Drug Development Needs More Focus on Profitability

By Louis Garguilo, Chief Editor, Outsourced Pharma

Ali Pashazadeh thinks biopharma companies – and CDMOs – need strategic help.

I challenge him first on his that perception CDMOs lack a “consultative, holistic view of development/commercialization” that they can provide to their biopharma customers.

That’s  because, frankly, sponsors often fail to seek important advice from, or listen when formenting development and manufacturing plans with CDMOs, regarding the viability of targeting certain molecules to specific diseases.

However, Pashazadeh, cofounder/CEO of Treehill Partners, a combined strategic and financial advisory group, holds his ground.

“A contract development organization has a certain set of capabilities that make them appropriate to work with a certain biotech,” he says.

However, he avers, there’s important knowledge – a vantage point – outside the CDMO that can construct a bridge from sponsor, to CROs and CDMOs, and investors.

That vantage point is provided by consultants, but most external advisors lack a direct link to investors.

Pashazadeh says executive-level advisors that also bring investor relationships (or serve as investors themselves) can create “an ecosystem around the specific molecule being developed, to reevaluate development decisions being made or already made, in a more dispassionate way.”

Dispassion applied specifically to the question of ultimate commercial profitability.

“Biopharma sponsors start with a molecule they believe has utility in a certain indication. They bring that to a CRO/ CDMO to develop and produce material for planned clinical trials,” explains Pashazadeh.

And that’s exactly what the provider is happy to do.

However, those initial assumptions – value propositions, he says – need to be independently pressure tested to map out the utility of that development path through clinical trials, and profitable commercialization.

“Even early preclinical development work needs to be done with that view of what you are trying to get to in the end, which is a new drug or therapy with a viable commercial market that affords profitability.”

Third-Party Prognosis

Pashazadeh relates a recent experience of reviewing a number of liver molecules in development by a biotech that had run an AIH (autoimmune hepatitis) model.

“My team said, ‘Look, there's no commercial benefit for these in AIH. You'll never make money. You can develop, you can commercialize, but you won’t actually financially benefit.’  

“We then asked: ‘Have you looked at a NASH model or a PBC model?’ They said no, they hadn't thought about it at that stage.”

According to Pashazadeh, neither would a CDMO they started working with have done a deeper dive. It’s simply not their prerogative, expertise, or mission as a service provider.

But what’s  needed – at that early stage as well – is “an informed vantage point to the complete value chain.”

Sponsors will ultimatgely benefit if they can undertake an unbiased review of decisions already made – and then return to the CDMO with the message of a needed retracing: This is now a potential NASH product, and we are asking you [the CDMO] to help determine the activities needed to move the program forward.

Forward to what purpose?

“To help demonstrate a preclinical compound worthy of continued and new investor funding.”

“We put an ecosystem around the development and clinical trials design,” explains Pashazadeh, and while currently he has strong relationships on the CRO side, he looks to now strengthen relationships with CDMOs.

“At first,” he says, “I had genuinely expected there would be resistance from these service organizations to our involvement. Kind of a ‘that's my job, stay out of my lane’ attitude.

“Interestingly, though, they really value our help. They want to move away from ‘I make money from you today, tomorrow your drug fails and I don’t have a client.’

“CDMOs want to own the client through the whole life cycle. They welcome our helping to pick profitable commercial winners.”

In Progress

Again, I’m not convinced CDMOs entirely lack the wherewithal to engage with their development customers in a “holistic” discussion that includes disease targets and some end-market (profitability) analysis.

As mentioned above, many sponsors never find out if they can.

We often hear CROs/CDMOs say they pine for more communication and dialogue.

Let me ask readers directly: Do you hold back strategic plans from your development and manufacturing contractors? Do you ask them to offer more strategic (life-cycle) insights?

Of the full-service providers Pashazadeh has worked with to date, he agrees some are better equipped for deeper strategic relationships than others, but laments, “the standard deviation is broad.”

Despite his less sanguine comments above, Pashazadeh says CDMOs he’s beginning to work  with strongly believe they know the answer to the right development pathways – and provide that opinion to customers.

“It’s their client, and they want to put their arms around them and the program.”  

That advice might include pointing out mistakes about to be made, and decisions that should be revisited.

Unfortunately, as Pashazadeh has learned with his clients, “Nobody ever wants to be told their baby is ugly. Ever.”

“I’ve learned over the past 20 years who we can, and who we cannot help.”

He adds: “I can't go around the industry telling people you’re getting it wrong, even after they have encountered development and clinical-trial challenges. But there are subtle ways of saying, for example, ‘That’s great, but why don't we put you in front of some potential investors who might be interested in funding generation two of what you're doing.”

Generation two (for new and existing investors) might be changing from an intravenous to an oral formation pathway, or it might be going after a different disease target and clinical trial strategy all together.

That funding opportunity, coupled with development/manufacturing and clinical-trial advice, is key to opening minds.

In the end, though, neither strategic advice nor funding enticements will be taken advantage of unless biopharma executives are flexible enough to admit mistakes and courageous enough to change course, and their service providers are willing to facilitate those new directions.