Tag: Pharmaceuticals

You probably know that drugs can get very expensive. What do you think – what percentage of new drugs actually provide significant therapeutic benefit compared to existing treatments? And do you think that drugs with a low clinical benefit are indeed priced any cheaper than highly beneficial ones?

Beyond drug prices, we will also talk about cancer “approvals gone wrong”. These were shown only after their regulatory approval to lead to equal or even worse outcomes for patients. One of these debated drugs ultimately led to bankruptcy of the company who developed it. However, the molecule has some nice chemistry behind it. You know the channel – we will take any opportunity to study organic synthesis that we get.

Healthcare Spending and Drug Prices

Let’s face the facts – healthcare spending has grown much faster than gross domestic product – in the US and everywhere else. Drug costs are one driver behind this. The most extreme example is perhaps cancer, where we can observe almost exponential growth of drug costs over the last 50 years.

The US spent $4.2 trillion on healthcare in 2021. Who paid the bill, and on what? As you can see, government spending on Medicare and Medicaid is about 40%, whereas patients paid out-of-pocket for 10% of costs. On the other hand, hospital care received the bulk of spend with 31%, with prescription drugs coming in at 9%. Increasing drug costs are problematic, but as we see, they are not the only reason behind high healthcare spend.

Initially expensive branded drugs are becoming much cheaper after entry of generic drugs. Fortunately, this leads to more accessible, vital treatment options for patients. This is where we have the crux: While standards of care improved across all diseases, new medicines need to continuously drive improvement in therapeutic benefit.

Let’s imagine we have a new drug in a disease that affects the liver, demonstrating it slows loss of liver function by 25%. Sounds good in theory, but let’s assume this was only tested against placebo and already approved treatments have shown similar results in their trials. If we ignore any benefits on things like safety or durability of response, this means the relative therapeutic benefit of this therapy would be rather low. On the other hand, a new drug showing superior efficacy to other already approved treatments would be much better. Instead of “me-too” drugs, we would want any new drugs to significantly improve on existing drugs. The problem is that this has not been the case in past years.

The Therapeutic value of new drugs

The authors of the first piece of research looked at the last decade’s new drug approvals and their ratings of therapeutic value from health technology assessment bodies in France and Germany. These agencies assess the added benefits of a drug’s approved indication compared with existing therapies. This tells us whether there is major, considerable, minor, or no benefit of a new drug. The underlying criteria are slightly different across countries but capture the drug’s effect on reduction of disease duration or side effects, for example. If any of the two agencies rated a drug as providing considerable or major benefit, the authors consider it a high value drug in their analysis.

The sad result is that only 40 to 50% of drugs approved by the US FDA or European EMA regulator are high value drugs. But check out the second set of bars. These refer to approved uses in additional diseases or indications after a drug’s first approval. In these settings, are even less likely to be quote-unquote better drugs.

Drugs with multiple indications

But why can drugs have more than one indication? As most of you know, a single mechanism of action can apply to different diseases. For instance, immuno-oncology drugs like PD1 inhibitors can be applied across solid tumors. Keytruda, the soon-to-be world’s best-selling medicine, is approved in more than a dozen different tumor types. Beyond oncology, we have complement inhibitors like Soliris which you might remember if you watched the previous video on the world’s most expensive drugs. Because the complement immune pathway is involved in many diseases, it is possible that the same drug which saves kidneys might save eyes as well.

On one hand, patients benefit because they get one more option which might help them go into disease remission (not always). It also makes sense for pharmaceutical companies to get rewarded by bringing innovation to more patients. Because clinical development costs billions, they maximize product revenues during their limited window of exclusivity.

But the reality shatters this pleasant theory: Only 40% of drugs in supplementary indications bring significant new benefit. If we look at the relative rate, drugs are less and less likely to bring new therapeutic benefit in every follow-on indication.

Some caveats remain, like questions behind the precise logic of defining something as high therapeutic benefit. There are specific local factors, like France using their own therapeutic strategy as a criterion. But more important is that while a drug might not be high value on average, sub-segments of patients with specific mutations or other characteristics might respond very well. We know who might respond best for some drugs but for most, this is less clear.

Value of Accelerated approvals & Friends

This research confirms what others have found before. An interesting second analysis differentiated the therapeutic value of normal drugs and those with expedited approval. The exception is awarded for drugs which major promise in diseases with high unmet (e.g., certain cancers, rare diseases). The logic is obvious: imagine there is a drug which shows drastic tumor shrinkage in an early phase 2 clinical trial. Instead of waiting 3-4 years for larger and longer-term data, an accelerated approval might be lifesaving for many patients. Accelerated approvals require drug developers to run confirmatory trials in parallel. The hope is that the drug will show full efficacy and safety retrospectively. In a minute, we will talk about two cases where this unfortunately was not the case.

The publication at hand also included other expedited regulatory mechanisms in their analysis such as fast track and priority review, as well as breakthrough therapy designations.

So, what do you think is value-add of these expedited programs? As you might expect and can see in the much higher purple band, drugs under expedited mechanisms are more likely to have high therapeutic value.

Most program types are in a similar range, with breakthrough designations coming in highest – 60% are indeed high value. While normal approvals are at a crappy 13%, drugs with 3 or more designations are at 65%. These designations are awarded during development, so before the clinical product profile become clear. Thus, it’s obvious that we will never get to let’s say 90% for breakthroughs, simply because drugs which appear very promising in phases 1 or 2 might prove out to be only mediocre after a larger scale phase 3 trial. Still, regulatory agencies should give additional explanations or disclaimers to set more realistic expectations for patients and doctors.

Are Drugs getting More expensive?

Finally, let’s see what a 2020 study has to say, covering 65 cancer drugs across countries. The sad insight: low-benefit drugs are just as expensive as high-benefit medicines. You can see that the blue and red distributions are awfully close to each other, with no statistically significant differences between them. From this chart, you can also immediately see why the US is the major pharmaceutical market globally, with drug costs roughly 1.3-times higher than in the European countries.

In summary, new drugs do not always mean innovation, breakthroughs are not always proven to be true breakthroughs, and a high price does not mean high value. Did any of these statistics surprise you? On an optimistic side, we should remember that this is just theory and does not reflect the real-world use of these drugs. Patients will not switch to a new drug which works just as well as what they are already on, and payers would restrict coverage for high-price drugs with dubious efficacy.

Approvals gone wrong – Avastin in metastatic Breast Cancer

However, as we alluded to at the start, there are unfortunately cases where drugsare proven to be quote unquote useless. Let’s check out two examples, and then dive into some chemistry.

The first one is Avastin, which is a VEGF-targeting antibody which suppresses the growth of new blood vessels. This hinders supply nutrients to the cancer, slows its growth, and therefore slows cancer progression.

The FDA approved Avastin in a broad set of tumors. So, we can see the theme of supplemental indications mentioned in the first part. The problem really was around its accelerated approval in metastatic breast cancer (2008). At the time, the FDA’s Oncology Advisory committee, so an outside advisory panel, had actually recommended 5 to 4 against the approving Avastin in metastatic breast cancer. This mixed opinion was because Avastin at the time did not extend life.

We look at the details of the clinical study comparing Avastin as an add-on to chemotherapy. Overall survival – the time from trial entry to patient death – is the gold standard primary endpoint in cancer trials but takes more time and patients to collect. Avastin missed the mark on this important metric. Avastin’s OS is numerically higher, 26.7 months vs. 25.2 months, but this is not statistically significant as indicated by a p value of higher than 0.05.

However, progression free survival improved significantly. PFS is the time between treatment start and first evidence of disease progression, or also death. PFS data is available earlier than OS, so it serves as a surrogate endpoint. So essentially, Avastin reduced the speed of progression by more than 5 months, but patients were ultimately not living longer. Also, their subjective quality of life did not increase either. You might think: If the drug slows down progression, should we approve it nevertheless?

What was The Problem?

An additional problem was the overall 20% increase in adverse events with Avastin. Toxic effects like hypertension or infections increased significantly. This resulted in 6 deaths due to Avastin. So, considering all this evidence, the accelerated approval was quite optimistic but understandable given the lack of other treatments that showed similar PFS benefit.

As we learned, accelerated approvals require parallel studies which intend to confirm the drug’s benefit. However, the opposite happened.

Looking at the AVADO trial comparing two doses of Avastin, the extended PFS was still there. However, with just under 1 month difference between trial arms, this was significantly lower than expected. More importantly, patients on Avastin had numerically shorter OS. Because of the high p value, we can’t really say if this means Avastin is indeed worse or just equal to chemo. This led the FDA to withdraw the metastatic breast cancer indication for Avastin.

Interestingly, the European regulator EMA did not follow suit. In their view, benefits outweigh risks given positive albeit small PFS benefit and lack of statistically significant detrimental effect on OS.

Approvals gone wrong – rucaparib in 3rd line ovarian cancer

The second case study is Rucaparib, which was indicated, among other uses, for third-line treatment in ovarian cancer. It belongs to the class of PARP inhibitors which interfere with DNA repair mechanisms.

Like the results for avastin, rucaparib extended the median progression-free survival by 5 months. Patients with DNA repair deficient tumors responded even better as they are more prone to PARP inhibition. This seemed like a solid benefit at the time – but can you guess the problem?

Four years after its approval, now in 2022, more mature data on overall survival came in. The harsh reality – across different data cuts, patients on treatment again did not live longer. Again, we need to check the p value to see that even in the BRCA mutated sub-group, the potential strong responders, the seemingly beneficial effect is not statistically significant. This led to a voluntary withdrawal in the third-line indication by the company. Unfortunately, a somewhat desperate filing of rucaparib as a first-line therapy by the company did not work out either.

If you watched my previous video, you would remember that pharmaceutical companies burn a lot of money on development and operations. Clovis tried to cut costs through lay-offs and raise additional money, but ultimately had to throw in the towel and file for bankruptcy.

In summary, PFS benefit does not necessarily translate into true survival benefit – which is ultimately most important. Also, we saw that the FDA and EMA can reach different scientific conclusions looking at the same data.

organic synthesis of rucaparib

Finally, it’s chemistry time. Here we have two things to check out. First, we will look at just one part of Rucaparib’s original large scale process route, and second, go through a more efficient synthesis in full.

The process route, albeit long, has an interesting reaction early on. It starts with a nitration of this benzoic acid – which selectively nitrates meta to the acid. So far, nothing special – most of you should know the selectivity. Doing a nitration with 23L concentrated nitric acid is nothing so sneeze at, but we are more eager to see what happens after this step, and a simple esterification. It’s a Leimgruber-Batcho indole synthesis which leverages the moderate acidity at the benzylic position of these nitroarenes. In the first step, the benzyl anion is formed and attacks the reagent, dimethylformamide dimethylacetal. This adds one carbon to the system and after spontaneous elimination of methanol, a conjugated link is formed.

The second step of the indole synthesis is the reduction of the nitro-group. The liberated nucleophilic aniline can intramolecularly cyclize with the iminium, and again eliminate dimethylamine to create the aromatic indole. Although you might expect that immediate intramolecular attack in a 5-endo-trig fashion would give an anion that is very much stabilized through the ester group, I think that’s kinetically disfavoured work due to Baldwin’s rules.

Second synthesis of rucaparib

The remaining steps are not revolutionary so we will instead look at the very direct synthesis published in 2022. The starting material is already highly functionalized, but you can buy this commercially so it’s fair game. The first step is a Heck-reaction with the highly reactive aryl iodide. Next, the aryl amine was condensed with an aldehyde bearing the other half of rucaparib. At this point, we essentially already have all atoms that we need already, it’s just about linking them and getting to the right oxidation states.

To create the indole, the chemists used a cyanide-catalyzed imino-Strecker reaction – you might remember this one as a prime example of Umpolung chemistry. The mechanism starts with nucleophilic addition of cyanide to the aldimine. The negative charge first sits on nitrogen, but rapidly tautomerizes alpha to the nitrile. Now, we have the typical Stetter 1,4-conjugate addition onto the vinyl nitrile. Finally, just like we’ve seen in the previous Leimgruber-Batcho synthesis, elimination delivers the indole. This regenerates the catalytic cyanide which is why the reaction works with just 20 mol% of sodium cyanide.

Well, what do we do next with the nitrile? You’ve guessed it – we need to reduce it to the amine, and link it to the ester. Because typical hydrogenation did not result in any reaction, the authors looked for other reducing agents. Interestingly, the generation of nickel boride from nickel chloride and sodium borohydride worked smoothly and chemoselectively, leaving the ester group in peace. The lactamization occurred spontaneously in situ, so that was quite convenient as well. The ultimate step was a simple deprotection of the amine sitting at the other side of the molecule, completing the total 5-step synthesis.

That’s it for this time. As always, I will catch you in the next one.

Key References:

• Therapeutic value of first versus supplemental indications of drugs in US and Europe (2011-20): retrospective cohort study: BMJ 2023, 382, e074166
• Association between FDA and EMA expedited approval programs and therapeutic value of new medicines: retrospective cohort study: BMJ 2020, 371, m3434$
• rices and clinical benefit of cancer drugs in the USA and Europe: a cost-benefit analysis: Lancet Oncology 2020, 21, 664
• The US FDAs withdrawal of the breast cancer indication for Avastin (bevacizumab): Saudi Pharm J 2012, 20, 381
• Efficacy and safety of bevacizumab in combination with docetaxel for the first-line treatment of elderly patients with locally recurrent or metastatic breast cancer: Results from AVADO: Eur J Cancer 2011, 47, 2387
• Paclitaxel plus Bevacizumab versus Paclitaxel Alone for Metastatic Breast Cancer: N Engl J Med 2007, 357, 2666
• Multikilogram Scale-Up of a Reductive Alkylation Route to a Novel PARP Inhibitor: OPRD 2012, 16, 1897
• Total Synthesis of Rucaparib: JOC 2022, 87, 4813

What is the most expensive drug in the world? Imagine a single dose of medicine priced at $3.5 MILLION. Since the approval of the gene therapy Hemgenix in late 2022, this is a reality. This eye-popping price is easy to scrutinize, especially if you know the truth behind most newly approved drugs. Drug manufacturers think these prices are still fair, with some even winding down operations due to pricing disagreements. Also, it couldn’t be more fitting that one of the companies we will talk about, who is selling a very simple drug for one million a year, very recently saw itself forced to lay off 25% of its staff, maintain loans and preserve cash burn to simply keep up its operations for another year.

After reading this post, you will know:

• Why soaring prices do not always equal large profits. You will not understand why some therapies, as crazy as it sounds, cannot be sold for prices under hundreds of thousands of dollars
• The answer to the question “what is the most expensive drug”?, as well as top contenders
• The chemical synthesis of the most expensive small molecule drug, used for an ultra-rare disease occurring in 1 out of 40 million people
• How to estimate drug sales for gene therapies

most expensive drug in the world – what is the bar?

Hemgenix approval dethroned the gene therapies Skysona and Zynteglo, both developed as rare disease therapies by the company BlueBird Bio. With costs per dose of 3 and 2.8 million respectively, they currently land on number 2 and 3. The Institute for Clinical and Economic Review, a non-profit organization publishing clinical and cost-effectiveness analyses of treatments, deemed the true value of Skysona to not be too far off. The company itself postulated normal standard of care consisting of regular transfusion treatments cumulate to total healthcare costs of $6million over a patients life time. Comparing this with Soliris, which had been the world’s most expensive drug for some years in the past decade, we can see that in certain diseases such as myasthenia gravis, a cost-effective price would require a more than 95% discount on the annual price.

So, million-dollar gene therapies are actually not bad in terms of value provided. We have also seen some companies offer outcome-based deals, where for example 80% of the price is refunded if the patient does not respond to therapy.

Gene therapies are also less-overpriced if we look at the cost that it takes to produce them. Producing the annual supply of the antibody Soliris, costs less than 1% of its price. In contrast, gene therapies require bespoke manufacturing and supply chains, with fully loaded manufacturing costs reaching over 200 thousand dollars. But maybe you’re wondering why companies wouldn’t sell them at a lower price let’s say, half a million, and still make a decent profit? First of all, these variable costs do not include the large capital investments required for manufacturing facilities.

Drug R&D Costs

But as anyone who had more than 30min of business school will tell you, there are many more direct and indirect costs behind drugs.

Currently, it costs roughly 2.3 billion dollars to research, develop and launch a new drug. As you can see, R&D costs have been trending up, roughly doubling during the last decade. Some drugs are even higher than 3-5 billion. These large upfront investments are why a company will typically command as high of a price as it can reasonably get, to try to maximize internal return on the dollars.

But if we look at the peak sales potential of drugs, we can see that this decreased instead of increased in recent years. Basically, development is getting more expensive while returns are getting smaller.

Don’t forget that there are other costs beyond the manufacturing cost we highlighted. Companies deploy various functional teams to drive uptake of drugs – the easiest to think about are sales and marketing. On a company level, selling, general and administrative cost are usually around 15-30% of net revenues. On a product level, this obviously depends on the lifecycle stage, with new drugs having much more investments behind them than established products which are more like cash cows.

Additional Factors: Discounts and risk

Another important thing to note are gross-to-net price discounts. You see, the list price you read in the news refers to a theoretical price which is actually never paid. In the extremely convoluted US healthcare system, manufacturers give discounts to various stakeholders involved in access, distribution, or other things. These typically untransparent gross-to-net discounts translate into actual net sales for companies which can be less than 50% of the original list price.

One of the underlying problems behind high development costs is the low probability of clinical success. Science and drug development is inherently high risk, high-reward. While big companies with more than a hundred projects will always get something out of their R&D funnel, smaller companies can get wiped out if several drugs turn out to simply not work as hoped. This is why no company will ever price drugs at minimal margins, because prices need to be high to compensate for large R&D costs AND offer protection against critical pipeline setbacks.

Lonafarnib: another expensive drug

This molecule was originally discovered by Schering-Plough more than 2 decades ago as an investigational cancer drug. After development for oncology was discontinued due to lack of efficacy, and Schering-Plough was acquired by Merck, a deal was struck with the small biotech Eiger Pharmaceuticals. Eiger originally wanted to develop the molecule for hepatitis D, but was also introduced to the Progeria Research Foundation by Merck. This non-profit research organization found that the mechanism underlying lonafarnib’s activity was also involved in progeria.

This heart-breaking disorder causes rapid-aging in children. With a prevalence rate of 1 case in 20 million individuals, this is an ultra-rare disease. Patients die at an average age of 13 years, perversely from heart attack or stroke – so the unmet need is massive.

This always fatal disease is caused by mutation in the gene coding for a protein called lamin A. A single cytosine-to-thymine mis-spelling is the most common mutation, and has critical effects.

Normal lamin A is modified with a farnesyl group which helps direct it to the nuclear lamina (a shipping tag). The tag is subsequently cut-off from normal lamin A. However, the progerin cannot be defarnesylated – meaning the un-natural shipping tag stays on the protein – and this interferes with a myriad of different cellular mechanisms. Because lonafarnib is a farnesyl transferase inhibitor, it prevents the addition of farnesyl groups to progerin to start with. Due to the missing shipping tag, the proteins do not reach their destination as easily but also do not accumulate and mess up the nuclear lamina either.

Although far from a cure, the simple farnesylation-block has significant clinical effects. Treated patients have significantly lower mortality risk and over the course of 11 years, live roughly 2.5 years longer. It also had a good safety profile with small number of discontinuations.

How Expensive is it?

As this is a significant improvement in ridiculously small patient population, we can start to understand why this medicine costs around one million a year, despite being a simple small molecule. This makes it the most expensive small molecule drug. There are not that many sales to be made – as many of the 400 children living with progeria worldwide were already dosed in your clinical trials. Of course, Eiger could theoretically sell it for cheaper, but you also must consider cost of the several clinical trials which lonafarnib was tested in, including its oncology history. So even though the price looks Machiavellian, the company actually lost 200 million dollars in the last three years.

The current R&D spend is focused on the development of lonafarnib in hepatitis D, which is a much bigger commercial opportunity but will also come with lower pricing. They also have additional pipeline projects, so all this cash drain resulted in them recently communicating a 25% workforce reduction. In summary, we see that having the most expensive small molecule drug doesn’t necessarily make life easy.

Chemical Synthesis

Lonafarnib was synthesized on a up to mind-blowing 100kg scale when it was planned as an oncology drug. If you compare the key intermediate to the target, you will notice that we need to introduce an aryl bromide group. How is this done selectively? If you ever had some electrophilic aromatic substitution theory, you would know that other positions are more electronically activated due to the present chloride substituent.

The team approached this starting with a single nitration, giving rise to two nitro regioisomers. Regardless of their position, the effect is the same. A novel reduction system with catalytic iodide proved to reduce the nitro group as well as ketone, saving a step. A mix of hypo-phosphorous and phosphorous acid avoided halogen side reactions while reducing both groups. However, they also observed severe foaming at the beginning of the reaction. For more control, they first added H3PO3 to reduce the nitro group, and then H3PO2 to reduce the ketone. This system proved better than hydrogenation or metal catalysis which would have decomposed the aryl halide groups and introduced potential contaminants.

With the amine in place, the desired bromination product is favored through either ortho-direction in one of the isomers, or para-direction in the other. After removal of the amino groups, the most acidic site is between the aryl rings. The addition of LDA, quinine and this electrophile led to a chiral alkylation, proceeding with impressive 95% ee. Gratifyingly, they were able to recycle the quinine – quite important if you run things on a double-digit kilo scale. Next, a diastereomer salt formation enriched ee to 99%. Last, a final amide formation introduced the missing part – and a one-pot Boc deprotection and urea formation gave the product.

Hemgenix in hemophilia B: The world’s most expensive drug

Now that the chemists are happy, we can pivot to the most expensive drug. For this, we need to understand a disease called hemophilia B, an inherited bleeding disorder caused by a deficiency of the coagulation factor IX. This disorder is characterized by frequent and recurrent bleeding into joints or soft tissue, leading to chronic pain, disability, and impaired quality of life.

The current standard-of-care for haemophilia B includes life-long on-demand and prophylactic replacement therapy with FIX concentrates. This replacement therapy is effective at reducing bleeding episodes and is well tolerated – although some patients develop antibodies, making them resistant to replacement therapy. These repeated injections become extremely expensive over a patients lifetime, with most estimates well beyond $10 million. ICER says 3 million dollars would be a very reasonable price – so Hemgenix is not too far off. So clearly this one-time treatment has a lot of impact, but how does this work biochemically?

How do Gene therapies work?

Gene therapies use engineered viruses as carriers or so-called vectors of genetic information to correct a patient’s genetic code, ultimately restoring the proper functions of vital proteins. For Hemgenix, this vector is adeno-associated virus or AAV-based. It’s like a train or truck delivering cargo. As viruses are doing virus things, they can enter cells and integrate or transduct the missing gene into the cell.

Compared to normal viruses, these AAV are modified to lose their replicative abilities, rendering them safe as therapies for humans. In addition, a DNA regulatory element called promoter limits the transgene expression in only the desired tissue. In this case, it’s the liver, as factor 9 is produced in hepatocytes and released into circulation from there. The actual factor 9 gene being incorporated is basically a factor 9 protein on steroids, which is 7-times more activity than wildtype due to a single mutation. This allows for a lower AAV vector dose which in turn decreased averse immune reactions by patients.

As you might expect, Hemgenix was superior to replacement therapy in a mid-sized trial with 54 patients. This led to a significantly lower rate of bleeding events as the primary endpoint. 96% of patients were able to stop replacement therapy. This transformational benefit shows in the increased factor IX activity of patients. Severe hemophilia is characterized with untreated factor IX activity below 5%. This also approved, with immediate and sustained increase post-treatment. Given the adult population, the approval is only in patients over 18 years. In summary, instead of continuously replacing factor 9 exogenously multiple times a week, incorporation of the missing gene solves the problem for good – or at least for more than 20 years.

How can we estimate drug sales?

Hemgenix is the world’s most expensive drug – so will it lead to the highest profits?

You might know that total yearly sales equal sales per year multiplied with the cost per patient. We already know the latter – but what is the true number of patients that will get treatment?

Well, there’s only approximately 6000 people with hemophilia B in the US. Let’s assume this population grows by 1% each year. Do you remember if we can treat all of them? Nope! The approval is only for adult patients, which might be around 80% of patients, and only in cases with severe hemophilia B, maybe around 60% of the patients. So 6K times 80% times 60% – some of you might do it in their head –is 2’880. But why is the number I have here different? Well, I mentioned some patients develop antibodies or inhibitors to factor IX replacement therapy. Because Hemgenix does not have data in these patients, we will exclude them too. This reduces the eligible pool by 2%.

Gene THerapies Are Unique

Now just multiply this number with price? Think again! Will all patients use Hemgenix, immediately? Clearly not – most of them will never receive it due to limited coverage due to the high cost, and the uptake will only gradually increase with time.

It’s probably fair to say that not much more than 10% of patients will ever get Hemgenix, and we also need to assume a build over time – let’s say a one or two percentage points every year. Hemgenix is a one-time treatment. It practically cures patients or it “does not work”. Therefore, more patients being treated reduces the addressable pool.

But hey, this therapy will also not be the only one. There is another hemophilia B gene therapy (Pfizer/Spark). Even if we assume that the first-to-market therapy will dominate, the second product will also have some penetration. Obviously, this all depends on its relative efficacy, safety and importantly price. Here, I simply assumed that the new product would have 50% of Hemgenix’ uptake, delayed by one year.

This means the blue line gives us the actual pool we can treat with each product in every year, factoring in the total number of patients previously treated with Hemgenix and the Pfizer/Spark product. I hope you could follow.

Now we can take the number of new patients treated with Hemgenix, calculated by multiplying the phased penetration with the untreated addressable pool, and multiply it with the price per patient. There are also some less important pricing assumptions.

How Profitable is The World’s most expensive drug?

Do you notice anything about the result? The number of Hemgenix-treated patients actually peaks after just a few years, maybe even staying below 200 patients per year. This translates into peak sales of $630M.

Definitely nothing to sneeze at, but we also have to be real here – many mega-blockbusters with lower pricing are much more lucrative for companies due to steady revenues and higher number of patients. Throw the quarter million-per unit production cost on top, program development cost, and all your other functional and SG&A cost … Just because something is the world’s most expensive drug, doesn’t mean it’s highly profitable or overly “capitalistic”.

And let’s once again re-iterate the topic of low probability of success. With bad luck, developers can easily risk all profits of one drug while financing others. Even the simplest medicines can simply fail to demonstrate efficacy – but the development of innovative therapies like gene or cell therapies is another beast. Very recently, the FDA put a clinical hold on Arcellx’s Phase 2 investigating a CAR-T cell therapy following the death of a patient. Just half a year prior, Gilead invested over $300M to secure development and commercialization rights. This shows how fast the profits gained on some products can disappear.

Thank you for sticking through to the end! As always, I hope you’ve learned something!

Key references

• Lonafarnib: First Approval | Drugs. 2021; 81(2): 283
• A Novel Iodide-Catalyzed Reduction of Nitroarenes and Aryl Ketones with H3PO2 or H3PO3: Its Application to the Synthesis of a Potential Anticancer Agent | Org. Lett. 2011; 13 (19): 5220
• Impact of farnesylation inhibitors on survival in Hutchinson-Gilford progeria syndrome | Circulation 2014;130(1): 27
• Gene Therapy with Etranacogene Dezaparvovec for Hemophilia B | N Engl J Med 2023; 388(8): 706
• Etranacogene dezaparvovec for hemophilia B gene therapy | Therapeutic Advances in Rare Disease. 2021;2. doi: 10.1177/26330040211058896
• Structure-activity relationship study to improve cytotoxicity and selectivity of lonafarnib against breast cancer cells | Arch Pharm (Weinheim) 2023; 356(4): e2200263
• Deloitte | Measuring return from pharmaceutical innovation 2022 – IQVIA | Global Trends in R&D 2021