Transcript A Review of Virtual Drug Development Models: two decades

A Review of Virtual Drug
Development Models: two decades
of perspective
R. Stephen Porter, Pharm.D.
CEO, Chairman
VDDI Pharmaceuticals
7/6/2015
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PROPRIETARY
Agenda
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The Distributed Partnering Model for Drug Discovery
and Development; is this the salvation of Big Pharma’s
or the last gasp of a dying dinosaur
Virtual Drug Development: Examples of wildly
successful and failure to launch companies
Shared Risk Shared Reward models: Winners and
losers
Chorus: Autonomous Experiment Drug unit: Lilly’s
successful paradigm copy of Protodigm 1993
Hudson Bay fur trapper model vs. the Colonialist Model
in China
CRO’s as drug development partners and stake
holders; conflict of interest or motivated strategic move
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PROPRIETARY
Virtual Outsourcing models
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Fully Loaded full service
Fully Subordinated Models
Deep Channel/Level Collaboration
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Shared Risk Shared Reward
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Cost plus 10% overhead, end loaded and
milestone based
Discount cost plus equity for profit margin and
overhead
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PROPRIETARY
Designing the Virtual Enterprise
Bernhard R. Katzy1, Vincent Obozinski2
1University BW Munich, Werner-von-Heisenberg-Weg 39, 85577 Neubiberg, Germany,[email protected]
2European Commission, 200 rue de la loi, 1049 Bruxelles, Belgium,
[email protected]
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Virtual organizations are a solution for turbulent business environments
Agile behavior towards market opportunities is the end to which virtual
organizations are designed.
As smaller companies lack the power of large multinationals, they have to seize the
opportunity to substantially improve their competitiveness by creating,
leading and sharing win-win constellations with their partners.
Essential element is strong advanced management talent cross trained and
visionary
In the virtual enterprise, value is created, not added.
The virtual enterprise is a temporary co-operation to achieve objectives. “Voodoo
Lounge Tour “
Why was the Virtual Enterprise
Created?
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The virtual enterprise is designed to create value of a
business opportunity.
The value is the force that drives continuous
restructuring of the virtual enterprise.
How can the value be created?
 Value is created with the virtual enterprise, as
business processes are adapted to the requirements
of the short-term business opportunity.
Who are the potential partners?
 The potentially participating partners of the network
will in most cases be related parties; independent
companies, but also decentralized profit centers or
strategic business units of a global holding.
PROPRIETARY
Innovation
Open Innovation
• The best people in our
field work for us
• To profit from R&D, we
must discover, develop,
market and follow up on it
ourselves
• If we discover ourselves,
we will have a first-mover
advantage
Closed Innovation
• Not all smart people work
for us so we must identify
and tap into expertise
outside our company
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External R&D can create
significant value; internal
R&D is needed to claim
some portion of that value
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PROPRIETARY
Pros and Cons Vertical integration
Pros:
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Reduced risk of sharing information.
Improve supply chain coordination.
Provides more opportunities to differentiate by
means of increased control over inputs.
Higher profit margins.
Increased entry barriers to potential competitors.
Gains access to downstream distribution channels
that otherwise would be inaccessible.
Lead to expansions of core competencies.
Pros and Cons Vertical integration
Cons:
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Capacity balancing issues. For example, the
company needs to be sure that the pipeline is big
enough.
Potentially higher costs due to low efficiencies.
Developing new core competencies may
compromise existing competencies.
Increased bureaucratic costs.
Pros and Cons Virtual integration
Pros:
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Focused on core competencies.
Low investments in facilities. Risk sharing, if the
research fails.
Innovative, can have huge pipeline with less
resources.
Cost savings, need less employees and Facilities.
Calibrations drive innovation; can get access to
huge number of scientists.
High efficiency, can focus on promising
compounds
Pros and Cons Virtual integration
Cons:
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Risk of loosing IP rights when sharing
information. Companies can copy the
research.
Share the profit.
Difficult to manage, few people and many
projects.
Lower bureaucratic costs.
Quality of work, CRO qualities vary.
The Sea Change…
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World’s economic environment is messy
Obama’s administration in power and
moving priorities Reimbursement/payment
environment reprioritized
Regulatory: priorities/policies/regulations
Outsourcing/off-shoring, go virtual young
man
Capital markets’ permanent restructuring
the cost of capital broke the system
Business Models are permanently changed
Pilosaurses walk the land: a Darwinian
moment for Big Pharma
The Perfect Storm 1.
Biotech Funding
and VC
investment
diminishing
2. Facing a global
financial crises
3. Declining
productivity and
sales
4. Commoditization
and downward
price pressure
Perfect Storm or Perfect Wave
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Big Pharma: Cultural
Armageddon
It’s their way of surviving in R&D. You
hire/fire 120,000 people last year in R&D
- how do you replace that?
So you either just become a sales and
marketing organization, or you acquire
biotech development companies or you
in-source/out-source them in a virtual
way.
Big Pharma: Cultural
Armageddon
So traditionally what has happened is that big
pharma has bought the small guys and
destroyed the companies and their culture
aka Lilly and Hybritech in the 1980’s.
You take an entrepreneurial fast moving, fast
decision making culture and you put in
bureaucracy where it takes weeks to months
to make decisions, you can really kill the
spirit of the company.
Big Pharma: Cultural
Armageddon
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Hybritech went public in 1981 and, five
years later, pharmaceutical giant Eli Lilly and
Company paid $480 million for the company.
A former employee of Hybritech described
the culture clash that followed Eli Lilly's
buyout as 'Animal House meets The
Waltons.
Darwinian Evolutional Pressures on
Pharma
Lilly Chorus Experiment
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Independent division to get cpd’s to POC
faster
Pursuring only what ist needs to get to
POC and eschewing to begin pivotal trials
Versant Ventures early looks at Lilly
cpds., and way to use Chorus team to
test Portfolio cpds. from versant
Lilly Chorus Experiment
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Transforming Drug Development
with a Fully Outsourced Model:
Lessons Learned for Biopharmaceuticals
Terri A. Roberson, Director - Chorus Operations
Neil V Smith, Director - Chorus Regulatory
Joel Scherer, Managing Director – Chorus
Eli Lilly & Co., Inc.
Pharmaceutical Outsourcing May | June 2009
Lilly Chorus Experiment
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Chorus Performance Efficiencies are
Attributed to Its Business Model
The Chorus Outsource Strategy:
Selection of the Right Vendor, at the
Right Time, for the Right Project
Technology is Essential to Enabling the
Implementation of the Outsource Model
Lilly Chorus Experiment
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Maintain a minimal organizational infrastructure, staffed with
experienced drug developers and operations experts, to enable effective
decision making with a low fixed operating cost.
Outsource the bulk of actual work (e.g., clinical development, toxicology,
CM&C) to a global vendor network to decrease direct costs and cycle
times versus comparable work conducted internally.
Implement a flexible change control process and push decision making
down to the lowest appropriate level, removing the need for belabored
governance reviews and facilitating decisions in a few days rather than
weeks or months.
Conduct functional operations on a streamlined set of SOPs and
processes, as well as utilize TPPs’ processes, tools, and templates to
minimize imposed sponsor burdens to partners and improve quality of
work product.
Provide a flexible global technology platform to bring key information
together in a comprehensive, accessible format, to enable multiple
external parties to collaborate on a project in a virtual global
environment.
Lilly Chorus Experiment
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Chorus has been establishing itself as a wholly
independent unit that essentially servesan internal
outsourcing function for Lilly Research Labs: assets are
transferred to Chorus for proof of concept work, which
is done by an external network, and then returned to
LRL.
“Chorus’ efficiency derives from two principles - minimal
infrastructure and small experiments,” Chorus Chief
Operating Officer Neil Bodick
Saves 18 months and is 8-10 x more productive
Lilly Chorus Experiment
end game
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Flexion is a spin out from originators
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Michael Clayman
Versant got short end of the deal Lilly cpds’ dominated
the efforts
Lilly has put maximum number of cpds. Into Chorus
Bob Armstrong will clone more Chorus’s instead of
building bigger company. (Stay Virtual)
CHINA: THE
TRANSFORMATIVE PROCESS
HAS BEGUN
Many Pharmaceutical Companies and CROs Have
Announced New R&D Investments and Risk
Sharing Partnerships in Asia
May06
China
India
AstraZeneca
$100 M
investment,
R&D Center
Amgen sets up
clinical
development
center in
Mumbai
Nov06
Novartis $100 M
investment,
R&D Center in
shanghai, 400
FTEs
Feb07
Roche plans to
expand R&D
center in
Shanghai
Merck / Advinus Eli Lilly /
risk sharing deal Nicholas Piramal
on metabolic
$100M risk
disease target
sharing
partnership
Note:
Singapore
Dec06 Jan07
Captive
R&D center
Mar07
GSK plans to
establish a fully
integrated R&D
center
AstraZeneca
sets up process
R&D lab in
Bangalore
AstraZeneca
China R&D
center will be
located in
Shanghai
GSK / Ranbaxy
$100 M risk
sharing
partnership
R&D
partnership
Apr07
Jun07
GSK sets up a R&D
center (CEDD) in
neurodegenerative
disease in Shanghai
Lilly $100M
investment
in 5 years
BMS/ Biocon /
Accenture
$300M
partnership
GSK / Tata
Consultancy
Service
partnership
Lilly expands
R&D center in
Singapore,
$150M
investment
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AstraZeneca R&D Investments in China
Development /
R&D
“In China For China”
May06
$100 M
investment in
3 years, focus
on oncology,
build
China R&D
Center
2004 &
Earlier
2005
Research
collaboration with
Shanghai Jiaotong
University on
neuropsychiatric
genetics
Apr01
Research
Dec06
Licenses
cubicin from
Cubist for
China and
other Asian
countries for
$10.25M
“In China For Global”
Mar07
Jun07
Innovation
Centre China
(ICC) will be
located in
Shanghai’s
Zhangjiang
hi-tech Park
Opens API
sourcing center,
target $100M
API sourced
from China by
2010, eventually
90% of API from
China
2006
Establishes clinical
pharmacology unit
at Peking University
3rd Hospital for
infections, diabetes,
and cardiovascular
diseases.
2007
$14M
outsourcing
partnership
with Wuxi
Pharmatech
in chemistry
Sep06
AstraZeneca
Sep07
2008
Innovation Centre
China (ICC)
• 70 plus staff grown to over
100
• Focus on translational
research (e.g. biomarker
study) in oncology
• Headed by Dr. Xiaolin
Zhang, Vice President and
head of ICC
2009
2010 &
Beyond
“The development opportunity is enormous in China.”
“China plays an increasingly important role as an emerging
market in AstraZeneca's global strategy.”
“We've got a longer-term view of what China can be that we
started investing in a few years ago, so India's not there yet”
- AstraZeneca CEO Dan Brennan
- Sep, 2007
Captive
R&D center
R&D
partnership
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GSK R&D Investments in China
Mar07
Development /
R&D
Jul07
GSK China CEDD
Sets up a R&D
center (CEDD) in
neurodegenerative
disease in Shanghai,
appoints Dr. Jingwu
Zang as head
2004 &
Earlier
2005
Established research
collaboration with
Shanghai Institute of
Materia Medica (SIMM)
in the field of
combinatorial chemistry
Research
Since 1997
2006
2007
Announces 2007
investment $40M
and long term
growth target of
1,000 scientists in
10 years
2008
• $40M in 2007
• 50 to 100 staff in 2007
• Eventually grow to 1,000 scientists
in 10 years
• Focus on neuro-degenerative
disease
• Headed by Dr. Jingwu Zang, SVP,
who reports directly to GSK global
head of R&D, Dr. Moncef Slaoui
2009
2010 &
Beyond
“We are entering an exciting period of expansion for our R&D organization as it builds on the strength of the
superb science now being conducted in China. We intend to be part of a future in which the phrase ‘discovered in
China’ is heard as often as ‘made in China’ is heard today.
“Our initiative in China reflects our commitment to ally GSK with talented researchers wherever we can find them
and to further encourage within R&D the contest of ideas needed to create new medicines. It shows as well our
commitment to the neurosciences, where many of the greatest challenges in drug discovery and development are
to be found. Indeed, as we create a centre in China to focus on neurodegenerative disorders, we will re-focus our
largely UK-based neurology drug-discovery efforts on finding new therapies for pain, epilepsy, and brain injury.”
- GSK, Chairman, R&D, Moncef Slaoui
- Mar 24, 2007
Captive
R&D center
R&D
partnership
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Eli Lilly R&D Investments in
China
Lilly – ChemExplorer
Partnership
Jun07
Development /
R&D
2004 &
Earlier
Established
partnership
with Shanghai
ChemExplorer,
focus on
chemistry
2005
Plans to invest
$100M in R&D
in 5 years
through
Chinese local
partners such
as
ChemExplorer
2006
2007
Established partnership with
Hutchison China MediTech
(Hutchison Medipharma) on
cancer and inflammatory
diseases drug candidates, with
potential milestone payments of
$20-29M per candidate
Jun02
Research
Aug07
• Started in 2002
• 250 plus staff
• Managed by ChemExplorer,
dedicated to Lilly
• Focus on chemistry, with
additional capabilities in
biology and process R&D
being built
Invests $10M
in BioVeda,
China biotech
VC firm,
through Lilly
Asian
Ventures
2008
2009
2010 &
Beyond
“We'll expand our activities in those areas where we
can continue to draw on the country's talent-rich
base of researchers and scientists,"
"Lilly has already invested nearly $200 million in the
country. We are committed to China”
- Lilly, President & CEO, John
Leichleiter
- Jun 7, 2007
Captive
R&D center
R&D
partnership
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Pfizer R&D Investments in China
(Including both publicly disclosed and unannounced
activities)
Development /
R&D
Nov04
Oct05
Dev Ops
pilot
started in
Shanghai
Pfizer China
R&D Center
was
established,
$25M
investment
in 5 years
2004 &
Earlier
2005
Research
Pfizer China
R&D Center
new facility
opened in
Zhangjiang
hi-tech park
2006
Established
Established
outsourcing
contracts with
WuXi
PharmaTech:
-Template
compound (Dec
01)
- FTE contract
(Oct 02)
Jul06
additional
outsourcing
contracts with
other Chinese
CROs such as
Medicilon to
explore vendor
base
“China is an important market for Pfizer
and it offers a large number of highly
skilled and talented scientists. The
Research and Development Center
we’re setting up in Shanghai is not only
an investment to expand Pfizer’s R&D
capability, it is also an investment in
China’s knowledge based industry and
infrastructure.
- Dr. Joe Feczko, CMO, Pfizer
- Oct 31, 2005
2007
Asia Research
Office was
established,
focusing on
implementing
CGA pilots and
developing
R&D
partnerships
2005
Aug06
Established
collaboration
with Tsinghua
University
Established
collaboration
with Peking
University,
Chinese
Academy of
Sciences
Dec06
2008
Established
partnerships
with five CROs
in Shanghai to
conduct R&D
pilot programs
Jan – Apr 07
Pfizer China R&D Center
(CRDC)
• $25M in 5 years (starting in 2005)
• 170 staff as of Sep 2007
• Focus on clinical data
management, programming,
report publishing, statistics, and
safety and risk management, etc.
• Headed by Dr. Lingshi Tan,
executive director, reporting to
global head of Dev Ops
2009
Captive
R&D center
Publicly
Announced
2010 &
Beyond
R&D
partnership
Not Publicly
Announced
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Major MN Pharmaceutical Investments in
China
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AstraZeneca
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BMS
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GSK
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Johnson & Johnson
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Eli Lilly Virtual
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Merck Virtual
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Novartis
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Pfizer Virtual
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Roche
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Wyeth
Virtual Vs Vertical
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Natural order for doing business in China
is virtual
Vertical is more a colonialist approach
from MNC’s
Hudson's Bay Company
•HBC is the oldest commercial corporation in North
America and one of the oldest in the world.
The company was incorporated by British royal
charter in 1670 as The Governor and Company of
Adventurers of England trading into Hudson's
Bay.
•Once to largest private land owner in the world
•A network of French and Indian first nation
collaborations
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PROPRIETARY
Virtual Outsourcing models
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Fully Loaded full service
Fully Subordinated Models
Deep Channel/Level Collaboration

Shared Risk Shared Reward
•
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Cost plus 10% overhead, end loaded and
milestone based
Discount cost plus equity for profit margin and
overhead
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PROPRIETARY
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Porter’s 8 point Rx for Darwinian
Survival
Patience –
 If you are patient in one moment of anger,
you will escape a hundred days of sorrow.
Persistent Pick the flower when it is ready to be
picked. and The journey is the reward
Positive
 Set yourself as the standard.
Proactive
 If you don't go into the cave of the tiger,
how are you going to get its cub?
Porter’s 8 point Rx for Darwinian Survival
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People
 A single conversation across a table with a
wise man is worth a month's study of
books.
Products
 There are many paths to the top of the
mountain, but the view is always the
same.
Processes
 The arrogant army will lose the battle for
sure.
Payments
 If you have money you can make the
ghosts and devils turn your grind stone.
Company (founded)
CEO
Acorda
Therapeutics (1995)
URL (New Corporate Name)
Ron Cohen
http://www.acorda.com/
Spinal cord
injury (SCI), multiple sclerosis
(MS) and related conditions of the
nervous system
Celladon
Krisztina M. Zsebo
http://www.celladon.net/
Gene and molecular therapies for
heart failure
CollabRx
Jay M. Tenenbaum
http://collabrx.com/
Molecular Disease Model in CA
therapeutics
Conatus Pharmaceuticals, Inc.
(2005)
Stephen J. Mento
http://www.conatuspharm
a.com/
Liver Disease: hepatitis C (HCV)
CardioPolymers, Inc.
(2003)
Rayman W. Cohen
http://www.symphonyme
d.com/index.html
Corthera, Inc. (2003)
Stan Abel
Cary Pharmaceuticals (1994)
Doug Cary
http://investing.businessw
eek.com/research/stocks/
private/snapshot.asp?privc
apId=9118933
http://www.carypharma.c
om/
Medical Device for post-op
Conduction disturbances and
CHF
Acute Heart Failure
Chorus
(2001)
Chorus Pharma (2002)
Hypertension
Joel Scherer
http://www.choruspharm
a.com/index.html
Various
Joel Scherer
http://www.choruspharm
a.com/about-us.html
Neuroscience, Endocrine,
Oncology, Women’s Health
Bone/Inflammation,
Cardiovascular
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Therapeutic area
PROPRIETARY
Company (founded)
CEO
URL (New Corporate Name)
Concordia Pharmaceuticals
(2003)
Mark Watson
http://www.concordiaphar Targeted Cancer
ma.com/
therapeutics
EuMederis Pharmaceuticals,
Inc. (2009)1
John Nestor
http://www.eumederis.co
m/about_us
Faron Pharmaceuticals, Ltd.
(2003)
Markku Jalkanen
Flexion Therapeutics
Michael Clayman
Galera
Randy Weiss
Jasco Pharmaceuticals
Pain, osteoporosis, and
metabolic disorders
http://www.faronpharmac metabolic syndrome
euticals.com/
related vasculopathies,
inflammatory diseases, and
cancer metastasis
http://www.flexiontherape Tinnitus, Ulcerative Colitis,
utics.com/index.php
and Autoimmune disease
http://www.galeratx.com/ Radiation protection and
CA therapeutics
http://www.jascopharma.c Oncology
om/index.html
Innovative NeuroTechnologies,
Inc. (2005)
Shawn Mojtahedian
Limerick BioPharma (2004)
Wendye Robbins
Metabolic Solutions
Development, Inc.
Robert A. Beardsley
http://www.innovneurotec Alzheimer’s and
h.com/index.html
Neurodegenerative
disorders
http://www.limerickbio.co Immunosuppression and
m/
disorders of lipid
accumulation
http://www.msdrx.com/
Metabolic Disease
mitochondrial targets
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Therapeutic area
PROPRIETARY
Company (founded)
CEO
URL (New Corporate Name)
Therapeutic area
(Fulcrum Pharma
Developments)
Product development to a
CRO
Protodigm (1996)
John Court
ReGen Therapeutics
(1998)
Percy Lomax
Sirtris Pharmaceuticals
(2004)
George P. Vlasuk
Speedel
Andrin Oswald
http://www.speedel.com/
Hypertension and
metabolic Disorders
Stromedix (2005)
Michael Gilman
http://www.stromedix.co
m/index.html
Syndax Pharmaceuticals,
Inc.
(2005)
Joanna Horobin
http://www.syndax.com/
Interstitial fibrosis and
Tubular atrophy in kidney
transplant recipients
Oncology
Tragara Pharmaceuticals
(2007)
Thomas M. Estok
http://www.tragarapharm
a.com/index.htm
Oncology
Vernalis (2003)
Ian Garland
http://www.vernalis.com/
Oncology and CNS
http://www.regentherapeu Neutriceuticals for
tics.com/regenplc/home/ Alzheimer’s and other
Neurodegenerative
disorders
http://www.sirtrispharma. Metabolic Disease, aging,
com/pipeline.html
Cancer
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PROPRIETARY
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PROPRIETARY
R. Stephen Porter, Pharm.D., FCP, MRCP
VDDI Pharmaceuticals
Chairman, President and CEO
115 Penn Warren Drive
Suite 300-389
Brentwood, TN 37027
(615)445-5761 (cell)
+86.15021242314 (Cell China)
http://www.virtualdrugdevelopment.com