Pfizer Inc. (NYC) and its German partner Merck KGaA (Darmstadt) have run into a brick wall in their race to expand the market for their PD-L1 checkpoint inhibitor Bavencio (avelumab).
Researchers on Tuesday (November 28, 2017) conceded that the checkpoint med–one of 5 now clambering to expand their market share in the mega-blockbuster global oncology business–failed to significantly improve overall survival for advanced gastric cancer patients compared to best standard of care, according to Reuters.
Bavencio, or avelumab, did not meet the primary goal of prolonging overall survival in patients whose Cancer had returned or spread despite two prior treatment rounds, the two companies said in a statement on Tuesday.
Bavencio this year won regulatory approvals against a rare and aggressive type of skin cancer and against bladder cancer. First trial results in lung cancer, its largest commercial opportunity, are not expected before next year.
The drug is a late entrant to a fast-growing class of drugs called PD-L1 or PD-1 inhibitors that help the immune system attack cancer by blocking a mechanism tumors use to evade detection.
Rival drugs Keytruda by Merck & Co. (Kenilworth NJ), Bristol-Myers Squibb Co.’s (NYC) Opdivo, Roche Holding AG’s (Basel CHE) Tecentriq and AstraZeneca PLC’s (London) Imfinzi are seen as having bigger blockbuster potential by analysts.
Evercore ISI analyst Umer Raffat said initial expectations were low because Bavencio/avelumab was tested against chemotherapy and not against an ineffective placebo, as was the benchmark in earlier comparable studies involving rival drugs in the same class.
“We are confident that our broad clinical development program in both monotherapy and combinations across a range of cancers will continue to bring new potential treatment options to patients,” Chris Boshoff, Pfizer’s head of immuno-oncology, said in the statement.
As the two drug partners were quick to point out, third-line gastric cancer “is a particularly hard-to-treat and heterogeneous disease,” FiercePharma reports. But it’s also a significant market opportunity; gastric cancer is the fifth most common type of cancer, with 950,000 new cases recorded in 2012, but it’s the third most common cancer killer.
In September, Merck’s PD-1 powerhouse Keytruda picked up an FDA nod in gastric cancer patients who’ve received at least two prior rounds of therapy and whose tumors express PD-L1. And earlier that month, Bristol-Myers’ Opdivo got a Japanese green light for patients who have progressed after chemo.
If you’re like me, hardly a week goes by where you’re not confronted with new terms like PARP inhibitors, CAR-T cell therapies, checkpoint inhibitors; names like Opdivo, Keytruda, Kymriah and Gleevec, just to name a few. And are they expensive? Novartis’s Kymriah has a cost of $475,000. And that’s just a mid-range price among the entire bunch.
The latest batch of promising “cures” for dreaded illnesses include Bavencio, Tecentriq and Imfinzi. The point is that the eruption of new cancer drugs that’s occurred over the past decade includes major superstars that have registered some early, eye-watering results in clinical trials.
I wrote a piece last month about researchers at prestigious King’s College London and the London School of Economics who decided to hit the pause button and examine 68 cancer indications approved in Europe over a 5-year period through 2013.
To their surprise and my and others’ dismay, they found that such indications were endorsed on only tenuous data resulting from unreliable trial designs. At least 10 of these approvals have never demonstrated any real benefit for patients.
How did we get to this point where television ads routinely hype this new era of personalized medicines–at stupendous cost–many of which begin with promising, temporary remission from a dire illness, only to prove a failure later when the underlying malady recurs?
Indeed, I agree we are in a new era. However, I and others refer to it (generally) as, “Pharmas shattered business template: An industry teetering on the brink of collapse.”
Like many industries, Pharma’s business model fundamentally depends on productive innovation to create value by delivering greater customer benefits, notes Kelvin Stott, contributor to Endpoints News.
Further, sustainable growth and value creation depend on steady R&D productivity with a positive ROI to drive future revenues that can be reinvested back into R&D. In recent years, however, it has become clear that Pharma has a serious problem with declining R&D productivity, Stott posits.
He argues that a simple, new method to measure R&D productivity/IRR (internal rate of return) of Pharma’s business model essentially involves making a series of investments into R&D and then collecting the return on these investments as profits some years later, once the resulting products have reached the market.
However, the situation is complicated by the fact that both investments and returns are phased over many years for each product, and not all products make it to market; in fact, most products fail to reach market at all and they fail at different times and costs during their development.
As it happens, the average investment period is relatively stable and well-defined, as it is largely driven by a fixed standard patent term of 20 years, as well as a historically stable R&D phase lasting roughly 14 years from first and 10 to the goal line.
Therefore, the average investment period is about 13 years, from the midpoint of the R&D phase after 7 years, plus another 6 years to reach peak sales before loss of exclusivity.
There is one potential argument against this method, Stott cautions, which is that the later phases of R&D tend to cost many times more than the earlier phases. However, Pharma realizes it must invest in many more projects at the earlier phases than at the later phases, due to natural attrition within the R&D pipeline. Thus, the total R&D investment is actually distributed fairly evenly throughout the development timeline.
Stott says before applying this simple method to calculate the return on investment, there is one additional but important detail to remember: The net return on R&D investment includes not only the resulting profits (EBIT), but also the future R&D costs. This is because future R&D spending is an optional use of profits that result from previous investments.
The most alarming aspect about this analysis, Stott suggests, is just how robust, consistent and rapid the downward trend is in return on investment over a period of over 20 years.
So, what is driving this trend, and why hasn’t Pharma been able evade it?
Law of Diminishing Returns
Many different causes and drivers have been suggested to explain the steady decline in pharma R&D productivity, including rising clinical trial costs and timelines, decreasing success rates in development, a tougher regulatory environment, as well as increasing pressure from payers, providers, and increasing generic competition. However. there is one fundamental principle at play that drives all these factors together: The Law of Diminishing Returns (LDR).
The recent explosion in the immuno-oncology field exemplifies how the LDR is fundamentally inescapable.
As each new drug like Keytruda and Kymriah improves the current standard of care, this only raises the bar for the next drug, say Bavencio, making it more expensive, difficult and unlikely to achieve any incremental improvement, while also reducing the potential scope for improvement.
Steve's Take: Law of Diminishing Returns is shattering current #Pharma business model
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Thus, the more Pharma improves the standard of care, the more difficult and costly it becomes to improve further. Companies continue spending to get diminishing incremental benefits and added value for patients which results in diminishing return on investment.
Stott concludes his analysis by saying what is clear is that Pharma (and Biopharma) will not be around forever and will begin to contract within the next 2 or 3 years. He believes Darwin’s theory of evolution applies to companies and industries just as much as it applies to the species of life, namely, “It is not the strongest of the species that survives, nor the most intelligent, but the one most adaptable to change.”
I think Stott’s timing about the collapse of Pharma is off by at least a decade. But his reasoning, founded on the hallowed Law of Diminishing Returns, cuts like a scalpel through the industry’s massive and effective advertising and PR apparatus. Like a beam of light speeding through the cosmos, the truth is shining through.
Pharma’s halcyon days are not immeasurable, as some observers and all product promoters predict.
The dawn of a new pharma era is already upon us.