Bruce Carter - Chief Science Officer
Slide 4 - Novo Nordisk vs. the "Average" Pharmaceutical Company
There has been much discussion in the last two or three years about the benefits of size, and it is reasonable to ask: Can Novo Nordisk prosper into the next century? The answer to this is Yes. Largely because Novo Nordisk has characteristics that are different from a classical pharmaceutical company. Let me elaborate a little more on that.
Slide 5 - Number of NCEs Required to Keep Sales at Status Quo
This is an analysis which has been presented by Lehman Brothers and by both SmithKline Beecham and Roche. Those observers have concluded that if you look at the patent expirations in an average portfolio and the consequent loss of sales, then the average pharmaceutical company's portfolio loses half its value in ten years. This is represented in the graph where we see an illustration of a pharmaceutical company with sales of USD 5 billion declining to USD 2.5 billion at the end of the ten years. In order to grow the sales line by 9%, USD 9.25 billion worth of new drugs have to come of the R&D pipeline over the ten-year period. This is a very difficult task if we look at historical trends. In fact, for a pharmaceutical company to achieve this it will have to increase its R&D productivity five fold. Even with the new technologies this is a challenging goal.
Novo Nordisk's prospects are different. Our leading product, insulin, does not have the short product life-span of most drugs. Insulin has been on the market for decades and decades and it will be on the market for decades and decades to come. Insulin sales will not follow the lower line in the graph, it will follow the top line. We make a product that is not susceptible to generic competition. It is a generic, but one in which there are huge barriers to entry.
Now, let me turn to our discovery strategy. It is based on two premises. First, we will only compete in areas where we believe we have an advantage. Secondly, wherever possible we will seek areas where there is no competition. How are we doing this? First by focusing our medicinal chemistry efforts in our core therapy areas where we believe our knowledge of the medical and marketing issues is superior.
We intend to leverage our expertise in diabetes in order to become a provider of a broad range of products to treat people who have Type 1 or Type 2 diabetes. We intend to expand our HRT franchise from treating oestrogen deficiency to treating some of the complications of oestrogen deficiency, such as osteoporosis. We are today one of the largest supplier of human growth hormone, and we have active research and development programmes where we are not only looking at better ways to deliver human growth hormone, but we will identify and develop products to be taken orally or transdermally which will stimulate the body's own production of human growth hormone. Further, we have a proactive discovery effort based on the identification and development of protein therapeutics which will meet unmet medical needs even if they lie outside our core therapeutic areas. We believe that protein therapeutics and the exclusivity associated with them will allow us to avoid competition.
Let me say a few words about our breakthrough drug strategy. Insulin has shown us the importance of exclusivity and long product cycles. It is becoming clear that with conventional New Chemical Entities (NCEs) based on medicinal chemistry the period of exclusivity before a drug faces competition is shortening as is evident from the recent introduction of three protease inhibitors within six months of each other. In contrast, proteins like Erythropoietin (EPO) sold by Amgen, have been on the market for ten years and still there is no real sign of competition. Our breakthrough drug strategy aims to identify protein therapeutics which will provide us with exclusivity and prevent us from having to compete with much larger companies in the market place. The process is opportunistic in terms of therapeutic utility. Let me explain why.
Slide 7 - Alternative Approaches to Discovery
In prior years, in what we might think of as traditional protein discovery, it was a knowledge of biology which lead to the identification of a protein like insulin or EPO which was therapeutically useful. Subsequent isolation of the gene lead to recombinant DNA production of, eg insulin or EPO. In the future, our collaboration with Incyte Pharmaceuticals will give us the gene first. The sequence of the gene and the protein will give us clues as to the function of the protein, but it will only be after a series of biological assays that we will know the true biological function and thus the therapeutic utility of the protein. Sometimes it will be in our core therapy areas and sometimes it will not. We will decide on the best way to commercially exploit these opportunities on a case by case basis.
Slide 8 - Why External Collaboration?
Our tactics are to supplement our in-house discovery efforts by collaborations with both universities and biotechnology companies. We recognise that today more money is being directed towards medical research in biotechnology companies than by the pharmaceutical industry in total. We also recognise that in a world of rapid change it is no longer possible for any pharmaceutical company to maintain the full set of technologies necessary for drug discovery. At the beginning of 1995 we said we would spend 20% of our discovery money on external collaborations by the end of 1997. We reached this target by the end of 1996. Our new target is to spend 25% of our discovery money on external collaborations by the end of 1997.
Slide 9 - Selected Research Agreements
This slide shows recent research agreements that we have signed. The first group gives us access to new structures or compounds having the potential to become drug candidates. The arrangement with Houghten gives us access to structures derived from combinatorial chemistry. The arrangement with Incyte gives us access to DNA sequences that may be the basis for protein therapeutics, and the arrangement with Takeda gives us access to their library of compounds derived from more traditional medicinal chemistry.
The agreements with Alanex and Ontogen are designed to bring together their skills in combinatorial chemistry and our knowledge of disease targets in diabetes.
The deal with Boehringer-Ingelheim is designed to establish a joint R&D portfolio of projects in obesity. We chose to collaborate in obesity because the risks are so high that we would like to share them and the potential rewards are great so we can afford to share them.
The agreement with Schering AG takes advantage of the strong expertise Schering possesses within contraception and steroid chemistry, and the Structure Activity Relationship (SAR) and fertility models used at Novo Nordisk to characterise the newly discovered series of compounds that regulate the meiosis process which is critical to sexual reproduction.
The most recent agreement signed is with the Indian-based company Dr Reddy's Research Foundation (DRF). The researchers have discovered new patentable second generation insulin sensitisers for the increasingly important market for Type 2 diabetes. Obviously, an insulin sensitiser would complement our novel Oral Hypoglycaemic Agent (OHA), NovoNorm, beautifully. 2122
We have been very focused in the last two years in speeding up our development processes. Part of our focus has been to secure a fast transition from discovery to development. The result of this has been that last year we were able to begin human testing on four new drugs. And our collaboration with Anergen in the US meant that we brought five drugs to the clinic in 1996.
Slide 10 - Clinical Trials Initiated in 1996
NNC 05-1869 is an orally active substance with a new mechanism of action which we hope will be useful in painful diabetic neuropathy, a disorder with no effective treatment today.
NN 304 is a novel, soluble insulin analogue with a protracted action. We are impressed by its long duration of action in intial clinical trials and my colleague, Lars Rebien Sørensen, will say more about the importance of this compound later.
X-14 premix is a new injectable formulation of the rapid acting insulin analogue X-14, which combines the quick onset of action of soluble X-14 with the sustained effect of a crystalline formulation of X-14.
NNC 26-0161 is a small molecule which is designed to release the body's endogenous growth hormone. We now have evidence that it does this in humans as well as in animals.
Anergix MS AG284 is a novel recombinant protein molecule, which is a potential therapy for multiple sclerosis based on immune system modulation.
The next slide shows some of the most important development projects in our development portfolio.
Slide 11 - Project Portfolio April 1997
The focus is clearly on our core business areas, primarily diabetes care. My colleague, Lars Rebien Sørensen, will comment further on the late stage projects. I will briefly comment on some of the exploratory phase projects.
NN 304 is our long-acting insulin analogue.
NN 2344 is the potent insulin sensitiser that we licenced from India.
Levormeloxifene is a molecule that was also licenced from India. It is a partial oestrogen agonist. It is designed to be effective in the prevention of bone resorption and as such osteoporosis but without the proliferative effect on the uterus that oestrogen possesses. Our Phase 2 studies have revealed that it does indeed have a beneficial effect in preventing bone resorption and that it will also have a beneficial effect as a lipid lowering agent.
NNC 26-0161 and NNC 26-0703 are both small molecules designed to cause growth hormone release in humans. NNC 26-0161 is designed to be delivered transdermally and NNC 26-0703 gives us the possibility of oral administration. Thereby avoiding the need for injectable human growth hormone.
Our business is really the commercialisation of intellectual property.
Slide 12 - First Patent Filings by Novo Nordisk. 1989-1996 - Health Care
As well as revamping our D&D we have taken a much more aggressive stance to the protection of our intellectual property. This is reflected in the more than doubling of our patenting activity.
At the same time we are taking a much more strategic view of our patent activity and monitor competitor activity much more closely, and we are also moving towards stricter enforcement of intellectual property rights which the recent lawsuits initiated by Novo Nordisk in the US demonstrates.
With these words I am pleased to introduce Lars Rebien Sørensen, Corporate Executive Vice President, Health Care.
