Companion Diagnostics & Personalized Medicine

What will the future bring?

Nandini Hadker, Managing Director, UBC James Parrish, Director, Pfizer Michael Epstein, Director, UBC

The product development and commercialization process is challenging

Internal Challenges Limited clinical pipeline Looming patent expirations maintaining revenue base High costs of clinical trials Increasing the success rates of compounds in clinical trials / Lower appetite for failure Need for risk sharing for product development costs Driving revenue and sales targets, capturing ROI External Challenges Competitive pressure Increasing physician and payer demand for evidence requirements for prescribing, coverage & reimbursement High cost of new therapies Payer pressures to manage / contain healthcare costs Payer demand for targeted therapies Payer demand for pay-for-performance models

What can we as Market Researchers do about this?

To justify use, a new medication will have to demonstrate clinical and economic value

How does the medication change patient diagnosis and management? How does the medication fit with the current treatment algorithm? How can the medication improve patient outcomes? How does the medication compare with the current standard of care (SOC)?

Clinical Value Economic Value

How will the medication affect our budgets? Will it be net negative, net neutral, or net positive? Can the medication provide better treatment outcomes without increasing healthcare costs? Is the medication cost-effective vs. the SOC?

The medical value story

The market is demanding a total value equation as a prerequisite for adoption of new therapies and rationalizing existing therapies.
Clinical Value Economic Value Medical Value Story

The clinical and economic value story need to go hand in hand in developing the total medical value story of the medication.

Maximizing the Medical Value Story

Medical Value is maximized when a product can effectively demonstrate both Clinical and Economic Value via compelling evidence.
Medical Value Map
Net positive Lower payer barrier but adoption rates low Lack of value proposition Highly favorable medical value story for the product Favorable medical value story for the product Coverage issues for the product

Economic Evidence

Net neutral

Net negative

Little or no justification for market acceptance Low

High
Clinical Evidence

Companion Diagnostics An emerging trend

One approach thats getting increased attention is the integration of diagnostic tests to drive healthcare decision making. Companion diagnostics are diagnostic products that can identify patients most suitable for therapy, stratify patient risk, and guide treatment modifications.

Therapy

Companion Diagnostic

Targeted Therapy

Rationalizing Treatment Decisions with Companion Diagnostics

Diagnostic test Stand-alone diagnostic value
Diagnostic helps in identifying the disease condition earlier or achieving a definitive diagnosis leading to treatment initiation

Companion diagnostic + Treatment Treatment selection

EFFICACY: CDs helps identify patients that are most likely to be responders and non-responders to a treatment. SAFETY: CDs helps in patient risk stratification, i.e. identify patients more or less susceptible to AEs

Optimizing treatment dosing

CDs helps in improving the efficacy of drug through optimized drug dosing, especially for drugs having a narrow therapeutic index and a dose-limiting toxicity profile

Treatment monitoring / modification

CDs helps in monitoring the progression of the disease during the drug treatment If disease is progressing, the diagnostic can guide treatment modification

The Value Proposition of Companion Diagnostics

The right treatment, using the right tests for the right patient Drive rational healthcare resource utilization

Clinical Value
CDs can inform: Appropriate responder selection Patient risk stratification Therapy dose and duration

Economic Value

Medical Value Story

CDs can drive: Rational resource utilization Cost savings Reduced budget impact

CDs can drive: Improved clinical outcomes Rationalize healthcare decisions Cost effectiveness in healthcare

The Business Rationale for Various Stakeholders

Drive rational utilization of healthcare resources Generate savings through appropriate Rx utilization

Improve health outcomes and quality of life by avoiding drug treatments that are ineffective and / or unnecessary

Payors

Patients

Manufacturers
Develop Rxcompanion Dx strategy to maximize the value and ROI of assets throughout the product lifecycle

Providers
Educate and facilitate appropriate utilization of treatments driven by evidence (right tests, right patients, right time)

Companion Diagnostics: Success Stories and the Cost of Not Doing

HER2neu for Herceptin
Herceptin (trastazumab) a monoclonal antibody active against the Her2-neu receptor. The diagnostic test for HER2-neu determines which patients should receive the drug Herceptin. The incorporation of the CD in Herceptin clinical trials was considered pivotal in the drugs approval and uptake.

K-RAS for Erbitux and Vectibix

The diagnostic test for K-RAS mutation can identify patients with colorectal cancer that will not respond to treatment with panitumumab (Vectibix) and cetuximab ( Erbitux). Patients with K-RAS mutations are not responsive to Erbitux and Vectibix. K-RAS testing is now routinely conducted in the U.S. for treatment selection of Erbitux and Vectibix.

Avastin in Breast Cancer

2008
US FDA approved Avastin for Breast Cancer based on one study suggesting it halted the spread of breast cancer for more than five months when combined with chemotherapy. NICE denies coverage.

2010
Follow-up studies showed that the delay lasted no more than three months, and patients suffered dangerous side effects. FDA recommendation to remove breast cancer indication from the label for Avastin.

2011
In FDA appeal, Genentech proposed a biomarker strategy to keep available for best responders. Genentech is proposing to conduct a RCT including a biomarker

Source: http://www.springerlink.com/content/r70g303550wu256v/ Accessed September 13 2011 http://blogs.wsj.com/health/2009/07/20/erbitux-vectibix-label-change-approved-for-kras-gene/ Accessed September 13 2011 http://www.npr.org/blogs/health/2011/06/29/137493653/avastin-as-breast-cancer-treatment-tests-fdas-ability-to-say-no Accessed September 13 2011 http://www.reuters.com/article/2010/07/08/us-roche-avastin-idUSTRE6676AP20100708 Accessed September 13 2011

Commercializing Companion Diagnostics

Facilitators and Barriers

Rapid advances in science and technology Emphasis by the FDA and EMEA on greater use of biomarkers and companion diagnostics. Evolving regulatory requirements for Laboratory developed Tests (LDTs) and In-vitro diagnostics (IVDs). Payers are beginning to require prior authorization for the most expensive oncology therapeutics.

The biology gap. Clinical cut-offs remain challenging. Regulatory policies and pathways for therapies and companion diagnostics are not aligned. Historically low reimbursement for diagnostics. Companion diagnostics typically funded by Rx company which needs for approval and/or adoption of new therapeutic.

Facilitators

Barriers

Real World Comments

Illustrative quotes from Pharma Execs

Positives

Negatives

Personalized medicine in the way of the future. No doubt about it. My company just started a new department called Personalized Medicine it s getting a lot of attention in the organization. Weve been getting a lot of push back from payers targeted therapies should help.

Why would I use a diagnostic to tell the physician who should NOT receive my product? Why would I limit my market share?? The clinical team at Pharma X gets it; but the commercial team doesnt I see the science-value of CDx, but what is its business value?? What is my economic motivation to invest in PM?

Case Study 1
Commercial Assessment for a Companion Diagnostic for a Neurological Condition

Disease Modifying Therapy (PRODUCT X)

(TEST Z)

Companion Diagnostic

Targeted Therapy for Neurological condition

Case Study 1: Commercial Backdrop

Product X, currently in clinical trials, has the potential to be among the first disease modifying agents (DMAs) for a neurological condition. This therapy area is poorly served by marginally effective symptomatic therapies. Costs associated with this neurological condition are well acknowledged to be astronomical. Test Z, under development by an imaging diagnostic manufacturer, can identify the onset of the neurological condition, with greater accuracy and less subjectivity than currently used tests. A key question we sought to answer was: Should the manufacturer of Product X acquire Test Z as a companion diagnostic? To address this question, we designed a multi-stakeholder study with KOLs, physicians and payers.

Case Study 1: Clinical Evidence for Test Z

Physicians and Payers value Test Z because it provides accurate and objective diagnosis, eliminating ambiguity in identifying patients with the condition, and allowing for early therapy intervention. But opinions vary in terms of timing of launch Prior to Launch of DMA Physicians welcome Test Z touting its utility in informing patients. However, given the lack of DMAs for the neurological condition, payers feel Test Z would have no clinical utility. Physician to mention that their treatment algorithm would not change as a result of Test Z. Post DMA Launch Once a DMA enters into the market, Test Z would have a higher clinical utility as it would help in earlier diagnosis of the condition.

Case Study 1: Economic Evidence for Test Z

The entry of effective DMAs would change the game entirely for payers and physicians.

Prior to Launch of DMA In the absence of a DMA, payers considered the test to be a net negative and were unwilling to cover it. It is a cost to the system without a benefit whats the use? If the patient still cannot be treated, how does the test help?

After Launch of DMA Once the DMA entered the market, payers see its value in providing rationalization for restricted access to the DMA, which was expected to be a very expensive medication. However, even then, timing of patients 1st presentation is key and may impact coverage.

Case Study 1: Commercial Assessment

It became clear that the commercial opportunity was significantly smaller than originally envisioned as coverage would be restricted prior to availability of a DMA. Post launch of a DMA, Text Z would have a higher commercial opportunity.
Launch of DMA Can we capture this value? Test Z Patent Exclusivity ends

Size of Test Zs Market Opportunity

* While physicians see the value, payers will push back.

Time

Case Study 1: Commercial Assessment

Test Zs success then hinges critically upon the availability of the DMA.
Net Positive Lower payer barrier but adoption rates low Lack of value proposition Favorable medical value story for the product Favorable medical value story for the product Coverage issues for the product

Value proposition of Test Z after DMA is available

Economic Net Evidence Neutral

Net Negative

Little or no justification for market acceptance Low

Clinical Evidence

High

Value proposition of Test Z prior to the DMA

Case Study 2
Value Proposition for an Oncology Product in Combination with a Companion Diagnostic

Oncology Product (PRODUCT A)

(TEST B)

Companion Diagnostic

Improved Efficacy, Better Safety

Treat only responders Improve clinical outcomes (survival, PFS) Limit side effects to responders only Reduce overall spend

Case Study 2: Commercial Backdrop

Product A, is an oncology product, currently in development. Product A demonstrates a moderate overall survival (OS) and progression free survival (PFS) over existing standard of care (SOC), with a slightly higher toxicity profile. Subsequently, Test B was identified that could identify the sub-set patient population that were responders to Product A. Strong sensitivity and specificity of Test B. Product A demonstrated a superior OS and PFS in responders than in non-responders (significantly higher than without Test B). A key question we sought to answer was: What is the incremental value proposition of Product A + Test B, versus Product A alone? To address this question, we designed a multi-stakeholder study with oncologists and payers.

Case Study 2: Clinical Evidence for Test B

Oncologists and Payers identify the clinical advantages of using Test B - to identify treatment responders and non-responders to Product A. Product A, by itself Product As high toxicity profile for all patients outweighs its moderate OS and PFS benefits. As a result, by itself, Product A does not generate much interest among oncologists and payers. Likelihood to recommend and prescribe are low Product A + Test B Test B is a game changer , allowing oncologists to identify likely non-responders, and preventing them from needlessly being exposed to Product As toxicity with no therapeutic benefit.

Case Study 2: Economic Evidence for Test B

Availability of Test B provides a cost-justification to the use of Product A making it more likely for Product A to get reimbursed upon approval. Product A, by itself Payers question the cost effectiveness of Product A, particularly if it is prescribed for a large number of patients who will realize no therapeutic benefit but experience toxic side effects. Product A + Test B Test B rationalizes use of Product A in payers eyes, making its approval and reimbursement a slam dunk to nearly all payers interviewed.

Case Study 2: Value Proposition Assessment

Product As value proposition is limited without Test B, strong with Test B.

Net Positive Lower payer barrier but adoption rates low Lack of value proposition Favorable medical value story for the product Favorable medical value story for the product Coverage issues for the product

Value proposition of Product A + Test B

Economic Net Evidence Neutral

Net Negative

Little or no justification for market acceptance Low

Clinical Evidence

High

Value proposition of Product A by itself

Case Study 2: Making the Case

Test B not only improves the value proposition of Product A, but also allows Product A to command a higher price point (than with Product A alone).
Product A, by itself could be priced below the current SOCs. With Test B, Product A can now be priced at par to SOCs or at a 30% premium to current SOC (depending on the country).

So do the positives make a slam dunk case for a companion diagnostic for Product A + Test B? NOT SO FAST!

Case Study 2: Making the Case

Many concerns were mentioned upon scrutinizing the process required: The logistics of using Test B are challenging.
Oncologists perceive shipping samples to specialty testing labs as barriers that will reduce use

Clinical cut off points are difficult to understand and interpret in clinical practice
If a patient did not reach the clinically validated cut off value, but came close, should the physician deny treatment? Moral hazard and liability issues were raised by both physicians and payers. The tests sensitivity and specificity were called into question.

Case Study 2: Making the Case

Ultimately, it comes to the pricing model. How should the companion diagnostic combination be paid for? Should Test B be made available free of cost? Thats unfair to the diagnostic test manufacturer. Payers push back on paying for treatment costs related to non-responders. Payers demand pay for performance model Pricing model between oncology and diagnostic company is tested. Pricing model between manufacturers and payers falls apart. The million dollar question: while the companion diagnostic makes clinical sense does it make economic sense?

Closing Comments
The pairing of companion diagnostics and therapies present a new way of patient treatment the right medication to the right patient. The market place understands the medical rationale But the economics are as yet under-developed Pricing models, risk sharing schemes, pay for performance needs to be clarified All stake holders need to benefit to facilitate progress: Pharma / biotech companies Diagnostic companies Physicians Payers

Closing Comments
What will the future bring us? Some safe predictions:
Advances in science will make more companion diagnostics available. Evolving regulatory guidelines and cost-constraints on health care stakeholders will further drive the need for companion diagnostics and therapies. What remains to be seen: How will adoption models work? Who will bear the costs of development and share the risk burden? Who will educate and train physicians?

Closing Comments
We believe that the commercialization process will remain challenging but that industry has few alternative choices.
As seen in the two case studies, the commercialization of companion diagnostics and therapies is not a straight forward process. Several other examples speak to the challenges and good technologies dying on the vine.

Closing Comments
Successful companies will be those that can effectively:

Clarify the business model

Articulate the true clinical and economic value of the companion diagnostics

Develop winwin strategies for market access and

Communicate with physicians, payers, PBMs and patients to drive adoption.

Contacts
Nandini Hadker Managing Director, Commercial Strategy United BioSource Corporation nandini.hadker@unitedbiosource.com James Parrish Director, Business Development Pfizer james.parrish@pfizer.com Michael Epstein Director, Commercial Strategy United BioSource Corporation michael.epstein@unitedbiosource.com