Xconomist of the Week: Roger Perlmutter’s Parting Thoughts on Amgen
[Updated: 1:50 pm PT] Roger Perlmutter had a long run by biotech standards, a full 11 years, to put his stamp on R&D at Amgen. Some of the work he oversaw was unequivocally good (denosumab for osteoporosis and cancer), some bad (the EPO debacle), and some of the record is still a work in progress (44 drug development programs in clinical trials on the company’s website).
Perlmutter, an immunologist, stepped down last month from his job as executive vice president of R&D at the world’s biggest biotech company (NASDAQ: AMGN) to make way for his hand-picked successor, Sean Harper. [Updated link to consulting agreement.] While sticking around for a while as a high-paid consultant, the past few weeks have given him an opportunity to reflect, and consider what comes next. Perlmutter has also agreed to be the newest informal editorial advisor to Xconomy, a group of technology leaders around the country who we call Xconomists.
There’s no doubt that Amgen today is a much bigger, more potent R&D organization than when Perlmutter left Merck to join Amgen on Jan. 8, 2001. Amgen’s sales grew five-fold, from about $3 billion to more than $15 billion. The R&D budget grew almost four-fold, to $3.17 billion in 2011, and the company expanded from its base in Thousand Oaks, CA into other top U.S. biotech hubs like San Francisco, Boston, and Seattle. Amgen went from relying on two cash cows (Epogen and Neupogen) to become a more diversified operation that has seven novel molecules approved by the FDA for treating cancer, autoimmune disease, osteoporosis, and chronic kidney disease. Like most every R&D organization in this risky business, Amgen under Perlmutter had its share of stumbles—a Parkinson’s drug candidate that flopped, and cancer drug candidates that underwhelmed. Most notably, its attempts to exploit anemia drugs by testing higher doses backfired big-time as safety concerns emerged.
I spoke briefly with Perlmutter, 59, by phone earlier this week to do an exit interview about his time at Amgen, his thoughts on the industry, and what’s next. Here are the highlights, edited for length and clarity.
On what he sought to accomplish in the early days:
I set out four guiding principles from the start, and for 11 years we recounted it as a daily catechism. The first was that we were going to focus on grievous illness. We want to treat people who are very sick and make them somewhat better. We’d love to cure people, but that is rarely done in this business. What it means is you don’t focus attention on things that are not grievous. You eschew distraction, which is very important. In the traditional pharmaceutical industry, you can spend a lot of time trying to improve your product’s image. You can change things from being given twice a day, and into a once-a-day drug.
Second, I thought we needed to be modality independent. I was uncomfortable with what was happening at a majority of the major companies at the time. Often, medicinal chemistry was something seen in isolation, and a lot of attention was focused on the tool and not the task. I wanted a R&D organization that was focused on the task.
If I’m proud of anything in my 11 years, it’s that—creating an organization that’s comfortable with fitting the tool to the task. You start by asking, what are we trying to achieve with this drug? It could be a protein, a peptide, an antibody, a small molecule. I don’t care what the tool is you use, I want to focus attention on the task. That was a very useful way of describing our activities, and it attracted an impressive group of research scientists. Amgen isn’t really unique in that respect, but for a time we were.
The third principle was to do the experiment in patients, recognizing that preclinical models have poor predictive value for disease. You can invest a lot of time in them, but we are trying to treat human beings in this business, and we owe it to people to test them in the human setting. You have to build the tools necessary to test in humans, and ask things like whether your drug hits the target you intend, and then measure the outcome. That is still something that is not satisfactorily explored by biopharmaceutical companies.
The last one is what we call seamless integration. I wanted us to have the insights that came from the marketplace brought to our research, and vice versa. George Morrow (Amgen’s former executive vice president of sales and marketing) came in the same day I arrived, Jan. 8, 2001, not that I remember that date specifically or anything (laughs). George and I had the view there’d be no white space between us and we’d do everything but keep house together. I wanted marketing people in our meetings. Not to tell us what to do, but so they understand what we were trying to do, and so we in R&D understood the insights they had from the marketplace. That was what we were trying to do.
On what he considered the biggest accomplishment, other than the FDA approval of denosumab:
Early on, the company registered a longer half-life version of epoetin, which was darbepoetin (Aranesp). That’s a very successful drug and continues to be. It certainly had a large commercial impact. You can argue that the extension of half-life was not so important to patients, but it is an important drug. Enbrel is a hugely important drug around the world, and would never have attained the success it attained without the energy and effort we put behind it. Sometimes it is underappreciated how much work it takes to build new indications into an existing drug. Immunex discovered and developed it for rheumatoid arthritis, but subsequent registration programs and process development improvements gave us the ability to manufacture the drug at scale. Those process development improvements were hugely important for enabling us to expand the use of the drug for conditions like psoriatic arthritis, ankylosing spondylitis, and psoriasis.
Other drugs that get less attention are quite important. At time I came here, Sensipar was in clinical trials for secondary hyperparathyroidism (in kidney dialysis patients). It was our first small molecule. We built up expertise to do large-scale clinical trials, and that drug is selling nearly $1 billion a year. That’s a pretty big drug, pretty important. Now we’re awaiting the outcome of the Evolve study, which will show whether we can reduce cardiovascular morbidity and mortality. That’s a substantial, important thing. If look at romiplostim (Nplate), that drug is not a giant seller in billions of dollars, but has had a big impact in patients with autoimmune platelet destruction. It continues to grow dramatically.
On the change to the organization’s capabilities:
We were principally active in North America when I came here, and now we have development in over 50 countries. It was a pretty big expansion. We ran the kind of global trials that you saw for denosumab, such as the Freedom study, an 8,000-patient study. That was not something the company was capable of doing when I got here in 2001. The study started in 2004. I think we should all feel pretty good about that.
The big question now for our development organization is what the future looks like. The answer is we’ve got seven major programs in late-stage clinical trials. For a company of any size, that’s a lot. My proudest achievement is surely in building this organization. I’m very proud of the Amgen R&D organization, what it has achieved and what it can achieve. It’s responsible for important products like denosumab, but also provides the basis for durable advancement in human health.
On his biggest disappointment:
There’s so many, it’s hard to know where to start. There have been numerous programs I lavished attention on that turned out to be less significant that I hoped they’d be. Like many in 2001, I was persuaded that by blocking signal transduction pathways in tumor cells, we’d have a dramatic effect on tumor progression and survival. Despite an enormous amount of work at Amgen and other companies, the output has been modest. While we registered an important drug, which is efficacious in a number of patients, we failed in a number of areas.
On Vectibix, Amgen’s first anti-tumor medicine for colorectal cancer, which fell short of expectations:
Vectibix is a good drug for a small number of people, and is not nearly as effective as it should have been. It was a disappointment for me.
On why the time and expense of drug development keeps getting worse:
There’s no doubt it is harder now to register new (FDA-approved) drugs than it was a couple decades ago when I started. It’s harder for a number of reasons. There’s less room for new drugs. Generic penetration has had a pretty big effect on the impact of new pharmaceuticals. It’s impossible to bring forward a new drug that offers modest improvement when you’re competing with generics that cost pennies a day.
Not inappropriately, we’ve raised the bar dramatically on what we expect from new drugs. They have to have a clearly better benefit/risk profile. The FDA now wants to see more long-term outcome studies. That raises the expense of development substantially, when you’re talking about larger clinical trials.
On the other hand, I’d say the productivity of the biopharma research community, while declining, isn’t declining in the same way for all organizations. Matt Herper at Forbes, in what I think he’d say was a pretty simple but useful analysis, looked at the total spending on R&D, the number of drugs registered at major companies, and the amount of R&D spending per registered drug. Amgen was most productive, and AstraZeneca was the worst. And there was a big range from top to bottom. My view of this is that yes, it’s more expensive, and yes, it’s harder than ever before, and the only way to success is to eschew distraction. It’s so hard to do, to focus only on things that can make a real difference.
On which pipeline program investors should watch at Amgen:
One that is getting a lot of attention is AMG145, which is a PCSK9-targeted therapy for cholesterol reduction. We described recently that we are seeing quite dramatic lowering of LDL cholesterol in patients who are unable to get to their goal with statins. There are millions of patients who could benefit from a drug like this.
This drug is interesting for another reason as well. When I came to Amgen, it wasn’t my goal to bring biotech to primary care. What we succeeded in doing here, through improved efficiencies, we ended up building a biotech organization that’s comfortable bringing biotech products to a primary care environment. You have denosumab in osteoporosis, which is a primary care indication. Look at how well it’s doing. AMG145 could do a similar thing. It may just be a natural evolution, in terms of how companies evolve. It took a lot of hard work, to get manufacturing to work at that scale, and clinical results on that scale, but we are now in position to deliver biotech products into a primary care environment.
On whether he considered staying to work under new CEO Bob Bradway:
No. Kevin (Sharer) and I talked about this last fall, and we agreed there’s a natural time for leadership transition. It was important for a new team to take over. We wanted to try to engineer something that’s rare in this business—an orderly transition in leadership. Kevin had privilege of building a new team with George (Morrow) and me, and he wanted Bob Bradway to have the same opportunity. Both of us had groomed our successors. I have complete confidence in Sean Harper, that he will do a terrific job, and it’s time for him. I’m happy to consult, happy to provide advice, but if I’ve done my job well, pretty soon he and others won’t need my advice or want it.
On what he’s going to do next:
I’m more committed than ever to the application of fundamental research to important problems in clinical care. I’m prepared to look in a variety of things, whether that’s in the for-profit or non-profit settings. I spent a lot of time in academic environment at the University of Washington, and have a lot of respect for what people are doing there.
I’m having conversations with academic institutes and other companies. Don’t rule out the possibility that I might be involved with a small company as well. I’m no less energetic than I was 11 years ago when I took the Amgen job.
On the one thing he wishes he could do over:
I’d do everything faster. That’s easy to say. In retrospect, the decisions you make seem straightforward. But at the time, they are fraught with challenges and they take time to sort through. Doing your deliberations, while squeezing down the amount of time you spend on them, that’s a discipline.
On one big piece of advice he’s given to his successor:
I don’t know if I can’t pick just one, but I think the advice I gave to Sean (Harper) is the same I’d give to the industry. Eschew distraction. It’s the most challenging problem facing our industry. The challenge is to identify the critically important things that warrant your attention, and throw yourself 100 percent into those things.