First of all, we at Bionest want to wish you a very happy, healthy, and prosperous new year. And we look forward to speaking to many of you in person during JP Morgan week in San Francisco!
Another year ended. Another begun. In the time-honored tradition of year-end wrap-ups and new year’s predictions, we thought we’d take a look at several of the big topics and trends of 2015 and comment on what we expect to see in those areas in 2016. We’ll discuss the first three now, and provide a look at two more — the increasing move toward customer/patient-centricity and the opportunities it brings, and the increase in deal-making within the orphan drug space — in a subsequent post.
Immuno-oncology: Much Deal Making and an Evolving Clinical Picture
Immuno-oncology was certainly one of the leading topics of 2015, especially in terms of deal-making. Oncology accounted for about half of the 32 largest in-licensing agreements of the year, including the top three (Juno/Celgene; Regeneron/Sanofi; and AstraZeneca/Celgene). The large number of deals in this space reflects the realization that the resources needed to succeed in this field are beyond even what the largest pharmaceutical firms can do on their own. The size of the transactions, particularly those entered into by Celgene and by Sanofi, reflect those firms’ late entry into this space and their attempts to catch up to companies like Merck, Roche, and AstraZeneca, which have already built a significant presence. As we wrote in our September editorial in Immunotherapy in Oncology, the time is clearly right for partnering between immunotherapy firms and those with targeted agents. And so, 2016 will likely to continue to bring collaborations and other deals in this field.
On the clinical side, it has been exciting to see the gains that some immuno-oncology treatments have made. During 2015, the FDA approved the first immunotherapy drugs for cancer, Bristol-Myers Squibb’s Opdiva and Merck’s Keytruda, both for non-small cell lung cancer. The agency also approved the first combination immunotherapy, which uses two drugs from BMS, Opdiva and Yervoy, to treat melanoma. Exciting, if still early, clinical results were reported with check-point inhibitors and CAR-T therapies in difficult to treat blood cancers.
We expect to get even clearer clinical picture of the potential — and perhaps, limitations — of this approach during 2016, including greater understanding of its usefulness against solid tumors.
Even before Martin Shkreli stirred up interest and outrage over his price hike for Daraprim last fall, the high cost of new drugs was a topic of intense interest. At ASCO last spring, for the first time we heard even physicians talking about drug pricing issues. Now that interest has spread to politicians and the general public. Outrage was triggered by several companies, including Valeant Pharmaceuticals and Shkreli’s Turing Pharmaceuticals, buying the rights to existing drugs and quickly hiking prices by several hundred percent or more.
We expect issues of drug pricing and availability to continue at the forefront of discussion in 2016, especially in the field of oncology where high prices for individual drugs will likely mean even higher prices for the new immuno-oncology combinations. There is a serious and justified fear on the part of physicians and payers that the health care system will not be able to afford the rising costs. With the median cost of each new cancer drug totaling $120,000 per year, the thought of paying for a combination therapy involving three or more of such products is especially concerning.
Along with continued discussion of these issues, we expect to see an increasing move toward value-based pricing. The challenge here is that payers do not yet have the tools needed to define and accurately track value and outcome of one therapy over another. An opportunity exists to create such technology platforms for integrating large amounts of data at the hospital level to provide a more accurate picture of the total cost of treatment and outcomes. We anticipate new or existing big data-focused companies moving into this field in the near future.
A New Dominance for Diagnostics
While molecular biomarkers have played an important role in drug development decision making for several years, they are increasingly becoming incorporated in into clinical medicine, particularly in the field of oncology where such diagnostic tests are increasingly employed to tailor therapy to the individual patient’s genetic profile. This approach is perhaps epitomized by Foundation Medicine’s services, which provide comprehensive genomic profiles to physicians to help them match their patients to targeted therapies. Third party payers are starting to recognize the value of such services, as illustrated by UnitedHealthcare’s December agreement to cover FoundationOne® genomic profiling for patients with metastatic non-small cell lung cancer.
As the cost and speed of next-generation sequencing technologies improve, we expect a continued but possibly slow increase and acceptance of genomic profiling and molecular diagnostics driving therapeutic decision-making more broadly. The challenge for broader acceptance remains in part with the oncologists, who may not want the data as they also see the potential liability of gaining large amounts of genomic information on their patients at a time when they can do little of use with it.
We also believe that the trend toward fast, inexpensive point-of-care diagnostics will drive pharmaceutical companies to increasingly assemble and use biomarker diagnostics to help differentiate their brands. This approach could be particularly powerful for firms with a portfolio of drugs for a particular condition, like asthma, where quickly running a proprietary panel of biomarker tests in the physician’s office could indicate the best of their drug products for a particular patient. We wrote about this trend toward diagnostics increasingly guiding the use of specific drugs in our 2014 In Vivo article, “When Illumina Buys Roche,” and the early moves toward diagnostic dominance that we saw then have increased and will continue to do so in 2016.