Letter to editor: Ophthalmic research funding
Like so many, I have followed Valeant’s hostile takeover bid for Allergan. I read with interest the recent comments by Scott Whitcup and Cal Roberts in Ophthalmology Times, both individuals who I consider friends and in whom I have great respect, regarding the contrasting philosophies of these two companies.
I hope, by this letter, to add a different perspective that may add some insight to this dialogue. While we in the field of ophthalmology may not have much clout in this knock-down, drag-out struggle between two large companies, I do feel we have a stake in the outcome.
By way of clarification, I am Professor, Chair, and CEO of the John A. Moran Eye Center at the University of Utah School of Medicine, however, what I express here is solely my own opinion. While I have been a consultant for Allergan in the past, I have no direct financial interest in Allergan or B&L, nor have I been a consultant since January 2010. What I have helped to develop recently is a partnership between Allergan and our Center for Translational Medicine under the able guidance of Dr. Gregory Hageman. The focus of this partnership is the identification of pathways and targets for age-related macular degeneration (AMD), a leading cause of irreversible vision loss worldwide.
We recruited Greg in 2009 because of his expertise in the field of causal biological processes that lead to the development of macular degeneration. The driving desire on both our parts was to come up with a more efficient and economical way of getting scientific breakthroughs into the market place. Greg had just finished a disappointing experience with a start-up company that had raised a lot of venture capital and is aware of the shortcomings of University scientists trying to innovate using the “start up company model.”
This common failure has been called “The Valley of Death” and the purpose of this letter is not to detail all the reasons why this process is so inefficient and ineffective. Suffice it to say, Greg and I felt that an approach more driven by the science in the early phase and then partnering with expertise at the appropriate time to seamlessly work toward approved treatments was worth a new look.
Greg came to us with a large NIH R-24 grant that provided money to specifically translate his macular degeneration research toward the development of treatment modalities. We built a large team, used great advisors and ran with all resources we could bring to bear to locate and protect novel pathways at the core of genetic risk for AMD.
When we felt the process was mature enough, we looked at multiple potential partners in both the VC and pharmaceutical company arenas. It soon was clear to us that the perfect partner was Allergan because of their willingness to invest in -- and work collaboratively with – our outstanding research team. The contracting was not easy because we wanted a seamless arrangement based on milestones and pre-arranged royalties so that all in the partnership were all in, and no one had a reason to hold their cards to their chest. This partnership was signed at the end of 2013 and the result has been an absolute wonder to behold.
Because of our access to abundant and rigorously characterized patient and tissue samples, and other robust resources, we can contribute to the discovery process in ways that the pharmaceutical industry typically cannot. When it comes to selecting an appropriate druggable target, then perfecting and developing the best therapeutic modality for that target, it is clear that the Allergan team has the resources and expertise to run circles around us and have shown this to definitively be the case in the few months we have worked together. What a fantastic partnership!
We are excited for the future development of novel treatments for this devastating disease that will likely derive from this partnership. Moreover, we feel a strong case will be made in the future, if we succeed, that our decisions have created a much more efficient and less costly approach to drug development.
What I can say further is that the retinal research team at Allergan is the finest such group in industry in the world today! Sadly, they have no illusions that if Valeant were successful in their takeover bid that all of their jobs are most certainly at risk.
In fact by Valeant’s own claims, over 80% of the Allergan research budget would be eliminated and what would be left would largely be expertise in late stage clinical trials. This is an elimination of research dollars larger than the entire budget of the National Eye Institute! This loss of expertise to the field of ophthalmology and the long-term loss to all those individuals losing vision, should Valeant be successful, is an international tragedy of epic proportions in my opinion.
Even if Valeant chose to maintain our partnerhip, where would the expertise be that is the very basis of our dynamic and productive partnership? Clearly not likely to be a component of the Valeant model, where most of the research budget will be converted to debt financing.
While no one can predict exactly what the future might hold, I personally know when Valeant took over B&L I was told that Valeant was interested in research with an 18-month approval window, which by definition would be after FDA phase II clinical trials. Is there roughly a billion dollars of VC money ready to fill this gap (the amount of research dollars Valeant has said they would cut in an acquisition of Allergan)?
In fact VCs are increasingly less interested in drug development in a world where software and device development is so much easier and more lucrative. With the overall NIH budget down 20% in inflation adjusted dollars since the NIH doubling peak, the NIH grant success level at historic lows and industry increasingly taking the short term view of the need to invest in product development, as exemplified by Valeant’s approach to research, I see a dismal future for vision scientists and for patients suffering with vision loss if these trends all continue.
Sadly, all indications are that they are only getting worse. So is this an atmosphere where the best and brightest are willing to start a career either in academic or industry basic bioscience?
I get it that, from a short-term view, industry has a hard time showing that investment in core research discovery enhances quarterly earnings. Allergan has been a refreshing exception. Just read David Pyott’s (Allergan’s CEO) letter to share holders in Allergan’s annual report last spring, just before Valeant’s takeover bid. Mr. Pyott vowed to increase the investment in R&D in both absolute terms and as a percentage of company revenue because he knows Allergan’s success with so many of their top products as well as their deep portfolio is the result of this long term view.
Sadly, this investment is exactly the reason they have become such a tempting takeover target. It is ironic that the very willingness to take this approach may be the very reason that an incredibly talented research and development team could be wiped out.
My father’s first job after receiving his PhD was with a basic research think tank at Shell Oil Company in Emeryville, CA. At that time, Shell, Bell and GE labs, to name a few, were among the most prestigious places to work in science in the world. These operations are all gone today.
We, as a country, have dramatically decreased the percentage of our gross national product invested in basic research and it is naive to think we will not pay the price down the road.
While Valeant’s hostile takeover bid of Allergan is but one example of this trend, all of us in the vision community have a personal stake in it’s outcome, in my estimation.
I view the alarming trend of short termism on the part of Wall Street and our federal government as a major concern for our country’s fiscal health and for our patient’s well-being.
Randall J, Olson, MD