The impact of AI on drug development

by Dr Fintan Walton, CEO and Founder, PharmaVentures.

Artificial intelligence (AI) has shown remarkable potential in transforming various industries, and drug development is no exception. However, harnessing the power of AI in this field comes with its unique challenges.

One of the primary challenges is data quality and quantity. AI algorithms require vast amounts of high-quality data to make accurate predictions and decisions. In drug development, obtaining comprehensive and reliable data from clinical trials, genomics, and other sources can be a complex task. Additionally, integrating data from diverse sources and ensuring data privacy and security pose significant hurdles.

Another challenge lies in the interpretability and transparency of AI models. In drug development, understanding the reasoning behind AI-generated predictions is critical for gaining regulatory approval and building trust among stakeholders. Complex AI models often function as black boxes, making it challenging to explain their decisions to researchers and regulators.

Additionally, the lack of standardised protocols and regulations for AI in drug development presents obstacles. Regulatory agencies are yet to establish clear guidelines for validating and approving AI-driven drug development processes, causing uncertainty and slow adoption.

Lastly, the high cost and expertise required for AI implementation pose challenges for smaller pharmaceutical companies and research institutions. Investing in AI technologies and building in-house expertise can be financially demanding and may deter widespread adoption.

Addressing these challenges requires collaborative efforts from stakeholders, including regulators, researchers, and industry players. Striking the right balance between innovation and regulation, improving data accessibility and standardisation, and enhancing AI model interpretability are crucial steps towards fully leveraging the potential of AI in drug development. With careful consideration and collaboration, AI can revolutionise the discovery and development of lifesaving medications.

The author of this commentary was solely the AI application ChatGPT not Fintan Walton!

The importance of Pricing and Market Access in licensing, partnering and early-stage development

by Ralph Hughes, Vice President, PharmaVentures.

A prominent biotech Venture Capital (VC) firm recently told me: “Insurance companies are the real movers and shakers in health care at the moment, they are the sharp end of the spear.” And he went on to say that we need to understand what they are thinking if we are going to develop drugs that are marketable.

Drug developers sometimes struggle to see the value that pricing and market access insights will bring at an early stage. Many believe it is too early, that the deal partner will do their own analysis, or they simply don’t understand it.

The VC I spoke to reflected this sentiment, but put a different spin on it: “It’s not us or even the small biotech who has to deal with pricing and access; it’s the larger partner; they get it right in the teeth.” He went on to say it is incumbent on VCs and biotech developers to do the work as it can “pave the way if they do or build barriers if they don’t.”

 This was mirrored by a comment from a pharmaceutical exec who said, “We will only look at assets where we can see the path to market for and that includes market access.”

With all this in mind, we spoke to several US payers to try to understand how payer perspectives can impact early development decisions in key areas of development from across the innovative spectrum from gene therapies to repurposed drugs. In these discussions there were some clear lessons that drug developers can learn from payers, even at the very early stage, such as:

  • Understanding incentives, perspectives and funding flows can lead to better pricing and development strategies.
  • Creating a cost offset narrative is essential for assets with infrastructure issues.
  • Understanding payer perspectives can help you define market positioning and pricing.
  • Targeting drug development at payers, as well as the regulators, can ensure adoption.
  • Payers can become advocates, not blockers, given the right data and narrative.

I have developed a series of short articles from these insights to help early-stage drug developers understand the value that payer insights can bring to early development and deal making.

The first, Understanding the payer perspectives and incentives can lead to a more commercially viable development strategy across the innovative spectrum from gene therapies to value-add therapies is available here.

The second, Creating a cost offset narrative early is essential for deal making in assets with infrastructure issues such as Psychedelics and Cell Therapies is available here.

Find out more about Pricing and Market Access from our website or contact us.

So you know how to calculate and manage risk?

by Dr Fintan Walton, CEO, PharmaVentures.

The key to success in the pharmaceutical industry is the ability to understand and manage the risks of products going through clinical development and into the market. Most pharmaceutical professionals tend to focus on understanding the clinical risk as a means of managing the certainty of commercial success. This is also true when it comes to determining the value of a drug in clinical development. What is often not fully understood is the certainty of getting the right price and probability of reimbursement for the drug. Furthermore, the actual clinical development programme and the Target Product Profile (TPP) for the potential product may be even more risky and even incorrect if the price and reimbursement of the product is not investigated or understood.

Today, prices for drugs are under greater pressure and scrutiny worldwide with considerable risk in getting that strategy right. That is why it is important for even early-stage biotech companies with products in early clinical development to have a clear understanding as early as possible of the probability of getting their clinical, pricing and reimbursement strategy correct. Clinical trials are not just important for getting regulatory approval, it is also essential for providing vital and relevant data to payors.

Many companies seeking partners believe that it’s not their task to consider these aspects of product market access and that this responsibility belongs to the future partner. This is a very dangerous assumption, as it may be too late by the time an interested party is aware of the opportunity.

To access our expertise, please contact us.

How to survive economic ‘Head Winds’!

by Dr Fintan Walton, CEO, PharmaVentures.

The world economy is going through some tough times, again. This time the causes are well known, including China’s economically damaging zero-COVID strategy, post-COVID recovery challenges elsewhere and the impact of the unwelcome Russian invasion of Ukraine. As stocks crash and inflation rises, all global corporations are taking stock and reassessing their strategies.

In our own biotech sector, the global IPO market has effectively dried up and listed biotech stocks have dropped by 70% in value from their peak. In the UK, the Biotechnology Industry Association’s half year financial report shows that VC funding and follow-on financing is down by 50% for the first half of this year, compared to the first half of last year (2021). Clearly all this will have an impact on our industry over the next few years.

Despite the apparent gloom, the BIO Conference in the US was buzzing just a few weeks ago. The partnering activity was in full swing with thousands of meetings taking place over the four days. We at PharmaVentures attended over 150 partnering meetings – the highest number ever.

In some ways this activity is not surprising, our biopharmaceutical sector is still one of most robust largely due to the need by pharmaceutical companies to build their future patented product portfolios with novel therapies. Pharmaceutical companies cannot simply weaken their long-term strategy and, therefore, still need to compete against the competition to acquire the most promising future therapeutic candidates. Luckily, biotech companies have been well funded over the past few years and still hold a reasonable amount of cash. However, over the next year as those funds drop and valuations decline, new strategies and tactics will be required if these companies and their assets are to survive.

For 30 years, we have been advising companies through several economic cycles on robust arguments for the valuation of their assets and helping them to deploy alternative funding strategies.

To access our expertise, please contact us.

Is ‘closed-shop’ innovation a threat of new therapies and the fate of some pharma?

by Dr Fintan Walton, CEO, PharmaVentures.

After nearly 40 years in the pharmaceutical industry, I believe pharmaceutical companies have still not got it quite right when it comes to innovation

In the 1990’s and 2000’s, there was considerable M&A amongst pharmaceutical companies. A largely fragmented industry underwent a significant process of consolidation so that the acquiring companies could achieve market dominance and efficiencies of scale. There was great debate about whether these goals were ever achieved. Since then, pharma companies have acquired or merged with the more mature biotech companies who have a market dominance in a particular field. These strategies often provide short term temporary solutions to a pharmaceutical company wishing to maintain its market position. Nevertheless, market dominance amongst pharmaceutical corporations no longer begins in the commercial marketplace, but at the very early stages of innovation.

Today, market dominance is achieved by selling products that are wholly exclusive to the successful company, i.e., through patent protection. Patents protect the pharmaceutical company from competition, or at least from drugs that infringe the claims within the relevant patents. Patents, by definition, are non-obvious inventions and drugs are often protected not by one patent but by several. So typically, a pharmaceutical company’s strength and market dominance is its ability to identify and gain access to patents that are commercially viable. This is not a simple task.

For nearly 30 years, PharmaVentures has been very active in helping both emerging biotech companies and larger pharmaceutical companies to partner around innovation. We have seen how pharmaceutical companies have become more sophisticated in their partnering strategies and processes. VCs and pharmaceutical companies now work more closely together, with the venture arms of pharma co-investing alongside VCs. This was a proposition I put to several pharmas 20 years ago and it was quickly adopted.

However, I am not convinced the industry has got it right yet. My observation is that pharma companies have become complacent and are posing a great threat to their market position. The close partnering between pharma and VCs has just created a bubble where convergent thinking occurs, mantras develop, and new ideas are more difficult to accept. If anything, companies have become more risk adverse as a result, despite partnering sooner. Innovation thrives where there are no barriers and closed bubbles. Fortunately, we at PharmaVentures provide access for our clients into all the significant pharma and biotech companies. However, by actively working more closely with firms like us, where we are continuously accessing hundreds of innovative companies worldwide and carefully listening to the opportunities within our portfolio, pharma companies, in my view, are more likely to gain access to exclusive innovation, develop better therapies and gain a greater share of the future market.

Vaccines, patents and supply

by Dr Fintan Walton, CEO, PharmaVentures.

In my experience, quick fix solutions to complex issues are usually founded on a total misunderstanding of the problem causing the issue at hand, and if implemented result in, at best, no solution at all and, at worst, result in long-term damage. Such is the case with the World Trade Organisation’s (WTO’s) proposed solution to the vaccine roll out and distribution world-wide. Their solution is a proposed temporary waiver on the holders of patent rights to COVID-19 vaccine patents on the basis that such a waiver would result in an immediate speeding up of the vaccine roll out.

There are two fundamental problems with their proposal:
First, the problem is one of global manufacturing capabilities, not patent rights. There is quite simply a shortage of biopharmaceutical manufacturing facilities and skills worldwide. We know that because, for the past 20 years, PharmaVentures has been helping companies sell and find such manufacturing facilities; there are simply very few around, largely due to the significant rise in the demand for biopharmaceutical products. So, to simply build new ones, owned and run by those lacking the skills, would take many years and therefore would not be the immediate short-term solution to vaccine production and roll out. Even if these manufacturing facilities were abundant, and there was a patent waiver, or a non-exclusive royalty-free license given to third parties, the skills and know-how to manufacture these new vaccines are simply not easily transferable in the short-term. Even those who possess all the patent rights and have all the necessary skills and know-how to manufacture are struggling to manufacture optimally against demand. The best solution, in my opinion, would be for governments of all nations, maybe through COVAX, to provide financial support to existing manufacturers to improve, optimise and expand their manufacturing facilities in return for their vaccines to be supplied at lower cost. Furthermore, those countries that have a demand for vaccine, and are seeking a higher supply of vaccine, should focus on the complex logistics of the vaccine roll out so that every village and hamlet in their country is vaccinated rapidly.

Second, waiving patent rights interferes with the most important driver for innovation in medicine. Readers of Termsheet already know that patents provide confidence for investors that their risk in investing in new technologies will be rewarded through short-term market exclusivity. To put future uncertainty on the strength of patents through future government interference would undermine that confidence and weaken our ability to find future therapies for debilitating diseases.