Kenneth I Kaitin, Ph.D. Director and Research Professor

Tufts Center for the Study of Drug Development

ACTION Workshop – FDA White Oaks Campus Silver Spring, MD, June 15, 2011

Current R&D Challenges

What are the Obstacles in Analgesic Development?

Current Realities for Pharmaceutical Developers

Patents on many high revenue products are expiring

Marketplace is highly competitive and reimbursement environment is increasingly restrictive

Public support is low

Regulatory hurdles are increasing

Pharmaceutical R&D remains a long, risky, and expensive process

$3.6

$4.9

$5.3

$5.9

$6.1

$6.8

$8.1

$8.1

$9.2

$9.4

BMS

Lilly

AstraZeneca

Sanofi Aventis

GSK

J&J

Novartis

Merck

Roche

Pfizer

Billions of US$

Top Ten R&D Spenders for 2010

Sources: FierceBiotech, 3/8/11

New Drug Approvals Are Not Keeping Pace with Rising R&D Spending

0

13

26

39

52

0

15

30

45

60

1963 1968 1973 1978 1983 1988 1993 1998 2003 2008

R&

D E

xp

en

ditu

res

(B

illion

s o

f 20

08

$) N

ew

Dru

g A

pp

rov

als

R&D Expenditures

New Drug Approvals

* Trend line is 3-year moving average; R&D expenditure adjusted for inflation

Source: Kaitin, Clin Pharmacol Ther, 2010;87:356-361

http://www.nature.com/clpt/journal/v87/n3/full/clpt2009293a.html

Bringing a New Analgesic to Market: Development Metrics

0 11

AIDS Antivirals

Anesthetic/Analgesic

Antiinfective*

Gastrointestinal

Immunologic

Cardiovascular

Endocrine

Antineoplastic

CNS

4.6

5.3

5.4

5.8

6.4

6.5

6.5

6.9

8.1

0.5

0.8

1.2

2.4

1.0

1.3

1.2

0.7

1.9

Years

Clinical Phase Approval Phase

10.0

7.7

7.8

8.2

6.6

5.1

6.1

7.4

7.6

* excludes AIDS antivirals

Clinical and Approval Times Vary Across Therapeutic Classes, 2005-09

Source: Kaitin & DiMasi, Clin Pharmacol Ther, 2011;89:183-188

Clinical Development Times in Three Decades

Source: Kaitin & DiMasi, Clin Pharmacol Ther, 2011;89:183-188

0

10

2.3

6.2

4.2

7.4

6.1

7.9

3.9

6.6

5.4

7.8

5.8

7.0

5.0 4.9

6.6

7.4

5.3

8.6

Years

1980-1989

1990-1999

2000-2009

* excludes AIDS antivirals

Overall Clinical Approval Success Rate for NCEs has Dropped to 16%

0 27

CNS

Cardiovascular

GI/Metabolism

Arthritis and Pain*

Oncology/Immunology

Musculoskeletal

Sys. Antiinfective

8.2%

8.7%

9.4%

19.4%

20.4%

23.9%

17%

Clinical Approval Success Rate

Source: DiMasi et al, Clin Pharmacol Ther, 2010;87:272-277

* Arthritis and Pain figure based on Kola and Landis, Nature Rev Drug Disc, 2004;3:711-715

Long Development Times + Low Success Rates = High R&D Costs

0

1500

Non-Clinical Clinical Total Costs

615 626

1,241

439

879

1,318

Millio

ns o

f 2005 D

ollars

Biotech Pharma (Time Adjusted)

Source: DiMasi & Grabowski, Managerial Decision Econ, 2007;28:469-479

Time Adjusted Capitalized Clinical Costs by Therapeutic Area

$604

$741 $750$792

$849

0

1000

Mil

lio

ns

of

20

05

Do

lla

rs

Anesth/Analg Cardiovascular All Antiinfective CNS

Source: DiMasi et al, Drug Info J, 2004;38:211-223

$20,457

$17,094 $16,653

$14,163

$12,500 $11,784

$10,850 $10,213 $9,835 $9,547

$8,948 $8,056

$6,341

$4,265

$0

$5,000

$10,000

$15,000

$20,000

$25,000

Clinical Trial Costs per Patient (all phases), 2007-2009

Source: TTC, llc; Parexel Statistical Sourcebook 2010-11

Approved NMEs by Therapeutic Class in Three Decades

Source: Kaitin & DiMasi, Clin Pharmacol Ther, 2011;89:183-188

0

80

4

25

51

11

52

20

7 10

3 3

23

35

41 38

74

35

25

9 10

18

10

20

30

47 49

27 26

11 12

7

Nu

mb

er

of

Ap

pro

vals

1980-1989

1990-1999

2000-2009

* excludes AIDS antivirals

Market Size

Competitive Landscape

Exploitable Science

Portfolio Risk

What Factors Influence a Company’s Decision to Invest in a Therapeutic Area

Source: Tufts CSDD, 2011

Top 15 Therapy Classes in 2009 Global Pharmaceutical Sales

$10.8 bil

$11.2 bil

$11.2 bil

$13.0 bil

$13.8 bil

$14.6 bil

$18.0 bil

$19.4 bil

$23.2 bil

$25.2 bil

$29.6 bil

$30.4 bil

$33.6 bil

$35.3 bil

$52.4 bil

Erythropoietins

Non-Narcotic Analgesics

Narcotic Analgesics

Anti-Epileptics

HIV Antivirals

Platelet Aggr. Inhibitors

Autoimmune Agents

Antidepressants

Antipsychotics

Angiotensin-II Antag.

Anti-Ulcerants

Antidiabetics

Respiratory Agents

Lipid Regulators

Oncologics

Source: IMS Health Midas, December 2009; Parexel Statistical Sourcebook 2010-11

2.7% of Global

Market

Source: Kissin I. The Development of New Analgesics Over the Past 50 Years: A Lack of

Real Breakthrough Drugs. Anesthesia & Analgesia 2010; 110(3): 780-789; Tufts CSDD

Development Classification of New Analgesics

Category N

Incremental improvement on an existing

drug mechanism

41

Novel selective mechanism of an existing

drug

3

Completely novel mechanism of action 1

Total 45

Portfolio Decision-Making Grid

— — Anesth/Analgesic

Oncology

—

—

—

— CNS

— Cardiovascular

— — Infectious Disease

Market Size Competitive

Landscape Portfolio Risk

Exploitable

Science

—

—

—

Source: Tufts CSDD, 2011

Oncology 34%

Central Nervous System 15%

Antiinfectives 11%

Cardiovascular 7%

Diabetes 7%

Respiratory 7%

Pain and Inflammation 6%

Gastrointestinal 5%

Blood 4%

Dermatology 3%

Compounds in Development in Top 10 Areas: Oncology Leads

Source: R&D Directions; Parexel Statistical Sourcebook 2010/2011

Development Challenges for Analgesics

Multiple etiologies

Poor understanding of pain mechanisms

Patient response variability: poor understanding why

Clinical trial challenges:

Poor overall responsiveness to chronic treatment

High placebo response

Poor patient reporting

Insensitive and imprecise clinical endpoints

Chronic use products often with abuse potential

Post-approval safety and risk management demands

Highly competitive market and strong generic penetration

Source: Tufts CSDD, 2011

A FIPNet Model for Drug Development: The Emergence of Innovation Nodes

Phase IV

Studies Approval

Late Stage

Development

Early Stage

Development

Discovery

Preclinical

Research

Pre-Discovery

Large Pharma

Academia

Biotechs/

Small Pharma

CROs/Other

Partners

Basic Research Translational Medicine

Execution, Monitoring, Analysis

Innovation, Partnerships

Coordination, Management Execution, Monitoring, Analysis

Large Scale Clinical Trials

Data Analysis

Medical Writing

Regulatory Approval

Source: Kaitin, Clin Pharmacol Ther, 2010;87:356-361

http://www.nature.com/clpt/journal/v87/n3/full/clpt2009293a.html

Oncology

AD Peds

RA

Diabetes

Source: Tufts CSDD, 2011

How Innovation Nodes Will Work

Tufts Center for the Study of Drug Development Tufts University, Boston, Massachusetts, USA

Kenneth I Kaitin, Ph.D. Director and Research Professor

Tufts University School of Medicine

Website http://csdd.tufts.edu

Email kenneth.kaitin@tufts.edu