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Novartis R&D: looking for the 'Sweet Spot'

Published on 27/08/13 at 12:42pm

The pharma industry has been struggling to improve its R&D productivity for a decade or more, there has been much talk, and many different strategies to address one of the sector’s biggest problems.

But analysis of industry performance shows clearly that one company has led the way in recent years - Novartis. The Swiss firm has the best track record among all the big pharma firms, across a number of R&D productivity measures. 

Between 2007 and 2012, it launched more drugs than any of its rivals, and its molecules have enjoyed a far higher chance of success in drug development. Moreover, some of these molecules have been among the most innovative new therapies to be launched.

So how has Novartis hit the sweet spot for innovative new drugs? And can it maintain this lead over its rivals, or are others poised to catch up?

A new independent R&D organisation

2002 was a pivotal year for Novartis. The company’s chief executive at the time, Daniel Vasella, took a handful of bold decisions which helped shape its approach to R&D over the following decade.

That year, Novartis announced it was moving its global research headquarters from Basel in Switzerland to Cambridge, Massachusetts.  This was an unprecedented move for a European pharma company at the time, but Vasella was determined to pick the best location for a new global R&D base, regardless of its history in Basel, and considered other US locations including  San Francisco and San Diego. 

In 2002, Cambridge was already among the leadings ‘hotspots’ for early stage biomedical research, and Novartis wanted to be as close to those academic research centres and leaders as possible. One of those leaders resident in Cambridge was the cardiovascular scientist and genetics researcher Mark Fishman, who Vasella personally headhunted from Harvard Medical School to be Novartis’ new head of global research.

On joining the company, Fishman said: “I think we can invent a new field of science,” said Fishman. “I believe we can invent a culture that is neither industry nor academia, but the best of both worlds.”

When Fishman joined Novartis, the company was already enjoying a great run in product launches – most notably the groundbreaking Glivec - but his tenure has seen this success continue, with even greater productivity achieved.  In 2004, the company inherited a site in the heart of Cambridge, the former factory of the legendary US confectionery company Necco, and set about turning it into a hub of drug discovery. Just a stone’s throw from world-class centres of learning, Harvard University and MIT, and close by leading cancer research hospital the Dana Farber Cancer Institute, Novartis had indeed found its own research sweet spot.

Since then, many of the tactics – moving an R&D base to an academic hotspot, and creating closer links with academia in general have been taken up by most of the big players. The most recent example is AstraZeneca’s which is moving its R&D headquarters  to Cambridge in England (a move 180 miles away from its current location in Cheshire) in order to tap into academic excellence there.

But closeness to academics is not the only core component of Novartis’ strategy – Vasella also gave Fishman greater freedom to determine the R&D strategy, and insisted NIBR should have complete independence from the firm’s marketing department.

As R&D costs climbed in the 1990s and early 2000s, many companies were attempting to make drug discovery more process-driven, by introducing more metrics and targets. At the same time, there was more pressure to guarantee commercial success for a drug, which meant that marketing departments were gaining greater power over R&D decisions.

Fast forward to 2013, and many pharma companies are once again giving R&D more breathing space, but this was decidedly not the prevailing mood in the early 2000s.

Novartis’ approach has won the praise of one of the sector’s most respected commentators, Bernard Munos.  Former Lilly executive Munos has analysed industry data to ascertain which R&D operations have been most productive, and why.  His analysis confirms Novartis has been the best performer over the last 10 years, and he believes NIBR’s autonomy was the crucial factor in this.

Munos wrote in Forbes earlier this year: “Ten years ago, as uninspired CEOs unleashed six sigma onto their scientists, Novartis was the only company to denounce the ineptitude of regimenting science and basing R&D investment on bogus forecasts and NPV (Net Present Value) calculations.   It broke ranks with its peers, and returned to its scientists the freedom to pursue unfettered breakthrough innovation.  It is now the company that derives by far the greatest percentage of its sales from new products. ”

Today, Novartis has one of the industry’s biggest and most promising pipelines, with 139 projects in clinical development with more than 73 New Molecular Entities (NMEs) across a wide range of disease areas (see table, opposite).

The firm has further impressive statistics to back up its R&D model. Independent analysis shows the firm’s hit rate is superior, with the probability of success from pre-clinical to approval in the period 2007-11 being around 5 times level higher than the industry average.

Higher spending

But it is not merely scientific excellence and independence which has helped create this success. Speaking at a Novartis R&D day for analysts in Boston last November, chief executive Joe Jimenez (who succeeded Vasella in 2010) said the company’s longstanding investment in R&D was a major factor.

“One of the secrets of our success is that we have consistently spent around the 16% of sales level for the entire Novartis group – if you just look at pharmaceuticals, it is closer to 20 per cent.

“That consistency of spend is leading us to a pretty high level of effectiveness.  But more importantly this spending is translating into an increased probability of success over time. 

The figures also show that across Novartis’ pharma and vaccines portfolio, the company launched the largest number of NMEs of any pharma company – a total of eight new drugs - which have peak sales projections over $600 million.

“Over the same period, our R&D spend produced the second highest level average number of newly launched products. But what is even more important is the trend – if you look at the period 2002-2006 and then look at 2007- 2011, as we have increased our annual average R&D spend, we are getting more effective in terms of our ability to generate larger (earning) new molecules.”

Novartis is forecast to become the world’s biggest pharma company by sales in 2018, largely on the back of these drugs.  Of course, this new No.1 status will put pressure on Novartis to maintain its position, requiring researchers to keep producing innovative drugs.

The targeted approach

Speaking at the R&D event in November, Mark Fishman encapsulated his approach: “Our aim is to discover drugs that really will change the practice of medicine.  Our approach is to focus on fundamental mechanisms, and then to go into the clinic in a way that permits us to test that mechanism – for example using a homogenous population of patients who have a genetic disease, or stratified.”

This means targeting rare diseases is a core approach for the firm – a strategy that was once overlooked as not lucrative enough, but is now being copied across the industry.

“The logic to this is that later we can expand from this restricted population to a larger population, with a more common disease, but with that shared mechanism”.

He added: “We have doubled our output, and increased the number of medicines that are going into development. This means that we have more ongoing projects than any other company.”

Fishman emphasised that NIBR is a global network of scientists, not just the Boston HQ. “Each of the 10 research centres has a different rationale – for instance the Friedrich Miescher Institute for Biomedical Research and industry is a basic science institute, while NITD in Singapore is a group working on developing world diseases.

Crucially, these teams work together, says Fishman, “as opposed to some other companies where they have been made to compete.”

He added: “We feel there is a great overlap of mechanisms between diseases, so that if we allow our network to work together, we will see – as not uncommonly happens – a drug that goes from autoimmune disease or oncology, or vice versa.  So our approach is to have a fundamental science platform that can be applicable across the whole world.”

This platform is in large part build around uncovering the role of signalling pathways in human biology and disease. A relatively small number of pathways play fundamental roles in the body, and defects in these pathways are often the underlying causes of disease.

A good example of a drug developed in this way is Afinitor – which targets the Tor pathway, which was first identified in yeast and fruit flies.

Novartis looked at this mechanism in children who had tuberous sclerosis – which is caused by the loss of the TSC gene.  Based on this fundamental understanding, the company was able to expand its indications into treating tumours in the breast, brain, and kidney.

Next Generation Sequencing

One of the most important new technologies in helping elucidate signalling pathways and other molecular mechanisms is ‘Next Generation Sequencing’ – new faster ways to delve deeper into the genetic and molecular secrets of the human body and diseases.   Novartis has been one of the most enthusiastic adopters of the technology, and has followed its logic to pursue new genetic in areas of unmet medical need.

NGS platforms can very quickly sequence nucleic acids (messenger RNA, microRNA, or genomic DNA) and ever-improving technology means researchers can sequence in a day, what used to take a decade.

The technology is particularly applicable to oncology, where NIBR’s researchers are focusing on identifying features in patient tumour samples that are likely to predict response to drug candidates.  The goal is to develop a molecu­lar profile for each patient.

In breast cancer, Novartis researchers have studied 200 hormone receptor positive breast cancers and sequenced them for about 200 genes that show up point mutations, amplifications, deletions and translocations in those genes.

Barbara Weber, Novartis’ head of oncology translational medicine says: “You pick up what you might expect in breast cancer, PER2 alterations and kinase mutations, but you also pick up quite a lot of what you might not necessarily expect in breast cancer patient populations.

“This shows how we are conducting our trials differently, starting to capture small subsets who will be able to respond to these drugs because we have identified the targets.

Weber says the company’s work in non-small cell lung cancer is another example of their new approach.  Research has already uncovered dozens of potentially actionable alterations that we find in patient in NSCLC tumours, indicating that many different disease pathways contribute simultaneously. 

“Instead of putting one lung cancer drug into development, and keep it separate from another, patients are screened for all relevant trials at the same time. This allows us to reduce the cost of screening, and increases the ability to get patients onto a study.

“But importantly it also decreases the frustration that the patients and the investigators feel when you are screening for an alteration that only occurs in say five per cent of a tumour, such as ALK translocations in lung cancer. Because in this setting, about 70% of the patients who are screened will have a trial to participate in.

The lead candidate in the company’s NSCLC research, LDK378, was given ‘Breakthrough Therapy’ Designation by the FDA, which will see its review prioritised in the next 12 months. 

Proof of Concept trials

Another major part of the Novartis strategy is greater use of proof-of concept trials, in place of the traditional phases I to III progression.   The new approach is particularly useful in oncology, where far earlier targeting of those patients likely to benefit most has reaped enormous rewards, cutting costs and producing proof of a drug’s efficacy (or otherwise) far earlier.

Novartis is now shifting towards a model of selecting patients most likely to benefit from the drug for the Phase I trial, and then following this up with a proof of concept trial which serves as the pivotal trial submitted to regulators. (see illustration).

Naturally this approach requires agreement from regulators about the validity and robustness of data from these trial designs, but the FDA in particular is now open to accelerated trial programmes. These trials often produce less mature data than traditional Phase III programmes, but this is partly offset by the science behind the design i.e. the targeting of patients based on their genetic profiles.

Proof of concept trials can’t reduce the failure rate of compounds in development, but they do shift any potential failure rate to earlier stages of the drug development process, saving huge amounts of time and money.

Trials of the Future

Like its peers, Novartis is looking to increase efficiency and productivity in drug development as well as discovery – but Novartis’ management team believes it is taking a bolder, more visionary approach. Tim Wright, Novartis’ head of development , is leading the company’s Trials of the Future initiative,  which aims to radically re-design development processes to reduce costs and increase efficiency, quality and patient safety.

The Novartis team has been inspired by business thinker Clayton Christiansen, the Harvard Business School professor who developed the theory of ‘Disruptive Innovation’.  This states that leading companies in any field who pursue ‘sustaining innovation’ of incremental improvements will sooner or later be caught off guard by a new technology or process that revolutionises the field.

That means existing leaders have to be bold in looking for revolutionary approaches and not merely tinker with the existing paradigm.

Some of the Trials of the Future projects already in development include remote monitoring and data collection from clinical trials, continuous manufacturing and telehealth. The firm has also launched a groundbreaking partnership with US pharmacy chain Walgreens in clinical trials.

Tim Wright, Novartis’ head of development says the huge growth in R&D costs has resulted in many companies adopting conservative approaches to containing costs, rather than trying radical new thinking.

 “The exponential growth in R&D costs has driven a strategy of thinking that it’s better to acquire than to invest in your own pipeline. It has also driven a focus on companies going with only those drugs which they think might make it, only betting on those that are likely to win.”

He adds: “Unfortunately that leaves some of the breakthrough medicines on the shelf.  Because the breakthroughs will be higher risk, but also higher reward.”

Confident of the visionary spirit of the Trials of The Future initiatives, Wright asserts: “These will transform the industry in the coming years. We deconstructed the R&D process, and we believe what happened to other people who tried this before was that they tried to put into one formula, and come up with a brand new way to conduct clinical trials,” he says, as opposed to using a portfolio of technologies and new ways of working.

Wright says the firm has developed some technology in-house, but in most cases has worked with third parties to come up with “disruptive ways of handling data, of recruiting patients, of capturing our clinical measurements such as sensors.”

“We believe that we are leading in this space, and that we are going to be driving innovation that eventually, others may catch up with.  But the others, I am not sure if they will have much of a portfolio to invest in, or if they would be willing to convert back to a risk-taking mode.”

Walgreens – a clinical trials revolution?

One of the most eye-catching initiatives is a new partnership with the US pharmacy chain Walgreens. Novartis hopes to exploit the national network of pharmacies, effectively turning them into local walk-in clinical trial centres.  Pilot studies have already been completed, and the partners now expect to launch their first 10,000 + patient study in 2013.

Wright said: “The average American lives only three miles from a Walgreens. There are 6,000 (existing) clinical trial patients going through their stores every day, they have 350 take care clinics, they have 110,000 healthcare professionals.”

A pilot study involving blood pressure monitoring of healthy volunteers in the stores was completed successfully, with the volunteers using just a smart phone to help them take their own blood pressure reading.

“The impact of that will be obvious – we won’t be paying the overheads of a tertiary set up – such as maintenance on the MRI machine. Also from the standpoint of recruitment, this will be transformative. Those who haven’t considered participating in a clinical trial might if it only involves stopping at the Walgreens on the way home.”

One final opportunity the partnership opens up is the potential for ‘real world studies’  following patients outside the artificial confines of a clinical trial, which could prove to be extremely useful as regulators and healthcare systems seek ever-more robust data on patient outcomes.

Conclusion

Taken individually, few of the methods or technologies Novartis is using are entirely unique and indeed many of its initiatives have parallels among its competitors.

The reasons for its success must partly lie in the combination of a handful of best practices – avoiding the distraction of mega-mergers, maintaining consistent R&D spending, and giving researchers freedom to pursue truly groundbreaking science.

That said the reality of ‘disruptive innovation’ means that merely creating a stable environment with scientific rigour is not enough to guarantee success in perpetuity.

Equally, while Novartis’ leaders like to stress the excellence of their in-house operations, the company must still balance risky research programmes with safer bets. Thus the firm’s current portfolio relies on ‘second generation’ molecules e.g. Tasigna, as well as in-licensing and acquisitions such as relaxin, the acute heart failure candidate it acquired when the firm bought  Corthera in 2009; though even in these ‘safer bets’ superior judgements in science and marketing can make the difference between a blockbuster and a flop.

An excellent example of one such judgement relates to Alzheimer’s - Lilly, Pfizer and J&J have all seen Alzheimer drug candidates fail in Phase III, costing hundreds of millions and dashing hopes of progress. Novartis, which is active in neuroscience, did not enter the fray, undoubtedly conscious of the shaky biomedical hypotheses on which these projects were built. In other words, a willingness to take risks in R&D is not enough in itself, the fundamental science must also be sound.

If Novartis, led by Mark Fishman’s ‘science first’ approach does prove to be the outright winner in productivity in the long-term, one of the clearest differences is the firm’s insistence on retaining expertise internally.

Recent years has seen many pharma companies repeatedly reduce their research and development base and exit therapy areas, and embrace instead early-stage outsourcing via discovery partnerships with biotech and academia.

Speaking to Nature last year, Fishman made it clear he felt the trend had gone too far.

“There also seems to be a belief that we can not only outsource repetitive experiments to save money, but that we can also ask academia to do discovery for us. This won’t work. I worry that companies that are downsizing their R&D, and hoping to harness the power of other companies and academia, means that people think drug discovery is just too difficult.”

Finally, while Novartis has shown leadership in research, it has attracted deserved criticism for the high prices it uses to recoup its R&D outlay. 

In particular, the ever-escalating prices of Glivec and Tasigna in the US have angered doctors and patient groups in the US, and the firm is now facing a backlash. Bernard Munos in his Forbes article We The People vs. The Pharmaceutical Industry called on Novartis to take a lead in doing away with excessively high prices. This is a persuasive argument, because if agreement on what constitutes a ‘fair price’ for new medicines breaks down, it ultimately also threatens progress in medicines development.

Rivals in hot pursuit

Proving that Novartis doesn’t have the monopoly on R&D productivity, a new analysis by Bernard Munos puts Johnson & Johnson at the top of the industry league table, with 13 drugs approved over the last 10 years, with GSK in second (11 launches) and Novartis in third (10 launches). Over a 15 year time frame, Novartis still reigns supreme, with a total of 21 drugs launched putting it far ahead of its nearest rival, Merck, which launched sixteen.

Late-stage pipeline

Novartis’ late stage pipeline is particularly, strong, however, and will take some beating if anyone can surpass its productivity.  The company predicts 18 approvals (additional indications plus new molecular entities) over the next 12-24 months.

Among the most promising of its late stage candidates are two which have been granted the new Breakthrough Therapy designation status by the FDA.

RLX030 (serelaxin) is for patients with acute heart failure (AHF), a condition affecting more than 15 million patients around the world, and one of the leading causes of emergency hospitalisation.

The FDA granted the special status to RLX030 after reviewing clinical data, which supports a substantial improvement over currently available therapies for AHF, a life-threatening illness.

Novartis’ phase III RELAX-AHF trial showed that patients who received RLX030 had a 37% reduction in mortality at six months after an acute heart failure episode compared to those who received conventional treatment.

Novartis have another heart failure treatment in late-stage development, LCZ696, which is targeted at chronic heart failure rather than acute heart failure.  Analysts believe that if both drugs are approved, Novartis could have on its hands a multi-billion dollar franchise in heart failure.

Meanwhile, LDK378, is a promising treatment for non-small cell lung cancer (NSCLC). The drug is a selective inhibitor of anaplastic lymphoma kinase (ALK), and shown a ‘marked’ clinical response in patients with NSCLC. Phase III trials are planned to start in the next few months.

Phase I data showed a 60% overall response rate in 78 patients with ALK+ NSCLC taking LDK378 at 750 mg per day.

These patients were a mixture of those who had progressed during or after therapy with Pfizer’s NSCLC drug Xalkori (crizotinib), or who had not been previously treated with Xalkori.

Declaration: Novartis provided Andrew McConaghie, former editor of Pharmafocus, with flights and accommodation to attend its 2012 R&D day, held in Cambridge, Massachusetts, on 8 November.

 

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