Abbott’s Humira, the 3rd-in-Class Drug That Toppled Lipitor as No. 1

4/16/12Follow @xconomy

Sometimes the biggest success stories in business never make it to the magazine covers. There’s no single Eureka moment, no surprise turning point, no redemption, no swashbuckling CEO delivering the goods. There’s just a team pursuing genius like Edison once said: through 1 percent inspiration and 99 percent perspiration.

Dull as it may sound, there is something remarkable in the Reuters report this week that Abbott Laboratories’ adalimumab (Humira), is on track to replace Pfizer’s atorvastatin (Lipitor) as the world’s top-selling pharmaceutical in 2012. You can easily read that sentence and conclude it’s just another sign that Big Pharma companies like Pfizer (NYSE: PFE) have failed to come up with innovative new drugs to replace their aging blockbusters that are losing patents.

There’s hard truth in that statement, but to dwell on that is to miss the big picture. It obscures the fact that Abbott (NYSE: ABT) has achieved something important by turning a biotech drug into the world’s best-selling pharmaceutical, with an estimated $9.3 billion in sales this year. This is no small thing, given that these products, made through gene-splicing techniques and manufactured inside living cells, are not as cheap and straightforward to mass-produce as chemically synthesized pills like Lipitor. Many of these biotech drugs have been able to hit precise biological targets in ways that conventional pills can’t, opening up new avenues for treating disease.

“It’s a bit of the changing of the guard that you’re seeing,” says Doug Williams, the executive vice president of R&D at Weston, MA-based Biogen Idec. “It’s brought about partly by the patent expirations of the drugs of the past. But there’s no question, biotech has established itself, and protein therapies are incredibly important additions to patient care. There’s no turning back.”

Humira, a drug for autoimmune diseases, will never be taken by millions of people like Lipitor, and it will never be a household name brand. It is expensive, but it provides a lot of bang for the buck, by helping very sick people feel healthy again and go back to their regular lives.

The story of this drug and the others in its class is one for the medical history books. But from a business perspective, it’s also fascinating that Abbott was able to climb its way to the top—not by blazing a completely new trail, but by doing methodical, consistent, disciplined work in maximizing a drug that could have languished as a third-in-class product.

Humira easily could have ended up being the third wheel of rheumatoid arthritis therapy. The drug was first approved by the FDA on Dec. 31, 2002, a little more than four years after the trailblazing drugs in its class hit the market. Those products, Johnson & Johnson’s infliximab (Remicade) and Amgen’s etanercept (Enbrel), were the first-generation drugs that showed scientists you could make a profound difference for rheumatoid arthritis patients if you could make targeted therapies that zeroed in on a marker called TNF-alpha. By doing that, you could soak up excess inflammatory molecules that were hammering the joints of patients.

They worked wonders for alleviating pain, swelling, and joint damage. Patients rhapsodized about these products in first-generation online chat rooms in the dotcom bubble era, stoking all kinds of demand.

While those drugs opened scientific eyes throughout their R&D journey in the 1990s, and started generating hundreds of millions in sales from virtually the moment they were introduced in 1998, some scientists in Boston and Cambridge, U.K. thought they could still innovate.

Bob Kamen, an entrepreneur-in-residence at Third Rock Ventures

Bob Kamen, now an executive-in-residence at Third Rock Ventures in Boston, recalls how the project then known as “D2E7″ was born through a collaboration between the BASF Bioresearch Center he led in Massachusetts, and a group at Cambridge Antibody Technologies in the U.K. The scientific idea was to see if they could develop an antibody drug candidate against the TNF target that was “fully human”—that is, didn’t use mouse DNA. By using only human DNA in the drug, it was supposed to help the treatment circumvent immune-system surveillance, and therefore avoid triggering immune-system reactions that might cause additional side effects.

There was one other key design feature, which many scientists didn’t fully appreciate at the time, but turned out to be a crucial advantage. The J&J drug had to be taken via an intravenous infusion, which meant regular trips to the doctor. The Amgen drug had to be taken via self-administered injections under the skin twice a week. The BASF/Cambridge Antibody drug, by contrast, was designed to last longer in the bloodstream. Patients could inject themselves just under the skin, as little as once every two weeks.

As the clinical trial data mounted in the late 1990s and early 2000s, the product profile became clear. This was an anti-TNF drug that had a comparable safety and effectiveness record to its peers, and its advantage would be in convenience. Abbott agreed to pay $6.9 billion in December 2000 to acquire the BASF Bioresearch Center in Massachusetts, obtaining D2E7, and the beginnings of a massive biotech drug manufacturing center in Massachusetts. Abbott CEO Miles White, in announcing the deal, called D2E7 “a high-potential product.”

Abbott hit the ground running almost immediately with the product, named Humira, in the beginning of 2003. The price was set almost identically to the Amgen drug’s—about $1,100 a month wholesale at the time. Abbott had the good fortune to introduce its rival just at the moment when Amgen was working to boost manufacturing capacity for its drug and repair the damage done by product shortages that upset many doctors and patients.

And, just like Amgen and J&J, Abbott laid out a bold clinical development plan that said rheumatoid arthritis was just the beginning. Year after year, Abbott moved down the list, with Humira clinical trials that earned a string of FDA approvals for treating patients with related conditions like psoriatic arthritis, psoriasis, Crohn’s disease, ankylosing spondylitis, and juvenile idiopathic arthritis. Kamen, the former head of the BASF center, looks back with great pride on what Abbott did to make the most of the product. “It just might be the most valuable product ever manufactured in Massachusetts,” he says.

Despite that string of success, Abbott hasn’t been able to completely corner the market for TNF-blocking drugs. The rival J&J and Amgen products are multibillion-dollar blockbusters in their own right—on pace to be No. 2 and No. 3 on the worldwide sales chart, just behind Humira, according to Reuters. And Abbott’s reign at the top, like most anything else in life, won’t last forever. Abbott loses its key patent on the composition of matter for Humira in 2016, meaning it could face competition from cheaper “biosimilar” knock-offs. Plus, there’s competition on the way from Pfizer and others looking to develop the first oral pills for rheumatoid arthritis that can stand on par with injectable TNF-blocking drugs.

Most of the glory in innovation goes to those who get there first, proving big new concepts. In the biotech industry, Genentech rightly gets a lot of credit for groundbreaking work that showed you could fight cancer by choking off the blood supply to tumors (Avastin) and by creating the pioneering personalized medicine for breast cancer (Herceptin).

Those products have long inspired admiration in the biotech community, but innovation comes in many flavors, and Abbott has clearly earned a lot of respect from industry insiders for its accomplishment with Humira. Here’s what a few had to say Friday afternoon about lessons they took from the Humira story:

Doug Williams, who competed against Abbott as a senior executive at Immunex and Amgen: “From a patient convenience perspective, they hit the sweet spot. It was in a hot class, they were as effective as the competition, and they had what was a dosing advantage in the eyes of patients. They had the discipline to pursue it in a very systematic way. They have done a really good job.”

Abbie Celniker, the CEO of Cambridge, MA-based Eleven Biotherapeutics, which is seeking to develop targeted antibody drugs with improved properties: “The lesson is very important. They were listening to the market. Humira is easier for patients to use. While there may not have been a significant safety or efficacy advantage, over time it was recognized by patients as easier to use based on how it was delivered. That does make a difference. With a chronic disease, and when you’re on a drug for the rest of your life, it is different and has value.”

Clay Siegall, CEO of Seattle Genetics, a company developing targeted drugs for cancer: “It’s hard not to notice how well Abbott has executed. They have executed extremely well on their clinical development, distribution, manufacturing, marketing—you name it. All the pieces of the company have executed extremely well. It’s obvious. First-in-class doesn’t always win the day.”

We in the media—myself included—often gravitate to what’s first, what’s hot, and what we perceive as new. We often shrug off a “third-in-class” product as essentially old news. But the real story here, which unfolded over a period of years, is that Abbott has done a pretty amazing job of treating patients with a debilitating disease and being handsomely rewarded for it. And even more importantly, the long-term trend says that biotech drugs are ascendant, holding an estimated eight of the top 10 spots on the worldwide pharmaceutical sales list for 2014, according to Thomson Reuters.

Siegall, who has spent his career developing targeted antibody drugs, says he takes a certain amount of pride from a distance in seeing a biotech drug at the top of the heap.

“I do take pride in that, that biotech and biologics have made a positive impact on patients’ lives,” Siegall says. “I take more pride in that than I do with the business aspects that come with being No. 1 or No. 2 or No. 3. It’s hard to make it to No. 1, and it’s even harder to stay there. But biotech has really helped people, and I love to see it keep helping more people.”

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