CEO Interview Harvey Berger Ariad Pharmaceuticals

Eight months into the launch of its first approved drug – Iclusig (ponatinib), a small molecule therapy indicated for two rare forms of leukemia – Ariad Pharmaceuticals’ principal founder and CEO Harvey Berger says doing it all, from discovery to global commercialization, is the company’s path to sustainability and the way to take on Big Pharma.

Ariad Pharmaceuticals’ CEO Harvey Berger is not making the rounds with press to extoll the virtues of external collaboration or open innovation. Instead, Berger is promoting a strategy that keeps all drug discovery, development and global commercialization activities internal, within company walls. This DIY approach to producing innovative cancer drugs bucks the trend toward virtual companies in the biotech space, or deal-making specialty pharmas scanning the candidate pool for something to spruce up and flip in the market. Berger says the basic model originated with Genentech, and is “really the only model at the end of the day that gives you the ability to build a great sustainable business…everything else is a step along the way.”

In 2010, Ariad licensed ridaforolimus, a cancer drug it discovered, to Merck, but regulators determined (FDA last summer and EMA last November) that a mere three additional weeks of progression-free survival, paired with substantial side effects, wasn’t a strong enough case for approval. Going it alone, however, Ariad picked up an FDA approval for a different drug, Iclusig, last December. EMA approved Iclusig in June, and submissions are planned for Australia, Canada and Japan in the coming months. Instead of hunting for marketing partners outside of the US, Berger is focusing on his company’s pipeline, and the transition into a fully integrated organization. In its first quarter on the market, Iclusig – priced at $115,000 for a year of treatment – beat Wall Street estimates with $6.4 million in net sales. Berger says the company’s patient assistance program mitigates that cost for patients; the maximum any patient with insurance will pay for Iclusig is $240 a year. The following Q&A has been condensed and lightly edited for length and style.

Harvey Berger, CEO at Ariad Pharmaceuticals

PharmExec: Iclusig is Ariad’s first product to reach the market, and it’s off to an impressive start. What elements of the launch have been critical to its success so far?

Harvey Berger: We put in place a commercial group that without question was entirely designed, organized and structured for the launch of Iclusig. Every member of the sales team wakes up every single morning thinking about how to make a difference in the lives of CML patients with Iclusig. There’s no dilution of their efforts among multiple products or types of uses, and so I think intrinsic to the structure we put in place was the model for success, and the reason why building a dedicated commercial organization to sell Iclusig worldwide, first in the US and now in Europe – next year in Japan – puts us in a very strong position to compete effectively against the big guys: Novartis and Bristol-Myers Squibb, which is our competition. There are relatively few biotech companies whose full line of competition is the big pharmas. We’ve really gone after them in their sweet spot, and we think we can beat them in areas that they’ve controlled in the past.

PE: Iclusig was approved for patients who have become resistant to or can’t tolerate other products, notably Novartis’s Gleevec, but now you’re testing it head-to-head against Gleevec and going after a front line indication. You’re taking the same approach with AP26113, an AKL and EGFR inhibitor for non-small cell lung cancer. Why not go after the front line first?

HB: Virtually every medicine in this field starts by targeting the area with the greatest unmet medical need. Clearly, there are loads of patients, if not all of them, who fail one of the other medications. If you can put patients under therapy with what we believe is the best in class BCR-ABL inhibitor [Iclusig], there’s no question that the place to start and the most rapid route to market is with patients who are resistant or intolerant to other medicines. Then you move forward into newly diagnosed patients or front line applications.

PE: How large of a sales force have you had to build to commercialize Iclusig in the US and Europe?

HB: In the US, the field force – not just reps – is about 65 people. That includes medical science liaisons and regional account executives, and sales managers; people in the field. Europe is about the same. We think from a coverage point of view, Europe and the US are very similar. Probably with a front line indication, we will justify increasing the size in Europe and the US, because you’ll want to go a bit broader, to more physicians that write fewer of the total number of prescriptions, and that’s the case in the front line. But resistant/intolerant disease is largely treated by physicians with experience who treat more than an occasional patient. Our sales force size is fine for now. We don’t think twice as many people in the field would have really any meaningful impact on sales.

PE: What are some of the challenges you face in the cancer space?

HB: The challenge on a global basis obviously is going to be pricing and reimbursement, more so in Europe than in the US at the moment. The US is pretty stable and pretty clear, but there is pressure around the world to only reimburse for drugs that really make a difference. I was with one of the medical directors of a payer recently on a panel – he’s an oncologist – and his comment to the group was, ‘if I could eliminate the 25% of medicines used in cancer that have no benefit, that are given but really don’t do any good, I’d pay virtually anything for the drugs that really matter, because I’d be better off, as a payer.’ I think there’s going to be far greater pressure on getting rid of stuff that just doesn’t do anything, and using the money that’s freed up to focus on medicines that do really matter.

PE: Ariad is one of the few companies that in-licenses nothing, discovers all its own drugs in-house, and takes them all the way through to global commercialization. You’ve said that your exclusive focus on the cancer space enables this capability. Still, why not partner?

HB: It’s the foundation of why we think we’re a sustainable, long-term, successful global oncology business. It goes back to two corporate values we have: scientific excellence, and clinical scholarship. The second one, clinical scholarship, we view as a critical part of our core values, and as a key distinguishing feature. Not only do we discover really important new medicines, but we take into account a deep understanding of the clinical and medical questions associated with those diseases, and we try to design and develop new medicines that are responsive to a deep understanding of the genetic and biologic basis of different diseases, and then incorporate that into our clinical trials and development, and ultimately into our commercialization strategies. If the biotech industry merely becomes a small specialty pharma company that in-licenses products that others don’t know how to develop – big pharma – or universities say, ‘here you go, develop this,’ and in turn you add no real innovative value, you can’t win in the end. You may be able to generate value, but you don’t have a sustainable business, you become purely a small specialty pharma company.

PE: Len Schleifer of Regeneron told me recently that outsourcing core functions of the development and commercialization process leads to inefficiencies and missed opportunities intrinsic to the external knowledge transfer between partners.

HB: We have the same people advising the commercial group that discovered the drugs. Our basic scientists were in the lab discovering drugs like Iclusig and AP26113 are the same folks that are working on the next product, so that what they learned on Iclusig applies to AP26113 and the pipeline behind it, and it also informs the clinical development group who sits down the hallway, on how to best design biomarkers and build the science in. Lastly, they all work together with the commercial group not just in the US, but worldwide. So the information from patients that we get in the marketplace worldwide comes back to the company and as Len suggests, it informs every step we take, from new products in the pipeline to product attributes and performance in different regions.