The CED Biotech/Life Science Conference in Raleigh, N.C. closed with the engaging and entertaining story of MedImmune LLC, the Maryland biotechnology company that was acquired by AstraZeneca plc (NYSE:AZN) for $15.6 billion in 2007.
Former CEO David Mott, who is now general partner at venture capital firm New Enterprise Associates, waxed nostalgic about MedImmune’s growth from venture-backed startup to public company and the roller coaster ride that was the company’s history of successes and failures. Multiple failures. MedImmune failed four times in late-stage clinical trials.
But MedImmune found success in its lead product, Synagis, a respiratory treatment for infants that grew to more than $1 billion in annual sales. While drug development companies are accustomed to encountering failures, today’s environment won’t allow a company four phase III failures anymore.
“Today, if you’re good, you’ll probably get two shots,” Mott said.
The CED Biotech/Life Science Conference didn’t have an official theme, but if it did, it could have been “think early.” What the more than 1,000 in attendance got was a steady, instructional drumbeat telling them to think about facing important decisions for their companies and their research and development at earlier stages than they’re accustomed.
Before investors will hand over any cash, they’ll want to know not only how novel and significant a new drug will be, but also whether payors will step up and pay for it. That means that drug companies need to start thinking about the reimbursement of a prospective drug well before it’s moved through clinical trials.
During a panel discussion on regulation and reimbursement, Eric Faulkner of nonprofit research institute RTI International said that drug development companies need to think about reimbursement as early as phase II clinical trials. A company needs to ask payers what they want to see in order to reimburse the drug, he said.
Part of those answers will come from companion diagnostics, tests that physicians can use to determine whether a drug is appropriate for a patient.
Myla Lai-Goldman, managing partner of consulting firm Personalized Science, addressed the matter during a panel discussion on personalized medicine. She said the jury is still out on how many drugs will require companion diagnostics, but she added that these tests will play a greater role in early drug development.
With early efficacy data, a company can make an earlier decision about whether it makes sense to continue developing a compound. By extension, a VC firm can make an earlier and better-informed decision about whether to pump more cash into the company.
Mott closed his talk by saying that he believes that the best innovations and ideas will still get funded. Perhaps that was the venture capitalist in him talking, but it’s now clear that early stage companies will need to get more data at an earlier point in time in order to get the financing they need to continue development.
We’re not likely to see a company fail four times in late-stage clinical trials again because the expectation is the signs of failure will be caught earlier — well before the time and money has been spent on an expensive phase III trial.