Approval of Vaccines to Viruses that Produce Frequent Variants

Given the current pandemic situation, I thought it would be useful to review briefly the method FDA typically uses to approve flu vaccines (a virus with frequent variants) and which they might (and I believe likely will) apply to vaccines for variants of the Corona virus now in circulation. The approval of modified vaccines to virus variants is based less clinical information than is required for a completely novel vaccine (or novel new drug) because there is already a lot of information available from the clinical trials of the original vaccine.

The FDA criteria for approval of a novel flu vaccine requires a phase I/II and phase III studies. The object of phase I/II is to identify a dose regimen that generates an immune response high enough that it would be expected to prevent and/or mitigate the viral illness. The magnitude of immune response targeted is generally equal to or greater than the immune response associated with recovery from natural infection. A second objective is to determine the tolerability of the putatively effective dose regimen in a relatively small number of human subjects.

Once the dose regimen that accomplishes these two objectives is identified, FDA requires a Phase III study of a large number of subjects to show that the vaccine is still found to be well tolerated in a much larger number of subjects and that the vaccine really does prevent or mitigate infection sufficiently to support approval. Approval is based on a judgement that the side effects are more than compensated for by the reduction of infection or the consequences of infection.

Because flu virus variants change every year, it is not feasible to require this same development process every year, because the time delay required for a phase III study would mean the vaccine for the new variant would not be widely available during period when the variant(s) is prevalent.

To overcome this, once a successful Phase III study has been conducted for an specific vaccine, FDA requires only the phase I/II study of the vaccine for the variant, to confirm that the dose regimen induces an immune response to the variant similar to the immune response the original vaccine produced against the original virus. This shortens the development process for vaccines to variants substantially and is the reason that we have a new flu vaccine every year, just in time for the new flu season variant(s).

I think it is likely that FDA will follow this precedent for vaccines to the novel corona virus variants that may become predominant and for which the current vaccines may have lower efficacy. Once a vaccine has had a successful phase III study (and assuming nothing adverse has cropped up in the interim), approval of the same vaccine for a variant will not require a phase III study, just a successful phase I/II to confirm the immune response to the variant and tolerability in a small number of patients.

Given the incredible speed of current vaccine studies, I would guess that the vaccines for the new variants will be available within a couple of months. The current manufacturing procedures can likely be quickly modified to produce large amounts of variant vaccines. Thus, we likely could have EUA for variant vaccines soon if they are needed.

Here are some links to relevant FDA documents.

One other Covid item of interest is the upcoming FDA Advisory Committee Meeting that will review the J&J vaccine for an EUA. Here’s a link to the announcement that includes links to the webcast of the meeting.

The meeting materials and webcast will likely be the most complete summary of the clinical data on the J&J vaccine that is readily available for quite some time. Highly recommended for all those interested in the J&J vaccine.

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JAMA Publication on Refusal to File Letters

One issue I describe in my book is that while companies are free to describe their interactions with the FDA (or not), the FDA is generally barred from disclosing any but the most top-level interactions, e.g., new drug application approvals. This imbalance can lead to a disconnect between the reality of a company’s interaction with FDA and what the public knows.

This potential problem was analyzed in a formal way in a recent publication in JAMA (JAMA Intern Med. doi:10.1001/jamainternmed.2020.8866), which described an analysis of FDA Refusal to File Letters for new drug applications.

A refusal to file letter is issued by FDA in response to a submission that it determines is too deficient to warrant a full review. So, it’s a pretty embarrassing for a company. Thus, it may not be surprising that the publication reported that applicants publicly disclosed the existence of only 15.5% of the Refusal to File Letters and only 5.4% of applicant-disclosed reasons matched the refusal reasons that the FDA had provided in the RTF letters. This suggests that there is a significant problem with company disclosures of these letters.

Here are some of my other takeaways from the JAMA publication:

  • Only a very small proportion of NDA submissions result in a refusal to file
  • The main reasons for issuance of letters are:
    • Safety issues
    • Efficacy issues
    • Failure to heed advice given by FDA prior to the NDA submission

The last sub bullet is especially troubling. As pointed out in the article, the FDA reviewers are typically very knowledgeable about the subjects of NDA submissions, having reviewed prior similar submissions by other sponsors. Thus, their pre-submission advice is typically extremely valuable (and FDA’s advice is provided for free).

As discussed in my book, companies ignore FDA advice more commonly than would be expected. In the case of Refusal to File Letters the authors found that about a quarter of the Refusal to File Letters were due to FDA’s pre-submission advice being ignored. This is roughly consistent with my personal observations. The publication reported that 1.5 year delay of the NDA approval; a significant part of the patent life of a typical NDA products and a delay in the time when patients can benefit from a new product and roughly consistent with my experience as well.

When a refusal to file letter is received from FDA, a sponsor can file “over protest,” essentially ignoring FDA’s Refusal to File Letter. Although this was done in only a handful of cases included in the publication, all the applications filed “over protest,” all were ultimately rejected by FDA, suggesting continued ignoring of FDA’s advice is not generally productive for a company sponsor.

As pointed out in my book, advice from regulators is generally extremely valuable. One can disagree with them. But, disagreements should be resolved prior to action that may result in a refusal to file or other adverse determinations by regulators. Proceeding in the face of contrary advice, increases the risk of the development process which is a very risky business in any event.

Given the relatively low rate of public disclosures of Refusal to File Letters by sponsors, investors and other interested parties should be alert to the potential of undisclosed RTF letters. Some ways to do this are for example: inquiring about apparent delays of expected events following an NDA submission for example failure to announce intermediate steps expected after the announcement of an NDA submission. For example:

  • Acceptance of NDA for filing
  • Submission of 120-day safety update
  • Completion of manufacturing sites inspections

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2020 FDA Novel New Drug Approvals

My objective in writing my book and this blog is to contribute in some small way to the more efficient and productive development and approval of new drugs. When I first started the blog, the number of new FDA novel drug approvals was near an all-time low. During 2014, I stopped writing about how to do more efficient and effective drug development and helped to start an organization that I believed could make drug approvals more efficient. I believed that this organization could, by its example, help drive the industry in a more efficient and productive direction. Whether by coincidence or in part because of the efforts of me and my colleagues, the number of novel drug approvals has increased considerably since the period before 2014 as evidenced by the Figure below.

CDER’s Annual Novel Drug Approvals: 2011 - 2020

A full listing of the approvals during 2020 is given on the FDA’s website at:


Two of the approvals listed are derived from Roivant Sciences, Ltd., the company I helped to start with the hope that it could be a more efficient drug developer. For 2020, about 4% of all novel drug approvals by FDA came from Roivant derived companies.

There were seven companies that had two approvals if you count the two that derived from Roivant as Roivant approvals and no individual company that had more than two. I am not sure if any of the companies listed were started by the same people like those derived from Roivant and therefore could be consolidated as I’ve done for Roivant. Quite possibly, I suppose. On the other hand, if none of them were started by the same people, then Roivant would be among the top 7 out of 53. Remarkable for a company is only 6 years old.

Another thing worth noting. Most of the approvals were obtained by companies that are not pharma majors. I think this is important because obtaining a new drug approval from FDA is a significant accomplishment and demonstrates a minimum level of competency at the main value generator in the pharma industry. I think it would be interesting to compare companies by calculating the average drug development spend over the prior 5 years divided by the number of NDA approvals in the current year. Of course, there are other kinds of drug approvals, new formulations and new indications and some drugs are a lot more important than others. But, I still think this might be a reasonable measure of productivity and a predictor of longer-term success because getting novel new drugs approved is such a core competency.

For reference, I’ve pasted the annotated page from the FDA website below. The numbers floating off to the right are the number of approvals for that company if it had more than one. The first, vibegron and third, relugolix were both derived from Roivant.

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A Comment on the Evaluation of the Risk of Covid Vaccination

Recently, people who know I’m a retired physician and pharma specialist, occasionally call to ask my opinion about the safety of getting vaccinated (immunized) against the SARS Covid-19 virus.  I believe their hesitancy is the result of the media’s emphasis on the vaccine’s potential side effects; both common (usually mild or moderate and transient), rare (that can be more serious but appear to respond well to therapy), and purely theoretical.    

The question presents a false dichotomy, namely that one can actually decide whether or not to be immunized.  Covid is a very infectious virus and is becoming more so as time passes and more contagious variants emerge. This means that the pandemic will not end until a large majority of the population becomes immune; realistically, all of us will become  “immunized” over time in either of the following ways:  

  • By getting vaccinated with a well-characterized substance that is manufactured to a high standard of purity and consistency in a pharmaceutical manufacturing plant and stored in a sterile vial, and which, at least over a period of months, has been found to be remarkably safe, subject to generally modest side effects.
  • By remaining unvaccinated until, almost inevitably, we become infected with the virus (which continues to mutate to cause ever-higher transmissibility and can have fatal consequences). Transmission from another infected person will naturally inoculate us, while introducing into our bodies viral components made from parts of another person’s body, and reproducing in our bodies a multitude of potentially toxic molecules that are known to frequently cause symptoms like fever, myalgia, cough, shortness of breath, loss of taste and smell sensation and for hundreds of thousands of Americans (so far) death, largely by suffocation.

I believe that for all but the luckiest who may somehow avoid infection in spite of remaining unvaccinated, these are the only two options: Getting a substance made by professionals who are trying to protect your health, or getting infected by a malign virus that uses you as food and doesn’t care if it has to sicken and kill you and your loved ones to feed itself; in short a monster.

Although all pharmaceuticals have side effects, one must compare them with the alternatives.

I am beyond grateful for the existing vaccines and to the dedicated people who’ve brought and will continue to bring these life-saving pharmaceuticals to us faster than ever before. They may not be perfect. But, what’s the alternative?

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Please Excuse My Absence

Been busy for a couple of years. During that time, I helped put some of the ideas included in my book into practice as part of starting a new company. Thus far, I am more than gratified by the results; most recently with the approval of two of the company’s new drugs by the FDA. The company has grown from a handful of us having dinner in a Mexican restaurant to over 1000 employees in its various parts. It has strong relationships with major companies and I am hopeful that it will grow even more productive. Although it’s quite small and young compared with the major companies, I judge its pipeline and number of FDA approvals last year to be comparable to those of some of the largest pharma companies in the world.

It wasn’t appropriate nor did I have time write in this blog while involved in such a demanding undertaking. But, now I do have some time so I plan to make some entries from time to time. I hope you find them interesting.

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Pharma Mergers and Acquisitions: No-win or a No-Lose Propositions

This seems to be the season for mergers and acquisitions in Pharma.  What is the motivation for these transactions.  One possibility is that if structured correctly, a merger or acquisition can be a no-lose proposition for accounting purposes and a no-win proposition for stockholders.

How can this happen.  Consider Company A which is slowly losing patent protections for its products and cannot get replacement products approved quickly enough to replace them.  Given the massive profitability of many pharma products and the enormous landscape of potentially successful development projects, Company A must be relatively poorly managed.  However, Company A can find Company B that has income producing products and acquire it.  What is the cost to Company A?  The cost is minimal because the money Company A spends to acquire Company B is counted as an investment.  Company B’s assets are simply a replacement for the money Company A spent.  Over time, Company A will have to depreciate these assets but this depreciation can often be spread over many years.  So, the cost of acquisition is low from an accounting point of view.  Just a lot of lawyer payments.

If the cost is low, what’s the benefit.  Well, that’s easy, the net income of Company B is added to the income of Company A.  So, profits go up automatically.  In fact, profits can go up even more if Company A fires as many people in Company B as possible.  Of course the firing should concentrate on people who don’t add immediately to the current income of Company B.  This maximizes the amount of Company B’s income that is available to add to Company A’s bottom line.  Who will be the first targets for firing?  The R&D group is prime.  R&D doesn’t contribute to current profits.  R&D generates future profits and a good R&D group can be extremely valuable.  But, in the short term, R&D is a cost.  So, getting rid of R&D makes short-term sense.  It makes many mergers and acquisitions a no-lose proposition, at least on paper.

But what about reality?  Firing all the people responsible for generating future profits means there will be no future profits.  All the value locked in the R&D organization is lost.  So, the value of Company B is greatly reduced.  However, this loss is probably not recognized for accounting purposes.  The value of Company B is still carried at close to its cost.

Thus, an acquisition can, for accounting purposes, be a no-lose transaction.  However, over time, the profits from Company B must decline because their future revenues are limited by the loss of R&D.   So, in due course, the slow depreciation of Company B that must be recognized year after year, will overtake the rapidly declining revenues.  This is when reality starts to set in.  Now Company A may have to start recognizing losses from the acquisition.

What to do?  Another acquisition will fill the bill.  Of course, it must be larger because the income from newly acquired Company C will need to cover the losses from depreciation of Company B in addition to the depreciation of Company C.  So, the acquisitions must get bigger and bigger.

That’s just what we are seeing.  Larger and larger acquisitions but sluggish growth or declining profits, except for a few years following the acquisition.

I’m not sure how something like this will end.  But, he size of acquisitions cannot grow to infinity.

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Changes at Merck

As I have written in this blog for the last couple of years and talked about for many years, the path to success in the pharmaceutical industry is clear and relatively straightforward.   The problem is that many managers find it difficult to tread this path because, it requires a different management style than many other industries where they may have had their prior training and experience.  Also, the massive profits from a single drug approval can delay the need to think about the long-term future and foster short-term and shortsighted management.

These challenges, which have yet to be fully overcome by many pharma companies, most notably the bigger pharma companies, have led to the current state of crisis in the industry.  For many companies, sales and profits are falling as patents expire on old, very profitable products, and companies, bound by shortsighted, unrealistic management techniques, are unable to replace them with new innovative products.

When crisis strikes, companies typically respond in one of two ways.  The most common is to try to minimize blame on management by asserting that existing management approaches were sound, but just not imposed strongly enough.  Thus, the rigid, bureaucracy-based management system is intensified, intensifying the problems.  A second approach is the more obvious one.  Admit that the current system is not working, fire the people responsible and hire new people who have a history of success in bringing new innovative products to market (yes this does still happen and the people who do it are well known).

Merck is now in the midst of a long crisis phase.  Last year Merck announced a workforce reduction of 20%.  This likely represents a massive loss of experienced personnel and a big blow to morale among the remaining people.  The question is, can Merck quickly rebuild a more productive organization.  The new head of R&D, Roger M Perlmutter, is a former Merck employee suggesting that he may have trouble changing the corporate culture that led to the problems now plaguing Merck.  So, it may be that Merck is still unable to create a culture of innovation and success and is merely intensifying the old system that led to the problem in the first place.

The final sentence of the New York Times article in the link above is not encouraging: “The company said it would also increase its focus on diabetes, acute hospital care and vaccines.”  Unfortunately, great opportunities in the pharma business do not generally present themselves in pre-specified therapeutic areas and it is, in my opinion foolish to restrict ones’ horizons.  This can lead to missing great opportunities elsewhere.

Another negative sign is Merck’s decision to create an innovation hub in the San Francisco Bay area in order to “actively seeking external scientific innovation”.  This sounds like Merck is to some extent giving up on innovation within the Company.  That it may be partially outsourcing its most critical function.  Outsourcing has been a consistent trend over my career and it has paralleled the decline of the industry.  Of course, association does not prove causation.  But, common sense tells us that a company should not outsource its most critical function to people and organizations that do not share company goals and incentives.

We shall see as time goes on.  A good manager should be able to start submitting successful NDAs within three years of taking over.  So, tune in to Merck in 2016.  If they don’t have at least one or two NDA’s successfully submitted, we will have our answer.

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Indian Patent Decision – A Spur to Innovation

A court in India recently made news by rejecting the patent on a polymorph of Gleevec, an anti-cancer drug.  A New York Times article cited the decision as a potential impediment to innovation in the pharmaceutical industry because it could reduce short-term profits for Novartis, the company that sells Gleevec and “the brand name pharmaceutical companies contend the profits they reap are essential to their ability to develop and manufacture innovative medicines”.

In my experience, this kind of interpretation of anything that effects the short-term profitability of pharma companies is very common.  But, does it stand up to rigorous scrutiny?  Allowing companies to extend the effective patent lives of their existing products could actually reduce their incentive to innovate.  This is because investing in short-term strategies to extend the lives of existing products could be a more prudent investment than the high-risks associated with innovation of important advances in medical therapy.

The Novartis patent in question is for a novel “polymorph”.  The concept of a polymorph is fairly easy to understand.  When a drug is made in solid form its molecules can arrange themselves in different patterns depending on exactly how the solid form of the drug is made.  Sometimes the molecules line up in very orderly arrays, sometimes they are all jumbled together in a disordered pile.  As part of assuring the quality of drug products, regulators require that the polymorph in a particular product always be the same.  This is required because polymorphs can differ in the rate and extent of absorption into the body when a drug is administered.  So, it is important that the polymorph be controlled to avoid potential differences in the rate and extent of absorption when the drug is administered.

But, what if two polymorphs have exactly the same rate and extent of absorption?  Should a company be allowed to patent a new polymorph and keep all other products off the market just because the molecules are arranged in a different pattern but the drug still has the same biologic effects?  This is equivalent to putting the drug in a differently colored pill.  It looks different but behaves the same when given to patients.  Does this kind of change justify 20 years of monopoly?  The common sense answer is “no”.  Patents should only cover real innovations.  Granting long monopolies for trivial accomplishments will tend to remove the pressure to make real innovations.

Thus, the Indian court decision is likely to spur innovation.  One cannot criticize Novartis for pursuing their patent case.  It was a good business decision in the existing business environment.  But, the court has changed the environment.  Perhaps going forward, money that might be used to pursue trivial patents and their resulting legal cases, will be channeled toward discovering innovative new therapies and the Indian decision will result in a long-term increase in investments in real innovations resulting in long-term benefits to pharma companies and patients.

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Some Good News

The trend of falling R&D productivity in the pharmaceutical industry seems to be reversing.  As shown in the following Figure, the number of new chemical entity approvals in 2011 and 2012 have increased above those for the last 7 years.FDA New Molecular Entity Approvals

The number of new molecular entity approvals by year. “New Drugs” was published in the Summer of 2009 

I published “New Drugs” in the Summer of 2009 to help spread understanding of the drug development methods I was taught and that I found lead to a high rate of success.  This was one of many efforts to improve the efficiency of the drug development process in recent years.  As detailed in other blog entries, both the NIH and some non-profit organizations have recently started programs that seek to improve the efficiency of drug development

We will know in a year or two if this increased number of approvals is a real reversal of the prior low number of approvals or results in an increased number of product withdrawals, suggesting the increase was caused by excessive FDA leniency (in my opinion the latter is unlikely).

My expectation is that this increase in drug approvals is due to a real increase in R&D productivity and that this productivity will accelerate over the years to come.  I hope that my book contributed in some small way to what looks like the beginning of an exciting new trend.  If, as I expect, this trend is real, it represents a real opportunity for investors, pharmaceutical companies and, most importantly, patients.

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Alzheimer’s Tragedy (Continued)


As expected, a second shoe has fallen.  Eli Lilly has reported disappointing results of two studies of solanezumab, an experimental treatment for Alzheimer’s disease.  The studies were named “Expedition1” and “Expedition2”.

I’ve expected this kind of result for many years and it has slowly become a mainstream belief in the investment community and to some extent in the academic community, especially since the recent failure of the similar product from Pfizer/Elan.

In spite of the widespread skepticism about the Lilly study it still seems to me that the news reports of the results of the solanezumab study do not emphasize how definitive the failure was.  The following quote taken from the Lilly press release is instructive.

“The EXPEDITION1 study did not meet co-primary cognitive and functional endpoints in the overall mild-to-moderate patient population; however, pre-specified secondary subgroup analyses in patients with mild Alzheimer’s disease showed a statistically significant reduction in cognitive decline. Based on those results, Lilly modified the statistical analysis plan (SAP) for EXPEDITION2 prior to database lock to specify a single primary endpoint of cognition in the mild patient population. This revised primary endpoint did not achieve statistical significance.”

What can we infer from this quote?  First, we learn that the primary analysis of the Expedition1 study failed.  That is, when the data from all patients were analyzed, they showed no statistically significant benefit from solanezumab treatment .  This means that from the regulatory point of view, the study failed.  However, a pre-specified sub analysis is reported to have shown statistically significant benefit.  Based on this observation the statistical plan for the second study was changed prior to locking the database.  However, the Press Release reports that in spite of this change, the second study also failed to show a statistically significant benefit.  How is this possible?  We can’t the reason in this particular case. However, this kind of outcome often happens because there are many pre-specified secondary analyses.  Thus, there is a possibility that one of them will show statistical significance purely by chance.  This is especially true if the analysis of the secondary endpoints is not corrected for the multiplicity of statistical comparisons and if the level of statistical significance is low.  Neither issue is addressed in the Press Release.  The fact that the second study failed in spite of the change in statistical plan suggests that the success in the first study was indeed due to chance rather than reflecting a real effect of solanezumab on Alzheimer’s disease.  These issues will become clearer if the full results of the two studies are published in a peer-reveiwed scientific journal.

There is one other speculation one can make.  Lilly decided to dramatically change the statistical analysis of the second study based on the results of the first.  This suggests that the results of the first study were so poor that Lilly felt there was no hope the second study would show efficacy unless the statistical analysis was changed dramatically.  This suggests that the first study didn’t just fail to show a statistically significant benefit of solanezumab but rather that is showed essentially no benefit (or that it showed the drug made patients worse).

Until these issues are clarified, I believe one must seriously question the justification for further investment in solanezumab as a treatment for Alzheimer’s disease.  As mentioned in a prior post, it is possible to show statistically significant benefit of Alzheimer’s treatments in much smaller studies, if the efficacy is there.  My team has done so in a number of studies and so have other teams.

Thus, the tragedy continues.  Money is poured into Alzheimer’s drugs that have a very low probability of success, while products with much better prospects are essentially ignored.

Like all bubbles, this one will pop sooner or later.  Let’s hope that when it does, companies don’t give up developing treatments for Alzheimer’s entirely.  There are a number of outstanding opportunities for developing Alzheimer’s therapeutics for much less money, in much less time and with much less risk.  Click to see one.


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