Issue Date: February 13, 2012
In the pantheon of companies competing in the health care market, Proteus Biomedical is unique. A start-up based in Redwood City, Calif., Proteus has developed technology to attach a biodegradable digital device to a pill. After a patient swallows the pill, it transmits data on the body’s interaction with the medication.
Although the system sounds like the stuff of science fiction, one of the company’s first major partners was the venerable Swiss drugmaker Novartis. In 2010, the two agreed to investigate applications for the California firm’s digital device and monitoring system, which transmits information from a patient’s iPhone or similar handheld device to physicians and others, such as family involved in a patient’s care, via the Internet. Proteus also has prospective deals with other big drug companies.
In recent months, drugmakers have been entering collaborations with information technology firms, electronics companies, health insurance providers, and others they have never before partnered with. Their motivation is partly to fill their pipelines and partly to develop businesses that are not tied to patented drugs. These partnerships illustrate a new reality confronting big pharma: In the age of personalized health care, companies must look outside their own walls for the patient data and technology necessary to grow.
“Since last fall, I’ve noticed a greater sense of urgency and inevitability on the part of pharmaceutical companies with respect to the fact that health care is really shifting,” says Carolyn Buck Luce, global pharmaceuticals sector leader for the consulting firm Ernst & Young.
According to Buck Luce, the shift is toward obtaining data that will provide drugmakers access to a “lifelong relationship” with patients—data far beyond what are amassed in a traditional clinical trial. In an indication of how far afield the sector is moving from its traditional strategic base, Buck Luce points to the business model Starbucks first brought to investors: the coffee house as a “third place,” on par with the home and the office, where people feel a particular level of social satisfaction.
“We are talking about the third places in health care,” she says. “We are seeing an inexorable shift in the epicenter of the health care system beyond the existing pillars of the hospitals and the doctors’ offices to wherever the health care consumer is—the home, the community clinic, the car.” With solid connections to the two traditional pillars, big pharma wants to connect to the third.
She points to Proteus’ partnership with Novartis as particularly forward-looking. “What can companies like Novartis and Proteus do together?” Buck Luce asks. “One thing or many things?” What matters, she says, is that a drug company is acting now to see how the Proteus chip can be used and how patient data heretofore excluded from research may guide drug development and marketing.
David O’Reilly, Proteus’ chief product officer, says the firm’s partnerships focus on its raison d’être: exploring the possibilities of digitalized personalized medicine. “How does one invent and innovate and advance novel digital technology to embed into existing medical products?” O’Reilly asks. “How do we do the same thing in the health care industry that we have seen in other industries, where physically tangible products in our lives are becoming smart?”
Although smart drugs and smartphones have obvious differences, Proteus sees a benefit in hooking the two together. The link will provide drugmakers with data on how their products are working. “There is a gap between the efficacy of drug design and the effectiveness of drugs in the real world,” O’Reilly says.
Proteus’ product has three components: a self-powered digital sensor called an ingestible event marker (IEM) that is glued to a pill; a nonmedicated skin patch sensor that is like a drug delivery patch; and a cell phone application that monitors and transmits data. After being swallowed, the IEM can transmit information on type of drug, time of dose, and heart and respiratory rate to the skin patch, which in turn sends it to the cell phone.
“We want to find fellow travelers and early adopters who share our strategic vision of what the world [of digital health care] might become and work with them on making it happen,” O’Reilly says. He notes that the company’s most recent partnerships are with Lloyds Pharmacy, in England, to market smart pills, and consumer products company Avery Dennison, to develop products associated with the skin patch sensor. Together with the Novartis deal, the partnerships cover a lot of territory in the health care market, O’Reilly says.
Under a licensing and research collaboration with Proteus, Norvartis is currently evaluating the technology on unspecified medicines. “The goal of combining a Novartis drug with the Proteus system is to understand patients’ medication-taking behavior, potentially improving adherence and compliance to therapies—a critical factor for achieving better patient outcomes and to enable patients to better communicate with physicians and caregivers,” says Beth Calitri, a media relations representative with Norvatis.
Monitoring patient behavior is also behind a partnership between Sanofi and AgaMatrix, a Salem, N.H.-based developer of blood glucose monitors. In 2010, the two firms signed a 10-year agreement under which the drug company, a major insulin supplier, began marketing AgaMatrix’ standard blood glucose meter, BGStar. The companies recently began marketing the first product developed under the agreement, iBGStar, which connects the meter to an iPhone. The iPhone can retrieve and archive information or e-mail it to health care providers involved in the patient’s treatment.
Sanofi, of course, is still looking for pharmaceutical breakthroughs in the laboratory, but in nontraditional ways. Last month, for example, with the venture capital firms Third Rock Ventures and Greylock Partners, it launched Warp Drive Bio, which will use genomics to guide natural product drug discovery. Warp Drive’s technology was developed by Harvard University scientist Gregory L. Verdine, a partner at Third Rock.
A new kind of academic partnership is also playing a key role in Sanofi’s quest to access scientific expertise, says Shiv Krishnan, Sanofi’s senior director of partnering and innovation.
“In the past, one way of continuing to feed the pipeline was to in-license products—a pure business development play,” Krishnan says. “Now, as science becomes more complex and diseases need to be better defined as challenges, we are continually adapting our strategies to be smarter in the way we partner. We want to build strategic alliances with academia, for example, to better understand how certain drugs for a human indication can be developed and to bring in a more medical and academic perspective to augment the scientific value of the project.”
Sanofi has tried to maximize input by dealing with networks of institutions rather than committing to projects with individual universities or labs. Krishnan points to the firm’s collaboration with a group of California institutions—including Scripps Research Institute, California Institute of Technology, Stanford University, and the University of California, San Francisco—in research areas such as regenerative medicine and protein engineering.
“Essentially, we are tapping into the innovation at the institution,” Krishnan says. “We may not have a specific application for it, but we are moving into an area where a convergence of different disciplines will be the source of innovative drugs—a convergence between biomaterials and pharmaceuticals, a convergence between cell engineering and therapeutics, a convergence between devices and biologics. It’s a different way of developing drugs.”
Sanofi is “evolving from a pure pharmaceutical company developing small molecules to more of a health care company,” Krishnan explains. Rather than simply delivering a drug, he says, Sanofi’s goal is to help patients better understand their diseases. “We are looking to grow our business to be sustainable and global, and not to be tied to cycles imposed on us by patent expiry,” he says.
The premium on information residing outside big pharma R&D departments is also reflected in new alliances with patient advocacy groups. A three-way spinal muscular atrophy (SMA) drug partnership among PTC Therapeutics, Roche, and the SMA Foundation illustrates the clout—both financial and scientific—that patient groups now wield.
The foundation approached PTC in 2006 to see what the biotech firm could do to target SMA with a technology PTC calls gene expression modulation by small molecules, or GEMS. PTC had already deployed GEMS against Duchenne muscular dystrophy and other diseases. “They started out giving us a small grant and then went to a larger grant that got us to a near-development candidate and a partnership with Roche,” says PTC’s chief executive officer, Stuart W. Peltz.
Yet the deal with Roche didn’t end the alliance with the SMA Foundation. For both PTC and Roche, the advocacy group brings a long-standing relationship with patients and their physicians, Peltz says. “SMA Foundation has done a good job understanding the natural history of the disease. They are a good partner from the standpoint of understanding the disease itself.”
Luca Santarelli, head of central nervous system clinical R&D at Roche, agrees. “The three-party collaboration is quite unique but also very welcome because of SMA’s deep scientific foundation,” he says. “They bring the link to the patient and to the clinical investigator in this very specialized area.” Looking ahead to later-stage development, “they have the skills to conduct trials more efficiently and more in tune with what the patient needs.”
Just as SMA Foundation got PTC busy on the disease, Santarelli notes, the collaboration between those partners got Roche off the dime in an area that it might not normally have pursued. Patient information was the enticement. “The foundation lowered the hurdles with evidence that the disease can be approached with therapeutics,” he says.
Nontraditional partnerships will become more prominent in the years ahead as drug companies act on their growing awareness that the information they need to expand resides outside their corporate walls, Santarelli adds. “Roche only has a limited amount of capability,” he says. “More and more we are realizing that we have to go outside for innovation.”
Even the world’s biggest drug company, Pfizer, has forged nontraditional links in pursuit of patient information. Last October, it announced partnerships with the insurance provider Humana and the pharmacy benefits management firm Medco Health Solutions. With Humana, Pfizer is investigating ways to reduce inefficiencies in getting drugs to patients with chronic problems including pain, cardiovascular disease, and Alzheimer’s disease. Researchers at Medco’s United BioSource Corp. (UBC) subsidiary, meanwhile, are investigating genomics-based, personalized-medicine approaches to improving the design and administration of therapies.
James Harnett, senior director of U.S. health economics and outcomes research at Pfizer, says the partnerships “provide us an opportunity to identify where the unmet need is and find where we can bring a solution to the table.” Humana and Medco both generate information about patients and “real world” success and failure of drugs.
Use of such data, Harnett says, marks a change in big pharma’s approach to R&D, which has traditionally focused on a drug’s performance in the clinic. But with regulators and insurance providers demanding that companies demonstrate a drug candidate’s benefit compared with what is already on the market, pharmaceutical researchers are hungry for detailed information on how individual patients respond to therapy.
“Any forward-looking drug company is paying attention to personalized medicine,” says Robert S. Epstein, chief clinical R&D officer at Medco and president of UBC. He says benefits management firms also have an interest in increasing the effectiveness of therapies. This interest was behind Medco’s 2010 acquisition of UBC, a research company with expertise in drug safety and health care economics.
Since the UBC acquisition, Medco has signed contracts with Sanofi and AstraZeneca with the goal of bringing the insights of its clients—insurance companies, often called payers—into the R&D lab at big pharma, according to Epstein. But the Pfizer deal, he says, is unique in its focus on personalized medicine. Harnett adds that the collaboration is intended to enhance Pfizer’s precision medicine approach, which leverages genomic and phenotypic information to investigate the underlying biology of disease and identify patients most likely to benefit from a new drug.
“We cover 65 million patients,” Epstein says. “We have a lot of payers who are very excited about having their membership participate in these kinds of research studies. So we are providing real-world access to patients, payers, and doctors.”
Similarly, Humana hopes to influence drugmakers’ R&D pipelines to better meet the needs of patients with chronic diseases, according to William Fleming, vice president of Humana’s pharmacy solutions division. Humana’s Competitive Health Analytics subsidiary is working with Pfizer researchers on “retrospective” research, using available data on patients to learn how well drugs performed. But the partners may advance to collaborating in the clinic.
Humana will announce a second partnership with a major drug company soon and anticipates a third one by the end of the year, Fleming says. In the end, he hopes to sign on with eight to 10 drug companies.
An evolution is under way in the strategy rooms at big pharma, Medco’s Epstein says. “In the last two years or so it has been dawning that the way drugs or medical interventions work in the real world is different than in clinical trials,” he says. “I don’t think the drug companies paid attention to it previously because they didn’t have to.”
Five years ago, Epstein says, the discovery of a new biological pathway could yield a drug that would be reimbursed under insurance programs whether or not it was better than existing therapies or likely to improve patient compliance. “It didn’t matter. Innovation just got reimbursed,” he says. “But now people are saying, ‘Great, I’m glad you found a new target or pathway, but if you don’t show me how current therapies are working in the real world—where the problems are and where yours is better—we are not so interested.’ ”
It’s a fair assessment, Pfizer’s Harnett says, and a reason Pfizer is pursuing patient-focused data. Drug companies and the payers are “realizing that there is a tremendous challenge out there with escalating health care costs,” he says, and they “will continue to foster new collaborative partnerships—expanding to the regulatory agencies as well.”
Research initiatives in areas such as opiates abuse, infectious diseases, and vaccinations will bring together drug companies, benefits management firms, and regulators to pool data, Harnett predicts. “We are on the edge of something that will very much be an opportunity for everyone involved,” he says. “The real impact is for patients. I can’t think of a better time for us to focus on that.”
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