By Randall Osborne
SEATTLE Take a broad research platform with plenty of flexibility, add a penchant for information sharing, and keep always an eagerness to partner while not giving away the store.
Such is the recipe for getting ahead in biotech, said Ed Fritzky, chairman, CEO and president of Immunex Corp.
"If you rely just on hitting the home run creating the blockbuster you may be waiting a long time," said Fritzky in his large-windowed office at the company's headquarters in downtown Seattle.
As sunlight poked through the clouds outside, Fritzky propped his tassel-shoed feet on the coffee table, waving his hands like a coach explaining strategy to a roomful of players.
"You're interested in doubles, triples and home runs when you can get them," he said. "Occasionally, you get the grand slam."
Immunex's game plan has worked. In November 1998, on the afternoon Enbrel (etanercept) was approved for rheumatoid arthritis (RA), Immunex's stock (NASDAQ:IMNX) closed at $70.625, up $1.562. By the day earlier this month, when the FDA issued an approvable letter for Immunex's chemotherapy drug, Novantrone (mitoxantrone), for multiple sclerosis (MS), the stock closed at $220.937, up $1.937.
Peggy Phillips, chief operating officer, said the company has "put in our dues for a long time. The joke used to be that Immunex couldn't develop a roll of film."
Not anymore. Today, FDA-approved products include Enbrel, a tumor necrosis factor (TNF) receptor; Leukine (sargramostim), a yeast-derived granulocyte macrophage-colony stimulating factor; and a line of chemotherapy drugs, including Novantrone.
Enbrel, the headliner, inhibits the binding of TNF to TNF receptors, thus reducing inflammation in RA. It's approved for use in patients with moderately to severely active RA who have had inadequate response to one or more disease-modifying antirheumatic drugs, and for patients with moderately to severely active polyarticular-course juvenile RA.
Net sales of Enbrel totaled $366.9 million in 1999.
Leukine, sales of which totaled $69 million last year, stimulates infection-fighting white blood cells. It's approved for use in patients with acute myelogenous leukemia and those undergoing a bone marrow or peripheral blood stem cell transplant.
Novantrone was first given the FDA's nod for the treatment of acute myelogenous leukemia. In 1997, the company received approval to expand the label to include the treatment of the pain associated with prostate cancer. Because the drug suppresses the activity of T cells, B cells and macrophages, Immunex explored the drug's utility in treating MS.
Fritzky, who calls Immunex a "biological knowledge company," said the key to its advancement is a research platform into the immune system a platform broad enough to allow for varied drugs in varied indications, and multiple indications for the same drug.
"We had lots of choices for Enbrel, given how it works as a TNF modulator," he said. "We chose RA very carefully as a market where the biology made sense, but in addition it was a large commercial market. We didn't take the first experiment and say, 'Wow, that would be great.' As it turns out, Enbrel could work in even larger markets. It might work in chronic heart failure."
Immunex was careful not to license out Enbrel for another company to develop an approach Fritzky recommends, even when it's financially tempting to do otherwise.
"We have a co-marketing agreement [with Wyeth-Ayerst Laboratories], but we never attempted to give the royalties to someone else, and the only thing that would have taken us in another direction is if we didn't have the money or didn't have the people," he said.
Novantrone is a similar case. Not only may it be approved for MS, but "the FDA is giving us, we think, a broader label, even though it's not approved yet," Fritzky said.
Relapsed-remitting MS may be added to the approved uses, he said.
"It seems that we'll wind up with a label that could include those patients anybody who has worsening MS," he said. "This gives us an opportunity to double or triple Novantrone's sales base, which is between $40 million and $50 million per year."
The "hit," Fritzky said, is a good one. "We're never sure until we're on the market, but I'd say it's a double."
He said the company's culture encourages staffers to "believe that many of the answers are out there in the world, in other laboratories or other companies." Especially in a genomics age of fast-flowing data, he said, "you can't have people inside who believe they know it all, and have massive egos."
It's crucial, Fritzky said, "to have that collaborative mentality, and people who can execute, who can pull it off." Conversely, firms can fail by "having too much of an internal focus. It's one thing to think about [looking outward], and another thing to do it."
Genomics will help tremendously, but "it's using these technologies to make drugs that's what it's all about, not the technologies themselves," he added.
"The way drug discovery used to be done, 10 or 15 years ago, is that researchers were in a dark room, sort of grabbing for things," said Fritzky, who has been with the company six years. "They had notions where things might exist, but it's a black room, and some have a better feel in the dark than others."
With the advent of genomics during his six years with the company, "the lights are turning up in that room," he said. "It still takes great researchers, but they're not in the dark anymore. We can see the light and get to discoveries faster and we can use and work with the best of [genomics firms]."
Founded in 1991, Immunex merged with American Cyanamid Company's Lederle Oncology business in North America, and Cyanamid took a majority interest.
In November 1994, all of the outstanding shares of common stock of American Cyanamid were acquired by American Home Products Corp. (AHP), making Cyanamid a wholly owned subsidiary of AHP, which now holds a 54 percent interest.
Immunex's total revenues for 1999 were $541.7 million compared to $243.5 million in 1998, and the company generated positive cash flow from operations last year of $112.7 million.
Triumph in the marketplace, although sweet, carries challenges as well, said COO Phillips.
"It's one of the hardest beasts to figure out how to master," said Phillips, who has been with the company 14 years.
"There was a fair amount of luck involved with Enbrel," she said. "There are two different receptors, and we were fortunate enough to clone the one that is far more significant in terms of disease modification. You have to have enough things going that some of them are going to be lucky hits for you."
At the same time, management must be careful not to expand simply because the company can, Phillips said.
"You can't be [a company of] 20,000 or 100,000 people and still have a lot of what makes a biotech company as nimble and able to make quick decisions as possible," she said.
"We've been holding people back for quite a few years," Phillips said. "Now, they're saying, 'OK, now I can get the 100 people I've been needing.' We've talked about this being a consolidating time for the industry, but [we're asking] how we can do that a little bit different from others." *