Business


time-constrained manner. Under such circum- stances it is not surprising that errors of judgment were made resulting in the acquisition and/or adop- tion of technologies/platforms that were neither mature, nor suitable for implementation into the DDD process. Given such scenarios it is not surpris- ing that there was a lack of any significant increase in DDD productivity by pharmaceutical companies in the 1990s-2000s (see Figure 1).


Types of platform-DDD companies What is a PD3 company? Borrowing from Robert Thong’s thoughtful and well-articulated analyses such companies contain6,7: i) Scientific and technological core competencies. ii) These competencies are utilised to generate new therapeutic drug candidates. iii) Enhanced application of such competencies across a range of disease indications. These platform companies can consist of propri-


etary hardware, biological, molecular and digital technologies, or some hybrid mix of some, or all of them combined. They typically evolve through sev- eral stages of growth and development. Thong6 has highlighted that the genesis of such platform companies can be through an academic-driven start-up or a spin-out from an existing pharmaceu- tical company. The company must be able to gen- erate a revenue stream and so establish a ‘credible technology and/or service provider’ capability. They must be able to enter into service provision contracts with a number of pharmaceutical clients as well as complete the usual milestones associated with such deals. As the company evolves and devel- ops a credible reputation associated with aggres- sive fund-raising, then it can start to fund its own platform-driven proprietary projects and create its own drug candidates in specific disease indications. In this stage of growth, the platform company will partner with large pharmaceutical companies who fund the expensive late-stage clinical trials and navigate the complex NDA/BLA discussions with the FDA. Finally, the company may ultimately transform itself into a fully-fledged pharma/bio- pharma company, suffering all the travails of risk but potentially enjoying all the rich rewards of its own drug candidates reaching market. PD3 companies must create a credible reputa-


tion, which is intimately tied to successful fund- raising and revenue generation. As noted above, most such companies undergo a methodical evolu- tion primarily determined by financial needs, and these options are described below7: i) Platform technology partnering: Licensing of the platform and providing related services to phar-


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maceutical companies are a low risk, fast revenue- generating option. In addition it also serves as an expeditious route to platform validation. The client absorbs all the financial risk that includes upfront technology licensing fees, fee-for-service revenue stream and near-term preclinical mile- stone payments are earned irrespective of whether the project eventually results in an approved phar- maceutical product. The downside is that the client owns any pharmaceutical assets that emerge from the project, but the platform company may earn limited, single-digit royalties on marketed products. ii. Asset creation and out-licensing: In this sce- nario the platform company develops its own drug candidates predicated on the platform and out-licenses such molecules to large pharma. The latter assumes responsibility for completing late- stage clinical trials and commercialisation of the drug. The financial returns can be considerable with significant upfront payments, milestones and double-digit royalties on future sales. In addition the PD3 company has mitigated cost and risk by transference to the pharmaceutical partner. The downside is that compared to a simple technology partnering play, the PD3 company has increased its own time and cost commitment as well as the necessity of acquiring appropriate disease domain expertise. iii. Product development and commercialisation: A PD3 company that has its own candidate drug with in-house regulatory and commercialisation expertise can make the transition to a pharma/bio- pharma company. This option is attractive given the potential high financial return on a successful marketed drug. In this case the financial burden and risk exposure is greatly increased, and the company may lack the necessary expertise for late- stage clinical development, manufacturing scale- up, regulatory approval, payer reimbursement negotiations, commercial brand management and sales promotion. iv. Hybrid approach: Most early-stage platform companies start with either the technology partner- ing or the asset creation and out-licensing approach. The former generates revenue faster with lower financial risk. With higher investor funding and a greater risk appetite, the latter gen- erates a much better return if successful, and it might be essential in a very competitive situation where you initially have to demonstrate technolog- ical superiority with your own pharmaceutical assets. An increasing number of research-stage companies operate a hybrid business model that combines both these two approaches.


Drug Discovery World Fall 2018


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