13 hours ago
Biocurious: CSL's R&D chief says drug development is like falling in love
CSL's hereditary angioedema prophylactic Andembry is one of only a handful of FDA-approved, Australian-developed drugs
Andembry reflects CSL's R&D approach of sticking with 'adjacent' competencies
CSL spends around $2.3 billion a year on R&D, but it's still outgunned by rivals and needs to play smart
CSL (ASX:CSL) global head of research and development Bill Mezzanotte likens drug development to falling in love.
'If you don't put your whole heart into it, it won't work,' the Pennsylvania-based Mezzanotte told Stockhead. 'But when you do, you are at risk of having your heart broken and that sometimes happens.'
The blood plasma giant certainly has had its share of heartbreak along the way, including a failed heart attack mega trial.
But as a 'hopeless romantic', Mezzanotte remains confident about the life-saving potential of the company's circa US$1.5 billion ($2.3 billion) a year R&D program.
Justifying this optimism, CSL last week won US Food and Drug Administration (FDA) assent for Andembry (garadacimab), a new treatment for the severe swelling condition hereditary angioedema (HAE).
In commercial terms, it's the most significant win in years for the $116 billion market cap behemoth.
Rare local drug success for rare disease
Developed over close to two decades, Andembry is one of only a handful of Australian-developed drugs to be approved by the FDA.
It's also the first non-plasma derived monoclonal antibody to be discovered and developed entirely by CSL.
Monoclonal antibodies are lab-engineered proteins that bind to a specific target such as a cancer cell or a virus.
Because they're not produced from painstakingly collected blood, these remedies have much more attractive margins.
Fittingly, CSL's new facility at Broadmeadows in northern Melbourne will make Andembry.
Regulators in Europe, the UK, Japan, Switzerland, the United Arab Emirates and locally already had approved Andembry.
But to re-phrase Paul Keating, if you are not approved in the US – the world's biggest reimbursed drug market – you are only camping out.
Same but very different
Andembry is intended as a powerful prophylactic for HAE, which affects about one in every 50,000 people.
The disease can cause fatal swelling throat swelling.
Andembry stemmed from an antibody 'library' of potential targets which CSL in licensed from the Nasdaq-listed Dyax Corp (later acquired by Shire Pharmaceuticals).
CSL discovered garadacimab on the 'bookshelves', along with some other molecules.
From that base, CSL did all the research and clinical development, including a 64-patient global trial dubbed Vanguard.
'We took the lead very early,' Mezzanotte says. 'We bought it all the way from research to product development.'
CSL's HAE armamentum consists of the injected Haegarda and the infused Berinert (for use during attacks).
Haegarda requires twice-weekly injections, while Andembry is administered monthly via a 'patient friendly' auto injector.
Mezzanotte says Andembry is 'completely different' to Haegarda.
Haegarda is a plasma-derived version of the C1 esterase inhibitor, which HAE patients lack.
With a more 'upstream' action, Andembry targets an associate pathway called factor XIIa.
'Both are effective but effective in different ways,' Mezzanotte says, adding that Andembry is 'darned effective' with low side effects.
The Vanguard trial showed Andembry reduced the median number of HAE attacks by more than 99% compared to placebo.
Blockbuster potential
But won't Andembry simply cannibalise Haegarda (and Berinert) revenue?
Haegarda chalked up US$491 million of sales in the 2023-24 year, with Berinert contributing US$242 million.
Mezzanotte says patients may prefer C1 inhibitors 'because they may do a little more than necessary'. Haegarda works well for pregnant women and it possibly is better for more severe attacks.
'Scientifically they live well together,' he says.
But management hopes Andembry will steal plenty of share from Takeda's Takhzyro, the market-leading HAE drug turning over US$3 billion but also requiring twice-weekly injections.
Bell Potter analyst Thomas Wakim dubs Andembry 'CSL's most commercially attractive near-term new product.'
His peer at Wilsons, Dr Shane Storey estimates Andembry will achieve peak annual sales of US$600 million within five years.
In the pipeline
Andembry exemplifies CSL's R&D approach of not straying too far from what it's good at, whilst not being afraid to disrupt its own products.
'I'm a big believer in adjacency – utilising our plasma platform – or sticking to an area we know like HAE and disrupting ourselves,' Mezzanotte says.
'When we get too far away from our base of operations it gets a little tricky for us.'
CSL's annual R&D manifesto outlines a dense agenda of advanced and nascent programs across its Behring (core plasma and specialty) and Seqirus (flu vaccine) arms.
An adjuvanted trivalent cell-based flu vaccine – which includes three flu strains to be more effective – is the most advanced.
The program is in phase III and may not need more data to win approval.
CSL is also trialling CSL300 (clazakizumab) for patients on dialysis for end-stage kidney disease (to reduce inflammation and heart attacks).
CSL inlicensed clazakizumab from another company that had tried the drug for kidney transplants without success.
Vifor? I'll tell you
Investors periodically have criticised CSL for its $18 billion, seemingly left-field acquisition of the Swiss kidney health and iron deficiency group, Vifor.
One of CSL's stated reasons for the purchase was to expand its R&D pipeline.
'Vifor gave us an insight into kidney disease, which allowed us to use a drug we had ,' Mezzanotte says.
'It helps us to be efficient with a great chance of success.'
CSL's global head of research and development Bill Mezzanotte. Pic: supplied
Checking out of Heartbreak Hotel
In February last year CSL experienced heartbreak – literally and figuratively – with the failure of its drug program, CSL-112, to prevent secondary heart attacks via cholesterol-reducing mechanisms.
The company's 18,000 patient phase III trial failed the primary endpoint.
The therapy showed the desired activity, but just not enough.
Mezzanotte says the candidate had passed futility analysis, which – as the name suggests – appraises whether continuing a program makes sense.
Mezzanotte says CSL took the conscious risk of eschewing a smaller intermediary trial.
'It was a particularly tough choice, a smaller trial would only have led to the bigger trial,' he says. 'We decided the most cost efficient was to go straight to the big trial but it was a risky approach and we failed.'
He says the lesson of such setbacks is to 'fail well'.
CSL-112 has gone back to the labs for researchers to have another look-see – but it won't be subject to another big-ticket trial.
AI speeds up the 'unsexy' drudge work
Mezzanotte says while AI is still immature, it could expedite early-stage drug discovery by enabling programs to skip early-stage animal modelling and to go directly to human studies.
'In theory it should improve speed and the probability of success, but we are in the infancy of using that,' he says.
'Automation has improved our productivity, but I'm hoping AI can bridge the gap with all the big laboratory work we can't afford to do.
'We haven't seen the tangible benefit yet, but we see the promise of it.'
He says while AI advocates focus on the 'sexy' research side, the technology is helpful for prosaic tasks such as preparing regulatory and safety reports.
'We create a lot of documents in R&D,' Mezzanotte says.
'We used to send it by trailer, now we email it.'
Getting bang for 2.3 billion bucks
CSL targets an R&D spend of 10-11% revenue, equating to the $2.3 billion at present.
While this sounds capacious, rivals are spending up to US$5 billion annually.
Given that, the company needs to glean maximum efficiencies from its global complement of 2000 R&D staff, about one-third of which are in Australia.
'We pick and choose carefully,' Mezzanotte says.
'We can't build huge research palaces and we try keep lean and use partners whenever we can to extend our reach.'
Having held senior roles at Boehringer Ingelheim and Astrazeneca, Mezzanotte says commerciality should not be a 'four letter word' in R&D.
'We look for areas of unmet need and rational targets to work on,' he says.
'There is plenty of commercial input early on, but the first few years of Andembry all about the science.'
Mezzanotte says through 'great successes and some disappointments', investors have long supported CSL's R&D endeavours.
'I hope shows them the power of R&D and what we can do at CSL.'
