Risk Framework – 2015

Partnering with patients in the development and lifecycle of medicine – 2015 – Therapeutic Innovation & Regulatory Science

Integrating the patient perspective in the assessment of benefits and risks of medicines – ISPOR 2014 Workshop

Finding the patient in the drug development process – F. Lewis-Hall (Pfizer) – ISPOR 2013

Toward Patient-Centered Drug Development in Oncology – 2013 – NEJM

 

Image Source

Can Finance Cure Cancer? Andrew W. Lo Talk at the University of Geneva – June 29th 2015

I had the chance to attend this refreshing talk about what finance could do to help drug development. My summary of the talk is shown below.

CanFinanceCureCancerAWLGenevaJune2015

 

The Rise of the Empowered Health Care Consumer – Deloitte Dbriefs Health Sciences Series

Deloitte-Debrief-EmpoweredConsumer-June2015

An excellent webcast took place yesterday.

The key points are above on the MindMap I did. The presentation is available here: Deloitte_Dbriefs_Empowered_Healthcare_Consumer_Jun2015

The main take-home message: companies really should include the new health care consumer as a stakeholder. The patient has now more power than ever. He/she is more informed, more connected, more commited but also more demanding.

Medtronic – The Digital Pancreas – The Future of Diabetes Management? – Fierce Medical Devices

pancreas

A truly interesting article of the transformation of Medtronic Diabetes business

2015 could be a year to remember as the start of a new era in improved diabetes management thank to digital tools.

Diabetes management at Medtronic & deals history

It started several years ago but back in May 2001, a transforming event took place: Medtronic bought Minimed as well as an affiliated company for USD 3.8 billion. Looking only at Minimed, Medtronic paid USD 3.28 billion for USD 400 million in sales (8.2x 2001 sales). Despite its price, quoted as high by some investors and analysts at that time, the deal rationale was pretty compelling as it allowed Medtronic to enter the diabetes management arena. MiniMed offered a beachhead into the field of technological management of diabetes, one of the fastest-growing chronic diseases in the world and one that affects an estimated several millions of people. The devices produced by MiniMed help patients manage their insulin needs and monitor glucose levels.

Since 2001, several deals and partnerships paved the way up to where Medtronic is today. After having a look at my deals database, I can say that some of them clearly stand out:

November 2004: agreement with Novo Nordisk on prefilled insulin cartridges;

– August 2007: co-promotion & co-marketing with Lifescan and Bayer of blood glucose meters (in USA together with Lifescan and outside USA with Bayer extended in 2011). These devices had wireless data transmission to insulin pums;

May 2009: strategic marketing collaboration with Eli Lilly on patient education and disease management;

June 2009: acquisition of PreciSense, a medical device company developing CGM (continuous glucose monitoring) technology. A step forward for “closed loop” systems dedicated to insulin delivery;

January 2013: research collaboration with GI Dynamics on EndoBarrier;

August 2013: acquisition of Cardiocom, a developer and provider of integrated telehealth and patient services for the management of chronic diseases;

June 2014: global strategic alliance with Sanofi, aimed at improving patient experience and outcomes for people with diabetes around the world. The priority is the development of drug-device combinations and delivery of care management services to improve adherence as well as simplify insulin treatment.

Medtronic has built its Diabetes franchise over the last several years and is still fully committed to be the leader in this field. This pledge could lead to the achievement of the digital pancreas, a fully autonomous device (closed loop system) monitoring blood glucose continuously and adjusting insulin doses as perfectly as the biological pancreas without human interaction. Some researchers already have prototypes, studies are ongoing, universities and hospitals are teaming up. The field is really at its boiling point!

Deals and partnerships in 2015

In this FierceMedicalDevices article, we can see Medtronic advancing its franchise by investing with determination and dedication in new technologies.

Many partnerships have been signed in 2015: Diabeter (a diabetes clinic and research center dedicated to providing comprehensive and individualized care for children and young adults with diabetes), DreaMed (artificial pancreas technology for integration into future Medtronic insulin pumps). Beyond healthcare companies, Medtronic is also expanding its network into consumer electronics with Samsung (integration of mobile and wearable devices to improve disease management with an Android mobile app) and diabetes data with a startup called Glooko. It also partnered with IBM Watson Health for next-generation disease management solutions.

All these deals are clearly accelerating innovation at Medtronic but in a patient-centric fashion as in every deal we can see the benefits for them and the management of their disease. What could be the next step? A deal with Apple in order to nearly fully cover all the mobile OS in the world.

For my conclusion I will quote Medtronic CFO, Gary Ellis: “We’re focused on transforming our diabetes group from a market-leading pump and sensor company into a holistic diabetes management company focused on making a real difference in outcomes and costs,” summed up Medtronic CFO Gary Ellis on the most recent quarterly conference call.

 

Image Source

Mergers & Acquisitions: what are the current key trends for the pharmaceutical industry? – KP

Handshake2

2014 was spectacular and fascinating with a lot of deals… What’s next?

Tremendous amount of reports have been produced (some of them, a selection from the bests, are at the bottom of this post). Rumors are sometimes saying it’s the end on Monday, it’s just the beginning on Tuesday and sky is the limit on Wednesday…

Internet serendipity is great! Indeed, I came across a very interesting website offering free reports on the pharmaceutical industry: Kurmann Partners. Just have a look! They are M&A consultants for several industries (I do not work for or is paid by them).

They put online another useful tool which will be a good starting point to look at M&A multiples: a visualization tool offering several types of charts to monitor the M&A activity over the years from different standpoints and for private companies: Multiples. Below is an example of a chart you could find.

KP_RevenueMultiples_EBITDAmargins

2015 – What happened up to now and what’s ahead?

The trend seems here to stay as there is still a need to replenish pipelines and build a competitive advantage in specific therapeutic areas. I suppose that some domains will attract more buyers than others like immuno-oncology (a very hot topic today), antibiotics (as the governements are trying to incentivize companies). More generally, all therapies that could stand out from the crowd by being innovative (and not “me-too“-improved version of already existing drugs) will attract opportunity hunters.

 

Additional resources:

2015 Global life sciences Outlook – 2015 – Deloitte – Starting on page 8, you have a overview of the deals that happened in 2014 and some thoughts on what could happen next

Royalty Rates and Deal Making Survey – 2015 – IMS – This short report gives a very good overview of a large survey (that can be bought) realized by IMS on royalty rates and deals during the first months of 2015. Access it here: 2015_RoyaltyRateDealmakingSurveyOverview

Global M&A report – Pharma/Biotech 2015 – 2015 – IMAP

Firepower fireworks drive record M&A in 2014. What’s ahead for 2015? – 2015 – Ernst & Young

HBM Pharma/Biotech M&A Report 2014 – 2015 – HBM Bioventures – It is a very interesting overview with a perfect coverage of the topic, from an global overview to some detailled analysis of the deals done by public as well as private companies. It is a MUST-HAVE.

 

Image Source

Defining Digital Medicine – Nature Biotechnology

Notes from the AppsWorld Europe 2013 panel "The Internet of Things Revolution - Functional, Usable, Wearable" with Tamara Roukaerts, Saverio Romeo, Paul Lee, Ben Moir and Mike Barlow.

Notes from the AppsWorld Europe 2013 panel “The Internet of Things Revolution – Functional, Usable, Wearable” with Tamara Roukaerts, Saverio Romeo, Paul Lee, Ben Moir and Mike Barlow.

Healthcare transformation ahead

In this excellent article from Nature Biotechnology written by people at PureTech, we have the chance to get an overview of this new exciting field: Digital Medicine.

This convergence of technology and health will lead to several transformations: disease management, research, clinical trials, medical practice,… A new era is beginning!

However, opportunities are doubled by challenges. We need to tackle the lasts to profit from the firsts.

Definition

Why do we use digital medicine instead of digital health? According to the authors, digital health is too broad as it also includes apps and products not medically validated but simply focused to enhance people’s wellness and wellbeing.

Digital medicine is defined by “technology and products that are undergoing rigorous clinical validation and/or that ultimately will have a direct impact on diagnosing, preventing, monitoring or treating a disease, condition or syndrome.” (quote from the article p. 457)

Digital medicine themes

1. Continuous and remote monitoring. A tool to detect disease earlier leading to lower healthcare costs.

2. Digital phenotype. A additional layer of information enabling the construction of more accurate disease models in order to better understand them.

3. Remote disease management. Chronic disease management will be nearly effortless and the lack of data gap will allow doctors to improve their medical follow-up of patients.

4. The connected patient. The empowered patient. The engaged and sharing patient. Communities of patients.

5. Interpreting the data torrent. The challenge of integrating large and heterogenous datasets could be solved one day with powerful algorithms and machine Learning.

6. Security and privacy. The obtention of the patient’s consent is crucial and should be much simpler than today.

7. Opportunities and challenges. Increased scientific evidence but reimbursement issues, new field of research based on wearables, changes to patient-doctor interactions, integration of patient-specific data by the doctor.

Conclusion

Digital medicine is unavoidable and doctors will have to integrate this trend in order to optimize their relationships with their patients by empowering them and maintaining a two-way discussion toward a unique goal: better patient outcomes.

Nature Biotechnology Article (free)

More on Digital Medicine

Have a look at my posts on this topic.

Why Digital Health Has Not (Yet) Transformed Pharmaceutical Drug Development – 2015 – Forbes

Rock Health Founder On The Future Of Digital Medicine – 2015 – TechCrunch (Video)

Top 20 Technologies that Will Change our Lives: Next Up – Digital Medicine – 2014 – Forbes

How Digital Medicine Will Soon Save Your Life – 2014 – WSJ

Medicine goes digital – 2009 – The Economist

Digital Medicine – Implication for Healthcare Leaders – 2003 – Healthfutures.net (a nice document from 2003, projecting the reader in 2013… with futuristic visions sometimes…)

What is digital medicine? – 2002 – D. W. Shaffer (the first article on the subject)

 

Image Source

How to determine R&D’s productivity – McKinsey

Test tubesMcKinsey experts led by Eric Hannon, worked on a unique formula to help innovative companies value the productivity of R&D activities

They explained the issues in trying to estimate the performance of R&D. Some ratios like R&D in % of sales as well as the % of new products launched over the last two years can be used but unfortunately they are not capturing the reality.

They worked on this challenge, designed a unique formula and tested it in real corporate life.

The approach

R&D outcomes = multiplying a project’s total gross contribution by its rate of maturation and then dividing the result by the project’s R&D cost.

The advantages

1. A single metric

2. Goal to measure what R&D contributes within the sphere of what R&D can actually influence

3. By measuring productivity both at the project level and across the entire R&D organization (through simple aggregation), it endeavors to speak to the whole company

The ratio & its key components

McKinseyRDRatio

Total gross contribution is the product’s economic value to customers. It is best calculated, I think, with a NPV.

Achieved product maturity is how close it is to verifying and validating its technical and commercial requirements. The implication is that companies must be able to assess, in real time, how close their R&D projects are to full maturity (simply looks at critical dimensions (such as cost, functionality, and quality) during each of the quality gates a project passes through in its development).

For pharma companies, I think that the numerator of the formula could be the rNPV for a specific project (or the aggregation for all the projects of the company). Have a look at my lectures on valuation if you would like to find out more about rNPV.

Consumed R&D costs are easy to find.

Management impact

This formula will help the management in several fields:

1. Setting direction

2. Improving teams

3. Making objective décisions

4. Driving change

McKinsey Article

Other resources:

Is R&D earning its investment? – 2010 – Deloitte

Measuring the return from pharmaceutical innovation – 2014 – Deloitte