March 14,  2005
Volume 83, Number 11
pp. 17-24

Peptide therapeutics market grows in fits and starts for drug firms and contract manufacturers
A SEPARATE PIECE A Roche production supervisor monitors a large-scale peptide purification column.


Imagine a conversation between a small molecule and a peptide on a make-believe pharmacological playground. The small molecule would tout its virtues of small size, low price, oral availability, ability to cross membranes, and straightforward synthesis. The peptide would respond: "True, I may be bigger, more expensive to synthesize, and less stable than you. I may clear faster from the body and usually need to be injected rather than swallowed as a pill. But I can be much more potent, show higher specificity, and have few toxicology problems. I also don't accumulate in organs or face drug-drug interaction challenges like you do. So there."

Throughout the body, peptides are active regulators and information brokers with skill sets that make them interesting for drug discovery. Himanshu Parmar, an analyst at Frost & Sullivan (F&S) and author of an analysis of the therapeutic peptides market, says chemical and biological diversity alongside high specificity, affinity, and molecular recognition are all important peptide virtues.

According to market research by Drug & Market Development Publications, the potential of peptide therapeutics "has recently intensified." That development is due to manufacturing improvements--peptides can be manufactured through transgenic, recombinant, or synthetic methods--and techniques that promise to make peptides more stable.

F&S's Parmar says peptides still need to surmount hurdles such as their high R&D expenses and difficult scalability. Yet they are drawing attention such that the global market for peptide-based active pharmaceutical ingredients (APIs) is expected to expand at a "growth rate nearly double the growth rate for APIs overall," he says. The U.S. holds 65% of the worldwide therapeutic peptides market, Parmar says. Europe is 30% of the total, with Germany and the U.K. in the lead. Japan dominates activity in Asia.

According to F&S, there are more than 40 marketed peptides worldwide, around 270 peptides in clinical phase testing, and about 400 in advanced preclinical phases. Natural peptides such as insulin, vancomycin, oxytocin, and cyclosporine and synthetically produced ones such as Fuzeon (enfuvirtide) and Integrilin (eptifibatide) are among the approved peptide-based drugs.

Peptides have a following in biotech and pharmaceutical companies as well as in the venture capital community. Roche and Eli Lilly & Co. are two drug companies particularly active in peptide therapeutics.

A number of undertakings could be considered a second peptide wave: from moving beyond manufacturing peptide analogs to expanding peptide traits with chemistry. The idea is to try to engineer desired physical, chemical, and pharmacological properties using the native peptide as the starting point.

A peptide is a short string of amino acids with amide bonds linking one amino acid to its neighbor in the chain; the COOH group of one connects to the NH2 group of the next. When the string folds into a three-dimensional shape, the peptide is called a protein. Some people choose to draw the line between peptide and protein at the length of 100 amino acids, although the boundary between the two classes is rather blurred.

There are 20 amino acids that are essential to the body and that are most often chosen by nature to assemble peptides and proteins. Despite the seemingly limited number of building blocks, peptides show physiological prowess and versatility.



"NATURE HAS done a pretty good job with just those building blocks--from antibodies to enzymes to peptide hormones to chemokines to cytokines," says Richard D. DiMarchi, who has been the Linda & Jack Gill Chair in Biomolecular Sciences in the chemistry department of Indiana University, Bloomington, since 2003. Prior to that, he was group vice president of biotechnology at Lilly Labs, where he played a crucial role in the design of Humalog [insulin lispro (rDNA origin)]. It was the first biosynthetic hormone--a peptide--optimized by recombinant DNA technology and approved as a medicine.

Humalog is a blockbuster drug. In 2004, Lilly's worldwide revenues from diabetes care reached $2.6 billion, with Humalog accounting for $1.1 billion of that. But not every peptide can be a blockbuster. "The simple thing is, nature didn't optimize these [peptides] to be pharmaceuticals," DiMarchi says. "Nature's focus is on physiology; our focus as chemists is on pharmacology."

For those who believe in the pharmacological and commercial promise of peptides, converting nature's regulated signaling champions into drugs means figuring out how to take advantage of their specificity while managing their drawbacks. Commercially, a drug developer will also need to make sure a peptide's virtues are unique, DiMarchi says. Where the market already has an efficacious, convenient, inexpensive drug, there may be no room for peptides.


THE APPEAL of peptides is lessened by the fact that they are rapidly cleared from the body, with half-lives often measurable in minutes. They are injectables, and membrane transport is a challenge due to peptide hydrophilicity. "These things fail the Lipinski rules," DiMarchi says. The Lipinski rules, named after Christopher Lipinski of Pfizer, are predictive criteria for determining the oral bioavailability of a lead compound. Peptides are more expensive to produce than most conventional drugs, so they need to be more potent. Otherwise, large quantities are needed, again driving up the price. Some marketed peptides face this challenge, he says.

As with small molecules, the road to peptide success is paved with failures. Magainin Pharmaceuticals, founded by National Institutes of Health researcher Michael A. Zasloff, could not get the Food & Drug Administration to find its antibacterial peptide for the treatment of diabetic foot ulcers more effective than compounds already available. IntraBiotics Pharmaceuticals discontinued the clinical trial of its lead peptide iseganan last June and is currently considering its options, including liquidating itself. PPL Therapeutics, the company that helped produce Dolly the cloned sheep and that had been working on transgenic means of making proteins and peptides, has sold its intellectual property to Bayer, Pharming, and other firms.

Peptides are a "tough subject," says Richard Ekstrom, chief executive of Demegen, a company developing antimicrobial peptides to treat topical infections. Though peptides have shown promise as antimicrobials without the resistance problems of antibiotics, the understanding of peptides has not yet matured enough, he says, for researchers to be able to develop synthetic analogs of natural peptides with the right pharmacological properties. In the early 1990s, peptides held the promise to be "the new systemic antibiotic," but "no one says that anymore," he says.

As do many in the industry, Ekstrom thinks that drug development means finding not only the right peptide but figuring out novel delivery techniques so that the peptide maintains stability and activity once inside the body. Ekstrom envisioned Demegen as a drug development company, but now he runs more of a virtual firm that pursues licensing possibilities for its peptides in the therapeutic areas of candidiasis (yeast infections) and cystic fibrosis.

On the sunnier side of commercial peptide activities by smaller companies, Cubist Pharmaceuticals brought Cubicin (daptomycin), a lipopeptide antibiotic it had licensed from Lilly, to market in 2003. Cubist's revenues grew from $3.7 million in 2003 to $68.1 million in 2004, $58.6 million of which was generated by Cubicin. Elan's Prialt (ziconotide), a synthetic version of a peptide found in the venom of a Pacific sea snail, was approved in December to treat severe chronic pain.

So there is not just rain on the peptide parade. Peptides have fewer toxicology issues from xenobiotic metabolism, according to DiMarchi. "That is what has been the graveyard of so many small molecules," he says.

Some peptides--like Lilly's Forteo (teriparatide), a synthetic version of parathyroid hormone or PTH--can be very potent. "A drug like PTH, which I was central to registering at Lilly, [requires] 20 micrograms a day," he says. "Compare that to Prozac at 20 milligrams per day; that is 1,000 times different." Peptide therapeutics are "incredibly efficacious," he says. In addition, he says, there are "very rational and even systematic methods" for optimizing peptides. "The chemistry is much more predictable and far less empirical than you see with small molecules."

The physiological dexterity of peptides opens up a broad scope of pharmacological effects for peptide chemistry, says Jürgen Drews, a partner at the venture capital firm Bear Stearns Health Innoventures, and peptide companies can hope to generate many structures of importance. "Probably the fact [that peptide chemistry] is not as broad as medicinal chemistry [with small molecules] is compensated by the fact that the problems you can address and the molecules you can try to imitate are particularly important or interesting," he says.

Bear Stearns Health Innoventures typically invests $5 million to $10 million in early- to mid-stage companies. Drews--who was previously at Hoffmann-La Roche as president of global R&D and a member of the executive committee--drew the peptide developer Affymax into the fund.

Formed in 1988 as a GlaxoSmithKline spin-off, Affymax is developing peptide drugs to treat cancer and immune-related disorders. Drews thinks the Glaxo heritage gives the company an edge in understanding successful strategies in the drug development process.

One drug in Affymax's pipeline is an EPO-mimetic, a peptide that imitates the protein hormone called erythropoietin. Erythropoiesis, the development of red blood cells, is stimulated when erythropoietin is secreted by the kidney. Myeloma patients and people with damaged kidneys, for example, do not produce enough erythropoietin and can become anemic.

Companies with a good technology platform but no products, or with products in preclinical stages but no technology, have little chance of catching a venture capitalist's eye. "I like to see a technology platform, a set of methods that allows you to do a set of medically important things, and then to exemplify the strength or the viability of the platform by coming up with compounds that meet the criteria," Drews says.

Affymax, he says, has both technology and compounds in various stages of development grown from this technology. The company explores the critical structural feature of a protein or peptide and then tries to re-create or even improve on this feature by placing amino acids in the right combination, Drews explains.

"It was interesting to see that peptide chemistry had emancipated from this idea of just building small parts of a protein," Drews says. The methodology is to obtain desired structural and pharmacological properties like charge or lipophilicity. "It is very much like the work of a medicinal chemist who works with all kinds of reagents to build small molecules," he says.

To create a new drug, the company could build a molecule that acts like erythropoietin but does not have erythropoietin's critical sequence that binds to the receptor. The result is Hematide, which is currently in clinical trials.

In collaboration with EntreMed, another clinical-stage drug company, Affymax is working on novel peptides that mimic fragments of an anticoagulant protein called tissue factor pathway inhibitor (TFPI). The idea is to stop tumor growth by tapping into TFPI's innate ability to inhibit blood vessel growth.

Other venture capitalists also pick firms that are trying new approaches to engineering peptides. "We obviously believe in protein and peptides and believe this is going to be a huge market," says John D. Diekman, founder and managing partner of 5AM Ventures, a seed- and early-stage venture capital fund with a biotechnology focus. He is a former chief executive of Affymetrix and chairman of Scripps Research Institute. As evidence for his view, Diekman points to the large percentage of drugs in the development pipeline that are peptides and proteins. One of his portfolio companies is peptide therapeutics biotech firm Ambrx.

Diekman has few illusions about peptides and their "suboptimal" physicochemical and pharmacological properties. Ambrx cofounder Peter Schultz is a chemistry professor at Scripps and director of the Genomics Institute of the Novartis Research Foundation. Schultz and his colleagues have developed technology that Ambrx is using to address peptide shortcomings. As Diekman explains, engineering could, for example, change a therapeutic peptide or protein such that it no longer requires once-a-day but rather a weekly or even monthly injection regimen.

PEGylating a protein or peptide--that is, attaching an appropriate polyethylene glycol (PEG) derivative to it--is one way to engineer therapeutic properties. Ambrx' technology chemically modifies a protein or peptide in a site-specific way and harnesses recombinant technology to produce the peptide.



Thomas O. Daniel, a former professor of medicine and cell biology at Vanderbilt University, Nashville, who was also vice president for research at Amgen, is Ambrx' chief scientific officer. Looking back over his career, he finds that investigating disease mechanisms and treatment approaches is easier than "reducing a concept to practice--making a valuable drug that changes the lives of patients." Although protein and peptide therapeutics are still in their infancy, Daniel believes they make up the largest growth segment of the pharmaceutical industry.

Ambrx uses a biological expression system, namely Escherichia coli, to build chemistry into the peptide. The company calls this process ReCODE, for reconstituting chemically orthogonal directed engineering. The method builds on the work of Schultz, who, in Daniel's view, is a chemist and technology innovator with a biologist's motive and with interest in scalable methods. Schultz's most significant innovation, Daniel says, has been his focus on biological selection to evolve components of the peptide/protein synthetic apparatus.

SLIDE SHOW Images rotate every 3 seconds
AMBER Ambrx has engineered components of the peptide/protein synthesis apparatus including tRNAs and tRNA synthetases. tRNAs are activated with amino acids by tRNA synthetases. The tRNA synthetase (labeled as RS, blue ribbon structure) is engineered to only bind a chemically-specified Ambrx amino acid (shown in red). The tRNA (blue space-filling structure) binds to the tRNAsynthetase and becomes charged with the Ambrx amino acid. (tRNA with red Ambrx amino acid). In order to deliver the Ambrx amino acid and have it be incorporated into the peptide sequence, the tRNA has been engineered to bind to a particular stretch of base sequence on the RNA template, a so-called amber codon. (highlighted pink region of the green RNA). That codon, normally a so-called stop codon, has been engineered to accept an amino acid.

THOSE COMPONENTS in particular are tRNA synthetases and tRNAs. DNA delivers the blueprint for proteins and peptides in the body. When an RNA template of a given DNA segment is rendered into a peptide sequence, tRNAs carry amino acids to the growing polypeptide chain. tRNAs are activated with amino acids by enzymes called tRNA synthetases.

Ambrx has engineered a tRNA synthetase-tRNA pair that is orthogonal to E. coli, which means that the bacterium's own tRNA and tRNA synthetases cannot interact with the pair engineered by Ambrx. The tRNA synthetase binds a chemically specified Ambrx amino acid and charges the tRNA with it. In order to deliver this nonnatural amino acid to the peptide chain, the tRNA, in turn, has been modified to bind to a particular stretch of the RNA template, a so-called amber codon that usually does not accept amino acids. In this case, amber has been chemically tailored to accept an amino acid.

Daniel sees Ambrx' near future focused on enhancing the performance of peptide and protein therapeutics to make them, for example, longer lived in the body. As the firm builds its own product pipeline, it plans to seek out partners in the pharmaceutical and biotech spheres, he says.

Chemically engineered peptides may appear to run a greater risk of possibly causing immunogenic reactions. But as Daniel explains, in some cases, the opposite is the case. "Generalization is very dangerous on this point," he says. Immunogenicity can be provoked by many factors, not just a nonnatural amino acid. "Getting the chemistry right matters to all of these factors, and biosynthetic routes have real advantages in homogeneity," he says.

DiMarchi, who is also on Ambrx's board of directors, says the company's approach combines the versatility of medicinal chemistry with modern biotechnology, to create the emerging field of chemical biotechnology. According to Diekman, Ambrx will next need to prove that scalability by modifying a protein or peptide and taking it almost to the point at which manufacturing can begin. That is a milestone with a number of new challenges.

As Frost & Sullivan's Parmar says, cost and technical problems still present "scalability challenges" for peptides. Alain Scarso, general director of the peptide manufacturer UCB-Bioproducts, agrees. Peptide production is still maturing, Scarso says, and will benefit from methods "beyond the technologies that all of us know."

Manufacturers apply known peptide chemistry and production methods. "It is not the best method; it is not the most economic one," he says. Chemical processes, biotransformation, and manufacturing--the elements of scale-up from the bench--all have not been thoroughly explored, Scarso says. "We are working on it."


IN THE INTERIM, as UCB and its competitors forge that transformation, a caveat remains: On a per-gram basis, peptides are typically more expensive to produce than conventional drugs. The pricing situation leads to a variety of strategies by manufacturers.

You may want to develop a peptide to compete against aspirin, but "aspirin is going be cheaper to manufacture," says José de Chastonay, president of peptide manufacturer Bachem Americas. Sometimes an expensive medication can make sense to treat an unmet medical need. In many cases, though, peptides are competitive, he says. "The prices of peptides, especially if they are needed in large volume, have come down significantly."

Headquartered in Switzerland, Bachem operates six production sites throughout Europe and the U.S. The company has research-grade peptides as well as full current Good Manufacturing Practices (cGMP) capabilities for solid-phase and solution-phase peptide synthesis. Sales last year reached $130 million.

For peptide pharmaceutical ingredients, the company foresees growth in 2005 exceeding that of 2004, and it expects a stronger market in the U.S. than in Europe. Generic active pharmaceutical ingredients were the company's growth driver last year. Peptides contributed to last year's "strong performance," the company states, while sales of new chemical entities fell by 15.6%.

Bachem is equipped for very small research projects up to cGMP batches of hundreds of kilograms, de Chastonay says. What sets his company apart from others, he explains, is the asset base and the track record. "You would not want to entrust your molecule with a company that does not have a track record of getting drugs approved or of being able to deliver a commercial quantity," de Chastonay says. Some manufacturers discourage early-phase work, he says. Others only have the skills to do the early part. "We can go the whole way, and we do," he claims.

UCB-Bioproducts, which is a division of UCB Group, follows a similar strategy, Scarso says. He and his colleagues aim to help biotech and pharmaceutical companies develop their therapeutic peptides. "We are there when a company has retained a lead candidate," he says.

Getting in early offers a view down the development pipeline to future technical processes and the economics of the potential drugs, he says. One of UCB-Bioproducts' customers is the Medicines Co., which markets the anticoagulant Angiomax (bivalirudin), given to patients undergoing coronary angioplasty. "We started around 15 years ago working with them to establish what would be the best process and set up all that would be needed for further development," Scarso says. At the time, the compound was being developed by Biogen.

UCB is largely an R&D-based drug discovery and development company. The peptides division retains much autonomy and may even deal with companies that are "competitors in some of the fields where UCB might be active," Scarso says. It has facilities in Braine-l'Alleud, Belgium, and a plant in North Augusta, S.C., that opened in 2003. The Augusta plant is dedicated to early-stage projects and was set up to be able to help with proof-of-concept studies in the same time zone as its clients, Scarso says. Projects are moved to Belgium as they advance.

The property, which was sized large, is set for expansion, Scarso says, and engineering plans are already drawn up for facilities that incorporate new synthesis technologies that the firm is developing. "The U.S. market is our major market," he says. Overall, he expects 20% revenue growth this year--more in the U.S. than in Europe or Japan.

According to de Chastonay, Bachem likes to be involved in research-grade peptides. "Catering to the R&D community allows us to remain at the forefront of the science and to forge contacts," he says.

Price depends on the length of the peptide, since synthesis involves a series of deprotecting, linking, washing, re-deprotecting, relinking, and rewashing steps. Consultants state that peptides may run between $300 and $500 per g for 300- to 500-g quantities, between $100 and $200 per g for 1- to 2-kg quantities, from $25 to $50 per g at the 50- to 100-kg scale, and less than $10 per g at higher ranges.

Manufacturers are hesitant to comment on definitive numbers. "I don't really like to give ballpark pricing," de Chastonay says, "because, in reality, ballpark pricing can be off by a factor of almost 10 one way or the other." Variability arises from the molecule itself and its specifications, with some facets only revealing themselves in the course of scale-up. Going from 1 kg to 100 kg necessitates experiments to optimize synthesis. "If the sponsor is willing to do those expensive experiments, lo and behold, the cost tends to go down quite dramatically," he says.

Process development is a big part of the customer relationship, UCB's Scarso says. For example, not all biotech companies have a dedicated person or team responsible for manufacturing and supply-chain issues, placing greater responsibility on the manufacturer.

At a meeting last year, a number of biotech executives approached de Chastonay to describe a bind they face. Venture capitalist backers often "don't see an imminent need" for elaborate tests to ascertain manufacturing methods--they just want to pay for clinical trials and keep costs low. In response, de Chastonay says that "if you have a drug that you need in large quantities, you can't really turn the ship on a dime."

In Scarso's experience, some customers underestimate the timeline and complexity of manufacturing. Some push back industrial process development in an attempt to delay manufacturing's financial burden. "That is difficult for us," he says. To strategize in this kind of market environment, he keeps his portfolio diverse and includes commercial products. Separately, he cultivates newcomers and products in various clinical development phases. "We would like to manage growth so we are not dependent on one product," he says.

While Bachem and UCB use their experience to position themselves for growth in the peptide market, others are eyeing the field. Increasingly, custom organic synthesis companies are becoming interested in cGMP peptide manufacturing, says Jeanick Pascal, CEO of NeoMPS in San Diego. "They can see that it is growing," he says.

NeoMPS used to be Multiple Peptide Systems, founded in 1986 by peptide chemist Richard A. Houghten. It focused on making research-grade peptides almost exclusively with solid-phase synthesis for academic and industrial clients. "We got a sequence from a researcher, and we prepared the product up to specifications defined between the client and us," Pascal says.

COMMITTED TO GROWTH NeoMPS, now owned by French defense giant SNPE, seeks business in GMP manufacturing of peptides.

RAMPING UP NeoMPS constructed a new building for large-scale peptide synthesis.
BENCHING 25-L bench-top reactor for solid-phase synthesis.
PURITY Column for peptide purification.
MINUS WATER In one of the manufacturing steps at NeoMPS, peptides are freeze-dried.


THE COMPANY established a GMP facility with solid-phase synthesis of pharmaceutical peptides in 1990. Putting that business in place has taken a while, Pascal says. Besides the quality-control facets and final product testing, a more intangible, soft skill is important, he says. "It took us some time to get accepted; people have to trust you."

As the customer base expanded and requests for larger peptide quantities increased, MPS outgrew its facilities. Because there were no expansion plans at the time, MPS began losing clients whose compounds were moving into the development phase.

In 1999, the company was acquired by the French defense giant SNPE, which already operated its own peptide business in France. That event meant a commitment to growth, Pascal explains, and the firm moved into a new building in 2002. Although still small, its business has almost doubled since 2002, he says. NeoMPS now has 30,000 sq ft of developed and 17,000 sq ft of undeveloped space to be used when the need arises.

In its size class, NeoMPS competes with firms such as American Peptide or PolyPeptide Laboratories. For larger volume products, the larger Bachem and UCB have many advantages, Pascal acknowledges. "The disadvantage is that they are big and a lot more expensive than us," he says. He sees competitive advantage and a road to slow, steady growth by cultivating close relationships with customers that the larger competitors may not have. "Because they are big, sometimes they also have problems of communication with the clients."

Last summer, SNPE decided to unite its French and U.S. peptide operations under the NeoMPS name. Although both are owned by the same parent and frequently collaborate, the two locations operate independently. A client may choose to work with either or switch from one to the other in the course of a project, Pascal says.

GMP projects range in peptide volumes. They may start at 50 to 500 g. Then, when compounds move on to Phase II and III, the volume demand can move to 5 kg, 50 kg, and higher still. One thing is for sure: "The business is in GMP," Pascal says.

In his view, the differences between peptide manufacturers are not so easy to discern, as "almost everyone uses the same technology," he notes. The differences show up in their soft skills--the way companies work with their customers. "Relationships are a big aspect of the business," he says.

In a few years, peptide engineering and manufacturing may have generated momentum to smooth the path from peptide to drugs. Forecasting long-lasting success for peptides, however, is just as tricky as for small molecules; the two classes do have something in common after all.


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