A Tale of Two Drugs

The BIO convention has unleashed a flurry of opinion items on drug pricing bemoaning the high prices of drugs coming out of biotech. While few are as absurd as the one Derek Lowe skewered today, they are coming from voices taken very seriously. Marcia Angell, former New England Journal of Medicine editor-in-chief, was quoted that biotech companies can charge whatever they want due to holding monopolies on their treatments, whereas today's Globe had an op-ed from Harvard prof Jerry Avorn all but proposing a tax on biotech drugs to be earmarked for NIH funding.

In the end the claim is that drug prices could be much, much lower but real pharmaceutical innovation would be preserved or even enhanced. Angell in particular seems to be fond of the White Queen's habit of believing impossible things; a run of Op-Eds from her this year in the Globe alternately excoriated the pharmaceutical industry for spending R&D dollars 'me-too' drug development followed by celebrating that the availability of multiple closely related compounds enabled large payers to bargain with pharma companies over dispensary prices. Angell also fails to explain why companies which can charge 'whatever they want to' don't charge more -- are they idiots? Or is the world really not so neat and tidy.

I'd like to use the stories of two drugs from my former shop to illustrate how complex reality is. The two drugs are Velcade and MLN-02, both entering Millennium's portfolio through the acquisition of Leukosite. Two or so other drugs from other companies will also make appearances, though that's getting ahead of ourselves.

Velcade is Millennium's biggest drug. Nobody can claim it is 'me too': it is the first proteasome inhibitor ever to enter the clinic, and is still the only approved one. Velcade has been approved to treat two cancers of B-cells, multiple myleoma and mantle cell lymphoma. That short list is not for lack of trying: between Millennium, the NCI and individual investigators it has probably been thrown at virtually every known cancer, alone or in combination with standard chemotherapy agents. Positive signals are few and far between and have the nasty habit of disappearing once the trials get large. In many cases, the right dosing or combination may not have been found yet, so oncologists continue to explore Velcade even in indications where it has not succeeded previously.

Now Millennium and its pharma partner J&J do market Velcade, but the effort is quite modest (I don't have numbers, but the U.S. sales force I think is a few hundred). Millennium continues to plow cash into Velcade trials in the hopes of hitting a significant jackpot; MM & MCL are important but won't drive sales to the stratosphere. Velcade was the first agent in over forty years to demonstrate a survival advantage in second line myeloma. Yet Millennium's stock price is stagnant and the company is trimming expenses annually. So why isn't Millennium in clover?

The answer quite simply is competition. Celgene had thalidomide, with its dark history, and thal is quite useful in myleoma. Thal is oral, whereas Velcade is injectable, and convenience wins all other things being equal -- and at the moment there is not hard evidence to say the two drugs aren't comparably effective. But what's really knocking Millennium around is the thalidomide follow-on Revlimid, which is claimed to be significantly less teratogenic. Now Rev is a follow-on and chemically related to thalidomide -- is this a me-too? Revlimid is also oral and is already looking good in front line trials of myeloma, where Millennium hoped to expand Velcade into -- that will probably be successful, but it will be another the same dogfight all over again.

Note that this competition has some very real effects. It is chic in some circles to sneer at worrying about stock prices, but that stock is a very real mechanism for raising money to plow into further R&D. Millennium is still an independent company because it was lucky enough to issue stock near the peak of the biotech bubble; money is still marching out the door faster than it marches in.

Now let's look at MLN02, another drug with an interesting story. MLN02 is an antibody which targets certain integrins, heterodimeric extracellular protein molecules important for the recruitment of immune cells to sites of inflammation. MLN02 targets an integrin believed to be specific to the gut, and so might offer a very specific approach to downregulating excessive immune activity in ulcerative colitis and Crohn's disease.

MLN02 has had a rocky history at Milllennium. Leukosite had partnered with Genentech on the drug, but Genentech later bailed out. A paper was published in the New England Journal with the results of a large study, but even these results are not as clear as one might like. In any case, the development of MLN02 has at times been a top priority on Landsdowne Street, but at other times the drug was essentially tabled. Why?

A lot has to do with the competitive landscape. Crohn's and UC are not huge markets, so dividing the market up isn't very attractive -- especially if the competitor gets there first. The first entrant advantage is quite large in pharmaceuticals. So the tea leaves are read daily -- and the newswires scanned obsessively -- to see what the competition was up to.

One development which iced down MLN02 enthusiasm greatly was the accelerated development of another biotech company's integrin targeting drug -- and that company was large and successful. Their drug would go first for another indication, but might hit Crohn's and/or UC prior to MLN02 could be expected to get there. With lots of safety data from the other indication & some of the same docs prescribing in both areas, the deck would be stacked against a new entrant -- even if MLN02 had the theoretical advantage of being gut-specific. Launch of the potential competitor in the other indication ahead of schedule did not help matters any.

What heated up MLN02 interest again was what happened to that competitor, as it was Biogen's Avonex. Avonex works in MS, but in a very small number of patients a lethal viral infection was enabled by the drug. Suddenly, the competitive landscape was altered -- though with a new regulatory challenge of convincing the regulators that MLN02 really doesn't alter lymphocyte trafficking in the brain.

To some degree, the numbers folks were daily running estimates of what the expected gain from MLN02 would be, given the competitive landscape (I've left the other big player, Remicade, out of the story -- and it is probably going to waltz all over these markets). Even when Avonex was in trouble the models suggested that MLN02 might end up being a money pit after all -- depending on its efficacy and the price payers were willing to pay for it. Biotech has proven many times it is possible to fail by succeeding; your drug works, but not well enough to make it to market -- and there are no money-back guarantees on clinical trials.

Like it or not, money is the lifeblood of pharmaceutical development. Trials are expensive. No matter how much you hacked away at marketing or executive salaries at Millennium, the brutal reality of costly trials and ever changing competitive markets would prevail. We might want to pay less for new medications and perhaps through price caps or other government fiats society may accomplish this desire. But to claim that new drugs will continue to flow as before is to ignore the real world -- dlrugs go forward which are predicted to pay for their development costs and cover the money sunk into expensive failures. Cut the reimbursement rates and you inevitably negatively change the risk-reward perception for every project in development. Some will survive, but many, particularly the MLN02s of the world, will not.