OUTSOURCING - Rand D Ride the Outsourcing Wave

Mark Egerton, PhD

Innovation in the new ecosystem of pharmaceutical R&D

By 2015, a staggering $250 billion of potential pharmaceutical sales will be lost to generic competition.¹ The stream of innovative new products that will replenish the industry’s pipeline has failed to appear and, fueled by this R&D productivity gap, the pharmaceutical industry has embarked on a process of reinvention.
Multiple strategic initiatives have been embraced in an attempt to increase R&D productivity. The mega mergers between top tier pharmaceutical companies that occurred during the past 10-15 years were partly designed to consolidate development pipelines and deliver R&D scale. A trend to “externalize” R&D closely followed, with top tier companies looking to supplement internal R&D activities by in-licensing development compounds/projects. Several top-10 pharmaceutical companies have publicly announced an aspiration to license up to 40% to 50% of their development portfolio from external sources, typically smaller biotech/pharma companies. In recent times, the theme of externalization has been further emphasized by a significant shift of pharmaceutical R&D organizations toward outsourcing of operational resource. Consequently, the overall shape and complexity of the pharma R&D ecosystem have changed dramatically as it progresses through the process of reinvention.

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FIGURE 1: The increase in the number of companies actively involved in drug development (A) and the number of molecules in the pharmaceutical industry’s drug development pipeline (B). Data abstracted from the Pharma R&D Annual Review 2010.

Few of these adjustments have directly addressed the processes underpinning drug development, however. As we enter an era of unprecedented insights into the molecular basis of disease, it is essential that the industry search for new and more efficient ways of evaluating candidate drugs within the development process. With the cost of developing a new medicine now estimated to exceed $1.5 billion, there are enormous potential benefits to drive for.²

The New R&D Ecosystem

Mega mergers and externalization of R&D have driven significant change in the pharma R&D ecosystem. An analysis of top tier pharmaceutical companies reveals that approximately 75% of those companies responsible for drugs receiving FDA approval in the mid-1990s no longer exist.³ Many names well known in the industry, including Ciba-Geigy, Hoechst, Marion-Roussel, Monsanto, Pharmacia, Upjohn, Warner Lambert, Wellcome, and Wyeth, have been relegated to the history books—an occurrence often associated with R&D budget cuts, site closures, and job losses.
The adoption of outsourcing strategies has driven further reorganization of R&D structures within large pharmaceutical organizations, which in recent years have entered into multi-year, multi-compound strategic deals. A number of strategic outsourcing partnerships announced in the public domain—SanofiAventis-Covance, AstraZeneca-Quintiles, and Eli-Lilly-Covance, for example—make it evident that major elements of operational responsibilities and resource have been transferred to the service provider, sometimes in conjunction with R&D facilities. These deals are multiyear partnerships, and it is inconceivable that the pharmaceutical partner could re-create internal competency at some point in the future and remain competitive. The move to outsourcing therefore appears to be irreversible.
Concurrently, the total number of organizations active in drug development has almost doubled, rising from 1,167 in 2000 to 2,207 in 2010. An equivalent increase in the total number of drugs in development, from 5,995 in 2000 to 9,737 in 2010, has followed (see Figure 1).⁴ The majority of the approximately 2,200 organizations that are actively involved in drug development are small- to medium-sized pharma/biotech companies that have development portfolios containing only a few molecules, some with just a single molecule.
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FIGURE A: SLx-2101 extended-release formulation design space.

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FIGURE B: SLx-2101 RapidFACT program design.

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FIGURE C: Pharmacokinetic profile of an optimized SLX-2101 extended-release drug product.

Case Study: Optimizing an Extended-Release Drug Product for a Novel PDE5 Inhibitor

Lx-2101 is a selective PDE5 inhibitor in development for a spectrum of indications, including hypertension. Once-daily dosing was considered essential for the indications being addressed, but the FIH program demonstrated a sub-optimal PK profile.
The maximal concentration (C_max) exceeded the threshold at which adverse events were observed, and the trough concentration (C_min) occurred within the 24-hour period, resulting in loss of pharmacodynamic activity. The objective of the program, therefore, was to develop and validate an extended-release
formulation that delivered C_max below the threshold level for adverse events and C_min above the threshold level for pharmacodynamic activity for 24 hours, thereby delivering a product suitable for once-a-day dosing in later stage clinical trials.

Program Design

A translational pharmaceutics platform was used to develop a rapid formulation development and clinical testing program (RapidFACT). Hydroxypropylmethylcellulose technology was selected to develop an extended-release matrix tablet as the drug product. The first step was to construct a two-dimensional formulation “design space” (see Figure A) with dosage strength on one axis and HPMC content—and therefore release rate—on the other axis. A clinical trial application was submitted to the UK regulatory agency, which contained supporting chemistry manufacturing and control data for the four prototype compositions at the extreme corners of the design space (FP1-4); however, permission was sought to make and test any formulation within the design space. Regulatory approval was secured within 14 days.
This flexibility of having critical-to-performance formulation components as continuous variables de-risks pharmaceutical development by avoiding the need to pre-select discrete, “locked” formulation compositions based on in vitro or preclinical data alone. Composition and, hence, in vivo performance can be varied within the clinical study in response to arising human data.
The clinical study was a five-period crossover design with 12 healthy volunteers (see Figure B). The interval between each period was 14 days. During this window, clinical safety, pharmacokinetic, and pharmacodynamic data from the previous period(s) were analyzed and a decision made on what formulation composition (dose and release rate) was to be manufactured and tested in the following period given the data from the previous period(s), which guided the project team to the optimal formulation. The clinical protocol was written to allow the option to investigate the effect of food following the selection of the optimal formulation.

Results

The RapidFACT program was completed in 21 weeks, from the point of initiation of the formulation development work through completion of the clinical program and delivery of decision-making data. An optimized formulation was identified within the first three extended-release prototypes tested from within the design space. In the fifth period of the study, the selected drug product was then dosed to healthy subjects in the fed state to confirm the absence of a food effect. Compared to a conventional process, the timeline and cost for this program were halved, and drug substance consumption was reduced by approximately 85%. These features, combined with the flexibility of the design space approach and the precision of using clinical data to drive decision making, ensured the program’s success.

Objectives typically include obtaining proof-of-concept data for their drug assets prior to licensing or sale of the business. Typically, the internal infrastructure of these companies is streamlined, and they rely almost exclusively on outsourcing to service providers to drive implementation of their development projects. This illustrates one of the clearest benefits of an outsourcing model: Any investment is directed toward progressing drug development projects to reach key milestones rather than toward internal infrastructure that may remain underutilized.
From the perspective of a service provider, this new R&D ecosystem presents a broad range of customers with very different requirements and expectations. At one extreme lie the top tier pharmaceutical organizations with significant internal infrastructure and drug development know-how; at the opposite end are the small virtual companies with no/little internal infrastructure and greatly reduced development know-how. The lifespan of many of these smaller companies may depend on the success or failure of a single molecule in development.
Where will the drive to innovate development processes come from within this ecosystem? Historically, pharma R&D personnel have been considered the owners of innovation. As a greater level of development activity is outsourced, however, service organizations are challenged to innovate.

The New Paradigm

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FIGURE 2: Translational pharmaceutics—horizontal integration of “make” and “test” supply chains to drive innovation in early development.

Numerous R&D leaders within the industry have commented on their approaches to drive R&D innovation and improve productivity.⁵ The competitive requirement for innovator companies to deliver first- and best-in-class medicines has increased the emphasis on new molecular targets and disease mechanisms that offer the potential to deliver breakthrough therapies. The challenges of translational science, however, mean that in reality the majority of these projects will fail at or before proof of concept, resulting in high attrition rates (approximately 66%) in Phase 2.
In essence, early development—defined as first-in-human through to proof of concept—has become part of the research continuum. In this process, drug candidates and molecular targets must be carefully tested to remove technical uncertainty and differentiate the “winners” from the “losers.” The conundrum, however, is that later stage attrition has to be reduced at a time when the number of disease targets being explored by the industry has never been higher. The early development process, therefore, must evolve to enable a much more flexible and interrogative approach with shortened cycle times. Early development plans must be tailored to individual molecules and focused on scientific interrogation to address the key questions—risk factors—that must be answered before the molecule progresses into full development. This vision can only be achieved by re-engineering the processes underpinning early development.
Current organizational structures and processes to support early development have evolved from working practices established over several decades in big pharma. Innovators and service providers have consolidated into two vertically integrated supply chains: one focused on the making of test materials (drug substance and product) and the other focused on testing of those materials (preclinical and clinical). In the outsourced industry, these two channels are typically referred to as contract development and manufacturing organizations and contract research organizations, respectively (see Figure 2).

The competitive requirement for innovator companies to deliver first- and best-in-class medicines has increased the emphasis on new molecular targets and disease mechanisms that offer the potential to deliver breakthrough therapies. The challenges of translational science, however, mean that in reality the majority of these projects will fail at or before proof of concept.

This strong demarcation of make and test functions has adequately served the industry to date. However, the established processes are sub-optimal when it comes to supporting the new early development paradigm. Transfer of drug product(s) between the two channels is cumbersome and often complex. For example, generation of sufficient stability data to assign an extended drug product shelf life and accommodate the logistical inefficiencies between manufacture and dosing can represent a significant penalty to the overall project timeline. The project team is also confronted with the challenge of investing at risk into drug product development and clinical trial manufacturing of a range of dose strengths at quantities to cover all eventualities.
For an innovator organization that has adopted an outsourcing strategy, these challenges are typically further exacerbated. The provision of a drug product for clinical testing may involve up to four different suppliers to cover drug substance supply, formulation development, clinical trial manufacturing, and packaging. The resulting supply chain presents a significant management burden and timeline risk, especially on those occasions when it breaks down and the incumbent suppliers are not focused on delivering a solution.
Translational pharmaceutics is a new approach in which make and test supply chains are horizontally integrated to create a delivery platform for early development. Such a platform enables the rapid and seamless manufacturing-to-clinic transfer of drug product, with manufacturing often taking place within a 24-72 hour period prior to dosing.
The savings in time and cost delivered by this approach are significant, and reductions by a third to half that of conventional approaches are typical. More importantly, however, it enables innovative thinking within early development, especially for those processes leading up to the FIH study or in subsequent work to optimize the drug product prior to full development. In essence, the make and test philosophy that has been used to drive discovery research can now be applied within clinical research.

First-in-Human Program

The FIH program represents a significant milestone for the R&D project team. In reality, it represents the first step into a new phase of investigations to confirm the merits of the drug candidate and molecular target in question.
Traditionally, the FIH program is undertaken with single drug product in a relatively simple format (e.g., drug in capsule). Decisions on this format, such as formulation type and dosage strength, are taken in the pre-clinical phase, often before pivotal toxicology studies have been completed. Significant quantities of drug substance, often in scarce supply at this stage, are consumed by the manufacturing of large batches of multiple dose strengths, to provide sufficient quantities and flexibility of drug product to cover the early development program. Hence, if the molecule fails toxicology or if the chosen drug product format proves sub-optimal following clinical dosing, all of the upfront investment in pharmaceutical drug product development and manufacture—typically $300,000-$500,000—is wasted.

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FIGURE 3: The benefits the can be achieved by using a translational pharmaceutics platform to deliver a FIH program versus a conventional process.

A translational pharmaceutics platform enables drug product manufacture in real time and, therefore, any significant investment in pharmaceutical development can be delayed until the pivotal toxicology studies have read-out, while timelines are maintained for regulatory submissions and first-subject-first-dose in the FIH study. Moreover, manufacturing in real time means that the results from one clinical period can inform the drug product to be made for the next clinical period. Adjustments to dose and formulation can, therefore, be made in direct response to emerging clinical safety, pharmacokinetic, and pharmacodynamic data.
The benefits delivered to the project team are significant (see Figure 3). The approach offers enhanced flexibility in the design of an early development program and equips the project team with a very powerful toolbox to interrogate drug candidates and mechanisms. Perhaps just as importantly for the smaller pharma R&D organizations, these programs can be implemented by working with just one service provider.

Product Optimization

In the current industry pipeline, the majority (estimated at 40%-70%) of small molecules for oral administration have sub-optimal solubility and/or permeability properties.⁶ Prior to transition from early development into full development, these drug products must be optimized so the active drug substance is delivered to the right place, at the right time, at the right concentration, to ensure that its therapeutic benefit can be achieved.
Optimization often requires the use of enabling formulation technology, in a conventional approach that involves iterative investigations in animal models, renowned for producing results with little correlation to humans, prior to testing a limited number of prototypes in the clinic.⁷ This process, which can take 18 months or more, is expensive and has a high failure rate. Translational pharmaceutics has transformed this process.
Data-driven make-test cycles of drug products in the clinic enable a much more rapid and effective approach to formulation development and clinical testing. Development timelines and costs can be halved—the project presented in the accompanying case study was completed within 21 weeks from formulation initiation to availability of clinical decision-making data. Perhaps more importantly, human clinical data underpinned all selection decisions, ensuring greater precision and accuracy of the drug product selected for full development.

References

1. EvaluatePharma. Evaluate pharma alpha world preview 2014. EvaluatePharma website. May 2009. Available at: www.evaluatepharma.com/worldpreview2014.aspx. Accessed March 15, 2012.
2. DiMasi JA, Grabowski HG. The cost of biopharmaceutical R&D: is biotech different? Manage Decis Econ. 2007;28(4-5):469-479.
3. LaMattina JL. The impact of mergers on pharmaceutical R&D. Nat Rev Drug Discov. 2011;10(8):559-560.
4. Informa Healthcare. Pharma R&D annual review 2010. Pharmaprojects website. Available at: www.pharmaprojects.com/therapy_analysis/annual-review-2010.htm. Accessed March 15, 2011.
5. Paul SM, Mytelka DS, Dunwiddie CT, et al. How to improve R&D productivity: the pharmaceutical industry’s grand challenge. Nat Rev Drug Discov. 2010;9(3):203-214.
6. Zhang GZ. Crystalline solid dispersions. Formulation strategies for poorly soluble drugs. Paper presented at: AAPS 45th Annual Pharmaceutical Technologies Arden Conference; Feb. 1-5, 2010; West Point, N.Y.
7. Grass GM, Sinko PJ. Effect of diverse datasets on the predictive capability of ADME models in drug discovery. Drug Discovery Today 2001;6(12)Suppl:S54–S61.

Dr. Mark Egerton joined Quotient Clinical in 2005. Mark has more than 20 years’ experience in the pharmaceutical and biotech industry and has worked in a range of organizations, from large multinational pharmaceutical companies to private, venture-funded biotechnology companies. Prior to joining Quotient, he was chief business officer at Oxagen, a UK biotech company focused on novel therapeutics for respiratory diseases, where he played a key role in securing a $60 million series B financing round, one of the largest biotech financings in Europe.

Editor's Choice

1. Lichtenberg FR. Contribution of pharmaceutical innovation to longevity growth in Germany and France, 2001-7. Pharmacoeconomics. 2012;30(3):197-211.
2. Hsieh CR, Liu YM, Chang CL. Endogenous technological change in medicine and its impact on healthcare costs: evidence from the pharmaceutical market in Taiwan [published online ahead of print Dec. 27, 2011]. Eur J Health Econ.
3. Seddon G, Lounnas V, McGuire R, et al. Drug design for ever, from hype to hope. J Comput Aided Mol Des. 2012;26(1):137-150.
4. Robertson GM, Mayr LM. Collaboration versus outsourcing: the need to think outside the box. Future Med Chem. 2011;3(16):1995-2020.
5. Festel G. Outsourcing chemical synthesis in the drug discovery process. Drug Discov Today. 2011;16(5-6):237-243.