Editor’s Corner (June 2015)

The Breakthrough of Immunotherapy

The success of immunotherapy and in particular of immune-oncology therapies is confirmed almost every day with new and sometimes spectacular clinical results and outcomes showing the value of this approach. Immunotherapy treatment uses the body’s immune system to attack cancerous cells and is considered by many as revolutionary as the arrival of chemotherapy in the 1940’s. According to Colin White, lead analyst at Datamonitor Healthcare: “It is a really significant breakthrough. It is being seen as the third major breakthrough in cancer treatments: the first being chemotherapy, the second being targeted treatments and the third being immunotherapy.” Immunotherapy was at the core of many presentations at the recent American Society for Clinical Oncology (ASCO) meeting in Chicago earlier this month and will undoubtedly be one of the major topic at BIO 2015 next week in Philadelphia. Most biopharmaceutical companies are now eagerly scrambling to get into this rapidly evolving field that experts believe could be worth as much as $40 billion per year in a short foreseeable future. This is best represented by the flourishing number of business deals that have occurred in the field over the last eighteen months. We have identified more than 50 industry deals since early 2014 and even more striking, half of them since the beginning of 2015. We can classify them in three types:  medium to large sized acquisitions, strategic collaborations with access to technology and portfolio, and agreements to conduct combination therapies in order to identify the best product combination for a given cancer or for a given subset of cancer patients.  We have regularly reported on those deals and we would just like to stress upon some of the most significant and recent ones:

• Bristol-Meyers Squibb’s acquisition of Flexus
• Juno’s acquisitions of X-Body and Stage Cell Therapeutics
• Pfizer’s collaboration with Cellectis,
• Roche’s agreements with NewLink Genetics and with Curadev
• Eli Lilly agreement with BioNTech
• Celgene collaborations with Lycera and BlueBird Bio

and the numerous combination therapies agreement between:

• Roche and Amgen
•  Amgen and Merck 
• Merck with Dynavax
• Syndax and Eisai
• Eli Lilly with AstraZeneca
• the simultaneously announced ones between AstraZeneca with Innate Pharma, Celgene and Juno Therapeutics to assess all the potential of MEDI4736 described as “the great white hope” for AZ with a potential of annual sales of more than $5 billion.

These expected outstanding breakthrough therapies are nevertheless raising one major question for all healthcare executives namely their cost.  “These drugs cost too much,” said Leonard Saltz, chief of gastrointestinal oncology at the Memorial Sloan Kettering Cancer Center, at the recent ASCO meeting. He expressed concerns about the cost of the melanoma treatment developed by BMS. The combination of Yervoy and Opdivo would help patients live for almost a year without their disease getting worse, something “truly remarkable for a disease that five years ago we thought was virtually untreatable. But the drugs would cost $295,000 a patient – an “unsustainable” sum, he said. Saltz is raising a concern which many healthcare payers are now tackling on a regular basis. This was illustrated again by the recent refusals by UK National Institute for Health and Care Excellence (NICE) for Celgene’s Otezla, for the treatment of severe psoriasis and for AstraZeneca Lynparza, for the treatment of ovarian cancer, on the ground that their costs failed to fall within a range considered to be a cost-effective use by healthcare economists. As reported in our previous newsletter after this refusal, Pascal Soriot, AstraZeneca’s CEO, lashed out in stating “On that basis we should stop all cancer research in the world”.

We also believe that some of these costs are unbearable for most payers and that result-based pricing will become the future agreed solution between drug sponsors and healthcare authorities. In a recent interview by Swiss Tages-Anzeiger, Novartis’ Chairman Joerg Reinhardt was pointing the finger at this precise topic in saying "This will evolve in the next 5-10 years, the system will move toward paying for results rather than individual tests and treatments. If the patient does not feel better, the system will not pay.”  This evolving paradigm shift will have a huge impact on drug value assessment and is currently not reflected at all in the bio dollar value of the recent deals we are seeing been signed by the various companies leading the field of immunotherapy.

Author: Jean-Claude Muller, Special Advisor at I&IR, jcm@btobioinnovation.com

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