Outsourcing Clinical Trial
During a Merger
Dr. Leire,
CEO DanDrit Biotech A/S
Outsourcing Clinical Trials Conference. May 2014.
“"When it comes to mergers, hope
triumphs over experience."
Irwin Stelzer (1932–), US economist
DanDrit Biotech: Developing the World’s First Colorectal Cancer Vaccine
Second generation dendritic cell cancer vaccine
Promising Phase II data colorectal and lung
cancers
Ongoing multicenter double-blind trial in
advanced colorectal cancer patients
Merger of Biotech and Pharma
Do not address issues with mega merger between Pharmas
Even if there are different points of views
Positive returns to shareholders
McKinsey & Co: February 2014 by Myoung Cha and Theresa Lorriman
Fierce Pharma: Thumbs up or down on megamergers? Depends on your point of view
Disruption Sap the life out of research
Focus and energy go into logistical decisions and away from science
Layoff worries
"Things that don't happen, drugs that don't get discovered--they make no sound at all," *
* Derek Lowe, In the pipeline
Industry Ecology
BiotechCROsBig
Pharma
Authorities
From
“Research & Dev.”to
“Search & Dev.”
Concentrating
Increasing role
Increasing regulatory
hurdles
2013 was a good year for M&A 169 deals
valued at $76 billion
compared to 2012
15% jump in number of deals
33% increase in dollars spent
Big
Pharma
*Reference: EvaluatePharma
Big
Pharma
Top 10 Deals 2013 1 Amgen / Onyx
2 Valeant / Bausch Lomb
3 Perrigo / Elan
4 Actavis / Warner Chilcott
5 AstraZeneca / BM's share of diabetes partnership
6 Shire / ViroPharma
7 Bayer / Algeta
8 Salix / Santarus
9 Mylan / Agila Specialties
10 AstraZeneca / Pearl Therapeutics
Big
Pharma
Outsourcing innovation (buying
individual licenses or entering into
partnerships)
41%
Buying whole companies is the best
approach, especially in the biotech area
39%
In-house R&D is the most efficient
source of future innovations
20%
Reference: Pharmalot, And the weather report calls for a cloudy future, posted July 7, 2008
Rebuilding Pharma Pipeline
Big
Pharma
Reference: Thomson Pharma; E. Saltzman, Defined Health 2011
Pharma Partnerships
Big
Pharma
Valuation
$34 $99$162
$249
$440
$822
$1050 MarketValuationof a $350M(Peak Sales)ProductDevelopment
Risk
91%
77%
67%
56%32%
10%0%
Pro
ba
bil
ity o
f
Develo
pm
en
t F
ail
ure
Late Pre-Clinical Phase I Phase IIA Phase IIB Phase III NDA Filing Market
Risk / Value in Development
5/28/201411
Big
Pharma
“A proliferating cancer within the
cancer trial process” Well-meaning bureaucratic functionaries have introduced
countless new regulations
Most often without field testing
Or consultation with clinical investigators
FDA final guidance on Risk Based Monitoring (RBM)
Authorities
“A proliferating cancer within the
cancer trial process” Burdensome auditing and documentation requirements from
Authorities mean that it is usually easier to outsource data
management tasks to CROs
… which themselves introduce new hurdles for investigators
CROs
Increasing Costs Cost per patient on a phase IIIA oncology trial
From an average of $3,000 to $5,000 in the early 1990s
To a range of $75,000 to $125,000 in 2013
In just 3 years: from 2008 to 2011
Per-patient clinical trial costs increased by 70%
Reference: Cutting Edge Information. Clinical operations: Benchmarking per-patient trial costs,
staffing and adaptive design.
Authorities
Azactidine 1983 Azactidine 2012
Increasing Complexity
The entire protocol had
fewer than 10 pages
An IRB approved the
protocol within 1 week of
filing
Patients were enrolled and
treated the following week
The S1117 Intergroup study for myelodysplastic syndromes*
+2 years of preactivation
involved US and Canadian national cancer institutes, various cooperative groups, the National Cancer Institute's Cancer Therapy Evaluation Program
244 study locations: more study locations than the planned accrual of 240 patients
* ClinicalTrials.gov identifier: NCT01522976
Authorities
Did this growth in cost and
complexity has convincingly made
the clinical trial process safer for
patients?
This growth in cost and complexity
made clinical trial process more
dangerous for biotech
Longer trial:
More exposure to a change in major partner CRO
More chance to have a merger occurring while conducting a
clinical trial
Biotech
Clinical Trials: 2/3 involve CROs
| CROs
Global Nature of Clinical TrialsDatabases of experienced
investigators worldwide
Coordination
Knowledge of the SOC and
regulatory affairs in the country
the trials are being conducted
CROs
Less Early Stage Developments Big Pharma concentrates on late-stage candidates
Emerging biotech narrows their pipeline under pressure of
investors
CROs
Constantly Shifting Panorama
CRO Mergers Consolidation rather than megamergers
CROs
Pharma Mega-merger Rumors Do
Not Benefit CROs* 3 to 7% drop in CRO’s share prices
Icon - 7.4%
Parexel - 6.9%
Quintile - 4%
Covance - 4%
* Jefferies, April 2014
CROs
CROs and Biotechs:
Can We Get the Attention We Need?
Emergence of Virtual Biotech companies
Biotech: we are not Pharma
How to ensure our trial is valued by the CRO
CROs
Strategic Partnerships Between large pharma companies and CROs
Biotech lack the volume of business to make such partnerships worthwhile
Maintain arm’s-length relationships with CROs
CROs
Pharma Biotech
Different Type of Client!
Global
Expertise in place
Large in-house staff
Large pipeline
Slow decision process
Standard internal procedures
Rigidities
Less likely to accept third party role
Quality-driven
National
Lack expertise
Limited in-house staff
Focused pipeline
Fast decision process
Lack internal procedures
More flexible
More open to objective third party
Cost-driven
Biotech
Different Types of Service
One-stop-shop
All-purpose partners or niche specialists
Complex TA such as oncology
Biotech
Time versus RiskBiotechs’ goal: quickly capitalize drug candidates
Traditional model does not align incentives
i.e. the longer a trial takes to complete, the more a CRO is
paid
Your trial will be delayed
Seemingly smoothly running studies can have
hidden quality issues found long after end of trial
Caution: CROs will continue to consolidate
Biotech
Service Agreement with CRODetailed
For some CROs, much of the profit comes from
change orders
Timing of payments
Contract directly with vendors, investigators and
sites
Include remedies
Protect your IP rights
DEFINE A WAY OUT
Biotech
Increased Productivity
BiotechCROsBig
Pharma
Authorities
From
“Research & Dev.”to
“Search & Dev.”
Concentrating
Increasing role
Increasing regulatory and
reimbursement hurdles
