Consolidation - the end of the big pharma model?

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Since the year 2000, what has Pfizer done?  Back in 2000, when I was at Wyeth, we were in the midst of merger talks with Warner-Lambert.  Warner-Lambert had acquired Parke-Davis in the 1970s and Parke-Davis had an antibiotics research group – so I was interested to say the least.  Then, just as things were about to draw to a close, Wyeth management was pushed aside by Pfizer, who apparently came in with a bigger pocketbook, and Pfizer became the acquirer, not Wyeth.  With Warner-Lambert, Pfizer also got Agouron, a hot new antiviral research group on the west coast that had several promising compounds in development.

In 2002, Pfizer acquired Pharmacia.  Pharmacia previously had acquired Upjohn, another antibiotics company, and Monsanto-Searle which had the very promising anti-inflammatory drug, Celebrex, in its late stage pipeline. This was a another case where Pfizer beat out Wyeth in the merger discussions to become the “winner.”  Celebrex did not turn out to be the barn burner it was predicted to be. And,  of course, in the ultimate “insult,” Pfizer acquired Wyeth last year.  How much did all these acquisitions cost?  $68 Billion for Wyeth alone.  

What has all this consolidation done for Pfizer?  Well, it allows them to obtain additional products and revenues while shedding jobs at the same time.  How many jobs have been lost from Pfizer and its acquisitions since 2000?  I don’t know.  100,000?  When I think about this in terms of antibiotics, we have now lost Upjohn and Parke-Davis antibiotics research partly as a result of Pfizer’s consolidation.  Wyeth had already cut their antibiotics research group prior to the Pfizer take-over.

Has the strategy worked?  Not if you look at market capitalization as shown in the chart above.  Since 2000, when Pfizer’s market cap was $264.2 Billion, it had shriveled to $119.6 Billion as of the end of 2009.  What about needed new medicines?  Have there been any additions to the Pfizer medicine chest as a result of all this?  If so – they haven’t been enough to stop an inexorable slide in investor value for the company.

The depressing part of the story is that Pfizer is not alone in its hunger for consolidation to salve its sorry pipeline.  Most of the large pharmaceutical companies have been pursuing a similar path with similar losses in both research, especially antibiotics research, jobs and market valuation.   To me, these data provide compelling evidence that the large pharma model is dying if not already dead.  We need a new way forward that I believe will involve much smaller and more nimble companies.

Skin No. 3 - the FNIH

Sometime in early March, the FDA let it be known through the Infectious Diseases Society and others that they no longer knew how to set a non-inferiority margin for designing trials in serious infections of skin and skin structures (ABSSSI).  Since then, there have been a number of conversations with the agency including my own that I described in a previous blog (http://antibiotics-theperfectstorm.blogspot.com/2010/04/skin-infections-follow-up.html).  The latest of these took place under the aegis of the Foundation for the NIH.  The reason for this gathering on May 5 was to explore whether there was a need for the NIH to carry out actual developmental work (clinical trials) to help establish the validity of endpoints in the study of complicated skin infections.  I was not invited to the meeting.  But – luckily – I have friends who were invited who provided me with the slides they presented. George Talbot, who organized the meeting, has sent an executive summary that he says is a public document. 

At the meeting, Ed Cox divided the possible process to select endpoints in the study of skin infections into three “Tiers.”  1) Current endpoints are acceptable and no modifications or studies are needed.  2) Development work is still needed but can be “piggybacked” onto ongoing or proposed trials.  3) Development work is required which must be carried out de novo, outside of current trial designs.   It would be within the last category that the NIH might be called into action.

Presentations by John Quinn of Pfizer and Philippe Prockocimer of Trius on trials of linezolid and TR-701 respectively, demonstrated that halting of spread of the lesion occurs in modern trials in a way similar to what was observed in the sulfonamide trials of the 1930s.  The same was actually true of fever, but in modern trials only 10-20% of patients were febrile.  As a biomarker, the lesion of ABSSSI is clearly on the disease pathway since it reflects bacterial multiplication, release of inflammatory factors, etc. and an antibacterial agent’s inhibitory effect on bacterial growth will lead to stabilization and then regression of the lesion. The working group at the meeting reached a consensus that this was both a feasible and desirable endpoint.  It is readily observable, it correlates with ultimate clinical outcome, and it allows for the enrollment of a diverse patient population. They rejected requiring fever for entry into trials since this would not be representative of the population to be treated in the real world and since it would render the trials much less feasible. The working group also recognized the need to ascertain some more sustained response at a later time point.

The FNIH working group will follow up these meetings to discuss a number of remaining questions.  Originally, they were also supposed to have discussed community-acquired pneumonia as well, but they focused on skin during the May 5 meeting.  Follow-up meetings could address pneumonia as well as some remaining questions on skin infections.

This is all interesting, but I wonder if it can possibly have any effect at all on the draft guidance on trial design in skin infections that the agency has said was to appear imminently (around July).  I believe, however, that the FNIH discussion is in line with what the agency will propose in their guidance in any case.  The remaining questions for me, that were not listed in proposed agendas for future FNIH meetings, are; 1) What will the non-inferiority margin be given that the treatment effect of antibiotics on halting the spread of lesion measured at 48-72 hours is well over 30% when compared to UV light treatment which, itself, is more effective than placebo? 2) Will prior antibiotics be proscribed given the potential effect on an early response? (I suspect we can already assume that prior antibiotics will not be allowed). 3) If only cellulitis is studied, in the context of wound infections, ulcers, abscesses, etc., will the label require cellulitis or erysipelas?  How restrictive will the language be and will the FDA force physicians into situations where off-label use is the rule or is very common?  Given a reasonable NI margin, I believe that the trial design as contemplated will be feasible and clinically relevant (thank goodness).  But until the draft guidance appears, we remain in a sort of limbo. 

I understand that the FDA is providing guidance to those companies caught by this reconsideration of design in skin trials, but I have no insight into what this guidance could be.  Forest seems especially vulnerable since they have already completed their pivotal trials and submitted their NDA to the agency. 

As far as I can tell, there has been no substantial progress in the pneumonia discussions.  I do not know where the agency is now in their thinking. I understand from at least one company that the FDA has been very helpful in the design of their trials in pneumonia. As always, for both skin and pneumonia, we await further developments.

Antibiotics - choosing a career.

Why did I leave the security of academia to work in the pharmaceutical industry?  I get this question a lot, especially from students and post-doctoral fellows.  I was a tenured professor of medicine at Case Western Reserve University.  I had ample grant funding and a moderate size research laboratory working on bacterial resistance to antibiotics. I liked clinical medicine to which I devoted about 25% of my time.  Why give that up?

First, the university isn’t as secure as many think it is. Tenure doesn’t necessarily mean anything practical.  In my case, tenure in the department of medicine guaranteed little in terms of actual salary support should I lose my position for one reason or another. Politics can make things difficult (not an issue for me).  Applying for grant funding constantly is no fun.  My last year or so, I applied for 11 different grants of which four were funded.  Writing was becoming almost a full time job. 

Luckily, two of those grants, along with my full time appointment at the Veterans Administration medical center, allowed me to undertake my second sabbatical year in France working with Pr. Laurent Gutmann.  The project we designed involved a multi-laboratory collaboration including facilities and scientists at Smith Kline Beecham outside of London where I was also consulting at the time. 

I fell in love with that style of research. Every lab contributed something different and complementary to the research.  The project was a priority at some level for all the participants. The key ingredient was the technology supplied by our pharmaceutical company partners that underpinned all of the experiments for the entire endeavor.  We would travel back and forth from Paris to London with our samples (bacterial extracts – not dangerous – not to worry), or we would send them by courier when necessary.

After my year in Paris, I returned to my lab in Cleveland.  Within just a few months, I came to recognize something I think I had always known but ignored.  In collaborative projects in academia, your project is almost never your collaborator’s highest priority.  Their interest is focused on their own grants and projects first. I also found that gaining access to the technology I used at Smith Kline Beecham in Cleveland was going to be a major undertaking requiring another round of grant submissions just to fund the purchase of the equipment.

At the same time, I had been receiving calls from headhunters looking to place me or someone like me in executive research positions in pharmaceutical companies.  I was being pursued seriously for two positions, one in a rather new biotech company in Boston and the other at Wyeth.  This coincidence of events forced me to carefully examine what I wanted to do with the rest of my life and how I would get there.  I chose Wyeth and worked there for the next six years.

Every grant I wrote (almost) had a sentence stating that if only we had the results from the experiments I was proposing, we would be able to use this new understanding to design new antibiotics active against resistant bacteria. But after 16 years of writing these grants, I was no closer to having anybody actually use my data to design a new antibiotic.  Why?  Because I didn’t know the first thing about what it took to design or discover a new antibiotic.  In reflecting on this reality, I came to understand that I could accomplish a number of very desirable goals only within the context of the industry.  I think that, mostly, this is still true.

1. I could materially contribute to the discovery, development and delivery to the marketplace of new antibiotics active against resistant bacterial pathogens.
2. I could participate in collaborative research where the project was everyone’s priority.
3. I would have access to the latest in technology to achieve defined research objectives.

For me, all of this came true.  I’ve never looked back.  Don’t get me wrong, working in the pharmaceutical industry, large and small, is no walk in the park (especially large pharma).  There are numerous downsides that I will explore in some future blog.  But to me, it all was and remains extremely rewarding.

Life in Big Pharma

In October 2001 I was the Vice President for Infectious Diseases and Co-leader (with a marketing colleague) of the anti-infectives therapeutic area for Wyeth.  I was happy (relatively).  Tigecycline, our most advanced antibiotic, was moving through the clinic and results were looking good (aside from some nausea and vomiting – don’t laugh).  We had placed a new drug for hepatitis C in clinical trials along with our partners at ViroPharma.  Our new program to find novel broad-spectrum B-lactamase inhibitors was showing astounding early success.  I had been at a meeting in Boston and was about to take the slow road home to New Jersey by driving through some great country for Fall colors. 

As I got in the car, my cell phone rang. It was the President for Research and Development at Wyeth (Dr. R.) – my boss’s boss.  He rarely called and when he did, it was usually for some problem.  He said that he had been watching the rapid abandonment of antibiotics research by other big pharmaceutical companies like Lilly, Roche, Bristol Myers Squibb and others.  He wondered why Wyeth should stay in the area.  The ground fell from under me.  I babbled some sort of response.  Dr. R. said that he had already discussed the question with his superiors (the upper stratosphere at Wyeth) and they were interested in reviewing the question.  Having found my footing, I posed my own question.  Why were we in the anti-inflammatory field?  The only drug we produced since Advil came from outside – not from our own efforts.  Why were we still in Neurosciences – we had produced nothing since Effexor?  At least in Infectious Diseases we had a blockbuster antibiotic - piperacillin-tazobactam - whose sales were continually increasing.  He didn’t exactly agree with me. 

Our call did not end on a happy note, but I didn’t hear anything more from him for another month or so.  The next call from Dr. R came towards the end of the year and was a proposal to carry out a review of all the therapeutic areas.  The ID review was ultimately scheduled for May of 2002.  This caused a flurry of activity for the entire anti-infectives therapeutic area team.  Marketing got into high gear.  We studied the entire market backwards and forwards. We then made risk adjusted market predictions for tigecycline and our emerging B-lactamase inhbitors as well as our Hepatitis C program. It was a great learning experience for me.  All this resulted in a presentation to top management in May of 2002.  The result was an assurance and a handshake agreement with the CEO of Wyeth that anti-infectives was here to stay.  The next month, I left to take on a new job at Idenix, a small antiviral biotech in Cambridge, Mass.  By the summer of that year, Wyeth lost a large part of their sales revenues because of issues around their Premarin birth control franchise.  By November, Infectious Diseases research at Wyeth was history.  They kept about 10 people out of almost 100 to support tigecycline, which was starting its Phase III trials.  A few others were employed in other areas of Wyeth and many were simply “let go.”  So much for process, fairness and hand shakes.

In spite of this, tigecycline went forward and has achieved good success both clinically and in the marketplace.  The hepatitis C program failed in the clinic over the course of almost 6 drug candidates – still championed by the ViroPharma partnership that Wyeth maintained. The B-lactamase inhibitor program lingered in purgatory with no one in a position of power to champion the program for 6 years until the company finally decided to go forward with the lead compound into the clinic.  That lead compound was synthesized back in 2001 or 2002!  I understand the program has now been put on hold once again at Pfizer (after their purchase of Wyeth last year). Most of the folks involved with tigecycline from marketing and the few left in the research area to support the drug took early retirement or were dismissed during the Pfizer takeover. Pfizer, the proud owners of Wyeth, still has an antibiotics program, but in their announcements over the last several years, has not included antibiotics among its “core” areas – always a bad sign.

I wish I could say that my experience was unique or somehow atypical for large pharmaceutical companies. But I fear that the opposite is more likely to be true.  These large behemoth companies focus on their bottom line from one quarter to the next.  Anything that increases the risk for the bottom line can become a target for the number crunchers.  All the meetings, data, presentations and the work to prepare it all count for little when the financial push arrives.  Yet, these large companies are very fond of process and meetings both low level and high level.  The process and meetings slow decision-making and make the companies unwieldy in a rapidly changing world.  At the same time, when a decision has to be made rapidly, the result is frequently, and not surprisingly, poorly considered as was the jettisoning of antibiotics research by Wyeth. 

Treatment of Cancer vs. Antibiotics for Infection

I see that the first therapeutic vaccine for cancer was approved recently (http://www.nytimes.com/2010/04/30/health/30drug.html).  This particular product is a difficult one.  A sample of the patient’s own immune cells are removed, treated with a protein or peptide derived from prostate cancer and then re-injected into the patient over several treatment courses to help fight their own prostate cancer.  The treatment improved survival in end-stage patients from 21.7 to 25.8 months.  After 3 years, 32% of vaccine recipients were still alive compared to 23% of those who did not receive it.  The treatment will cost $93,000 and only 2,000 treatments will be available from the company (Dendreon) initially. 

This represents a major advance in cancer therapy since it is the first example of an efficacious and specific therapeutic vaccine.  Scientists have been working for decades to make this work and it finally has.

Science aside, lets compare this result to the treatment of infections caused by bacteria like pneumonia, serious skin infections, wound infections, and others.  These infections, untreated, kill between say 15 and 80% of their victims.  Antibiotics reduce this mortality to anywhere from 0.3 to 15% or so.  Not bad.  Not only that, but patients treated with antibiotics are cured of their infection – not usually the case for cancer victims.  For this cure, patient take a few days of pills or they may have to spend a week or two getting intravenous therapy at home, in a chronic care facility, in a hospital or some combination of these.  Generic antibiotics in pill form can cost as little as pennies per day.  The most expensive of antibiotics will cost about $1800 for a 10-day course of therapy (cost from the pharmacy).

How lucky can we get?  Of course, this luck won’t last long if we continue to stick our heads in the sand and ignore growing antibiotic-resistance in bacterial pathogens.  And the first step in getting back on track must be the FDA.  The industry, both large and small pharmaceutical companies, and the FDA must find a way to work together to bring needed therapies forward to the marketplace.  In this regard, my own view is that the FDA lost its way more than industry has.  For more details, you can see my previous blogs (http://antibiotics-theperfectstorm.blogspot.com/2010/03/earthquake.html).  But if the FDA cannot find its path forward, and the industry cannot follow, we are doomed to a future with more resistant bacterial pathogens and fewer and fewer antibiotics to fight them.  In a future that I hope will never come, maybe the one or two large pharma companies still left in the antibiotics business will be able to charge $93,000 for a course of life-saving, curative therapy for resistant infections.  Who knows?