IT WAS ALMOST MIDNIGHT. Dr. Richard Scheller, Executive Vice President of Research and Early Development of Genentech, was sitting at his desk in the Grand Hotel Les Trois Rois, Basel, Switzerland. He had arrived in Switzerland earlier that afternoon and spent the rest of the day finishing up the slides for his presentation to the Roche Executive Committee the next morning. Severin Schwan, CEO of Roche Group, was expecting Dr. Scheller to present his strategic plan on how to manage Genentech’s R&D process and clinical pipeline.
Roche had completed its acquisition of all remain- ing publicly held Genentech shares in 2009, cementing a corporate partnership that dated back to the 1980s. Roche believed that Genentech’s legendary expertise in biotechnology could help propel the company to the forefront of personalized medicine.
Dr. Scheller’s last meeting at Roche headquarters had not gone well. Many questions were raised regarding the recently failed clinical trial for the use of Avastin in early-stage colon cancer. Avastin was first approved for advanced colon cancer in 2004 and had since been approved for several other types of metastatic cancer.
An antiangiogenesis agent, Avastin worked by blocking a protein called VEGF that tumors needed to form blood vessels and gain access to nutrients in order to grow.1 One of Roche’s main motivations for acquiring Genentech had been to obtain the rights to Avastin, and Roche was counting on extending its applications as a major part of its growth strategy.
If positive, the clinical trial results could have led to billions more in Avastin sales, as well as primed the way for multiple other early-stage cancer indications. Instead, the negative results were a major setback, sending Roche shares down by 10 percent.
Severin Schwan’s words from the last meeting at headquarters were still ringing in Scheller’s head: “We need more efficiency in drug development, only an approved drug is a good drug.” A failed Phase III clinical trial was a major “inefficiency” that Roche’s executives did not want to see repeated.
Phase III trials involved testing the effectiveness and safety of a new drug compared to existing treatments in any- where from 1,000 to 3,000 patients, with costs exceeding $26,000 per patient.2, 3 To make matters worse, a U.S. advisory panel had recently voted to revoke Avastin’s approval for the treatment of advanced breast cancer, after two large Phase III trials revealed that Avastin provided no significant benefit in terms of survival.
Patients and doctors were fighting to keep the product on the market, but the FDA rarely deviated from an advisory panel’s recommendation, especially when the vote was 12 to 1.4
Despite this string of recent failures, Dr. Scheller continued to feel pressure from Roche to focus on the development of Phase III projects in order to bring more products to market. Things were different now that Roche owned Genentech outright and was not just a well-invested partner. Scheller missed some of his previous autonomy. He was not sure that reducing the resources dedicated to early drug