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PM2, February 19, 2017

Meredith Reichert, Ph.D.

McKinsey and Company

Is your organization ready for PM?

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Speaker Introduction

Meredith Reichert, Ph.D.

Engagement Manager, McKinsey and Company

Experience in all aspects of healthcare, serving

pharamaceutical and biotechnology, companies as

well as providers and distributors, particularly in

oncology and precision medicine strategy

33McKinsey & Company

Conflict of Interest

Meredith Reichert, Ph.D.

Engagement Manager, McKinsey and Company

Has no real or apparent conflicts of interest to report.

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Agenda

Opportunities of precision medicine in oncology and beyond

Challenges of providers implementing PM capabilities

Potential solutions to bring PM to all patients

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What is precision medicine?

…a medical model that

proposes the

customization of

healthcare…

…to classify individuals

into sub-populations

that differ in their

susceptibility to a

particular disease or

their response to a

specific treatment

…capacity to use

molecular knowledge

(genomics, proteomics,

metabolomics) to

prevent, diagnose,

treat, or

monitor disease

…ability to predict an

individual's

susceptibility to

diseases…

Precision medicine is…

Medical care tailored to the individual based on that individual’s unique characteristics or unique characteristics of the disease itself

SOURCE: McKinsey, Wikipedia, Center for personalized genetic medicine, President’s Council on Advisors on Science and Technology

66McKinsey & Company

After a long lead time, PM is coming of age in healthcare

1990 – 2003

Human Genome Project

2004 – 2010

2011 – 2020

Beyond 2020

Understanding the

Biology of Genomes

Understanding the

Biology of Disease

Advancing the

Science of Medicine

Understanding the

Structure of Genomes

Improving the Effec-

tiveness of Healthcare

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Precision medicine is real today…

69

204

2010

+20% p.a.

2016

Diagnostics are progressing, with liquid biopsies

becoming more and more standard

KOLs in leukemia and lung cancer say they routinely

use NGS in ~40% of their patients

Community providers are increasingly building PM

platforms with strong diagnostic offerings

Health IT players are finding ways to integrate patient

EHRs, genetic information, treatment and outcome

data to fully automate clinical decision support

FDA-approved drugs

associated with a biomarker

SOURCE: FDA.gov, expert interviews

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… and new initiatives are paving the way for PM beyond oncology

Obama Announces $215 Million Precision-Medicine

Genetic Plan

– Wall Street Journal, Jan 2015

New blood pressure, hypertension loci identified

through large analyses

– Genomeweb, Sept 2016

Children’s National and Inova announce three-year,

$2.8 million research and education collaboration

– Yahoo News, Jan 2017

Geisinger research reveals underdiagnosed, undertreated

genetic disorder

– Genomeweb, Sept 2016

How Precision Medicine could be a lifesaver in kids

with brain cancer

– Forbes, Jan 2017

Gaurdant Health and the U of Texas MD Anderson have

struck a multilayer deal to push comprehensive liquid

biopsy into the standard of care in cancer treatment

– FierceBiotech, February 2017

99McKinsey & Company

SOURCE: http://www.nature.com/ng/journal/v45/n4/full/ng.2582.html; Science Vol319, p1478; http://www.fda.gov

Genomic testing can drive value in healthcare in several ways

Prenatal screening

Risk-based

screening and prevention

Pharmacogenomic guided

optimal drug dosing

Immunogenetic blood and

tissue matching

Targeted therapy based

on patient stratification

Most applications can be achieved with a single genomic sequencing test (orange box)

Genomics especially valuable in cosmopolitan populations with diverse genetics

Genome sequences linked to EHRs are a resource to further improve medical care and R&D

Individual sequenced once per lifetime

• Sequencing patient / tumor DNA and match drugs to molecular “fingerprint”

• Adjust therapy intensity based on viral load or tumour risk profile

• Maintain a database of blood and tissue types to facilitate efficient and safe

organ donation and blood transfusion

• Can also help reduce adverse drug reactions

• Adjust drug dosing based on individual metabolism to ensure all patients

receive an effective dose while reducing adverse reactions

• Reduce the cost of prevention and screening programs without impacting

quality by targeting resources to high risk individuals

• Non-invasively test for genetic abnormalities before birth using new

genomic tests that require only a maternal blood sample

Description Example

• Down syndrome (trisomy 21) occurs in 1/800 live births in UK

• Breast cancer screening can be reduced by 24% with minimal loss

of effectiveness

• ~15% of patients may have non-optimal dosing of psychiatric drugs

• Traditional serology has more errors than genomics based typing

and leads to acute reactions in 1/12,000 transfusions

• Erbitux has been approved for patients with an EGFR mutation and

do not have Ras mutation

• Maraviroc works only for patients without CCR5 mutation

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With the increasing public excitement, providers can’t afford to ignore PM

Reputational and service line

benefits

• Opportunity to distinguish from local competitors

• Potential to be distinctive in level of service (e.g., WGS)

• “Halo effect” to drive increased patient volumes

• Opportunity to attract research & clinical talent

Direct participation

• Revenue potential to set up CLIAsequencing lab and associated clinical care

• Value shifting toward data analytics

• ROI is often breakeven at best

Partnership and database

commercialization

• Opportunities to partner with emerging Dx companies

• Pharma companies increasingly leveraging genomic data, allowing a small revenue stream for providers

• Can also support in-house research activity

Not developing PM offerings poses a significant long-term strategic risk, given the increasingly competitive market for PM care

1 2 3

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So why don’t all providers have a precision medicine platform?

Cultural barriers1

Infrastructure2

Clinical evidence / treatment options3

Barriers to precision medicine

4 Misalignment of incentives

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Problem

Barriers to PM

Cultural barriers

• Oncologists and other care providers may not have background

knowledge in genomics and the rapidly evolving world of targeted

therapies

• Physicians may be hesitant to start down a path that may not yield a

difference in treatment

Infrastructure

• Expensive infrastructure elements needed to establish a PM platform

– CLIA lab and sequencing capabilities

– Bioinformatics and clinical decision support tools

– Access to specialty pharmacy

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2

There’s a freight train of knowledge that is

impossible for physicians to keep up with

It’s hard to comprehend how much really needs

to into building this from scratch, especially for

a large regional system

– Head of community cancer center

– Head of community cancer center

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Barriers to PM

Problem

Clinical evidence / available therapies

• Gap between the knowledge and evidence for new standard of care

• No clear path to evidence; becomes an issue both for clinical

implementation and payor reimbursement

Misaligned incentives

• Misalignment between payors, providers and patients on appropriate

use and reimbursement of PM

• Healthcare still largely fee for service, which does not incentivize use

of PM

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4

The greatest near-term challenge is data

proliferation and the difference between data

and actionable evidence

We need greater transparency of information to

get all players to cooperate

– Head of community cancer center

– Clinical Evidence Director,

Large Payor

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These barriers can be addressed by considering the patient provider journey

Steps in provider journey

3 Clinical evidence2 Infrastructure1 Cultural barriers

4 Misalignment of incentives

Patient meets

with MD, may

benefit from PM

Patient sample

collected, sent

for sequencing

Sequencing,

interpretation

sent to MD

MD discusses

results with

patient

Treatment

protocol

and/or clinical

trial selected

Patient

receives treat-

ment, out-

come tracked

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Cultural barriers1

Solutions

• Centralized physician education and

support

• PM physician experts lead the way in

physician training

• Guidelines to support identification of

PM applicable patients

Key is to recognize where PM will create clinically

actionable decisions

“Physician education is tough… we brought in a third

party to help with messaging

– Head of community cancer center

– Head of community cancer center

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Several systems have successfully built these capabilities…

Steps in provider journey

Clinical

decision

support tools

Bioinformatics

capabilities

CLIA lab

facilities

Patient meets

with MD, may

benefit from PM

Patient sample

collected, sent

for sequencing

Sequencing,

interpretation

sent to MD

MD discusses

results with

patient

Treatment

protocol

and/or clinical

trial selected

Patient

receives treat-

ment, out-

come tracked

Access to clinical trials

and/or specialty pharmacy

2

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… however, most use partnering to gain at least some of these capabilities externally

DescriptionExample systems

Vendor service

relationships

Vendors with established track records provide

sequencing services to provider networks

Joint PM venture between

health systems

Share the new infrastructure requirements

(e.g., physician education, CDS) with a

provider partner

Multi-stakeholder

partnerships in health data

Potential to sequence in house but benefit

from the data sharing of a collaboration (e.g.

recent Oncology Precision Network)

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Clinical evidence / available therapies

Establish clinical

guidelines

Collect patient

data

Stay relevant

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• Ensure clear pathways and guidelines are embedded into EHRs

– Selected by committee of physicians and pharmacists

• Establish a process to submit feedback and change care treatment guidelines

when necessary

• Collect patient history, test results, treatment plan and outcomes

• Share this aggregated data amongst physicians to track best practices

• Participate in larger data consortiums to allow for population health analytics

• Keep guidelines at the cutting edge of care by attending conferences and meetings

• Ensure infrastructure is in place to access the newest therapies

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The level of precision care will only get more complex

ILLUSTRATIVE EXAMPLE FOR NSCLC1

All patients are treated the

same based on anatomic

location of tumor

EGFR

ALK

EGFR and ALK mutations

guide decision to use

erlotininb (Tarceva) or

crizotinib (Xalkori)

5-10 biomarkers dictate

treatment, requiring

multiplexed capabilities

EGFR

ALKPIK3

NaPi3b

Kras

Met

PD-L1

1 NSCLC: Non small-cell lung cancer

3

20 years ago

Today

5-10 years from now

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PM care requires consistent data access and new therapies, but stakeholders have varied investment in each

Need for new therapies

Need

fo

r d

ata

Historically have necessitated large clinical trials with slow approval times for each new

indication

Limited enforcement of data sharing

Regulatory Pharma

Beginning to shift to genetic, PM based R&D

Need simplified path for label expansion

Mixed knowledge and awareness of PM

Some are seeking out providers that offer PM

Fear of data sharing

Payors

Rarely sufficient evidence to justify reimbursement of some diagnostics and off-

label therapies

Prefer to see prospective, randomized control trials for each new indication

Mixed optimism and knowledge of PM

Mixed motivation to collect and report patient data around PM therapies

Starting to provide diagnostic platforms

Not rigorously collecting patient data

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Provider systems PatientsPhysicians

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The ideal state of healthcare would incentivize a continuous learning cycle between all stakeholders

• Ideal state continuous learning cycle and data sharing between all stakeholders

• Tracking of all patient data using consistent criteria

• Potential for integrated systems to lead the way in showing the value of PM (e.g., Intermountain)

RegulatoryPayorsEvidence

4Genetic and

outcomes data

Therapeutics and

clinical trials

Patients

Pharma

Provider systems

Physicians

Novel tailored

therapies

Evidence

Evidence

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Questions?