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Oncology now dominates every therapeutic category in the drug industry, with global revenues projected to exceed $100 billion by 2016. But these projections assume payers and physicians play ball. With significant pushback on pricing already prevalent in Europe, are the estimates realistic? Joe Dysart reports

While results are preliminary, continued game-changing advances in cancer treat-ment using immunotherapy have many

drugmakers in oncology wondering: have we finally turned the corner on the war on cancer?

Research released earlier this summer indicates that immunotherapy—once perceived as an interest-ing treatment for a handful of cancer tumors—may be effective against a much wider range of cancers.

Moreover, the research is being greeted by an ea-ger FDA, which a few years back created a fast-track approval program—known as Breakthrough Therapy designation—to bring drugs that treat life-threatening diseases to market much more quickly than normal.

Janssen’s Imbruvica (lymphoma) and Novartis’s Zykadia (NSCLC), for example, received Break-through Therapy designation early enough in their clinical development to reach the market much more quickly than normal, according to Alan Gray, senior director, oncology strategy group, Kantar Health.

Essentially a class of drugs that use the body’s

own immune system to fight cancer tumors, much of the groundbreaking research in immunotherapy has centered on a subset of drugs in that class known as checkpoint inhibitors.

These inhibitors are able to interrupt cancer’s abil-ity to “switch off” immune system cells that ordinar-ily fight off a foreign invader like cancer—and could very well emerge as the backbone of 60% of all cancer treatment regimens in the developed world, according to a 2013 report released by CitiGroup, “Immunother-apy: The Beginning of the End for Cancer.”

Simultaneously, the pricing and sales projections for these new immunotherapy drugs have been through the roof. One hundred thousand dollars or more for a year of treatment is currently considered de rigueur.

All told, all the froth has catapulted oncology to the head of the industry as the largest therapeutic cat-egory, with global revenues expected to exceed $100 billion by 2016, according to Fenix Leung, an analyst at GlobalData.

But the payoff could also be substantial: The im-munotherapy market could reach $35 billion a year within the next nine years, according to the CitiGroup report.

Oncology’s new dominance in drugs “reflects the considerable advancements made through the iden-tification of novel molecular pathways and the grow-ing use of targeted biologic therapies to exploit these novel pathways,” Leung says.

Those advancements, Leung adds, command signifi-cantly higher prices than traditional, small-molecule therapies.

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“The future of cancer IO lies in combination regimens involving immune checkpoint inhibitors.” —Fenix Leung, analyst, GlobalData

$100B Projected annual revenue for oncology by 2016

Source: GlobalData

Overview: Wonder Years Ahead for Cancer DrugsBook

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Top 10 oncology agents, 2013 Category leaders, ranked by 2013 US sales

Rank Product Manufacturer US sales

1 Rituxan Roche $3.3B2 Avastin Roche $2.7B3 Herceptin Roche $1.9B4 Gleevec Novartis $1.9B5 Alimta Eli Lilly $1.2B6 Xgeva Amgen $788.6M7 Zytiga Janssen $775.9M8 Xeloda Roche $754.7M9 Afinitor Novartis $720.7M10 Treanda Teva $681.4MSource: IMS Health

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“GlobalData anticipates the future of cancer immu-notherapy to lie in combination regimens involving immune checkpoint inhibitors, with the Opdivo/Yer-voy combination likely to be the pioneer in this field,” Leung notes.

One player to watch closely is Bristol-Myers Squibb, which could elbow its way past earlier entrant Keytruda, made by Merck, to dominate the US mar-ket mid-decade, according to Leung. He also likes the prospects for Merck, which is trying to combine Key-truda with other drugs.

“Merck is also exploring combinations with com-petitors, such as GlaxoSmithKline’s Tafinlar/Mekinist combination, and Amgen’s investigational tamoligene laherparepvec (T-VEC),” Leung says.

“Ultimately, the major threat to BMS’ Opdivo/Yer-voy will be a new anti-PD-1/novel immunotherapy combination that is at least as effective as Opdivo/Yervoy, but which is safer and causes fewer treatment-related side effects,” Leung adds.

Other key moves to monitor include increasing num-bers of alliances between cancer drug competitors, as researchers relentlessly pursue new combination drug

therapies. Members of this club include BMS and Jans-sen; BMS and Novartis—and still other partnerships being developed by AstraZeneca.

But there’s also a nagging unknown: The substantial pushback against the stratospheric pricing for several of the new cancer drugs, which has left many patients and doctors dazed—and many regulators hostile.

Indeed, in Europe and especially Germany, regu-lators have refused to license 50% of all new cancer drugs during the past few years, according to Jim Mill-er, president, PharmSource Information Services.

And he says the same pushback against $100,000+ drugs is beginning to emerge in the US.

Currently, many cancer drugs fail to get past Eu-ropean regulators because they don’t significantly prolong the life of a cancer patient as compared to existing formulations, Miller says.

“Drug companies and contract-manufacturing or-ga ni zations will take an even bigger hit as the US catches up with Europe in the evaluation of compara-tive effectiveness,” Miller says. “The furor over the

Overview: Wonder Years Ahead for Cancer Drugs

cost of Gilead’s hepatitis C treatment Sovaldi—con-tract-manufactured by Patheon—has focused height-ened attention on the cost/benefit trade-off.”

US drugmakers are hoping to beat back growing price resistance with prolonged public information campaigns squired by groups like the Pharmaceutical Research and Manufacturers of America (PhRMA).

Central to the informational onslaughts: convincing patients, doctors and regulators that $100,000-plus-a-pop for a year’s worth of cancer immunotherapy is completely fair—when considered in the grand scheme of things.

“Despite repeated claims to the contrary, prescrip-tion drug spending continues to be a small and declin-ing share of overall healthcare cost growth—a reality that often gets ignored in the public debate about drug costs,” says John Castellani, president, PhRMA. ■

“Rx drug spending continues to be a small and declining share of overall healthcare cost growth.”—John Castellani, president, PhRMA

Heightened attention of the cost/benefit of drugs is stoking price resistance

$35BProjected annual revenue for IO market by 2022

Source: CitiGroup

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Competing cancer drugmakers are leaping into partnerships in ever-increasing numbers, as they pursue combination therapies that promise to extend lives. Industry watchers believe the new direction could alter the very nature of how oncology science is done

As increasing numbers of drug companies com-bine competing cancer treatments together in a quest for more powerful results, many in-

dustry watchers believe the new direction in research could alter the very nature of how oncology science is done.

Lay-down-your-swords collaborations between Bris-tol-Myers Squibb with Janssen/Pharmacyclics; between BMS and Novartis—and still other partnerships pursued by AstraZeneca—have been turning heads. Some look to explore the potential of immunotherapy and include novel combinations with PD-1 inhibitors (see box).

Those with most at stake—the patients—fervently hope the new drug combinations will be positioned for maximum synergy rather than sheer profit.

Fortunately, that old reliable, the bottom line, ap-pears to be on the side of greater synergy—at least in some sense, according to Casey Quinlan, Mighty Mouth, Mighty Mouth Media, a cancer survivor and patient advocate.

Essentially, all the collaboration and combined research will allow drugmakers “to spread the drug-development investment risk,” she says.

But the trick will be if researchers are able to keep their science pure, when a showdown flares up pitting science against the bottom line, according to Quinlan.

Too often, Quinlan says, drugmakers are tempted to evaluate the potential of a cancer drug cocktail on its ability to increase market share—rather than focus solely on combinations that will best beat cancer.

“The bottom line really should be less dollar-driven and more efficacy-driven,” Quinlan says. It should be “ ‘save people, make money,’ vs. make money and ‘maybe’ save people.”

Wendy Selig, president, Melanoma Research Alli-ance, agrees. All the new combination research part-nering has hopes running high in the cancer patient community, she says.

But she too worries that the science underlying the research into various drug mixtures could be pervert-

ed by that relentless magnet, profits.One of Selig’s greatest fears: that too many drug-

makers may end up first researching combinations of their own cancer drugs rather than participating in joint research with competitors that clearly appears to offer a more potent blow to cancer.

“There is a potential for waste with the enormous patient and financial resources consumed in clinical studies for ‘combinations of convenience’ if there might well be more efficacy or safety at hand with combina-tions of drugs from different companies,” Selig says.

Yet another danger, according to Mark Booth, VP, oncology client consulting, Kantar Health, is that drug companies could fritter away major research dollars on new drug combinations they suspect will only yield paltry improvements in treatment.

Such drugmakers should “avoid thinking about combining drugs for incremental benefit,” Booth says. “Building a better chemo, or combining several tar-geted therapies without a significant benefit, is not a sustainable long-term strategy for a company or a patient. The costs and risks outweigh the benefits.”

In a perfect world, the research will get sorted out. And more lives will be saved. “This is an unprecedent-ed era in oncology,” Selig says. “There is a convergence of rapid and affordable genomic techniques, molecu-larly targeted agents, checkpoint blockade as a com-pletely new principle in the oncology armamentarium and evolving approaches to harness the immune sys-tem to fight cancer. The market can only stand to ben-efit, as will patients.” ■

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“It should be ‘save people, make money’ vs. make money and ‘maybe’ save people.” —Casey Quinlan, Mighty Mouth Media, cancer survivor and patient advocate

Therapeutic Research: Alliances Turn Rivals into Partners

5%-10% Estimate of ultimate potential of immune- based approaches realized to date, much of it to be unlocked through pairings

Source: Leerink Partners

Creative collaborations

New combinations of oncology drugs are encouraging a new model of alliances. Here’s a sampling.

AllianceAstraZeneca/Pharmacylics PD-1 inhibitor MEDI4736 is being tested as a companion medication to Pharmacy-clics/Janssen’s Btk inhibitor Imbruvica (ibrutinib) for use in diffuse large B-cell lymphoma and follicular lymphoma

AllianceBMS, Pharmacyclics and Janssen are testing a combina-tion of PD-1 inhibitor Opdivo (nivolumab) and Imbruvica for use in non-Hodgkin lymphoma

AllianceNovartis is collaborating with BMS to evaluate three of its assets in combination with IO drug Opdivo: ALK inhibitor Zykadia and small-molecule agents INC280 and EGR816 for use in metastatic non-small cell lung cancer (NSCLC)

More than ever, sales reps will need to learn how to play well with others—specifically competitors—in coming years as combina-

tion therapies become ever more prevalent.One of the greatest challenges will be ensuring that

sales reps selling a combination therapy featuring a treatment from a competing manufacturer stay on message, industry watchers say.

“Often, planning for a co-promotion sales force needs to begin six to nine months earlier than a non-co-promotion to allow time for both companies to align on the sales model, metrics, compensation, etc.,” says Jon Roffman, principal, ZS Associates.

Essentially, sales reps will need to know as much about the competitor’s drug featured in a combination treatment as they know about their own.

And they’ll need to know how each component in-teracts with each other based on the science provided by the competing companies.

“The biggest pitfall to avoid is customer confu-sion, due to mixed messages coming from different reps about the same combination,” says Roffman. “So collaboration amongst marketing teams—as well as strong field training, incentives, and field leadership—is needed to drive consistency.”

Another danger will consist of sales reps who iden-tify too strongly with their brand, struggle with the transition, and consciously or subconsciously talk down a competitor’s component in the cancer drug cocktail.

Such reps could easily “undermine the combo at the expense of maximizing their own molecule,” Roffman says.

Adds Alan Gray, senior director, oncology com-

As former competitors bury the hatchet in an effort to develop combination therapies, their armies of sales reps will also need to make nice—and get up to speed on the competitive components in a cancer cocktail—if the new combinations are to succeed in the marketplace

mercial strategies at Kantar Health: “It all starts with corporate marketing to have the right message flow to illustrate the benefits of the combination and also how to communicate that they have the best single agent as part of the combination, and then sales to create the right compensation to get the selling behavior you want.”

Probably one of the highest-profile companies to watch as industry sales reps undergo this transforma-tion is Incyte, says Mark Booth, VP, oncology client consulting at Kantar Health.

The company has cut deals with numerous big play-ers looking to combine its IDO1 (indoleamine 2, 3-di-oxgenase) immune regulatory enzyme with their own drugs as a combination treatment.

“Incyte has secured collaboration agreements with Novartis, Eli Lilly, Merck, BMS, Medimmune/AZ, Genentech and Pfizer,” Booth says. “The emerging immuno-oncology space is a ‘hot potato,’ and every-one wants in on the game.”

Adds Gray: “If the agreement to co-promote is important enough to corporate, then it will be repre-sented in the sales bonus targets and discussed during plan-of-action meetings.

“Some companies are better than others, some reps are more seasoned and understand when to partner and when to compete,” says Gray. “Companies that have a history of co-promotion know how to set up the compensation to make it work.”

Ultimately, with all partnering, there’s a good chance sales reps at some competing firms could wind up wearing the same jersey. “With more players in on-cology and greater potential for cross-company com-binations, we hypothesize that the trend could lead ultimately to some consolidation of manufacturers,” Roffman says. ■

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Coevolution: As Offerings Evolve, So Must Promotion

“The big pitfall to avoid is customer confusion due to mixed messages coming from different reps about the same combination.” —Jon Roffman, principal, ZS Associates

Reps must know as much about a rival’s drug in a combo as their own

6–9

Months of extra lead time needed to develop promotion of a combination therapy featuring 2 or more competing treatments

Source: ZS Associates

Due to new combination drug therapies, sales reps will

need to learn how to play well with others

Drugmakers in the cancer field are learning that first is not always best. And they’re facing the prospect that nimbler competitors with better products may relegate them to runner-up sales status over the long term

While first to market in the US used to guar-antee largest market share in the drug in-dustry here, these days, the product with

the best profile is often besting earlier contenders.Just as in the hepatitis C market, for example, where

Gilead is cleaning up in sales with Sovaldi, despite the fact that it was late to the HCV party, conditions are ripe for a similar phenomenon in oncology.

In cancer treatment, it looks as though PD-1 drug Opdivo—a drug produced by Bristol-Myers Squibb in partnership with Ono Pharmaceuticals—could ul-timately elbow its way past earlier entrant Keytruda, made by Merck, according to Fenix Leung, an analyst for GlobalData.

Leung’s reasoning? While currently positioned to be a late entrant to the US market behind Keytruda, Opdivo has nevertheless been selling very well in Japan since early fall, where it was greeted by rave reviews.

Plus, the drug could breeze past Keytruda for first-to-market status in Europe, where regulators—ex-tremely pleased with Opdivo’s performance in clini-cal trials against competing drug dacarbazine—have pushed it to the head of the approval line.

“BMS stopped the CheckMate-066 trial [of mono-

therapy Opdivo vs. dacarbazine in subjects with ad-vanced melanoma] early due to favorable results, and [in the EU] the Committee for Medicinal Products for Human Use granted accelerated assessment for Op-divo at the end of July,” Leung writes.

“It is clear that BMS is working on a tight dead-line to push Opdivo ahead of Keytruda in the EU,” he writes.

Further momentum for Opdivo emerged this No-vember at the Society for Melanoma Research Con-gress in Zurich, Switzerland. Research data released there revealed a superior overall survival benefit and response rate for Opdivo in first-line BRAF wild-type advanced melanoma patients compared to dacarba-zine—which is still the standard treatment for this set-ting in many European countries, Leung says.

Moreover, while Keytruda is first to market in the US, “BMS still holds a trump card regarding combi-nation therapy with Opdivo and Yervoy, which has demonstrated very promising clinical data to date in previously treated patients, having a median overall survival of around 40 months in these patients,” Leung says.

Undoubtedly pleased with its chances, BMS further greased the skids for Opdivo by bringing a patent-in-fringement lawsuit against Merck.

The charge? BMS is alleging that Merck violated the PD-1 patent on Opdivo (owned by Ono) and be-gan work on Keytruda based on that patent.

Even if the patent lawsuit goes nowhere, BMS/Ono could attempt to short-circuit Keytruda’s first-to-mar-ket position in the US by bringing out a competing combination therapy.

That treatment: Opdivo (nivolumab) plus anti-CT-LA-4 mAb Yervoy (ipilimumab).

Essentially, Merck’s Keytruda is already approved in the US as a second-line indication in advanced melanoma—that is, for use by patients who have al-ready used Yervoy—and will most likely beat Op- divo to market as a first-line therapy, according to Leung.

“Keytruda is also likely to gain [FDA] approval as a first-line melanoma treatment in the US earlier than Opdivo,” Leung says.

“Since the latter is expected to reach the market a year after Keytruda, BMS may instead put forward a combination of Opdivo with Yervoy.

“Combination strategies are essential in the race to capture a large share of one of the most promising markets in cancer immunotherapy,” he adds. ■

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Launch Windows: The Sleek Shall Inherit the Earth

“BMS still holds a trump card regarding combo therapy with Opdivo and Yervoy.” —Fenix Leung, analyst, GlobalData

4 0

Median number of additional months of life patients enjoyed when taking Opdivo/Yervoy combo therapySource: BMS

Merck’s

Keytruda, the

first FDA-

approved PD-1,

could ultimately

be upstaged

by competitor

Opdivo

Stunned doctors, patients and regulators have successfully mobilized in Europe to push back on what they see as outrageous prices for new combination cancer drugs. Even more disturbing for drugmakers: the same waves of resistance are beginning to show up on US shores

While the promise of new cancer drugs is exhilarating, the prices that go along with those new treatments have many doctors

and patients seeing red.Peter Bach, MD, MAPP, at Memorial Sloan Ket-

tering Cancer Center, for example, has recently come out with some scathing opinion pieces on cancer drug pricing.

And many cancer patients, saddled with higher in-surance co-pays, are suffering from sticker shock.

“It’s particularly troublesome in the US, which pays a much higher price for drugs than do other countries,” says Casey Quinlan, Mighty Mouth, Mighty Mouth Media—a cancer survivor and patient advocate.

“I don’t think that stratospheric pricing is sustain-able without a clear commitment by pharma to mak-ing drugs available to people who need them.”

Marc Engelsgjerd, MD, a senior principal at in-Thought Research, agrees: “In general, aggressive pricing for drugs, even cancer drugs, will prove to be unsustainable.

“This is not to imply that some drugs are not worth a six-figure price tag: some are. But they have to de-liver value—in terms of additional months of overall survival—that justifies the expense.”

So far, the pricing pushback has been most severe in Europe, where regulators are systematically paring down cancer drug pricing as part of their approvals process.

Those regulators are also unafraid to simply reject a new cancer drug if manufacturers refuse to play ball, according to Jim Miller, president, PharmSource In-formation Services. Roche learned this the hard way this past summer when its new breast cancer drug,

Kadcyla, got a thumbs-down from UK authori-ties over a pricing feud, Miller says.

Indeed, UK regulators have rejected 50% of all new cancer drugs they reviewed 2009–2013 over pricing concerns, accord-ing to a recent Pharm-Source Trend Report.

And German regula-tors deep-sixed 50% of the new cancer drugs

they looked over from 2011 through the first three months of 2014, Miller says.

The trend is an especially tough nut for drugmak-ers, given that UK and German rulings on new cancer drugs are referenced by most European countries—and even in Japan, Miller says.

Scarier still for drugmakers: those same waves of pricing pushback are beginning to pummel US shores. “In recent months, the American Society of Clinical Oncology has begun its own initiative to evaluate the cost effectiveness of alternative cancer therapies as guidance for oncologists,” Miller adds.

Counters John Castellani, president, Pharmaceuti-cal Research and Manufacturers of America: The real problem is that many doctors and patients fail to see the bigger picture when it comes to drug pricing. “It is penny wise and pound foolish to focus solely on the price of a new medicine,” he says.

“Curing hepatitis C, for example, not only dramati-cally improves patients’ lives, but has the potential to save the US healthcare system as much as $9 billion per year by preventing expensive hospitalizations and avoiding thousands of liver transplants,” Castellani notes.

Castellani points a finger at health insurers. “Insur-ers are increasingly imposing unprecedented cost-sharing on patients, which deters them from utilizing the medicines they need to manage—or even cure—their disease,” he says. “We have a Blockbuster insur-ance model in a Netflix world.

“And patients are being harmed as a result.” ■

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Financial Performance: At What Cost Life?

“[Costs] are particularly troublesome in the US, which pays a much higher price for drugs than other countries.” —Casey Quinlan, Mighty Mouth Media

50% Percent of all new cancer drugs UK regulators rejected over pricing concerns, 2009–2013

Source: PharmSource Trend Report

Value for money is defined as delivering additional months of survival

John Castellani