How Do Strategics View Retina Opportunities?

Retinal disease remains a challenging target for drug and device makers, but a panel of senior executives at last week’s OIS@ASRS says the potential benefits of treating the back of the eye outweigh the difficulties.

Frederic Guerard, worldwide business franchise head of ophthalmology at Novartis Ophthalmology, which now manages the pharmaceutical portfolio once held by Alcon, said “the benefit of being part of a larger R&D bucket is the costs [of retina research] are not very different than what we see in oncology or other areas.

“There is little risk that retina will be deprioritized because everything we do in retina is big,” Guerard said. Any successful product will provide clear benefit to patients and address huge, unmet clinical needs. Large pharma companies won’t steer clear of retina. “Retina will always win because it is such a large segment growing so quickly. I see more risk for other areas of eye care … because of [retina’s] market size and the unmet medical need.”

Bill Link, OIS co-chair and a founding partner at Versant Ventures, says the venture firm has invested in 20 ophthalmology start-ups since its founding in 2000. Half of them focus on the anterior segment, and the other half is split between glaucoma and the retina. Developing treatments for the back of the eye may come with higher costs, but the rewards are higher as well.

“We do not need to fund a project as far as we do in the device and vision restoration side, so it can be relatively cost-effective,” Link said. “Versant and other venture firms have had a number of very handsome exits with early clinical and preclinical assets and that is where you need to be really sophisticated and thoughtful to sort which targets to go after.

“If we’re right 60 to 70% of the time we’ll do great for our investors,” he said.

Mazzo asked if the costs of retina development are too onerous for start-ups. Do larger corporations like Roche/Genentech rely more upon their own internal R&D?

Tony Adamis, MD, is global head, I2O and metabolism, clinical science at. Genentech. He says of the firm’s 180 late-stage projects, one third of the molecules have been in-licensed. “You can’t afford not to look outside,” Adamis stated. “We’re just not that smart. You can’t invent every next great molecule.” Companies such as Roche, Novartis, and Bayer need early-stage companies, he said.

As for the cost of developing retina drugs, Adamis says they’re not more expensive than other complex drugs. In fact, the refining of imaging tools and biomarkers enables drug companies to see if molecules are performing as expected in early clinical trials.

Mazzo asked panelists about one theme raised during the conference – how will the health care system pay for breakthrough technologies like those in the retina. Ludwin Monz, PhD, president and CEO of Carl Zeiss Meditec AG, agreed that cost-per-patient is “extremely important but it is always going to be coupled with efficacy.”

Zeiss tries to offset those cost concerns by developing “dedicated products” for higher- and lower-end market segments,” he said. “This probably is not possible on the pharma side. But on the equipment side that allows us to make the product widely available.”

Video Highlights:
00:48 – Will genetic testing become routine in the future?
01:32 – Should we be genotyping our patients now?
01:41 – How does the recent movement at Alcon/Novartis impact the retina space?
03:12 – How will advances in diagnostics change the outcome for patients with retina disease?
04:25 – How do smaller companies play in the retina space?
06:00 – Data suggest US surgeons are treating patients more aggressively than their European counterparts. What could you attribute to that?
09:10 – How do you balance providing patient access to care while also growing a business and increasing shareholder value?
11:09 – How does pricing impact your approach?
14:50 – Is Gene Therapy something we’ll see in our lifetimes?
17:30 – Will programs in the retina follow other specialties where cost-per-case is weighed against efficacy?
19:00 – How do you answer concerns about the cost of retina research when product development in other disease areas within the eight are less expensive?
20:25 – How do you justify the costs and time invested in retina when product development of other conditions takes less time and money?
22:30 – Do big companies need to look outside for R&D?
25:10 – What is the next big thing?

Participants:

Transcript:

Jim Mazzo: I’ve done this Masters of the Industry, Masters of the Universe many times. The first time at ASRS, so I’m looking forward to having the opportunity to ask these fine gentlemen a question. You probably noticed that I changed my title recently, so I promise Ludwin will not get any breaks on this discussion at all from that perspective. So you’ve all known this panel. If you haven’t known them, you’re obviously new to our industry, so I won’t want to introduce them. They’re an illustrious group of guys. I’ve got some tough questions for you. Hopefully you’re all ready to address them. So let me go right to you, Tony, with the first one. With Genentech’s finding of a factor 1 subgroup of responders with the anti-complement treatment for dry AMD, will genetic testing become routine in the future?

Tony Adamis: Depends on the phase 3 results. So that’s the working hypothesis, that the patients who have snips in the complement pathway genes, that their pathway is overactive, and therefore it should be prognostic is the working hypothesis. And because the natural history of those patients is that they decline more quickly, we’re hoping that the intervention will be more visible in that group of patients and be predictive as well. But we’ll see in phase 3 if that theory pans out.

JM: Should we be genotyping our patients now?

TA: If phase 3 data are positive with the biomarker positive group, yes.

JM: OK. Frederic, as the only company on this panel to have both a pharmaceutical and surgical treatments for retinal disease, how does the recent movement of what’s happened with Novartis where we’ve taken the surgical component, and now the pharmaceutical component, how’s that impact the retina space?

Frederic Guerard: Yeah, so that’s a very good question. So maybe to summarize what we have done, so we’ve basically separated the medical device part of Alcon that now is under the umbrella of Alcon, and we have integrated the pharmaceutical portfolio of Alcon together with the retinal portfolio of Novartis Pharma under Novartis Pharma. It’s a bit complicated. But basically we are now in one entity that is specializing doing research and development in pharmaceuticals. So the benefits of doing such a move was actually to be able to benefit from the critical mass of Novartis in terms of research and development. And I don’t know if you know, but research in ophthalmology is the second largest investment we do in research at Novartis after oncology. So it’s actually quite big investment we have there. And when of course research is producing compounds that we actually like that we want to move into clinics, then we can benefit from the scale of the clinical development organization of Novartis Pharma. So that was the rationale to make the move. So in practice, it should not change anything for anyone except the fact that we should be able to generate innovation even quicker.

JM: OK, good. Looking forward to that. So Ludwin, Zeiss is known for the high quality diagnostic equipment. And recently, you introduced an advanced OCT. how do you feel advanced diagnostics is going to change the outcomes for patients suffering from retinal disease?

Ludwin Monz: It’s actually fascinating to think about that. When we go back in time 15 years, there was in retina diagnostics, there were just fundus cameras and slit lamps and no OCT. And if you think about how much OCT has changed the way patients are diagnosed and treated, that might give us an indication of what’s ahead of us and what’s happening in the future. And I feel that with the technology that you mentioned, the visualization of micro vascular blood flow in the retina, that this actually will move forward the way we understand and see the processes in the retina. So I would expect that both the understanding of diseases will benefit very much from diagnostics, but also the treatment of patients.

JM: OK. So Bill, you know, you and I have known each other a long time. We talk about the smaller companies, we’ve always talked about it from a cataract and glaucoma perspective. How do smaller companies play in the retina space?

Bill Link: Well, I think they play in the retina space in much the same way that they play in the anterior segment and in glaucoma. And I love the blend of in house and out-house R&D. So one of the things that some of us are focused on is outsource R&D, and trying to figure things out and iterate quickly, and get to a certain stage of reducing risk and validating performance of a project, and then teaming up with and handing that project off to a corporate leader who may well be able to power it forward and scale it differently than a small company. When we started Chiron – or when we started Versant Ventures in 2000-ish, we have invested in 20 ophthalmic startups. Half of them are in the anterior segment. So related to seeing better, not – less disease related, more vision related. Twenty-five percent are in glaucoma, twenty-five percent in the retina. And so that’s kind of the blend of how we as one organization see retina play a very critical role.

JM: OK. So market scope, and 2015 global trends in the Retina Report presented at the ASRS last year show that US surgeons are treating patients much differently than we’ve seen on OUS basic. In fact, more aggressively in the US than OUS. So Frederic first and then Bill, what do you attribute this difference to? So Frederic, I’ll let you hit it first, and then Bill, I’d like to hear what you think.

FG: So I think it’s extremely hard to compare the medical practice in different countries because access and reimbursement are very different from one market to the other. So you get countries where, you know, drugs are entirely self-pay, so patients have to pay for the drugs. You have countries where the healthcare systems are putting some sort of imitations, so you need to have a certain amount of improvement in visual acuity to be eligible to continue on a certain group. Some countries will reimburse only a number of injections, and then the patients will have to self-pay. So I think having these cross-border comparisons, it’s always very difficult because every country has a different system. I think the US are in a very specific situation where access to medicine is actually much more generous than most socialized healthcare systems like in Europe, for instance.

JM: Bill, anything to add?

BL: Not too much. I think that what I like about US market and the practitioners and the teaming up with industry is that we’re often early. We’re not always first, but we’re often early at perfecting and building a therapy or scaling a therapy, etc., that obviously happens really well in many developed countries. And it was mentioned earlier today on one of the other panels that innovation is rewarded, often in the US and the other developed countries, and then the less developed countries benefit by having that early innovation that’s well paid and reimbursed and rewarded in the US and other countries.

JM: Tony, does this influence your decision as you look at product development, that you’ve got a heavier US component than an OUS component?

TA: Yeah, it does. Obviously we want to make sure our medicines get to all of the world, especially if they have a large benefit. In the case of the anti-VEGFs, there’s a lot of variability around the world. Frank Holtz published a paper last year showing just the variability in Europe. And basically the takeaway was the less aggressively you treat, the worse the outcomes in the case of the anti-VEGFs. So if we’re treating a little more aggressively here, it’s probably a good thing. The way it impacts the way we think about disease is that if we or somebody in this room or somebody in this sector comes up with long acting delivery, I think it’ll benefit patients not only from reducing their treatment burden, but improving outcomes, given what the latest data show, because aggressive therapy leads to better visual outcomes.

JM: All right, Ludwin and Frederic, I’m going to give you this one. How do you guys balance the patient access to care versus the business growth and shareholder value? So if you look at retina, it might not have that return as quickly as some of the other disciplines that you’re involved with. How do you balance that? I’ll go to Ludwin, then I’ll got to Frederic.

LM: First of all, I believe there’s no contradiction between optimizing accessibility to patients on the one hand and optimizing growth on the other hand. What we try to do in the field of diagnostics is to make diagnostics technology available in all segments of the market. So for example, to make diagnostics technology, high end technology also available in low end segments of the market, for example, in emerging countries. So we develop dedicated product for these specific market segments, which probably is not possible on the pharmaceutical side, but on the equipment side, that’s definitely an option. And that allows us to make the technology broadly available.

JM: Frederic?

FG: I know we have a patient declaration at Novartis, so we try to make everything that is reasonable to make available all our products in all the countries worldwide, even in the countries where there is very little healthcare system. So we have a number of patient support programs around the world. We also have tested a number of strategies like access brands for countries where clearly it’s all self-pay and affordability is an issue. So we try to address that with some differential pricing models, depending on the different markets. But I would say even in the developed markets, pricing is becoming more and more of an issue, and not so much on the cost effectiveness and value based pricing side, but very much on the affordability side, because healthcare systems have actually been really struggling to even afford the drugs that are even cost effective. So it’s an issue absolutely everywhere now.

JM: How are you addressing that internally? What are – what’s your plans to think about the pricing issues that we’re facing in this industry?

FG: I think it was mentioned before in the panel. I think expanding the debate from the healthcare costs to the societal benefits. I think it’s something that’s very important because unfortunately, in most countries, the systems are set up in a silo. So you have the healthcare costs, but you don’t look at the social care costs. You don’t look at the other costs that are actually linked to some disease. So when you start expanding the scope and showing that actually you bring value for the taxpayers, I think you have a very different discussion with these countries.

JM: OK, thank you. Ludwin and Tony, Ludwin, you actually made me think about this question a little further in the advanced diagnostics. Given we have poor patient compliance today to injection regimens, will we see a shift towards the sustained release drug delivery? And how does diagnostics play in that role? So maybe I’ll go to you, and then I’ll go to Tony.

LM: Yeah, I’m not sure if I can comment on the drug release systems. I mean diagnostics definitely can help to improve the treatment schemes, right? I mean today we have treat and extend, we have PRN. And I believe that the more objective the decisions are, whether to inject or not to inject, the better the compliance will be. On the other hand, as we heard before, and as Frederic said, probably the driver for not being compliant to these schemes is reimbursement. So diagnostics might only have a little influence.

JM: Tony?

TA: So it’s important that we identify the patients as early as we can who are going to need frequent injections. Right now we’re just learning it empirically. And there are some patients, and we saw this in a Harvard trial, you give them 3 monthly injections, and their disease seems to go in remission. It’s more so in DME, but you also see that in AMD. So having a diagnostic that will tell you at baseline the first time you’re seeing the patient whether they’re going to be one of those patients who need monthly injections or whether they’re going to be essentially cured after three, that’ll be important. And then what we’re hearing about treatment acuity and visual acuity responses, I think that’s pointing towards the increased need for long acting delivery. The average age of these patients is 79. It’s hard for them –

JM: That’s 79?

TA: 79. At least in our phase 3 wet AMD trials, 79. It’s hard for them to come in. They often need a care taker or loved one to take off a day of work to bring them in.

JM: Right.

TA: So that’s driving the lack of adherence. So again, I think accentuating the importance of getting long acting delivery so that people are treated appropriately.

FG: If I may comment on this, I think a way to extract cost from the system now is actually to have better monitoring systems available for the patients because you see countries where you have queues of 80, 85 years old patients waiting to get their OCTs done. And then they go back home, and they have to inject it. So if you can reduce that by having systems that, you know, home-based monitoring systems which would trigger on that hurt when people need to get injected, and then they go and get their OCTs, that will reduce a lot the healthcare cost and reduce the burden on the healthcare systems.

JM: So I think there’s a question that we had today, but I cannot not ask, and I’ll go to the 3 of you about gene therapy. Because that’s the topic you read in all the magazines and heard a lot today. Is this something we’re going to see in our lifetime? Tony, I’ll go to you. What do you think?

TA: Yeah, I think there’s a lot of progress being made, a lot of exciting progress. The RP 65 or – it’ll depend on to a certain degree stoichiometry. So what is it you’re trying to correct? So in the case of using gene therapy to make an anti-VEGF, well, it turns out there’s a lot of VEGF in the eye, and it’s going to be hard to make enough mols of anti-VEGF to block that VEGF with the current state of technology. Doesn’t mean it won’t happen in the future. And then part and parcel of that is something called transduction efficiency. Are you going to get enough of the virus into the retina to make your protein of interest? In the case of RP-65, you may not need a lot. Certainly the New England Journal paper showed there was some visual acuity that was restored. And there’s the longer term issue about the loss of that efficacy in understanding what’s driving that. There seems to be a subclinical inflammation in the retina. So yes, I think there’s a lot of hope for gene therapy, buhealtht there’s a lot more work still to do.

JM: Bill?

BL: Yeah, I agree totally. I think what I watch are patterns. And if you look at the number of high profile projects in the gene therapy area, and those that are being strongly supported, some are being commercialized in terms of supported and financed, going public to be more robustly financed, to drive programs, to me that’s a pattern. And ultimately, while we make mistakes, markets are efficient. We tend to resource to where there’s opportunity. And so I see that as kind of a broad pattern there. And then there are individual specific projects that have promise.

JM: Frederic, anything to add on that?

FG: I agree with everything. I think like many large companies having an interest in oncology, we have also a big interest in cell and gene therapy. And I think it’s – what we learned is that it’s actually quite complicated. So I think we will see some winning companies maybe for some disease. I don’t think we will see in our lifetime a cure for every kind of retinal disorder with a gene or a cell therapy. But certainly for some diseases, it seems to be working pretty well.

JM: Ludwin and Tony, will retina have to follow other specialties where the primary driver of treatment decisions is cost per case than actual pure efficacy? Ludwin?

LM: Yes. I believe that for new treatments, cost always plays an important role. And of course the price is always coupled to efficacy. So this all goes together. And the good news is there is money in ophthalmology. If this wouldn’t be the case, there would not be any new drug developments and technology development in that field. But the consequence of that of course is, well, one has to pay for new treatments. So I wouldn’t look at it only negatively. And I believe that the cost per case is extremely important and remains to be important. But it’s always coupled to efficacy.

JM: Tony?

TA: I agree. I mean there are cost pressures today and I think they’re only going to increase in the future. So whatever you’re developing has to bring a lot of benefit to the patient. You know, we try to focus on unmet medical need and being first and best in class. And just a priori looking at the evidence of the efficacy of this drug and saying this is something valuable. I think it’s the only way going forward you’re going to be reimbursed. It’s going to be much more challenging going forward.

JM: Frederic, how do you balance the cost for retina within the R&D portfolio when it’s probably more costly to develop today, at least, a retina product than others? How do you balance that?

FG: Well, the benefit of now being part of a larger R&D bucket is that actually this cost are not very different from what we see in oncology or in other disease areas. So I think that’s not really the concern in terms of balancing the projects. I think the – especially in retina, there is very little risk that retina will be deprioritized in any part because everything we do in retina is big. So it’s not incremental innovation, it’s providing a lot of benefit for the patient. There is still a ton of unmet medical need, so I don’t expect that to be a point for making decisions in at least of large organizations. Retina will always win because it’s such a large segment growing so quickly. So I don’t see there’s a risk for it. More a risk for other disease in eye care, but not for retina.

JM: Because of the market size?

FG: Because of the market size and because of the unmet medical need. I mean you look at the number of diseases for which we have now no treatment. We are all looking now for a cure, for cures of different disease. So I think there is so much that needs to be done, I don’t see a risk in there.

JM: So Bill, as you look, I think you said 25% retina, 25% glaucoma I think you were talking about. Again, take it from a different perspective, as you have. How do you balance the longer term nature of the opportunity in retina versus the shorter term nature of some of the other categories we deal with?

BL: Well, it’s hard from an investment strategy standpoint. However, what often with the pharmaceutical plays and targeting the retina, we do not need to fund a project as far as we do in the kind of the device vision improvement side. And so it can be relatively cost effective. Versant and other venture firms have had a number of very handsome exits with early clinical or preclinical assets. And so that’s where you have to be really sophisticated and thoughtful and sort what targets to go after and how far it needs to be funded, how long, and then how much capital is required. And if we’re right 60 or 70% of the time we’ll do great for our investors, and we’ll be wrong part of the time, and it either didn’t work or it took too long and too much capital. So there’s that balance. And on the retina side, it’s disease based. I’ll tell you, the feedback is very clear. I’m losing my vision. On the vision improvement side, you can take a category, and it’s not disease related; it’s vision related. So there are just different characteristics. And one thing I really like and respect about the ophthalmic field is it’s this combination of helping people see better, no kidding, and that can be disease related or it can be optics related. And so we have a blended market here. Retina is disease related.

JM: So Frederic, Tony and Ludwin, if Bill wasn’t sitting next to you, how important do the smaller companies play as you look at potentially not saying the not-invented-here syndrome within your organizations? Are you looking externally at smaller players and saying let’s bring them inside? Or do you feel that in retina, because of the long term nature, it’s better to spend the money internally? Remember Bill’s not next to you here. Frederic, go ahead.

FG: You want to go?

TA: Sure. So if you look across the Roche late development pipeline, we’ve got about 180 projects. About a third of the molecules have been in-licensed. So you can’t afford to not look outside. We’re just not that smart. We can’t invent every next great molecule. So we’re constantly looking. That’s why these meetings are so important. Just to the previous issue, I just wanted to add that as well with regard to retina development, it’s not necessarily more expensive than other therapeutic areas. I think that bodes well for ophthalmology. And we can do, thanks to the wonderful diagnostics, we can get early PD biomarkers and actually see if our drugs are working fairly early in development before you spend a lot of times big money in phase 3. So it’s a good thing that Novartis is in, Genentech Roche is in, Bayer Regeneron is in. I think it bodes well for the future of retina. And the small companies feed our pipelines.

JM: Frederic?

FG: Our numbers are very similar to Roche’s numbers. And no company can rely only on inside innovation, so we have a very large team of technologic researchers in Cambridge. But they go out there and they scout the market, and they partner with promising smaller companies. So I would say the same thing. We are not going to rely entirely on in house developed innovation. We need to have a balanced portfolio.

JM: Ludwin?

LM: Yeah, same perspective. We cannot afford not to look externally. On the other hand, I believe that it needs really a good balance. A company needs to have internal competencies which allow the company to differentiate from others. So if a company does not have that internal competency, which also is in certain fields better than what others can do, it’s very difficult to compete. But of course nobody has all the competencies in house, nobody has all the good ideas in house, and that’s why the balance is so important.

JM: So I know we’re running a little extra time, so I’m just going to end with one last question. And I want us to record this for next year when these 4 guys are up here. So let’s see, I’ll go with you, Tony, first. What’s the next big thing?

TA: Well, for my own point of view, where I sit, we’re waiting on our geographic atrophy trial results, the phase 3 results with lampalizumab, the complement inhibitor.

JM: Bill?

BL: I have no idea.

JM: But you’re willing to buy it.

BL: I would not say it out loud.

JM: Marsha, please help me with Bill. Frederic?

FG: I’m quite excited by the combination therapies, to see not only if they will deliver in the phase 3 trials the promise that they had in phase 2, but also to see how they will be used in practice. Because when we started working on anti-VEGF, the regimens were very fixed: monthly injections. And then clinicians started to do their own protocols, and it started to change. And I’m quite sure what we see in oncology over the last 10 or 15 years moving from monotherapy to combination treatments is probably what’s happening now in the field of retina. So I think it’s going to be much more complicated and much more exciting.

JM: Ludwin, before you answer that, let me actually build on that. You talk about combination therapies. Who do you go to in the FDA? Do you go to the device or do you go to the drug? If you’ve got a drug delivery combination? How do you plan to attack that? Frederic, and I’ll ask all.

FG: I was more mention in combination of drugs than drug device.

JM: But I was just thinking about from a drug device standpoint, how do you think you’re going to be approaching that? Are you going to Wiley? Or are you going to Malvina? Or John?

FG: I’m not an expert in regulatory affairs in the US, so I can’t –

BL: It’s both. A lot of our projects that are drug delivery based, OK, it depends a little bit on the active agent and how well known it is and so forth, but we end up on either the biologic side or the drug side, so there’s a device component, but the active agent is the drug. And so yeah, so we end up almost always on the pharma side of FDA.

JM: Tony, anything to add on that?

TA: Yeah. Same thing. We’ve been working with our device with the ophthalmic division, the pharma division. But clearly, the device division weighs in.

JM: So Ludwin, back to the last question. What’s the next big thing?

LM: Yeah, in diagnostics I believe that OCT angiography is a big thing. We don’t know yet actually what will develop out of that. As I said before, I believe that the understanding of the diseases will improve, that therapies can be better adapted to the patients. So I believe something might develop out of that. And again, just think about these last 15 years and think into the future. That might tell you what’s going to happen in diagnostics. The other thing which comes to my mind when I think about the next big thing is actually information technology. So that in diagnostics now, different sources of information will be combined and will provide new insights. I believe that’s also a big thing.

JM: That’s a good point. So gentlemen, did I miss anything before I turn you over? Anything else you’d like to add before I say thank you? All right, with that, let’s give these 4 gentlemen a big round of applause.