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Betting on BEAT

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Bouyed up with promising research results, Glenmark seems to be revving up for some major out-licensing deals. Do they finally have a blockbuster waiting in the wings? Will their bets pay off? By Viveka Roychowdhury

Last December, Glenmark Pharma unveiled its strategic blueprint for the next decade. In the 16 years since its IPO in 2000, the Mumbai-headquartered company has achieved many milestones. It has grown into a global entity, from two formulation facilities in 2000 to 17 facilities across four continents, seven of which are approved by the US FDA. International revenues have grown from eight per cent to 70 per cent of total revenues. Consolidated revenue went from $31 million in 2000 to $1.2 billion in 2016.

But more importantly, the management realised that the generics game was not sustainable as a sole business and hence took the first steps into new molecular entity (NME) research in 2000. The announcement in December was a reaffirmation of this stance, even though the company today is a leading player in the generic dermatology space in the US and has filed approximately 200 drug master files (DMFs) in various markets in the API business segment.

Its three business segments clocked healthy CAGRs over the past five years, with APIs at 21 per cent, followed by generic formulations (20 per cent) and branded formulations (19 per cent).

There have been seven out-licensing deals since 2004,  with the likes of global majors like Forest Laboratories and Teijin (2004-05) , Eli Lilly and Merck (2006-2007), and Sanofi (2010-11). In fact for 2011, a year after the IPO, the company won two awards from the London-based SCRIP as the  ‘Best Company in Emerging Markets’ and ‘Best Overall Pipeline’. Even though all three out-licensed molecules ultimately suffered setbacks before the Sanofi deal too fell through, Glenmark had clocked cumulative revenues of over $20 million.

R&D roulette

Pharma R&D has always been a high risk-high reward game, a Russian roulette at best. And Glenmark has been one of many hopefuls, chasing dreams of a blockbuster, only to have them turn to dust. In October 2008, Eli Lilly stopped clinical trials of Glenmark’s pain drug molecule after adverse findings. In August 2009, Glenmark’s first out-licensed molecule, oglemilast, was terminated by Forest as Phase IIb dose range studies on the COPD molecule were not successful enough. Glenmark’s deal on oglemilast with Teijin Pharma for the Japan market also met the same fate.

Not all of the out-licensing deals were terminated because the molecule was snuffed out due to unimpressive data.  For instance, in October 2006, Glenmark had out-licensed melogliptin for type-2 diabetes to Merck. But less than two years later, in February 2008, the MNC decided to refocus its portfolio and stop further investments in diabetes R&D. This, in turn, led to R&D on Glenmark’s molecule being terminated.

Coming after these disappointments, the Sanofi deal in 2011 for one of Glenmark’s first monoclonal antibodies, vatelizumab (GBR 500) was seen as a major positive for Glenmark, but Sanofi too decided to return the molecule in 2016.

But Glenmark has not given up. It is very clear from the strategic blueprint released in December that going forward, the engine of the next level of transformation will clearly be the R&D pipeline, which seems to have three main areas of focus: oncology (the company has four NOEs from preclinical to Phase 1), dermatology (one NME in Phase 2) and respiratory (four NOEs, in preclinical to Phase 3). The 10th molecule is for pain and is in the Phase 2. Any one of these 10 NOEs are potential candidates for out-licensing deals in addition to four NOEs which have been classified as non-core assets.

The market is already sniffing out the molecules with promise. The HDFC Securities report says that the company believes that GBR8383 (which is in pre-clinical phase) is going to be a groundbreaking product and is showing better efficacy than current treatments.

Glenmark’s earliest NDA/ BLA filings, as per currently planned studies, is in 2019, for two respiratory molecules in the speciality area, GSP301, currently in phase 3 and GSP304 currently in phase 2.

With a mission statement to “transition into an innovation-led global pharmaceutical organisation over the next decade, the identified focus ‘growth catalysts’ besides NOEs, are filing as many as nine new drug application (NDA)/ biologic license application (BLAs) in the next 10 years and targeting 30 per cent of total revenues from specialty and innovation segments over the next decade.

The change in the distribution of ANDAs across segments also give a hint of Glenmark’s chosen path. In FY12-16, the “ANDAs were distributed across just four segments: the bulk of 46 per cent in oral solids, followed by topicals (21 per cent), onco injectables (18 per cent) and oral hormones (15 per cent).

Contrast this with the projected picture for FY17-21, when oral solids will shrink to 22 per cent, topicals grow to 35 per cent, onco injectables reduce to 12 per cent, hormones reduce to eight per cent with two new segments, drug-device combinations (16 per cent) and controlled substances (seven per cent) are sure to play a significant role.

Muted market reaction

But Glenmark’s R&D play in the last 16 years, has taken a toll on the balance sheet, as had currency fluctuations. The market is cautious about Glenmark’s strategic blueprint. With a Neutral rating, an HDFC Securities Institutional Research report in response to Glenmark’s strategy says, “Although we believe Glenmark’s strategy to invest in three lucrative therapies enthuse us, it is a long term play and monetisation remains the key. Due to the increase in R&D spend on specialty and novel pipeline, the possibility of debt reduction with gZetia cash flows could be limited. Free cash flows have been weak historically and the balance sheet is also heavily leveraged.”

According to the company, it has around approximately 15 in-licensing deals either signed or in advanced discussion stage but most of these opportunities are likely to be monetised post FY19E. Hence external partnerships will be key to grow its business, with launches expected from 2HFY18. Estimates are that the total market size of deals under discussion is approximately $12 billion. Glenmark has already executed agreements for products such as generic Abraxane, g-Nuvaring and g-Suboxone.

The company will also be launching inhalers in the next three-four years, looking to target multiple new dosage forms as a differentiator against competition. Two of these additional new dosage forms could be launched in CY18 and CY19.

At the helm

So will Glenmark succeed this time? Will any of these NOEs turn out to be the blockbuster that Glenmark needs to validate its strategy? And is there anything different this time around when the company sits at the out-licensing deal table?

Dr Kurt Stoeckli

Steering this next level of strategic growth on the R&D side, is Dr Kurt Stoeckli, President and CSO, Glenmark Pharma who joined the company last October. No stranger to India, he’s quite familiar with the country, having visited several pharma R&D and manufacturing sites here during his two decades with MNC pharma companies Sanofi and Novartis/ Sandoz.

Clearly, he doesn’t see the move from MNC to Indian pharma as a step down. “My motivation to join Glenmark is the potential of the pipeline and secondly, the vision of the leader, Glenn Saldanah.” As promoter and Chairman and MD of the company, Saldanah has ensured that the company set up by his father has more than held its own against it peers in India and globally.

Stoeckli finds the pipeline attractive and his priority will be to make sure that we can realise what is there, turn it into late stage products and take them to market. “Coming from Big Pharma, I was always exposed to the challenge of moving out of Europe to establish small molecule manufacturing sites in India because of the cost effectiveness that we have here in this domain. Now, I find it quite interesting and remarkable being exposed to the opposite. The vision of Glenn (Saldanah, promoter and Chairman and MD) to expand into innovation globally is a good vision to support.”

You get a sense of the urgency when he says, “I want to make sure that we will rapidly follow up on the priorities,” by further selecting the top priorities within the focus areas of research portfolio and making sure that resources are aligned to pursue them.

The heart BEAT of Glenmark’s oncology portfolio

The BEAT platform, which stands for Bispecific Engagement by Antibodies based on the T cell receptor, is built around the concept of binding at least two targets with one single bispecific antibody. Though an attractive concept to design new therapeutics, for the past two decades, bispecific antibodies have reportedly posed a challenge to the industry since all antibody formats developed so far have had stability and/ or manufacturing issues.

In terms of the biology of the BEAT platform, according to the company website, a major challenge in the engineering of bispecific antibodies is to produce a heterodimeric bispecific antibody without the presence of contaminating homodimeric antibodies.

Glenmark’s scientists turned to nature to solve this engineering problem and designed a bio-mimicry strategy to establish a stable heterodimer. Hijacking the T-cell receptor (TCR) constant domain alpha/ beta interface found on natural T-cells and grafting it onto the antibody CH3 homodimer interface results in two different heavy chains that readily assemble. This innovative solution results in an antibody highly similar to a natural one as only the buried interfaces of the CH3 homodimer domains are modified.

On the technology side, BEAT antibodies have demonstrated excellent stability and production yields. By implementing a “built-in” purification technology, Glenmark has been able to achieve a very high degree of bispecific purity after a single Protein A chromatography step.

The unique advantages which make BEAT a best-in-class technology to produce bispecific antibodies is the levels of stability, purity and scalability of the process, which have not yet been manufactured from a stable CHO cell line using standard processes

(Source: Company website)

Stoeckli is in fact no stranger to Glenmark’s R&D portfolio. While he was at Sanofi, in 2010, he was part of the decision to in-license one of Glenmark’s first monoclonal antibodies, vatelizumab (GBR 500), an antagonist of the VLA-2 (alpha2-beta1) integrin, for testing in a Multiple Sclerosis (MS) Phase II clinical study. Sanofi ultimately decided not to pursue further vatelizumab as a potential Relapsing – Remitting MS therapy, following the results of a pre-planned interim analysis that revealed the primary efficacy endpoint was not met. This decision was not due to safety concerns and with termination of the contract with Sanofi becoming effective in Q1 FY 2017, GBR 500 is now one of Glenmark’s top candidates for relicensing.

In his role in Sanofi as Group VP, Global Biopharmaceuticals Division & CSO for R&D France, Stoeckli played a pivotal role in fostering and managing Sanofi’s JV with Regeneron Pharmaceuticals. He is known for his successful leadership of scientific teams responsible for
discovery and development of both NBEs and NCEs, steering more than 20 projects as they advanced to clinical stages (ranging from Phase 1 through Phase 3) in the areas of autoimmune and inflammatory disorders, and oncology. With Glenmark’s focus on biologics, his extensive industry experience in driving biologics from early research up to Phase 3 is obviously key to achieving the company’s strategic  blueprint for the next decade.

His predecessor, Dr Michael Buschle has been designated as Glenmark’s Chief Scientific Mentor and will continue to work on the company’s worldwide drug discovery programmes and pharma development, according to a company release.

Betting on the BEAT platform

Cherry picking from the pipeline of the top priority areas, it is clear oncology is first.

As Dr Stoeckli reasons, “We put a lot of priority on the oncology sector. Which goes hand in hand with a number of things. First, Glenmark has done a great job in establishing a platform technology, BEAT, a second generation antibody platform, which is all about the engagers of immune cells. (See box:  The heart BEAT of Glenmark’s oncology portfolio) In my view, the products derived from this platform have the highest potential because they rely on very well understood mechanisms, validated targets. So we have combined validated targets with novel mechanisms of killing cancer cells. So we’ve de-risked at this point. And knowing how to deal with mechanisms means that we already have the ways to translate this into our clinical strategies. Having this information also allows our colleagues in clinical to size the studies properly, it’s not trial and error. The segment of patients can be selected. It is a targeted approach. And the alignment and full integration of research, in a patient centric way, makes for topnotch R&D today. That is how innovation can be somehow controlled from a risk perspective.”

Filings expected from Glenmark’s NME and specialty portfolio in the next decade

Source: Company presentation, above timelines are based on currently planned studies and may change based upon data, regulatory agencies feedback etc.

He also points out that as the three front liners, GBR1302 (which is a HER2 X CD3), GBR1342 (CD38 X CD3) and GBR1372 (EGFR X CD3), are in all segments, there is clearly a very high unmet medical need. Despite the fact that a lot of progress has been made, even the best standard of care, only reaches 30 per cent of patients. So, Glenmark clearly sees a huge opportunity.

The focus on immunotherapy could not just see these molecules as novel monotherapies but also eventually as combination immunotherapies. Stoeckli points out that this is a big trend today with both big pharma and biotech companies as nobody can predict which combination will be the best in which indications. He mentions an example of a checkpoint combo programme, when Johnson & Johnson (J&J) looked to partner for Darzalex (daratumumab) in combination with an PD-L1 drug atezolizumab which came from Genentech.

Similarly, another molecule, GBR 8383, which is a very strong (OX40R) agonist molecule, a check point regulator against multiple cancers, can also be used either in combination with Glenmark molecules or molecules from other companies. This according to Stoeckli, is the the greatest opportunity for Glenmark, both from a risk management and a business opportunity perspective.

He agrees that Glenmark has not been making a lot of noise about research results for a long time. The December 2016 strategic blueprint is in a way a signal that Glenmark now has research results good enough to talk about. He doesn’t share names of potential partners, but says, “Be sure that we are in touch with a number of companies, big and small, on a continuous basis. It is actually a good place to be now.”

And the BEAT platform is at the heart of this turning point. “We realised that once we had the BEAT platform and it gave us such exciting results over the last couple of months. This gave us the opportunity to expand into innovations. Frankly, the platform technology we’ve developed and the ability and capacity to scale it up all the way up to manufacturing, is not the only factor, but certainly one of the key enablers of making this change happen now.  Glenn was able to capture this very early, get new people on board and helping the team to realise this vision.”

The question is, will the company get the finances to pursue these leads, upto a point where bigger companies get interested? The blueprint freezes  R&D investments at 11 per cent of sales but is this adequate? As Stoeckli says, “If you look at R&D budgets, even the biggest ones (pharma companies) tell you that it’s not enough. I’ve just heard that the CEO of Hoffmann Roche Genentech, who spends $10 billion every year on R&D, said that his researchers come back to him ask for three times more than what he could actually spend. You could always spend more (on R&D). But you have to be disciplined as well. We have decided for strategic reasons to keep it at this level in a very disciplined way. Partnering would also help us in managing this.”

The proof of Glenmark’s strategic blueprint will only be visible 2019 onwards, when its first NDA is filed. Its first oncology BLA is projected to be filed in 2022. Hence, while the pipeline seems promising, will Big Pharma bite the bait?

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