The 25th edition of the BIO convention was bigger and more diverse than ever. This year over 18,000 participants from 67 countries descended on Boston. With the bustle of booth activity, serendipitous floor conversations and a record breaking number of partnering meetings, BIO reminds the world that it is a micro representation of the industry as a whole. Year on year the conference grows bigger and is greeted with increased enthusiasm, and we were glad to once again be part of BIO for 2018, witnessing the latest conversations that are shaping the industry.
There has been a vast amount of progress this year in the biotech industry. Between the advancement of IO, the approval of the first cell therapies and the obviously present capital being demonstrated by the high value mergers and acquisitions, 2018 has already outpaced 2017 in terms of biotech IPO value. Although there is a fear that we are on the edge of a funding precipice there is also hope that the IPO trend will continue to grow as more markets open their doors to companies with no commercialised assets.
Despite the successes, a recent MIT report by Chi Heem, Wong Kien, Wei Siah and Andrew W Lo highlighted that most of the industry is still acutely aware that less than 1 in 5 drug candidates make it from Phase 1 to market. The industry is navigating the hardest challenges; developing treatments that haven’t been defined, with science that hasn’t been tested to treat diseases that are only beginning to be understood.
We at Cello Health wanted to gain a first-hand understanding on the key challenges facing BioPharma, from a variety of perspectives within the industry. Throughout BIO 2018 we had conversations with 100’s of individuals from all areas of our industry, ranging from thought leaders, investors and Big Pharma executives to academics and R&D scientists. We decided it was worth sharing this feedback with the wider community due to the common nature of many of the comments - focusing on five key challenges that BIO 2018 attendees felt most pressing to the industry. In general, it was recognised that we have come a long way as an industry in recent years but there were significant challenges present in the road ahead.
Regulations have evolved, but require further reform to keep up with new drug developments
"Technology is moving fast. Regulation is slow. How do we streamline without compromising on quality?” – Managing Director, Venture Capitalist
It was a common sentiment among BIO delegates that over the past decade regulatory authorities have come a long way in reducing the barriers to market entry. Now, especially in the US and Europe, we have well defined regulatory pathways for products that previously had to be assessed on an individual basis – such as biosimilars, cell therapies and orphan designated drugs. At present the FDA is making more approvals than ever; and arguably with relaxed standard, some oncology products are now being approved without a single randomized trial. Taking these factors in to account it was perhaps surprising that we found there was a growing opinion at BIO that regulatory authorities are not moving fast enough. With novel treatments becoming ever more complex and expensive to develop, there is concern that regulatory authorities are not doing enough to accommodate new innovations in drug development. There appears to be a clear consensus that technology is moving faster than regulations and this is likely to have a direct effect on patients who could benefit from these new technologies. Whilst there is a clear desire arising from BIO for regulations to adapt quickly it is important to get the correct balance ensuring that high standards and patient safety are not compromised.
Similarly, much has been done recently to address the vast differences in regulatory requirements that are needed for differing global authorities. As emerging markets become more influential within the industry there is an increasing desire to enter these markets, and enter them quickly. Many of these countries have acknowledged the need to redesign their regulatory requirements and in general bring them more closely aligned to the FDA. This can clearly be seen in Latin America and Asia where in the last 5 years both the Pan American Network for Drug Regulatory Harmonization (PANDRH) and the ASEAN Pharmaceutical Product Working Group (PPWG), have highlighted the need for clearer and more consistent harmonization. Yet whilst again it is clear there may be good intentions from regulatory authorities, there was still a big concern arising from BIO delegates that, especially in developing countries, the confusing regulations are still too difficult to navigate and far from aligned with FDA regulations.
The increasing desire but poor consensus on how to use patient insights to inform earlier stages of drug development
“We are moving to a patient centric world, which is starting to influence our industry” – Managing director, Leading CRO
In recent years we have seen a shift to a more patient centric paradigm within our industry. It is acknowledged widely that to produce novel therapies that maximise value at the lowest cost, patients’ needs and desires must be considered at all points of a drug’s life cycle. From research prioritization, clinical trial design, patient population identification and TPP assessment. The value of earlier and more frequent patient insights is known across the industry, and was reflected in our discussion with BIO delegates.
Whilst the benefits are understood we must ask ourselves if enough is being done in reality to use patient insights at the key points to effectively enhance drug development. Although many will be able to think of an example where patients have been involved in or assisted with informing product strategy, clinical trial design, developing PROs, or generating evidence it is still the case that it is not a practice that is commonplace. While it could be said that as a fairly new strategy, there may not currently be enough data available to show this benefit to patients. Whilst many BIO attendees, especially from Big Pharma, expressed the desire to utilise patients more frequently there were large concerns over protecting patient confidentiality and in the majority of cases it is apparent that many companies are still not comfortable or fully aware how to best operate with their patients.
Focusing on patients from another angle there was significant conversation at BIO on how to deal with the challenges arising from the increasing personalisation of new therapies and their small patient populations. Today it is common for new drugs’ targets to be very specific. Due to this it has become ever more difficult to recruit enough patients for clinical trials in order for the outcomes to be statistically significant. It is clear that this challenge will become increasingly common place; and there were many conversations taking place at BIO focusing on how to deal with this. Many people agreed that the best way forward was to utilise the advancement in both technology and social media.
In regards to social media it has become common for patients, especially those with rare diseases, to “diagnose” themselves online and create online communities for people around the world with the same disease. By doing this it also raises awareness of the disease which can lead to more accurate diagnosis and an increased patient population; whilst at the same time mapping areas where the disease is most prevalent.
We discussed the use of new technologies with many BIO delegates in regards to dealing with the challenges arising from personalised medicine. Although there was agreement that regulations would have to adapt in order for new technologies to be used to their full effect there were many interesting ideas. One theme that resonated at BIO was the increased use of site less clinical trials, allowing more patients from varying territories to take part easily and at a reduced cost. There was one company we talked to, that were in the process of a Phase III trial where the patients’ data and updates were automatically uploaded on their mobile phones and then sent to a central database for analysis.
Capital is available, but could be better utilised to match the increasing cost of drug development and growing competition for funding
“Fail early and fail cheaply, it’s better” – Director of Business Development, Big Pharma
Fears around the funding of current and future R&D programs was unsurprisingly a focus point for a large proportion of BIO delegates. While it is evident that there is still a vast amount of capital being invested in our industry, there is also a common feeling of unrest regarding how long that will last. As therapeutic challenges are being met, with most of the “low hanging fruit” gone, development programs for complex disorders with currently unmet clinical needs are increasing at an unprecedented rate. This is highlighted by the most recent assessment by the Tufts Center for the Study of Drug Development, showing the average cost of taking a drug from development to market approval is now just under $2.87bn, up 145% from the figure published by the center in 2003 with inflation taken into account.
Delegates highlighted a combination of factors contributing to these rising development costs. Firstly, as biotechs and pharma turn their focus to products that treat more complex, often chronic and degenerative, disorders - the failure rate of these assets increases dramatically, impacting overall research program costs. This has been highlighted by a number of high-profile failures in late stage clinical trials for the treatment of Alzheimer’s, with some big players withdrawing from the field completely. Secondly, regulatory authorities and payers are increasingly raising the bar to market approval and reimbursement, driving the generation of more complex and costly clinical trials with extensive endpoints. Additionally, trials in these areas are typically conducted over increasing time frames as the drug progresses through clinical phase, in turn escalating costs. For this reason, multiple delegates we spoke to expressed their preference for drugs to fall over much earlier in clinical trials and no longer wanting to “take the risk” of facilitating costly new studies. Finally, as pharma and biotechs target smaller patient pools in the pursuit of personalised treatments, access to suitable patients for clinical trials becomes increasingly difficult – requiring more trial sites to be setup globally, in turn increasing facilitation costs.
For the industry as a whole these increasing costs put pressure on funding sources, as well as return on investments. Increasing development costs also raise questions regarding the long-term viability of developing novel therapeutics, yet it is not evident that these fears have impacted investor sentiment - with record amounts of capital still going into the life sciences and healthcare sectors.
The challenges faced in go-to-market strategy when demonstrating value in novel therapies
“Gaining market access is becoming increasingly complex. Even if a company presents strong data, is it the ‘right’ data? Will it satisfy HTAs?” – Life Sciences Fund Manager
Before treating the patient, the drug must reach them. Whether a drug reaches the patient is down to national or regional regulatory authorities, alongside payers. Regulatory authorities, as discussed in greater detail previously in this article, will consider whether a drug is safe and actually works (efficacy). Payers, such as insurance firms in the US and the NHS in the UK, will consider whether paying for the drug (reimbursement) warrants its proposed efficacy.
Although concerns surrounding regulatory authorities and payers have always been present in the sector, BIO delegates continued to voice fears regarding multiple dynamics putting pressure on pricing.
While new diagnostic technologies have allowed us to identify patient pools where a novel treatment is more likely to succeed, the proportion of patients within these pools is reduced. For drug developers, this means they will have to increase the price of their drug to guarantee their ROI. Furthermore, multiple BIO delegates described how their firms are struggling to justify these high prices – often finding it difficult to demonstrate the intrinsic value and real-world benefits of these novel treatments. In turn, some delegates felt that payers were stifling innovation in the field by choosing not to reimburse expensive personalised treatments – with some biotechs beginning to shift away from targeting small patient populations.
In an effort to cut spending on treatments that offer no benefit, many payers are moving to “pay-for-performance” reimbursement models, as well as demanding supplementary clinical evidence illustrating drug performance – further squeezing biotech and pharma pricing margins. Yet while “pay-for-performance” seems like an obvious path to take, implementation of such outcomes-based reimbursement schemes are extremely complex – particularly in diseases with subjective outcome measurements, such as those involving the central nervous system. Similarly, with the development of promising gene therapies which could offer to completely cure genetic disorders with one course of treatment, how do pharmaceutical companies and payers approach pricing and reimbursement of such an asset? While this may indicate we are on the edge of a sector-changing shift in how drugs are paid for and distributed, there was still an underlying concern among BIO delegates that patients who would benefit from novel personalised treatments are still going to suffer from a lack of access – either due to a lack of payer reimbursement, or by a reduction in research programs targeting smaller patient pools.
Maintaining Innovation: Being successful in a progressively competitive and challenging industry which is increasingly difficult to navigate
“Bringing new innovative technologies with most potential to market. How do you find the needle in the haystack?” – Associate Director, Big Pharma
Whilst analysing the previous four sections it may become apparent that in all four areas there has been substantial advancement and innovation in recent years. In many areas there was still a fundamental concern raised by BIO delegates. How do we maintain this level of innovation? How do we build on it rather than standing still, or even falling back on ourselves?
In all arenas within our industry the challenge remains to keep up and improve on the level of innovation. On a company level there are now over 13,000 assets in the development pipeline worldwide, alongside almost 4,000 biotech companies. With so much competition how do we develop an asset that can truly be a “game changer”? There are frequently new fields that are coming to the forefront of our industry such as gene therapy or Microbiome. With these ever more complex products how can regulatory authorities keep up with the technology to allow the industry to continue to thrive? With increasing competition for available funds, alongside increasing costs of developing novel products, how is it possible to find the level of funding the industry requires and allocate it more accurately to the products that will make a real difference to the lives of our patients?
Contributors: Andreas Wersall, Jiaxi Liang, Kelsie Langley, Lydia Jenkins & Thomas Thurston
Given the level of interest around these topics and our observations on how this is impacting many of our clients, stay tuned over the coming weeks as we navigate through these complex questions and more