Innovation in the Pharmaceutical Industry

through Partnerships with Academia & Industry

Malcolm Skingle CBE DSc PhD

Director – Academic Liaison

Drug Discovery

January 26th 2011

Annual Icelandic Medical Conference

Medical Research Symposium

Talk Plan

- Changing Landscape in the Pharma Industry

- Innovation in Pharmaceuticals

- The Future for Pharma & Healthcare

- Discovery Partnerships in Academia (DPAc)

- Concluding remarks

Changing Landscape in the

Pharma Industry

138

318

802

1318

0

200

400

600

800

1000

1200

1400

$ m

illi

on

1975 1987 2001 2006

Year

Estimated full cost of bringing a new chemical or biological entity to market

($ million – year 2005 $)

Source: J.A. Di Masi and H.G. Grabowski, „The Cost of

Biopharmaceutical R&D: Is biotech Different? Managerial

and Decision Economics 28 (2007): 469-479

It takes up to15 years to develop a new drug

For every 5-10,000 molecules synthesised & screened for activity, only 250 reach pre-clinical development, only 5 reach clinical trials and only one reaches the market

Cost to develop a drug in 2006:

$ 1.318 billion Only 2 of 10 marketed drugs ever

produce revenues that match or exceed R&D costs.

Pharmaceuticals are generally cheap and easy to copy – generic companies enter mature markets developed by innovator with low entry costs

These features are probably unique to the pharmaceutical industry

Drug Development is a costly & risky business

Source: Burrill & Company; US Food and Drug Administration.

Note: NMEs do not include BLAs

26 25

22

28

53

39

30

35

27

24

17

21

31

18 18

14

$12$13 $13

$15$17

$19$21

$23

$26

$30$32

$33

$39 $39

$43

$54

0

10

20

30

40

50

60

0

5

10

15

20

25

30

35

40

45

50

$55

New Drug Approvals (NMEs) PhRMA Member R&D Spending

New

Dru

g A

pp

rova

ls (

NM

Es)

Ph

arm

a R

&D

($ b

illi

on

s)

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

R&D Productivity decreases the innovation gap is getting wider

GAP

Pressures on the Pharma Industry

R&D spend continues to rise

The blockbuster model is unsustainable

Drugs not being reimbursed in some countries if

they are not sufficiently differentiated

There are higher regulatory risks post-launch

Pricing discussions continue

Over 6,000 compounds in development

Source: Adis R&D Insight Database, customized run (December 2007)

540

1,415

1,704

2,742

0

500

1,000

1,500

2,000

2,500

3,000

Nu

mb

er

of

Co

mp

ou

nd

s i

n

De

ve

lop

me

nt

in 2

00

7

Japan Europe Rest of World USA

Competition in Therapeutic Innovation

• Many scientists seeking to solve same problems in different

or similar ways from similar starting points at the same time

The first to market is generally quickly followed by several

others

– >15 beta blockers

– 9 protease inhibitors

– 15 NSAIDs

– >10 statins

The first mover is rarely the most successful

The period of exclusivity for first movers is shrinking &

Pharma are becoming more conservative

The period of exclusivity for first entrants to a therapeutic class is decreasing (US data)

Source: DiMasi & Paquette (2004)

1.2

3

4.1

7.2

10.2

7.7

1.8

2.8

5.1

5.9

8.2

7.2

1995-98 (n=18)

1990-94 (n=15)

1985-89 (n=14)

1980-84 (n=5)

1970s* (n=9)

1960s (n=8)

First-

in-C

lass A

ppro

val Period

Years

Mean

Median

Compound differentiation

New drugs tested against “gold standards”

Patent competition drives improvements:

Increased Efficacy

Decreased Side-effects

Decreased ADRs

Decreased drug-drug interactions

Decreased dosing

Specialised drug delivery systems

Patients benefit from a range of products with differing characteristics

Quarterly Enalapril Sales in the UK

0

5,000

10,000

15,000

20,000

25,000

QTR

SEP 1

992

QTR

MAR 1

993

QTR

SEP 1

993

QTR

MAR 1

994

QTR

SEP 1

994

QTR

MAR 1

995

QTR

SEP 1

995

QTR

MAR 1

996

QTR

SEP 1

996

QTR

MAR 1

997

QTR

SEP 1

997

QTR

MAR 1

998

QTR

SEP 1

998

QTR

MAR 1

999

QTR

SEP 1

999

QTR

MAR 2

000

QTR

SEP 2

000

QTR

MAR 2

001

QTR

SEP 2

001

QTR

MAR 2

002

Sale

s (

£ m

illi

on

)

Protection

Expiry

Source: IMS Health MIDAS database

Quarterly Enalapril sales in the UK

The patent cliff:

Pfizer will lose $13bn of income when the Lipitor patent

expires in 2011.

Eli Lilly will lose up to 75% of its revenue over the next 8

years unless it has new drugs to make up this loss.

Forcing risk averse Pharma companies to

diversify their approaches to R&D

Innovations in the Pharma Industry

penicillins

sulphonamides

aspirin

psychotropics

NSAIDS

H2-antagonists

beta blockers

lipid lowerers

ACE-inhibitors

Biotech drugs

chronic

degenerative

disease associated

with ageing,

inflammation,

cancer

drugs against

targets identified

from disease genes

1900 20301950 1960 1970 1980 1990 2000 2010 2020 2040

New

Thera

peutic

Cycl

es

1st generation 2nd generation 3rd generation

natural products

and derivatives

serendipity

receptors

enzyme

genetic engineering

cell pharmacology/

molecular biology

genomics / proteomics

Step Change Therapeutic Innovations

Rapidly Changing MarketBiologicals gaining market share

-10 -5 0 5 10 15 20

0 2 4 6

8 10 12

% Sales Growth: CAGR 2007-2012

Mark

et S

hare

%

anti-hyperlipidaemics

anti-psychotics anti-bacterials

anti-hypertensives

anti-viralsanti-diabetics

anti-rheumatics

vaccines

bronchodilators

oncology

New drug product sales growth (2007-12)

Where science and unmet need converge

Cystic Fibrosis

OSA

ARDS

Infant RDS IPF

Idiopathic Fibrotic NSIP

Fibrotic ILD Assoc RA

Fibrotic ILD Assoc SLE

Fibrotic ILD Assoc Sys Scl

Sarcoidosis

Idiopathic BOOP

Chronic Cough

PAH

AAT Deficiency

Bronchitis - acute

Bronchiectasis

BPD

HPS

HistoplasmosisInfluenza

Legionellosis

LAM

Silicosis

Berylliosis

HP - Farmer's Lung

PneumoniaPE

RSV

Bronchiolitis

SIDS

Chronic sinusitis

Nasal polyposis

AR

NAR - Pure AR - Pure + Mixed

Peanut Allergy

Atopic dermatitis

COPD

Asthma

0

1

2

3

4

5

100 1,000 10,000 100,000 1,000,000 10,000,000 100,000,000

US Population Prevalence/Incidence (Log Scale)

Un

met

Nee

d I

nd

ex

Progressive, Fibrotic ILD (inc. IPF, NSIP, ILD Assoc CTDs - RA / SLE / Sys Scl)

Emergent science drives new disease opportunities

Lung repair

COPD, fibrotic lung diseases

(IPF, ILD, CF)

Neuronal mechanisms

Rhinitis, asthma, COPD,

cough

Immunomodulation

Asthma, allergic rhinitis

Core diseases Opportunities in “new” diseases featured in the business plan

Key emergent areas of

science

Changing Trends in Pharma/Biotech

Management consultants, automation and HR:

In the ‟90s consulting companies offered their services to Pharma.

– Robotics for screening 1,000,000 compounds/week.

– Combinatorial Chemistry.

– “me too” compounds.

The rise of Biotech:

Antibodies were validated as drugs, small innovative companies cash starved

therefore ripe for take over (could solve Pharma‟s pipeline problem). How do you

copy a biotech product (no generics).

Health Budgets are finite:

The amount paid for healthcare is no more than 15% of GDP

Drugs must offer value (NICE).

Biomedical innovation:

The last 50 years

• new technologies:

applied pharmacology – agonists and

antagonists

genetic engineering – therapeutic

proteins, imaging, arrays and antibodies

bioengineering advances – hips and

pacemakers

• but…

economic model is unsustainable

lacking productivity

US health reforms starting to bite

& we cannot focus only on “developed

nations”

Source: IMS MIDAS 2006 sales data, Total Pharmaceutical Market* Extrapolations from 2006 to 2020 based on IMS projection and % of 2006 sales

China,

$82B

India,

$44B

Russia,

$38B

Brazil,

$60B

Mexico,

$60B

Korea,

$66B

Turkey,

$52B

US, $276B

Europe,

$123B

US,

$364.18B

Europe,

$162.30B

$526.48B

$400B

$55B

Year: 2006 Year: 2020*

Assuming

2% growth

per year

Emerging Markets will outgrow Developed Markets by 2020

2020 Growth Profile:

BRIC countries, Mexico, South Korea &

Turkey

12-13% growth p.a

Total sales $400billion by 2020

Cf Mature markets (USA & Europe) low

single digit growth

GSK turnover growth in 2009 despite decline in US Pharma

US Pharma£9.2bn

EuropePharma£7.7bn

Rest of Pharma £2.2bn

2009 Turnover £28.4bn (+3%)

Emerging Markets Ph

£3.0bn

Japan Ph £1.6bn

Consumer £4.7bn US growth rate impacted by

losses to generics

+7%

+19%

+22%

+20%

+9%

-13%

CER growth rates

Rest of Pharma includes Stiefel sales of £248m

The Future for Pharma& Healthcare

The world today:

The population challenge

60% of the worlds population is in Asia

Cf. 5% of the world population in N.America

N.America currently purchase almost 40% of

the worlds Pharmaceuticals.

This is unsustainable

Possible game changers

looking out 20 years

• genomic medicine & epidemiology

• companion diagnostics

• pharmacogentics

• stem cell therapeutics

• synthetic biology

• nanotechnology

• bioengineering

• computational sciences

• digital pathology

• decision support systems

• medical imaging

• neurology

• infectious disease

• population (prevention)

• longevity (diabetes, neurological diseases,

cancer)

• cost of healthcare (price, volume, companion

diagnostics, efficacy)

• infectious disease (re-emergence of TB,

influenza, potential for vaccines and

therapeutics, drug resistance)

• counterfeiting

• understanding of genetics critical to human

medicine.

The changing face of

biological innovation

Iceland‟s Unique Offering:

University Hospital

The Icelandic Cancer Society

Icelandic Heart

Association

“Genetic correction of Prostate Specific

Antigen values using sequence variants

associated with PSA levels”

Gudmundsson et al, Science Translational Medicine 15th December 2010

The Future:

Increased emphasis on in silico analysis

Pulling disparate datasets together to create new knowledge

Genetic information

Species linkages – mouse, zebra fish, human

Spatial information – protein structures

Epidemiology

Screening data

Imaging data

Genomic medicine:

Treatment of metastatic malignant melanoma with selective

inhibitor of BRAF V600E (Plexxicon 4032)

Before 15 days after

Courtesy of Dr Grant McArthur

Academic - Pharma

Partnerships

Pharma

-Specific agonists &

antagonists

-- Biological reagents

Clinical academics

-Deeper understanding of

physiological & pathological

control mechanisms

Publications

Innovation through Partnership

Q: Why place Chemical Probes in the Public Domain?A: Potent and selective small molecules provide complimentary (if not better) target validation to genetic methods as evidenced by their scientific impact

Compound Receptor Papers Citations Years h-index g-index

GW1929 PPARg 317 11063 14 47 100

GW0742 PPARd 392 7212 10 41 78

GW4064 FXR 250 4482 8 37 61

SR12813 PXR 127 4628 8 33 67

GW9662 PPARg 528 4513 8 32 50

GW3965 LXR 181 3073 7 29 53

GW7647 PPARa 118 2312 7 22 47

CITCO CAR 73 711 5 14 24

Data compiled from Google Scholar, October 5, 2007

All compounds were made available by GSK to the Public Domain

through commercial suppliers (Sigma-Aldrich and Tocris)h-index: a metric of scientific impact, combining quality and quantity of citations

g index: a modification of the h-index with more weight on highly-cited articles

Discovery Partnerships in

Academia (DPAc)

Discovery Partnerships

with Academia

DPAc aims to leverage the unique expertise of both academia and industry...

Academia

• In depth biological insight

• Target and pathway expertise

• In vivo disease models

• Clinical disease insight

• Key opinion leaders

Industry

• Hit generation & assay development

• Medicinal chemistry

• Quantitative biology

• Preclinical development

• Integrated discovery & development

• Regulatory & commercial infrastructure

Discovery Partnerships

with Academia

GSK resource and expertise to progress project

Lead Identification

Late Lead Optimisation

Early Lead Optimisation

Assay Development

Target Feasibility

Medicinal chemistry and computational molecular design

Preclinical development(safety assessment, pharmacy, chemical development, DMPK)

Synthetic & analytical chemistry

Selectivity screening

Encoded Library technology>10million compounds

HTS capacity2 million compound set

Large scale protein production

Flexible, high tech assay platforms

PK-PD modelling

Discovery Partnerships

with Academia

DPAc focus on early drug discovery and future pathway options to launch

First dose human

Launch

GSK InternalProject

DPAc project can transition at

any stage but likely around CS

AcDPU SharedProject

P III start

Drug Discovery Initiated

Screen Initiated

Lead Identified

In vitro

Candidate Selection

Lead Identified

In vivo

DPAcShared Project

Lead ID

Late LO

Early LO

Assay Dev

Target Feasibility

PhaseI

Phase IIb

PhaseIIa

CS toFTIH

Registr-ation

PhaseIII

Target validation data

Some assays in place

Early molecules identified

Advanced assets identified

Discovery Partnerships

with Academia

Reagent generation

Activities shared between academics and GSK

Value research support & reward

Value of GSK contribution

Lead Identification

Late Lead Optimisation

Early Lead Optimisation

Assay Development

Target Feasibility

Drug Discovery Initiated

Screen Initiated

Lead identifiedin vitro

Candidate Selection

Lead identifiedin vivo

3-6 mths 9-12 mths 9-12 mths 9-12 mths 9-12 mths

£

Physiological assays

Typical GSK activities

Assay feasibilityTool generation

Assay developmentScreeningChemistry

ScreeningChemistryDMPK

Assay development

ChemistryDMPKSafetyPharmacy

Typical academic activities

Physiological assaysIn vitro and in vivo

Physiological assaysIn vivo models

£ ££ £££ £££

£ £ £ £ ££+ downstream development milestones and/or royalty

Discovery Partnerships

with Academia

Therapeutic hypothesis

Coherent and supportable hypothesis that modulation of target will produce an effect expected to be of therapeutic benefit

Target definedSpecific drug target identified, with some understanding of type of

pharmacology desired

(Exclusive) enabling expertise

Academic partner has know-how, experience, expertise essential to progressing the target which is not (readily) found elsewhere

TractabilityA path to identification of a drug molecule can be defined

Target knowledge suggests that a drug-like molecule can be generated

Requirement for GSK contribution

GSK has capability which will help progress to the next milestone

DPAc looks for leading academics working on a target or pathway with high therapeutic potential

DPAc Partnership Criteria

Conclusions:

GSK are keen to promote a more open culture for sharing ideas & data

Traditional relationships between Academia and Industry are being re-defined

Access to public funding will drive areas of science underpinning the Pharma industry

Innovative partnership models allow both GSK & academics better access to science & technology

Thanks for listening

We are looking for

innovation wherever

it may originate

Discovery Partnerships

with Academia

DPAc is a differentiated approach to translating innovative academic research

What DPAc is not……What DPAc is………

Fixed term research funding

Pulling projects into industry away from academics

Funding of exploratory research

Milestone aligned resourcing

The opportunity for academics to collaborate in drug discovery

Access to GSK’s expertise and resource in early drug discovery

Discovery Partnerships

with Academia

...looks for innovative academic science…that may ultimately deliver

differentiated medicines

from across multiple

therapeutic areas

...integrates with academic groups…to provide resource and

expertise to undertake

early drug discovery in

partnership with

academics

...delivers quality development candidates…through milestone

driven collaborations, that can then progress through the GSK organisation

DPAc offers a new approach to collaborative drug discovery

Discovery Partnerships

with Academia……..

GSK profile of current

global collaborations

GSK have more academic collaborations than

any other UK company (all sectors)

GSK – UK Academic Research Partners

BirminghamCambridge

Southampton

EdinburghGlasgow

Cardiff

Dundee

Sheffield

Leicester

GSK currently has >500

active research collaborations

ongoing with UK Universities.

Two way exchange of knowledge &

technology

Newcastle

Durham

Leeds

Ulster

Belfast

YorkHull

NottinghamLoughborough

Warwick

ManchesterLiverpool

BuckinghamOxfordReading

HertfordshireEssex

Canterbury

BrightonPortsmouth

SurreyBristol

Exeter

Bath

LancasterBradford

Cranfield Ipswich

Country No.

Austria 1

Belgium 4

Denmark 4

France 16

Germany 21

Greece 1

Ireland 10

Italy 4

Netherlands 4

Norway 2

Spain 4

Sweden 4

Switzerland 15

EUROPEAN ACTIVE AGREEMENTS BY COUNTRY

Spain

Portugal

UK

Iceland

Ireland

Germany

France

Switzerland

Italy

Austria

Belgium

Holland

Norway

Sweden

Denmark

Lux

Poland

Czech R.

Hungary

SloveniaCroatia

Corsica

Sardinia

Sicily

Bosnia & Herz

Slovakia

Serbia

Albania

Greece

Macedonia

Bulgaria

Romania

Ukraine

BelarusRussia

Lithuania

Latvia

Estonia

Finland

Russia

Moldova

Turkey

Crete

GSK Agreements by State

AL

NY (10)

NC (20)MD (19)

PA (19)

MA (15)

CA (9)

MI (6)

TX (7)

CO(3)

GA( 2)

WA(3)

OR

MO (4)

NE IA

FL

TN

NJ(2)

VA(3)

DE

1 Agreement

CT(3)

AZ

January 2008-April 2010

North Carolina NC

Maryland MD

Pennsylvania PA

Massachusetts MA

New York NY

California CA

Texas TX

Michigan MI

Missouri MO

Colorado CO

Connecticut CT

Virginia VA

Washington WA

Georgia GA

New Jersey NJ

Alabama AL

Arizona AZ

Delaware DE

Florida FL

Iowa IA

Nebraska NE

Oregon OR

Tennessee TN

4-9 Agreements

2-3 Agreements

19-20 Agreements

10-18 Agreements

GSK Academic Spend 2009

0

500000

1000000

1500000

2000000

2500000

3000000

GSK funding to Harvard in 2009 was >£9m

£0

£1.000.000

£2.000.000

£3.000.000

£4.000.000

£5.000.000

£6.000.000

£7.000.000

£8.000.000

£9.000.000

£10.000.000

Immune Disease Institute,

Harvard Stem Cell Institute,

MGH,

Dana Farber Cancer Institute,

Brighams & Womens,

MIT

How large Corporates are

changing their business models

to embrace Open Innovation

Data Sharing Agreements

GSK have collected bloods from clinical trials for

more than a decade

Genetic analysis on cohorts of >20,000 patients

Need to combine datasets with other well

phenotyped collections to find significant trends

e.g MRC £500k + GSK £500kNick Wareham (University of Cambridge) Obesity/Diabetes

Peter McGuffin (KCL) Bipolar disorder

Developing Chemical Probes for Epigenetics

Chemistry @ GSK

No structures disclosed

Assays @ Oxford

X-ray @ Oxford

Data to GSK

Chemical Probe

Public

Domain

Structures disclosed

1–5 Compounds meeting probe

criteria for potency and selectivity:

e.g. Potency <100nM, Selectivity

>100, Cellular activity <1uM

*

*Only GSK scientists can

view data with compound

structures

Sigma make

probe available

Pharmaceutical

Industry

Public

Domain

GSK-WT-SGC

Partnership

Chemical

Tractability

Chemistry (GSK)

Screening (WT-NIH)

Structure (SGC)

Chemical

Probes

No restrictions

on use or

publication

Enable Academic

Target Validation

Drug

Discovery

Proprietary Target Validation

(Re)Screening

Lead optimization

Pharmacology

DMPK

Toxicology

Chemical development

Clinical development

A future model for Drug Discovery?Wellcome Trust Epigenetics Collaboration

Open Access Proprietary

The realities of having the best pipeline

0.0x 0.1x 0.2x 0.3x 0.4x 0.5x 0.6x 0.7x

Lehman Brothers PharmaPipelines (Sept 2007)

Pharma Replacement Power – NPV

Pipeline renews

60% of sales

LB Method: [NPV of recent launches (06-07) + NPV of pipeline opportunities from „08-‟13] / NPV of products marketed before 2006.

GlaxoSmithKlineMerck

Bristol Myers Squibb

Novartis

Johnson & Johnson

Sanofi-Aventis

AstraZeneca

Pfizer

Wyeth

Eli Lilly

Roche

Abbott Labs

Schering Plough

AVERAGE

Science base attracts R&D spend

0

10

20

30

40

50

60

UK market UK R&D US market US R&D

UK/US Global PharmaMarket share & World R&D spend

2.46%

37.64%

•Global Pharma sector

MRC

TSB

Basic researchPrototypediscovery

and design

Pre-clinicaldevelopment

Earlyclinical

trials

Lateclinical

trials

Developmental PathwayFunding Scheme

Developmental Clinical Studies

Targeted initiatives to alleviate bottlenecks

Infrastructure/Resources

Methodology

Training

Continued commitment to

basic lab, clinical and population research

Capacity building

NIHR

Translational Stem Cell Research Programme

Translational Research Support

MRC translational activities

Developmental Pathway Funding Scheme (DPFS)

Cornerstone of the MRC‟s Translational Strategy

Launched at end of April 2008

Planned expenditure of at least £25m over next 3 years

– Guidance of £250k-750k; 1-2 years per project

– Will consider larger scale proposals where justified

Projects do not need to originate from MRC funded research

Goal oriented rather than hypothesis-led

Funding is milestone-based

– Projects will be required to submit quarterly and

milestones progress reports

– Failure to meet a milestone may result in funding being

terminated

Scope of the DPFS

Examples of proposals:

– validating an association between a fundamental

discovery & a preventive, diagnostic or disease process

(target validation)

– developing candidate therapeutic entities - from

discovery up to early evaluation in humans

– developing candidate diagnostics or medical devices -

from prototype design up to early evaluation in humans

– developing a new research tool to overcome a

bottleneck in the development of therapies or diagnostics

Drug Development Costs Escalate

MRC

TSB

Basic researchPrototypediscovery

and design

Pre-clinicaldevelopment

Earlyclinical

trials

Lateclinical

trials

Developmental PathwayFunding Scheme

Developmental Clinical Studies

Targeted initiatives to alleviate bottlenecks

Infrastructure/Resources

Methodology

Training

Continued commitment to

basic lab, clinical and population research

Capacity building

NIHR

Translational Stem Cell Research Programme

Translational Research Support

MRC translational activities

Developmental Pathway Funding Scheme

(DPFS)

• Cornerstone of the MRC’s Translational Strategy

• Launched at end of April 2008

• Planned expenditure of at least £25m over next 3 years

– Guidance of £250k-750k; 1-2 years per project

– Will consider larger scale proposals where justified

• Projects do not need to originate from MRC funded

research

• Goal oriented rather than hypothesis-led

• Funding is milestone-based

– Projects will be required to submit quarterly and milestones

progress reports

– Failure to meet a milestone may result in funding being

terminated

Scope of the DPFS

– validating an association between a fundamental

discovery & a preventive, diagnostic or disease

process (target validation)

– developing candidate therapeutic entities - from

discovery up to early evaluation in humans

– developing candidate diagnostics or medical

devices from prototype design up to early evaluation

in humans

– developing a new research tool to overcome a

bottleneck in the development of therapies or

diagnostics

MRC Industrial Collaboration Applications

(MICAs)

• MICAs are aimed at encouraging &

supporting collaborative research projects

between academic researchers & industry

• The key feature of this scheme is its

flexibility, especially the level & nature of

the industry contribution

MRC Industrial Collaboration Applications (MICAs)

MICAs are aimed at encouraging & supporting collaborative

research projects between academic researchers & industry

The key feature of this scheme is its flexibility, especially the

level & nature of the industry contribution

Without patents there would be no innovation

Given the costs & risks of drug development, without a period

of exclusivity against copyists there would be no investment

in pharmaceutical innovation

Pharma do not seek therapeutic area exclusivity (anti-virals,

antibiotics)

Patent protection promotes

therapeutic & innovative competition

Changing Landscape of I.P

More small companies owning & licensing basic IP

Many companies not in manufacturing, only generating technology/IP

More patent aggregators, who take on patents from universities & small companies

Patents used as bargaining chips