A High Level Snapshot of Challenges &A High Level Snapshot ... · 2013/05/15 · A High Level Snapshot of Challenges & Opportunities in the Oncology Market • The cancer field has

A High Level Snapshot of Challenges &A High Level Snapshot of Challenges & Opportunities in the Oncology Market

Jeffrey M. Bockman, PhD

Vice President

Defined Health

May 15 2013May 15, 2013

A High Level Snapshot of Challenges & Opportunities in the Oncology Market

• The cancer field has been undergoing some significant changes and challenges, especially in this age of premium-priced, targeted therapies: from molecular stratification of patients to the increasing pushback from payers and cancer centers themselves around the cost benefits of new therapies. To some degree, the use of molecularly targeted agents directed to specific patient populations can help overcome market access barriers by providing a stronger efficacy signal and hence meaningful clinical value. The potential downside to the "niche-ification" of cancer is that supporting a sustainable oncology franchise expansion could become more difficult. This talk will explore at a high level how novel targets and trial designs are enabling advances that can provide unique ways for oncology companies to grow their franchises by generating the data for novel products with differentiated value propositions that garner the interest of all the key constituencies—patients, physicians, regulators and payers

© Defined Health, 2013Defined Health Oncology Webinar, May 15, 2013

Disclaimer

The information in this report has been obtained from what are believed to be reliable sources d h b ifi d h ibl N h l h i f iand has been verified whenever possible. Nevertheless, we cannot guarantee the information

contained herein as to accuracy or completeness. All expressions of opinion are the responsibility of Cancer Progress, and though current as of the date of this report, are subject to change. The opinions and information set forth herein are expressed solely for the benefit of the addressee and only for the purpose(s) for which the report was produced. Without the prior written consent of Cancer Progress, this report may not be relied on in whole or in part for any other purpose or by any other person or entity, provided that this report may be disclosed where disclosure is required by law.This report may contain information provided by third parties such as Thomson Reuters, WoltersKluwer, EvaluatePharma, Datamonitor, Informa Healthcare, IMS Health and others with a proprietary interest in the data provided herein. Please note that you are not permitted to redistribute any such third party information without consent from the originator company.y p y g p y

Cancer Progress © 2013


Disclaimer (Cont.) - Discriminating Self From Non-Self


THE INCREASINGLY CROWDED &THE INCREASINGLY CROWDED & DYNAMIC ONCOLOGY SPACE


Oncology Remains a Dominant Category, With Blockbusters Built from Expansive Labels, Chronic Use & Potentially from High Pricing in Unique Patient SubsetsPricing in Unique Patient Subsets

Top 10 Oncology Drugs (WW) Top 10 Drugs (WW)


EvaluatePharma, Defined Health

And Still Dominates the Clinical Development Pipeline

Pipeline includes products in research P1-3 and pre-registration shown based on likely time to approval but are not adjusted to reflect likelihood of launch.


The Global Use of Medicines: Outlook Through 2016, IMS Institute for Healthcare Informatics, July 2012

But Then, The Improvements, While Important & Sometimes Dramatic, Have Been Mostly Incrementaly

Disability-adjusted life-years (DALYs)Total DALYs and the five cancers that contributed most to the total for each region

Lancet. 2012 Nov 24;380(9856):1840-5


Lancet. 2012 Nov 24;380(9856):1840 5

Pipeline Activity Versus Epidemiology & Unmet Needs: Why a Spike for Leukemia But Not Pancreatic & Ovarian?p

300,000 New Cases

Deaths

200

250

Drugs in clinical development

Drugs in clinical development200,000

250,000Deaths

New Cases and Deaths Per Year

100

150

100,000

150,000

0

50

1 2 3 4 5 6 7 8 9 10 11

0

50,000


American Cancer Society, Leukemia & Lymphoma Society, Defined Health

Fun With Math Riddle: More Drugs Than Possible, But Less Than Necessary?y

Phase* Number of Cancer Drugs

Cancer Drugs Reaching Market –BioMedTracker**

Cancer Drugs Reaching Market -Nat Rev Drug Discov***

Number of Lung Cancer Drugs

Lung Cancer DrugsReaching Market**

Prereg-Reg 42 34 159 10 8

Phase III 145 64 50 22

Phase II 476 71 320 115 17

Phase I 771 69 456 35 3

Total 1434 238 935 210 50

Adis R&D Insight, WW* h / i d ** d k *** ( )


*Phase II/III categorized as Phase II; Phase I/II as Phase I

**BioMedTracker, BIO presentation, BIO 2011 ***Nature Reviews Drug Discovery 8, 15-16 (January 2009)

Phase III and Submission Failures: 2007–2010

Nature Reviews Drug Discovery 10, 87 (February 2011)


Despite the Attrition Rates, Oncology Still Led 2012 ApprovalsFDA Approvals, 2012Axitinib (Inlyta, Pfizer) is used to treat patients with advanced renal cell carcinoma who have not responded to other therapies. It was approved in the United States in January and in Europe in September.

Vismodegib (Erivedge, Genentech) is used to treat patients with locally advanced basal cell cancer who are not candidates for surgery or radiation and to treat patients whose cancer has metastasized. It was approved in the United States in January

Picato (ingenol mebutate) gel; LEO Pharma; For the treatment of actinic keratosis, Approved January

Afinitor (everolimus); Novartis; For the treatment of renal angiomyolipoma associated with tuberous sclerosis complex, Approved April

Votrient (pazopanib); GlaxoSmithKline; For the treatment of soft tissue sarcoma, Approved April 2012

Pertuzumab (Perjeta, Roche) is used to treat patients who have HER2-positive metastatic breast cancer and to treat patients who have not received any previous HER2-trageted therapy or chemotherapy in combination with trastuzumab (Herceptin) and docetaxel. It was approved in the United States in June and was just recommended for approval in Europe.

Afinitor (everolimus) Novartis; For the treatment of hormone receptor-positive, HER2-negative breast cancer, Approved July 2012

Marqibo (vincristine sulfate liposome injection); Talon Therapeutics; For the treatment of Ph- acute lymphoblastic leukemia in August

Carfilzomib (Kyprolis, Onyx Pharmaceuticals) is used to treat patients whose multiple myeloma has progressed despite at least 2 previous therapies, including bortezomib (Velcade, Millennium Pharmaceuticals) and an immunomodulatory agent. It was approved in the United States in July.

Ziv-aflibercept (Zaltrap) is used to treat patients with metastatic colorectal cancer that is resistant to or has progressed after an oxaliplatin-containing regimen, in combination with the FOLFIRI regimen (5-fluorouracil, leucovorin, and irinotecan). The drug was approved for colorectal cancer in the United States in August. In November 2011, an ophthalmic solution (Eylea) was approved for use in age-related macular degeneration.

Enzalutamide (Xtandi, Astellas/Medivation) is used to treat men with metastatic castration-resistant prostate cancer who previously received docetaxel. It was approved in the United Stated in August.

Regorafenib (Stivarga, Bayer) is used to treat patients with metastatic colorectal cancer that has progressed despite standard treatment. It was approved in the United States in September.

Bosutinib (Bosulif, Pfizer) is used to treat patients with chronic myeloid leukemia who have developed resistance or tolerance to previous therapy with tyrosine kinase inhibitors. It was approved in the United States in September.

Omacetaxine mepesuccinate (Synribo, Teva Pharmaceuticals) is used to treat patients with chronic myeloid leukemia who have progressed after treatment with at least 2 tyrosine kinase inhibitors. It was approved in the United States in October.

Abraxane (paclitaxel protein-bound particles for injectable suspension); Celgene; For the treatment of non-small cell lung cancer, Approved October

Cabozantinib (Cometriq, Exelixis) is used to treat patients with metastatic medullary thyroid cancer, which accounts for about 4% of all of thyroid cancers. It was approved in the United States in November.

Ponatinib (lclusig, Ariad) is used to treat patients with chronic myeloid leukemia or Philadelphia-chromosome-positive acute lymphoblastic leukemia who are resistant to other


( g, ) p y p p y ptherapies, and in those who carry T315I mutations. It was approved in the United States in December.

12

http://www.medscape.com/viewarticle/776320; http://www.centerwatch.com/drug-information/fda-approvals/drug-areas.aspx?AreaID=12

Oncology & the First-in-Class Barrier: Is This Changing?

• TKIs and mTORs, Anti-VEGF, Anti-CD20s, Anti-EGFR• On the other hand, Herceptin, Perjecta, Kadcyla…

DiMasi and Grabowski, Economics of New Oncology Drug Development, J Clin Oncology Vol. 25, pp. 209-216, Jan 10, 2007


Shortening Timelines from Discovery to Market

N t M d 2011 M 17(3) 297 303


Nat Med. 2011 Mar;17(3):297-303

Fast-Followers, Especially Enabled by Biomarkers and Refractory Patients Linked to MutationsDrug Company Phase Mechanism Indication & Phase Comment

Crizotinib Pfizer MRKTALK inhibitor, Proto oncogene protein c met inhibitor

NSCLC – MRKT US, PreReg EUNSCLC (combo therapy) - P1/2Solid tumors – P1

ALK-positive diseaseinhibitor Solid tumors P1

AF 802 Chugai P1/2 ALK inhibitor NSCLC – P1/2 JPN ALK-positive NSCLC

AP 26113 ARIAD P1ALK inhibitor, EGFR antagonist, ROS1-protein-inhibitor

NSCLC – P1 US/EUSolid tumors – P1 US/EU

pts whose tumors exhibit ALK rearrangements

ASP 3026 Astellas P1 ALK inhibitorB cell lymphoma – P1 USSolid tumors – P1 US/JPN

pts with advanced solid tumors

LDK 378 Novartis P1 ALK inhibitor Solid tumors – P1 US/EUpts with confirmed ALK positive tumors

X-396 Xcovery P1 ALK inhibitor Solid tumors – P1 US

ALK inhibitors Tesaro, Amgen PC ALK inhibitor Cancer, NSCLC – Preclinical

Anticancer mAbsMedImmune, Georgetown

PC ALK inhibitor Solid tumors – Preclinical

Cancer therapeutics sanofi-aventis PC ALK inhibitor Cancer – Preclinical

Kinase inhibitors Cephalon PC ALK inhibitor NHL, Solid tumors – Preclinical

Kinase inhibitors Nerviano PC ALK inhibitor Cancer – Preclinical

Therapeutic antibody Delenex PC ALK inhibitor

Cancer, Neurologic disorders, skin disorders –


fragmentsDelenex PC ALK inhibitor

Preclinical

15

Those Many Lung Cancer Drugs Reaching the Market Will Have to Do a Lot of Slicing, Dicing and Vying

Sequist, Sci Transl Med 201


Genetic Engineering News Webinar, Jan 31, 2013: Personalized Cancer Treatment and Patient Stratification Using NGS and Other OMICs Data

16

Will the Ongoing Paradigm Shift of Targeted Therapies and Precision Medicine Get Us Beyond Incrementalism?

With the Caveat That Such Comparisons Are Necessarily Based on Median OS!


Clinical Cancer Res Vol 16, pp. 5951-5955, 2010

Oncology’s New Equation: Value vs. Cost of Drugs…The Good & the Bad (…& in the Not Too Distant Future, Maybe the Ugly?)


BBC News, Jan 14, 2013; BioCentury, Feb 15, 2013

Rising Costs of Drugs – The Payer Pressure on Performance of Any Individual Drug is Increasingy g g

Graph provided courtesy of Dr. Peter Bach, Memorial


Sloan-Kettering Cancer Center N Engl J Med. 2009 Feb 5;360(6):626-33

But PoR May Not Be So Easy When the SOC Bar is High and/or the Price of the Individual Components, Let Alone the Regimen Cost is HighCost, is High

The cost of managing CRC has risen more exponentially (~ 500-fold), while the clinical benefits have risen meaningfully but more arithmetically (fromthe clinical benefits have risen meaningfully but more arithmetically (from around 11 months to upwards of 30 months).


xxx J Clin Oncol 25:180-186, 2007.

Even in the US, Cancer Is Losing Its Privileged Status

Sanofi Halves Price of Cancer Drug Zaltrap After Sloan-Kettering RejectionNovember 8, 2012 – The New York TimesIn an unusual move, a big drug company said on Thursday that it would effectively cut in half the price of a new cancer drug after a leading cancer center said it would not use th d b it t i Th d b S fi f th l d Z lt ld b i f i t t th f tt d i i ththe drug because it was too expensive. The move — announced by Sanofi for the colon cancer drug Zaltrap — could be a sign of resistance to the unfettered increase in the prices of cancer drugs, some of which cost more than $100,000 a year and increase survival by a few months at best. Zaltrap came to market in August at a price of about $11,000 a month. Soon after, Memorial Sloan-Kettering Cancer Center in New York decided not to use the drug, saying it was twice as expensive but no more effective than a similar medicine, Avastin from Genentech. Both drugs improved median survival by 1.4 months, doctors there said. Three doctors at Sloan-Kettering publicized the cancer center’s decision last month in an Op-Ed article in The New York Times. “Ignoring the cost of care is no longer tenable,” they wrote. ”Soaring spending has presented the medical community with a new obligation. When choosing treatments for patients, we have to consider the financial strains they may cause alongside the benefits they may deliver.”

In an unusual move, a big drug company said on Thursday that it would effectively cut in half the price of a new cancer drug after a

Sanofi executives argued that the price they had set was very similar to that of Avastin. “The intent was not to charge a premium,” Christopher A. Viehbacher, the chief executive of Sanofi, said in an interview last month. Sloan-Kettering, he said, was basing its price comparison on a dose of Avastin that was half the dose Sanofi used in its own comparison. On Thursday, Sanofi backed down. “We believe that Zaltrap is priced competitively as used in real-world situations,” it said in a statement. “However, we recognize that there was some market resistance to the perceived relative price of Zaltrap in the U.S. — especially in light of low awareness of Zaltrap in the U.S. market. As such, we are taking immediate action across the U.S. oncology community to reduce the net cost of Zaltrap.” The move was first reported on Thursday by The Cancer Letter, a newsletter about cancer issues. Sanofi said it would not change the official price for Zaltrap but would offer discounts of about 50 percent. Zaltrap, which is given intravenously, is not bought directly by

y p gleading cancer center said it would not use the drug because it was too expensive. The move — announced by Sanofi for the colon cancer drug Zaltrap — could be a sign of resistance to the

patients but is sold to doctors or hospitals, which administer it. The cost is then reimbursed by Medicare or private insurers. Patients could be liable for a co-payment. Dr. Leonard B. Saltz, chief of gastrointestinal oncology at Sloan-Kettering and one of the authors of the Op-Ed article, said Sanofi’s offer of discounts “doesn’t really address the problem from our perspective” because Medicare reimbursement and patient co-payments would still be based on the higher list price, at least for several more months. Also, he said, the discounts could give doctors and hospitals an incentive to use Zaltrap because they could profit from the difference between the discounted price they pay for the drug and the higher price at which they are reimbursed by insurers. Dr. Saltz said even at the lower price, he did not foresee Sloan-Kettering doctors using Zaltrap because it was no better than Avastin and might be more toxic. Dr. Saltz is now a consultant to Genentech and has been one to Sanofi. Zaltrap, developed by Sanofi and Regeneron Pharmaceuticals, a biotechnology company in Tarrytown, N.Y., was approved by the Food and Drug Administration in August for

unfettered increase in the prices of cancer drugs, some of which cost more than $100,000 a year and increase survival by a few months at best. S fi id it ld t h th ffi i l i f Z lt b tuse as a second-line treatment for colorectal cancer, meaning after an initial regimen had stopped working. Like Avastin, Zaltrap impedes the formation of blood vessels that

nourish cancer cells. Dr. Peter B. Bach, director of the Center for Health Policy and Outcomes at Sloan-Kettering and one of the authors of the Op-Ed piece, said the price of Zaltrap reflected a bigger problem — that over all there was little relation between drug prices and the value they provided. “Normal markets wouldn’t behave like this,” he said on Thursday. “You couldn’t introduce something twice as expensive and no better and still sell it.” Dr. Lee Newcomer, senior vice president for oncology at UnitedHealthcare, said it was the first time he could recall a company cutting the price of a cancer drug so much. “It was the first time physicians have stood up and said, “Enough is enough,’ ” he said. “And I think that was a watershed moment.”

Sanofi said it would not change the official price for Zaltrap but would offer discounts of about 50 percent.


http://www.nytimes.com/2012/11/09/business/sanofi-halves-price-of-drug-after-sloan-kettering-balks-at-paying-it.html?_r=0&pagewanted=print

21

Oncologists Revolt, Again…And Payers Are Paying Attention


Oncology Market: Business as Usual?

Pfizer-Drug Xalkori Approved for Lung Cancer, but at What Cost?August 30 2011New York City-based Pfizer Inc. gained FDA approval for their drug Xalkori, the first new medicine in several years for deadly, advanced lung cancer, according to new research. Xalkori is used to treat certain patients with late-stage -- advanced or metastatic -- lung cancer along with an abnormal anaplastic lymphoma kinase (ALK) gene, which causes cancer development and growth. The drug, which works by blocking certain proteins called kinases, including the protein produced by gene abnormality, is being approved with a companion diagnostic test from Abbott Molecular Oncology that helped determine if a patient has the gene.“The approval of Xalkori with a specific test allows the selection of patients who are more likely to respond to the drug,” said Richard Pazdur, M D director of the Office of Oncology Drug Products in the FDA’s Center for Drug Evaluation and Research “Targeted therapies such as XalkoriM.D., director of the Office of Oncology Drug Products in the FDA s Center for Drug Evaluation and Research. Targeted therapies such as Xalkoriare important options for treating patients with this disease and may ultimately result in fewer side effects.”The Wall Street Journal reports that, four years ago, Pfizer Inc. was on the verge of abandoning a cancer therapy until scientists discovered its effectiveness for, at the time, only a small group of people -- 6,000 patients a year in the U.S. The results may not achieve multi-billion-dollar sales, but whether that yields a product for tens of millions of patients or 10,000 patients, we're interested, Geno Germano, who runs Pfizer's specialty-care and cancer businesses, told WSJ. In two clinical trials involving about 255 patients, Xalkori delayed tumor progression for at least t th i li htl th h lf th ti t h h d ifi ti t ti th t d t d R hl t t f th

Pfizer plans to charge $115,200 a year per patient for Xalkori.

ten months in slightly more than half the patients who had a specific genetic mutation, the study noted. Roughly one to seven percent of those with larger-celled lung cancer have the ALK gene abnormality, according to the FDA. Patients with this form of lung cancer are typically non-smokers. Federal health regulators discussed the drug shortly after its U.S. approval based on it being reasonably likely to predict a clinical benefit to [lung cancer] patients, they said. Xalkori is approved for the roughly four percent of patients with non-small cell lung cancer who have the gene.In one study, the objective response rate was 50 percent with a median response duration of 42 weeks. In another, the objective response rate was 61 percent with a median response duration of 48 weeks with most patients tested had tumors shrink or disappear for months, without the nasty side effects of chemotherapy. FDA officials said the most common side effects reported in patients receiving Xalkori included vision disorders, nausea, diarrhea, vomiting, swelling, and constipation.Pfizer plans to charge $115,200 a year per patient for Xalkori.


http://www.ibtimes.com/pfizer-drug-xalkori-approved-lung-cancer-what-cost-306928

23

Even the Patient-Stratified Approach May Not Be A Sure Thing

German Cost Agency Spurns XalkoriFebruary 21, 2013

The well-armed German pricing gatekeepers have dismissed another Big Pharma drug. Pfizer's lung cancer treatment Xalkori got an initial thumbs-down from the Institute for Quality and Efficiency in Health Care (IQWiG).

Under recent healthcare reforms--and budget cuts--in Germany, IQWiG assesses new treatments in comparison with existing alternatives The agency's decisions determine whether new drugs can wear premium price tags If theexisting alternatives. The agency s decisions determine whether new drugs can wear premium price tags. If the treatments aren't deemed superior to older drugs, then companies' pricing power is virtually nil. "No additional benefit" is the operative phrase when IQWiG is least impressed. And that's the designation the agency awarded Xalkori.

The Pfizer lung cancer drug is designed for patients with an abnormal ALK gene. That's about 5% of people diagnosed with non small cell lung cancer It was greeted with great fanfare in the U S when FDA approved it in 2011 as a highly

If the treatments aren't deemed superior to older drugs, then companies' pricing power is virtually nil.

" dd l b f " h h h lwith non-small cell lung cancer. It was greeted with great fanfare in the U.S. when FDA approved it in 2011 as a highly effective, targeted drug for patients whose disease is particularly difficult to treat. But it's highly expensive as well.

IQWiG took issue with Xalkori's side effects in comparison with other NSCLC chemotherapies. And it slapped a "no additional benefit" on the drug in comparison with best supportive care because Pfizer hadn't provided any data.

"No additional benefit" is the operative phrase when IQWiG is least impressed. And that's the designation the agency awarded Xalkori.

Pfizer, in turn, took issue with the assessments in a statement titled "IQWiG method distorts the benefits of personalized cancer medicine." The company says it believes Xalkori offers a "significant benefit" for appropriate patients. And it plans to argue its case before the agency deadline in early March.


http://www.fiercepharma.com/node/93063/print (modified)

24

The Times They Are a Changin’: Cancer is No Longer Sacrosanct & For the Moment We Are Not Yet Under as Draconian a System as NICENICE


Source: In Vivo , May 2011, “What New Cancer Pathway Programs Mean for the Drug Industry”

The Times They Are a Changin’: Moving to Differentiate Based on Outcomes – Evidence-Based Medicine

New Competitive Arena Emerges for Pharmaceutical Companies in Healthcare’s Changing Payment Landscape, Finds PwC Health Research Institute StudyInstitute StudyNEW YORK, May 17, 2012Pharmaceutical companies that are first to meet healthcare’s new expectations pof value could have an advantage in the competition for market share and brand differentiation, according to a report published today by the Health Research p y yInstitute (HRI) at PwC US. Physicians, health insurers and patients now want to know how well a drug will work and affect total medical costs. Yet an HRI survey of health plan executives finds the information currently provided by the biopharmaceutical industry no longer suffices.


www.pwc.com/us/en/health-industries/publications/pharma-reimbursement-value.jhtml

g

26

Fending Off Clinical Pathways With Personalized Causal Pathways?y


Genetic Engineering News Webinar, Jan 31, 2013: Personalized Cancer Treatment and Patient Stratification Using NGS and Other OMICs Data; Thomson Reuters’ Metaminer

Niche-ification & PCP-ification: Dynamic Tension

Niche-ification PCP-ificationNiche-ification

• Identifying the subsetsh h l

PCP-ification

• Chasing established marketsh bl h• Matching the target, novel or not,

and the patient• Therapeutic and companion

diagnostic paths

• Chasing established MOAs• Chasing validated development paths• Add-on to SOC regimens for

i t l b fitdiagnostic paths• Add-on or not, significant benefit (in

PFS if not OS)

incremental benefit


DEALS IN ONCOLOGY – THE HISTORICAL CONTEXT TO THE COMING CHANGE


Defined Heath’s Analysis of Deals – Oncology Continues to Lead and to Recover in 2012 from Hit of Prior Few Years


EvaluatePharma report - Therapy area licensing in 2012 – Rags and riches

Dealmaking in 2012 in Oncology Continued to be Strong


Deloitte Recap Webinar: 2012 year in Review, January 22, 2013

Dealmaking in 2012 in Oncology Continued to be Strong


Deloitte Recap Webinar: 2012 year in Review, January 22, 2013

Oncology Licensing & JV Trends, 2008-2012: Oncology, Autoimmune Deals Break Away from the Pack in Recent Yearsy

$800

Average Disclosed Total Size of Licensing Deals by Year (2008-2012): Oncology (n=103) vs. Autoimmune/Inflammatory (n=64) vs. All Other Therapeutic Areas (n=230)

$519.6$557

$669

$600

$700

$Mill

ions

)

Cancer Autoimmune/Inflammatory All Other Therapeutic AreasOncology Autoimmune/Inflammatory All Other Therapeutic Areas

$467.5 $369

$492.7

$328.7

$541.1

$356.6

$446.6

$391.7$408.1

$400

$500

ed T

otal

Dea

l Size

(

$318.8$297.5

$205.8$200

$300

Aver

age

Disc

lose

$0

$100

2008 2009 2010 2011 2012

Chart includes 2008-2012 Licenses and Joint Ventures involving at least one major market territory (U.S., EU, Japan) that disclosed a total deal size and had


Data Source: Deloitte Recap LLC

Chart includes 2008 2012 Licenses and Joint Ventures involving at least one major market territory (U.S., EU, Japan) that disclosed a total deal size and had an assigned therapeutic area (TA) - deals with a TA of “Not Applicable” or “Unknown” were excluded. NOTE: Deal Size includes the maximum possible payments under the deal structure, including upfront cash, upfront equity, contingent equity, loans, R&D funding payments, and all milestone payments.

33

Oncology Licensing & JV Trends, 2008-2012: Upfront Payments Rise Predictably by Stage, Phase II Earns Highest Premiumy y g g

70

Average and Median Upfront Cash Payments for Oncology-Focused Licenses & JVs in Major Markets 2008-2012, Discovery-Phase III (n=100)

Average Upfront Payment ($M) Median Upfront Payment ($M) $58.0

50

60

Mill

ions

)

Average Upfront Payment ($M) Median Upfront Payment ($M)

$18 8

$28.5

$38.4

$31.5

$41.5

30

40

nt P

aym

ent (

$M

M di Ph$18.8

$11.2

$9 3 $6 0

$1310

20

Upf

ro Median Phase II Premium: +142%

$9.3 $6.00

Chart includes licenses and JVs with an assigned stage at signing of Discovery through Phase III, disclosed an upfront payment and involved at least one “major

Phase III(n=21)

Range:$3-$210M

Phase II(n=23)

Range:$4-$150M

Phase I(n=17)

Range:$1-$140M

Lead/Preclinical(n=25)

Range:$0.25-$40M

Discovery(n=14)

Range:$0.07-$121M


Data Source: Deloitte Recap LLC

Chart includes licenses and JVs with an assigned stage at signing of Discovery through Phase III, disclosed an upfront payment and involved at least one major market” territory (U.S., Europe, Japan). NOTE: When data are skewed or contain outliers (see ranges above), the median value is generally more informative than the average value in terms of where the middle of the range of values lies.

34

Cancer M&A Trends: 30% of Acquisitions are Early Stage Versus 15% for Non-Cancer

Percent Distribution of Lead Product Stages For Therapeutic Product Company M&As (2008 – 2012)

36% 22%Cancer(n = 81) Phase II Marketed / Approved

Cancer(n=81)

22% 53%Average,

All Therapeutic Areas M k t d / A dh

Average,All Therapeutic

Areas

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Areas(n = 419)

Marketed / ApprovedPhase II(n=419)

Lead Molecule Preclinical Phase I Phase II Phase III Registration Stage Marketed / Approved

Source: Deloitte Recap LLC

Early Stage Products Late Stage Products

Data Source: Deloitte Recap LLCInsight into Action | www.recap.comCopyright © 2013 Deloitte Development LLC. All rights reserved.


ppy g p g

What Standard Do We Aim For Going Forward:for Regulators, Physicians, Patients, Payers &for Regulators, Physicians, Patients, Payers & Partners? Proof of Relevance


The Challenge of Developing an Optimal Label for Any New Oncology Agent

Activity Efficacy=Activity EfficacyEfficacy Regulatory Approval

R l A l C i l T i

==

Regulatory Approval Commercial Traction or Access to Patients

=

Clinical & Market Success Require Evidenceof Differentiation AND Value

M difi d f d d t f St H ll S H ll LLC O l St t Ali i R&D d M k t


Modified from and used courtesy of Steve Heller, S Heller LLC - Oncology Strategy: Aligning R&D and Markets

The Evolution of Hurdles Broadly for the Industry Across All Therapeutic Areas Has Reached Oncology

RR → PFS → OS → HEOR

Overall Improved Outcomes

Overall Improved Outcomes

Pharmacoeconomicbenefit

Pharmacoeconomicbenefit

Utility in first line nonUtility in first line non Improved OverallImproved Overall

No prior therapyNo prior therapyOrphanOrphan

Extended survivalExtended survival

Utility in first line non-responders or as add-onUtility in first line non-responders or as add-on

Tolerability, Safety & QoLTolerability, Safety & QoL

Improved Overall Therapeutic ProfileImproved Overall Therapeutic Profile


Extended survivalExtended survival y Qy Q

Focus is Shifting to Proof of Relevance: Clinically Meaningful Differentiation for Patients, Physicians, Regulators and Payers, y , g y

The Zen Zone of Balancing Commercial and Scientific/Clinical Risk


PoR is Not So Easy for the 15th, 30th or 70th Anti-VEGF Agent in Clinical Developmentp

• Bruce Booth’s timely Forbes blog from last year’s ASCO: 8 targets are addressed by >20% of pipeline projects, each of which has more than 24 projects in clinical development.


Forbes, Pharma & Healthcare 6/07/2012 (using Thomson Pipeline)

http://www.forbes.com/sites/brucebooth/2012/06/07/cancer-drug-targets-the-march-of-the-lemmings/

40

PoR Built Into PoC: Biomarker Strategy + Strong Differentiation = Short Term Value Creation Past Consensus Analyst Forecasts

Recent Consensus Analyst Forecasts


Plexxikon press releases; EvaluatePharma, Zelboraf projections 2011 and May 2013

41

And Facilitating Follow-on Products & Fast-Followers

• Similar clinical and commercial developments have been seen with follow-ons to Gleevec (imatinib), with BMS’ dasatinib (Sprycel), Novatis’ own nilotinib (Tasigna), Pfizer’s bosutinib (Bosulif) and Ariad’s ponatinib.

FierceMarkets Webinar, June 12, 2012 – Getting the most PoC data in Phase I cancer studies – Jamie Freedman, MD, PhD, VP Cancer Research,


Phase I cancer studies Jamie Freedman, MD, PhD, VP Cancer Research, GSK

42

Trying to Differentiate in the Anti-EGFR Space: Novel, Synergistic Anti-EGFR Antibody Mixturey g y

• Sym004 is a combination of two monoclonal antibodies which target different non-overlapping eptiopes of EGFR

• In murine tumor xenograft models, Sym004 demonstrated efficacy superior to Erbitux and Vectibix – like these agents, Sym004 inhibits ligand binding and EGFR activation, and also induces immune-mediated killing of cancer cells

• However, Sym004 induces more rapid internalization and greater degradation of EGFRgreater degradation of EGFR

• It has been hypothesized that the increased rate of receptor internalization and degradation may account for the greater anti-tumor efficacy of Sym004 compared to conventional anti-EGFR antibodies

• Sym004 is believed to from larger antibody-receptor complexes at the cell surface than antibodies targeting single epitopes and these larger complexes apparently promote an increased rate of receptor internalization

• Agents which promote increased internalization and degradation of EGFR may provide superior anti-tumor activity compared to conventional anti-EGFR antibodies for the following reasons:

o more complete inhibition of ligand binding and EGFR activationo increased EGFR degradation prevents ligand-independent signaling via interaction with other

receptors


ADIS R&D Insight, Cancer Res. 2010 Jan15;70(2);588-97; www.symphogen.com

o less susceptible to resistance due to increased EGFR ligand production

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$25M for Phase I/II Compound with Animal Model PoR

Merck KGaA grabs a cancer antibody hybrid in $625M Symphogen pactg y y y p g pSeptember 6, 2012 | By John CarrollDanish biotech Symphogen picked up a major league pharma partner today along with an injection of fresh cash. Merck KGaA snagged Symphogen's second program--an anti-EGFR "mixed" antibody now in Phase II--with a €20 million ($25 million) upfront payment and promises of up to €475 million ($600 million) more in development and commercial milestonesmillion) more in development and commercial milestones.Merck KGaA gets Sym004, which is engaged in a mid-stage efficacy study. Antibodies, of course, have now become a standard feature in the biotech landscape. But Symphogen is one of a number of developers working on a next-gen approach by concocting antibody "mixtures" that can attack disease along multiple fronts. Genentech teamed with Symphogen on polyclonal antibodies four years ago.Merck KGaA's treatment is a combo threat weaving two antibodies together which have the potential toMerck KGaA s treatment is a combo threat, weaving two antibodies together which have the potential to "block ligand binding, receptor activation and downstream signaling but are also thought to elicit removal of the EGFR receptors from the cancer cell surface by inducing EGFR internalization and degradation." And the pharma giant says that it sees the program as a natural extension of its Erbitux franchise.A Phase I/II study has begun to produce safety and biomarker data for patients with KRAS wild-type metastatic colorectal cancer. And a year ago Symphogen launched a mid-stage study of the treatment formetastatic colorectal cancer. And a year ago Symphogen launched a mid stage study of the treatment for head and neck cancer.


FierceBiotech

44

Ipilimumab and BMS’s PD-1 Program Open the Door for Biotechs Targeting Other Checkpoint Moleculesg g p

Anti-PD-1 MAb


Trends in Mol Med Vol 14: 550-559, Dec 2008, ; J Clin Oncol Vol. 29:4828-4836, Dec 2011; Nature 480, 480–489 (22 December 2011); EvauatePharma , May 2013

45

Related PoR Can Provide Halo Effect Over PoC!

MacroGenics pockets $20M in $450M deal with ServierDecember 1, 2011 | By Ryan McBride

Taking another step forward after the failure of a late-stage trial of its lead drug last year, MacroGenics has bagged a pharma deal to fuel development of an immune-stimulating antibody against cancer. Servier, France's second-largest drugmaker has ponied up $20 million upfront inFrance s second-largest drugmaker, has ponied up $20 million upfront in the deal that gives it an option to develop and commercialize the drug, dubbed MGA271, for the European market.

Rockville, MD-based MacroGenics is testing the antibody drug in a Phase I trial in patients with solid tumors. The drug is intended to target the B7-H3 immune receptor, which is overexpressed in a wide variety of malignancies such as non-small cell lung, prostate and colorectal cancers. The developer is using a companion diagnostic in the trial to screen patients for the B7-H3 receptor, the company said.

The pact with Servier gives the French drugmaker the option to license the antibody after Phase I testing, at which point payments tied to the deal would total $60 million for MacroGenics. MacroGenics could reap up to an additional $390 million in payments if other development and commercial goals are reached, and the deal enables the company to hold on to rights to the drug in North America, Japan, India and Korea,


hold on to rights to the drug in North America, Japan, India and Korea, according to a press release. Servier gets rights to the drug in Europe and the rest of the world.

Clin Cancer Res Published OnlineFirst May 21, 2012; 1–12

46

SOME FINAL THOUGHTSSOME FINAL THOUGHTS


The Hope & the Challenge of Precision Medicine in the Face of the Harsh Realities of Tumor Heterogeneityg y


The Hope & the Challenge of Precision Medicine in the Face of the Harsh Realities of Tumor Heterogeneityg y

• Intratumor heterogeneity can lead tocan lead to underestimation of the tumor genomics landscape portrayed from single tumor-biopsysingle tumor biopsy samples and may present major challenges to personalized-medicine and biomarker development.

• Intratumor heterogeneity, associated with heterogeneous proteinheterogeneous protein function, may foster tumoradaptation and therapeutic failure through Darwinian

l J d V l 366(10) 883 892 h 8 2012


selection.

49

N Engl J Med Vol 366(10):883-892, March 8, 2012

Schema for Prioritizing Targets: A Multi-Pronged Approach of the Biological and Chemical Spaceg p

• “Selecting the best targets is a key challenge for drug Cancer Research UK Cancer Therapeutics Unit, The Institute of Cancer Researchkey challenge for drug discovery, and achieving this effectively, efficiently and systematically is particularly important for prioritizing

Cancer Research UK Cancer Therapeutics Unit, The Institute of Cancer Research

candidates from the sizeable lists of potential therapeutic targets that are now emerging from large-scale multi-omicsinitiatives such as those ininitiatives, such as those in oncology. Here, we describe an objective, systematic, multifaceted computational assessment of biological and h l h bchemical space that can be

applied to any human gene set to prioritize targets for therapeutic exploration. “


Nat Rev Drug Discov. 2013 Jan;12(1):35-50

We Must Be Thinking Mechanistically, Holistically & Dynamically

Nature Reviews Cancer 6, 924-935 (December 2006)Cancer as an evolutionary and ecological processLauren M.F. Merlo, John W. Pepper, Brian J. Reid3 & Carlo C. Maley

Nature Reviews Cancer 11, 375-382 (May 2011)An analogy between the evolution of drug resistance in bacterial communities and malignant tissuesG ill L b t L i E té S l St OhGuillaume Lambert, Luis Estévez-Salmeron, Steve Oh, David Liao, Beverly M. Emerson Thea D. Tlsty & Robert H. Austin

© Defined Health, 2013Defined Health Oncology Webinar, May 15, 2013 © Defined Health, 201351

Hopefully We Will Look Back in Ten Years Time & Marvel at How Far We Have Come


We Are Moving Forward to the Solution: Hopefully One That Is Tenable for All Parties

Hyper-intelligent pan-dimensional beings demand to learn the Answer to the Ultimate Question of Life, The Universe, and Everything from the supercomputer, Deep Thought. It takes Deep Thought 7½ million years to compute and check the answer which is:compute and check the answer, which is:

But hopefully less than 42 agents will beBut hopefully less than 42 agents will be needed in combination to cure most cancers – and immunotherapy may be part of this ultimate answer


ultimate answer.

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A High Level Snapshot of Challenges &A High Level Snapshot ... · 2013/05/15 · A High Level Snapshot of Challenges & Opportunities in the Oncology Market • The cancer field has