With Streamlined Pipeline, Next Steps For Sanofi R&D Include Full Reorg

Sanofi Aventis has already cut 14 projects from its pipeline since February, but there could be more coming by the end of the year - and with a possible Plavix successor among the compounds in limbo, those decisions will be a true test of whether Sanofi is really going to steer clear of "me-too" type products that may be a tougher commercial climb.

Sanofi announced the ¹ discontinuation of 14 pipeline projects, including seven mid- to late-stage compounds, during its first quarter sales and earnings call April 29.

"We made some decisions [with our Phase II and Phase III programs] on the basis of either the product didn't have sufficient efficacy, there were safety issues, or they really didn't deliver what we were looking for in terms of added value to patients," Sanofi CEO Chris Viehbacher said in a published Q&A.

The company isn't stopping there. "Going forward, a complete R&D pipeline review will be conducted regularly by a newly-created 'Portfolio Management Group,'" Senior VP-R&D Marc Cruzel announced. And the exec identified four compounds with upcoming go/no-go milestones that will be reassessed near-term: AVE1625 for schizophrenia, xaliproden for peripheral sensory neuropathies, a West Nile virus vaccine, and idrabiotaparinux for deep vein thrombosis/peripheral edema and atrial fibrillation.

Putting Their Money Where The Market Is

Those in-limbo products highlight the philosophy Sanofi is applying to its R&D decisions - which Cruzel described as "focusing R&D resources on projects with the best chance of success and acceptable returns."

Looking at the criteria used in the just-completed pipeline review puts a finer point on it: the lengthy process, overseen by a "neutral external party," evaluated projects based on the degree of innovation, extent of patient need addressed, technical and commercial risk and overall value/return on investment.

Both the products that have already been cut and the products still under review demonstrate how the company has been making decisions based on market opportunity.

The jettisoned products include drugs aimed at crowded markets like cholesterol management and depression, and Sanofi seems to have determined that the "value proposition" wasn't there.

The antidepressant saredutant is a clear case. The product's future had been in doubt last summer (² (Also see "Sanofi-Aventis Pares Pipeline, Ditches Antidepressant Amibegron" - Pink Sheet, 11 Aug, 2008.), p. 7). The final decision to cut the program came after reviewing the results from a study in association with escitalopram. The NK2 antagonist had missed the mark in placebo-controlled studies but showed good long-term tolerability, so Sanofi was waiting on the results of combination trials with paroxetine and escitalopram.

The decision to cut two therapeutic cancer vaccines from the pipeline has interesting timing. Momentum for the novel class of products built a couple years ago, with several big pharmas buying into the idea, but the lack of any clinical advancement across the class had many in doubt. However, Dendreon just managed the first Phase III success for a cancer vaccine with its Provenge , possibly renewing hope (see ³ (Also see "Provenge Scores In Phase III; Will Dendreon Need To Confirm The IMPACT?" - Pink Sheet, 4 May, 2009.)).

Projects In Purgatory

The products that still might be terminated also come from therapeutic areas where market outlook is a major factor. Schizophrenia (where Sanofi is waiting to decide on AVE1625, a cannabinoid-1 antagonist) and peripheral neuropathy (where xaliproden hangs in the balance) have real commercial need. Schizophrenia in particular, despite the number of competitors, has a demand for new therapies to address treatment-failures (⁴ (Also see "Support For Serdolect In Specific Patients, But Panel Can’t Define Population" - Pink Sheet, 13 Apr, 2009.), p. 17).

The antithrombotic idrabiotaparinux is the most intriguing example of how Sanofi may be pulling back from development of "me-too" type projects that do not have clear first-in-class/best-in-class rationales.

Sanofi had worked on modifying the Factor Xa inhibitor idraparinux, originally a joint project with Organon, to improve its dosing profile. Biotinylated idraparinux, or idrabiotaparinux, is a long-acting neutralizable Factor Xa inhibitor administered weekly by subcutaneous injection. It would be similar to GlaxoSmithKline's parenteral indirect Factor Xa inhibitor Arixtra (fondaparinux).

But most development in the Factor Xa area is focused on development of an oral, direct Factor Xa inhibitor - like J&J/Bayer's pending Xarelto (rivaroxaban) and Bristol/Pfizer's apixaban. There are at least five other oral agents behind those (⁵ Pharmaceutical Approvals Monthly October 2008, p. 3). Therefore Sanofi's idrabiotaparinux would be going into a market where a different delivery option will be available and where competition is hot - making the value proposition a very difficult equation. Sanofi does, however, have an ultra-low molecular weight heparin in a broad Phase III program, AVE5026, which would be a potential successor to the firm's Lovenox .

Viehbacher singled idrabiotaparnux out as an area where he wanted to give a "little bit of a sense of what goes on behind the curtains." As thrombosis is a key market for Sanofi - which stands to lose Plavix to generic competition in 2011 - that's one investors are keen to know about.

"I would be skeptical of the product," he stated. On the other hand, the CEO noted, "Marc [Cluzel] is passionate about the product. I think that's a healthy thing. There are plenty of people that would tell you that Plavix would never have seen the light of day if R&D hadn't been passionate about it."

The wait-and-see moment may not really be contingent on the drug itself. As with all blood thinners, the potential for bleeding events exists. He noted that though no signal has yet surfaced, the firm's decision to continue development will be contingent on FDA's comfort with the drug's safety profile. The agency's decisions on the pending prasugrel (Lilly/Daiichi Sankyo's Effient ) and rivaroxaban might soon give some clarity on that front.

Another product where Sanofi is waiting on the next milestone is the firm's West Nile vaccine, which is notable because many firms are emphasizing products aimed at emerging markets. Sanofi's highest profile public health project - a dengue vaccine, which could earn the company a priority review voucher - was highlighted as a promising R&D project, where the firm is pushing development as rapidly as possible. Cluzel did note that it is expected to be first to market.

Sanofi has already lost the first-to-market position for a different specialty vaccine, for Japanese encephalitis. Novartis and Intercell beat them out with the approval of Ixiaro March 30, for U.S. travelers (⁶ (Also see "Intercell Reaches Commercial Stage In US: Japanese Encephalitis Vaccine Gets FDA Okay" - Pink Sheet, 1 Apr, 2009.)). But Sanofi is trying another tack. With its own Japanese encephalitis vaccine, Sanofi is trying for approval in Asia first; regulatory submissions are slated for the third quarter.

Along with the dengue vaccine, Cluzel spotlighted a pair of oncology projects to counter the negative pipeline news. With BSI-201 (from BiPar), described as a potential first-in-class and best-in-class PARP inhibitor, he spoke of the potential to be a platform therapy in oncology. He also focused on the VEGF Trap agent aflibercept, where they have a broad development program ongoing. The regulatory strategy for aflibercept had been under review last year after a mixed trial in advanced ovarian cancer. Ovarian cancer is not one of the Phase III targets.

Changes To The Company's R&D Profile

Cluzel also walked through how the revisions to the pipeline change the company's overall R&D profile. The firm's largest therapeutic area is vaccines (18 novel assets), followed by central nervous sytesm (11) and oncology (8). In internal medicine, thrombosis, cardiovascular and metabolic disorders, the company has three to four projects. In total, the streamlined pipeline now consists of 51 new molecular entities and vaccines. Notably, 21 of those are in Phase III or pending at FDA.

Sanofi is also now evenly split between chemical entities and biologics - with vaccines comprising 35 percent of the 49 percent large molecule share. However, Sanofi's dollar spend in R&D is still weighted toward drugs. In 2009, the firm will increase R&D spend on vaccines, but there will be a low-single- digit decline in R&D spend.

Currently, 73 percent of Sanofi's pipeline comes from internal work - but the company signaled that the 27 percent from partnerships and collaborations is likely to grow. A couple of times Cluzel mentioned the intention to reallocate resources to external R&D partnerships, and that licensing will be aimed at all stages of development.

More Reorganization To Come

The streamlined pipeline is only the first part of a larger R&D transformation initiative. Now that the firm has completed a pipeline review, it will determine a set of key technologies and disease areas and come up with a new R&D organization. Details on those steps will be given when Sanofi releases its second quarter results.

For Sanofi, the timing is right for an R&D overhaul. The company is still recovering from a string of product development setbacks (most recently with rimonabant) (⁷ (Also see "Sanofi-Aventis Pares Pipeline, Ditches Antidepressant Amibegron" - Pink Sheet, 11 Aug, 2008.), p. 7). Coupled with that was the start of new leadership. When Chris Viehbacher, formerly GlaxoSmithKline's North American president, took the helm as Sanofi's CEO in December 2008, the board charged that R&D "must be better adapted to the new regulatory and economic constraints of the market" (⁸ (Also see "GSK’s Viehbacher Charged To “Adapt” Sanofi-Aventis To New Realities" - Pink Sheet, 15 Sep, 2008.), p. 13).

The idea of picking targeted R&D focuses is a popular one for big pharma. The most recent splash there was Pfizer's latest round late in 2008, when the company backed away from cardiovascular (⁹ , p. 20).

In terms of organizational change as a means of encouraging innovation, Sanofi will likely realign into smaller scale groups, similar to other big pharmas' efforts to capture the biotech model and innovation-producing atmosphere. GlaxoSmithKline has been a leader there, first with its Centers for Excellence in Drug Discovery and later with the even smaller, competitive system of Drug Performance Units (¹⁰ (Also see "GSK Tries to Mimic Real-World Biotech" - In Vivo, 1 Feb, 2009.)). The merged Pfizer-Wyeth R&D organization is also pushing the research side into smaller groups, headed by accountable chief scientific officers in discrete areas.

Whatever the R&D organization is, Sanofi may be imposing a system of metrics to guide R&D decisions (a tactic Wyeth had incorporated). Speaking about the R&D decision-making, Viehbacher said, "I think that what is important is that you don't kill that passion on the scientific side, but you do put in place a number of milestones."

"It's not all so black and white here, and I personally have a huge respect for our R&D colleagues who really do believe in a product, because at the end of the day, when we look at the history of the industry, sometimes that belief has really triumphed over commercial logic. ... We know these are some projects where not everybody would see immediate benefit, but we have identified milestones, we have a process and I think an objective way of looking at this."

- Mary Jo Laffler ([email protected]) and Jamie Hammon ([email protected])