‘In rare diseases, you don’t transform into billions of revenues overnight’

Interview: Julie O’Neill, executive vice-president, global operations, Alexion

Julie O’Neill at the site in College Park, Blanchardstown. When it is completed, Alexion will have invested €508 million in the State. Photograph: Dara Mac Dónaill/The Irish Times

Julie O’Neill at the site in College Park, Blanchardstown. When it is completed, Alexion will have invested €508 million in the State. Photograph: Dara Mac Dónaill/The Irish Times

 

It’s been a long day already, but, with a quick sip of a soft drink, Julie O’Neill gets stuck in. Earlier in the day, O’Neill had announced a €450 million investment by Alexion Pharmaceuticals to build a manufacturing facility at its west Dublin base in Blanchardstown. It will be the first in-house manufacturing site for the company outside the US and only the second altogether. When complete, it will employ about 200 people, bringing the company’s Irish workforce to around 500.

It is the second phase of the company’s plan for its Dublin base. The announcement was made in a windswept marquee pitched in a newly completed car park, with workers swarming over the half-built structure of the company’s first-phase development in the background.

“The facility in College Park was really the reason for [Alexion] coming here [to Ireland],” she says. Close to the M50, it offers ease of access to the city, to Athlone (where the company is fitting out another, former Elan/Alkermes, plant) and to the airport, where, as head of global operations, O’Neill can get to and from the company’s operations in the US and elsewhere.

“That’s one of the attractions of the west Dublin environment,” O’Neill says, though she’s more interested in pointing to the availability of the “diverse and rapidly expanding” dynamic young workforce she hopes will drive the company’s future growth.

“If you are looking to attract and retain people, there is a good stock of housing, a young workforce coming through, and there is Blanchardstown IT just down the road,” she says. “There is always a will-we-won’t-we invest further in Ireland, but having that 41-acre landbank [acquired with help from IDA Ireland last year] available makes the decision much easier.

“You don’t acquire 41 acres just to put an office building there . . . It was always in the back of the mind, once we had the evidence that really showed, first, that Ireland could deliver and, second, that the people of Ireland, the employees, could deliver. And this was fundamentally the right time, and the time we need to make the decision [to expand the company’s manufacturing capacity]. It fell into place.”

Alexion announced its entry into Ireland in the second half of 2013. O’Neill herself, targeted to run the Irish business as well as to manage the wider group’s global supply chain, joined only early last year. Fifteen months on, Alexion Ireland employs 170 people, and distribution and finance functions previously managed out of European headquarters in Switzerland have been relocated here.

When this new manufacturing plant is completed in four years’ time, the pharma group will have invested $580 million (€508 million) in the Republic.

Successful drug

“Soliris delivers the financial muscle to go out there and really move on to the next phase, building pipeline, acquiring, investing,” O’Neill says.

Alexion specialises in biological drugs for such ultra-rare disorders. Putting it in context, O’Neill says: “In a population of one million, a common but serious condition like diabetes will affect 49,000 people. In this same population of one million, with a rare disease, the number affected will be fewer than 650, and for an ultra-orphan condition, like those treated by Soliris, the figure is no more than 20 per million.

“These patients suffer from truly devastating diseases, for which there is very often very little research, low awareness and understanding, and a lack of effective treatment. Too often, patients with rare diseases and their families suffer with little or no hope.”

This is the area of personalised medicine, increasingly a target for drug companies with newer biologic medicines. But developing an effective therapy and manufacturing it for such a thinly spread patient population has some very particular challenges, not least the costs involved.

It’s all a far cry for Alexion’s early days. The company at the cutting edge of medical innovation was put together in 1992 by two friends on their way to pick up ice cream at a local store for their children.

Leonard Bell was a tenured academic at Yale University. He had met Stephen Squinto when the latter started dating the best friend of Bell’s wife. At the time, Squinto was one of the early employees of another biotech business Regeneron. By the time the ice cream was bought, Bell had persuaded Squinto of his business idea and recruited him as his first employee.

Twenty-two years later, Bell has only recently stepped aside as chief executive and is now company chairman. Squinto retired at the end of last year but still heads Alexion’s scientific advisory board.

The kernel of Bell’s idea was to tap into “complement blockers” to treat a variety of conditions. Complement is a type of enzyme that is part of the human immune system and attacks foreign substances in the body. Complement blockers are the system’s own way of stopping complement attacking vital organs in the body.

The pair’s early endeavours to develop drugs based on complement blockers to treat a variety of conditions were notable only for their failure. Funding, too, proved difficult to source, not helped by the high-profile failure of other biotech drug candidates. By 1995, the company was reportedly on the verge of closure.

Redemption came almost by chance. A British haematologist, Peter Hillmen, working with patients suffering from paroxysmal nocturnal hemoglobinuria (PNH) had been liaising with Alexion on a separate project. Although that came to nothing, he thought Alexion’s approach on complement blockers held the answer for his patients.

PNH is essentially an outcome of a misfiring complement system. A shortage of complement blockers means a sufferer’s red blood cells are attacked. Where such cells might usually live for a number of months, in PNH patients they die within days. This leads to a form of anaemia causing long-term, at times fatal, damage.

While Bell and Squinto were not convinced of the commercial opportunity, they did think PNH offered the chance to prove that Soliris actually worked. And it did, very effectively.

In hindsight, Bell accepts that the search for the big targets – diseases affecting large numbers of patients – was the very thing holding back the company. Having found its niche with much rarer conditions, the remaining issue was how to deliver a drug for such a small patient group at a commercial return.

Soliris is one of the world’s most expensive medicines. Approved for use in Ireland only this year, it costs the Health Service Executive more than €430,000 per patient per year.

The decision to fund it was by no means unanimous, with many voices – and even some within the health service – arguing that it was too expensive and that, with public funds increasingly scarce, buying it would mean money being unavailable for other treatments that benefited a greater number of patients.

‘Aggressive’ pricing

Leo Varadkar

Funding this new generation of personalised medicines presents challenges for health systems around the world. Patients with conditions for which there is no effective treatment suffer greatly, but arguably it is even worse for those who know that a treatment has been developed but is unobtainable due to cost.

O’Neill’s view is clear-cut. “I cannot comment on the value of the price of a life, but I know if it were my child I would fight tooth and nail for everything to make the drug available,” says the mother of three. “It’s a challenge, but I think it’s one that we all have to work together around.”

Certainly the handful of patients in Ireland with PNH and atypical haemolytic uremic syndrome (aHUS) – the two disabling and potentially life-threatening conditions for which Soliris is currently approved – were vociferous in their campaign to get access to the drug.

First approved by regulators in the US and Europe in 2007, Soliris has certainly delivered for Alexion. By 2012 it was recording sales of more than $1.1 billion (€964 million) a year, comfortably qualifying as a “blockbuster” therapy. Last year, that figure had almost doubled to $2.23 billion (€1.95 billion).

That growth is continuing. The headline growth figure of 6 per cent is respectable enough, but stripping out exceptional income of almost $88 million (€77 million) in the same period last year, underlying growth of 25.4 per cent shows the potential of Soliris is nowhere near exhausted. Those sales have delivered dramatic profit growth, from $254.8 million (€223.3 million) in 2012 to $656.9 (€575.5 million) last year.

Alexion has eschewed the option of broadening its portfolio to include more mainstream therapies and is sticking to the high-risk game of developing and delivering therapies for ultra-rare diseases. Last year, it invested $513.8 million (€450 million) in research and development, a figure that has more than doubled over two years.

Apart from examining the potential for Soliris to treat other conditions, the companiy’s most advanced pipeline candidate is Strensiq (asfotase alfa), to treat a genetic and progressive condition called hypophosphatasia, where a deficiency of a key enzyme inhibits bone mineralisation, generally leading to death in very young children. In the final stages of regulatory approval, it is likely to become available in Europe and the US by the end of this year, and possibly ahead of that in Japan.

Will it replicate the success of Soliris for the company whose shares are among the highest rated in the sector?

“The revenues will speak for themselves over time,” says O’Neill. “Irrespective of what revenues we generate from it, it is a life-transforming product. It is wondrous what it does. In rare diseases, you just do not transform into billions of revenues overnight. It is a very slow build-up over time, with patient identification and initiation of therapy. So I think we are hopeful it will be a drug that will make a radical difference for the patients that it serves. Hopefully it will perform and meet the expectations that everyone has for us.”

In any case, she adds, “we are making inroads into becoming less of a one-product company”.

Contentious

“The regulatory environment, the cost of bringing a drug to market, the cost of oversight of manufacture or safety, all of those, we are still held to the same stringent conditions that everyone else is,’ she says. “So for a company like Alexion to go through 15 years of not being successful and to continue with innovation in diseases like hypophosphatasia . . .”

She pauses, before pointing to another pipeline candidate drug that, she says, Alexion will develop and put through the complex and costly regulatory process, even though it will treat a condition affecting only six identified patients worldwide.

“To do those sort of things, there is balance on the cost of innovation and the price of drugs.”

A pharmacist by training, O’Neill believes there are steps that can be taken too reduce the strains on health budgets, “but it requires a little sacrifice”.

“ I mean, we do reimburse a lot of drugs that have limited benefit,” she says. “They may have a benefit that people can make the choice to pay for or not pay for. Clearly, there are many drugs that we must take – if you have blood pressure medication or diabetes medication, you have no choice, absolutely no options – but I think we can make other choices and save money in some areas that we could give and offset against the higher-price drugs that will come [to market].

“I don’t think the cure for some forms of cancer is that far away. I mean, if you can cure the likes of hepatitis C, if you can make the changes that have been made in the treatment of the HIV virus . . . I think there are many illnesses that are going to benefit from a cure, or very close to a cure, very soon. They are on the horizon and we have got to think how, as a society, we want to deal with that, and it is a very difficult challenge not just for Alexion but for everybody.”

O’Neill speaks from broad experience, much of it with innovative companies in the sector. On leaving college, she worked initially with Helsinn Birex, before stepping across to retail pharmacy with a business partner and setting up a four-strong chain of chemists in and around Dublin.

“It was around the time of my MBA,” she says. “It was part of the mantra, I remember. You were kind of encouraged to develop your business plan, and then off you go. And so I did that, and very successfully, and really enjoyed it.”

But the lure of industry proved too strong and O’Neill joined a small American company called NexStar, tempted by the “life-changing” nature of its flagship drug. NeXstar was acquired by Gilead Science and O’Neill spent 17 years working with and expanding its Irish and international business.

O’Neill is no stranger to leadership. In 2011, she became the first woman president of Irish business lobby group Ibec.

Her first encounter with Alexion came when she ran into the charismatic Squinto at an industry gathering.

“After I first encountered him, I said I want to work in that company,” she says. “And I really felt that what I learned from a really terrific bunch of people at Gilead, I could translate into another organisation. I hope that is what I bring to Alexion. I certainly have never enjoyed a time more in my career than the last 15 months.”

With Squinto’s retirement at the end of last year came the offer to O’Neill to assume his role as head of global operations. “You put your hand up and say ‘I’ll do it’, and that was exactly what happened. It has been very exciting . . . This week has been the culmination of all the nice bits – the planning and design. From here on in, the hard work begins to build that building and get product in the door.”

CV

Name: Julie O’Neill

Age: 49

Position: Executive vice-president, global operations, at Alexion Pharmaceuticals

Family: Married with three sons

Interests: She’s a keen cook, finding it the ultimate stress-buster

What you might expect: Given the importance of quality control in the biopharma sector, it’s little surprise that she is chairwoman of the National Standards Association of Ireland

What might surprise: A graduate of Trinity College Dublin (Pharmacy) and University College Dublin (MBA), she was until recently on the governing body of University College Cork