Personalized medicine opens bright future for biotechs
There remains a bright future for biotechnology in partnership with pharmaceutical companies, despite the current uncertainties about financing.
Shifting everyone’s focus forward at BIO-Europe Spring® and away from well-worn problems of conventional dealmaking was the morning session entitled “Personalized Medicine — The Next Big Thing in Biotech?”
The Vice Chairman for Investment Banking Europe with JP Morgan, Andrea Ponti, led a panel that included Dr. Thomas Metcalfe, the head of the Personalized HealthCare Portfolio for Roche; Michael Nohaile, Head of Molecular Diagnostics at Novartis; Dr. Antonius Schuh, CEO with Sorrento Therapeutics; and, Jim Vaughn, VP for International Sales and Marketing at Genomic Health.
Key points to emerge from the discussion describe essential elements for guiding biotech partners bringing either a biomarker or a diagnostic platform to the table for negotiating a deal in this emerging area.
First, pharmaceutical companies are now awakening to the opportunities. The panel provided a sharp contrast with Roche, which entered the diagnostic segment long ago, and is an experienced leader in the field, and Novartis, which recently formed the Molecular Diagnostics group.
“My unit was created just a couple months ago,” said Nohaile. “We are very new working at this intersection of therapeutics and diagnostics, and we intend to partner heavily to do it.”
“Over the past 24 months there has been a sea change in big pharma,” he said, with the industry now responding to a pressure from both regulators and payers calling for more targeted and more effective therapies.”
Second, while the pressure may be coming from regulators and payers, neither of these two groups is very clear yet about what these new tools may be or what they are worth.
“Innovative diagnostics in this space are not necessarily under the purview of the FDA,” said Dr. Metcalfe from Roche. “Novel tests that truly are clinically innovative often exclude the FDA.”
As for reimbursement, the panel agreed that the biggest challenge is that the majority of payors see diagnostic tools for testing the effectiveness of therapies as an additional cost of the therapy and not as a driver for healthcare savings.
Biotech and pharma partners need to produce clinical evidence for novel tests and then deliver the clinical value in order to be rewarded by payors.
Dr. Antonius Schuh, CEO of Sorrento Therapeutics said, “Increasingly a biotech company coming forward with a test or a biomarker must have both the intellectual property and the clinical data. The emphasis on the platform is becoming less and less. If you have IP and data, then you bring value to the partnering table.”
Last, the most contentious issue among panelists was whether diagnostics are seen as working for, or against, pharmaceuticals in personalized medicine. At this early stage in the development of potential companion diagnostics, a battle line is drawn that runs directly through the label indicating the use of a given pharmaceutical.
All members of the panel, whether the promoter of a diagnostic tool or the protector of a therapeutic, weighed in on this issue and the session ended on a tense note.
Jim Vaughn with Genomic Health suggested that “the drugs that are the most vulnerable to personalized medicine are those that are the least targeted coming out of the box.”
“It is in the interest of pharma post-launch to close gaps and make a medication more effective for specific patient groups,” he said.
While the diagnostic developers see nothing but opportunity, there is an emerging risk that pharmaceutical companies will fiercely defend a drug’s label.
“Where there is an existing label and a diagnostic test that tries to affect that label in an unfavorable way, that is not really working together. It is confrontational, and viewed as a third party trying to interfere with a label,” warned Dr. Metcalfe.
“If pharma is forced to fiercely defend its label, it will be to the detriment of diagnostic companies,” he said, adding, “the co-development model works better.”
“Working together in a pre-launch phase,” Dr. Metcalfe said more encouragingly, “the interests of both parties is aligned, as well as those interests of the regulators and the reimbursement parties.”
“With this co-operation, the developer of a diagnostic tool becomes party to the value of the combination of the diagnostic tool and therapy, and shares in the back-end split of that value,” he said.
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