Changing of the Change Agents: Exit Wyeth’s Ruffolo, Enter OrbiMed’s Dolsten

We just heard the news that Bob Ruffolo, Wyeth’s R&D boss, is retiring.

A few points to make: first, from our auslander’s point of view, Ruffolo took a Wyeth research group which had already been significantly improved in the almost reverse takeover by the former Genetics Institute crowd (including its head of R&D Pat Gage) and made it a lot more business-like.

Ruffolo is not an executive to suffer fools (or those he thought fools) gladly. He rubbed a lot of people the wrong way – including colleagues running competitive R&D organizations, who didn’t like his outspokenness. And he was a particularly harsh and public critic of the FDA (at least when he talked with us – as you can read in The RPM Report here)

But he ran an organization which got stuff done. In the otherwise horribly dry year of 2007, Wyeth managed to push through two drugs (Torisel and Lybrel) – punching far above its R&D weight (Wyeth is on the small side of Big Pharma’s R&D organizations).

Wyeth is already ahead of the game this year, with two approvals, both of which your blogger had – incorrectly – written off (and we weren’t alone): Relistor (methylnalrexone), which they’d licensed from Progenics, and Pristiq, which is an isomer of their near-patent-expired anti-depressant Effexor. Pristiq in particular ran into FDA trouble last year, with the agency dinging it twice – first for its major depression indication, then for its use for post-menopausal hot flashes. Still hasn’t been approved for the latter – but scooted in on the former.

And Ruffolo has been the outspoken exponent of the statistical strategy of R&D – that for all the theories on how to improve the odds of drug discovery and development, with new markers and “model” diseases (á la Novartis – see an IN VIVO discussion here), ultimately R&D is a numbers game. You’ve got to put a certain number of compounds in the front end to get out a set number at the back end.

Science isn’t making us any better at improving those odds, Ruffolo would almost take pride in pointing out. It was Ruffolo, speaking at Windhover’s Pharmaceutical Strategic Alliances meeting in 2005, who, at least to our knowledge first among major R&D chiefs publicly, noted that attrition rates in Phase II were going up. Before you knew it, everyone was talking about it. And Ruffolo kept insisting that the only real solution to the attrition problem was to add in more compounds.

So now enter Mikael Dolsten, the former head of Boehringer Ingelheim research, whom not so long ago the IN VIVO Blog had named as a potential candidate for the top R&D job at Pfizer. (OK – we spelled his name wrong there. We may be spelling it wrong now. But we’re not alone – either Wyeth spelled it wrong in their PR (they use an “h” in Dohlsten) or Boehringer spells it wrong in theirs (they leave out the “h”).

In the brief interregnum between leaving Boehringer and landing at Wyeth, Do(h)lsten parked himself as a private equity partner at the OrbiMed, the health-care focused investment firm. Which leads us to speculate: damned few Big Pharmas are going to be able to pay themselves for all their development programs, a fact that most of them are as yet unwilling to admit. Project financing is eventually going to play a role in this game.

When we first wrote about Dolsten, one recruiter told us he was a “change agent.” So was Ruffolo, of course. But Dolsten’s few months at OrbiMed could make him a change agent of a very different kind.

Musical Chairs at Novartis, Except When the Music Stops, 1250 Fewer Chairs

Novartis posted its third quarter results this morning and missed its profit guidance. Genericization, delays to Galvus, and the withdrawal of Zelnorm all contributed to a 12% decline in earnings. And so out comes the axe. Oddly enough, the press release was titled "Novartis delivers record earnings in first nine months of 2007 thanks to strong operational performance and divestment gains." Is it time to revive IN VIVO Blog's 'press release of the week' feature?

Novartis is cutting 1250 jobs (mostly in sales, and including 510 'third-party' sales positions) in the US, a move cheered by analysts and expected to result in savings of about $230 million in 2008. The layoffs are part of a restructuring of its pharma development and commercialization organization.

Most conspicuously Thomas Ebeling, the current head of pharma, will be shuffled over to Novartis' consumer business--a position perhaps more suited to his background: he came to Novartis from Pepsi a decade ago. At pharma he'll be replaced by American Joe Jimenez, the current head of the consumer business who joined Novartis earlier this year (and was until 2006 European president and CEO of the food giant Heinz), effective immediately, "to expand management experience and provide fresh impetus." That might be a new euphemism, we're not sure.

Less surprisingly, the company is also establishing Novartis Biologics "as a focused unit to accelerate and optimize the potential of research and development of innovative biologic medicines." We've noted before (and discuss at length here) certain pharma's need to bulk up in large molecules. Novartis says:

This unit will unify and expand the expertise within Novartis by bringing together the key elements necessary for fast and high-quality R&D activities and to help attract top talent. Biologics comprise 25% of the pre-clinical research pipeline at Novartis and are increasingly a priority in R&D activities.

It will be interesting to see whether Novartis feels the need to augment its internal biologics capabilities with the kind of external moves being pondered by Sanofi-Aventis and Pfizer. The company has inked some 22 deals in large molecules over the past five years and most impressively has bulked up in vaccines (through the full acquisition of Chiron) and in RNAi, though a first-mover deal with Alnylam.

But back to the layoffs for a moment. Novartis' cutbacks don't approach the level of some of the other Big Pharma that have cut back this year--see the chart below from the September issue of IN VIVO--and will mainly be executed by not filling vacant positions, the company says.

Nevertheless, can the decision be seen in the broader context of the general shrinkage of Big Pharma sales forces, thanks to a variety of factors including but not limited to the rise of biologics and a shift toward specialist medicines? Which brings us back to the pharma/consumer reshuffle; both execs' backgrounds are more grounded in consumer marketing than pharmaceuticals. To say the least appointing Jimenez to the pharma post goes against the grain of the specialist marketing trend.

While You Were Watching the Upsets

This weekend we were in Cardiff for the Rugby World Cup quarterfinal between France and New Zealand, which saw France upsetting the favorites. Earlier in the day defending champs England upset heavily-favored Australia, setting up a very surprising all-Europe semifinal next weekend. Suckers for a lost cause, we managed to keep tabs on the Phils into the wee hours, and showed our support on the streets of Cardiff amongst the hordes of Kiwi and French fans (see below--it's a jungle out there).

So what'd we miss?

• The repercussions of the failure of Merck's HIV vaccine are being felt across the entire field, points out the Philadelphia Inquirer.
  
• Roche isn't raising its offer for Ventana, the company said this weekend, but it remains convinced Ventana shareholders will see the light.
  
• And the winner is ... Andrew Witty. GSK's head of Europe appointed CEO-designate, will replace JP Garnier in May 2008.

gotta support the team

How Much Does Pfizer Want to Succeed?

Yesterday, Pfizer’s Jeff Kindler ended the speculation around what we think is his most important appointment, elevating development chief Martin Mackay to the top R&D job (an appointment, by the way, which we predicted--here).

As the WSJ’s health blog pointed out, Kindler has chosen managerial continuity. If Mackay does some of the requisite R&D reforming, it will at least come from within the Pfizer context – and theoretically won’t generate the antibody response an outsider’s initiative would (like Peter Corr’s attempts when the former Warner-Lambert chief was briefly R&D boss).

Second, Mackay is not John LaMattina. He clearly recognizes the need to change Pfizer—as he’s noted to IN VIVO and as he’ll explain at Windhover’s FDA/CMS Summit on December 6.

But two big issues will determine how successful Mackay can be—one more or less in his control; the other out of it.

The first: just how far is he willing to go in reforming Pfizer R&D? A $7.5 billion annual cost, it is vastly too expensive for what it produces. And it’s got too many people working on too many projects to manage effectively.

To succeed—our view, of course--Mackay will have to reduce headcount; start and objectively judge experiments in development (like its Project Fisher, a parallel to Lilly’s Chorus division); figure a way to push biologics into the mainstream of Pfizer’s discovery and development and create systems for monitoring the likely but as yet unknown safety challenges they’ll present; push for independent (and probably independently traded) R&D organizations, on the models of Genentech or Theravance, to whose output Pfizer will have post-Phase II options; and figure out ways of partnering Pfizer’s own de-prioritized drug candidates.

Among other things. But that’s enough for right now.

Problem is: Pfizer’s commercial and financial sides (including its CEO) will have to accept and adapt to the kind of output a revitalized Pfizer R&D must generate—high-value specialty drugs, including biologics. That will mean a smaller, more focused commercial Pfizer--or even Pfizers (we’re all for disaggregation and spinouts—therapeutically focused mini-Pfizers, for example). When Pfizer has followed its instincts, taking a mass-market approach to specialty drugs, it’s failed: witness the disappointing performance of Rebif in multiple sclerosis or the disaster of its inhaled insulin, Exubera.

We know and respect Martin Mackay. And we know he has his work cut out for him. But if he does his bit, Pfizer then needs to let him succeed.

While You Weren't Working

For those of you in the US, we hope you had a relaxing three-day weekend. Here are a few items you may have missed while sparing a thought for the Noble and Holy Order of the Knights of Labor and/or enjoying a cocktail. Not everyone took the weekend off ...

• Merck & Co said on Sunday at the European Society of Cardiology congress in Vienna that Cordaptive, it's extended-release Niacin plus flushing inhibitor, was effective at lowering LDL cholesterol while raising HDL. Reuters has the full story.
• The Observer takes a look at investor unrest at GlaxoSmithKline, and in particular institutions attempts to get their points across to the company's as-yet unchosen new CEO, who will take the reigns when JP Garnier retires in May 2008. You might recall the Telegraph running something along these lines back in May (and our comments at the time on succession speculation). We'll have more to say on this later in the week.
• The Philadelphia Inquirer weighs in on the state of drug marketing, and finds that drug samples and TV ads help drive uptake of medicines.
• Eli Lilly's new schizophrenia drug may offer safety and efficacy improvements over existing antipsychotics, according to results of a 200-patient Phase II trial. From Nature, via the New York Times.
• Acambis has received FDA approval of its ACAM2000 smallpox vaccine

GSK's War of Succession

It's GlaxoSmithKline's turn to find a new chief executive, after incumbent JP Garnier retires next May. Apparently there's no shortage of internal candidates: three senior executives are battling for the position, according to the UK's Daily Telegraph.

Like a roman emperor--or, a more contemporary analogy, The Apprentice's Donald Trump--JP has chosen to watch the three wannabes fight it out in the corporate ring over the next year.

David Stout, president of global pharmaceuticals, is tasked with re-thinking supply-chain management. Chris Viehbacher, head of US pharmaceuticals, must work out how to improve GSK's public image, and Andrew Witty, Viehbacher's European counterpart, needs to sort out marketing; he's testing "new selling models" in a dozen world markets, according to an insider.

They’re big tasks, requested on top of the day job. But it’s a big reward, too—not just the kudos of running one of the largest drug firms (and, according to analysts, one with an above-average pipeline), but large pay-checks. One of the many controversies around JP’s reign was his fat-cat pay package, famously thrown out in 2003 by irate investors—the first such embarrassment for a FTSE-100 company chief.

It’s an unusual way of selecting a successor--AstraZeneca, Merck and Pfizer (which picked a relative outsider) apparently didn't have such a choice of candidates when they appointed new CEOs over the last year or so--but one which has merits. Each of the tasks is important to GSK’s future, and this is one sure way of making sure they’re tackled. And whoever wins will be able to build on the output of all three projects.

When the candidates enter the boardroom on judgment day, one of them will be hired. It’s unlikely that the other two will stick around to see their projects through, however.

Source: Telegraph