Magazine Article | February 25, 2015

Grünenthal Builds A New Entrepreneurial & Networked Approach To R&D

Source: Life Science Leader
Rob Wright author page

By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL

The German proverb, “Wer rastet, der rostet,” loosely translates to, “He who rests grows rusty.” This saying occurs to me as I sit across from Grünenthal’s chief scientific officer, Klaus Langner, Ph.D. We are at the Omni hotel in San Francisco, and it is very late. However, since we are in town for the 33rd Annual J.P. Morgan (JPM) Healthcare conference, each of us knows this is far from our last meeting of the day.

Langner’s dark suit still looks crisp, and his white shirt is still bright. I think to myself, “He has no ‘rust’ on him.” Only the slight loosening of his tie provides any evidence his metal is beginning to fatigue. “It’s pronounced Grew – nen – tall,” he politely corrects in English laden with a German accent. “We are a fully integrated R&D company, having always a strong footprint in internal research.”

"The U.S. is an important market for us, but only via partners."

Klaus Langner
Chief Scientific Officer of Grünenthal


In 2013, Grünenthal, a nearly 70-yearold family-owned German drug developer that has primarily focused on discovering new ways to treat pain, invested approximately 27 percent of its revenues back into R&D. For the same year, that’s five percentage points higher than Novartis, one of the most innovative pharmaceutical companies in the world. Like most companies in this industry, Grünenthal recognizes that to develop a sustainable business model, it must adopt an open and collaborative approach to R&D. But how is a company the size of Grünenthal, with revenues of approximately $1.2 billion (€1 billion) in 2014 supposed to compete for collaborative R&D partners so that it can continue to grow and remain “rust-” free? According to Langner, Grünenthal intends to broaden its business by implementing a new entrepreneurial specialist and networked approach to R&D built on the foundation of its focused drug discovery and development legacy.

One of Grünenthal’s first R&D success stories was tramadol, a narcotic-like pain reliever which was marketed by Janssen in the U.S. as Ultram. According to Langner, after Ultram, the company took an “opportunistic approach” to R&D, seizing opportunities not necessarily closely related to the development of pain-oriented therapies. “But from the 1990s onwards,” he explains, “we began to focus more and more on pain.” From then on, the company developed tapentadol, a centrally acting opioid analgesic. In the EU, Grünenthal markets the drug under its brand name, Palexia. In the U.S. however, tapentadol was, until very recently, marketed by Janssen under the brand Nucynta. “Tapentadol represented a real innovation in pain,” Langner points out. “With respect to the development of a new chemical entity [NCE], prior to tapentadol, nothing new had happened in pain for 30 to 35 years.”

Grünenthal’s R&D approach reveals a pattern worthy of emulation, especially for small to midsize biopharmas. First, focus on your drug development niche. Second, when you are a small company seeking entry into the biggest and most stringent biopharmaceutical market in the world (i.e., the U.S.), seek highly reputable therapeutic category champions as your partners. “The U.S. is an important market for us, but only via partners,” Langner states.

Grünenthal has other reputable pain management collaborators. Purdue Pharma, known for bringing pain relief to millions via OxyContin, licensed the technology patents from Grünenthal for their crush-resistant manufacturing technology which raises the hurdle for tampering and abuse. If you’re a small pharma or bio company trying to grow, there are lessons to be learned from Grünenthal’s partnering examples. For instance, don’t put all your niche drug development into the basket of a single partner. And make sure you create strategic partnerships earlier than the out-licensing phase.

During our conversation, Langner explains why it’s important to adopt a focused approach to R&D. He says that if you wanted to develop an analgesic with a broad label, you would have to run up to nine Phase 3 trials in different pain subcategories, each with its own standard of care. “This broad approach increases your risk — heavily,” he attests. Instead, to reduce risk, he advocates a more targeted approach, focusing on developmental compounds with smaller labels, as well as smaller patient populations. “Neridronate is a nice example of this right here in the U.S.,” he states.

Neridronate is registered in Italy for the treatment of several diseases (e.g., osteogenesis imperfecta and Paget’s disease of bone). CRPS (complex regional pain syndrome) is a progressive disease of the autonomic nervous system that, according to the McGill Pain Index, ranks as the most painful form of chronic pain. Since pain management is a Grünenthal core competency, the company set out to obtain (which it did successfully) the licensing rights for Neridronate for the Americas. With less than 200,000 U.S.-Americans suffering from CRPS, Grünenthal executives knew this represented an unmet medical need, as well as a possible orphan drug indication for Neridronate. “Worldwide, two things we look for when assessing development, licensing, or commercial opportunities are drugs with niche and/or orphan indications,” Langner states. Neridronate fits the bill. Apparently, the FDA agreed. On March 25, 2013, Neridronate was granted orphan drug designation by the FDA for CRPS-I, CRPS-II, and CRPS-NOS (not otherwise specified). “We think we can make a real difference in the treatment of patients suffering from CRPS-I, and we are highly committed to starting clinical trials in the U.S.” The only thing missing is an R&D partnership to help bring Neridronate to patients in pain. Grünenthal will start clinical trials without a partner, but is seeking a partnership for future R&D and marketing activities. If successful, Neridronate would be the first drug on the U.S. market specifically approved for the treatment of pain due to CRPS-I.

Grünenthal’s approach to creating a networked and entrepreneurial R&D program seems simple. Know what you are good at. Find synergistic opportunities that play to that strength. Then, find partners that complement your strengths and that also fill in your weaknesses. This is one of the main reasons for Langner’s visit to J.P. Morgan. As Grünenthal’s strength is pain, Langner sees complementary opportunities in conditions (e.g., certain inflammatory diseases), niches in neurology, cancersupportive care, as well as various pain treatment settings (e.g., postoperative pain). “If we see an opportunity to bring something new to patients where there is a high unmet medical need and it fits to our target audience, we would go into the business,” says Langner. For example, when Californiabased AcelRx Pharmaceuticals was seeking a European collaborator for Zalviso, its novel combination pain drug-delivery device, the firm picked Grünenthal. According to AcelRx CEO Richard King, though the search for an EU collaborator involved a number of large players, Grünenthal was selected because of its footprint in Europe’s postoperative pain setting with tapentadol.

But King noted it was also important to align with a company that “couldn’t lose our product [Zalviso] in a sea of other products.” Though the deal may seem small by Big Pharma standards — $30 million up front and potentially $220 million more in development, regulatory milestones, and rights to Zalviso in Europe and Australia — for a company the size of Grünenthal, this demonstrates not only a very significant commitment, but also a strong willingness to partner in R&D.

It should be clear by now that Grünenthal is a pain company, first and foremost, that is seeking opportunities which build upon that competency or are adjacent to that area. Nevertheless, Langner contends that being strategically opportunistic does not mean being chained to your core. For example, Grünenthal has been in business in Latin America since 1968. About one year ago, the company nearly doubled its revenues in Latin America by acquiring Empresas Andrómaco, a Chilean company. “The acquisition of Empresas Andrómaco enriched and matched our portfolio that already included gynecology and CNS even before the acquisition. We now have more than 400 products — including oral contraceptives — in Latin America.” In Europe, however, Grünenthal divested its gynecology business because of generic competition.

In other words, don’t be so true to your core that you aren’t open to tinkering with innovative opportunities. ”When evaluating opportunities, the standard approach is to always focus on risk,” Langner says. “But don’t let risk overshadow how you assess an opportunity. Yes, you need to be confident that you can develop compounds in areas of opportunity, but you don’t necessarily have to do so alone.” To help foster this concept, Langner drove for the creation of the company’s innovation medicine’s unit (IMU). “The purpose of the IMU is to help us establish R&D entrepreneurial networks for assessing early-phase opportunities. We use the IMU to help find people outside our organization who can help with things like clinical profiling or the development of a biomarker that does not yet exist,” he explains. The IMU consists of five people charged with identifying and assessing new late-stage discovery or early-clinical development opportunities from the external innovation community. “In creating the IMU, we wanted to bring a biotech atmosphere to Grünenthal — doing things fast and with a very senior, empowered, decision-making team,” he explained. Started in 2014, Langner feels it is still too early to reveal the progress of the IMU. However, he is pleased thus far. “The IMU has been active in helping facilitate collaborations in Europe,” he attests. “But we are also quite active in the U.S., interacting with potential partners in the San Diego and Boston areas.”

One of the unique benefits afforded Grünenthal’s IMU is the company’s geographic location. Located in Aachen, in the western part of Germany, the city places Grünenthal in what is referred to as the North Rhine Westphalia — one of Europe’s densest regions for research networks and nonuniversity research centers. “We are closer to the countries of Belgium and the Netherlands than we are to the German cities of Frankfurt or Berlin,” Langner says. “We are at the heart of an entrepreneurial enabling ecosystem.”

As Langner and I conclude our discussion and ready ourselves for our next meetings, I am struck by an American saying made famous by Mark Twain, “Actions speak louder than words.” Interestingly enough, the saying is very close to the German proverb, “Taten sagen mehr als Worte,” which translates to, “Actions say more than words.” More than Langner’s words, it is Grünenthal’s actions which bode well for this midsize company’s entrepreneurial, networked, and partnered R&D future.

How Do You Keep Commitments Made To Collaborators?

Klaus Langner, Grünenthal's chief scientific officer, says time is one of the most important metrics when working with a collaborative partner — specifically, delivering to your partners on time. "We were developing a product for a partner that uses INTAC, our crush-resistant technology," he explains. "We had to make a technology transfer to the U.S. involving the new technology, the new formulation, and all of the machines necessary to produce the product." Keep in mind, Grünenthal was not the maker of the manufacturing machines used in the INTAC manufacturing process. "Nonetheless," Langner says, "we said we'd deliver everything, and therefore, we were responsible."

The initial time budgeted to complete the tech-transfer project was 18 months. "We had no previous experience conducting this size of a transfer, which included a completely new technology and completely new machines," he admits. Soon into the process, colleagues approached Langner to inform him they had seriously underestimated the time required, and shooting for 18 months was asking the impossible. Langner thought, "I am responsible. We have to deliver on time."

The first thing he did was to meet with the team to discuss options for meeting the delivery time period they had committed to. After the meeting, Langner sat down to do some analysis of the project and realized he needed some help. "We decided to hire two expert external consultants who were experienced in what I call ‘bottleneck project management,'" he states.

At the next team meeting, Langner announced the decision to bring on the consultants, but was quick to clarify their role was not to take over the project's management. "Their job was to focus on analyzing the data to determine where backlogs could be eliminated," he states. "I reiterated that the responsibility for delivering the project on time remained with the Grünenthal internal project leads." The project team meetings became a routine, occurring early in the week and lasting an hour and a half. Although not necessary, Langner attended many of the meetings. "I made this project and these meetings my number-one priority," he says. "If I wanted people to take this project seriously and be committed, I needed to demonstrate the same level of commitment I was asking of them. It was visible." What wasn't visible was what Langner was doing outside of the meetings to help foster the project.

When most people are told a project will not be able to meet a deadline, their first inclination is probably to pick up the phone and ask the customer or partner for more time. Langner did pick up the phone, but not to call Grünenthal's collaborative partner. "I thought to myself, ‘There are other industries with tough timelines; how do they do it?'" he shares. Having contacts at RWTH Aachen University, a prominent technical institution, who have done work with a number of industries external to pharma (e.g., automotive and aircraft), Langner set up several evening and dinner discussions to gain their insights on approaches to project management, cycle times, etc. "If companies in other industries are able to accomplish tasks just as difficult as the one facing Grünenthal and achieve success in even shorter time frames [than the typical 6-8 years for drug development], then so can we," he says.

At the beginning of the project, the team was measuring progress in months, first reducing the backlog to being only four months behind, then three, and eventually two. "All of a sudden we were at zero," Langner states. "In the beginning, nobody believed this possible, but we really adopted a can-do mentality." The end result was successful completion of the project on the last day at 12 noon. "This was a very important lesson for our organization," he shares.

How did they do it? First, the project was planned down to the last detail, and for each the critical path was analyzed. "We looked at literally everything: What is interconnected and in which way? Where are synergies, and how can these be used to speed up the timelines?" he shares. For each of these details, the time-critical steps were identified and intensely monitored. The progress of every detail was evaluated with a traffic-light system, and in the weekly meetings, everything – literally, everything – came to the table. "Sometimes these meetings were rough, of course; however, this approach created very high transparency, and we immediately saw if one activity was delayed, which other activities were affected. This was helpful also for prioritizing our actions," Langner explains. "It was also important that the team understood that this exercise was not meant as finger-pointing, but to ensure we can address delays quickly so the whole project was not in danger." Understandably, this process created a lot of emotions and pressure that needed to be managed. However, as the red traffic lights began to turn more to yellow and green, the team saw their commitment and personal engagement was paying off.

If you face a similar prospect of having to make the impossible possible, Langner has some words of wisdom. "As early as possible, look for the most critical steps that could derail the project's timeline, and pay close attention to them. Next, test and train your people. While my colleagues and I were familiar with project management, we had never undertaken this complex of a task before." Another piece of advice from Langner is to have a good project monitoring system in place. However, his most important tip, "You need a project lead who is willing to step on people's toes and be outspoken when things are not getting done." While you can probably find people like this within any organization, you are setting them up for failure if you don't empower them. It is important that they feel comfortable telling you, your boss, or even your boss' boss when someone on the team isn't pulling their weight on the project. "If you involve the people in the process, if the process is transparent and solution-oriented, if you manage emotions, celebrate milestones and if you are visible and approachable to everyone on the team, you can make it," he concludes.