Pfizer’s bounce back?

Dr. John LaMattina, President of Global R&D at Pfizer, on life after torcetrapib and his optimism for the largest pipeline in history.

By Leslie Knudson

If you’re the world’s largest drug maker, losing one hopeful Phase III candidate amid a sea of research projects spanning 11 therapeutic areas should barely make you flinch. But when it’s designed to help fight the leading cause of death in the US and is expected to surpass your largest selling drug ever, which also happens to be facing the end of its heydays due to pending patent loss as early as 2010? Then add the fact that everyone – investors included – had heard all the rave about its star potential and was banking on it to help revive the lackluster, blockbuster-craving industry.

This was the case for global pharma giant Pfizer, which ended 2006 with a bang when it received the news last December that its late phase experimental drug, torcetrapib, designed to treat heart disease, was doing more harm than good. Pfizer pulled the drug from clinical trials after findings showed that more people had died that had taken torcetrapib than those who hadn’t. Now all eyes are on Pfizer to see how the biggest of big pharma will find momentum in 2007.

Big blow, big comeback?

To say it was a shocking disappointment would be an understatement. Just days prior, Pfizer CEO Jeffrey Kindler was hailing torcetrapib as one of the most important developments for heart disease in decades. With heart disease wiping out approximately 910,000 of the US population every year, having to pull the plug defeated hopes for sufferers, scientists and investors, along with everyone at Pfizer.

“Torcetrapib was an experimental medicine founded on a well-described hypothesis and some superb science,” LaMattina says. “It passed appropriate milestones; and progress was judged by our scientists and external experts, using state-of-the-art technologies and metrics. Against all the odds, the final analysis came out against us and that was a surprise to our own team and to the many eminent scientists and clinicians who advised us and participated in the trials.”

After pouring nearly $1 billion R&D dollars into a 15,000 patient study, and with fingers crossed for a 2007 approval, the most discouraging part of the outcome was that it brought into question the validity of how the drug worked. Torcetrapib was among an elite class of drugs working to fight cholesterol by raising HDL (good cholesterol) levels and thereby inhibiting the production of LDL (bad cholesterol) levels. “This was a huge disappointment for patients with heart disease, for our scientists, and for clinicians because we were testing a hypothesis that represented a wholly new way to treat the most common cause of death,” LaMattina admits.

The notion of raising HDL levels is an innovative theory expected to make significant strides in the heart disease arena. Yet torcetrapib had one major fault going into the late phase studies – not only did it raise HDL, it also raised blood pressure – a severe side effect for patients already experiencing heart-related ailments. Scientists are hoping that this side effect can be attributed to the trial failure and not impede future success of drug models designed to increase HDL.

The fallout of torcetrapib taught two very important lessons. One goes back to the age-old saying of ‘don’t have all your eggs in one basket’ – or in this case, don’t put one very large egg in your favorite basket. The other lesson brings into question the practice of over-praising a not-yet-there drug. To continue the theme: don’t count your chickens before they hatch.

After undergoing criticism for ‘overpromising’ on the drug, the natural assumption would be that Pfizer, having learned its lesson, would keep its lips sealed from now on about what was coming down the pipeline. But in fact, Pfizer did just the opposite. Since that time, Pfizer has disclosed more detail than ever on its pipeline, going so far as to even designate a page on its website strictly for tracking development compounds. At www.pfizer.com/pipeline, you can view the compound name, therapeutic area, mechanism of action and indication of pipeline candidates.

The bold move – whether to quell over-anticipation or pique investors’ interest again – seems to be a step in the right direction. Spreading interest across the board should help Pfizer escape another torcetrapib episode and clarify any ambiguity in its pipeline promises.

Ramping up R&D

The monetary setback from the trial failure along with the overall wavering productivity of R&D felt across the industry required more than just a see-through pipeline to kick-start the organization. After having spent nearly $7.5 billion on R&D in 2006 alone, Pfizer is making a significant overhaul of its division model [see also: “The downsizing solution”, page XX].

In January, Pfizer announced it would be cutting 10,000 jobs and closing a number of R&D and manufacturing facilities: including research sites in Michigan, Japan and France, two manufacturing plants in New York and Nebraska. It also plans to sell another manufacturing site in Germany.

According to LaMattina, shifting investments from brick and mortar to R&D should allow Pfizer to, “deliver more products of more value, more rapidly while maintaining the same level of investment.” LaMattina estimates that they will be able to reallocate hundreds of millions of dollars while reducing the budget for support staff and facilities by 20 percent.

“With a flat budget, we have a financial challenge because the most expensive component of R&D is late-stage development,” LaMattina says. “Our response is to find the right way to fund an increasing number of clinical trial programs without busting our budget. Through various acquisitions, Pfizer had inherited an overly-complex R&D site network so we acted to simplify that structure, close some sites and transfer spending from infrastructure to science.”

Plans to maximize its R&D investment also include consolidating research teams focused on a therapeutic area to one of four major sites. The one-site-per-therapeutic area strategy aims to gift leaders with more autonomy and control for better communications and decision-making. In addition, more activities will be outsourced at each site. Over the next few years, Pfizer expects to double drug production outsourcing.

As ailing R&D productivity across the industry calls for significant cost reduction moves – Pfizer’s division remodeling should serve as an example for other pharma companies to apply creativity to introduce new cost efficiencies. With industry-wide spending on R&D estimated to be a whopping $31 billion annually, there’s no question that many need to follow suit.

Pfizer hopes that the overall savings will help fund their burgeoning late-stage portfolio, along with their investments in biotherapeutics and third-party collaborations. “We are already a major player in biotherapeutics, and we plan to increase the output of candidates in this area to 20 percent of our internal portfolio,” LaMattina says. “Within the next 10 years, we could have one biotherapeutic launch a year. We’ll see new vaccines, antibodies and other large molecules.”

Regardless of the extent of savings, scale is still on its side. “We have 18 compounds in advanced development or registration and about 170 more in early and mid-stage development. Pfizer’s scale is a significant advantage. It allows us to make major plays, like torcetrapib, to manage disappointment, to apply lessons learned and to quickly move on to other promising programs. Our pipeline of new medicines is the largest in the industry, focusing on a broad range of unmet medical needs spanning 11 therapeutic areas.”

Pipeline dreams

While no one doubts its ability to pump out a lineup, the question now is whether its current pipeline will be enough to offset the billions of dollars lost each year due to expiring patents. Claiming about 170 new molecular entities in the pipeline, Pfizer is optimistic about its diverse pipeline across a wide variety of therapeutic areas. While Pfizer isn’t naming any favorites – undoubtedly a wise decision – they recently shared with investors and analysts new data from three therapeutic areas.

“Our metabolic disease group is making outstanding progress with three different approaches to obesity: anorectics, thermogenic/metabolic stimulants and absorption inhibitors,” LaMattina says. “Similarly, in diabetes, we have discovery candidates across three treatment approaches. We are working against osteoporosis and bone fracture healing and we described a promising candidate against thrombosis from our cardiovascular group.”

With one of the industry’s leading cancer programs, researchers at Pfizer are tackling 30 individual targets, which account for 70 percent of cancer deaths. In the neurosciences area, Pfizer is optimistic about making progress against Alzheimer’s disease, cognition disorders, ADHD, bipolar disorder and schizophrenia, depression and anxiety, and sleep disorders.

The organization hasn’t relaxed its focus either in the growing area of unmet medical needs. “Pfizer has also maintained its infectious disease research with advanced candidates against HIV, resistant infections, hepatitis and malaria,” LaMattina says. “We have also returned to human vaccine development, with the acquisition of Powdermed and its novel delivery system that allows us to leapfrog some older technologies.”

And of course, there is the industry standout that continues to perform. As the most prescribed cholesterol-lowering therapy in the world with nearly 133 million patient-years of experience, Lipitor remains a huge success for Pfizer, raking in approximately $13 billion last year. And just recently the US FDA expanded its approval of Lipitor (atorvastatin calcium) tablets across five more indications – to reduce the risk of nonfatal heart attacks, fatal and non-fatal strokes, certain types of heart surgery, hospitalization for heart failure, and chest pain in patients with heart disease.

The new indications for patients with heart disease make Lipitor the first cholesterol-lowering medication to receive FDA approval for the reduction of the risk of hospitalization for heart failure. Previously approved to reduce cardiovascular events only in patients without heart disease, the new approval marks a huge landmark since Lipitor can now be used by patients who are at high risk for cardiovascular events because of prior heart-related problems or episodes.

While the expanded approval is good news for both Pfizer and those with heart ailments, Pfizer’s success can’t be buoyed by its luck with Lipitor alone. With pending patent loss as early as 2010, Pfizer is in need of a post-Lipitor strategy and as of right now, there’s no drug in the works that can fill its shoes.

Having already endured patent-protection losses on major drugs including antibiotic Zithromax and anti-depressant Zoloft – and with its hypertension treatment, Norvasc and allergy medicine, Zyrtec joining the list in 2007 – patent loss is putting the squeeze on Pfizer. It’s estimated that between 2005 and 2008, Pfizer will have faced between $12 and $14 billion in revenue loss due to expiring patents.

With more patents on key drugs set to expire in the next few years, increased competition from generic drugs will only continue to drain a good chunk of sales. Still, LaMattina is quick to shrug it off. “Patent loss is a constant that drives innovation in our industry but, right now, the opportunities have never been greater. Global economic growth and the world’s aging population are driving heightened demand for affordable, quality healthcare. Because of Pfizer’s human and capital resources, as well as our experience, we are well-positioned to seize those opportunities.”

Regardless of how well it’s positioned, Pfizer has set some tough goals for the road ahead. “Several of our newer products, like Lyrica, Chantix and Sutent are off to great starts and our commercial colleagues are transforming the way we do business to maintain our revenues. We hope to triple our Phase 3 pipeline between now and 2009 and we will generate four internally generated products, starting in 2011. Business Development will generate another two per year from external sources, starting in 2010.”

One thing is for certain – the organization won’t be shrinking away from taking risks. Pfizer knows better than anyone that risk is the name of the game – and when risk leads to rewards, nothing is better than when profits and improved health go hand in hand. “We will never conceal the fact that drug development is a high-risk, high-return enterprise,” LaMattina admits. “Risk management is what we do and we’re constantly updating and revising the technologies and processes that help us invest in the most promising areas – areas with high unmet medical need where we can make a significant difference with a new therapy.”

LaMattina will be the first to point out there’s no shortage of risk or innovation at Pfizer and cites some of the most innovative treatments. “Our newest medicines, all invented at Pfizer, are first-in-class and represent wholly new ways to treat disease. I’m thinking about Chantix, a partial nicotinic agonist for smoking cessation, Lyrica, an alpha-2-delta agonist for pain and other indications, and maraviroc, which if approved by regulators, will herald the first new class of oral HIV medicines in more than a decade. Rather than fighting HIV inside white blood cells, maraviroc prevents the virus entering from uninfected cells by blocking its predominant entry route, the CCR5 co-receptor.”

It’s obvious that Pfizer has big hopes for the future. LaMattina understands that ups and downs are the nature of pharma – and remains as confident as ever in the pipeline and what lies ahead. “We have our largest-ever pipeline, we’re reducing attrition and we are seeing our highest ever productivity levels. The important conclusion here is that science is difficult; this is a very tough business for all of us.”

Dr. John LaMattina: “Risk management is what we do … we’re constantly updating and revising the technologies and processes”