Roche had been approaching a Trifecta of datasets and decision points that would determine whether their steadfast focus on innovative R&D in neuroscience would be sustained. Now, it seems certain that it will be, because the Company had success in a major depression trial for their mGluR5 blocker, and an internal review of interim (likely some type of biomarker assessment) data for gantenerumab has led to a full go-ahead for that mAb in Alzheimer’s. Phase III data for bitopertin, their GlyTi in schizophrenia, has begun to arrive, but they may well decide to not disclose those results, since they do not want to impact enrollment (and investigator/patient expectations) in bitopertin studies that arestill underway. Setting aside the obvious question of whether maintaining two AD mAb programs in parallel (i.e. along with Genentech/Roche‘s crenezumab) is a prudent use of resources for a single company, this is outstanding news for Roche and the sector.
There is major news regarding the neurotherapeutics aspirations for two Big Pharmas, Roche and Bristol Myers Squibb. Roche has had sufficient success in two of the three programs whose outcome was to dictate their future course vis-a-vis CNS (gantenerumab and their mGluR5 depression program, the third program (GlyTi) results have not yet been reported publicly)- to proceed ahead at full speed. Meanwhile, Bristol Myers Squibb is essentially exiting the neuroscience area, management apparently concluding that neuroscience is not advanced enough to make drug development therein viable.
The two companies cannot both be right, and indeed, BMS is quite wrong. If they are, justifiably or not, dissatisfied with their inhouse science, they have the resources to go out and acquire ample innovation in CNS, and to become a prominent and successful player in the space. While they have oncology programs worthy of note and indeed excitement, no Big Pharma worth the title can elect to walk away from the largest areas of unmet need in all of medicine. BMS lost its nerve, and folded its CNS cards before the game had fully developed. This almost-complete but relatively late exit (compared to some of their peers) will provide their management with a relatively brief window of relief, followed by the dawn of regret.
Back in January, Teva Pharmaceuticals had made our Best News of 2012 roster, based on its announced intention to revamp and refocus its R&D on CNS and respiratory disorders, and to invest $10 billion over the next five years to building their pipeline
via licensing and acquisitions. We concluded that “Teva will be a very interesting story to watch going forward.”
And so it is, but not at all in the way that we’d expected, or hoped for. CEO Jeremy Levin abruptly departed shortly before we went to press with this issue; there is some dispute over the process by which this occurred, whether he resigned or was pushed. Our guess is that the latter is more-to-the-point: There had apparently been heightened conflict between Levin and Teva’s BOD over Teva’s future course, which was going to include some combination of dramatic cost-cutting (it had recently been announced that a 10% workforce-reduction would be initiated) and investment in new products-in-development as Copaxone’s demise approaches.
NIR had not greeted all of Levin’s initiatives with untrammeled enthusiasm: His projection of major revenue streams from new reformulated drugs (“New Therapeutic Entities”) seemed overly optimistic, and his style could veer into the abrasive. But his plan to also license and fully develop genuine New Chemical Entities, with CNS as one of the two therapeutic areas of choice, was in our view a welcome and savvy contrarian play, in contrast to the shift of some Big Pharmas away from CNS.
Now, this appears to be at risk, and comments from one Teva BOD member that the issue was leadership rather than direction are not reassuring, the latter seemed to be integrally intertwined with the former. The other issue here is systemic: BMS veteran Levin had taken the CEO position at the very beginning of 2012, and for intractable conflict to have developed vis-a-vis Teva’s BOD in less than two years suggests significant unresolved issues as to power and control within Teva’s organizational structure.
We had also seen the arrival of CSO Michael Hayden, given his strong and longterm interest in neurodegenerative disease, as a harbinger of a new era at Teva. Now, we will be watching to see if he stays or leaves. If he leaves, that would raise the odds that Teva may opt to deal with the Copaxone crisis primarily via draconian cost-cutting rather than simultaneously pursuing a R&D investment strategy. On the other hand, if Hayden stays at Teva, that probably can be interpreted as indicating that the drug development strategy remains intact. Teva has enormous resources and its new strategy was promising: Our hope is that they do not delude themselves into thinking that they can subtract their way to growth.
In preparing the October issue of NeuroPerspective, we noted that September was another solid month for the neuroscience stock sector, with a number of companies showing dramatic valuation gains. In fact, the index was up over 11% in just the past month, and the closing NIR Index value is the highest ever recorded: 377.22, blowing by the previous high, 354.16, achieved back in March 2000.
The NIR Index is an admittedly crude benchmark, an unweighted basket of fourteen publicly traded CNS companies, but even so, this high water mark is worth noting. To put it in perspective: That previous high of 354.16 back in 2000 came less than two years after the all-time low point of 81.02, a nadir reached in September 1998. Those were indeed heady, even bipolar times, where money was indiscriminately thrown at academics turned entrepeneurs based on promises that almost always vaporized. That 2000 high point soon vanished in the rear view mirror, and if one parses out five months at the beginning of 2006 where the index barely and briefly rose above 200, it remained in a range 0f 103 to 195 until July 2012–more than a decade. Now, in the past three years, the NIR Index has risen 366%.
Someone is making money in CNS, but the slope of this transformation, after a seeming eternity of moldering in the Horse Latitudes, begs the question of whether this is another bubble, one that could burst as suddenly as did the bubble of 2000, where the index fell by almost 50% over the next twelve months. We do not think so: The cynicism of these times about the prospects for neuroscience is a far cry from the euphoric naiveté of that era. There will be corrections of course, partly in response to geopolitical tremors and governmental microcephaly. But these gains are based on advances far more substantive than the vague promises that fueled the rise thirteen years ago.
Like a chronic gambler who keeps thinking that the next time will turn out different, the pharma industry has developed a nasty habit of sidling back to the Alzheimer’s roulette table, putting all their chips on 7, and watching forlornly as the statistical croupier cleans them out, again and again. Hedging one’s bets, putting a few chips on different numbers, has yet to be universally adopted as a less-masochistic ‘investment’ option. A process that we like to think of as akin to 3D-chess ends up being played as a game of craps, and the dice have yet to roll in pharma’s favor.
Lilly is the most recent company to take the plunge into irrational exuberance, deciding to again take solanezumab into Phase III on the basis of post hoc parsing of grouped results from the previous Phase III trials, hoping that selecting only mild patients–albeit with observable amyloid plaque–is the key to one-pivotal-trial success. A $300-400 million trial will surely consume a prominent share of the resources available to CNS within Lilly, a company now cost-cutting because of Cymbalta’s looming patent expiration. We are not reassured by the somewhat arbitrary–in our view–judgment that the optimal trial population is intact enough to only show mild cognitive impairment, but is advanced enough to show plaque on imaging. The reality is that the plaque requirement, which assures some semblance of patient population homogeneity, runs counter to the thesis that one must intervene early in order to achieve a meaningful effect.
Perhaps such gambles are all we have at present; for all the neuropunditry around validated targets in Alzheimer’s, nothing has truly been proven, and ideology is only slightly less dominant than it was ten years ago. Rather than criticizing companies like Lilly for taking the risk, perhaps they should be supported and cushioned against overcommitment–risk can be titrated by being shared amongst several contenders. No company should take all the risk in the hope of hitting the jackpot. Pfizer and JNJ did have this right when they collaborated with Elan on bapineuzumab: While bruised, none of these companies ended up ruined by bapineuzumab’s failure. For those who continue to consider amyloid the best access point for intervention–we do not claim it isn’t, we simply believe that this has yet to be proven–a few companies could consort around BACE inhibition or gamma secretase modulation; alternatively, tau oligomerization or metal-binding, to name a few. Risk and reward sharing would make this kind of gamble manageable, and it would also let some of the other targets that have long languished in amyloid’s shadow have a few chips placed on them. To this point, they have not had the resources necessary for their evaluation, because Pharma had prematurely decided that they knew what the ‘sure thing’ was. TauRx has only survived because of a cadré of Singaporean investors, and it is damning that Prana has had to rely for so long upon a network of Australian investors and government grants to crawl its way towards POC–or not. Does this mean that they are right? No one knows, but no one reading this publication can say for sure that they are wrong, either. A good dose of humility is overdue, but this does not mean exiting the field; the societal stakes are too high, and we cannot afford to wait for mechanistic certainty. Humility means acknowledging that we don’t even know what color is going to come up on the wheel, let alone which number, and our bets should be diversified accordingly.
*Thompson, H. 1972
Data-fracking is the fracturing of a dataset by the application of a pressurized search through as many datapoints as is necessary to find one that has the appearance of being positive. Typically, data is combined with cortisol and caffeine, and the mixture is injected at high pressure into statistical analyses to illuminate illusory correlations along which the appearance of success may migrate to a press release. The products of data-fracking tend to be more gaseous than substantive.
Vanda Pharmaceuticals had received considerable attention and improved valuation for tasimelteon, whose NDA has been filed in the treatment of circadian rhythm disruption associated with blindness. Now, Adam Feuerstein (Street.com) has outlined in devastating detail what went into the making of that NDA sausage, and it is indeed unappetizing. Vanda’s PR regarding the trial data did not acknowledge what appears to have been a change of primary endpoints even as the trials were ongoing–’total nighttime sleep” turning into the “worst quartile of all their sleep;” the use of arbitrary cutoffs for nonvalidated measures not agreed to by the FDA beforehand; and the shoehorning of results into statistically significant range via the post hoc combination of patients from the randomized and screening components of the study. For those of strong stomach and curious mind, we refer you to Feuerstein’s article (http://www.thestreet.com/story/11954365/2/vandas-sleep-disorder-drug-is-a-nightmare.html). For NIR, Vanda has long epitomized the nightmare of wasted resources; their CEO received our coveted ‘Worst CEO of the Year’ for 2008, followed by ‘Luckiest CEO of the Year‘ in 2009, after Fanapt’s miraculous approval. His luck may be approaching its finite limit, even as he and his poor excuse for a BOD have run Vanda into the ground. Ordinarily, NIR takes a dim view of shareholder lawsuits, but in this case, one seems inevitable and justified.
*apologies to Thomas Dolby (1982)