Taking a Commercial Approach To Drug Development

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Explore Target Product Profile development and commercially driven drug development strategies for early stage pharmas and drug development companies. See how to develop commercially compelling new drug candidates and increase future licensing opportunities.

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  • care for condition Will your product meet patient unmet needs? Is unique value proposition in this patient segment Not satisfied with sustainable given current and future competition? current therapy Will unique value proposition convince physicians to use your product.online grocery coupon
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Taking a Commercial Approach To Drug Development

  1. 1. Taking a Commercial Approach to Drug Development Target Product Profile Development And New Product Strategic Planning For Early Stage Pharmas and Drug Development Cos.
  2. 2. Pharma/Biotech New Product Strategic Planning Understand the market environment Develop therapies to meet unmet medical and realized market needs Start with the end in mind – Develop target product profile (TPP) to realize unique value proposition – Understand financial valuations of TPP over product life cycle – Factor in risk – Build plan for Exit strategy Create a drug development plan to reach TPP Effectively utilize advisory board and primary research to develop/support assumptions Estimate risks and outlicensing valuations Demonstrate investment value opportunities to support strategic decision making and fund raising support Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 2
  3. 3. Goal: Develop Target Product Profile Hypothesis Blueprint for valuations and future planning Frequently “gut-checked” throughout drug development Indication Efficacy Safety/Tolerability Convenience Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 3
  4. 4. Strategic Planning Approach – How TPP Fits In Market Mapping/Prioritization Define Success Develop Target Product Profile Clinical Manufacturing & Development formulation Strategy Strategy (not covered in this presentation) Financial Projections Exit strategy Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 4
  5. 5. Example Market Mapping – Define market and map out market landscape 8 0 0 ,0 0 0 Acute 59,633 70 0 ,0 0 0 Un- diagnosed Undiagnosed 6 0 0 ,0 0 0 Patients Target Chronic Condition(s) 332,936 50 0 ,0 0 0 Patient Patients Prevalence 4 0 0 ,0 0 0 Chronic 61,147 3 0 0 ,0 0 0 Symptomatic Patients “High Risk” Diagnosed Diagnosed Patients 2 0 0 ,0 0 0 and Asymptomatic In Health 1 0 ,0 0 0 0 Care Symptomatic “Low Risk” Patients Asymptomatic 0 Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 5
  6. 6. Example Evaluate SOC* and unmet needs – Determine Target segments “Satisfied” “Unsatisfied” with therapy with therapy High Risk, Symptomatic “Unsatisfied” with therapy “Satisfied” Patients with therapy High Risk, “Satisfied” Asym ptom ati with therapy c “Unsatisfied” with therapy Low Risk, Sym ptom atic Low Risk, “Unsatisfied” Asym ptom ati “Satisfied” with therapy c with therapy Diagnosed Pts *SOC= standards of care Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 6
  7. 7. Example Understand Key Market Drivers and Barriers to Prescribing For Each Segment Primary Drivers Primary Drivers Primary Barriers Primary Barriers Stricter guidelines calling for lower Concern over cost/managed care BP in high risk patients reimbursement challenges Want greater ability to control HBP Push to use generics No longer acceptable for high risk Prior authorizations and insurance patients to have “borderline” HTN claim rejections for use of newer high Want greater reduction in the rate of priced antihypertensive drug as initial end organ failure (brain, kidney, therapy heart, eyes) in all patients Skeptical of data showing differences in Want easy to take, well-tolerated efficacy within RI class therapy Entrenched prescribing habits Need to see compelling clinical data Comfortable with existing before switching to any new antihypertensive products and products regimens Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 7
  8. 8. Evaluate Current and Future Competitor Landscape Strengths/ Exp. Launch Date/ Weaknesses/ Future Anticipated Class Indication Compelling Unmet Needs Impact date of generic Advantage on Mkt entry Product 1 Product 2 Current Product Competitors 3 Product 4 Product 5 Product 6 Product Compounds in 7 Dev. (Future Competitors Product 8 Product 9 Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 8
  9. 9. Define your unique value proposition for each target market segment • Identify Imp/Diff features and benefits that are sustainable and can drive behavioral change leading to initial product trial and usage • Postulate unique value proposition for product based on hypothesized Imp/Diff features and benefits • Create target product profile to highlight important differences • Target product profile (TPP) should drive clinical development plan to demonstrate unique value proposition Not Different Different Convenience Efficacy Greater target Important Oral Rx organ protection Unimportant Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 9
  10. 10. Prioritize Segments For Clinical and Commercial Development Evaluate and prioritize individual segments using the following eligibility tests: Does the segment have adequate size to reach financial targets with modest product market Total Addressable penetration? market Can patients be easily identified and targeted? Can high volume treaters be easily targeted? In care for condition Will your product meet patient unmet needs? Is unique value proposition in this patient segment Not satisfied with sustainable given current and future competition? current therapy Will unique value proposition convince physicians to use your product? Have symptoms compound can treat Can clinical trials be easily designed with end points to demonstrate unique value proposition ? TPP needs to be compelling Willing to Can clinical trials be designed, approved, enrolled for this group switch and completed in a timely manner? Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 10
  11. 11. Example Develop Unique Value Proposition Hypothesis Antihypertensive market is huge – 65 million American adults have high blood pressure – $55 billion spent annually in direct expenditures to treat HBP – Antihypertensives are #1 prescribed class of drugs for Medicare Part D enrollees with 122 million prescriptions in 2006 – 6 different classes of drugs and over 70 individual drugs on the market to treat hypertension Yet still largely uncontrolled – 60% of patients require 2 or more drugs to treat their hypertension – Poor compliance remains a major factor exacerbating poor HTN control with existing therapies – 70% of patients on therapy still do not have their BP under control (<140/90 mm Hg) – Hospitalization rates for congestive heart failure continue to increase – 69% of CHF patients are hypertensive – Increasing trend in end stage renal disease – hypertension second only to diabetes as most common antecedent for this condition – Higher blood pressures lead to higher risk of death from heart disease or stroke – 77% of first stroke patients have high blood pressure For patients with uncontrolled HTN on initial antihypertensive regimens, Product X provides an excellent “first switch” agent to add to a second antihypertensive regimen to lower blood pressure while providing proven protection against target organ damage that can cause heart failure, kidney damage and strokes. Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 11
  12. 12. Define Commercial Success Efficacy, safety and convenience performance levels required to drive target segment behavioral change to generate product adoption Market environmental changes required to capitalize on market drivers and overcome barriers to adoption Pricing levels needed to meet NPV goals Adoption and target patient penetration levels needed to meet NPV goals Make assumptions on all the above Need Market research and/or medical advisory board feedback to validate assumptions!! TPP needs to deliver on commercial success drivers! Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 12
  13. 13. Historical Case Study Prod X to prevent infections after Bone Marrow Transplantation Problem: Allogeneic BMT patients, and in particular unrelated donor BMT patients are at increased risk for life-threatening airborne infections due to: – Immunosuppression for 6 months with calcineurin inhibitors – Treatment of acute Graft vs. Host Disease (aGvHD) with increased immunosuppression (high dose steroids) – Subsequent extended immunosuppression for more than 2 years Solution: Prod X aerosol new product concept: – Coats upper respiratory tract (trachea, big bronchi) – Blocks and physically expels viruses / fungi – Potential for use as prophylaxis against fungal and viral infections, which have high mortality rate in this patient population Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 13
  14. 14. Historical Case Study Bone Marrow Transplantation Market Landscape 1998: Est. WW procedures 52,000 10-40% infection rate 5,200 - 20,800 mortality 2-8% 1,040 - 4,160 Overall mortality is about 40% (GVHD, Infection, Relapse) Primary viral and fungal species implicated in morbidity and mortality are: – Virus: CMV, RSV, rhinovirus, Influenza, parainfluenza – Fungi: Aspergillus fumigatus (mainly pulmonary); Candida sp. Risk factors for post BMT infectious complications – GVH Disease, Toxicity of chemotherapy, Steroid therapy for immuno-suppression, Antibiotics (overgrowth of opportunistic fungi), Ganciclovir therapy (late stage CMV and/or fungal infections), donor age, underlying disease morbidity Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 14
  15. 15. Historical Case Study Target Market and Commercial Success Criteria Target market – Preventing Aspergillus fumigatus fungal infections in allogeneic post BMT patients – Biggest post BMT infection concern – Incidence: 5-10% in allogeneic BMT patients, 30% in unrelated allogeneic BMT patients – mortality: 70-90% – Current Competition: • Amphotericin B, Itraconazole - modest efficacy against Aspergillus • issues: nephrotoxicity, Cyt.P450 3A4 inhibition – Future Competitive Landscape: • New class of antifungals on the rise: echinocandins (e.g. Cancidas [Merck]) effective and less toxic. • Will be strongest competition, but resistance can develop with overuse as prophylaxis. Commercial Success Criteria - Activity against Aspergillus with lower levels of resistance development than new antifungal class of antibiotics Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 15
  16. 16. Historical Case Study Product X Product Profiling/ Gap Analysis • Key unmet need and physician concern: Aspergillus infection prevention in unrelated allogeneic post-BMT patients • Need to demonstrate activity against Aspergillus for commercial success • Clinical development efforts need to focus on prevention of Aspergillus infections and seek Aspergillus prophylaxis as a labeled indication Not Different Different Aspergillus Important prevention Unimportant Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 16
  17. 17. Historical Case Study Prod X Aerosol Target Product Profile (TPP) Indication Prevention of life-threatening Aspergillus and Respiratory Virus Infections in allogeneic Bone Marrow Transplant Recipients Efficacy 1. Reduction of Aspergillus infections within the first 3 12 months after transplantation in unrelated donor graft recipients by 50% 2. Reduction of Respiratory Virus infections in allogeneic BMT patients with an aGvHD history requiring continued high dose immunosuppression or cGvHD by 50% between month 3 and month 9 12 months after Transplantation Safety/Tolerability Acceptable tolerability. No additional inflammatory activity within the Upper Respiratory Tract and lungs. No increased coughing Enveloped viruses and prion safety comparable to present hyperimmunes. Non-enveloped viruses safety according to PEI standard Convenience Aerosol administration. Low: 50 mg x 2 per day Base: 50 mg x 3 per day High: 50 mg x 5 per day Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 17
  18. 18. Historical Case Study TPP Drives Commercially Focused Clinical Development Strategy Clinical phase Phase I Primary: Safety Secondary: Effect on Respiratory Virus Infections; Respiratory Bacterial Infections, Effect on Aspergillus Infections Timing: 1.1 yr Cost: $0.9 MM Patients: 30 Phase II Primary: Safety and Dose Finding Secondary: Effect on Respiratory Virus Infections; Respiratory Bacterial Infections, Effect on Aspergillus Infections Timing: 1.1 yr Cost: $3.1 MM Patients: 60 Phase III Primary: reduction of aspergillus lung infections within 12 months post- transplant from 30% to 15% (50% reduction) (unrelated allogeneic pts) Secondary: Reduction of Respiratory Virus Infections; Reduction of Bacterial Infections, Mortality Reduction Timing: 3.25 yr Cost: $10.5 MM Patients: 240 Phase III Primary: reduction of RSV/parainfluenza/influenza lung infections 12 months after transplant from 15% to 7.5% (50% reduction) (all allogeneic patients) Secondary: Reduction of other respiratory virus infections (rhino, adeno), reduction of aspergillus infections, reduction of bacterial (pneumococci, hemophilus) infections, Mortality Reduction Timing: 2.25 yr Cost: $26 MM Patients: 600 Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 18
  19. 19. Estimate Costs and Timelines for Clinical Trials Drug Development Timeline and Risks IND submission File NDA Pre-Clinical Testing Phase I Phase II Phase III NDA Review Total Years 1.5 1.5 2 3.5 1.5 8.5 Expected Costs ($ millions) in 2007$ $2 $13.5 $28.3 $81.2 $2.5 $127 20 to 100 100 to 500 1,000 to 5,000 Test Population healthy subjects patients patients n/a n/a Confirm Evaluate effectiveness, Determine efficacy, optimal monitor adverse safety and dosing, side reactions from Purpose dosage effects long-term use n/a n/a Sources: Risks in new drug development: Approval success rates for investigational drugs ; Clin Pharmacol Ther 2001;69:297-307. The Drug Discovery, Development and Approval Process , PHRMA website R&D Costs and Returns by Therapeutic Category ; Drug Information Journal, Vol 38, 2004. Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 19
  20. 20. Understand Risks and Exit Strategy Considerations Licensing most feasible exit strategy Probability of FDA approval ≠ Expected Probability of commercial success in all cases High risk business – platform strategies and compounds with multiple indication potential much more attractive to investors In most cases, plan for outlicensing at early human proof of concept stage Prob of Stage Time (Yrs) Success* Pre-Clinical 2 40% Phase I/IIa 2 65% Phase IIb 2 44% Phase III 3 65% Approval 1 80% Cum Total 10 6% *Sources: DiMasi 2001, Kola 2004, Avance * For Immunology drugs in development Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 20
  21. 21. Construct Financial Projections “You did a great job with your forecast. The only thing I can say about it with absolute certainty is that it’s wrong.” -- Words of wisdom I received early in my career Do the best you can without the benefits of having perfect information and a crystal ball! Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 21
  22. 22. Example Start by Tying Market Assumptions to Financial Assumptions Use US Census population projections 6% NHANES data used to estimate % population 5% with HTN 4% 3% 85% of patients with HTN are on therapy 2% 1% 63% to 75% of patients >20 have uncontrolled 0% HTN 18 19 20 21 22 23 24 25 26 27 20 20 20 20 20 20 20 20 20 20 Only Pts with uncontrolled HTN are candidates for NewProd X % Uncontrolled HTN Pts on PH-RI 5% Peak patient shares estimated for % of uncontrolled pts on NewProd X $2,000 3% Peak patient shares estimated for % of total HTN treated patients on NewProd X $1,000 80% Compliance rate Pricing estimates based on current Tekturna $0 revenue/Rx + 10% 18 19 20 21 22 23 24 25 26 27 4% annual price inflation 20 20 20 20 20 20 20 20 20 20 Launch 2018 with 10 yrs of revenues US Revenue Forecast ($MM) Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 22
  23. 23. Example Create Pre and Post-Launch Financial CF Projections Factor in probabilities of success and risk adjustments at each milestone Make financial projections for company and for any anticipated future alliance or licensing partners who complete development and launch product 2018 2020 2022 2024 2026 2028 2030 2032 Yr1 Yr3 Yr5 Yr7 Yr9 Yr11 Yr13 Yr15 Phase Launch Market Market Market Market Market Market Market Revenues ($000s) $7,872 $97,444 $199,370 $244,342 $263,558 $259,352 $228,576 $185,988 G&A and R&D Expenses $5,376 $0 $0 $0 $0 $0 $0 $0 COGS $1,120 $13,870 $28,377 $34,778 $37,513 $36,914 $32,534 $26,472 Marketing and Sales $50,656 $53,741 $57,014 $60,486 $60,432 $56,860 $53,500 $50,338 Milestones $10,000 Royalties $472 $5,847 $11,962 $14,661 $15,814 $15,561 $13,715 $11,159 Expenses (for Licensee) $67,625 $73,457 $97,353 $109,925 $113,758 $109,336 $99,748 $87,970 PHARMA LICENSEE Effective Tax Rate 0% 26% 26% 26% 26% 26% 26% 26% Risk adjusted CF ($13,671) $5,488 $23,341 $30,755 $34,274 $34,324 $29,476 $22,427 Discount 53% 43% 35% 29% 23% 19% 15% 12% Risk adjusted net DCF ($7,309) $1,762 $6,083 $6,505 $5,884 $4,783 $3,333 $2,058 rNPV BIO-TEC Effective Tax Rate 26% 26% 26% 26% 26% 26% 26% 26% Risk Adjusted CF $2,396 $1,338 $2,737 $3,354 $3,618 $3,560 $3,138 $2,553 Discount 53% 43% 35% 29% 23% 19% 15% 12% Risk Adjusted DCF $948 $430 $713 $710 $621 $496 $355 $234 Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 23
  24. 24. Example Cash flow projections provide early estimate of licensing value License deal at start of phase IIb Milestones/Upfronts Phase I Phase II Phase III NDA Approval Royalties DCF $5,000 $5,000 $8,000 $10,000 6.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Year3 Year4 Year5 Year6 Year7 Year8 Year9 Year10 Yr1 Phase Phase I/IIa Phase I/IIa Phase IIb Phase IIb Phase III Phase III Phase III NDA Launch Transition probability 100% 44% 100% 100% 65% 80% 100% Probability 100% 100% 44% 44% 44% 29% 23% Revenues ($000s) $0 $0 $0 $0 $0 $0 $7,872 G&A and R&D Expenses $4,386 $4,386 $12,200 $12,200 $12,200 $2,000 $5,376 COGS $0 $0 $0 $0 $0 $0 $1,120 Marketing and Sales $0 $0 $0 $0 $0 $25,328 $50,656 Milestones $5,000 $5,000 $8,000 $10,000 Royalties $472 Expenses (for Licensee) $9,386 $4,386 $17,200 $12,200 $12,200 $35,328 $67,625 PHARMA LICENSEE Effective Tax Rate 0% 0% 0% 0% 0% 0% 0% Risk adjusted CF ($9,386) ($4,386) ($7,568) ($5,368) ($5,368) ($10,104) ($13,671) Discount 100% 90% 81% 73% 66% 59% 53% Risk adjusted net DCF ($9,386) ($3,952) ($6,142) ($3,925) ($3,536) ($5,996) ($7,309) (11% discount rate used) rNPV $17,460 BIO-TEC Effective Tax Rate 26% 0% 26% 0% 0% 26% 26% Risk Adjusted CF $5,000 $0 $2,200 $0 $0 $2,288 $2,396 Discount 100% 90% 81% 73% 66% 59% 53% Risk Adjusted DCF $3,700 $0 $1,321 $0 $0 $1,005 $948 (18% discount rate used) Construct business rNPV in 2012 $14,071 Value of license for US rights Value share 45% Total Milestone and Royalty Payments ($000s): $202,029 Initial Valuation Assuming Outlicensing at start of Phase I/Iia $4 plans and financial Cash Flows Prob 2008 100% 2009 100% 2010 40% 2011 40% 2012 26% projections with rCFs Discount Rate: PV Cash Flows ($775) 100% ($775) ($775) 85% ($657) ($340) 72% ($244) ($340) 61% ($207) $3,658 52% $1,887 potential licensing Total Value rNPV ($000s) $4 Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, valuations in mind. info@pharmacision.com 24
  25. 25. Exit Strategy Considerations – “Typical” Deal Terms Look for comparable deal terms to draw from Develop strategic target outlicensing partner “short list” Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 25
  26. 26. Summary Understand your market environment Develop therapies to meet unmet medical and realized market needs Start with the end in mind – Develop target product profile to realize unique value proposition – Understand financial valuations – Factor in risk – Anticipate exit strategy Create a drug development plan to reach TPP Estimate risks Construct financial projections linking market assumptions to financial assumptions Develop partnering strategy and demonstrate investment value opportunities to potential investors Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 26
  27. 27. Pharmacision LLC Service Offerings Strategic Planning – Business strategy and plan development – In/out-licensing commercial due diligence assessments/preparation – Business partnering support – New product planning – New market and competitive landscape assessments – Qualitative Market Research – Market modeling – Demand forecasting and financial NPV analyses Marketing Initiatives – Brand strategy and marketing plan development – Positioning and message development – Targeting strategy development – Professional and patient advertising campaign development Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 27
  28. 28. Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 28
  29. 29. Contact Information Pharmacision LLC Thomas Marten President (734)895-3670 tmarten@pharmacision.com www.pharmacision.com Copyright © 2009 Pharmacision LLC, www.Rapid-Insights.com, info@pharmacision.com 29

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