How does a pharmaceutical company with no marketed products have a market capitalization of 1 billion dollars? The answer to this question is probably quite complex, but ultimately the value investors place on a company is related to the commercial potential of the pipeline. Ensuring you have a commercialization strategy that increases the chance of success for investors is key to obtaining the funding and will support the cost of your therapeutic development activities.
In recent years, scientists at large pharmaceutical companies have been challenged to understand the potential commercial value of their targets prior to initiation of development programs. AstraZeneca is an example of a company that applies what they have termed the “5 Rs” to all therapeutics before they are accepted into the portfolio and the 5th R is the right commercial potential.
The 5 Rs are based on a detailed analysis of why programs failed to move from the development phase to the market and suggests that even with a great therapeutic candidate and demostrable efficacy the absence of sound commercial potential can still sometimes lead to a failure to reach full market potential.
Evaluating the commercial potential of a project begins in the very early stages of therapeutic development, usually when considering the target product profile in the discovery and preclinical phase of development.
Therapeutic product development has evolved substantially in recent years and the need to demonstrate translational biology in all phases of development; discovery, preclinical and clinical is imperative to optimizing the drug development processs. This has a considerable impact on the commercial aspect at each stage, therefore, having a strategy to ensure you keep commercial viability at the forefront of your mind from the very beginning is essential.
So, what are the commercial aspects that should be considered when choosing a target or generating data packages? Here, we review four considerations and provide examples.
1. What will the treatment landscape look like for the chosen patient population when your drug comes to market?
From initiation of your project, it's essential you have an understanding of the potential competition, not just the current competition, but also new therapeutics that are in the R&D pipeline. You will need to understand how your product will fit in with future treatment paradigms and how your therapeutic will work with, or compete with, others in development.
You will also need to consider who will pay for the treatments you will be bringing to the market and understand how this may change over time.
What is the likelihood that policy will change in the target markets and how will this affect the value of your product?
The increased cost of novel therapies means that a high level of scrutiny is applied to the value for money that new therapies will provide. What will be the benefit of your product to the healthcare payers?
As novel therapeutics come to the market new models for reimbursement are being developed. A number of products offer patient access schemes to allow a period of free treatment where response to the therapy will be assessed. However, as we move to truly novel therapies that potentially cure or give long term efficacy, pricing becomes more complicated.
This is demonstrated by the CAR-T therapies where a single treatment may be able to cure the disease. The currently approved therapies, Kymriah and Yescarta are marketed for young adults with B-cell acute lymphoblastic leukaemia (ALL) and adults with refractory diffuse large B-cell lymphoma, respectively. These are diseases which a single treatment could cure at the cost of a single infusion of $475,000 and $375,000, respectively.
These costs seem high but probably compare well to alternative treatments and heathcare costs which, may not provide the same potential longer term benefits.. Novartis is initiating an outcome base approach for Kymriah, where payment will only apply when young adults in the US with ALL respond after 1 month. However, investors will want to see how you can bring your therapy to the market and gain reimbursement. This will affect the value of your therapeutic.
2. What is the intended patient population?
This is a question that has become key to the success of many targets.
The broad, all-encompassing disease definitions such as asthma, rheumatoid arthritis and cancer are being replaced by stratified approaches that divide these diseases into smaller groups defined by specific mechanisms. This is important for numerous reasons:
- Some patients are well controlled on current standard of care and developing new medicines for these patients would require a major increase in benefit to the patient
- The size of the patient population and its geographical location will also impact on the potential commercial success. Ideally your therapeutic should be aimed at a well-defined patient population that can easily be identified
- Development of a diagnostic biomarker would define the responder patient population, increasing the confidence that the therapeutic would deliver patient benefit and possibly allowing a more targeted clinical approach
For example, Nucal is an anti-IL-5 antibody that causes a reduction in circulating eosinophils and is currently approved for the treatment of severe eosinophilic asthma. It took nearly 20 years to get from the first in human trial to approval and after the initial phase II trials in severe asthma, anti-IL-5 was considered a failure. It was revived by trials that demonstrated that anti-IL-5 reduces asthma exacerbation in severe asthmatics with high levels of eosinophils. This demonstrates how selection of the correct patient population and patient stratification can be crucial to the commercial success of a therapy.
There are also many diseases with no effective therapies and addressing these unmet medical needs provides a clear benefit for patients. These may be entire patient populations or aspects of a disease.
It is well recognised that chronic obstructive pulmonary disease (COPD)places a massive burden on health care systems. While patients can benefit from current standard of care that provides symptom relief, prevention of the relentless decline in lung function is not altered. Therefore, disease modifying therapeutics for COPD would have a huge potential benefit for health care systems and be considered high commercial value.
When you have identified your patient population you will need to decide if it is commercially viable in terms of numbers and the need for treatments. If the impact of the disease is mild, your therapeutic is unlikely to command a high price. If it's a small patient population will it qualify for orphan designation?
3. What is the probability of regulatory or technical success?
When developing small molecule or full length antibodies with a fairly traditional mechanism of action, the technical challenges of bringing these molecules to the clinic is well understood and characterized.
The move to new therapeutic modalities such as peptides, bispecific antibodies and nucleic acid based drugs creates technical challenges that are not fully understood.
Aspects such as the route of delivery, distribution and pharmacokinetics need to be characterized and optimized to give them drug like characteristics.
In one example, early nucleic acid based drug platforms such as antisense and RNAi offered the potential to block many targets that were considered un-drug able at the time and this increased the perceived commercial value of these therapeutics and the companies that were developing them. However, oligonucleotide based drugs need to pass through the cell membrane to act and this process was not very efficient in the absence of a carrier. These drugs did not distribute very well and tended to accumulate in the liver and kidney. Understanding these technical challenges and using them to guide indication selection helped to maximize the commercial value of these therapeutics.
Regulatory hurdles also need to be taken into consideration to get to the clinic and beyond. If your therapeutic has a novel mechanism of action you will need to demonstrate its safety prior to the start of clinical trials. The TeGenero trial of antii-CB28, for example, demonstrated when dealing with a novel mechanism of action there needs to be a complete understanding of translation between toxicology species and humans.
Other novel modalities will not have the weight of prior clinical experience necessitating the need for additional characterization. These are all risks that until mitigated effect the commercial value of programs.
Regulators will also want to understand how your project will improve the quality of life for patients. This could be simple considerations such as self-administration at home rather than having to visit the physician to have the therapeutic. Does your product reduce hospitalizations or ER visits, since these not only reduce costs but have a major impact on the quality of life for the patients?
4. What is the long-term plan for your drug discovery project?
There are many different objectives that could be the ultimate goal for your project such as, reaching a clinical mile stone that allows licencing or maybe you intend to take the project to the market.
It's important to remember there is often high uncertainty around securing investor relations so don't underestimate the financial implications of commercialization. Set aside some capital specifically and identify potential partners early on to allow you to develop a data package tailored to the indication and the values of the potential partner.
Many pharmaceutical companies have strategically defined therapeutic areas and oftentimes will not consider targets that do not have potential in these areas.
It's well worth investing the time to ensure your therapeutic has a solid rational and good data indicating its potential fit within the strategically defined therapeutic areas. Identify the companies that may be interested in your drug and spend some time researching their scientific values and how they make in licencing decisions.
You should tailor your presentations and literature to key partners and sell your ideas on the commercial potential. The initial look at your project may be a panel of scientists who triage opportunities for Senior Managers. These scientists see many proposals and often have a good understanding of why therapeutics have failed in the past. This experience may be applied to your projects, so identifying the weaknesses of your approach and addressing them with experimental data could be the key to get you through the triage.
Evaluate the portfolio of potential partners and think about how your therapeutic fits with their current portfolio. Does your therapeutic fill a gap in their current or future portfolio and pipeline of projects? You will need to build a data package to demonstrate the benefits and show how your therapeutic will be differentiated from current and future drugs.
These are the main commercial considerations you should be thinking about at the beginning of your therapeutic discovery project to help understand the ultimate goal for your project, its commercial viability and the impact on the overall cost of drug development. As projects progress many of these considerations may change and so having a clear strategy, backed by a strong scientific rational, is imperative to success.
This is just one of the areas to consider early on in the drug development phase. Learn more about some of the other considerations in our ‘How to plan and conquer the drug development process in the early stages’ e-book.