Zoetis R&D chief Catherine Knupp on innovation and the fight to stay atop animal health

At Zoetis' ($ZTS) first-ever Investor Day, held at the New York Stock Exchange on Nov. 18, financial bigwigs were treated to a sit-down lunch and four hours of presentations from the company's top executives--all of whom eagerly made the case that the animal health giant was thriving as an independent company. Spotted in the audience that day was Pershing Square Capital's William Ackman, who had recently bought up $1.5 billion of the company's stock, reportedly with the intention of pressuring the company to put itself up for sale.

Zoetis' president of R&D, Catherine Knupp, didn't seem fazed by Ackman's presence, however, as she enthusiastically took the stage to describe the company's approach to research and some of its recent accomplishments. Among those milestones: Zoetis has completed a key FDA filing that will allow it to move into the red-hot market for oral flea-and-tick fighters with its investigational compound, Sarolaner.

After the presentations ended, I had the opportunity to sit down with Knupp to talk further about how Zoetis is learning from the challenges it has faced over the last year, and some of the initiatives underway in R&D that she believes will propel the company's growth going forward. Here are some excerpts from our chat.

FierceAnimalHealth: With Sanofi ($SNY) and Merck ($MRK) having rolled out chewable flea-and-tick fighters this year, Sarolaner could be very late to the market. What do you see as the opportunities for Zoetis in that market?

Catherine Knupp: What you're seeing in terms of trends in the market are products that offer convenience, as well as spectrum of activity. And the ideal spectrum of activity includes not just fleas and ticks, but also heartworm and internal parasites. But not all components of the market need that all the time. For example, in the southern part of the U.S., you're probably going to want to have that coverage all year round, because fleas, ticks and heartworm are active all year round. In northern parts of the country, perhaps you can be more selective. So from an innovation perspective, the notion is can we address all of those needs in a single-product approach, but also make sure we have the offerings to address components of that market?

FAH: You mentioned during your presentation that customer insights shape decisions in R&D. Can you give me a recent example of that?

Catherine Knupp

CK: The most recent example is our vaccine for PEDv (porcine epidemic diarrhea virus). Here we had a devastating disease affecting 50% of the sows in the United States and causing millions of losses of piglets. It was devastating to our farmers, not only economically but also emotionally, to see that much loss of life in their herds. There was an incredible need for a vaccine to be able to prevent that and to create immunity in the mother that she could then pass on to her piglets. We [worked with farmers] to understand how customers would fit the vaccine into their existing methods of management, so that it could be effectively used out in the field.

FAH: Zoetis' new drug to treat allergic dermatitis in dogs, Apoquel, is so popular the company is now facing a supply shortage that won't be resolved until next year. Could any of the manufacturing innovations that have been applied to other drugs be used in the future to avoid shortages like this?

CK: Apoquel is a relatively unique situation. It is a complex manufacturing process with long lead times for some of the key ingredients. And ultimately the capacity could not keep up with the demand. Still, you're raising a very good point with respect to the application of technology to improving the efficiency of the manufacturing process.

For example, we talk a lot about cost of goods. Well, one of the ways that we can envision improving cost of goods is through the application of technology that drives more efficient processes. If you look at vaccines, they used to be made in roller bottles, which were labor-intensive and presented a potential risk of contamination. Today, we're making many of our products in disposable plastic bioreactors, which are closed systems that are much more efficient and that decrease the risk of contamination.

We can't do that with all of our products, but I think we've learned a lot about Apoquel. We are incorporating those learnings into the way we plan for new product introductions in the future.

FAH: I noticed some interesting early discovery partnerships being formed overseas, including with academic institutions. What does Zoetis look for in forming those collaborations?

CK: Our philosophy is to gain insights in research that will enable shorter cycle times. For example, we recently announced a European-based collaboration with the Easter Bush consortium to establish a surveillance center for emerging infectious diseases. It's a follow-on to a collaboration we've had in place for several years now with multiple universities in Scotland. What those universities offer is insights into new infectious diseases and complementary skill sets to what we have.

So rather than reinvesting or recreating that wheel, we look for great opportunities to partner, gain insights, and then apply those in our disease models.

FAH: You mentioned during your presentation that animal genetics is a big area of focus going forward. What are some of the opportunities there?

CK: In the genomics area, we currently offer tests that are valuable to our producers, both in the feedlot and in the dairy segment, which allow them to understand efficiency of production. Is a cow likely to be an excellent producer of milk? How long will she be able to be milked? Those are insights that offer a very clear and immediate economic return. Where we would like to go with genomics is to continue to probe the genetics of the animal to understand its susceptibility to disease. So if you look at use of vaccines, they are very safe and efficacious, but they don't always deliver exactly the performance customers want. So we'd like to be able to probe that insight into genetics to see if we can come up with even more rational approaches to creating vaccines. We'd like to get to the point where can we offer a degree of customization that really builds the confidence in the outcome even further.

In companion animals, it's really about understanding risk of disease, being able to benchmark how the disease is occurring and progressing. Then we could couple that with an innovative approach to either prevent or manage a chronic condition. Even in mixed breeds, there are a lot of illnesses that we can't anticipate or manage before they become chronic. That's true in dogs as well as in cats. So as pets live longer, we want to do more to understand those diseases and provide tools for managing them before they become such an issue. -- Arlene Weintraub (email | Twitter)