Dominating news headlines around the world, the COVID-19 pandemic is asking multiple questions that challenge current norms within every facet of day-to-day life.  As the landscape and impact of this pandemic evolve rapidly, I find myself contemplating the impact of COVID-19 on biotechs in 2020 and beyond – is it disruption, or for some, will it be devastation?

It’s already clear that numerous elements within the biotech environment will be impacted:

TRIALS DEPENDENT ON HOSPITALS – some of the most susceptible studies will be those which require medical or hospital setting, phase 1 healthy volunteer studies, high risk of AE requiring specialist monitoring, those requiring respiratory support and hospital administered treatments (IV) with hospital resource restraints.  Additionally, a lack of willingness to travel to study sites will impact planned timelines

SUSCEPTIBLE POPULATIONS – studies focused on patient populations that have either been most affected, i.e. the elderly, or particular geographies (e.g. China and Italy currently), are likely to see a reduction in patient compliance and follow-up. Trials with small sample sizes (e.g. small phase 2 studies) or with limited patients available (e.g. rare diseases), may also struggle to recruit in the time forecast

INTERNAL CONSTRAINTS – new biotech’s with limited staffing, where internal infrastructure is not yet in place to handle the loss of multiple staff members for significant periods of time, may struggle to manage the number of tasks required effectively

Biotech entrepreneur Arie Belldegrun tests positive for Covid-19" (1)

SUPPORT STRUCTURE – manufacturing disruptions are likely to occur resulting in clinical material supply line issues and CRO staff will inevitably be affected causing further trial delays

Despite these challenges, some biotechs could benefit from the current situation, increasing enrolment into studies due to route of administration available (SubC vs. IV), earlier diagnosis because of respiratory symptom involvement, or increased patient populations due to the virus.

“Enanta Pharmaceuticals, conducting a study in community-acquired respiratory syncytial virus patients”(2)

On balance however, the question is not if  biotechs will be negatively impacted but when.

With biotechs reliant on a single trial or conducting multiple studies which are affected by one or all four of the prior categories likely to fair worse, with major enrolment challenges occurring, complex data, significant delays of 3 to 6 months and the inevitable increase in cost occurring, resulting in funding drying up.

So far, there have been few reports of significant interruptions in clinical trials. With the majority of Biotechs yet to see significant impact, but more than half acknowledging that the impact is inevitable.

“86% of them reported no immediate impact on development efforts, but 72% are clearly worried that it’s coming”(3)

The first notable trial delay was reported today, with Provention Bio’s resurrected diabetes drug teplizumab, temporarily pausing randomizing and treating new patients. Although this delay, is said not to hinder plans of its BLA submission by the end of the year.

“Our decision was not based on any study-related COVID-19 infections or other safety events, but rather a preponderance of caution relating to the ongoing pandemic, and our concern for the well-being of recently diagnosed T1D paediatric patients and their caregivers“ and “The demands on medical institutions and their clinicians during this unprecedented global crisis were also a main consideration in this decision.”(4)

CEO Ashleigh Palmer said in a statement

The big uncertainty is not knowing how much worse the pandemic will get and how long the disruption will last for. These are uncharted waters and the scenarios that may play out are unclear. What is clear is that for early stage companies, the knock-on effect to clinical development plans, heavily scrutinized valuations, restricted venture capital flow and reduced licensing and M&A opportunities, will become more challenging for some time, as markets continue to slow and overall uncertainty surrounding Biotechs increases. This may be compounded by a slowing in regulatory review process due to resource reallocation, slowing access to market and subsequent income.

Against this uncertain backdrop, the majority of companies have already implemented plans to limit the impact on staffing, following the events at Biogen earlier this month [March], encouraging plans to minimise face-to-face interactions, adopting work-from-home policies.

However, few companies have probably yet to fully plan for the world which is unfolding and it may be that Biotechs likely to fall into three camps:

1) DENIERS - Those who choose to believe the inevitable, delaying, slowing or stopping all activities, believing the storm will pass soon and all will quickly return to normal

2) HESITATORS – Those who will hunker down, proceed as planned where possible, and wait until the impact is clearer before planning how to respond

3) PREPPERS - Those who scenario plan for the new world and what will be required of them to be successful, ensuring they continue to develop incremental value for them and their assets, spending capital wisely and utilising it to the fullest

For 1 and 2 above, these companies are likely to slowly burn through capital whilst not changing their plans and considering how the world after COVID-19 will be different to the world they planned for.

It is hard to say which camp if any will come out on top, with individual circumstances also playing a critical role. However, those who put the effort in to planning for multiple scenarios now and continue to develop incremental value are likely to weather the storm best.