New R&D leaders were named yesterday at a pair of pharma giants that have struggled in recent years to translate pipeline drugs into Phase III successes that can win marketing approvals and reach patients.

Roche named John C. Reed, M.D., Ph.D., the CEO of the nonprofit Sanford-Burnham Medical Research Institute, to head its pharma Research and Early Development (pRED) unit, based at the company’s Basel, Switzerland headquarters. Dr. Reed will also be added to an expanded corporate executive committee when he begins his new position April 2, reporting to CEO Severin Schwan.

Dr. Reed will succeed interim pRED head Mike Burgess, who took over the job after Jean-Jacques Garaud resigned, less than two years after taking the position. The company bluntly said in its statement that Burgess “has decided to leave Roche”—although to verbally soften the blow, the announcement includes comments from Schwan thanking Burgess “for his valuable contributions to Roche. Mike has been instrumental in refocusing the pRED organization during the past few months.”

It’s fair to say pRED has needed refocusing, as Roche has struggled in recent years to make the most of its R&D effort. That explains why, nearly four years after its acquisition by the pharma giant, Genentech still retains its own Genentech Research and Early Development (gRED) unit with roughly as many people as the counterpart of its corporate parent. In its statement of Dr. Reed’s hiring, Roche noted that gRED “is not affected by this management change.”

While Genentech’s successes have outnumbered its setbacks since the acquisition, Roche labs on the other hand have experienced several high-profile and costly failures. In May, for example, Roche halted Phase III clinical trials of experimental heart drug dalcetrapib, one of several new medicines in development that are designed to raise levels of beneficial cholesterol. Some have speculated the dalcetrapib failure may have been behind Roche’s decision last year to begin shutting down its Nutley, NJ, research site, which was focused on early-stage research on drugs for cancer and inflammatory and viral diseases, and eliminating its 1,000 jobs.

Roche has said it needed the savings to fund a large number of experimental drugs through clinical testing, and that it was committed to other areas beyond cancer: “Roche will continue to allocate the biggest part of its R&D investment to oncology, given the sustained high level of unmet medical need. However, the company remains committed to investing in other disease areas,” the company said in a statement, citing inflammation, metabolism, neuroscience, and virology

Despite its recent failures—or maybe because of them—Roche told investors Sept. 5 it would maintain an internal annual R&D budget of more than 8 billion Swiss francs ($8.7 billion): “Despite the promising increase of late-stage projects, Roche intends to keep its R&D budget stable by implementing continued productivity improvements and rigorous portfolio prioritization,” the company said in a statement.

Roche’s statement of Dr. Reed’s appointment noted both his academic and biobusiness resumes: “One of the world’s leading” researchers with a focus on cancer, neuroprotection, autoimmunity, and other diseases; author of authored several hundred medical research publications; among the most highly-cited scientists. Inventor listed on more than 100 patents; member of multiple scientific journal editorial boards; and founder or co-founder of a number of biotechnology companies. “With his broad scientific and medical background he is ideally positioned to drive Roche’s strategy of translating a better understanding of disease mechanisms into promising therapeutics,” the company said.

At Sanford-Burnham, Dr. Reed will retain institutional ties by serving as an adjunct professor. He will be succeeded on an interim basis by Kristiina Vuori, N.D., Ph.D., the president of the research institute, and director of the research institute’s NIC-funded Designated Cancer Center. A cancer researcher who has focused on identifying the molecular mechanisms of adhesion-dependent survival and motility in normal cells, Dr. Vuori is also a board member of the Independent Citizens Oversight Commission, the governing board of the California Institute for Regenerative Medicine, the state’s stem-cell agency.

AZ: One Job Becomes Three

At AstraZeneca, meanwhile, CEO R&D Pascal Soriot eliminated the positions of R&D president and evp, global commercial—and with it, the jobs of the men in the position, Martin McKay and Tony Zook, who will leave the company at month’s end. Unlike Burgess, the ousted AZ executives received verbal well-wishes from Soriot in a statement thanking them “for their contribution and the exemplary leadership they have shown in their time at AstraZeneca. We wish them well in their future endeavours.”

With the goal of reviving AZ’s R&D by using his experience integrating a biotech company and making deals, Soriot took office Oct. 1 after previously serving as CEO of Roche’s pharmaceutical division, whose CHF 32.8 billion ($35.3 billion) in annual revenue last year exceeded AZ’s  total 2011 revenue of about $33.6 billion. At Roche, Soriot successfully combined its drug development with that of Genentech, of which he had been CEO before its $20.1 billion acquisition by Roche.

AZ, by contrast, has struggled in recent years to recover from several late-stage setbacks with experimental medicines the company had counted on to make up for sales revenues it is set to lose through 2014 due to the “patent cliff” expiration of several brand-name drugs.

Last year, in one setback, AZ and partner Targacept shelved plans to file for marketing approvals for anti-depression drug TC-5214 after it failed its Phase III trial. Another 2012 setback saw AZ and partner BTG halt development of the experimental drug AZD9773 or CytoFab™ for severe sepsis and/or septic shock, following its failure in a Phase IIb trial. CytoFab had been projected to generate £1 billion ($1.6 billion) in annual sales for AZ had it worked. AZ’s shrinking drug pipeline was a key factor in the sudden resignation in April of CEO David Brennan, amid news reports he was pushed out.

In McKay’s case, the end came just two years after being recruited to AZ from Pfizer, and less than a year after telling the Financial Times he was working on a flurry of deals that may include partnerships with other large drug companies, full acquisition of smaller public biotech companies, and licensing deals for specific drugs developed by others. He also said he was interested in alternative forms of funding R&D, such as joint investment with private equity firms on drug projects—most likely in core therapy areas such as diabetes and inflammation.

McKay said at the time that he should be judged on AZ’s ability to complete deals, accelerate the number of drugs tested in humans, wring more sales from existing products (particularly after their patents expire), and ultimately, successfully launch new medicines to market: “I know we are doing the right things.”

Soroit apparently disagreed, and divided global R&D among three executives:

  • Menelas (Mene) Pangalos will oversee the company’s small molecule discovery research and early development activities as evp, innovative medicines. He joins AZ from Pfizer, where he was svp and chief scientific officer of neuroscience research after that company acquired Wyeth.
  • Bahija Jallal will be responsible for biologics research, development and clinical activities as evp, MedImmune, with the task of advancing its pipeline of drugs targeting cancer, infections, respiratory and inflammatory diseases, cardiovascular and gastrointestinal disorders, and pain. A MedImmune executive since 2006, holding roles of increasing responsibility, she guided MedImmune’s R&D organization through its pipeline expansion from 40 to more than 120 drugs.
  • Briggs Morrison will lead AZ’s global late stage development organization for both small molecules and biologics as evp, global medicines development. He joined AZ last year from Pfizer, where he was head, medical excellence, overseeing development, medical affairs, safety, and regulatory affairs for Pfizer’s human health businesses.

“This new senior executive team structure that draws heavily from the leadership talent within the company, enables us to bring an even sharper management focus to key pipeline assets, key brands, and key markets, and helps us further accelerate decision-making,” Soriot said in a statement.

The statement added that AZ will hire at a later date a new commercialization executive who will hold the title of evp, global portfolio & product strategy.

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