[Corrected: 11:15 pm Pacific, 11/29/10] Diabetes is supposed to be one of the biggest public health threats facing the U.S. over the next decade, yet if you talk to anybody developing drugs for this chronic disease, times have never been tougher. So how can Kurt Graves, the executive chairman at Hayward, CA-based Intarcia Therapeutics, sound so relentlessly upbeat?
“We have an opportunity to reshape treatment of diabetes,” Graves says.
Intarcia is still a long way from showing it can really do that, but the company clearly has an intriguing strategy tailored for the tough new era of regulatory and insurance scrutiny for diabetes meds.
There’s certainly a big potential opportunity for any clever new approach. More than 24 million Americans are said to be diabetic today with the vast majority of them having Type 2 diabetes. By the end of the decade, something like half of all people in the U.S. are expected to be either diabetic, or prediabetic. That means diabetes—a condition in which inadequate blood sugar control can lead to a slew of complications like blindness, heart attack, stroke, and limb amputations—could account for about $500 billion annually, or about one one-tenth of the nation’s healthcare bills, by the end of the decade, according to a new report by UnitedHealth Group.
But despite the growing scale of this costly epidemic, the FDA has taken an ever-tougher stance toward new therapies for diabetes. In September, the FDA placed tight new restrictions on use of GlaxoSmithKline’s rosiglitazone (Avandia), after studies suggested it may increase heart risks—years after it was approved for the market and reached billion-dollar blockbuster sales status. The next month, the FDA slapped down a new drug application from Amylin Pharmaceuticals and Eli Lilly for a once-weekly version of the drug exenatide, asking the companies to do further study about cardiovascular risks. One startup company that had raised more than $100 million, San Diego-based Phenomix, went out of business, saying it would take too long and cost too much to run the necessary clinical trials.
None of that deters Graves. “I’m still every bit as excited as I ever was,” he says.
One of the reasons is that Intarcia is attempting to tackle diabetes in an unorthodox drug/device combination strategy. The company started on this track about five years ago when it obtained a license to technology from Alza (now part of Johnson & Johnson), Graves says. By March 2007, it had raised $50 million from New Leaf Venture Partners, Quilvest Ventures, New Enterprise Associates, Venrock Associates, Alta Partners, Omega Fund, and Granite Global Ventures. The plan was to further develop an intriguing platform to deliver drugs in an efficient new way.
Intarcia’s key technology, called Duros, is a matchstick-sized implantable mini pump that is supposed to slowly, steadily secrete a precise amount of any drug in the body. One of the main technical challenges was figuring out how to keep protein and peptide drugs stable over long periods of time at high temperature in the body. Once that was solved, the next step was to figure out the best potential application of such a technology, Graves says.
Diabetes seemed like a logical place to start, because the market is so big and growing. So Intarcia went to work on putting exenatide into its slow-release pump, to see what it could do. That drug made sense, Graves says, because Amylin and Eli Lilly had already spent many millions of dollars and years of effort to show it was safe and effective against diabetes. [Correction: An earlier version of this story said Byetta had also lost its patent protection. Amylin spokeswoman Anne Erickson says that’s not the case. “Byetta is protected by seven FDA Orange Book listed patents that have expiration dates ranging from December 1, 2016 to January 14, 2020,” Erickson wrote in an e-mail. “Amylin and Lilly have a high degree of confidence in the strength and depth of Amylin’s intellectual property rights in Byetta.”]
Exenatide, currently marketed as Byetta, is proven to control blood sugar, and to provide the added benefit of helping many overweight diabetics lose weight. Its main drawback, however, is that it must be injected twice a day. That’s why Amylin and Lilly have sought to build on the franchise by offering the same benefits in a more convenient once-weekly dose.
Intarcia hopes to raise the bar much higher. Its drug/device combo can be set to release exenatide continuously for three months, six months, or a full year at a time, Graves says. A patient can come in, get some topical anesthetic to numb an area under the beltline, and have the matchstick-sized device implanted just under the skin in less than 10 minutes, Graves says. Intarcia has dubbed this combination therapy ITCA 650.
From a regulatory point of view, this has advantages, Graves says. The drug itself is well understood by the FDA, and has been used by an estimated 2 million patients, so there’s less chance the agency will have unpredictable safety questions like it might have with a new chemical entity. Having an implantable device releasing a small, steady dose means that there should be fewer of sort of side effects such as nausea that typically come right after injection, when the drug reaches peak concentration in the blood.
For insurers, things get more interesting. An estimated two-thirds of diabetes patients don’t take all their medications exactly as prescribed. That leads to further complications that often end up sending patients to the hospital—to the endless annoyance of payers. So Intarcia, by implanting a device and taking patients’ behavior out of the equation, is betting that it can keep blood sugar under control on a more steady basis, and cut down on complications (although this isn’t something it can prove yet).
“If you are a payer, you know that two-thirds of the medicine you are paying for is being wasted,” Graves says. “With this device, you know you are getting 100 percent of the benefit from the drug that you are paying for.”
The data to support how well the Intarcia treatment works is still preliminary. About 2,000 people, mostly physicians, gathered to hear investigator Bob Henry of UC San Diego describe the latest Phase II results at the European Association for the Study of Diabetes in Stockholm. The study, involving 155 patients, looked a number of dosing regimens, and found that it could get a key measure of blood sugar control, hemoglobin A1C, to drop from 7.9 to 6.94 over the course of 12 weeks of therapy, with nausea rates declining from 21 percent to 2 percent from start to finish. This is what physicians want to see, since the American Diabetes Association’s guidelines are that diabetic patients should keep their hemoglobin A1C scores to 7 or less.
Besides the adequate blood sugar control, patients also typically lost 3-5 kilograms of weight (6.6 to 11 pounds) and reported improved quality of life, researchers said. This was all compelling enough for Intarcia to say it was ready to go to the third and final stage of clinical trials sometime in early 2011.
This is the sort of profile that has got the marketer in Graves thinking big. Graves, the former chief commercial officer at Vertex Pharmaceuticals, worked a lot on hepatitis C market dynamics while he was there but says he spent a lot of time studying diabetes during an earlier stint in his career at Swiss drug giant Novartis. He formally joined Intarcia in September, so this is all still relatively new to him. Besides going over the clinical trial results, he has been surveying payers on what they would be willing to shell out for a drug that gets patients to their desired hemoglobin A1C score, and has 100 percent compliance. He said that the existing branded form of exenatide currently costs about $3,200 a year, and his market research says payers have no problem paying a 20 percent premium as long as they could be certain patients stayed on their meds. “We actually didn’t find a price point where they said ‘No,’ which is the first time I’ve ever seen that,” Graves says.
The really big idea at Intarcia will be to see whether it can move its therapy up to earlier stages of disease. Most patients with diabetes initially go on metformin treatment, which is a cheap and widely available generic in oral pill form. When that drug fails, patients tend to move through other classes of what are known as DPP4 oral medications like Merck’s sitagliptin (Januvia) or Bristol-Myers Squibb’s saxagliptin (Onglyza). Doctors today try to warn patients to stay on their regular regimens with those drugs, because when they fail, then it’s time to turn to injectables like exenatide (Byetta), or ultimately, insulin replacement therapy. Intarcia’s hope is that it can take exenatide from that third-line position, and move it into the first line of therapy, where there are more patients and more money to be made.
If everything goes right in clinical trials, Intarcia could be in position to file its new drug application with the FDA by the end of 2012, and to potentially introduce its product to the market by the end of 2013 or early 2014, Graves says. Meantime, he’s talking to a number of Big Pharma partners, trying to strike a deal. He concedes that most people he talks to see this primarily as a more convenient version of exenatide, and probably not worth that much. His main task is to convince partners that the drug/device combo is actually more effective at controlling diabetes through the consistent dosing, more attractive to payers because of the 100 percent compliance rate, and likely to change the standard of care by being used in combination with metformin in front-line therapy.
If Intarcia can even get a tiny toehold in his market, it could mean big bucks. The global market for Type 2 diabetes treatment is expected to double to about $35 billion, according to Decision Resources, a market research firm. Every percentage point of market share will be worth hundreds of millions of dollars a year, Graves says. It’s lucrative enough to justify the risk that anyone assumes when they get in the business of developing new diabetes meds.
“I’ve really fallen in love with this,” Graves says. “I think this could be one of the biggest drugs in the industry.”