February 2014

A CenterWatch Article Reprint

Volume 21, Issue 02

Tracking major changes in the R&D pipeline Therapeutic area and sponsor trends call for new strategies By Karyn Korieth

A

new CenterWatch analysis finds that growth in therapeutic areas has shifted during the past five years, with rheumatoid arthritis and psoriasis showing increased levels of activity. And sponsorship of the pipeline has changed significantly, as small biopharmaceutical companies now sponsor the majority of R&D activity. The new analysis, which features data from CenterWatch’s Drugs in Clinical Trial Database, has significant implications for CROs and investigative sites going forward. Industry professionals need to constantly monitor information about how the pipeline is changing and see where top opportunities will emerge in order to survive in a competitive environment. Companies that don’t anticipate changes in therapeutic focus, or that continue to work only with the largest pharma companies, could miss out on these new prospects. In particular, CenterWatch’s analysis provides important information to industry professionals developing strategic plans and trying to determine where their

Distribution of global drug development spending In U.S. billions

Small biopharm ($10 billion market cap) $112.5

$118.7

$125.3

$131.7

$135.9

53%

61%

64%

62%

65%

47%

39%

36%

38%

35%

2005

2007

2009

2011

2013 Source: CenterWatch

companies need to build or acquire capabilities as opportunities for activity shift. Forward-looking organizations already have begun to anticipate pipeline and sponsorship changes and have developed new capabilities to take advantage of upcoming opportunities. “We are always trying to anticipate what the needs of our sponsors and investigators will be, depending on what is coming through from the pipelines and what kind of capabilities may be necessary,” said Christopher Cabell, M.D., senior vice president, global head of therapeutic delivery at Quintiles. CenterWatch, which has monitored pipeline activity through its Drugs in

The CenterWatch Monthly (ISSN 1556-3367). Volume 21, Issue 02. © 2014 CenterWatch

Clinical Trial Database for the past 13 years, draws on its database of more than 4,100 drugs—those that have completed development or currently are in clinical trials—to shed light on how activity is changing and the implications of this shift for researchers, CROs and sponsors in the near future.

Shift in pipeline activity The analysis shows oncology remains the most dynamic therapeutic area, representing 18% of active commercial Investigational New Drugs (INDs) in 2012, and has among the highest number of trials in phases II and III. The FDA approved 63 oncology drugs over the past five years, more than medicines in any other therapeutic area. Small cell lung cancer and various lymphomas continue to drive intense competition for new cancer drugs. Neurology shows continued activity, comprising nearly 8% of commercial INDs in 2012, yet growth in this area was flat last centerwatch.com

CenterWatch Publications and Services Clinical Trials Data Library A valuable online resource providing access to comprehensive data on the life sciences and clinical research industry. CWWeekly A newsletter that reports on breaking news in the clinical trials industry.

IndustryNews Average proportion of drugs per company pipeline relying on biomarker data 63%

57%

CenterWatch News Online A free, virtual newsletter that covers news, developments and drug and professional updates.

36%

Research Practitioner A bi-monthly publication that provides educational articles and practical insights and tools for study conduct professionals. Credits available. JobWatch A web-based service listing clinical research jobs, career resources and a searchable resume database. Drugs in Clinical Trials Database A searchable database of more than 4,000 detailed drug profiles. CenterWatch also prepares custom drug intelligence reports covering a variety of medical conditions. Clinical Trials Listing Service™ An international listing service of actively enrolling clinical trials to support sponsors and CROs in their patient enrollment initiatives. Market Research Services Custom surveys for organizations to gain competitive insight into the market and their business. Medical Writing Solutions Comprehensive medical writing services for the biotechnology, medical device and pharmaceutical industries. Training Guides l Global Issues in Patient Recruitment and Retention l Protecting Study Volunteers in Research, 4th Ed. l The CRA’s Guide to Monitoring Clinical Research, 3rd Ed. l The CRC’s Guide to Coordinating Clinical Research, 2nd Ed. l Becoming a Successful Clinical Research Investigator l Global Regulatory Systems l SOPs for Clinical Research The CenterWatch Monthly ISSN 1556-3367 Editor-in-Chief Cheryl Appel Rosenfeld Drug Intelligence Tracy Lawton, Stephanie Hill Production Holly Rose © 2014 CenterWatch To subscribe or for more information: Sales: (617) 948-5100 or [email protected]

Pre-clinical

Early clinical (phase I-IIa)

Late clinical (phase IIb-IV) Source: Tufts CSDD

year. In addition, INDs for musculoskeletal and dermatology development both have grown around 9% in the past five years, as research in oncology and inflammation has allowed new therapies to be developed across a variety of diseases. In comparison, growth has slowed significantly in gastroenterology, in which heartburn studies were prevalent five years ago and the proportion of INDs for transplant programs has dropped. While there are more than 200 medicines in development for diabetes, overall growth in endocrinology and metabolism INDs has slowed compared to 2005. And while the industry has seen a drop in antibiotic development, antiviral programs show a high degree of activity across all development phases. Significantly, CenterWatch’s analysis finds small biopharm companies (defined as those with a market capitalization of less than $10 billion) now fund 65% of research and development activity, or $90 billion of global R&D spending. The largest sponsors no longer dominate early R&D, as the top 50 biopharmaceutical companies comprise only 35% of the total R&D spend.

Small companies fund most activity The importance of small biopharma companies in R&D has steadily increased during the past decade; the percentage of the

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The CenterWatch Monthly | February 2014

drug pipeline funded by small companies has jumped 23% since 2003. The number of companies with at least one active clinical trial also has increased during the same period, from 1,500 to more than 2,300. Meanwhile, a Citeline Pharmaprojects/Pipeline report found the proportion of all drugs in R&D originated by the top 10 pharma companies dropped to 11.2% last year. Clearly, early R&D has now shifted to small companies. Large sponsors typically partner with smaller companies once certain thresholds show molecules are safe and effective, and then become more involved in programs as they move into later development phases that are larger and more global. “Small and mid-sized biopharmaceutical companies are truly the genesis of innovation,” said Ubavka DeNoble, corporate vice president, phase II/III, key accounts at Parexel. Smaller companies are running a variety of preclinical and early clinical programs as well as small-scale phase III and post-marketing programs. Some small companies carry only a single molecule or, perhaps, a new mechanism for an existing class of drug. Other companies, particularly small biotechs, are well developed and have multiple molecules in their portfolios. Importantly, this sector has picked up development in some therapeutic areas that large pharma companies have dropped.

IndustryNews Several large pharmaceutical companies, for example, have abandoned or restructured their CNS programs, citing costly, long drug development periods and high failure rates. Yet the number of commercial INDs in neurology has grown 7.5% during the past five years, as small biopharma companies now conduct a significant amount of CNS work, particularly in psychiatry, in which large-scale programs have diminished. Cabell said the programs conducted by small companies tend to focus on areas historically less common or more difficult, such as negative symptoms in schizophrenia. Lawrence Meinert, M.D., vice president of strategic planning at Covance Clinical Development Services, said many smaller companies are continuing to address CNS interventions around neurotransmitter modulation in different parts of the nervous system. “In addition, many small companies are speculatively investing in CNS disease at a cell biology level,” said Meinert. “The unmet public health need should help sustain investment in scientifically promising mechanisms.” An increase in smaller, venture-capitalbacked biotech companies has helped to fill the void in CNS programs. A report issued by Silicon Valley Bank last year found CNS/pain was the top disease area for biotech startups in 2012 and has been the biggest growth area for the past four years. “That market is still there and there is unmet need in psychiatry, and particularly neurology,” said INC Research’s CEO Jamie Macdonald. “That work has reverted back to the biotech sector. It went a little bit quiet because biotech funding fell apart in 2008 for about three or four years. But because funding is coming back, there is a significant amount of research being done in CNS within the biotech sector.”

Active therapeutic areas Kenneth Somberg, M.D., chief medical officer at Covance, said there has been a

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The CenterWatch Monthly | February 2014

Number of drugs in development worldwide Phase I

Phase II

Phase III 646 547

435

397

391

771

884

1098

521

589

1998

2000

409

434

1674

1257

1357

654

778

877

2002

2004

2006

573 1812

2123

1265

1422

1641

2008

2010

2012

Source: CenterWatch Drugs in Clinical Trials Database

shift in therapeutic areas as sponsors look to reduce portfolio risk. With the exception of oncology and inflammation, he said the industry has seen a decrease in novel mechanisms from many sponsors over the past six years. “Portfolio prioritizing within larger biopharmaceutical companies and availability of funding for biotech has been influenced by a focus on lower risk development candidates, scientific plateaus in certain diseases, regulatory barriers for broader patient therapies and easier reimbursement for life-threatening diseases with identifiable subpopulation benefits,” he said. Diabetes remains an active therapeutic area, with more than 221 medicines to treat diabetes and related conditions in development, according to the Pharmaceutical Research and Manufacturers of America (PhRMA). About half of the medicines in development are in phase II. Many of the new mechanisms being explored are to treat hyperglycemia and new insulin formulations. CRO executives say the biggest challenge in the diabetes area is a new FDA requirement for outcome studies to assess cardiovascular safety of type 2 diabetes treatments. To meet these requirements, phase II and III development programs must be larger and more comprehensive,

and include high-risk patients. The requirements put financial pressure on diabetes programs because of the high cost of conducting large-scale cardiovascular outcome studies during development. “There are some barriers to drug development in diabetes that are a bit unique compared to other therapeutic areas,” said Quintiles’ Cabell. Lindsay McCarthy, general manager of PharmaSeek, an investigative site network with 225 sites across the U.S., Canada and Puerto Rico, said the cardiovascular outcome study requirements can make it difficult to find sites that can both conduct the diabetes study and collect the required cardiovascular data. Endocrinologists typically lack the expertise to monitor the cardiac outcomes, and cardiologists usually are not involved in the treatment of diabetes patients. “The extra element certainly makes it much more difficult to find that perfect site,” she said. The number of compounds in development for anti-infectives has risen 8% over the last five years. PhRMA reports there are nearly 400 medicines in development for infectious diseases—more than half are focused on viral infections—as pathogens causing these diseases have become resistant to existing treatments. Medicines and vaccines in development include one for the most common and difficult-to-treat

IndustryNews forms of hepatitis C, an anti-malaria drug and a potential new antibiotic for treatment of penicillin-resistant bacteria. Both sites and CROs report strong activity in anti-infectives. Chris Hoyle, executive director of Elite Research Network, which has 23 dedicated, multi-specialty research centers with affiliations to privatepractice physicians, said infectious disease comprised 7% of its pipeline last year. In particular, its sites conducted studies in influenza, hepatitis C and HIV. In addition, INC Research recently strengthened its capabilities in infectious disease services through acquisitions and hiring experts in the area; the company has seen increased demand for anti-virals, vaccines and even tropical disease services. Covance’s Meinert has seen a sustained drop-off in antibiotic development, in part because scientific knowledge in the area has reached a plateau. Challenging regulatory barriers also play a role in the decline. However, he sees an early development of more pro-active agents such as monoclonals, which can help prevent disease in high-risk patients, and a high degree of activity in antiviral programs across all development phases. “However, as interferon-free regimens for hepatitis C enter the market, we anticipate a substantial shake out due to demand satisfaction and increased difficulty in enrolling trials comparing new agents against interferon,” said Meinert. The number of rheumatology INDs has increased significantly over the last five years. The therapeutic area was among the top five R&D categories in 2012. INC Research’s Macdonald said rheumatology has shown significant activity since many companies are developing large molecules, predominately monoclonal antibodies, and a common development pathway for those molecules is rheumatology, where they could stand a good chance of approval. The sponsors, however, often have a broader objective to see if the molecule

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The CenterWatch Monthly | February 2014

Distribution of active commercial chemical and biologic INDs 2012 18.1%

Oncologics

7.8%

Neurologics Hematologics

7.5%

Pulmonary/Allergy/Rheumatology

7.6%

Endocrine

7.4%

Anesthesia/Pain

6.0%

Cardiovascular/Renal

5.7%

Reproductive/Urologic

5.7%

Dermatology

5.7% Source: CenterWatch Drugs in Clinical Trials Database

could be beneficial in a spectrum of autoimmune diseases such as rheumatoid arthritis, psoriasis, Chrone’s disease, ulcerative colitis and, ultimately, some of the less well-addressed markets, particularly lupus. “If you look at the cost of drug development, what companies want is a shot-ongoal to see whether they have a competitive molecule for the whole autoimmune market,” Macdonald said. “It’s part of a development program strategy where the monoclonal has potentially multiple therapeutic areas in which it could be beneficial. But unless you were slightly crazy, you wouldn’t jump straight into trying to cure lupus, where you would spend a lot of money and have a high likelihood of failure. So they want a shot-on-goal, which could give them at least some return commercially, and then try to expand their development and label.” In cardiology, the number of compounds in development fell 42% between 2003 and 2010. Yet the area has begun to rebound and comprised 5.7% of INDs in 2012. Parexel’s DeNoble said as patents for lipid-lowering statin drugs have expired,

researchers now are trying different mechanisms of action to reduce cholesterol and optimize HDL since the market for these types of drugs is unlimited. “Cardiovascular diagnostic is going forward and we have much more opportunity to do certain things, including devices,” she said. “Interventional cardiology definitely plays a role.” Covance’s Meinert said cardiovascular metabolic trials show significant activity in all phases of clinical trials. However, as a result of early phase pipeline pullback between 2008 and 2009, he anticipates a decline in the launch of new megatrials. “On the other hand, there are a variety of new mechanisms emerging in early development directed toward treatment of advanced complex disease rather than risk factor control,” he said. PhRMA reports cardiology medicines in development include a gene therapy that uses a patient’s own cells to treat heart failure, another that blocks the transfer of good (HDL) cholesterol to bad (LDL) and a genetically engineered medicine that dissolves clots to treat stroke. Meanwhile, development in companion diagnostics, which can predict whether

IndustryNews a drug will work in a particular patient, hasn’t advanced as quickly as the industry expected. Companion diagnostics are used in early clinical development when biomarker strategies are used to improve development decision-making and clinical development. Yet as programs move into later phase clinical research, Quintiles’ Cabell said the FDA wants data about broader patient populations for which the results have been more generalized. “There are some examples of companion diagnostics that have been effective. But I think we were all anticipating a larger uptick of companion diagnostics and there has only been a marginal increase,” Cabell said.

Therapeutic area growth

Annual growth in number of active commercial INDs (2008-2013), CAGR% 9.6%

Musculoskeletal

8.7%

Dermatology Anti-infectives

8.2%

Oncology

8.2%

CNS

7.5%

Metabolism/Endocrinology

7.5%

Cardiovascular

5.4%

Gastroenterology

5.3% Source: CenterWatch Drugs in Clinical Trials Database

Growth in phase IV Activity in phase IV studies, conducted after a product has been approved for consumer sale, has grown dramatically during the past decade and now makes up nearly 16% of projects in clinical phases. Historically, phase IV studies have focused on expanding market access or supporting new indications for an approved drug. The number of studies has increased as the FDA now requires post-approval studies to evaluate the long-term safety and effectiveness of an approved drug in the general patient population or to answer a specific question related to the molecule. “Post-marketing commitments are areas that are definitely expanding but some other parts of phase IV research are becoming a little less common,” said Cabell. As phase IV research expands and shifts toward answering clinical questions, it presents new opportunities for both CROs and sites involved in a phase III study to continue working on the post-marketing study. Yet Elite Research’s Hoyle said it’s often difficult for investigators to find the right project team to contact for phase IV work. Clinical teams typically focus on getting the drug to market; once approved,

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The CenterWatch Monthly | February 2014

late-phase decisions are often made by a different group within the sponsor, such as those focused on clinical affairs or commercial operations. “The project teams are typically changed throughout the process,” said Hoyle. “But we are aware of the CROs that have phase IV teams dedicated to post-approval studies. We keep in touch with them and get contacted for studies.” INC’s Macdonald believes there will be greater opportunity for CROs to participate in late-phase studies on a programmatic level going forward. Some companies already have begun to run programs that include phase III through IV work. “The old phase IV studies that were essentially seeding or marketing studies are really few and far between. There has to be a clinical driver to the study,” he said. “We are hopeful that as we develop drugs that get to market, that we can transfer that incumbency and pick up their support for the phase IV work.”

Implications of analysis Industry professionals can use data tracked by CenterWatch’s drug intelli-

gence department to make strategic plans, anticipate how pipelines are changing and identify top opportunities going forward. Through the database, available by subscription, CROs, sponsors and researchers also can monitor the performance of drugs in the pipeline, track competitors’ development activity and identify partners and clinical grant opportunities. The new CenterWatch analysis suggests CROs and sites that pursue studies only from the largest sponsors will miss out on a significant amount of work sponsored by the increasing number of small biopharma companies. As some therapeutic priority areas in the pipeline change, companies can expand their marketability by building or acquiring new capabilities in these areas. And as phase IV activity increases and requires more clinical and therapeutic expertise, both CROs and sites involved in a company’s phase III trial now have the prospect of moving on to the post-marketing study. Leading companies have begun to adapt their business practices to take advantage of these new opportunities. While small and mid-sized pharma companies traditionally work with smaller CROs, believ-

IndustryNews ing they will receive more personalized has seen an increase in pediatric studies, are open to working with new sites with attention, global CRO Parexel has created its sites have added that capability by part- which they have not partnered in the past. McCarthy also alerts PharmaSeek’s the Parexel BioPharm Unit to focus solely nering with pediatricians and family pracon providing the services needed to help tice groups that have access to younger sites about anticipated changes in the drug small and mid-sized biopharma companies patients. Sites also pre-identify patients in pipeline and encourages investigators to advance their drugs through the develop- therapeutic areas for which they anticipate broaden their scope by partnering with new physician investigators and coordinament cycle. Since the unit was launched activity. tors who bring new areas of in 2012, it has seen increasing expertise, or to establish relademand for its services. tionships with a local hospital “Large CROs are increas“If you look at the cost of drug where they can conduct trials. ingly focusing on meeting the “The sites we are partnered needs of smaller companies, development, what companies want with have become more proin part because of the growing is a shot-on-goal to see whether they active in staying on top of importance these companies what studies are out there, are playing from an R&D perhave a competitive molecule for the versus continuing on in their spective,” said Parexel’s Dewhole autoimmune market. It’s part area of expertise. This can Noble. “After several years in make them much more mara relatively slow lane, imporof a development program strategy ketable than they have been tant changes are now driving where the monoclonal has potentially historically,” she said. “We momentum in the market for have seen our sites make it small and medium-sized biomultiple therapeutic areas in which it through the highs and lows pharmaceutical companies in could be beneficial.” and continue to be successthe U.S. and worldwide. Work ful throughout the changes in with small and medium-sized —Jamie Macdonald, CEO, INC Research companies has been—and the industry.”  will continue to be—one of PharmaSeek focuses business develop- Karyn Korieth has been covering the clinical the core businesses within Parexel.” Elite Research develops therapeutic re- ment efforts on small and mid-sized spon- trials industry for CenterWatch since 2003. ports, which include information about the sors and CROs; the network attributes half Her 30-year journalism career includes work types of study opportunities the company of its business in 2013 to small biopharma in local news, the healthcare industry and has received, to track emerging trends. In- companies. While it can be difficult to ac- national magazines. Karyn holds a Master’s vestigators use those reports to adjust their cess information about what programs large of Science degree from the Columbia Univerclinical trial capabilities and take advan- sponsors have in their pipelines, McCarthy sity Graduate School of Journalism. Email tage of new areas. For example, since Elite said small and mid-sized companies often [email protected].

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The CenterWatch Monthly | February 2014