By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL
Prior to 2011, Daiichi Sankyo, the second-largest pharmaceutical company in Japan, had very little oncology drug development experience, unless you include the 1977 launch of the anticancer drug, Krestin. Instead, the company, which is more than 100 years old, is probably best known for its expertise in cardiovascular (CV) disease, thanks in large part to the blockbuster success of Benicar (olmesartan medoxomil) — an angiotensin II receptor antagonist that generates approximately $2.5 billion in annual sales globally. Yet as of May 2014, the Daiichi Sankyo oncology pipeline consisted of 15 active clinical projects (nine in Phase 1, three in Phase 2, three in Phase 3), and one under application in Japan. As a point of comparison, in July 2014, Pfizer had 14 oncology compounds in development. If you are like me, you are probably wondering how a century-old global drug company known for valuing harmony and consensus (two of innovation’s biggest roadblocks), and with essentially zero experience in creating cancer therapies, becomes one of the most innovative oncology companies in the world — in just under three years.
One of the ways is that you find people who have been successful, and you let them continue to be successful, and you learn from it,” says Senior Executive Officer and Global Head of R&D at Daiichi Sankyo Co., Ltd. Glenn Gormley, M.D., Ph.D. Indeed, this strategy seems overly simplistic. But Gormley, who also holds the position of chairman of the board, executive chairman and president of Daiichi Sankyo, Inc, the company’s U.S. subsidiary, knows most strategies don’t fail because they are too simple. Strategies fail because they are made overly complex in their tactical execution. Leonardo da Vinci said, "Simplicity is the ultimate sophistication." Gormley explains how Daiichi Sankyo is venturing into the unfamiliar territory of oncology R&D and building its cancer compound pipeline through partnerships and acquisitions, all while (and this may surprise you) shunning the notion of harmonizing the drug discovery process to the Daiichi Sankyo way of doing things.
"For now, I'm very happy to work with smaller companies with expertise in developing biomarkers and companion diagnostics."
Glenn Gormley, M.D., Ph.D., Senior Executive Officer and Global Head of R&D at Daiichi Sankyo Co., Ltd.
Get Aligned Internally When Entering Unfamiliar Terrain
When Gormley joined Daiichi Sankyo, the company already had begun delving into oncology R&D. For example, in November 2008, the company formed a strategic partnership with ArQule (NASDAQ: ARQL), a company engaged in R&D of next-generation small molecule cancer therapeutics. Two years earlier, the company acquired U3 Pharma AG, a German biotech focused on researching antibodies for the treatment of cancer. But someone like Gormley, called to cultivating therapies for cancer (see sidebar), knew Daiichi Sankyo’s successful entry into oncology R&D required more than a couple of strategic moves. It necessitated getting directionally aligned on some key principles internally. “We had to be comfortable with risk taking in a field where there's a high level of uncertainty,” he says. “Having a willingness to take risks is an important element of being successful in oncology.” Additionally, because the company was in competition with some very experienced players, the organization had to also be able to make quick decisions. “In oncology you often don't know as much about the biochemistry or the biology as you might in cardiovascular disease,” he explains. “You need to be able to move on innovation when it’s discovered.” Gormley believes that to make quick decisions internally requires a simple assessment system, such as Daiichi Sankyo’s GEMRAD (global executive meeting of research and development). The GEMRAD committee serves as the supreme decision-making board for R&D. “All project teams report directly to this committee for either approval or challenge,” he states. This makes the decision process very streamlined.
Another key area of alignment for Daiichi Sankyo was how best to couple the company’s interest in building oncology into a major area of therapeutic expertise with a planned commitment to expand its biologics capabilities. “We had a lot of success historically in small molecules,” Gormley explains. “But moving into biologics meant antibodies, many different kinds of biologics, companion diagnostics, biomarker discovery, and biosimilars.” Unlike small molecule drugs, which are chemically based entities designed to treat the masses (e.g., Benicar), large molecule biologics often are more personalized to individual patients. Thus, when it comes to discovering and developing a biologic, it can be equally important to focus on developing a companion diagnostic (assuming one does not already exist) to determine if the patient is an appropriate candidate for treatment. Companion diagnostics play an important role in nonbiologics as well. For example, FDA approval (Aug. 17, 2011) of the oncology drug ZELBORAF (vemurafenib), indicated for the treatment of patients with BRAFV600E* mutation- positive inoperable or metastatic melanoma, required the simultaneous approval of the cobas 4800 BRAF mutation test to serve as a companion diagnostic to determine a patient’s eligibility for ZELBORAF treatment. ZELBORAF was discovered by Plexxikon (to be discussed later), a company acquired by Daiichi Sankyo. The cobas 4800 BRAF mutation test was developed by Roche Molecular Systems. The simultaneous approval of the drug and the diagnostic required a very coordinated effort. According to Gormley, if Daiichi Sankyo wanted to be successful in developing oncology as a key therapeutic area of expertise, it required a simplified structure to similarly coordinate its biologic R&D development efforts. In March 2013, the company announced a major organizational restructuring, including R&D. Within the R&D division, Daiichi Sankyo created the Biologics Oversight Function, which is charged with integrating all of the company’s globally dispersed (i.e., Germany, India, Japan, and the United States) biopharmaceutical functions. Under the Biologics Oversight Function, Daiichi Sankyo created two new laboratories — the Biologics Pharmacology Research Laboratories (drug discovery) and the New Modality Research Laboratories (technologies formulation). Gormley believes by aligning the two labs under one oversight unit, the company will benefit from having a highly coordinated biologic R&D effort — even if a biomarker or diagnostic requires an outsourced or partnership model. “It takes a lot of resources to develop both the drug and the diagnostic internally,” he says. “For now, I'm very happy to work with smaller companies with expertise in developing biomarkers and companion diagnostics.”
*BRAF, officially named “B-Raf proto-oncogene, serine/ threonine kinase,” is the gene that provides instructions for making a protein that helps transmit chemical signals from outside the cell into the nucleus. BRAF belongs to a class of genes known as oncogenes. When oncogenes become mutated, they have the potential to cause normal cells to become cancerous.
As you can see, the process of gaining alignment is not something done all at once, but is more of an evolution. To drive alignment within Daiichi Sankyo, Gormley utilized the company’s core principles of integrity, innovation, and accountability. “We use these three principles to focus our efforts on putting the patient first, finding ways to make a difference, to test our decision making internally, and then do the same thing with our external partners,” he states. Though Gormley believes you can easily establish these three guiding, core principles across any culture, when working with external partners there are other keys necessary if you want to realize the full potential of strategic partnerships.
Empower Partners To Fully Realize Their Potential
The saying, “Two heads are better than one,” may explain why many companies enter into partnerships. However, the unfortunate reality is that most business partnerships don’t live up to their full potential. Often compared to a marriage (50 percent of which end in divorce), estimates place business partnership failures at a whopping 80 percent. I asked Gormley how he goes about selecting organizations with which to partner. “I don’t think of it as a selection process,” he clarifies. “It is a mutual interest that creates successful relationships.” According to Gormley, when Daiichi Sankyo approaches a partnership the conversation begins with asking, “What do you need from us? What would we bring to you that would make a successful partnership?” To be successful and equal partners, Gormley ascribes to using a straightforward approach, striving for a win-win relationship. Gormley acquired this partnership philosophy while in his role as the CEO of a small biotech company, Gemin X. “I learned a lot about being on the other side of a partnership,” he says. “I know the benefits achieved in creating a relationship where the potential partner is going to gain as much as we are at Daiichi Sankyo. I’m more attracted to win-win scenarios and less so to relationships that look to be very one-sided.”
To determine how best to find and create these win-win scenarios, Gormley brought the senior R&D leadership team together. “We talked about what characteristics would lead to success in oncology. One of those, as mentioned previously, was our becoming more comfortable with uncertainty,” he shares. The group concluded that just as being able to make quick decisions internally proved beneficial, this same principle would be advantageous for Daiichi Sankyo’s external partners. “Our approach is to provide our partners with a high level of independence so they too can make quick decisions,” Gormley states. “Let's identify successful organizations and let them continue to be successful. As long as they can demonstrate that level of continued innovation, why would we want to change it?
Daiichi Sankyo has a number of business collaborations (e.g., Amgen and ArQule), as well as academic partnerships, such as the recently announced three-year alliance with Sanford-Burnham Medical Research Institute. To find these collaborative opportunities, the company utilizes initiatives such as the Venture Science Laboratories (see sidebar — The Creation Of Venture Science Laboratories) and the External Scientific Affairs (ESA) team — a group of scientists, Ph.D.s, and M.D.s charged with contacting academic and biotech organizations. “The ESA team works independently of me, making their own decisions on who to contact, as they know our interests and where we want to focus,” he states. “I tend to get involved personally at a later stage once the group has determined both mutual interest and mutual benefit.”
If you asked Gormley what he looks for when he gets involved in the partnership process, he would tell you flexibility. In addition, he would also tell you he seeks organizations where he can empower as many people as possible to think independently, even in the case of Daiichi Sankyo company acquisitions.
Fostering A Different Kind Of Partnership
In April 2011, Daiichi Sankyo acquired Plexxikon, a small Berkeley, CA-based biotech that had experience in oncology drug discovery and early development with its novel compound, ZELBORAF, that gained FDA approval just five years after the initiation of the first clinical trial. Gormley admits it was ZELBORAF which served as the initial attraction to Plexxikon. But as Daiichi Sankyo learned more about the organization, Plexxikon’s targeted approach to oncology drug development became the real appeal. “We felt they [Plexxikon] would fit in well with our approach of developing companion diagnostics in biologics,” Gormley recalls.
When it came time to execute the Plexxikon acquisition, Gormley decided to apply some of the lessons he learned at Gemin X, namely, he provided Plexxikon with a high degree of independence. He based this decision on the simple fact that the company had managed to maintain a high level of innovation discovery and success (i.e., ZELBORAF) with a staff of only 43! “If you want a different outcome, you need to foster a different kind of relationship,” he states. “Plexxikon didn’t approach discovery the way we might in our labs. That’s great. We don't try to harmonize those approaches, but seek to take advantage of our differences.” Further, the Plexxikon executive team was given a high degree of autonomy to run the company as they saw fit. Gormley feels some other best business practices from the Plexxikon acquisition include keeping the entire leadership team intact, making no attempt to change the size of the company, and not moving the Daiichi Sankyo organization into Plexxikon. Unless folks at Plexxikon want help or support, Gormley says they are allowed to establish their own annual objectives and timelines. “We give Plexxikon a defined budget for the year and let them choose how to allocate it to discovery and development, as well as what discovery areas they want to pursue. They have a tremendous amount of flexibility to decide the direction of the company.”
He admits that providing this high degree of autonomy is a continual learning process, but he believes the benefits far outweigh the challenges. “Where's the next area of breakthrough science or innovation going to come from?” he asks. “We don't all have the same answers to that question. It depends on one’s background, experience, and contacts. If we want a better product, providing a better patient outcome, we need to encourage people to challenge each other in a very respectful way, so we can capture the benefits of diversity of thought.”
The Creation Of Venture Science Laboratories
"I believe there is a perception in the pharmaceutical industry that it takes a biotech mindset to drive innovation, and such a mindset can't be found in Big Pharma. I wanted to challenge that perception. ” That’s how Glenn Gormley, M.D., Ph.D., explained why he spearheaded Daiichi Sankyo’s formation of the Venture Science Laboratories (VSL). The concept was to establish an organization resembling a small biotech, within the walls of a Big Pharma, in order to create a more innovative culture at the company’s research organization. In forming VSL, Gormley, senior executive officer and global head of R&D at Daiichi Sankyo, says he intentionally resisted the idea that to be successful VSL needed to be isolated from the broader R&D culture. “I want the biotech culture of VSL to coexist with our broader R&D culture so they can learn from each other,” he shares. “If you create the right culture within VSL, people will naturally think and do things differently, while working in the same labs as their non-VSL colleagues.” As a result, the VSL culture is evident everywhere Daiichi Sankyo has an R&D facility.
The process of building VSL began with Gormley hand-selecting the two people he believed would be critical to its success — its leader and its head of business development. In choosing these leaders, he looked for openness, entrepreneurial spirit, and the ability and willingness to think differently. To fill the VSL leadership position, Gormley selected Takashi Fukuoka, DVM, Ph.D., a 27-year research veteran with a wealth of R&D change-initiative experience. Fukuoka also had held a number of positions with global responsibilities, such as working with the company’s Reinvent Drug Discovery Program (RDP), GEMRAD, and the Change Excellence Team. “The number two person is the head of business development and licensing [BD&L], Go Saito, Ph.D.,” Gormley explains. “I wanted VSL to have its own BD&L function and for it to be in a single person.” Saito, who worked directly on initiatives with the likes of Coherus (a biosimilar company), Eli Lilly, Kai Pharmaceuticals, and NGM (a biotechnology company), brought significant external collaboration experience to the position. Because Gormley wanted the leaders to own the success of VSL, he let Fukuoka select his own group. Established in April 2013, VSL consists of 28 people.
Once the VSL team was assembled, they were given very few directions. “I gave them a blank slate and said, ‘Your goal is to develop innovative, first-in-class medicines.’ But there was one condition: Everything had to be done in partnership with an academic organization, although it could be government research if it made sense,” he stipulated. When Gormley gave the team its small start-up budget, he reminded them they would need to demonstrate their value to the organization. “There would be no entitlements,” he stated. “Bring us new, innovative ways to work on projects. If you can demonstrate value, you will get the funding you need.” According to Gormley, demonstrating value eventually involves VSL giving a presentation to Daiichi Sankyo senior leadership. “They [VSL] need to convince us that what they are doing is worth funding,” he shares. A recent example of an approved VSL project proposal, announced this past April, is a drug discovery collaboration with the UC San Francisco (UCSF) Institute for Neurodegenerative Diseases. UCSF focuses on developing novel therapeutics and molecular diagnostics for multiple neurodegenerative diseases, such as Alzheimer’s, Parkinson’s, Creutzfeldt-Jakob disease, and frontal-temporal dementia.
When creating this kind of company-within- a-company, Gormley says to expect people to be skeptical and challenge you. “We knew that one of our challenges would be to isolate this group so it could maintain its unique culture,” he states. “But we also knew that people would be questioning whether we even needed such an approach.” Here are Gormley’s tips on how to create your own version of VSL:
- Choose the right leaders, and then let them own the success.
- Take a small group, and embed them in the organization.
- Give them a small budget.
- Ask them to demonstrate the value of what they want to do rather than guarantee funding.
- Require them to partner on every project.
- Stay out of their way, and see what they can do.