What’s the difference between biotech and pharma?
How are biotechnology drugs different from traditional pharmaceuticals, and how are biotech companies different to pharma companies?
This is one of a series of entry-level blogs that we commissioned for the non-expert reader
Biotechnology therapies, or biologics, are based on biology and harness cellular and biomolecular processes. They include vaccines, blood and blood components, allergenics, somatic cells, gene therapy, tissues and recombinant therapeutic proteins.
In comparison, small molecules, or synthetic drugs, are chemical compounds produced by chemical synthesis. They are easier to manufacture and to characterize because they tend to be simpler and more stable than larger molecules.
“Biologics are isolated from either humans, animals, or microorganisms, and they can be composed of sugars, proteins, or nucleic acids or complex combinations of these substances, or they may be living entities such as cells and tissues,” said FDA spokeswoman Sandy Walsh.
“Gene-based and cellular biologics are often at the forefront of biomedical research, and they may be used to treat a variety of medical conditions for which no other treatments are available” she said.
The FDA recently approved the first gene therapy that may be able to cure diseases like cancer. Novartis’ CAR-T (chimeric antigen receptor) therapy Kymriah was approved in August 2017 to treat pediatric B-cell acute lymphoblastic leukemia in patients up to 25 years old.
The CAR-T therapy involves removing T-cells from a patient and modifying them to include a new gene that contains a specific CAR that directs the T-cells to target and kill leukemia cells that have a specific CD19 antigen. Once the cells are modified, they are infused back into the patient to kill the cancer cells.
The clinical trials showed that the overall remission rate within three months of treatment was 83 percent.
“We’re entering a new frontier in medical innovation with the ability to reprogram a patient’s own cells to attack a deadly cancer,” said FDA Commissioner Scott Gottlieb at the time of the approval.
Gene editing technologies, such as CRISPR-Cas 9, can alter DNA by adding, removing or altering genetic material, and the new technology allows scientists to create cell and animal models more quickly.
Monoclonal antibodies (mABs) comprise the largest class of biologics. An important component of personalized medicine, mABs target specific targets to interfere with the action of a chemical or receptor.
Some of these mABs have transformed care, such as Roche/Genentech’s breast cancer drug Herceptin that targets the HER2 protein, which is now a standard screen for breast cancer to determine which patients will best respond to the drug.
Examples of mABs include BMS’ melanoma therapy Yervoy, a cytotoxic T-lymphocyte antigen 4 (CTLA-4) blocking antibody; BMS’ Opdivo, a programmed death receptor-1 (PD-1) blocking antibody; AbbVie’s Humira, a recombinant human IgG1 mAB specific for human tumor necrosis factor; and Roche’s Actemra, an interleukin-7 (IL-6) receptor inhibitor.
First-in-class small molecules include Novartis’ kinase inhibitor Gleevec and Gilead’s hepatitis C blockbuster Sovaldi, a nucleotide analog NS5B polymerase inhibitor, which is curing HCV.
The mABs mentioned above target molecules which are outside cells (either on the cell surface or circulating in the body). Because of their size, mABs cannot penetrate cells and hit important intracellular targets. As such, the number of disease-associated targets that mABs can be deployed against is limited. In contrast, small molecules can be designed to penetrate the cell membrane and hit intracellular targets. Unfortunately, there are several important intracellular targets that even small molecules can’t hit. These include, for example, inhibiting the interface between two big proteins in the cell (“protein-protein interfaces”). A larger molecule (like a mAB) would be required for such a job. Excitingly, new technologies are in early stages of development which may enable the delivery of mAB-type macromolecules to the inside of cells. This could unlock several so-called ‘undruggable’ targets; high value targets that cannot currently be hit with either small molecules or biologics.
Increasingly, biologics represent a larger portion of companies’ portfolios, and they will likely take a larger share in the future for several reasons.
First, it is quicker to make a biologic drug. A small molecule needs to be discovered and optimized, which takes an average of 5.5 years from target to a drug ready for a Phase 1 clinical trial (Source: Paul et al, 2010). Biologics can be much quicker.
Recent studies suggest that due to the higher target specificity and lower off-target effects, biologics might have a higher rate of success than small molecules. In fact, the likelihood of success from phase I to approval was twice the rate in biologics compared to small molecules, according to a study published in Translational Medicine.
The specificity of biologics also means they can have a better side effect profile. It is hard to make a specific small molecule, which means many small molecules are ‘dirty’, hit many targets in the body, leading to unwanted “off-target” side effects.
Biologics can do several things at the same time. They can be engineered to be bi-or tri-specific, meaning they bind to two or three targets. This can be useful if you want to pull immune cells closer to a tumor cell, for example in the case of approved biologic blinatumomab.
Drug delivery remains a challenge for biologics compared to small molecules. Small molecules can be delivered orally, but biologics are usually injected. Blinatumomab needs to be infused continuously which requires specialist equipment (an infusion pump which needs to be programmable, lockable, non-elastomeric, and have an alarm).
The regulatory pathway is slightly different for biologics and synthetic molecules in the way they are reviewed. Synthetic drugs are approved in the U.S. under a new drug application (NDA) by the FDA’s Center for Drug Evaluation and Research; whereas biologics are approved under a biologic license application (BLA) by the Center for Biologics Evaluation and Research.
Lastly, biologics typically have a longer franchise life, which is very attractive for companies. The U.S. patent term is 20 years. Small molecules can secure five years of additional exclusivity and biologics 12 years. However, once this legal exclusivity has expired, small molecule drugs are much more vulnerable to generic competition. When generics are introduced to the market, sales of the branded original typically reduce dramatically. In contrast, due to the size and complexity of a biologic, it is virtually impossible to copy such a macromolecule exactly. Generics of biologics drugs are called ‘biosimilars’. Because biosimilars are not identical to the branded original, patients and doctors can be more reluctant to adopt them. This means that sales of the original biologic decline at a slower rate compared to sales of small molecules. This is even truer for cell therapies.
How are biotech companies different than pharma companies?
The definition for a biotech company compared to a pharmaceutical company is much less clear-cut, and one would be hard-pressed to find a definitive answer.
Traditionally, pharmaceutical companies focused on small molecules, while biotechnology companies focused on large molecules. But this is no longer the case, and big pharma is more agnostic about large and small molecules.
Today, the distinction between biotech and pharma is leaning more toward “who is doing the research and who is doing the development in the drug R&D process,” said Phosphagenics CEO Ross Murdoch.
Biotechs tend to be leaner and more nimble and are able to change course more quickly than larger pharmaceutical companies with their rigid layers of management. They tend to hire scientists with deep experience in certain specialty areas.
“For people going into companies, biotechs are not a place if you’re learning. They tend to be a lot leaner and have people performing multiple tasks, and they don’t have time to train people,” Murdoch said.
A clinical pharmacologist by training, Murdoch has spent most of his career working with big pharma companies such as GlaxoSmithKline, AstraZeneca and Shire. He’s run early development programs for big pharma and has also managed a few biotech companies.
Murdoch said that in the 1990s, big pharma used to have the attitude that if “you threw enough money at a project and put enough people in a room they would invent.”
“But the probability of success is so low in inventing, and companies couldn’t afford to cover the inventing end of it anymore,” he said, noting that pharma companies now look to the research that comes out of biotech companies that is often fostered in universities.
Biotechs leaner, nimble and take on more risk
Biotechs are more about moving rapidly, taking risks and driving to produce, while big pharma is more focused on certainties that it can put its machinery around to get a product to market.
“Pharma is really good at the big grunty drug development work of phase III onward, and biotech is really good at the early-stage research,” Murdoch said.
Pharma companies today are less worried about the size of the molecule and more interested in how they can develop it to a specific type of indication as they have begun to narrow their focus to specializing in certain areas, Murdoch said.
Race Oncology CEO Peter Molloy said he would define “biotech” as more of a business model that is technology agnostic.
“Biotech drug development firms exist because big pharma no longer has the capacity to discover and develop new drugs,” he said. Instead, they focus on commercialization and end of development with big phase III trials.
Anthony Walker, managing partner of consultancy Alacrita, agreed that the technology of the drug makes no real difference as far as the fundamentals of drug development are concerned.
“However, when you get into gene therapy or cell therapy, then it’s a different type of territory,” said Walker, who also co-founded immuno-oncology company Onyvax.
“There’s not a whole raft of manufacturers you can go to like you can for a chemical drug. In fact, there’s nobody else that can make your product. You’re often the only one in the world,” he said.
Pharma buying spree
With the average cost of bringing a drug to market pegged at roughly $2.4 billion, and with 90 percent of drug development programs doomed to fail, big pharma realized it couldn’t go it alone anymore. It increasingly needed to think like a biotech, with a focus on being nimble, more flexible and able to make quick go/no-go decisions.
Amgen’s Jessica Droge, executive director of business development in the U.S., said that Amgen relies heavily on genetics for making early kill decisions as well as making study designs more efficient.
Although killing a drug is never an easy decision, companies can’t afford to run big phase III programs that flop. Droge pointed to a Merck & Co. phase III Alzheimer’s disease trial that included 30,000 patients, but the drug was killed because it didn’t make a big difference in patient lives.
Big pharma began to transform itself, moving away from the primary care market that was dominated by small molecule drugs, and it began to narrow in on biologics and specialty areas to improve R&D efficiency.
And for that, it needed the early research and discovery coming out of biotechs and universities. Big pharma increasingly formed relationships with academic centers located in biocluster areas such as Boston, San Francisco, San Diego, and London.
Mega deals ensued, such as Roche’s acquisition of Genentech, Sanofi’s acquisition of Genzyme and BMS’ acquisition of Medarex.
Biologics and specialty products now account for roughly 50 percent of companies’ portfolios, and they will continue to take a larger portion as more targeted therapies come into play.
Most first-in-class drugs have come out of biotech companies, such as Amgen’s genetically programmed herpes virus T-VEC to treat advanced melanoma and BioMarin’s enzyme replacement therapy Brineura.
Novartis found its CAR-T therapy inside the University of Pennsylvania. The company is also working with Intellia Therapeutics to explore potential uses of CRISPR-Cas 9 gene editing technologies.
Upfront payments for biotech deals are getting larger, and deals are being cut earlier and earlier -- often before a molecule reaches proof of concept, which was unheard of a few years ago.
For example, Merck paid $20 million upfront last year for a preclinical program in acute myeloid leukemia from Harvard’s Blavatnik Biomedical Accelerator program.
At the moment, immuno-oncology is reaping huge rewards.
Pfizer inked a deal with German Merck KGaA in immuno-oncology that saw the largest upfront payment to date of $850 million.
BMS also inked a deal with Flexus Biosciences in immuno-oncology that included an $800 million upfront payment for preclinical compounds.
What all of them are seeking is disruptive technology. And these days that is more likely to come from innovative biotechs.