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Revitalizing Drug Discovery

Hoping to squeeze more products out of a sputtering drug pipeline, pharmaceutical makers are Aiming to exploit advances in molecular biology. That means changing everything from their corporate cultures to the nature of their university collaborations.
October 1, 2003

It was the kind of detail that pharmaceutical executives at $20 billion companies don’t typically bother pointing out. But Jacky Vonderscher, vice president and head of drug development at the Novartis Institutes for Biomedical Research in Cambridge, MA, paused while guiding a visitor through the company’s spanking new research labs to sing the praises ofa hallway. True, it was open, airy, and exceptionally commodious, but all the same, it was a hallway, running through the institute’s oncology and infectious-disease research laboratories. No one was likely to discover a new blockbuster drug in this hallway, any more than a scientist was likely to think up a cure for cancer while dreamily staring out the tall windows lining nearby labs.

Or were they?

“You see, it’s not just laid out as a square,” Vonderscher explained over his shoulder as he hurried along the corridor. Indeed, the hallway sliced through the labs at a provocative angle, revealing office geometry according to Picasso, not Mondrian. That architectural detail is just one small part of the multibillion-dollar attempt Novartis is making to provoke innovation by cutting across departments and disciplines, bringing people together in odd juxtapositions, and knocking down the walls between academic and entrepreneurial interests. In choosing Cambridge as the site of a new $4 billion operation, which will be the company’s worldwide research headquarters, “We are trying to think of everything that affects the dynamics of the scientists and their interactions with each other,” Vonderscher explained.

Like many other pharmaceutical companies, Novartis is in the midst of trying to revitalize the drug discovery process. Throughout the industry, that process has long followed a standard-and perilous-progression: identify a biological target like an enzyme or a gene that appears related to a disease; fling hundreds of thousands of compounds at the target in the hopes that several of them will interact with it; study the toxicity, absorption, and other physiological properties of the most promising molecules in animals; and if all still looks encouraging, test one of the compounds in humans. The entire marathon can easily take a decade and cost hundreds of millions of dollars. And actually getting across the finish line is particularly brutal: the failure of many potential drugs, for either safety or efficacy reasons, often does not become apparent until large-scale clinical trials involving hundreds of patients, which is why only about one in ten compounds that enter human testing succeeds and becomes a drug.

“When you think that the best people at good companies sit around and make decisions about bringing something into human development, and nine out of ten of those molecules fail-that’s amazing,” says Bennett M. Shapiro, who in August retired as executive vice president for worldwide licensing and external research at Merck. “So it’s obvious that if we can decrease our failure rate from nine to eight, we’ve doubled the output of our operation as if we had doubled the size of the lab.”

The stakes in this game are higher than ever. The pipelines of future products at many pharmaceutical companies emit no more than a trickle of largely prosaic, me-too drugs-copycat cholesterol reducers and mood elevators-just as the patents on pharmaceutical blockbusters such as Zocor and Paxil are about to expire. And despite the industry’s steady increase in R&D expenditure, which now totals more than $25 billion annually in the United States alone, U.S. Food and Drug Administration statistics show a steady decline in the approval of “new molecular entities”-drugs whose active ingredients have never before been approved in the United States-since 1996 (see graph, above). In part, the decline indicates that much of the low-hanging fruit has been plucked; but it also points to the fact that it takes a number of years for new technologies to be incorporated into the drug discovery process.

To refill the pipeline, and to squeeze that one additional success out of every ten human trials, pharmaceutical companies have been doing all they can to reap the benefits of the latest advances in molecular biology, changing everything from corporate culture (right down to the hallways running between their labs) to the nature of their collaborations with university researchers. They are seeking to combine the basic fascination of academic biological research with the passion and entrepreneurial zest of biotechnology companies, all coupled to the economic brawn of major corporations. This transition has been under way at many pharmaceutical companies for several years, but firms are now moving rapidly to search out mergers, forge collaborations with academic groups, strike deals with biotechnology companies, and establish outposts near hotbeds of university research. In short, drug companies are positioning themselves-geographically, technologically, and even sociologically-to take full advantage of the gush of information that is revolutionizing biology and medicine.

Basic Biology

Of all these efforts, perhaps none is being watched as closely as Novartis’s. Vonderscher, an Alsatian-born biochemist who trained in Lyon and has been with Novartis (or one of its predecessors, Ciba-Geigy) for nearly 25 years, has a craggy, bearded, Gallic face that seems to be animated by a permanent, if controlled, sense of urgency. What Novartis and other pharmaceutical companies are trying to do right now, he explained, is take a hard look at biotechnology and selectively adopt those technologies “that will help us in boosting our pipeline and our drug discovery processes.” It’s not a simple task, he said, “because, especially five years ago, there were a lot of interesting things, but there was a lot of crap in the biotech world at the same time.” Despite his skepticism about the lack of discipline in the less mature biotech industry, however, Vonderscher stressed that it has much to offer the pharmaceutical industry. “We need the risk-taking of biotechs,” he said.

Indeed, in shifting the heart of its R&D efforts from Basel, Switzerland, to Cambridge, Novartis is in effect abandoning technology roots that stretch back several centuries through its predecessor companies, Sandoz and Ciba-Geigy. The hope is that the multibillion-dollar gamble in making the move will pay off in an approach that will, in Vonderscher’s words, allow researchers to be “more clever”-that is, allow the company to identify problems (and possibilities) and make shrewder decisions earlier in the drug discovery process. Part of that added cleverness derives from new technologies based on an increased understanding of biology, and part from a change in corporate culture.

The culture of drug discovery at Novartis began to change in 2002, when the company hired Mark C. Fishman, head of cardiology at Massachusetts General Hospital and a professor at Harvard Medical School, to lead all of its research and development efforts. Fishman is a respected cardiologist who also brings blue-ribbon credentials as a basic researcher studying the genetic and molecular mechanisms of cardiac development. He immediately instilled the ethic that a more academic-style understanding of biological processes and pathways could speed up the drug discovery process-even though basic research is often viewed as slow, tedious, and curiosity-driven rather than market-driven.

Key to Novartis’s new enterprise is a shift from focusing on particular molecules as targets to looking at biological pathways-interconnected sequences of biological events that together affect the course of a disease. Teasing apart biological pathways used to be a purely academic pursuit, and it can be a laborious and time-consuming process, but Novartis believes that the new molecular-biology tools will sharpen the understanding of the pathways and increase the odds of making unexpected discoveries. “I call it guided serendipity,” said Vonderscher.

Novartis has paid a great deal of attention to creating an infrastructure for this guided serendipity, and has done so very rapidly. “This was an empty shell in the summer of 2002,” Vonderscher said, walking through the lobby of the new research headquarters in Cambridge. Although there was a hectic, unsettled feel to the place-Vonderscher’s office still had boxes waiting to be unpacked, and many labs remained vacant-the research and development staffs were rapidly ramping up; every other Monday morning, management circulated a list of another ten or so new employees. The facility is slated to house a total of about 400 researchers by the end of the year.

Making Deals

Creating new, centralized research institutes close to hotbeds of academic and biotechnology prowess is one way pharmaceutical companies are strengthening their hold on the new biology. Another way is making deals.

Merck, for one, is making deals more aggressively than it ever has before, establishing beachheads in genomics, proteomics (the science and technology of cataloguing and describing the behavior of all the proteins encoded in a particular organism’s genome), and other forms of advanced bioscience. “From a pure numbers point of view,” explains Ben Shapiro, “our research budget is around $3 billion a year, so we do about 1 percent of the world’s biomedical research. That means, at the most simplistic level, that one hundred times as much [innovation] is going on outside of Merck as inside of Merck. Given that as a fact, what do you need to do? The answer is, we’ve got to look outside of Merck, voraciously, for other opportunities.”

Merck has stepped up its dealmaking in the past few years; the company executed 48 agreements in 2002, compared to only 10 in 1999. Perhaps the most prominent deal has been the half-billion-dollar acquisition of Rosetta Inpharmatics. Rosetta’s groundbreaking technology allows researchers to systematically analyze changes in “gene expression”-which genes are turned on or off-in the cells of both healthy and diseased tissue. The gene expression technology helps Merck researchers sharpen the focus of every step in the development of a new drug, from identifying potential toxicological problems to shaping the selection of patients for late-stage clinical trials.

A particular pattern of gene expression in cells exposed to a potential new drug molecule, for example, might give an indication that the molecule would ultimately be toxic in humans. “We realized that we didn’t need to do three-month animal safety studies to start sorting the sheep from the goats here,” Shapiro remarks. “We could in fact do cellular studies that would tell us quickly, by gene expressions, using Rosetta’s approach, to help sort through what might be toxic later.” If a gene expression pattern is associated with the progression of a disease, and researchers find that manipulating a particular drug target alters that pattern in a favorable way, it gives the researchers a strong indication that the target is a good one to aim for.

This past February, Merck also reached an agreement with Sunesis Pharmaceuticals, based in San Francisco, to develop a series of promising compounds for the treatment of Alzheimer’s disease. Using a proprietary technology called “tethering” that allows researchers to identify molecules that bind to a given drug target, Sunesis has found a number of small molecules that block the activity of an enzyme linked to one of the hallmarks of the disease-a buildup of biological gunk, known as amyloid plaques, in the brain. And Merck is getting not just the small molecules but broader rights to use the tethering technology, which it hopes will make drug discovery more efficient in other areas of research.

Shapiro says Merck is particularly interested in any technology that allows researchers to validate drug targets-that is, make clear that the targets they are aiming for play critical roles in diseases and their treatment. “If we could increase throughput here,” says Shapiro, “we’re going to be able to take more shots on goal and increase our probability of success.”

Irrational Exuberance

Many people at pharmaceutical companies never bought all the hype surrounding the Human Genome Project. As Shapiro puts it, “I think it’s fair to say that there was a substantial amount of irrational exuberance’ about the genome. People who didn’t know much about science felt that once you had the human gene sequence, basically you were a significant portion of the way to the goal. And anybody who really knew anything about this knew that maybe you were just beginning to start the ball game at that point. You were nowhere near the goal.”

Indeed, most drug company executives appear to understand that the transformative power of genomics, proteomics, and other related technologies will take time to exert itself. Iain Cockburn, a Boston University economist who follows the drug industry, predicts that it will take on the order of a decade for the new technologies to have an impact. “The clock of drug discovery has speeded up, in part because of the culture of the biotechs,” he says. “But reducing all these technologies to practice will be a long and difficult process. It’s not going to shorten drug discovery to two years.”

Even a slight increase in the rate of drug discovery would dramatically change the formula for success in the business, however. And that is why Novartis’s new institute is merely the largest and most visible example of the rush by pharmaceutical companies to spend enormous amounts of money to gain the smallest edge from the new biology. “I’m not sure that many people know how to integrate all these aspects,” said Vonderscher. But, he added, “It’s the groups that integrate all these elements the fastest and the best that will be the winners.” And if genomics and other new approaches can increase the industry success rate by a mere 10 percent, no one will be talking about problems in the pipeline.

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