Tufts Center for the Study of Drug Development

Tufts Center for the Study of Drug Development T U F T S U N I V E R S I T Y OUTLOOK 2014 R & D T R E N D S R E G U L AT O RY E N V I R O N M E N T B I O T E C H N O L O G Y S E C T O R T R E N D S P R E S C R I P T I O N D R U G P O L I C Y R & D M A N A G E M E N T A N D O P E R AT I O N S

C O N T A C T T U F T S C E N T E R F O R T H E S T U D Y O F D R U G D E V E L O P M E N T Tufts CSDD faculty experts are available to comment or discuss a wide variety of topics relating to drug development. CONTACT Kenneth I Kaitin, PhD Director and Professor Tel 617-636-2181 Email kenneth.kaitin@tufts.edu Christopher-Paul Milne, DVM, MPH, JD Director of Research and Assistant Professor Tel 617-636-2188 Email christopher.milne@tufts.edu Joseph A. DiMasi, PhD Director of Economic Analysis and Assistant Professor Tel 617-636-2116 Email joseph.dimasi@tufts.edu Joshua P. Cohen, PhD Assistant Professor Tel 617-636-3412 Email joshua.cohen@tufts.edu EXPERTISE Economic and regulatory environment R&D and corporate strategy Academic-industry partnerships Emerging markets New business models Impact of regulatory policy Orphan drug program Pediatric initiative Counter-bioterrorism initiatives Global R&D and innovation Cost of drug development R&D efficiency Post-approval R&D Therapeutic class development trends Prescription drug policy Formulary trends Follow-on drug development trends Prescription-to-over-the-counter switching Ken Getz, MBA Director of Sponsored Research Program and Associate Professor Tel 617-636-3487 Email kenneth.getz@tufts.edu Ronald Evens, PharmD, FCCP Adjunct Faculty and Biotechnology Consultant with Tufts CSDD Tel 707-317-3046 Email medaff4biopharma@aol.com Richard I. Shader, MD Senior Research Fellow & Medical Consultant; Professor Emeritus, Pharmacology & Experimental Therapeutics Tel 617-636-3856 Email richard.shader@tufts.edu Drug development management trends Contract research organizations Investigative site landscape International clinical trials E-technologies in drug development Biotechnology product development Novel biotech research platforms Biosimilar development Biotech business models and financing Experimental design Clinical pharmacology and therapeutics Ethics

ABOUT TUFTS CSDD AND THIS REPORT Founded in 1976, the Tufts Center for the Study of Drug Development at Tufts University School of Medicine is an independent, academic, nonprofit research group that develops strategic information to help drug developers, regulators, and policy makers improve the quality and efficiency of pharmaceutical and biopharmaceutical development, review, and utilization. Kenneth I Kaitin, PhD, director of Tufts CSDD since 1998, leads a team of 12 research professionals and four support staff who: Monitor and report on the development, regulation, and utilization of new drugs and biopharmaceuticals. Explore the economic, legal, scientific, and public policy issues affecting pharmaceutical and biopharmaceutical innovation worldwide. Provide analyses on the development and review of new therapeutic agents. Sponsor conferences, roundtables, and public forums that bring together the often diverse perspectives of government, industry, academia, and public health advocacy. Raise the level of national and international debate on issues related to new drug and biotechnology product development and regulation. Tufts CSDD Outlook, published each January, showcases the Tufts Center s view on near-term pharmaceutical and biopharmaceutical development trends. Data contained in Outlook 2014 are based on proprietary research conducted by Tufts CSDD. Analyses are from the ongoing work of Tufts CSDD s research staff, who confer regularly with a broad range of pharmaceutical and biopharmaceutical industry leaders, as well as with regulators, policy makers, investors, service providers, and others involved in biomedical innovation. Outlook 2014 constitutes one element in a full range of information and related services focused on the research-based drug and biotechnology industry and other stakeholders in pharmaceutical innovation. Other Tufts CSDD offerings include professional development courses, workshops, and symposia. In addition, the Tufts Center publishes the Tufts CSDD Impact Report, a bi-monthly newsletter providing analysis and insight into critical drug development issues, and the Tufts CSDD R&D Management Report, a quarterly review of strategic issues in pharmaceutical R&D. Research findings developed by Tufts CSDD are regularly published in peer-reviewed, trade, and business publications, and Tufts CSDD faculty are quoted frequently in the business, industry, scientific, and general interest press worldwide. For more information, call 617-636-2170 or click on http://csdd.tufts.edu. 2014 Tufts University. All rights reserved. No part of Outlook 2014 may be reproduced, transmitted, or distributed by any means, mechanical or electronic, in whole or in part, without written permission of the Tufts Center for the Study of Drug Development. 1

G L O S S A RY Biomarker Also called biological marker. A substance, measurement, or indicator of a biological state. Biomarkers may exist before clinical symptoms arise. Biosimilar A follow-on, approved biopharmaceutical that is biologically similar to an existing medicine. Clinical trial A specific type of clinical study in which a medical intervention is tested against a placebo or an active control in human subjects. Clinical study is a broader term that includes other forms of human participatory research, such as pharmacokinetic, epidemiologic, and behavioral studies. Companion diagnostic A diagnostic test linked to a therapeutic drug, which serves to stratify populations into responders and non-responders, as well as indicate likelihood of adverse events in particular patients. CRO Contract research organization. A business entity that manages one or more steps in the drug development process, including conduct of preclinical studies, clinical study design and execution, data management, analysis, medical writing, and regulatory submission. Form 1572 Contractual obligations signed by principal investigators that drug sponsors submit to the FDA prior to initiating clinical trials. Monoclonal antibody (mab) types Murine mabs are derived from mouse genes; human mabs are derived from human genes; chimeric and humanized mabs are each derived from varying amounts of mouse and human genes, with the humanized products containing more human protein sequence than the chimeric versions. NICE The National Institute for Health and Care Excellence, an independent organization in the United Kingdom that provides national guidance and standards on the promotion of good health and the prevention and treatment of ill health. Orphan drug Drugs developed for rare diseases and conditions, which, in the U.S., affect fewer than 200,000 people, or, in the European Union, affect 5 per 10,000 people or fewer. Because sales of orphan drugs are likely to be small compared to their development costs, pharmaceutical companies are awarded exclusive rights to market these medicines for a period of time as an incentive to develop them. Personalized medicine The tailoring of medical treatment and delivery of health care based on the individual characteristics of each patient, including genetic, molecular, imaging, and other personal determinants. Phase I Studies typically conducted in healthy volunteers to determine the pharmacokinetic and pharmacologic actions of a drug in humans, the side effects associated with increasing doses, and, in some cases, early evidence of effectiveness. Phase II Studies designed to obtain data on the efficacy of a drug for a particular indication or indications in patients with the disease or condition. Phase III Expanded controlled and uncontrolled trials to gain additional data about efficacy and safety needed to evaluate the benefits and risks of a drug. Protocol A plan detailing the methodology of a clinical study. 2

OUTLOOK 2014 Over the last dozen years, drug sponsors have made important strides in improving R&D performance, largely by focusing on drug development efficiency or by implementing new strategic partnerships and alliances. Going forward, however, R&D success measured by the number and pace of new product approvals will require sponsors to pursue both avenues simultaneously. Company efforts to speed development, boost success rates, and control runaway R&D costs, all of which are critical to improving R&D efficiency, require objective, robust metrics. However, it won t make a difference in the long run if it simply feeds into an old and inefficient development paradigm. That s why many companies are embracing newer and more efficient R&D models and utilizing enhanced and adaptive clinical trial designs. Moreover, many pharmaceutical and biotech companies are forging new strategic alliances, partnerships, and consortia for example, with patient groups, academic medical centers, contract research organizations, investors, and even competitors. By sharing knowledge and leveraging resources, sponsors hope to make significant strides in finding new drugs to treat many of today s most challenging and complex indications. Early results suggest great potential and payoff. The industry s focus on operational efficiency and the willingness of diverse stakeholders to collaborate emphasizes a long overdue critical examination of the R&D process. It is worth noting that the drug industry s development model fundamentally has not changed in over 50 years since the Kefauver-Harris Amendments of 1962 established the current standard for the clinical testing of investigational drugs. This stands in stark contrast to many other research-intensive industries that regularly revamp their development processes. Perhaps the greatest gain from clinical design improvements and new partnership models will be the development of industry best practices, which will enable companies to maximize their formidable R&D investment and help ensure future commercial success. DRUG SPONSOR SUCCESS WILL BE TIED TO AN ABILITY TO COORDINATE COMPLEX PROCESSES A Tufts CSDD analysis of 36 major pharmaceutical and biotechnology companies found that a substantial share of critical drug development processes is being outsourced, a trend likely to grow. Similar to today s auto makers, in which competitive advantage flows from their ability to coordinate numerous suppliers to create a complex product, successful drug development increasingly will depend on sponsors ability to orchestrate complex processes managed directly by partner organizations. Use of Strategic Sourcing Models Functional Area Activities/Tasks Share Kept In-house Share Outsourced Primary Relationship Model Design + Planning 80% 20% Niche Site Operations Selection 30% 70% Full, FSP*, Alliance Contracts & Budgets 40% 60% Full, FSP, Alliance Start-Up 20% 80% Full, FSP Alliance Enrollment 25% 75% All Data Management 25% 75% FSP, Alliance Statistical Analysis 30% 70% All Medical Writing 40% 60% All Regulatory Strategy 85% 15% Niche Support 45% 55% All * FSP = Functional service provider 3

R & D T R E N D S While drug sponsors have taken numerous steps during the last decade to increase R&D productivity, investors, payers, and other stakeholders are pushing for further improvements, which will boost bioinnovation. PERSONALIZED MEDICINE WILL PLAY A GREATER ROLE IN DEVELOPMENT PIPELINES Progress Developing the Science of Personalized Medicine 100% 80% 60% Advances in understanding the pathophysiology of a growing number of diseases, resulting from genetics research and the identification and validation of new biomarkers, will spur development in therapeutic areas, such as neurological and psychiatric disorders and cancer, where there is significant medical need. In an effort to improve success rates, speed development times, expand pipelines, and diversify risk, pharmaceutical companies will engage in an increasing number of novel collaborations and strategic alliances involving other pharma and biotech firms, academic research centers, patient groups, contract research organizations, and venture investors. Drug companies will increase their focus on personalized and targeted medicines, as well as development of companion diagnostics, as payers in the United States increase their coverage of diagnostic products. Growing concern over expensive, late-stage clinical development failures will lead firms to reassess their use of meta-analyses and subgroup analysis which have been used to justify pushing compounds forward in development, despite poor Phase II results and make more realistic assessments about the likelihood of candidate success. 40% 20% 0% Companies that Have Established Strategic Partnerships Related to Personalized Medicine Companies that Have Submitted Biomarker Data to the FDA Trials that Collect DNA Samples from Clinical Trial Participants Continued growth in emerging markets will account for an expanding share of global pharmaceutical sales and profits, providing R&D incentives that favor development of drugs to meet demand in these markets. Development of personalized medicines is prompting changes in the way drug sponsors do R&D, leading to new partnerships and alliances. Co-development of drugs and diagnostics requires careful life cycle planning and management, as teaming with external partners raises questions regarding project stewardship and intellectual property rights. Factors developers need to manage include assay and platform improvements, regional differences in technologies, testing requirements, barriers to diagnostic testing, and how to demonstrate clinical utility. 4

R E G U L AT O RY E N V I R O N M E N T THE FDA S REGULATORY FRAMEWORK WILL BE EMPLOYED TO ADVANCE MORE RAPID DRUG DEVELOPMENT FDA Expedited Programs 100% 80% 60% 40% Regulatory authorities in the U.S. and Europe will become more proactive, working in a quasi-partnership manner with drug sponsors to increase the pace of new product development while stepping up vigilance over patient safety. Other Cancer The U.S. Food and Drug Administration (FDA) in 2014 will push to complete by 2015 the 140 actions required by the FDA Safety & Innovation Act, including developing or enhancing databases on active pharmaceutical ingredient (API), dosage form manufacturing, and bioequivance for use by generics-related firms. Re-organization of the European Medicines Agency (EMA), first announced in December 2012, will continue to absorb the agency s attention and resources as, among other actions, it establishes five new divisions for R&D support, medicines evaluation, inspections and pharmacovigilance, procedure management and business support, and stakeholders and communication. The FDA will push sponsors to comply with new requirements of the Best Pharmaceuticals for Children Act and the Pediatric Research Equity Act to enhance harmonization with the EMA program of early submission of pediatric assessments. With 40% of finished drugs and nearly 80% of active ingredients of drugs consumed in the U.S. imported, the FDA will assign higher priority to protecting the drug supply chain. The FDA will foster greater use of patientreported outcomes to support labeling claims in drug applications and make greater use of social media and the Internet to communicate with patients, caregivers, and patient advocates. 20% 0% Priority Fast Track Accelerated Approval Breakthrough Therapy Designation The FDA s new Breakthrough Therapy Designation (BTD), assigned to drug or biological drug development programs as early as Phase I clinical trials, not only aims to speed development but also seeks to encourage use of advances such as adaptive clinical trial designs and companion diagnostics. Sponsors have responded favorably, filing nearly 100 BTD requests in the program s first year (FY 2013). Concern that oncology compounds would dominate BTD requests proved unwarranted based on a comparison with recent FDA special program approvals (2008-2012). 5

B I O T E C H N O L O G Y S E C T O R T R E N D S Continued development of new technology platforms will foster a growing cornucopia of biotech products, which, in turn, will reinforce Big Pharma interest and investment in large molecule product development. MONOCLONAL ANTIBODY PRODUCTS WILL DOMINATE BIOTECH DEVELOPMENT Biotechnology Products in Development 100% 80% 60% Sustaining the recent pace of investments in new biotech companies more than 40 initial public offerings in 2013 valued at more than $3 billion will be a major challenge in 2014, which will spur further development of alternative financing approaches, e.g., industry based venture capital groups and patient support foundations. Big Pharma acquisitions of biotech companies will continue in 2014 as major company pipelines continue to thin out and blockbuster drugs go off patent; acquisition targets will include companies with novel pipeline assets and innovative platforms. Although Europe outpaces the U.S. in biosimilar approvals, going forward, such approvals will be more common in the U.S. as a variety of marketed drugs, including many blockbuster products, lose patent protection. Novel mechanisms of action and marginally improved outcomes may not be enough to convince payers to cover the high cost of biotech products, posing a growing barrier to their broader utilization; annual per-patient costs for therapies for chronic diseases commonly surpass $50,000, and patient co-pays can be 10%-25% or more of the total drug cost. 40% 20% 0% 2001 (359 Products) 2012 (907 Products) Monoclonal antibodies Genes/RNA therapies Vacciness Cell therapies Recombinant proteins/protein Other products based on reports from Pharmaceutical Research and Manufacturers of America Monoclonal antibody products, especially those that use antibody-drug conjugates and antibody fragments, will dominate biotech product development for the next few years. However, the full scope of molecules, including vaccines, cell and tissue therapies, RNA interference, gene therapy, proteins, and peptides, will be developed as well. At the end of 2013, more than 200 biotech molecules were in Phase III trials or filed with the FDA. 6

P R E S C R I P T I O N D R U G P O L I C Y Rising prescription drug costs and growing use of drug therapies by an expanding patient population worldwide will lead payers to impose stricter reimbursement regimes. PAYERS ARE LIKELY TO CONTINUE TO CHALLENGE ORPHAN DRUG REIMBURSEMENT REQUESTS U.S. England and Wales The Netherlands Drug regulatory agency FDA EMA/MHRA CBG Cancer drugs Payers increasingly will be reluctant to provide reimbursement for newly approved cancer drugs that offer relatively small, incremental benefit in terms of survival and quality of life. Personalized medicine More approvals of co-developed companion diagnostics and therapeutics are likely. However, diagnostics without evidence of positive impact on health outcomes will continue to face reimbursement challenges. Biosimilars U.S. approval of a growing number of biosimilars, beyond the two now being marketed, are likely within three to five years with a regulatory pathway in place. In Europe, where a pathway was enacted in 2006, uptake has been slow due to safety concerns and lack of familiarity among physicians. Similar challenges will likely confront biosimilar manufacturers in the U.S. Orphan drugs New approvals that carry costs exceeding $100,000 per year per patient are likely to encounter more pushback from payers. Health authority No single health authority National Institute for Health and Clinical Excellence (NICE) Health Insurance Board Number of drugs approved by drug regulatory agency 99 85 85 Source: Tufts Center for the Study of Drug Development Number of drugs reviewed by health authority N.A. 31 79 Number of drugs covered* 84 19** 72 Number of drugs rejected by health authority or plan(s) 15 12 7 EMA = European Medicines Agency; MHRA = Medicines and Healthcare Products Regulatory Agency; CBG = College ter Beoordeling van Geneesmiddelen Medicines Evaluation Board * Either covered by the Dutch health authority or given a positive recommendation by NICE. Of the 85 approvals, NICE only reviewed 31, and the Dutch Health Insurance Board 79. Number of drugs conditionally covered 79 9 20 ** NICE reviewed 31 drugs, and recommended 19 for reimbursement. Note: Drugs that NICE has not reviewed are not necessarily not covered. In the U.S., 15% of the 99 outpatient orphan drugs approved by the FDA between 1983 and 2008 were rejected by at least one major health plan. In England and Wales, 39% of the 31 drugs reviewed by NICE were given negative recommendations, while only 9% of 79 similarly reviewed drugs by the Health Insurance Board in The Netherlands were denied reimbursement. 7

R & D M A N A G E M E N T A N D O P E R AT I O N S Drug developers will deploy strategies to optimize study design, collaborative relationships, and patient engagement in clinical research to drive higher levels of operating performance at lower cost. As development spending decelerates and programs target smaller market opportunities, cost and time pressures will prompt sponsors to collect more robust, real-time management metrics to guide their relationships with contract research organizations (CROs) and investigative sites. The ongoing transfer of operating risk to integrated alliance partners will drive leading CROs to invest in big data systems, project management technology solutions, and stronger relationships with preferred investigative sites. Adoption of adaptive clinical trial designs will accelerate, particularly in earlier clinical phases, as cross-functional teams within sponsor companies look to increase program success rates while lowering costs and disruptions from protocol amendments. A FRAGMENTED INVESTIGATIVE SITE LANDSCAPE WILL CONTINUE TO CHALLENGE SPONSORS Active Unique Investigators Worldwide Filing Form 1572 30000 25000 20000 15000 10000 5000 Facing limited government spending on clinical research, academic institutions will turn in earnest to industry-funded clinical trials, where health systems are gaining a competitive advantage by offering access to large patient populations and their centralized and integrated electronic medical and claims records. Consolidation is likely among the global investigative site community to drive scale efficiencies and improve patient recruitment success as demand from sponsors and CROs for more effective and predictable study conduct performance intensifies. 0 1992 1996 2000 2004 2008 2012 analysis of the FDA s Bioresearch Monitoring Information System The number of principal investigators participating in FDA-regulated studies worldwide reached an all-time high in 2012, with the vast majority operating as part-time research centers in community settings. The global site landscape has remained highly fragmented with widely variable performance, underscoring the critical need for this sector to consolidate and build infrastructure and scale efficiencies. 8

S E L E C T E D C S D D P U B L I C AT I O N S Listed below are selected articles published in 2013 by Tufts CSDD research staff. R&D TRENDS DiMasi JA. Innovating by developing new uses of already-approved drugs: trends in the marketing approval of supplemental indications. Clinical Therapeutics 2013;35(6):808-818. DiMasi JA. Pharmaceutical R&D performance by firm size: approval success rates and economic returns. American Journal of Therapeutics. [Published online January 23, 2013]. http://dx.doi.org/10.1097/mjt.0b013e318269198f DiMasi JA, Reichert JM, Feldman L, Malins A. Clinical approval success rates for investigational cancer drugs. Clinical Pharmacology & Therapeutics 2013;94(3):329-335. Kaitin KI, Honig PK. guest eds. Clinical Pharmacology and Therapeutics 2013;94(3). (Includes: Kaitin KI and Honig PK, editorial. Reinventing bioinnovation, pp 279-283). Martell RE, Sermer D, Getz KA, Kaitin KI. Oncology drug development and approval of systemic anticancer therapy by the U.S. Food and Drug Administration. The Oncologist 2013;18(1): 104-111. Stergiopoulos S, Kim J, Getz KA. Characterizing the cost of non-clinical development activity: understanding a critical R&D segment. Contract Pharma 2013;15(5):70-73. PRESCRIPTION DRUG POLICY Cohen JP, Milne C-P. Is the increasing cost of treating rare diseases sustainable? Expert Opinion on Orphan Drugs 2013;1(8):581-583. Cohen JP, Malins A, Shahpurwala Z. Compared to US practice, evidence-based reviews in Europe appear to lead to lower prices for some drugs. Health Affairs 2013;32(4):762-770. Malins A, Milne CP. Population dynamics, demographics, and disease burden of infants and children across the world. And, Milne CP, Malins A. Pharmaceutical economics and market access for pediatric medicines. In: Mulberg AE, Murphy D, Dunne D & Mathis LL, eds. Pediatric Drug Development. 2nd ed. Singapore: John Wiley & Sons, Inc., 2013:16-56. R&D MANAGEMENT AND OPERATIONS Getz KA. Impact of in-pharmacy education on patients' knowledge and attitudes about clinical trials. Therapeutic Innovation & Regulatory Science 2013;47(3):336-340. Getz KA, Kim J, Stergiopoulos S, Kaitin KI. New governance mechanisms to optimize protocol design. Therapeutic Innovation & Regulatory Science 2013;47(6):651-655. Getz KA, Lamberti MJ. Assessing global CRA workload and utilization. ACRP Monitor 2013;27(1):11-18. Getz KA, Stergiopoulos S, Marlborough M, Whitehill J, Curran M, Kaitin KI. Quantifying the magnitude and cost of collecting extraneous protocol data. American Journal of Therapeutics [Published online April 9, 2013]. http://dx.doi.org/10.1097/mjt.0b013e31826fc4aa Lamberti MJ, Brothers C, Manak D, and Getz KA. Benchmarking the study initiation process. Therapeutic Innovation & Regulatory Science 2013;47(1):101-109. Lamberti MJ, Walsh T, Getz KA. Tracking trial cost drivers: the impact of comparator drugs and co-therapies. Pharmaceutical Executive 2013;33(5):34-37. Cohen JP, Millier A, Karray S, Toumi M. Assessing the economic impact of Rx-to-OTC switches: systematic review and guidelines for future development. Journal of Medical Economics 2013;16(6):1-10. 9

A G E N D A 2 014 TUFTS CSDD RESEARCH PROJECTS DUE FOR COMPLETION R&D TRENDS: STRATEGY, OPERATIONS, AND MANAGEMENT Measuring the cost of drug development: Tufts CSDD's newest estimate Identifying predictors of success for compounds entering late-stage clinical trials Analyzing the prevalence of companion/complementary diagnostics development in late-stage pipelines Quantifying the adoption and impact of adaptive clinical trial designs Assessing outsourcing strategies and operations [CSDD Multi-Company Project Series] Benchmarking risk-based monitoring practices [CSDD Multi-Company Project Series] Assessing the magnitude and cost of collecting unused and excessive protocol data [CSDD Multi- Company Project Series] Evaluating best practices in improving minority patient participation [CSDD Multi-Company Project Series] Assessing sponsor-site relationship quality and effectiveness Measuring the adoption and use of electronic health records in clinical trials [CSDD Multi-Company Project Series] REGULATORY TRENDS Assessing the relative performance of FDA reviewing divisions Evaluating the FDA s expedited review and development programs and the impact of the new Breakthrough Therapy Designation Measuring the cost of regulatory harmonization [CSDD Multi-Company Project Series] BIOTECHNOLOGY SECTOR TRENDS Analyzing the landscape for biopharmaceutical products and sponsors Evaluating biosimilar diffusion barriers in the U.S. market Reviewing the evolution of biotechnology innovation PHARMACEUTICAL POLICY AND MARKET TRENDS Analyzing the market for prescription to over-the-counter switches in the U.S. and E.U. Examining trends in orphan drug reimbursement Evaluating the alignment of state and federal regulations on essential drug benefits in the U.S. Assessing the impact of drug and device reimbursement policies on innovation Examining pharmaceutical industry donation programs targeting neglected diseases Evaluating the personalized medicine reimbursement landscape Examining the company and product landscape for medical countermeasures Quantifying the impact of generic drug manufacturers on U.S. state economies [CSDD Multi- Company Project Series] Examining the challenges of post-approval evidence generation for regulatory and reimbursement authorities [CSDD Multi-Company Project Series] Developing standard practices and policies for optimizing social and digital media communities in clinical research [CSDD Multi-Company Project Series] Mapping and identifying gaps in the adverse events reporting system in the U.S. [CSDD Multi- Company Project Series] 10

A G E N D A 2 014 TUFTS CSDD EDUCATIONAL PROGRAMS February 3-7, 2014 Boston Postgraduate Course in Clinical Pharmacology, Drug Development, and Regulation Now in its 41th year, the Tufts CSDD Postgraduate Course provides advanced instruction in clinical pharmacology, drug development, clinical trial strategies, biopharmaceutical development, drug safety, and the regulatory process. The 2014 course features lectures, breakout groups, and an interactive panel discussion. Over five days, expert faculty will examine clinical trial ethics, outcomes research, epidemiology, and vaccine development. The program includes an interactive, mock presentation to regulators, providing participants with a unique opportunity to identify and analyze the impact of drug design protocols on the regulatory process. February 20, 2014 Boston Tufts CSDD Executive Forum Roundtable: Predictors of Clinical Success: New Approaches to Boosting Success Rates The Tufts CSDD Executive Forum Roundtable Series brings together R&D leaders from industry, academia, and contract services organizations to discuss strategic R&D issues and new approaches that will guide the research-based industry to future success. More on Inside Back Cover. May 15, 2014 Boston Tufts CSDD Executive Forum Roundtable: Risk-Sharing Partnerships and Alliances: Strategic and Operational Challenges See Inside Back Cover. July 8-9, 2014 Boston Leadership for Drug Development Teams: Improving Cross-Functional R&D Performance Designed in collaboration with industry R&D leaders, the curriculum is based on challenges experienced by hundreds of development teams, program managers, and functional directors. Two-thirds of the course is devoted to hands-on casework, with the rest focused on interactive discussion with faculty. Attendance is limited to 35. September 18, 2014 Boston Tufts CSDD Executive Forum Roundtable: New Directions in Outsourcing See Inside Back Cover. November 6, 2014 Boston Tufts CSDD Executive Forum Roundtable: Managing the Changing Investigative Site Landscape See Inside Back Cover. Looking ahead... February 2015 Boston Postgraduate Course in Clinical Pharmacology, Drug Development, and Regulation See description above. For more information about these programs, call the Tufts Center for the Study of Drug Development at 617-636-2170, email to csdd@tufts.edu, or visit http://csdd.tufts.edu and click on the COURSES section. 11

0% Efficacy Safety Commercial Efficacy Safety Commercial Other 60% 50% 40% 30% 20% 10% 0% Respiratory Antineoplastic CNS All 50% 40% 30% 20% 10% 60% 50% 40% 30% 20% 10% Efficacy Safety Commercial Other Other 0% Musculoskeletal GI/Metabolism Cardiovascular Systemic Anti-infectives 100% 80% 60% 40% 20% 0% Non-traditional Recruitment Tactics Fail to enroll a single patient 11% Under-enroll 37% Meet enrollment targets 39% Exceed enrollment targets 13% Traditional Recruitment Tactics STAY ON TOP OF THE RAPIDLY CHANGING DRUG DEVELOPMENT LANDSCAPE WITH THE T U F T S C S D D I M PA C T R E P O R T A bi-monthly, authoritative analysis of critical drug development issues, highlighting current research of the Tufts Center for the Study of Drug Development. Tufts CSDD Impact Reports have become must reading for professionals worldwide who are looking to understand the current state of drug development and regulation. Presented in a concise, four-page format, each issue delivers original research, analysis, and insight on mission-critical topics relating to the nature and pace of drug development and regulation that can t be found anywhere else. It s why readers, year after year, describe Tufts CSDD Impact Reports as thoughtful and timely, excellent, and a real asset. Available electronically or in hard copy format. 2014 EDITORIAL CALENDAR: January/February Breakthrough Therapy Designation: Building on Existing FDA Special Programs March April Social Media in Clinical Research: Standard Practices and Policies June/July Interrupted and Uninterrupted Drug Development Performance Assessment July/August Orphan Drug Reimbursement Landscape September/October Study Design Optimization Strategies: Governance Mechanisms and Adaptive Designs November/December Development Trends for Central Nervous System Medicines Volume 15, Number 3 May/June 2013 Impact TuftsCenterfortheStudyofDrugDevelopment TUFTS UNIVERSITY 48% of sites miss their enrollment targets, while 52% meet or exceed them Phase II and III Enrollment Performance on a Multi- One out of every 10 investigative sites that are ready Center Study to recruit study participants in a given clinical trial fails to enroll a single patient. REPORT Nearly four in 10 investigative sites (37%) in a clinical trial, on average, fail to achieve their study ANALYSIS AND INSIGHT INTO CRITICAL DRUG DEVELOPMENT ISSUES enrollment targets, while a similar share of investigative sites (39%) meet their enrollment targets. For a given Phase II and Phase III clinical trial, one Clinical success rates for new cancer Volume 15, Number 4 July/August 2013 out of every eight investigative sites manages to exceed study enrollment targets. Volume 15, Number 6 November/December 2013 drugs double while more enter testing Impact TuftsCenterfortheStudyofDrugDevelopment TUFTS UNIVERSITY Sponsors and CROs rely on traditional tactics to recruit patients Recruitment Tactic Usage by Region The vast majority of sponsors and CROs use traditional recruitment tactics, including physician Volume 15, Number 2 March/April 2013 referrals and mass media (e.g., newspaper, flyers, REPORT Impact Tufts Center for the Study of Drug Development TUFTS Success UNIVERSITY rates rose from 9.9% in the mid-1990s to 19.8% in the early-2000s Thenumberofnewcancerdrugsenteringclinicaltestingincreased50%between 1993-98 and 1999-04. radio, and television). Impact TuftsCenterfortheStudyofDrugDevelopment The clinical success rate for new cancer drugs entering clinical testing across the Arelativelysmallproportion(14%)ofallrecruitment tactics include non-traditional approaches REPORT TUFTS UNIVERSITY 12-yearperiodof1993-04was13%. ANALYSIS AND INSIGHT INTO CRITICAL DRUG DEVELOPMENT ISSUES (e.g., Facebook banner ads, Twitter, YouTube, ANALYSIS AND INSIGHT INTO CRITICAL DRUG DEVELOPMENT ISSUES 72%ofnew,investigationalcancercompoundsfocusedsolelyonsolidtumorindications, whereas 20% were studied in both solid tumor and hematological Phase III indications. Reasons for Failure Efficacy issues dominated Phase III failures for networking, and online data mining), and they are Efficacy and safety factors outranked commercial issues in Phase III failures electronic medical record (EMR) reviews, social investigational drugs that first Annual entered clinical testing in 2000-09, accounting for 52.3% of all Phase approvals for neglected diseases Small molecule drugs had higher success rates than biologics in transitioning from almost exclusively implemented in North America. REPORT Biotech products in Big Pharma clinical Phase I to Phase II and from Phase II to Phase III. Highly limited use of non-traditional recruitment III failures. rose from 2.6 in 2000-08 to 5 in 2009-12 tactics is a function of real and perceived restrictions by global region, aversion to high-risk Drugs focused solely on hematologic tumors had a 36% success rate over the 1993-04 ANALYSIS AND INSIGHT INTO CRITICAL DRUG DEVELOPMENT ISSUES While reasons for failure were identified for a pipelines have grown dramatically period, compared to 10% for drugs focused only on solid tumors. greater share of Phase III failures, compared to HIV/AIDS and malaria drugs accounted for 60% of approvals in 2009-12 approaches, and limited recruitment budgets. earlier phases, they accounted for less than 7% of all failures with reasons given. Large molecules represent dominant share of big Pharma sales Annual R&D funding for neglected diseases grew rapidly from 2000 to 2007, but then o meet the growing demand for new cancer therapeutics, drug companies are Safety issues accounted for nearly twice as many leveled off at $3 billion. Nearly one-third (32%) of studies do not receive centralized recruitment support The number of biotech products in clinical development grew 155% in 11 years, employinganumberofinnovativeapproachestocancerdrugdevelopment, Phase III failures as did commercial reasons: 29.5% Share of all Studies With respect to retention, nearly half (45%) of From 2009 to 2012, development of drugs to treat neglected diseases focused on the from 355 in 2001 to 907 in 2012. which include focusing on new targets within validated and new pathways, vs.15.9%. studies do not receive centralized support. StudiesusingNOcentralizedrecruitmentsupport 32% Tdesigning novel drug formats, and improving clinical study design. To provide an Big Three HIV/AIDS, malaria, and tuberculosis. Financing of biotech research increased 10-fold, from $10.5 billion in 2001 to $103 Top recruitment tactics used: The most common centralized Numberrecruitment of investigators tactics understandingofhownewcancercompoundshaveprogressedthroughtheclinicalstudy worldwide reached an all-time high in 2012 billion in 2012. Public-private partnerships accounted for 50% of new product approvals in 2009-12, include physician referrals and newspaper and process, Tufts CSDD analyzed success rates for compounds transitioning from one 1. Physician referrals 11% Efficacy issues leading to failure dominated for certain therapeutic classes up from 46% in 2000-08. radio ads. 2. Newspaper ads 11% Worldwide growth in biotechnology product sales grew 353% between 2001 and phaseofclinicalstudytothenext,keyfindingsofwhicharesummarizedinthisreport. Nearly 28,000 principal investigators (PIs) in 2012 participated in studies regulated Therapeutic Classes with Relatively High Efficacy For investigational drugs that first entered clinical 2012, from $36 billion to $163 billion. Failure Shares The research-based industry s share of sponsorship of neglected disease 3. Radioads drug development increased to 44% in 2009-12, from 36% in 2000-08. EMR reviews to aid recruitment. 9% Approximately 6% of all Phase II-IV studies perform by the U.S. Food and Drug Administration (FDA) worldwide. While the clinical success rate for new cancer drugs entering clinical testing during the testing in 2000-09, more than half of the respiratory and antineoplastic indications (54.3% and The proportion of PIs based in North America has steadily declined, from 84% of the StudiesusingNOcentralizedretentionsupport 45% In 2012, the 21 largest pharmaceutical companies had 429 biotech products in clinical 12-year period studied was 13%, that rate doubled over the study period from 9.9% in To helpcombatneglecteddiseases,morethanadozenlargepharmaceuticalfirms Top retention tactics used: For all Phase II-IV studies that receive centralized development, of which 58% were monoclonal antibody products. 1993-98 to 19.8% in 1999-04 which suggests that drug companies are making headway 53.3%, respectively) that failed did so primarily for total pool of FDA-regulated investigators in 1996 to 61% in 2012. have pledged to donate 14 billion drug treatments to patients over a 10-year 1. Phone call period. reminders 10% retention support, the most common tactics are in improving the development process. Drug development overall remains a highly complex undertaking. Another Tufts CSDD study found that, for the top 50 firms, clinical 2. Travel reimbursement 8% efficacy reasons. From 1998-02 to 2008-12, the number of biotech company acquisitions by Big Pharma phone call reminders (10%), travel reimbursement 53% of all global FDA-regulated clinical trials are now conducted by independent, For the respiratory, antineoplastic, and CNS increased five-fold from 15 to 75 while the value of those deals jumped eight-fold. (8%), and other reminder notices (7%). community-based principal investigators. approval success rates for self-originated compounds across all therapeutic areas that therapeutic classes, commercial reasons ranked as 3. Otherremindernotices 7% entered clinical study during the same period ranged from 14% to 18%. For more, see the second most common reason for clinical study North American investigators have the fastest study start-up times and higher than Tufts CSDD Impact Report 2010 September/October: 12 (5). rowing global action to fight neglected diseases by developing and distributing failures. average enrollment performance. ver the last 20 years, the pharmaceutical industry, especially Big Pharma, has dramatically changed its R&D strategy, evolving from having an almost singular focus For antineoplastic and CNS indications, safety Combat Neglected Tropical Diseases, comprised of drug sponsors and other After peaking in 2003, the rate of complaints for PI non-compliance and fraud has new drugs appears to be bearing fruit. Last year, a group called Uniting to Tufts CSDD Impact Report page 3 Volume 15, Number 1 January/February 2013 on small molecule drugs in the early 1990s to today s broader and more dominant issues were as likely to be the primary reason for Gorganizations, issued the London Declaration on Neglected Tropical Diseases, dropped. Ofocus on biotechnology products. Last year, biotech products accounted for 71% of failure as they were for all indications in clinicalcommitted to helping achieve the goal of the World Health Organization (WHO) to the revenue generated by the world s 10 top selling pharmaceutical-biotech drugs. This study. control and eliminate 10 neglected diseases by 2020. Turnover rates among PIs is high, with about 40% of participating PIs annually remarkable growth mirrors the successful evolution of biotech research over the last three choosing not to conduct another FDA-regulated clinical trial. decades, which has spawned novel technology platforms and an extensive pipeline of products across a wide range of therapeutic areas. In 1989, only 13 biotechnology products Nearly half of cardiovascular failures were related to commercial issues diseases, as well as patient access to existing products through donation programs, Tufts CSDD s latest study tracking progress in drug development targeting neglected Therapeutic Classes with Relatively Low Efficacy Failure were commercially available; by 2012, that number grew to 210. While gastrointestinal/metabolism, musculoskeletal, summarized in this Tufts CSDD Impact Report, foundmarkedimprovementinnew Shares and systemic anti-infective compounds had a relatively low prevalence of efficacy failures, efficacyhowever, annual funding for R&D targeting neglected diseases has stagnated at $3 billion, landscape since Tufts CSDD began examining the field in detail seven years ago. approvals by global regulatory authorities as well as donations and donation pledges. hange continues to be the watchword for the FDA-regulated principal investigator Biotech products often meet unmet medical needs, represent novel mechanisms of issues for these classes ranked as the most common about the same as it was in 2007. Moreover, certain diseases, such as leprosy and In 2012, for the first time, more than half of all FDA-regulated clinical trials action, improve disease outcomes, possess relatively long effective patent lives, and reason for failure. trachoma, continue to be underfunded. While increased approvals may result in greater Cworldwide were conducted by independent, community-based principal investigators, as opposed to universities, hospitals, and government clinics. But the investigative command high prices. As a result, many have become blockbusters. These factors, along access to new medicines, policy makers need to ensure that safe, effective, and easy-toadminister products are adopted by health care systems, that they are affordable, and site landscape remains highly fragmented, with growing numbers of less experienced with patent expirations for many top-selling small molecule drugs, have constituted Safety issues accounted for 32.4% of musculoskeletal drug and 32.7% of systemic anti-infec- the driving force behind the dramatic evolution of Big Pharma R&D. To more fully that they reach the people who need them. professionals and limited infrastructure. The landscape is also less stable as turnover understand the proliferation of biotech product development in large pharmaceutical tive failures, substantially more than the 20% of ratesremainhigh particularlyinregionsoutsidenorthamerica. companies, Tufts CSDD examined R&D, pipeline, and sales data for three specific time gastrointestinal/metabolism and 13.3% of cardiovascular candidates that failed for safety reasons. This Tufts CSDD Impact Report presents recent analyses on the changing site landscape points: 2002, 2007, and 2012, key findings of which are summarized here. Cardiovascular drugs experienced the highest and offers new insights, as well as updates to results of analyses presented in earlier prevalence of commercial failures (46.7%) among reports. See Tufts CSDD Impact Report 2005 May/June:7 (3) and Tufts CSDD Impact all classes of compounds analyzed. Report 2009 January/February:11 (1). Share of Failures Share of Failures Overall North America Western Europe Eastern Europe Asia/Pacific Latin America Global site landscape remains highly fragmented with variable performance Tufts CSDD Impact Report page 3 Volume 15, Number 5 September/October 2013 To preview Tufts CSDD Impact Reports, visit http://csdd.tufts.edu/reports for a complimentary PDF download. To subscribe, visit http://csdd.tufts.edu/reports to order online. Tufts CSDD corporate subscriptions are available at volume discounts. Contact Jonathan Hsieh at 617-636-0840 or email Jonathan.Hsieh@tufts.edu for details. 12

T U F T S C S D D E X E C U T I V E F O R U M RO U N DTA B L E S E R I E S An ongoing program of highly interactive, one-day roundtable discussions for senior R&D leaders, hosted by the Tufts Center for the Study of Drug Development. February 20, 2014 PREDICTORS OF CLINICAL SUCCESS: NEW APPROACHES TO BOOSTING SUCCESS RATES Improving clinical success rates remains one of the pharmaceutical industry s greatest and most vexing challenges. High attrition rates are associated with extended development times, increased costs, and diminished investor and public confidence. Tufts CSDD recently analyzed a set of clinical and operating attributes of successful and terminated drug candidates in an effort to create a tool to better predict clinical success or failure. This roundtable will open with a presentation of CSDD's findings, and will follow with a discussion of new approaches by companies to improve overall success rates. May 15, 2014 RISK-SHARING PARTNERSHIPS AND ALLIANCES: STRATEGIC AND OPERATIONAL CHALLENGES Over the past several years, numerous partnerships, alliances, and consortia have been formed to share risk, lower cost, and drive efficiency and speed in pharmaceutical R&D. This roundtable will look at recently created and established collaborations and explore their strategic and operational challenges. We also will look at their actual and anticipated impact on performance, cost, and quality. September 18, 2014 NEW DIRECTIONS IN OUTSOURCING Sponsor-CRO relationships continue to evolve to drive higher levels of efficiency, performance, and cost advantage. This roundtable will examine ways that sponsors are modifying their strategic and integrated alliance models to meet current demands. We will review innovative synergies and assets that CROs are bringing to their relationships with sponsors, and we will assess new management mechanisms to better leverage collaborative partnerships. November 6, 2014 MANAGING THE CHANGING INVESTIGATIVE SITE LANDSCAPE The global investigative site landscape remains fragmented and undeveloped with highly variable and unpredictable clinical trials performance. This roundtable will open with a review of recent Tufts CSDD studies characterizing the current investigative site landscape and benchmarking site management practices and their impact. Subsequent presentations will examine opportunities to consolidate the global investigative site landscape and drive higher levels of operating sophistication, maturity, and efficiency. Roundtables are held 10 a.m. 4 p.m. at the Tufts Center for the Study of Drug Development in Boston. For more information, call Robert Chung at 617-636-2187, or email robert.chung@tufts.edu.

Tufts Center for the Study of Drug Development T U F T S U N I V E R S I T Y OUTLOOK 2014 75 Kneeland St., Suite 1100 Boston, MA 02111 USA TEL 617-636-2170 FAX 617-636-2425 EMAIL csdd@tufts.edu WEB http://csdd.tufts.edu