Chris Adams, CEO, Andarix, explains how industry can leverage technology to make the drug development process more efficient

In the drug development world, coming up with a billion-dollar drug is almost like winning the lottery, except that there is a lot of hard work, false leads, and significant technical and financial risk.

This article discusses the possibility of designing a program to develop a billion-dollar drug using a virtual development model. Whether in a traditional clinical development effort or virtual model the rules of the market still apply: what is the standard of care, who are the competitors in the market, how far along are they in the development process, and what is the competitive advantage of the technology?

New Technologies can make Data Collection more Efficient

The key question in any drug development effort is: Will the eventual therapeutic be of benefit to patients suffering from a disease? It’s a straightforward question but often overlooked by many. Given the long lead times in drug development, the extraordinary expense, and any potential failure along the development pathway, it’s important to ask that question upfront. If the answer is equivocal then one needs to find a better technology or molecule, or stop the program before it consumes more resources.

Fortunately, for those companies and entrepreneurs who lack the multi-million dollar budgets of major pharma there are alternatives. In the virtual model, a company outsources the clinical development effort to service providers, from new chemical entity screening to late stage clinical development. With the advent of new digital technologies, data collection and analysis make for a more efficient process. Coupled together, digital technologies with traditional clinical research organizations make for a powerful development tool to aid in the virtual development model. Information technology has enabled a small development team that is adequately funded to move a molecule through the development pipeline and into the clinic.

Always Start with the Market

Before the program gets started, it’s important to start with the market issues and questions. Most scientists tend to become enamored with the drug or technology and fail to understand the greater market implications, such as development stage and competitive advantage. A small organization that lacks the marketing resources of big pharma cannot proceed or extract value with an incremental clinical opportunity. If an organization is seeking to develop a billion-dollar drug then a significant change in patient management or clinical outcome is the only business endpoint. As an example, Abraxis Pharmaceuticals, a small cap pharmaceutical, developed a less toxic, more effective therapy based on Taxol for breast cancer. The drug, Abraxane, a nano emulsion of Taxol, had significant advantages for both patients and payors, with fewer administrations and side effects. Because of the advantages, the drug was sold for $2.9 billion dollars in 2010 to Celgene. Abraxis lacked many of the resources of traditional pharma and relied on outsourced services.

Another more recent example involves Enanta Pharmaceuticals (Nasdaq:ENTA) and the development of a hepatitis C virus (HCV) protease inhibitor drug. Enanta used the outsourcing model to advance the program through clinical development to the point where the company could partner with Abvie in a licensing arrangement at Phase II. The drug, Paritaprevir, received approval in 2015. Paritaprevir is now part of an HCV therapeutic regimen and generated over $150M in annual sales in the second year of being on the market. Given the market potential and future revenue generation the drug is clearly headed for billion-dollar valuation territory.

The Keys to a Successful Model

These are just two examples of biotech companies that could exploit the intellectual property opportunity they had in therapeutic molecules by leaning heavily on the outsourced clinical development model. There more examples in diagnostics and health care information technology that have taken advantage of the virtual company model to create value.

The keys to a successful model to extract maximum value out of intellectual property company assets are:

  • Have a well differentiated patent, know-how or trade secret position that provides the company with a significant and defensible competitive advantage
  • Create a strong management team with a diversity of developmental and commercial experiences in the market and technology domains
  • Use the management team’s capabilities to leverage the initial capital raised for the development efforts. Be most efficient with the capital as it most likely comes from corporate partners or private investors, and is expensive in terms of equity or product control
  • Search and identify the outsourced CRO sources needed to bring the product through development in a timely manner. It’s important to interview 3-4 potential organizations for each required step in the development process. Not all CRO’s excel at each step in the process. For example, many of the smaller organizations are well suited for early concept clinical studies, but aren’t capable of a well-managed multi-country late stage study

Drug development is a high risk and time-consuming proposition. Given the right technology, team and plan the outsourced model can lead to significant clinical and financial benefit.


Chris Adams