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 perception CDMOs lack a “consultative, holistic view of development/commercialization” they can provide to their biopharma customers.

I suggest the real problem is sponsors often fail to seek important advice from or listen carefully to CDMOs when forming development and manufacturing plans with 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.

“Each 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 other supporting organizations, and investors.

That vantage point can at times be provided by consultants, but these external advisors often lack a direct link to investors.

Pashazadeh says executive-level advisors that do bring investor relationships (or serve as investors themselves) can create “an ecosystem around the specific molecule being developed, reevaluate development decisions being made or that have already been made, and do this 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 CDMO to develop and produce material for planned clinical trials,” explains Pashazadeh.

That’s exactly what the provider is happy to do.

But those initial assumptions – value propositions – need to be 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 a 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 – is “an informed vantage point to the complete value chain.”

Sponsors will ultimately 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.

The result of the above discussion? That program is now a potential NASH product, and the CDMO is being asked to help determine the activities needed to move it forward.

Forward for the purpose of "demonstrating we have a compound worthy of continued and new investor funding.”

“We put an ecosystem around the development and clinical trials design,” explains Pashazadeh.

“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 as strategic financial advisors. CDMOs want to move away from a model of ‘I make money from you today, tomorrow your drug fails and I don’t have a client.’

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

In Progress

Still, 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, says Pashazadeh, “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 investors might be on board with changing from an intravenous to an oral formation pathway, going after a different disease target and clinical trial strategy all together.

That funding opportunity – for existing and new investors – 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, have the courage to change course, and the service providers are willing to facilitate those new directions.