Monday, May 23, 2011

AstraZeneca, Biogen look externally for new drug candidates

By Lori Valigra, Mass High Tech correspondent

AstraZeneca Plc and Biogen Idec Inc. have joined the ranks of local large biotech and pharmaceutical companies like Pfizer Inc., which, facing looming patent expirations and unproductive pipelines, are reaching outside their own walls to find new drug candidates.

For Pfizer, that means establishing a new network of academic centers in 2010 to serve as a “farm team” for drug development. Based in Cambridge, The Global Centers for Therapeutic Innovation aims to refill Pfizer’s pipeline with company-academic teams that will work side-by-side to speed drug discovery efforts. Pfizer is facing generic competition in the next few years when patents on some of its blockbuster drugs like Viagra and Lipitor expire. The first partnership is with the University of California, San Francisco. Pfizer plans to expand the program to Europe and Asia next year.

It’s a concept called “open innovation” that has been used widely, and with successes, by consumer products companies like Proctor & Gamble to restore competitiveness when inside resources begin to dry up.

For AstraZeneca R&D, the move comes as the company jolts through a massive restructuring announced last year that will result in a total of 8,550 layoffs worldwide, including 135 people at its Westborough factory starting May 31. 

In the company’s R&D organization in Waltham, which has about 600 people, 25 percent of the drug projects were dropped across the company’s internal portfolio. In addition, about four campus sites were closed.

“AstraZeneca last year made transformative changes in its R&D organization,” John Hennessy, executive director, AstraZeneca R&D Boston, said at the Convergence 2011 forum in Chatham last week. He pointed to a lack in R&D productivity — the last drug to reach the market from the lab was in 2003 — and lots of Phase 2 failures and some in later stages. “We haven’t been innovative enough,” he added.

That included bringing in new leadership. Half or more of the company’s R&D leaders are new, and more than half are from outside AstraZeneca. “They have fresh ideas and new ways of thinking,” he said.

Part of that thinking is that up to 40 percent of AstraZeneca’s pipeline should come from external sources by 2014. “In parts of our R&D we saw radical ideas squashed too quickly,” he said. “We are looking at a patent cliff as a company and we have to have a strong pipeline over time.” He said the company will look to license patents, acquire smaller companies and collaborate with research partners. In addition, the company will reward scientists for publishing their research.

Michael Cima, an MIT professor and serial entrepreneur, saw firsthand how risk-adverse big pharma can be in holding down new ideas. Cima took a leave from MIT to become part of the management of Transform Pharmaceuticals Inc. of Lexington, which was bought by Johnson & Johnson for $230 million in 2005. When the acquisition was made, Cima had to sign on as a consultant for five years. “I saw hundreds of good ideas squashed at Johnson & Johnson in those five years,” he said. “They would think of ways how not to make it happen.”

Hennessy acknowledged the issue, saying, “We’re trying to change the culture. A key benefit with bringing in new leadership is they are positioned better to make the difficult decisions.”

George Scangos, who took over as Biogen Idec’s CEO a year ago, faced similar tough decisions. The company has axed 17 R&D projects, more than half of the total, and now has six Phase 3 and four Phase 1 projects. “We don’t have enough in the R&D pipeline so we’re looking outside,” he said. “We have to rebuild and refocus.” The company’s Ampyra drug to improve walking in multiple sclerosis patients received a positive opinion for conditional approval on May 20 in Europe.

Scangos said the company has gotten rid of its hierarchical committees. He added that he does not like that the company is split between its headquarters in Weston and R&D in Cambridge, but is not sure if the two can be reunited. “In an ideal world, we’d all be back in Cambridge, but I don’t know if that will happen or not.”

He also questioned why the company has a $100 million venture fund rather than linking it with the company’s R&D funding. “I don’t know why we have this as a separate fund,” he said. 

Scangos said the company is having more discussions with universities. The move to take on outside partners is unusual for a company like Biogen, which historically has developed products internally, said Alison Taunton-Rigby, CEO of RiboNovix Inc. of Natick. She said Biogen will now have to compete with big pharma and others for Phase 2 and other drug candidates.

“I think we can be creative in structuring these deals,” said Scangos, pointing out that current management at Biogen has experience working at smaller companies when they were looking for deals. He added he’s willing to talk to companies with drug candidates that are pre-Phase 1. “And we have money to get what we want,” he said. The company has more than $1.2 billion of cash on hand.