Bet on chemistry
New cancer drugs allow you to be treated without hospitalization
Matthew Herper, Forbes, 06.02.2018
Translated by Maria Hanyutina
The drug Jakafi has made the shares of the pharmaceutical manufacturer Incyte one of the most popular on Wall Street, and the company itself is the subject of endless speculation about the takeover.
Susan Waite recalls how five years ago she first heard the name of her disease – myelofibrosis. "I got on the Internet," she says. – Actually, you can't, but everyone climbs. At that time, they lived with it for two and a half years." This rare type of cancer turned her bone marrow, the producer of blood cells, into scar tissue, causing anemia.
Susan Waite, 48, had two children in college at the time, and another at school, and she was so tired that she turned from a socialite into a person who goes to bed right after dinner. Her spleen was swollen with blood, hurt and wouldn't let her eat. Then the doctor prescribed Susan a medicine called Jakafi manufactured by Incyte from Wilmington, Delaware. After a few days she felt better, her spleen shrank. "I could eat normally again," she says. "It was amazing." What's today? She still has a little anemia, but overall everything is fine. "I feel almost normal," she says.
Jakafi has made Incyte's shares one of the most sought-after on Wall Street, and the company itself has been the subject of endless takeover gossip. The reason is partly in the effectiveness of this medicine, and partly in its stated price ($11,587 per month, indefinitely, usually covered by insurance). Last year, Incyte made $104 million in profit on sales of $1.1 billion, showing annual growth of 1496% and 47%, respectively. Its shares have risen in price six times over the past five years, with a market capitalization of $25 billion.
The secret of Incyte is its commitment to the traditional activities of large pharmaceutical companies, while other firms are chasing newfangled technologies. A thousand Incyte employees still work in Delaware – a conservative position against the background of the fact that pharmaceutical companies, ranging from the giant Merck to the biotech firm Alexion, are settling in Boston, closer to the main centers of biological research. Moreover, Incyte focuses on the basic chemical stage of drug creation, a part of the new drug development process that many large companies are increasingly outsourcing.
Incyte already has two new developments: a remedy for arthritis, created jointly with the American pharmaceutical company Eli Lilly, which has already been approved in Europe, and in early 2018 will be submitted for approval to the US Food and Drug Administration (FDA), as well as a second cancer drug that has already aroused the interest of investors. 57-year-old pharmaceutical veteran Herve Oppno, who became CEO of Incyte in 2014, believes that the company can change the approach of American healthcare to cancer treatment. "If we are successful, the entire cost of cancer treatment will consist of the price of the drug," says Oppno. – I hope so not from the point of view of business, but from the point of view of medicine. I would like to be able to replace palliative measures and hospital stays for patients who have several months to live with medications that fight cancer very effectively."
Incyte has spun off from one of the pillars of American business – DuPont. In June 2001, the chemical giant decided to sell its pharmaceutical division to Bristol-Myers Squibb for $7.8 billion. It took four months to complete the deal, during which time the head of the division, Paul Friedman, found another job.
Friedman met Julian Baker, a well-known hedge investor in the field of biotechnology. Baker had a stake in the then little-known company Incyte, which sold genetic data to drug manufacturers. At the beginning of the century, a price bubble formed in the field of genetic data, which allowed firms like Incyte, Celera Genomics and Millennium Pharmaceuticals to make a lot of money. By the end of 2001, Incyte had $508 million in accounts. Baker and Friedman made a deal: Friedman headed Incyte, but the research laboratory was located not in Palo Alto, next to the company's office, but in Wilmington, where DuPont is based.
Friedman immediately began to poach the best scientists from DuPont. "People didn't want to work for Bristol-Myers Squibb," says Friedman, now CEO of Madrigal Pharmaceuticals, but still a member of the Incyte board of directors. "They wanted to find a new job." Swami Yeleswaram, one of Incyte's research associates, recalls how Friedman called him and asked: "Well, Swami, are you transferring to Incyte?" According to Yeleswaram, Friedman did not like that he did not immediately agree. A significant part of the Incyte team, including the current head of the research division, Reed Hubert, and the main developers of the drugs, were lured from DuPont.
The Incyte gene database was supposed to help this team develop new drugs. This did not happen, however, one gene patent (which, by the way, later turned out to be invalid) showed researchers the right way – to a protein called janus kinase 2 (JAK2), involved in the nervous system. The company hoped that the drug targeted at him would treat blood cancer – plasmocytoma.
In 2005, when Incyte was preparing the drug for clinical trials, three articles were published in the journals Nature, Blood and the New England Journal of Medicine proving that mutations in the JAK2 gene were the main cause of myelofibrosis and the related disease polycythemia (causes blood thickening). In one day, the team changed their plans, deciding to investigate the effectiveness of the created medicine against these diseases.
Then a new problem arose, this time with side effects, as well as with the rights to the original JAK2 inhibitor Incyte. Friedman gave his team a week to find an alternative, and another JAK2-oriented substance was used, which was originally planned to be turned into a cream for external use. In 2007, the drug was undergoing clinical trials. In 2010, the results published in the journal NEJM showed that in half of the patients taking the medicine, the volume of the spleen decreased by 50%. The FDA demanded additional evidence that patients began to feel better. The drug, called Jakafi, was approved in November 2011. In the first year, it was sold for $136 million.
Friedman decided to leave when the drug went on the market (Incyte's main building in Delaware now bears his name). Herve Oppno, who grew up in France and made a career in the French pharmaceutical company Rhône-Poulenc Rorer, was chosen to replace him. At that time, he was the head of oncology at the Swiss drug giant Novartis, which had obtained the right to sell Jakafi outside the United States. Oppno says he couldn't miss the opportunity to build a company around this cancer drug.
In 2016, Oppno acquired the European division of Ariad Pharmaceuticals from Cambridge, Massachusetts, the deal included the rights to another blood cancer drug to sell future Incyte products in Europe. In April 2017, a rheumatoid arthritis remedy that Incyte licensed to Eli Lilly was rejected by the FDA. To the surprise of investors, in August Eli Lilly announced that it would be able to apply for registration of the drug again in January 2018.
Many investors pin their hopes on a new substance developed by Incyte employees – epacadostat. This is the brainchild of biologist Peggy Scherl, who also came from DuPont. She was interested in the cascade of chemical reactions used by the developing fetus to protect itself from the mother's immune system. Tumors, as it turned out, also use it for protection. Incyte chemists have tested 10,000 potential substances to find the one that will fall into the goal set by Scherl. Even in laboratory conditions, the drug does not reduce the tumor, but only prevents it from growing.
But epacadostat seems to boost the effectiveness of two other drugs made by Bristol-Myers Squibb and Merck: Opdivo (2016 sales – $3.8 billion) and Keytruda (2016 sales – $1.4 billion), both forcing the immune system to attack tumors. In clinical trials at a late stage of deadly skin cancer, melanoma, tumors were most likely to disappear when using a combination of epacadostat and one of these drugs. A large Merck clinical trial examining the combination of epacadostat and Keytruda in melanoma will be completed in the first half of 2018. Roger Perlmutter, Merck's head of research, is a little nervous. He believes that the test results will be positive, but notes that the combinations of epacadostat and Keytruda, on the one hand, and epacadostat, Keytruda and placebo, on the other, have not yet been compared. "Now all arguments are based on one–sided information," he warns. "And she may be wrong."
Incyte management notes that the results shown by epacadostat during tests on melanoma and lung cancer are similar. If the drug really works, it will make Incyte one of the lucky few companies selling several super-successful cancer drugs that are expensive in the US market.
Oppno admits that the US healthcare system can be "illogical and cruel", forcing patients to pay a lot extra for medicines that are most likely to save their lives, but he is confident that his medicines will find their place in it. He compares the revolution in cancer treatment to the one that happened with HIV two decades ago: drugs like the ones he worked on at Incyte and Novartis will be expensive, but they will justify themselves by eliminating the need for long-term hospitalization (which is also very expensive in the US). And that would be great.
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