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Small biotechs with big drug ambitions threaten to upend the traditional drug launch playbook

25 Jan 2022

Of the countless decisions Vlad Coric had to make as Biohaven’s CEO over the past seven years, there was one that felt particularly nerve-wracking: Instead of selling to a Big Pharma, the company decided it would commercialize its migraine drug itself.

"I remember some investors yelling and pounding on the table like, you can't do this. What are you thinking? You're going to get crushed by AbbVie," he recalled.

To be sure, the naysayers — Coric reckons a quarter or more of Biohaven's total investors shared those opinions — had good reason to be skeptical. The New Haven-based Yale spinout, newly public following a 2017 IPO with a headcount of fewer than 100, wouldn't just be fielding its first commercial launch but crashing right into AbbVie, the pharma behemoth behind the world's best-selling drug, Humira, in the oral CGRP corner of the migraine space.

Biohaven is far from alone in its ambitions to go it alone but is in a small club of companies to pull it off. In an analysis published last February, McKinsey analysts reviewed all new drugs approved by the FDA from 2014 to 2017 and found that first-time launchers were much less likely than their experienced counterparts to meet their sales forecasts. Out of 28 first-time launchers, 61% of them failed to deliver on revenue expectations, compared to 51% of the experienced launchers.

Still, and perhaps more importantly, is that even when experienced launchers missed the mark, they tend not to be far off. The median sales they ultimately achieved as a group was 93% of the sales forecasts.

For first-time launchers, it’s a “meaningful gap,” said study author Pablo Salazar, who leads McKinsey’s North America launch service line — with a “median achievement of expected forecasts” of 63%.

Except Biohaven proved itself.

Launching its brand, Nurtec, two months after AbbVie’s Ubrelvy and at the beginning of the Covid-19 pandemic, Biohaven racked up $63 million of sales marketing the drug for the acute treatment of migraines in 2020, then surprised Wall Street with product revenue that far exceeded consensus estimates halfway through 2021 after bagging another approval in the prevention setting.

It’s tempting to read Biohaven’s as a David versus Goliath story. But that would belie the broader biopharma narrative where a multitude of Davids start to outnumber the Goliaths. Not all of them will beat the giant — indeed many of them don’t set out to — yet their fates could have major implications for how future generations imagine the business of drug development and commercialization.

And if David keeps winning, what will become of Goliath?

'Stop partnering with Big Pharma'

As Salazar, the McKinsey partner, tells it, the impetus to write a report on first-time launchers in the pharma industry was really to quantify and codify something he was noticing over his decade of experience advising drugmakers on their commercial strategy.

“My life, maybe five or six years ago, was usually to help a large pharma co with a very large pipeline. The challenge was, you know, you have 10 launches in the next three years, how do you develop capabilities,” he said. Soon enough, though, “we had the realization that now most of the work that we do was companies going through this transition from R&D to commercial.”

Taking a step back, his team realized it’s not just their consulting firm, either. While Big Pharma once held a monopoly to the idea of commercialization, teaming up with smaller companies or snapping up license rights to promising drugs — if not outright buying them out — before they cross the regulatory finish line, in exchange for an outsize percentage of sales, they began losing the tight grip.

It was a reasonable deal for those biotechs, according to Tim Moore, a longtime commercialization consultant who spent 13 years at Pfizer’s sales organization, because they’d “rather have 40% of a giant pot than 100% of a small pot.”

The way Moore sees it, efforts by managed care and insurance companies to put a lid on drug prices — thus seriously hindering pharma’s ability to move a drug — changed the equation.

“Somewhere around five to 10 years ago, the PE firms and the investment firms that were investing in these said, ‘Well, hold on,’” he said. “Stop partnering with Big Pharma; it’s no longer financially useful.”

Other factors were in play. The McKinsey report notes that a mix of capital influx into the biotech sector, talent exodus following megamergers and dramatic growth of vendors all swelled the ranks of first-time launchers.

Then there’s the rise of rare disease and orphan drugs to consider, which allows for a different set of parameters where companies with fewer resources can still go it alone.

In his former life, Max Colao led the commercialization of Enbrel for Amgen. The $4 billion drug commanded a field salesforce size of 200-plus — not counting the associated teams — with TV advertising, direct to patient spending and outside expenses adding up to a $300 million or $400 million infrastructure.

Colao, who’s now the chief commercial officer of Aurinia in charge of marketing Lupkynis for lupus nephritis, notes that in rare disease, “You can scale up a team as low as 30 people in the field. 100 people is really a big team for rare disease.”

"I’ve launched in rare diseases where you can launch with a $20, $30 million infrastructure, with a $40 million infrastructure,” he said. “So it starts to make commercial sense, especially if you can get a price point that is a rare disease price point."

No matter the reason, the result is stark. By McKinsey’s estimates, from 2006 to 2018, the share of launches by first-time launchers more than tripled.

'They just started way too late'

So why do certain drugs that look so promising in the biotech late-stage pipeline fail to blossom?

“It’s a multifactorial issue of they don’t have enough money, they don’t have enough time, they don’t have the right people,” said Moore, whose role now at Indegene is to assist emerging biotechs with launches. “And so they’re behind the eight ball so to speak, they’re behind in every facet of the commercialization.”

Biotechs, after all, often must build a whole infrastructure from scratch rather than plugging a new drug into a launch machine as pharma can.

The initial hires are often crucial, but with hundreds of up-and-coming biotechs popping out each year, there are simply not enough experienced drug launchers to go around them.

Earning insight into the market — the competitive environment, treatment realities, how patients and physicians feel about the disease — costs time and money, and often requires companies to go beyond the KOL physicians and tap the perspectives of those at the frontline of care, Franco noted.

“When I’ve done the benchmarking in terms of commercialization and startups and and looking at, you know, the ones that did really, really well and the ones that didn’t, there were a lot of common themes,” said Colao, the Aurinia CCO. “The ones that didn’t do well, (many of them) just started way too late.”

But biotechs are starting to pick up on those common mistakes and lessons, according to Franco. Many are putting in the effort and money to hire a chief commercial officers or marketing directors months or years before launch.

“They recognize that it’s not like they’re going to be sitting around twiddling their thumbs,” she said. “There’s a lot of work to be done.”

'The product really ended up selling itself'

For Argenx, the preparation for commercialization began before any of the pivotal readouts proving its rare disease drug worked.

Keith Wood, the chief operating officer, recalls he got a call in 2017 from founder and CEO Tim Van Hauwermeiren, who relayed two pieces of advice he had gotten if he wanted to build a real, global company: Get listed on Nasdaq, and start thinking about commercialization.

The first indication Argenx had targeted with its drug, Vyvgart, was myasthenia gravis, a rare chronic disease marked by muscle weakness, often affecting the eyes and eyelids. Patients could have trouble with their facial expressions, chewing, swallowing and speaking.

“So when we very first had the results from our myasthenia gravis Phase II, one of the first places we went was to the patients,” Wood said. “We went and met with the [Myasthenia Gravis Foundation of America]. And we were put together with focus groups of patients, and we shared the data with them.”

The feedback they got there ultimately shaped how Argenx designed the Phase III trial that cemented the approval in December. Throughout the launch prepartion, Wood’s mantra of being patient-focused translated into learning, awareness raising and community building exercises like creating a docu series reflecting the everyday lives of MG patients, creating an unbranded online community of patients and their caregivers or families, developing an app for real-time patient support, launching a real-world evidence trial, among others.

Once physicians become more familiar with a rare disease, it helps that there are no other options, said Colao, who also had a stint at Alexion.

“We would spend, I would say, 90% of our time and effort educating around the disease, not educating about the product,” he said, speaking about his time at the rare disease specialist. “The product really ended up selling itself.”

A lot of times, added Salazar, these rare disease companies are operating in areas where large pharma companies are not willing to take the risk.

“I think once we would look into it, we were excited to see that part of the picture was also much like a role in biotech commercializing assets that might not be a natural fit for another company,” he said.

However, as disappointing launches — think Esperion, Clovis — shows, though, in some cases competition is unavoidable. And it’s not a journey for the faint hearted.

'We'd go bankrupt'

When Zoom started taking over everyday conversations and entering the lexicon as a verb on par with Google, Coric felt like seeing a close friend on TV.

The company had been using Zoom since 2015, after the Biohaven chief was first introduced to the software while meeting with investors at Third Rock. Deeply impressed, he added a Zoom account to every Biohaven employee’s starter package — alongside a suite of other digital tools that allowed them to communicate seamlessly even if they were working remotely.

The digital-first mindset permeates the rest of the marketing campaign for Nurtec, according to the CEO, who is fond of the term “modernizing” the launch.

Admittedly, Biohaven didn’t have a lot of time — Coric exacerbated the time crunch when he bought a priority review voucher to accelerate — but what they lacked in resources, they made up for in new tactics such as shorter TV ads (“Do you know there’s never been a 15-second pharma commercial?”), so called omnichannel marketing (being present on every platform a patient may be on), celebrity spokespeople (Khloé Kardashian and Whoopi) and sales reps well versed in digital engagement.

Whereas AbbVie took two months to adopt to the pandemic normal, Coric said Biohaven’s salesforce, which was about a third of the size of AbbVie’s, hit the ground running.

“You have to innovate to really compete against the bigger companies,” he said. “You can’t take their strategy. We’d go bankrupt if we tried to have the same type of commercial footprints and our competitor or spend the same amount on advertising.”

While Big Pharma budgets could offer the luxury of trying out a number of things, small biotechs see a bigger need to be right the first time, or at least spend less money trying — but not so little that you get drowned out by rivals.

It is a balance Colao tries hard to strike every day, as Aurinia’s Lupkynis competes directly with GlaxoSmithKline’s Benlysta. Oftentimes, it’s not just about the promotional channels and getting patients or physicians to remember your products’ defining attributes. One of the lessons they learned from the Lupkynis launch, for instance, is that payers are demanding more documentation and justification for reimbursement. And it can be especially trying on medical centers during Covid, when staffing is stretched thin.

“So the implications for us is we actually have to provide a lot more support than what we anticipated to make things easy and smooth,” he said.

'The game has changed'

Almost a year into his new job at Indegene as the SVP of emerging biotech development & commercialization, Moore’s biggest challenge isn’t what he had imagined.

“It’s just literally exploding,” he said. “My biggest challenge is fielding all the requests. It’s not the problem I expected when I started to build this business. I expected it would be how do I find them — in reality it’s been the exact opposite. They’re calling us.”

They’re calling for digital marketing support, for pharmacovigilance work, for ways to get to patients and healthcare providers, for information on the newest channels, for insights on integrating artificial intelligence — for high-level, cutting-edge tools that small companies just couldn’t do on their own. The alternative would be going back to Big Pharma partners or hire separate vendors for each task and end up with 15 different partners to manage.

Moore calls this contract operations. Much like his counterparts in contract research organizations, contract development and manufacturing organizations and contract sales organizations, he believes outsourcing is a small player’s best bet at tapping the newest, field-tested technologies and capabilities — at scale.

"All we’re doing now is taking that very next step," he said.

The tides aren’t just pushing small startups forward. Maureen Franco, the marketing consultant, believes the talent shift, field force effectiveness and expansion of channels will force a fundamental rethink on traditional pharma marketing.

“The game has changed for everybody,” she said.

Author: Amber Tong, Senior Editor, Endpoint News

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