Immuno-Oncology: Still the hottest game in town

Oncology remains a red-hot favourite among investors and dealmakers. It was central to 2019’s first two big deals, Bristol-Myers’ Squibb’s $74 billion Celgene merger and Lilly’s purchase of Loxo Oncology. Oncology dominated 2018’s outsized biotech IPO roster, according to Informa’s Strategic Transactions. Industry’s development pipeline saw an almost 70% increase in the number of immune-oncology candidates between September 2017 and September 2018, according to New York-based Cancer Research Institute.

There are good reasons for this dominance. The concept of harnessing the immune system to fight cancer has been validated by the huge success of a first generation of immuno-oncology (I-O) drugs, notably Merck & Co. Inc.’s checkpoint inhibitor Keytruda (pembrolizumab), which sold about $7 billion in 2018. The breadth of the approach means I-O drugs may work across several cancer types, and as part of an almost endless range of combinations. Keytruda is now approved for almost a dozen indications (including one defined not by tumor location but by the presence of certain biomarkers), and is being tested in multiple further trials.

 

Keytruda is not alone: behind it and BMS’ first-to-market Opdivo (nivolumab) is a growing handful of similar drugs. Regeneron/Sanofi’s Libtayo (cemiplimab) became the category’s 6th entrant in late 2018, with its FDA approval for a type of skin cancer called metastatic cutaneous squamous cell carcinoma (CSCC). Latecomers to this crowding field are seeking out the quieter corners: Libtayo is the first checkpoint inhibitor approved for CSCC, and its sponsors are going after other less well served indications, like cervical cancer and basal cell carcinoma.

 

While the unmet need across many cancers remains significant, regulators are granting expedited approval to innovative drugs that help meet those needs. Many are initially approved in advanced settings where patients have few other options, commanding high prices as a result. Oncologists and their patients are embracing these new drugs, driving a shift in cancer treatment away from chemotherapy towards more targeted, personalised approaches. A Datamonitor survey of 26 US oncologists revealed that most expect a doubling of the proportion of their cancer patients on I-O treatments within the next five years, to 50%. GlobalData forecasts that the I-O market will by then be worth $34 billion.

 

Yet checkpoint inhibitors, despite their success, do not work across all – or even most – tumor types. They work best in tumors that already trigger a mild immune response.

 

This constraint is driving multiple programs designed to unlock the full potential of this tried-and-tested drug class, by co-delivering something that stimulates the immune system in a targeted fashion. Such programs include oncolytic viruses and bi-specific antibodies (antibodies that hit two targets at once). Licensing and acquisition activity is following: Merck and Johnson & Johnson in 2018 acquired oncolytic virus players Viralytics and BeneVir, respectively, while Boehringer Ingelheim snapped up ViraTherapeutics the same year. Clinical data around several oncolytic virus-checkpoint combination trials are expected during 2019, likely driving further deals. Meanwhile, Regeneron hopes to trump its checkpoint inhibitor competitors by combining Libtayo with one of its bi-specific antibody candidates.

 

Bi-specific antibodies may also challenge another new I-O drug class: chimeric antigen receptor T-cell (CAR-T) therapies. These involve extracting patients’ T-cells (a type of immune cell) and tweaking them to recognise cancer. But they’re complicated and expensive to make and administer. Sales of pioneer CAR-T therapies, Novartis’ Kymriah (tisagenlecleucel) and Gilead’s Yescarta (axicabtagene ciloleucel) have remained modest. But a new generation of CAR-T therapies may soon emerge, too. Companies like France’s Cellectis are developing off-the-shelf therapies using donor T-cells, for instance.

 

These are just a few of the I-O drug mechanisms under investigation. The immune system is not a single pathway with a single on/off switch; it has multiple, interacting pathways and actors, many of which scientists still don’t understand. Cancer cells, too, are complex and evolve over time.

 

From a scientific point of view, then, immuno-oncology is just getting going. The limits on this field will come from payers, as they figure out how to fund a growing range of high-priced treatments and treatment combinations.

Cervical cancer is under attack from multiple modalities – including AI

Computer algorithms have joined the battle against cervical cancer. Scientists at Israeli digital health company MobileODT have developed technology that can detect pre-cancerous lesions better than trained humans or conventional pap smear tests. The artificial intelligence (AI)-based approach needs only a single image to do its detective work, generating results in seconds rather than the days required by regular screening.

 

MobileODT’s Automated Visual Evaluation (AVE) machine learning algorithm, validated by the National Cancer Institute and FDA-approved, is already in use across 29 countries. The technology could turn cervical cancer into a thing of the past, including in low- and middle-income countries where the disease’s impact is deadliest. Vaccines against the human papilloma virus (HPV) responsible for most cases have been around for over a decade, but aren’t widely available in poorer nations.

 

There is good news, too, for many with the disease – the fourth most frequent cancer among women, according to the World Health Organisation. More treatments may soon arrive, after a relative drought in approvals over the last few decades.

 

Merck’s checkpoint inhibitor Keytruda (pembrolizumab) became the latest new option, in mid-2018, for women with recurrent or metastatic disease whose tumors express PD-L1. Roche’s bevacizumab (sometimes called Avastin) was approved in 2014 and is now part of standard therapy, but offers limited improved survival.

 

Regeneron’s checkpoint inhibitor, Libtayo (cemiplimab), already approved for some kinds of skin cancer, in late 2017 begun a Phase III for cervical cancer with Sanofi, after promising results in a small Phase I study. Cervical cancers tend to have quite high numbers of gene mutations, which may enhance their sensitivity to the wide range of immuno-oncology (I-O) approaches progressing across the broader cancer field.

 

They include, for cervical cancer, Princeton, NJ-based Advaxis’ Phase III therapeutic vaccine axalimogene filolisbac. This involves re-programming a live strain of listeria bacteria with a particular antigen to generate cancer-targeting T-cells, and to knock out tumors’ in-built immune-protection mechanisms. The drug candidate showed promising results in Phase II (12-month survival rates over 50% higher than predicted, given patient characteristics) and has Fast Track designation as an adjuvant therapy for women with locally advanced disease.

 

Iovance’s adoptive cell therapy approach involves extracting and multiplying patients’ own tumor-infiltrating lymphocytes (TIL). TILs are naturally-occurring immune cells that can penetrate and kill tumors, but which are typically out-gunned by cancer’s own immune-cloaking mechanisms. Iovance, based in San Carlos, California, is currently recruiting a Phase II trial of LN-145 among women with recurrent, metastatic or persistent cervical cancer.

 

Further combination trials are underway, many involving checkpoint inhibitors with bevacizumab, chemotherapy and radiotherapy. There are also non-I-O studies underway, such as Genmab/Seattle Genetics’ antibody-drug conjugate tisotumab vedotin. The conjugate targets and inhibits a protein involved in tumor signalling and angiogenesis (tumor blood vessel growth), and includes a cytotoxic drug.

 

AstraZeneca and Roche have the highest number of cervical cancer clinical trials, according to Datamonitor analysts. Industry’s increasingly busy pipeline, alongside improved screening offered by AI, will hopefully soon improve the prognosis for women suffering with the disease, estimated to total almost 600,000 worldwide.

New Pharma Models for a new Healthcare Era

When Google in November 2018 hired David Feinberg to head up its healthcare efforts, it was just the latest sign of the tech giant’s ambitions in the sector. Feinberg was previously president and CEO of Geisinger, among the US’ largest and most forward-looking health service providers. Feinberg was already talking about using technology to transform healthcare delivery and costs before he left Geisinger. At Google, he’ll be well-placed to accelerate some of those ideas into reality.

Pharma has been slow to recognise the tech-threat. Some executives felt that the highly-regulated nature of the pharma industry would mean most technology firms would play outside the fence, sticking with fitness apps, wrist-worn heart rate monitors and online appointment-booking. Tech firms might make healthcare more convenient for consumers to access, the thinking went, but they wouldn’t fundamentally change its nature.

 

That thinking was off. Technology giants including Google, Apple and Amazon are not just hiring top-end healthcare innovators and regulatory experts (Amazon’s new hires include surgeon, author, and healthcare innovator Atul Gawande, who will lead the company’s joint venture with Berkshire Hathaway and JP Morgan Chase). They’re also cosying up to providers and payers – pharma’s key customers – with customer-facing apps and other data-driven tools to help better match patients to care, encourage preventative care, and measure outcomes. And they’re vying for position – via the smartphone – as the doorkeepers who determine how and where individuals’ access their healthcare. (Both Apple and Google’s parent Alphabet are trying to help consumers gain access to their medical information, currently scattered piecemeal across multiple systems.)

 

Beyond generating and controlling unprecedented volumes of consumer data, technology groups are coming to FDA with medical-device grade diagnostics and ‘digital therapeutics’ – an entirely new treatment modality that may, in future, impact care pathways in some therapy areas.

 

The regulators are playing ball. The FDA in September 2018 cleared an electrocardiogram measuring device within the Apple Watch. This, together with an app to detect irregular heart rhythms, may help millions of people to diagnose health issues much earlier, before they become dangerous – and expensive. A couple of months later, the Agency approved Pear Therapeutics’ app-based cognitive behavioural therapy, reSET-O, for opioid use disorder – the first FDA-authorized prescription digital therapeutic, according to the company (partnered with Novartis’ Sandoz). Scott Gottlieb, FDA commissioner, appears committed to ensuring regulations do not inappropriately hold back the momentum towards a “universal digital future in healthcare” and the “re-imagining of healthcare delivery.” He talked in September 2018 about a “modern, flexible, risk-based approach to regulation in this area […] to reduce the time and cost of market entry […] while ensuring patient safeguards are in place” (FDA, 2018).

With regulations no longer an insurmountable hurdle for sector-outsiders, and with technology already transforming most other aspects of our lives, pharma must start considering where and how digital therapeutics will fit within their portfolios.

 

Digital approaches will not replace conventional therapies. Yet they may complement them, for example as precursors to pharmacological treatment, especially in areas like cognitive disorders or other chronic conditions where drugs on their own are insufficient – or intolerable. Digital therapeutics provide a consumer-friendly angle that conventional pharmaceuticals lack. And, last but not least, their built-in data capture offers insights into customer behavior and needs, informing R&D and providing the foundation for outcomes-based deals.

 

FDA (2018) Statement from FDA Commissioner Scott Gottlieb on agency efforts to work with tech industry to spur innovation in digital health. September 12, 2018. Available at: https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm620246.htm [Accessed January 8, 2019]

Is January’s M&A a flash in the pan, or does it signal sustained dealmaking heat

2019 started with a bang for pharma M&A: by January 7, $82 billion worth of shopping had been announced. Bristol Myers Squibb’s $74 billion cash and stock offer for Celgene on New Year’s day is the fourth-largest deal ever. It was followed days later by Eli Lilly’s $8 billion purchase of Loxo Oncology.

To put that $82 billion into context: 2018’s tally of $1billion-plus pharma acquisitions was about $115 billion, according to Informa’s Strategic Transactions. To achieve more than three quarters of that in the very first week of January is remarkable, even if 2018’s M&A activity ended up being relatively lacklustre.

 

Indeed, January shopping splurges do not always last. In the first month of 2018, four deals clocked up about $27 billion worth of M&A (including Sanofi’s acquisitions of Bioverativ and Ablynx, for $11.6 billion and $5.1 billion respectively). Celgene itself was also among the early buyers, paying a whopping $9 billion for CAR-T company Juno, and $1.1 billion up-front for Impact BioMedicines (billions more are due if Impact’s myelofibrosis candidate, fedratinib, is approved). Reporting on the Juno deal in January 2018, Bloomberg reporters speculated that “dealmaking activity may be picking up, after a sluggish 2017.”

 

Despite US tax cuts that left many pharma giants flush with cash, and continued pressures on prices, pipelines and patents, the anticipated M&A wave did not come. Takeda’s pained, fifth-time-lucky acquisition of Shire, in May 2018, made the biggest splash, at $61.2 billion.

 

This year, with biotech valuations lower than they have been for months, executives at the annual JP Morgan event in San Francisco are all talking about M&A. Gilead Sciences’ CFO said mergers were the group’s “primary focus”. Merck & Co. chief Ken Frazier says they’ve been trying to buy.

 

But a growing number of pharma CEOs have been downplaying mega-mergers over the last 12-18 months, and those voices are still there. Pfizer CEO Albert Bourla has shunned larger deals in favor of smaller ones, and continued to warn at JPM 2019 against a “destructive” transaction. Few pharma mega-mergers over the decades have created value. They might have plugged some short-term revenue holes, but these complex, messy transactions have more often stalled than re-invigorated R&D. Integrating large teams of scientists and commercial operations can take years. “Historically, big deals have not worked out,” said Novartis CEO Vas Narasimhan at JPM 2019.

 

Innovation is increasingly widely spread across the globe. Technology progresses faster and faster. These dynamics call for broad, flexible, externalised R&D networks and partnerships, rather than for ever-larger in-house activities. They call for pharmaceutical firms that are more agile and more digital, not bigger.

 

M&A won’t go away. But more focused, smaller deals may be the ones that build sustainable value tomorrow, even if they don’t catch the headlines today.

2019: The Year of the Digital Pharma?

Mergers and acquisitions (M&A) used to be the most disruptive force affecting pharma. Mega-deals continue: Takeda’s $59 billion deal for Shire in 2018, a record-breaker, has just been surpassed in early 2019 by Bristol Myers Squibb’s surprise $74 billion cash and stock deal for Celgene.

But digital technologies are changing pharma more profoundly than even the largest mega-deal. And while several Big Pharma CEOs have said they’re now avoiding large M&A, the digital shift will doubtless continue in 2019, as technology’s potential to improve drug industry productivity becomes clearer – and as pharma’s need grows.

 

New tools and capabilities, including back-office data capture and analysis, artificial-intelligence-based algorithms to accelerate drug discovery and development, virtual clinical trial platforms, wearables and smartphone-based therapeutics are impacting every business function. “Digital” isn’t a single department or skillset. “Going digital” – establishing a robust digital infrastructure and user-friendly tools that can help improve efficiency and output – requires people from across the entire organisation to engage with new kinds of systems and ways of working. It requires a change in culture.

 

Changing culture is the hardest part. The workings of AI-based algorithms and data analytics tools may be complicated. Using them effectively does not usually require a deep understanding of those workings, though: we all use smartphones and GPS in our cars. We need to want to use them. We need to be convinced that they can help us get to where we want to be – rather than see them as a threat.

 

Hence leadership in digital transformation must come from the top. Yet turning digital into a core capability also requires support and expertise at all levels. It also involves partnering with new kinds of organisations – from Google or Amazon to tiny digital start-ups and technology-makers – with entirely different cultures and far more rapid innovation cycles than in the highly-regulated pharmaceutical industry.

 

After a slow start, many pharma firms are well underway in their digital transformation. These transformations vary widely in their speed and focus. Few initiatives are made public – although those that are give a sense of the scope of change. Novartis claims it is already seeing results from huge, CEO-led digital initiatives such as its ‘mission control’ centre for clinical trials, and from its Digital Cortex data analysis and simulation program in discovery. Otsuka Pharmaceuticals in late 2017 achieved FDA approval of its schizophrenia pill, Abilify (aripiprazole) combined with a tiny ingestible sensor, made by Proteus Digital Health. The combination – a data-collecting pill — is designed to track adherence among patients with CNS disorders. Roche says it is using data from high quality electronic health records (EHR) as a surrogate for standard-of-care control arms in cancer trials.

 

That data came from Roche’s $1.9 billion purchase of oncology-focused Flatiron in February 2018.  This new kind of pharma M&A  – accessing data, not just pipeline or products –will likely increase in 2019 and beyond, as the era of Digital Pharma begins.

‘Tis the Season to be Vaccinated

The influenza season illustrates the value of preventative medicine, and how pricing dynamics and vaccination strategies can influence population health.

Preventing ‘flu and the complications that can arise from ‘flu-related infections, especially among the elderly and vulnerable, can save significant health system costs. That is critical as such systems come under increasing pressure, including from ageing populations and the approval of new, high-priced medicines.

 

In mid-December 2018, ‘flu rates were still low across most of the European Union. The virus doesn’t usually show itself fully until about that time, peaking in January and February before declining in March and April. But the European Centre for Disease Control and Prevention is warning nevertheless that few countries are achieving the 75% vaccine coverage target set by the European Union.

 

Key variables affecting vaccine uptake are the incentives used to promote vaccination, and the type of vaccine used. Intra-nasally-delivered vaccines generally go down better than injectable, particularly with young children. Vaccines covering a broader range of influenza strains have the best chance of beating off the pathogen happens to prevail that particular season.

 

Flu vaccine purchasing and vaccination strategies have a massive impact on how well protected the population is. In the UK, the government buys an intranasal flu vaccine for children directly from manufacturers. It is administered to children in schools. This ensures that a maximum number of children are protected. And protecting children has a knock-on effect on the rest of the population, according to a UK physician and key opinion leader interviewed by Datamonitor. “We showed in a pilot that when children aged 5-10 years were vaccinated at school, not only was ‘flu reduced among them, as judged by doctor visits, but the same happened to everyone over 18 – people at work, parents, the elderly.” Kids spread bugs – that’s familiar to many parents with school-aged children. So protecting them, first and foremost, makes sense.

 

For the rest of the population – in particular the elderly and those with chronic conditions like COPD or other respiratory diseases – vaccination needs to be as easy and cheap as possible. Incentivizing the vaccinators is the best approach to ensuring maximum coverage, according to the UK KOL. In the UK, doctors’ practices buy the vaccine (for adults) from the manufacturer, often with a discount, and are reimbursed at the list price, plus a fee for each successful vaccination within at-risk groups. So it is in their financial as well as their professional interest to vaccinate as many patients as possible. They will call patients in, and remind them as many times as it takes.

 

The result: the UK percentage coverage is in the high 70s – one of the few European countries that appears to meet the ECDCP’s target. (Another implication of this system for manufacturers is that lower-priced vaccines don’t necessarily mean greater uptake: doctors’ practices make less money by getting a discounted price for a cheaper vaccine than a more expensive one.)

 

In countries where vaccinators are not incentivized, but instead have the medicine available to those who want it (or in countries where patients have to buy the vaccines themselves), then “your vaccination rate would be very low,” warns the KOL.

 

Quadrivalent vaccines (covering four important ‘flu strains) are now used in the UK, after the 2017-18 season saw the spread of an important influenza B strain that was not covered in the prior trivalent vaccine. Other aspects of vaccine technology are advancing, but influenza vaccines are still far from perfect. “If you are lucky [the ‘flu vaccine] will be 50% effective, depending on your age, the year and the mismatch of the virus that is circulating,” says the UK KOL.

 

For more details on the progress in vaccine coverage, technology, and vaccination policies and incentives in the UK, Europe and the US, please see the related content links below.