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Wednesday, August 10, 2011

Good Data? $100. Good Product Development? $100. Good Commercialization Strategy? Priceless.

I'm not going to fool anyone into believing I'm a therapeutic product development expert but that's not going to stop me from making a few humble observations in light of the Dendreon "fiasco" of last week which I have no doubt will one day be considered an unfortunate pothole on their road to eventual success.

(though perhaps not before certain current management finds themselves polishing their CVs or retiring to spend their time alternating between their yachts and the courtroom defending their questionable stock trading antics)

I received the following message this morning by email. I don't include it here to promote or endorse or even comment on NWBT, DCVax, Linda Powers, or Toucan Capital in any way -- or in a way that is blind to all the things right or wrong about any of them -- but simply to illustrate the 3 points I want to make below the email.


Northwest Biotherapeutics' (OTC.BB: NWBO)... DCVax® immune therapies for a broad range of cancers (including prostate, brain, ovarian and others) hold the promise, based on available data to date, of being cost effective and priced below other immune therapies while still providing substantial profit margins for the Company and longer survival for patients.

The investor concerns in the news relate to the pricing and reimbursement of Provenge for late stage, metastatic prostate cancer. Provenge is priced at $93,000 for one month of treatment and was approved by the FDA based upon having added 4.5 months of patient survival (to reach overall survival of 25.9 months).

NWBT’s DCVax® will be priced in the range of $37,000 per year for up to 3 years of treatments. In NWBT’s Phase I/II multi-center clinical trial in late stage, metastatic prostate cancer, DCVax® added 18 months of patient survival (to reach overall survival of 38.7 months). DCVax® has previously been cleared by the FDA for a 612-patient, randomized, controlled Phase III trial, although the trial has not yet begun. As is typical before a Phase III trial, the manufacturing processes and product costs have already been determined.

The key to the substantial pricing advantage of DCVax® is NWBT’s proprietary batch manufacturing process together with its cryopreservation technology for frozen storage of the finished vaccine. NWBT has spent a decade developing and improving its manufacturing and cryopreservation processes. The manufacturing of personalized, living cell products is expensive. But the frozen storage of living cells is quite low-cost – once the specialized freezing technology is worked out for a particular type of cells (the culture conditions, rate of freezing, density of cells and many other factors).

NWBT’s manufacturing methods produce – in a single manufacturing run – a large batch of personalized DCVax® product for 3 years of treatments are much less costly than separate manufacturing runs for each treatment. The technology for freezing the master immune cells (dendritic cells) which comprise DCVax® enables these
cells to remain frozen for years and, when needed, to be thawed and “come back to life” with full potency.

This approach makes DCVax® an "off the shelf” product [for that patient] for several years of treatments after just one manufacturing run. In contrast, Dendreon must do a separate manufacturing run for each one month of treatments. In addition, Dendreon's Provenge product is fresh and not cryopreserved, which limits its shelf life to at most a few weeks.

Another important factor in the cost effectiveness of DCVax® is its simplicity and ease of administration. DCVax® is delivered as a small intra-dermal injection under the skin, similar to a flu shot. As such, it can be administered in any physician’s office or clinic. There is no lengthy intravenous infusion, with the attendant patient discomfort, cost and need for a specialty infusion center. In contrast, Dendreon’s Provenge is delivered by intravenous infusion.

The cost effectiveness of NWBT’s DCVax® is enhanced by the fact that DCVax® is targeting a portion of the prostate cancer market that is 4 times the size of the market segment that Dendreon’s Provenge is currently targeting....

Now this is NWBT clearly blowing their horn - nothing wrong with that - in an attempt to woo back frightened investors. I'm agnostic as to whether any of it is true but it does serve to draw out several points of distinction between what some companies might do to optimize their products for commercial success versus what others might do in an overriding belief that clinical benefit is the only precursor to the happiness of investors, the physician community, patients, and partners.

What I say below is not a commentary, in criticism or praise, on any particular company including NWBT or Dendreon. Many others - Luke Timmerman among the best of them - have provided outstanding and in-depth analysis of the Dendreon story along the way.

I'm only interested in what we as an industry might learn from recent experiences or trends and to perhaps facilitate a useful discussion based on 3 simple observations from someone who has swum in this cell therapy pond for now just over a decade:

1. There is a tendency among some to believe that what we are making (cell-based therapies) are so revolutionary and compelling that the products should almost sell themselves - to investors, partners, regulators, insurers, physicians, and patients.

Of course we know it's not true but sometime we act like it is.

Appligraf and Dermagraft didn't sell themselves to physicians even after regulatory approval. Neither is Provenge apparently-- though they did a good job of selling it to very vocal patient groups. Organogenesis and Advanced Biohealing had to work very long and hard to get profitable reimbursement and market penetration. Dendreon will too.

Investing early in understanding potential clinical adoption hurdles, reimbursement issues, and how the product is and will be perceived not by its champions but by its critics and most importantly, the average agnostic practitioner, is not easy to do because it means spending precious resources long before there is a product to sell but it may mean the difference between a product which eventually sells and one which doesn't.

2. There is a tendency to de-emphasize what I call the "ancillary sciences" around a product -- like lowering the cost of goods, optimizing fresh or frozen storage, cell delivery (e.g., injection/application science) mechanisms, in vivo cell tracking, onsite clinical handling, etc.

Product development science is a science. The science that turns good data into something commercially viable. Not everyone is good at it and certainly this is where a lot of companies fail. PD is not the 'second cousin' in the room of esteemed basic and clinical science.

Take these examples when considering the cellular immunotherapy sector:

Several prominent immunotherapy investigators I have spoken with strongly believe cell-based immunotherapies will require long-term administration to be meaningfully effective -- certainly longer than 3 doses in 3 months. Did Dendreon lock into their clinical protocol too early?

Other immunotherapy companies - like Opexa Therapeutics for instance - create multiple doses for a patient from a single patient collection thus saving considerable expense and creating a better patient experience. Did Dendreon lock into their manufacturing protocol too early?

Other companies are investing heavily in finding ways to extend viable shelf-life of their fresh products or to create cryopreserved versions of their product to optimize its commercial viability.

Imagine a Dendreon that only had to build one manufacturing facility (with a backup CMO) to serve the US market rather than 3 facilities. With a cryopreserved version of the product or a version that had longer than its current limited shelf-life (~72 hours I believe?) that might have been possible.

At every point in clinical development there must be concurrent R&D towards the product's:
  1. science (e.g., MOA, characterization, etc),
  2. clinical effect, and
  3. how to optimize its commercial viability - a big part of which is what we think of as 'product development'.
This is the 3-legged footstool of a commercialization strategy geared for success (credit to Bob Preti of Progenitor Cell Therapy for this analogy).

But 'product development' is also not always about the product strictly speaking and even an expansive definition of product development is only part of a good commercialization strategy.

There is significant component of it that is about studying ways to lower the cost of goods, improving manufacturability and scalability, how hard/easy it is to handle, the patient treatment experience, the physician experience, how it impacts patient's QOL (quality of life), not just what side effects it generates but what side effects it prevents (resulting from other treatments or no treatment) and the cost-savings that generates, etc.

Other cell therapy companies have been more proactive in terms of engaging not only KOLs but average practitioners in a meaningful way that might impact their product and clinical design as well as reimbursement and clinical delivery issues.

3. There is an understandable, largely VC-driven, desire to race forward to the next trial phase when a phase-repeat to optimize or better understand different aspects of the product might be the better way to go.

What's worse? Facing the prospect of not being able to get funding or a partner on the terms one wants for a 2nd phase II or burning through a bunch more money in phase III in an attempt to bring a product to market that isn't market ready? I understand its a tough choice -I'm not saying it's an easy one - but one is certainly more strategic and, as pharma says, is certainly a "de-risking" pathway.

Consider the ratio of products we've seen thus far in the cell therapy industry's short life-span that have been raced to phase III or (worse yet) market only to seriously stumble if not fail when they get there. I can think of 8-10 off the top of my head and there are less than 20 cell or tissue based therapies on the market in US/EU that have received any kind of formal regulatory approval.

Some would argue that this is a prime example of why spinning companies out of academia too early is not beneficial because companies want to minimize exploratory science and lock into a "product" too early. I would argue that this may be true if the problem is understanding the product characterization or mechanism of action but not if your problem is related to how best to develop/optimize the product for commercial viability. Few academics are geared to think this way.


I certainly don't believe Dendreon failed to identify or consider each and every one of the things they might have done better along the way. I'm sure they did and sure they made calculated judgement-calls about how to approach each one.

Since I'm not a shareholder I don't have to worry myself about being critical of their decisions but rather simply to do what I can to ensure that we as an industry do our best to learn from what - with the benefit of retrospect - may be apparent they did right and wrong.

What are your thoughts? To what extent are the problems that Dendreon has experienced along the way with PROVENGE a predicable result of it being a first-generation product or the result of insufficient focus on critical investigation into the less sexy "ancillary sciences" of product and commercial optimization?

(comment below and/or in the LinkedIn Cell Therapy Industry Group)