ISPE GxP Expo “The changing Biotechnology Model, From Lab Bench To Commercial Product Launch; An Evolving Paradigm” Topics & Bio’s Surviving in Tight Economic Times Del Stagg - Regulatory Affairs & Quality Consultant Capital Starvation – How To Survive The “Lean” Years Andrew Norris, BCN Bio, President Partnering with Big Pharma and Big BioTech EJ Brandreth, Althea Technologies, Vice President, Quality A Case Study - Amgen's Application Portfolio Steve Thompson, Amgen, Director, Information Systems Surviving in Tight Economic Times Del Stagg, PhD Consultant in Regulatory and Quality Surviving in Tight Economic Times 1. Understand Your Goals And Timelines 2. Understand The Costs For Reaching Goals 3. Understand The Process Surviving in Tight Economic Times 1. Understand Your Goals And Timelines • Innovative product – vs. – The next generation of an existing product • Experienced management team – vs. – Scientists who generated the product • Intermediate milestone goals within the development plan – vs. – Plan for commercialization Surviving in Tight Economic Times • Innovative product – vs. – The next generation of an existing product • Innovative products often require new methods to demonstrate clinical effectiveness and need careful evaluation of new safety concerns • Next generation products already have defined efficacy and safety endpoints and this usually makes development easier • Product Quality is usually better understood for Next Generation Products vs. New Products Surviving in Tight Economic Times • Experienced management team – vs. – Scientists who generated the product • Academic Scientists are brilliant, but often have difficulty understanding the time, costs or regulatory environment for developing a product from the laboratory to clinical to commercialization Surviving in Tight Economic Times • Intermediate milestone goals within the development plan – vs. – Plan for commercialization • All Development Programs have intermediate milestones that have to be reached prior to moving the program forward. • These milestones need to be identified early and recognized as significant achievements to provide the development team a measure for progress and a sense of accomplishment Surviving in Tight Economic Times 2. Understand The Costs For Reaching Goals • Time • Resources • Regulatory Environment Surviving in Tight Economic Times • Understand the Time • Product development • 12-15 year average from lab to commercialization • 5 – 7 years in the best of circumstances • Product characteristics and manufacturing • Analytical Methods, Formulation Development and Scale-up Manufacturing • Preclinical safety prior to human clinical studies • Preclinical Tests required prior to going to Humans • Human clinical studies Surviving in Tight Economic Times • Understand the Resources needed • The development cost is $ 500 – 2,000 million • The costs for a specific product is • Product Development 2,000,000 • Preclinical Safety • Clinical Development 500,000,000 • Phase 1 • Phase 2 • Phase 3 $ 385,000,000 $ 0.5 - $ 2.5 - 3,000,000 $ 300 - $ 500,000 $ 10,000,000 $ 300,000,000 • The commercial manufacturing plant $ 30,000,000 Surviving in Tight Economic Times • Understand the Regulatory Environment • Regulatory Agencies are “Risk Adverse” • FDA “Review Team” of Regulatory Scientists • Review the entire Application within 10 Months • Decide on whether the data supports approval to use the product and the risks associated with its use. • Because of continued “Off Label” use of products the FDA has to consider these risks in labeling. Surviving in Tight Economic Times 3. Understand The Process • Quality of product and development plan • • • • Has the Management Team developed products before Test Results are only as good as the product used to generate the data How easy is it to make the product and scale up from the lab bench to supplies for GLP and Clinical studies Safety to patients and employees • Safety of the patient always comes first • Always weight the Benefit/Risk Ratio (always +) • 1st Dose Risk should not be more than taking aspirin Surviving in Tight Economic Times • Improving Your Odds For Success • Frankly Assess Your Goals and Resources • Find and Hire Senior Staff Members who have Successful Product Development Experience or • Find and Contract with Experienced Professionals who can fill Gaps in your Organizations Staffing • Set Milestones to measure progress of the development program and • Celebrate when Milestones are reached to maintain the drive to reach goal Surviving Lean Times Venture Capital Investment Historical Trend Historical Trend First Quarter in 2009 • Venture capital investment plummets in Q1 2009 to 12 year low • In the Life Sciences sector (Biotechnology and Medical Devices): • 40 percent decline in terms of dollars • 31 percent drop in deals • $989 million going into 133 rounds • Investment fell in Q1 2009 • Biotechnology fell 46 percent to $577 million • Medical Device fell 27 percent to $412 million. Biotech IPO • Harsh Economy Thwarts Biotech IPO • Last biotech IPO: November 2007 • National Venture Capital Association poll: • 96% of venture capitalists said it will be harder for new companies to get funded in 2009 • Many VCs anticipate a slowdown in early stage investment, due to the closed exit market and a lack of money at VC firms to invest in new projects. That’s What’s So! What’s Ahead? History does not repeat itself but it rhymes Changing times/vs. lean times 1973 Gas Crisis 1980 Savings & Loan 2001 Dot Com 2007 Housing 2009 Changing times/vs. lean times 1973 Gas Crisis 1980 Savings & Loan 2001 Dot Com 2007 Housing 2009 Changing times/vs. lean times Some changes that we predict may come out of this economic shift that may shape the future of the industry includes: Businesses that are an asset (short term) De centralization of business Globalization of business Asset based businesses Liability Asset (Expenses greater Than Income) (Income greater Than Expenses ) Most early stage Biotechnology Companies Asset based businesses An Economic comparable. (Leveraged vs. not so leveraged businesses) Mortgage backed securities. Decentralization Research & Development Royalty/ Income Innovations Products & Services Intellectual Property Licensing Marketing Decentralization Research & Development Royalty/ Income Innovations Products & Services Intellectual Property Licensing Marketing Decentralization/ Virtualization Research & Development Chemistry MOA Pre Clinical Testing PK ADME Tox Globalization Globalization Globalization Globalization • In 10 years it is predicted that the number one English speaking country in the world will be China. • 100% of college graduates in India speak English. • More than 70% of US 4 year olds have used a computer. • More than 50% of US 21 year olds have created content on the web. • 1 out of 8 couples married in the US met on line. Summary: Strategies for Survival • • • • Asset Model (Services etc.) Decentralization Restructuring Government Funds for Innovation Outsourcing • More than a trend, means for survival • CRO (Contract Research Organization's ) • Effective method for limiting R&D costs • R&D services • Drug formulation and devlopment • CMO (Contract Manufacturing Organizations) • Advantages over in-house manufacturing • Existing infrastructure in place (for scale up, validation, clinical trials) • Lower cost, greater flexibility Outsourcing Growth • Growth estimated at 16% per annum over the next five years, and is driven by: • Changing demands of clinical trial outcomes and consequential changes in practice • Demand for more specialist, niche, service providers • Greater demand for global inclusion • Higher regulatory and safety expectations Outsourcing • Cost and other pressures on large pharmaceutical and biotech companies together with the emergence of reputable and financially stable service providers has made outsourcing more acceptable. Outsourcing • Factors in deciding where to outsource: • Market access • High availability of researchers • Access to specialized R&D knowledge and results • Macroeconomic and political stability Outsourcing • Growth in outsourcing over the last 10 years. • Current trends (what types are most common). • What % is in the country and what % outside (in the most general sense). • What are the advantages. • Overseas outsourcing. Partnering with Big Pharma E.J. Brandreth Vice President, Quality and Regulatory Affairs (Althea Technologies) Partnering with Big Pharma 1. 2. 3. 4. 5. Overview Strengths Weaknesses Opportunities Threats Partnering with Big Pharma 1. Overview • Current economic conditions are ideal for partnering activities • Lack of available venture capital • Need for larger pipelines while reducing R&D expenses Partnering with Big Pharma 2. Strengths- Pharma provides • Depth of resources • • • • • Technical (Process, Analytical Development) Marketing Distribution Regulatory Vendor Leverage Partnering with Big Pharma • Strengths- Biotech provides • Clinically Developed Product • Innovation • Technical Specialists Partnering with Big Pharma 3. Weaknesses – Big Pharma • Big Pharma procedures are entrenched, long review cycles • Culture clashes • Lack flexibility Partnering with Big Pharma • Weaknesses -Small Biotechs • Ill-defined processes • Risky raw material controls • Islands of critical knowledge-one or two key scientists Partnering with Big Pharma 4. Opportunities – Big Pharma • • • Rapidly Increase pipeline Rapidly Increase technology platform Rapidly gain earnings Partnering with Big Pharma • Opportunities – Small Biotech • Stay in business • Increase pipeline-continue to innovate • Gain free assistance/expertise with challenging issues • Raw materials, regulatory, analytical, process, facilities Partnering with Big Pharma 5. Threats- Big Pharma • Hidden issues surface after deal • • • Need thorough Due Diligence Competitors and Bidding War If partnering with a small biotech with an approved drug, look into 3PL sales; a strong Q1 could be due to sales for entire year Partnering with Big Pharma • Threats- Small biotech • Small Bios should be aware of the preferred options of bigger companies • Find a financially depleted company, and • Buy the IP for pennies • Buy the company for pennies • Partner, but eventually take over the company • Partner for the long run Partnering with Big Pharma • Threats- Small biotech • Risk Management- Will the partner pay you $20M for a promising Phase II drug, or wait and pay you $100M for a confirmed Phase III drug? • Be aware that big Pharma can likely manufacture the drug for less cost, and will want to do so Partnering with Big Pharma Example Tarceva Deal Activity Genentech Licensure OSI Shared 100% No Marketing, Launch. 100% Promotion/Sales <75% US, No >25% US Yes 100% No 100% ROW Manufacture/ Supply US Manufacture ROW Ph IV Development 100% No Yes Partnering with Big Pharma Conclusion • Many benefits for both parties • Be aware of the risks/benefits and related intentions on both sides of the table • Negotiate a contract which assures longterm survival of the Small Biotech while boosting Big Pharma’s earnings Application Portfolio Steve Thompson Amgen Key discussion points (Agenda) • Expectations need to be set, and myths need to be clarified • Application Portfolio Management requires a framework and sustainable process that delivers the ability to consistently assess, measure, and report application value • Looking at applications from different perspectives identifies retirement candidates and critical applications that don’t/do deliver Business Value • Total Cost of Ownership (TCO) can be leveraged to rationalize Business / Data Value Information Systems owns very little data • Myths • Can’t delete / destroy data • Have to keep the application running • Archival patterns provides options to maintain records • The record retention schedule must be adhered to Application Portfolio Program Primary purpose is to establish an overall framework and sustainable process that will: • maximize IS value, • minimize costs, and • ensure application alignment with business and compliance drivers. Application Portfolio Management includes a framework, key inputs, & sustainable process Security & Compliance Policies & Standards Assessments Architecture Technology Roadmaps PROCESS • Asset Inventory Application Lifecycle • Asset Classification • Asset Appraisal • Portfolio Rationalization • Portfolio Management & Governance Client Facing IS groups IS Goals Business Process Maps Application Roadmaps 5 criteria used to score and profile each application 1. Cost 2. Business Value 3. Data 4. Technology 5. Risk Total Cost of Ownership (TCO) includes infrastructure, software, licensing, and resource costs Aligned with business goals and provides a good Return On Investment Data has integrity, is compliant (Record Retention Schedule), secure, and complete On-target with Standards and charting to technology roadmap Risk is acceptable based upon all areas of compliance including nonregulated areas and adherence to Amgen/IS policy and standards The IS Quality System is managed as a product and sets the foundation for compliance and best practices Assessing applications from different perspectives identifies retirement candidates • Low Hanging Fruit are systems that can be retired immediately, and the decision is basically unanimous between IS and business • Rapid retirement are systems that can be retired but may take a few months or more duration to complete • Larger cost savings may require more time to assess & develop a mutually agreed upon strategic solution. For example: • Tracking systems • Laboratory automation • Document management • • Right sizing storage can show big saving potential Infrastructure consolidation results in less components and lower costs • Implementing a sustainable process can keep a portfolio under control There are several ways to assess an application • • • • • • Number of users Performance Total Cost of Ownership Cost to remediate to comply Application Clusters (redundancy) Environments (DEV / TEST / PROD) Total Cost of Ownership (TCO) is used to quantify and prioritize investment • • • Annual Support Costs (people to support & maintain the system) Server costs distributed over the life of the hardware Software depreciation costs (initial investment) • • • • Includes hardware, database licensing, support, and management services) You must include the overhead for development, test, and production environments Development, Test, and Production environments will multiply costs Annual Storage Costs can be significant when “requested” storage costs are incurred versus “actual used” storage costs Questions?? ISPE GxP Expo “A Facility Perspective on The Current Economic Situation: How Facilities are Coping – A Panel Discussion” Panelists: Dan Borton – Sr. Manager for Global Strategic Sourcing, Amgen Donna Tseng, Manager Process Engineering, Baxter HealthCare Teresa Berry, Director, Facilities, Avid Bioservices, James Page, Director Corporate Facilities, Amylin Pharmaceuticals, Key Topics: 1. What are some of the issues, challenges, and opportunities facing facilities in the next 3-5 years? 2. What or who are the change drivers within each prospective industry/area? 3. What is being done regarding these change drivers? Questions?