Managing Your Product Pipeline in this New Era of FDA Scrutiny

1. Managing Your Product Pipeline in this New Era of FDA Scrutiny William K. Sietsema, PhD Vice President, Clinical and Regulatory Strategic Planning Kendle, and Adjunct Professor of Pharmaceutical Sciences University of Cincinnati College of Pharmacy

2. Background on Product Pipelines and Portfolio Management • What is a pipeline? • Examples of pipelines • Pipeline review processes • Portfolio balancing • Risk/Reward Isoquants • Blockbusters and Multibusters

3. Product Pipeline • A portfolio of products in various development stages, each with its own potential risks and rewards, and which, taken together, define the overall potential of a company

4. Example Pipeline http://www.npsp.com/drug_development/pipeline.php

5. Example Pipeline www.predixpharm.com/pipeline/popup-pipeline.htm, used with permission

6. Portfolio Management: Portfolio Reviews • Provide insight into value of individual projects • Gauge the contribution of each project to corporate aims • Optimize resources across projects • Define gaps (in-licensing needs) • Define excesses (out-licensing opportunities) • Improve quality of corporate decisions • Evaluate multiple potential candidates and grow/acquire/support those projects which give the right portfolio balance • Manage consumption of resources and generation of revenues so as to optimize growth and profitability

7. Portfolio Management:Review Considerations • Scientific strength of the technology • Stage of development (how much farther does it have to go?) • Robustness of underlying science (are we on a sure footing?) • Level of competition (who else is working in this area?) • Degree of advancement (is this a big step forward?) • Diversity of targets (spread eggs across multiple baskets) • Potential risks and rewards

8. There are Many Development Risks • Not found to be efficacious • Not safe for the targeted patient population • Drug delivery problems • Budget over-runs due to unforeseen circumstance • Not having the right “experts” or expertise to fit the program • Differences of opinion with Regulatory Authorities

9. Resources Resources Resources Resources Resources Resources Resources Resources Portfolio Balancing Act Risk Reward

10. Diversify and Balance the Portfolio High Potential Return Low Low High Probability of Success For a discussion of portfolio management strategy and theory, see Ding M and Eliashberg J. Structuring the New Product Development Pipeline. Management Science 48(3):343-363 (2002).

11. Risk/Reward Isoquants High Very Attractive Potential Return Attractive Less Attractive Low Least Attractive Low High Probability of Success Adapted from: Allport S. Strategic Project Management at the Portfolio Level. In Pharmaceutical Project Management, Kennedy T, editor. Drugs and the Pharmaceutical Sciences, volume 86. Marcel Dekker, New York. 1998.

12. Portfolio Management:Shift from Blockbusters to Multibusters • Change in technologies with introduction of pharmacogenomics and proteomics • Shift from broad target medicine to personalized medicine • Target treatment of patients with specific genotypes • Multibusters = series of personalized therapies that dominate a targeted disease area • Dual strategy of developing a diagnostic agent with selection of “personalized” therapeutic agents Gassman O, et al. Leading Pharmaceutical Innovation: Trends and Drivers for Growth in the Pharmaceutical Industry. Springer, New York, 2004

13. Pipeline Management Post-Vioxx™ Withdrawal • Events of 9/30 • Differences in expectations since 9/30 • Risk • Reward • Risk/Benefit

14. Vioxx Withdrawal

15. 9/30 – An Important Date in History • Vioxx™ withdrawal • Marks a change in expectations for drug safety • Sudden and unpleasant public awareness that seemingly safe medications can have infrequent but serious adverse events • Much turmoil, finger-pointing, fault-finding and litigation • Merck • FDA • Inadequate legislation

16. Differences Since 9/30 • Greater focus on safety, especially infrequent events in large populations • Greater scrutiny of data during approval process • Approval delays? • lumiracoxib • etoricoxib

17. Differences Since 9/30 (cont.) • Will the approval bar be raised? (Has it been raised?) • Will large outcomes studies be required for products with large markets and chronic exposure? • Increased expectations for post-marketing surveillance? • Will increased expectations have an adverse impact on innovation? • Will we enjoy fewer innovative medicines because of fears about infrequent adverse events?

18. 2004 and 2005 ApprovalsAll NDAs Sequence 000 250 200 150 Number of Approvals 100 50 0 Jul-05 Jul-04 Jun-04 Jun-05 Oct-04 Jan-05 Jan-04 Nov-04 Apr-04 Apr-05 Mar-04 Mar-05 Aug-04 May-05 May-04 Feb-04 Feb-05 Sep-04 Dec-04 Dec-03 Time

19. 2004 and 2005 ApprovalsNME Only 40 35 30 25 Number of NME Approvals 20 15 10 5 0 Jul-05 Jul-04 Jun-04 Jun-05 Oct-04 Jan-05 Nov-04 Jan-04 Apr-04 Apr-05 Mar-04 Mar-05 Aug-05 Aug-04 May-05 May-04 Feb-05 Feb-04 Dec-04 Sep-04 Dec-03 Time

20. Risk Side of the Equation • Need for better understanding of safety • However, most infrequent adverse events not predicted and may not be predictable in preclinical studies • Risk could be addressed by exposing more patients for longer periods prior to approval • But this will increase cost of innovation and lengthen development time

21. Risk Side of the Equation (cont.) • Risk can also be addressed by improving quality of post-marketing data collection • Post-marketing commitment to conduct large outcome studies? • Prospective randomized studies provide the best data • Appropriate control groups must be included • Spontaneous adverse event reports are not useful for calculating event rates

22. Reward Side of the Equation: Pharmacoeconomics of Pipeline Management • PE has always been a strong contributor to pipeline choices • Accounts for (among other things) • Costs of development pre-marketing • Costs of development post-marketing • Expected market share and revenue • Lost opportunity costs Miller P. Role of Pharmacoeconomic Analysis in R&D Decision Making. Pharmacoeconomics 23(1):1-12 (2005)

23. Reward Side of the Equation: Pharmacoeconomics (cont.) • Post 9/30, most companies expect increased costs for • Safety data pre-marketing • Safety surveillance post-marketing • Must be balanced against revenue • Will better safety data lead to greater market share and revenue? Miller P. Role of Pharmacoeconomic Analysis in R&D Decision Making. Pharmacoeconomics 23(1):1-12 (2005)

24. Risk/Benefit Equation:Choice of Indications for a Product • Most products have potential for more than one indication • Choice of lead indication is often based on the largest market • With increasing development costs, choice of lead indication may be more heavily influenced by other factors: • Indications for which greater risks would be acceptable • Approval may be granted with less safety data • Approval may be granted despite less favorable safety profile

25. Risk/Benefit Equation:Choice of Indications (cont.) • Choice of lead indication (cont.) • Indications which may demand higher pricing • Acute indications may be more attractive than chronic indications • Untreated indications may be more attractive than indications with multiple therapeutic options • Rituximab example

26. Summary • Events of 9/30 have led to a change in the way pipelines are managed • Greater attention to uncovering infrequent but serious safety events in pre-approval studies • Greater scrutiny during approval process • Possibly an expectation for more and longer human exposures prior to approval of some products

27. Summary • Increased vigilance in uncovering infrequent serious events after approval • Possible post-marketing commitment for large outcome studies for some products • Better disclosure of risks to prescribing physicians and the public • Greater cost of drug development • Possibility for suppression of innovation