New York, NY – January 7, 2019 – Stelexis Therapeutics, LLC announced that it closed a $43 million Series A financing to expand its proprietary platform to discover and selectively target pre‐cancerous stem cells. Deerfield established Stelexis in 2017 together with scientific founders, Ulrich Steidl, Evripidis Gavathiotis, Amit Verma, and Roman Perez‐Soler of Albert Einstein College of Medicine, Montefiore Health, New York and Derrick Rossi of Boston Children’s Hospital, Harvard Medical School. Patrick Doyle serves as the founding CEO, and Keren Paz is the CSO of Stelexis.

Stelexis’ proprietary drug discovery platform identifies the earliest definable pre‐cancerous stem and progenitor cells that lead to the formation of human primary and recurrent tumors for therapeutic intervention and relapse prevention. Stelexis’ mission is to develop novel cancer drugs that selectively target these critical pre‐cancerous events related to both hematopoietic and solid malignancies.

“The ability to identify, isolate, study and screen rare pre‐cancerous stem cells, from within bulk tumors, is an enormous breakthrough that has the potential to change how cancer patients are treated” stated Dr. Steidl. “Our thesis is that targeting cancer at its very origin should not only be effective as first line therapy, but should also lead to long‐lasting remission for patients,” said Dr. Rossi, who, prior to co‐founding Stelexis, has also co‐founded numerous other successful biotechnology companies.

Utilizing Deerfield seed funding and operational support since 2017, Stelexis has established its labs in Albert Einstein College of Medicine facilities, hired key management and is poised to deliver clinical trial data that validate its platform using the proceeds of this Series A round.

“We are thrilled to announce the formation and funding of Stelexis, which has the platform technology to explore the role pre‐cancer conditions play in cancer development and recurrence. The team has an outstanding track record and we look forward to a stream of transformative cancer medicines,” stated Dr. Robert Jackson, director at Stelexis and partner at Deerfield Management.

“Deerfield’s holistic approach to forming, funding and providing operational support to Stelexis has been instrumental in creating a leadership position in a novel targeted approach to treating cancer,” said Patrick Doyle, CEO of Stelexis. “With these funds we are now positioned to execute on our potential to transform patients’ lives.”

About Stelexis

Stelexis is a New York‐based cancer therapeutics company, utilizing its proprietary platform to selectively target pre‐cancerous stem cells to discover and develop transformative therapies.

For more information, please visit www.stelexis.com

About Deerfield

Deerfield is an investment management firm committed to improving healthcare through investment, information and philanthropy.

For more information, please visit www.deerfield.com

Contacts

Deerfield Management Company
Karen Heidelberger
212‐551‐1600   
[email protected]

Stelexis Therapeutics
Patrick Doyle
[email protected]

Pharma sales representatives (reps) are one of the most integral components to a manufacturer’s commercialization plan. They have long been the voice in determining and shaping the adoption curve of a new drug. However, the “good ol days” are in the rearview mirror for reps as there have been efforts to curb dollars and gifts that reps can shower upon physicians and their staffs, as well as both fewer and lower quality touch points with the decision makers with purchasing power and/or authority on drug choice, particularly when there are multiple options in the same therapeutic category. Here, we will try to put the role of the rep in context and provide some perspective, conceptually, on where the sales model may migrate in the future, and what issues will need to be addressed.

Companies spend significant amounts of time, energy and resources dedicated to planning and building out the sales force optimization plan. Specifically, the commercial team oversees multiple teams to plan the success of the sales rep. Activities that contribute to this success include:

• Market research to quantify the opportunity and understand the behaviors and triggers of doctors to prescribe:
  • Identify potential points of push back from doctors
  • Segmentation of doctor mindsets that can drive training of the sales reps – i.e. identifying high vs low likelihood to prescribe and pyschological drivers that sales reps can use to trigger prescription activation
• Sales training to ensure the rep is knowledgeable and help drive rep performance
• Analytic teams analyze physician productivity to ensure reps are calling on doctors that will yield the greatest return:
  • Spending time with doctors who are loyalists to the therapeutic class and/or may have affinity to a certain type of therapy within a therapeutic area
  • Identify high density geographic areas that may require heavy sales force deployment
• Sales leadership teams develop:
  • Incentive compensation plans (performance-based plans above base salaries) to further drive excellence
  • Determine call planning strategies (who to target, and at what frequency)
  • Ensure operational effectiveness and execution is in line with overall strategy
• Managed care teams drive appropriate reimbursement coverage and facilitate sales training around reimbursement-centric adoption strategies:
  • How to combat doctors wary of reimbursement issues
  • Selling the value of the drug in relation to reimbursement coverage
  • Help the doctor navigate the prescription journey from their office to the pharmacy counter for their patients

In the past, the sales rep had many tools at their disposal to engage and sell their products to physicians:

• Dinner meetings
• Grand Rounds (sponsored lecture series in the hospital setting)
• Lunch and learns
• Golf outings
• Literature leave behinds
• Sampling

The rep had the ability to access the majority of not just physicians, but importantly those with autonomy and decision-making authority, and the nature of the detail (industry lingo for reps providing doctors with the details of a drug, including approved scientific information, benefits, adverse events, etc) evolved around the clinical efficacy and utility of the product. Reps were trained on the mechanism of action of their product as well as competitors, all the key clinical data in the therapeutic area, and how to convey their product’s differentiation. This last part is significant as training also focused on breaking down clinical studies, with successful reps well-trained in how to handle any objections raised by doctors around use of their product (ideally identified ahead of time by the manufacturer’s market research), and able to rattle off why one product may have a better p-value (measure of statistical significance used in clinical trials) or better efficacy at symptom resolution, among other product features.

Simplified schematic of common commercial team structure

Level and types of rep-doctor interaction have changed

Reps historically had an environment that was for the most part without many restrictions, which is increasingly no longer the case. The ability of the sales rep to develop a relationship with doctors they called upon was easy and simple due to the tools at their disposal. However, over the past two decades, there have been considerable changes in both the ability to access and the types of activities the reps can use to engage with doctors. These changes have come about in an effort to clamp down on what has been viewed as inappropriate influence over docs by industry reps.

Any payments made to physicians by drug and device companies must be reported under the Physician Payment Sunshine Act, signed into law in 2010 along with the Affordable Care Act, and the data is made public by the Centers for Medicare and Medicaid. While these payments can be as seemingly benign as research grants, it can also include things like travel and accommodations around medical conferences and scientific or advisory board meetings, food and beverage, and consulting fees. Details on the types of payments are included in the public data set. Now the public can see if physicians are receiving what might be perceived as healthy sums of money, which whether innocently or not, can be perceived as doctors being “in the pocket” of big pharma, and a potential PR concern for their institutions.

Physician access has been on the decline due to consolidation of independent physicians into heath systems

Most academic medical centers do not allow reps to call on their physicians on site, though there may still be some level of doctor-rep interaction if the doctor maintains an off-campus practice location. One industry report from ZS Associates found that 56% of physicians in the US have either restricted or severely restricted who can visit them, with some specialties even more restrictive. Integrated delivery networks (IDNs), systems where the provider network is also the payer, and group practices, are also increasingly locking out reps. Further, physicians’ prescribing autonomy in IDNs and group practices is not the same as in an independent practice, with decisions around drug purchase and utilization instead made by higher level management.

This trend is likely to continue as cost pressures have made it more and more difficult for independent physician practices to remain financially viable. Independent physician practices have been on the decline since 2000, according to a 2016 analysis by inVentiv Health Consulting. While 57% of physicians were independent in 2000, this decreased to 37% in 2013 and was expected to continue sliding to 33% by the end of 2016.

The sales call has migrated from a pure clinical sell to addressing reimbursement

When reps are still able to get interactions with doctors, the nature of the sales call has shifted from a clinical sell to putting the rep more in the role of a reimbursement navigator. Price never came up as a major topic of the sales detail, whereas now it may be the primary focus of the conversation, as it is often easier for a doctor to simply pick the drug that is cheapest for their patient – “is it covered by insurance and how much will the patient need to pay?” The use of co-pay cards, which reps can drop at the physician office to reduce financial burden for patients (discussed in a past issue of this newsletter), was largely unheard of until more recent years. Still, co-pay cards are not a panacea, and doctors remain skeptical of the overall utility of these cards. Patients often encounter issues at the pharmacy when they try to use these cards, and may ultimately abandon any attempts to get the drug they were prescribed in the first place. These co-pay cards are off-limits to Medicare patients by law (but fair game for those with private insurance), and so might only benefit a fraction of the doctor’s patients.

Put this all together, and reps now have less time to discuss more complicated topics like reimbursement during their detail. The question now to ponder is how will the rep model evolve with the environmental dynamics at play. Specialty reps in the device sector that are required to train docs in the surgical area will continue their business as usual, but there will be a need to evolve the model overall in many sectors.

There is probably not a one size fits all strategy, and that current strategies in the therapeutics sector need to be adjusted to address some of the key challenges outlined below.

• The model needs to pivot from a single point of contact between rep and doctor to one where the sales team has a multi-touch point strategy to various customers in the ecosystem.
  • Customer will be cross functional, including buyers and influencers, not just the physician:
    • Administrators
    • Business/purchasing mangers
    • Chief medical officers
    • CFOs
• The ability to both articulate what constitutes value for patients, doctors, and their institutions, and to create a more holistic approach that drives value throughout all key customers will inform overarching strategy.
  • What services, tools, and business offerings can the commercial team offer to doctors and institutions to drive pull through and adoption of their products?
  • How to generate a more ambitious patient-centric approach?
• Realignment of commercial organizations and build out of the talent pool in key functionalities and responsibilities will take on added significance.
  • Need to create cross-functional business operational teams vs. more independent/siloed groups
    • Re-calibration of the managed markets and sales force groups to more of an account management team that can foster relationships with all key stake holders
    • Ability to trouble shoot and bring customized approaches to physician groups
  • More sophisticated sales rep that can work with a cross functional team and have stronger business acumen:
    • Upgrade to drive toward more sophisticated approach to independent docs
    • Move away from reliance on business-to-business like model that some pharma companies have started to adopt (while acknowledging there are some specific areas where this may still have utility)

Hypothetical schematic for business management-centric approach to commercial organization

Where are we in the continuum with the shift to a more holistic approach? Our observation is that manufacturers acknowledge and discuss that we are at a tipping point, with some having piloted various more integrated approaches to drive behavioral change. Some of these pilot approaches have yielded positive returns but we have not yet seen a full migration over to a new model. What we do believe, however, is that the environmental factors at play will eventually force a significant change for all pharma.

At first, finding any two pieces that might fit together in a complex jigsaw puzzle is a Herculean task.  Painstakingly, colors and shapes can be sorted one-by-one into groups that seem to be related.  One satisfying match is then followed by another, sometimes preceded by long frustrated periods of searching yet in other moments an almost magical placement and orientation allows for instant recognition.  With each piece connected, the picture becomes clearer and the pool of remaining pieces smaller.  Each becomes easier to find than the last, and easier to place until at last the puzzle is complete.

So it is with understanding the biologic underpinnings of disease.  At first there is a confusing mixture of molecules, interacting with each other in undecipherable pathways.  Slowly the different types of molecules are identified, separated and tested to see what they interact with and how.  As the function and interactions of each molecule are placed in turn, the picture of causation becomes clearer, and the work to identify the remaining molecular players becomes easier and easier.  

Since the unveiling of the human genome nearly 20 years ago, progress in elucidating the underpinnings of disease has occurred at an exponential pace.  Gone are the days when insights are shared in only annual gatherings or through publications which can be separated from the work to produce them by years.  Instead, this is an age where insights are often shared real time over the internet.  In this way, laboratories learn which pieces have been placed in near to real time and the chase to create the finalized picture is made all the more rapid.  Meanwhile, technological advancements in the tools used to identify important molecular players and to tease out their exact roles is shifting the pace of discovery into entirely new gears.

And thus we find ourselves as we enter 2017, with many of the pieces in many important diseases discovered and those remaining to be placed before there are cures becoming smaller and smaller.  Accordingly, our expectations for advancements in medicine over the next decade should be high.  Very high.  Already we see drugs targeting new molecular pathways, sometimes by making use of our growing understanding of our own body’s disease-fighting functions, entering the market.  The Food and Drug Administration, cognizant of the deepening of our understandings and the importance of new discoveries has created a new regulatory pathway for breakthrough therapies.  Some new products have made it from conception to market in a handful of years.  This timeframe contrasts starkly with the decade historical medicines have required.  Therefore not only will discoveries occur more quickly, but their approval for human use as well.

The stock market has not been sitting idly by.  2012 through 2015 were years in which the biotechnology indexes tripled.  In the private markets, valuations of private biotechnology companies rose correspondingly.  That is until 2016, when the biotechnology index fell approximately 20%, the potential for companies to go public changed abruptly, and funding for earlier stage enterprises began to become difficult again.  What happened?

While the pace of invention is historic, that does not mean it will go in a straight line, or that everyone should have the stomach for the inevitable failures along the way.  During the years of strong performance, many who lacked this perspective joined the joyful fray to participate in the gains.  When the market retraced, however, they found themselves wondering if they could evaluate those companies in which they were invested, and the answer was often no.  Thus, bad market performance led to worse performance by virtue of selling by those headed for the door.  The party, after all, seemed over for now, particularly with a seemingly certain Clinton win on the way and all that could accompany that in regard to what was expected to be negative changes in drug pricing and reimbursement.  The surprise Trump win caused a moment of reflection where prospects for biological innovators seemed brighter, followed by general confusion as campaign promises to overturn the Affordable Care Act became more muted and as bystanders waited to see what a Trump administration might actually look like.

This is all a side show in which it is easy to lose perspective.  Throughout the world there are many different payment systems for new drugs.  Most of them are government operated.  Despite penny pinching and hurdles that have made drug launches more complex in certain countries, there are vanishing few instances where a drug that actually does something new and important receives an inadequate price.  In the United States, whether you have a Hillary Clinton or a Donald Trump, this will be the case in the future.  And the drugs that are to come will do important things.

What is more problematic are the disconnects between academic medicine and the commercial world.  Academia is where most of the interesting new science is emanating.  Yet in the academic setting, it is difficult to marshal all of the technical expertise and funding required to advance a medicine past the conceptual stages.  Meanwhile, the venture industry and the pharmaceutical industry have sought to cherry pick the best academia has to offer.  However, identifying the cherries is something no one has been good at, leaving behind a disappointing morass of missed opportunities, wasting assets and frustrated faculty.

We are proud this year to have announced the formation of Bridge Medicines, a bold attempt to overcome many of the barriers to translational research.  This new company is a collaboration between ourselves, Takeda Pharmaceutical Company, Memorial Sloan Kettering Cancer Center, Weill Cornell Medicine and The Rockefeller University, along with Bay City Capital.  Through this entity, the intellectual property from prominent academic institutions is moved forward through pharmaceutical technical expertise, and combined with funding and the ability to create new enterprises.  In this manner, the barriers between a discovery and the ability to find the drug we need in our medicine cabinets, are removed.

We hope Bridge will not be just one piece of the puzzle, but rather a catalyst for bringing many pieces in the beautifully complex puzzle placed, oriented, and connected.  Please keep reading to learn what makes Bridge so unique, and why it is an important new venture for advancing healthcare.