By Cliff Mintz, - Contributing Editor
To bolster its therapeutic MAb (monoclonal antibody) development pipeline, in 2006, AstraZeneca purchased United Kingdom-based Cambridge Antibody Technology, and shortly thereafter, in 2007, acquired MedImmune for $15.6 billion. These transactions were strategic moves by AstraZeneca that were designed to improve its biologics capabilities and add protein-based products to its almost exclusively small molecule drug development pipeline. Subsequent to those acquisitions, AstraZeneca combined both biologic groups into a single organization under the MedImmune name.
Today, MedImmune comprises AstraZeneca’s worldwide biologics business unit and employs approximately 3,500 employees in Maryland, California, Pennsylvania, Kentucky, the UK, and the Netherlands. With two products on the market, MedImmune is a vertically integrated biopharmaceutical company (basic discovery through commercialization) with expertise in antibody and vaccine technologies. As part of AstraZeneca, the company has expanded its therapeutic focus and now includes discovery and early-stage clinical development programs in oncology, neuroscience, cardiovascular and gastrointestinal disorders, and autoimmune diseases. Prior to its acquisition in 2007, the company reported annual revenues of roughly $1.5 billion.
The person who has overall responsibility and is accountable for all activities at MedImmune is its President, Peter Greenleaf. A veteran of big pharma acquisitions of smaller biotechnology companies — he was part of the management team at Centocor when it was acquired by Johnson & Johnson in 1999 — Greenleaf joined MedImmune in 2006 as senior VP of commercial operations. He became company president early last year.
During his tenure at MedImmune, Greenleaf has overseen development of the company’s global marketing portfolio and has played a pivotal role in managing the broader commercial, corporate development, and strategy functions. In addition to his responsibilities at MedImmune, he is also accountable for the investment activities of MedImmune Ventures, an internal corporate venture capital fund.
Greenleaf was able to find some time to chat with me about MedImmune’s business and investment strategies, its expanding focus on new therapeutic indications, and future commercialization opportunities for the company.
AstraZeneca is one of only a handful of pharmaceutical companies still in the antibacterial drug discovery business. What role, if any, is MedImmune playing in the development of new antibacterial drugs?
Given our heritage in infectious diseases, we believe the antibacterial space — not only small molecule antibiotics but protein-based solutions — is emerging and represents an ideal opportunity for a company like ours. There are a number of small biotechnology companies that we have aligned ourselves with (through investment, licensing deals, or simply following their science) that are doing some really interesting things we believe will help us capitalize on opportunities in the antibacterial space. Finally, MedImmune scientists are engaged in organically driven, internal research designed to treat bacterial infections. As such, we continue to evaluate novel vaccine approaches or new technology platforms to prophylatically prevent bacterial infections.
We are also vigorously exploring opportunities to utilize MAb-based treatments that target infections caused by multiple antibiotic resistant strains of bacteria. In addition, AstraZeneca’s legacy in small molecule drug development allows us to leverage both our small and large molecule technology and capabilities to innovate in the antibacterial space. This approach gives us an opportunity to develop products to either prevent or actively treat bacterial infections. Finally, we believe the growing incidence of bacterial resistance to most commercially available antibiotics represents an excellent market opportunity for us to innovate and offer novel solutions for a growing public health problem that is affecting many patients’ lives.
Why is MAb development beginning to play a prominent role in a variety of therapeutics areas, most notably oncology and anti-infectives, for MedImmune?
We are aggressively pursuing an MAb approach for a variety of therapeutic indications for several reasons. First, the development of Synagis (a prophylaxis against serious pediatric respiratory syncytial virus [RSV] infections), in combination with the skills obtained from the acquisition of Cambridge Antibody Technology, provides us with the technical expertise required and the commercialization experiences that we believe are necessary to develop and launch new MAbs for other clinical indications.
Second, the markets are projecting a material shift over the next 5 to 10 years from small molecule solutions to biologic-based ones. Over this period, analysts are predicting single-digit growth for small molecule drugs; whereas healthy double-digit growth is anticipated for biologics and vaccines. In other words, small molecule solutions will likely take a backseat to biologics in the near future. As far as MedImmune is concerned, the future business and market opportunities in the MAb and vaccine spaces are obvious.
Third, AstraZeneca was historically a publicly stated, pure-play small molecule organization. However, over the past 6 to 10 years management has aggressively pursued a strategy — through smart investments (both licensing and acquisitions) and internal R&D work — to improve its capabilities and expertise in the biologics space, mainly in the MAb area.
Fourth, we and others have clearly demonstrated that MAbs can be extremely successful commercial products. Therefore, a percentage of MedImmune’s R&D efforts (both internally and externally) are focused on leveraging novel technology platforms to not only discover new MAbs for specific targets but also to fine-tune the structures of existing MAbs to enhance target affinities, increase circulating half-lives, and improve potency and safety profiles.
Many big pharma companies, including AstraZeneca, are beginning to move away from and minimize internal R&D activities.
What are your thoughts on this trend?
Despite recent trends, I, along with others, believe that organic R&D will remain as the mainstay of the life sciences industry. However, current (and future) economics and overall success rates across our industry are driving how we look at existing new drug development paradigms. It is becoming increasingly obvious that we desperately need to find more effective and efficient ways to internally develop new drugs. So, how do we do that? In my opinion, first, life sciences companies need to become more lean and agile, while improving efficiencies with existing personnel. Second, outsourcing certain activities when and where it makes sense will also be a necessary solution to lower drug development costs. Finally, establishing partnerships and other external relationships earlier in the drug development cycle may help to minimize, share, or balance the inherent risks associated with the overall drug development process. I believe that these early relationships, whether they be corporate partnerships, licensing deals, or even private/public partnerships, will be critically important as the industry moves forward.
Recognizing the industrywide changes taking place in R&D, we internally devised a three-step approach to optimize our own internal biologic R&D efforts. First, we believe that by routinely reviewing our product portfolio we can adequately prioritize and focus our R&D investments. For example, if we have 100 different development programs in progress, we must identify and selectively focus on the programs (out of 100) that represent the greatest likelihood of technical, regulatory, and market success. Second, while we continue to believe that novel first-in-class therapeutics are extremely valuable, we have shifted a part of that effort to also identify so-called best-in-class molecules. This offers us the opportunity to develop biobetter or biosuperior second-generation products as potential new revenue sources. We believe this more balanced approach to R&D will help us to diversify our product portfolio, reduce some of the financial and technical risks commonly associated with new drug development, and increase the likelihood of commercial success of our products. Finally, in recent years, we have begun to emphasize and rely more on our translational science capabilities to help to identify more predictive development methods and outcome tools that can be leveraged in both preclinical and clinical studies. We believe our growing capabilities in translational and predictive science methods will lead to the development and commercialization of more effective medicines with improved safety profiles and better patient outcomes.
Along with improvements to our internal R&D activities, MedImmune also has been very aggressive in its external approach to drug discovery and development. Historically, MedImmune has been very active in partnering and licensing deals and has roughly built 60% of its current drug development portfolio through external collaborations.
This trend is likely to continue — although the actual percentages may vary — because we believe that external R&D programs are vital to hunting new science and keeping our pipeline full.
Our externalization activities will continue to include corporate partnerships, early and midstage licensing deals, and selective M&A opportunities. Also, through MedImmune Ventures, we have the unique opportunity to identify and invest in small, privately held companies that are developing new and forward-looking compounds and platform technologies that are aligned with our product portfolio. While organic R&D will remain core to our business, external activities including venture investment and licensing deals will be as critical a capability for us. Put simply, our mission is to find science wherever it is being developed because we don’t believe that innovation can solely come from within the four walls of the company.
M&A and consolidation continues to occur at a vigorous pace in the life sciences industry. What impact do you think this trend may have on future innovation in the life sciences?
I think the current M&A trend in the life sciences will continue at a brisk pace for another five years or so. This is mainly because of low new-drug-approval rates, impending patent cliffs at many major pharmaceutical and biotechnology companies, and insufficient amounts of investment capital caused by the economic crisis.
In my view, good science, good technology, and good leadership will always be funded regardless of existing economic conditions and pressures. With this in mind, I believe the tough economic conditions in recent years may have actually helped to accelerate elimination of some questionable companies and bad science that may have existed in the industry. Nevertheless, I think that within the next couple of years there will be a resurgence in investment by well-heeled private and public life sciences investors who are hunting good science and obvious commercializable assets. The days of investing in life sciences companies simply to expand operations and increase the size of an organization are definitely over, in my opinion.
How does MedImmune choose the companies that it invests in?
With early-investment strategies, the first thing we evaluate is therapeutic alignment. That is, we tend to stay in our therapeutic areas of expertise.
The second is strategic alignment. We tend to not invest in companies solely for financial return. There needs to be a strategic fit that will help to advance products and technologies that we have in development. For example, the probability of MedImmune investing in a medical device company is very low, since there is little strategic alignment to where we are as a company or where we are going. While we don’t completely close the doors to new ideas in areas such as this, we try to focus our efforts for the best return on investment.
Third, we evaluate the science — whether it is a platform or single- or multiple-molecule company — to determine the relative likelihood of success of the company. Because of our internal corporate VC capability and in-house scientific expertise, we believe we can more effectively identify opportunities as compared with external VC firms and other entities.
Finally, we look at company leadership and our co-investors in the venture. The management team must have a proven track record and our co-investors have to be reputable. My belief is that good science, good leadership, and good money lead to positive outcomes, which means advancing the science to provide solutions that address patient health.
As far as later-stage investments are concerned, we typically look at licensing deals and focused M&A activity. These transactions are primarily driven to enhance and expand our currently marketed products portfolio or our existing R&D efforts. But, I want to point out that both investment strategies are used as a means to bolster our ability to hunt science and translate it into products that ultimately help patients.
Which markets represent the greatest future commercial opportunities for MedImmune and why?
Over the next 10 years or so, the U.S. and European markets will continue to represent the greatest growth opportunities in the biologics space. Within that period, I believe both markets will be critically important to launch and promote uptake of new biologics and biotechnology products. However, the emerging markets in Brazil, Russia, India, China, Turkey, and Mexico will begin to become increasingly important in the future.
While there is no doubt about the importance of emerging markets, we are still carefully studying and trying to understand the best possible strategies to penetrate these markets. For example, should we follow the traditional drug development and approval pathways — first in Europe, then the United States, then Japan, and elsewhere? Or, does it make more sense to conduct parallel drug development in both Western and emerging markets?
To that end, we are currently analyzing drug development opportunities in emerging markets. We believe that being in these markets as early as possible will allow us to better capitalize on the commercial opportunities that undoubtedly will arise as these markets mature. Also, an early presence in these emerging markets will give us an opportunity to determine whether parallel rather than sequential drug launches can help to improve market penetration for new products.
What are the greatest impediments and challenges to new drug discovery and commercialization in today’s market?
There is no question that the current global regulatory environment is challenging. To overcome this, I believe it is vitally important that companies and regulators find common ground to provide solutions to improve the current new drug approval process. Without this kind of approach, I don’t see the regulatory environment getting much better.
Another challenge is the drug development process itself. It has become too costly and is no longer as effective as we would like it to be. Modification or improvements to the process would likely result in an ability to offer drugs to the market at more affordable prices. Insurance companies, governments, and other third-party payors are incredibly cost-conscious these days, and whether or not a particular medicine is reimbursed now hinges on its cost and efficacy as compared with older and cheaper medicines currently on the market. To that end, a focus on pharmaco-economics and budget impact modeling are no longer an emerging trend but a critical requirement today for drug pricing and reimbursement calculations.
Will the life sciences industry of tomorrow look much different than it does today? If so, how will it look?
The economic crisis, healthcare reform, changes in reimbursement strategies around the world, and the continued decline of drug approval rates have forced the life sciences industry to reconsider the way in which it conducts business. Put simply, we are in a critical transition period as an industry. We can no longer continue to invest more and get less in return. Therefore, I believe that the industry of the future will look quite different from what it is today.
While I cannot predict exactly how it will look, I believe that the continued success of the life sciences industry hinges on: 1) increased focus on appropriate risk taking and a drive for innovation, 2) a greater emphasis on cost containment, 3) improved portfolio prioritization and management strategies, 4) a proper balance between internal and external corporate activities, 5) more investments into private-public drug development partnerships, and, perhaps most importantly, 6) a greater focus on developing medicines that meet true patient needs. To that end, life sciences companies can no longer expect to develop commercially successful products without increasing their reliance on patient and physician input. After all, the core of our business has always been providing solutions to change patient lives. And, we ought to continue to remember that, as we move the industry forward.