The choices surrounding research investment and drug development are daunting for even the most experienced and successful biopharma executives. CEOs and other company leaders must consider a number of complex factors and market data to decide which therapeutic assets warrant investments, and their choices can drastically alter the future of a company.
An interactive panel at BIO 2017 provided attendees with a first-person perspective into how biopharma CEOs weight these factors. The panel of industry experts examined the example of Medzana, a young, small biotech company that had received a large investment and needed to identify the most promising of three molecules to advance into a clinical research program. Each molecule had shown early signals in research for one of three diseases (for the purposes of the panel, the company and diseases in question were fictional and meant to provide an illustrative example).
Attendees followed the decision-making process of the panel and had opportunities to vote and provide perspectives on the decisions. Sara Radcliffe, President and Chief Executive Officer of the California Life Sciences Association (CLSA) moderated the discussion. The panel started by describing the diseases in question, including the potential therapeutic benefit of each treatment, size of the patient populations, development time, risk and cost, and price potential. The second phase of the exercise zeroed in on a specific molecule the panel chose and examined the health-related quality of life (HRQoL) scale, and treatment benefit and cost compared with other treatments.
“I have to think of what I can sell to my investors,” said William Newell, Chief Executive Officer of Sutro Biopharma. That calculus includes finding the molecule with the highest probability of reaching the market, and thus the highest probability of bringing in revenue to enable future research and development spend into one of the other candidates. The panel acknowledged that the probability of success is never high in biopharma. Even though the session provided a number for that probability, a slew of complex calculations and data analyses would be behind any such statistic in the real world.
“As a start-up, you get one shot on goal,” said Paul Howard, Fellow and Director, Health Policy at the Manhattan Institute. While Medzana had secured an unusually large investment, the results of its first clinical program would dictate whether the company would survive. Even with an extremely high probably of success compared to reality – 30% for the compound the panel chose – there are huge risks involved.
The extent of these risks exacerbated the gap between the information the panel did and did not have, including context on current and anticipated competition, intellectual property, the political environment. The biggest piece of missing information was the patient perspective. “We don’t always know what patients are thinking,” said Debra Liebert, Managing Director at Domain Associates. Liebert noted that any biopharma company, and especially a start-up with few relationships to patient groups, needs to understand what is important to patients and to their physicians.
Among the data that the panel did have on hand, the potential cost of the therapy and the price range of the treatment provided a strong undercurrent to the discussion.
“The number one question I get is: what’s the price going to be?” said Ian Davies, Executive Director, Market Access Policy at Celgene. The answer is to first define the value the drug brings, which will then get the company to the price. The session provided an ideal scenario: a promising drug candidate with a high probably of success that extended life and improved HRQoL over existing treatments.
While the deciding on a price was relatively straightforward, “Biotech companies don’t do the math like we just saw,” said Pam Traxel, Senior Vice President, Alliance Development and Philanthropy at the American Cancer Society Cancer Action Network. “We can’t let the math dictate peoples’ lives.”
The panel agreed that biopharma executives need to weigh their decisions in terms of helping as many patients as they can. That means asking the questions that only long, expensive trials can answer: How efficacious is the drug? How safe is the drug? If a company can answer those questions with certainty, they can set a fair price.
And for all the factors a company can grasp, there’s one that provides the biggest challenge: “Human biology is not within our control,” said Newell.