Development of Cell-based Therapies in a

Large Organization: Orchestrate for

Success

Paul Williamson, MD

Senior Director

The Stem Cell Organization of

Janssen R&D, LLC

7 June 2012

0

20

40

60

80

100

0 6 12 18 24

Placebo Infliximab

ASAS 20 Response Over Time

*

2

Medical Needs Persist Despite the Advent of Biologicals

Week

Pro

port

ion o

f P

atients

(%

)

*

* * *

*

* p< 0.001

Van der Heijde D, Dijkmans B, Williamson P et al: Efficacy and Safety of Infliximab in Patients with Ankylosing Spondylitis:

Results of a 24-week Randomized, Placebo-controlled Trial (ASSERT). Arthritis Rheum 2005;52(2):582-591.

New Growth Platforms

Big Pharma Is Looking For New Growth Engines To

tal 2

00

6 R

eve

nu

es

2006-2010 Revenue CAGR

$60B

$30B

$0B

$20B

$50B

4% 6%

DNA

• Cell Therapy

• Gene Therapy

• Mimetic Technology

• Therapeutic Vaccines

12% 0%

Source: Broker Research (2006-2007 reports from Prudential, Bear Stearns, Wachovia, and CSFB), Frankel Group, LLC

$40B

$10B

RHH

BMY

LLY

ABT

NVS

GSK

SNY

JNJ

AZN MRK

PFE

8% 10% 2%

Genentech

Amgen

Roche Novartis

Abbott

BMS

Lilly

J&J

GSK

Pfizer

Sanofi

Merck

AstraZeneca U.S. regulators approved 18 new drugs in 2006, close to an eight-year low, as drug makers struggled to develop products

The number of medicines recommended for sale in 2006 and 2005 dropped from the annual average of 26 drugs recorded in the previous six years

AMG

Pharma Drug Discovery Technology Cycles

Natural products:

Digoxin Insulin Penicillin

Synthetic Chemistry:

NSAIDS Antibiotics Morphine

Receptors/ enzyme biology:

Beta blockers H2 inhibitors ACE inhibitors Statins

Mab

Genomics/ proteomics:

Combi chem Bioinformatics/Systems Biology

1850-1960

1950 - 1970

1970 - 1990’s

2000 -

Source: Steve Plag, Credit Suisse, 2007

The need

for something transformational

Investment

• Which is the preferable alternative for exploiting new technology?

– Placing numerous smaller bets on external technology?

• Darwinian selection for the strongest (academics, VC’s)

• Await need for funding late development and global distribution

• Retain internal expertise for analysis

• Acquire surviving asset, but at high price

– Placing larger bets up-front on internal technology?

• Diversity of projects is much less than external environment

• Organizational bias

- Line extension mentality

- Near-term results

• Depth of processes

• Fewer bets, but larger payoff

Internal Innovation

• How can J&J:

– Innovate in areas previously occupied by start-up companies?

• Venture funding (external) driven to projects with less risk

– Protect innovation from internal processes that have been put in place to protect mature businesses?

• CMC

• Regulatory

• Medical devices/diagnostics

• Surgery

Hybrid Model

• Johnson & Johnson Development Corporation

– Partnership with the J&J Corporate Office of Science & Technology (COSAT)

– External investments

– J&J Internal Ventures (JJIV)

• Syndicate investment with ≥ 1 operating company (60/40)

• Project review using standards applied externally

• Milestone-based

• Compensation driven by milestones

• Independent governance

• Risk too high and timelines too long for an operating company

- Do scientists at operating companies embrace or eschew risk?

Stem Cell Organization Overview

• Johnson & Johnson Sectors

• Pharmaceuticals R&D

– 5 Therapeutic Areas: Immunology, CV/Metabolism, Virology, Neuroscience, Oncology

– Biotechnology Center of Excellence

• Cell Therapy, Biologics Discovery, Biologics Toxicology

• Stem Cell Organization

– Originated by JJDC as a J&J Internal Venture

– Charged with development of a cell-based therapeutic

– Integrated into the Pharmaceutical Sector during the Phase 1 trial in patients with RP

– Operating model: partnerships

The Venture Ecosystem

External Partners

Own

Core

Internal Partners

Building the Venture Team

• Creating a small, focused, experienced, entrepreneurial group

– Recruitment

• Competencies and culture

• Living in survival mode within a larger matrix organization

– Business/operating plan

• Defining the milestones (e.g., Proof of Concept)

• Describing the specific development activities

• Outsourced model: partnerships in preference to vendors

Why the Eye?

• Unmet medical needs

• Targeted delivery

• Commercial manufacturing scale

• Potential immune privilege

• Clinical biomarker (imaging) strategy

• Approach: pursue proof-of-concept

Log r

eflection

OCT Image—Diabetes SD-OCT Images

Adaptive Optics OCT

NEJM 2004;350:48-58 and http://vsri.ucdavis.edu/research/retinal/ao-oct

Study Synopsis

• Phase 1, Open-Label, Non-comparative Study Evaluating the

Safety of a Single, Unilateral, Subretinal Administration of CNTO

2476 in Advanced Retinitis Pigmentosa

– ClinicalTrials.gov Identifier: NCT00458575

– Objectives:

• Safety, immunogenicity & changes in retinal structure/visual function

– Seven subjects enrolled:

• Single sub-retinal dose escalation

– Interim results (12 months)

• 7 subjects treated, 2 had retinal detachments requiring surgical intervention

• There was no evidence of immunogenicity

Venture Challenges

• Supporting entrepreneurial function with large organization infrastructure

– Creating venture-like milestone-based compensation

– Annual business planning

– Budget tides: ebb and flood

– Change in strategy of the larger organization

• Navigating processes imposed from mature businesses

– “ „These guys are cowboys. They don‟t follow the rules.‟ It was not that we were unwilling to follow rules. We were very committed to quality. But, we needed to think differently about how the rules applied to this new technology, stem cells.”

Confidential

New Workstreams: Cell Therapy in Clinical Trials

GMP GCP

Shipping Clinical Supplies Clinical Trial

Shipping

hand-off

GTP GMP

Cell Processing

Donor

Eligibility Qualification

Preparation

of

Clinical Supply

Completion

Of

Batch Record

Administration

To

Patient

MD Review

Conventional

Therapeutics

Cell-based Products

Refinement of a Surgical Delivery System

Microcatheter Delivery System

(MDS)

3-port Pars Plana Vitrectomy

Study Synopsis

Phase 1/2a, Study Evaluating the Safety and Clinical Response of a Single, Subretinal Administration of CNTO 2476 in Subjects with Visual Acuity Impairment Associated with Geographic Atrophy Secondary to AMD

– ClinicalTrials.gov Identifier: NCT01226628

– 10 objective: assessment of safety

– 20 objectives: assessments of clinical response, immunogenicity

and performance of the MDS

– Design: Fellow-eye controlled, ascending dose, safety and Proof of

Concept

– Study population: vision loss from GA

– Estimated size: 56 - Clinical site locations: US

Venture Challenges

• Success

– Leads to greater annual costs

– Reaches the larger organizational funding radar screen

– Requires ―at risk‖ expenses in new platforms

– Generates additional questions

• Does it fit?

• Is this our core competence?

• Do we have a model for commercialization?

• Do we have any ophthalmologists?

Stem Cell Organization of Janssen R&D, LLC

• SCO Blueprint defines our mission/vision/culture

– Rules of Citizenship

• Communication

• Collaboration

• Innovation

– Behaviors that foster Innovation

• Challenge the status quo

• Maintain focus in an environment of uncertainty

• Anticipate and embrace change

• Accept risk proportional to the potential benefit

• Don’t lose ―content‖ pursuing the ―process‖

Venture Structure

• Inter-relationship of structure and function

• Advantages of a small entrepreneurial group

– Alignment on milestones

– Focused commitment

– Co-location

– Vendor alliances

– Consistency in collaboration and ―convergence‖

– Recruitment of the ―right,‖ not necessarily the ―best,‖ candidate

• Advantages of integration into larger organization

– Depth and breadth of expertise

– Recognition in the external environment

– Staying power

– Potential for seamless hand-off

Conclusions

• Unmet medical needs will drive demand

• Benefits will accrue to:

– Patients

– Health Care Providers

– Organizations that can

• Exhibit behaviors that foster innovation

• Gain support for the appropriate organizational structure

• Accommodate to paradigm shifts

• Successfully collaborate with development partners

• Overcome technical challenges

• Achieve sequential milestones

• All structures have advantages and limitations

– Choose yours judiciously

Suggested Reading

Pisano GP. Science Business: The Promise, the Reality, and the Future of Biotech. Harvard Business School Press; 2006.

Whalen J. Glaxo Tries Biotech Model to Spur Drug Innovations. WSJ; 1 July 2010.

Govindarajan V, Trimble C. Building Breakthrough Businesses Within Established Organizations. Harvard Business Review; May 2005, pp 58-68.