The costs associated with navigating a new therapeutic through the regulatory process to final approval and subsequent marketing continue to rise despite industry's collective efforts to speed up the process of drug discovery and development in order to rein in those burgeoning expenses.
Last year, for example, the top ranked 100 public biopharmaceutical companies by market cap, not including big pharma companies, invested well in excess of $33 billion, or approximately 22% more on research and development (R&D) than they did in 2017. (See BioWorld Insight, April 1, 2019.)
The sheer scale of investments is magnified when the $133 billion that the top 10 big pharma companies reported they spent on R&D in the same two-year period is factored into the equation.
The reward, just in terms of novel medicines, has been 105 new molecular entities (NMEs) approved by the FDA; with a record 59 last year, a 22% increase over the 46 medicines approved in 2017, that increased the agency's five-year annual average to around 43 therapeutics per year. (See BioWorld Insight, Jan. 8, 2018, and Dec. 31, 2018.)
The industry and patients will be hoping that the impact of new technologies, including data mining and machine learning, will eventually eat into the high costs of innovation.
At the halfway point of this year, it appears that R&D spending is not slowing down. From an analysis of the second-quarter 2019 financial reports filed by the top 100 public biopharmaceutical companies ranked by market cap, excluding big pharma companies, conducted by BioWorld, the amount invested in R&D has increased by more than 4% compared to the same period in 2018. The study found that those companies collectively spent well in excess of $18 billion. The top 10 big pharma companies also increased their R&D investments by 1.4% for a collective $23 billion spent.
It appears that the biopharmaceutical industry is on an average pace for NME approvals. So far this year, the FDA has approved 23 NMEs, including four last week – Rozlytrek (entrectinib) for the treatment of adults with ROS1-positive, metastatic non-small-cell lung cancer from Basel, Switzerland-based Roche Holding AG's Genentech unit; Wakix (pitolisant), which Harmony Biosciences LLC licensed from Bioprojet Societe Civile de Recherche for the treatment of excessive daytime sleepiness in adults with the chronic sleep disorder; Inrebic (fedratinib), a treatment for myelofibrosis that Celgene Corp. acquired in its 2018 acquisition of Impact Biomedicines Inc.; and Abbvie Inc.'s Rinvoq (upadacitinib) for treating moderate to severe rheumatoid arthritis. (See BioWorld, Aug. 16, 2019, and Aug. 19, 2019.)
In terms of total R&D expenditures this year, Summit, N.J.-based Celgene, the fourth largest biopharmaceutical company by market cap, continues to top the leaderboard, with $2.3 billion invested in R&D, a decrease of 33% over the same period in 2018. In its 10-Q filing, the company attributed the decrease in part to a $1.1 billion of R&D asset acquisition expense related to its announced $7 billion purchase of San Diego-based Impact during the first quarter of last year. (See BioWorld, Jan 9, 2018.)
Gilead Sciences Inc. reported it invested $2.2 billion in R&D, and Amgen Inc. recorded $1.8 billion in expenses. (See Top 10 biopharmaceutical companies by R&D spending, right.)
Thousand Oaks, Calif.-based Amgen ramped up its investments by almost 11%, driven, the company reported, by increased spending in research and early pipeline support of its oncology programs.
Regeneron Pharmaceuticals Inc. vaulted into fourth position with almost $1.7 billion in R&D investments, a 64% increase over its 2018 spending. The boost came in the second quarter with a $400 million up-front payment in connection with a collaboration agreement with Alnylam Pharmaceuticals Inc. Tarrytown, N.Y.-based Regeneron is committing $800 million in up-front cash and equity, along with as much as $200 million in near-term milestones, to Alnylam, of Cambridge, Mass., in a deal to discover, develop and commercialize RNAi therapies by taking aim at targets in the eye and central nervous system plus some focused on the liver. (See BioWorld, April 9, 2019.)
Regeneron reported it had plenty of cash, with $5.6 billion in cash and marketable securities as of June 30 – more than enough to nurture its 21 product candidates in clinical development, including five FDA-approved products for which it is investigating additional indications.
The company is investing in hot technologies such as immuno-oncology, and President and CEO Leonard Schleifer noted "its platform, which includes Libtayo and our portfolio of bispecific antibodies, is progressing well, with the most advanced bispecific program, REGN-1979 (CD20xCD3), entering a potentially pivotal phase II trial in follicular lymphoma."
Decreases in milestone and up-front expenses pegged back Cambridge, Mass.-based Biogen Inc.'s R&D expenses by 29% to $1.04 billion in the first half of 2019. Those lower expenses and increasing sales of its multiple sclerosis (MS) therapies helped the company beat both top- and bottom-line expectations during the second quarter, despite lower-than-expected sales of its spinal muscular atrophy drug, Spinraza (nusinersen).
Biogen posted total revenues of $3.6 billion, up 8% vs. the second quarter of 2018, and net income of $1.5 billion, an increase of 72% vs. last year's Q2 net income of $867 million.
The company has plenty of cash, about $3 billion as of June 30, to fuel its robust product pipeline. It also added four clinical programs to its pipeline during the second quarter, including two mid- to late-stage ophthalmology gene therapy programs through its acquisition of Nightstar Therapeutics plc, as well as an oral BTK inhibitor for MS and an oral compound for sporadic amyotrophic lateral sclerosis acquired from Karyopharm Therapeutics Inc. in January. (See BioWorld, July 24, 2019.)