The Life Sciences in New York State

Where's Starbucks?

Tom Evslin continues his discussion on Skype, the future of VOIP, etc., here. I've been waiting for Skype to come out with a phone number feature, and it is now in beta. I just ordered a headset, and I'll let you know how it works soon

I'm very interested to see how this works For one thing, cell phone coverage in some parts of New York are, shall we say, sporadic, at best. Something like this will incent me to lug my heavy laptop around more than I do. All I need is a Starbucks and I'm good to go.

While your reading Tom's blog, also pay close attention to his discussion of Metcalfe's Law.

Areas of Interest #2 - Drug-Diagnostic Co-Development

Earlier this week, Lilly and GE Healthcare announced a collaboration to develop a treatment for Alzheimer's Disease. The plan is to utilize GE's extensive imaging expertise to develop techniques for earlier diagnosis of Alzheimer's, which could then be treated by a drug developed by Lilly. Quote:

Fairfield-based GE will develop contrasting agents, which are injected into patients to help Lilly scientists evaluate therapies to treat Alzheimer's. GE will have access to Lilly's extensive molecular libraries to search for compounds that would be promising for use in targeted diagnostic imaging agents for Alzheimer's disease.    

Lilly, based in Indianapolis, will then have access to any diagnostic agents developed by GE to use from the early research phase through clinical trials.

Scientists at both companies can accelerate their progress by sharing molecular libraries, research findings and other resources, GE officials said.    

GE's health care business is developing targeted molecular diagnostics for a variety of neurological diseases, including Parkinson's disease and Alzheimer's disease. GE is planning to expand its activities with pharmaceutical partners to research other diseases.

This touches on a second area of interest of mine, which is the co-development of diagnostics and therapeutics. Diagnostics and therapeutics are usually (exclusively?) developed separately, and often by different companies. Pharma companies tend to use well-established markers of disease for their clinical trials and for marketing, as this makes it easier for them and for their prescribers.  Plus, diagnostics tend to be low volume, low margin products (at least from a pharma perspective). However, the lack of good diagnostics tools and techniques has hampered drug development in some areas, Alzheimer's being one of them.

In theory, a company can identify a novel marker of disease in animal studies, then develop a human version of a diagnostic test. Concurrently, the company can use this marker for the development of a drug to treat the disease. Upon approval, a simple diagnostic tool can drive earlier treatment of disease. The company potentially captures revenue from the diagnostic (initial use and monitoring) and the drug itself. Even if the drug is discontinued, the patient may remain "captured" through continued use of the diagnostic.

The catch, of course, is the drug which is co-developed may have to be extraordinarily safe if it is to be used in a pre-disease state. There is also the potential issue of reimbursement. Will an insurer cover the use of a drug which is being prescribed for a patient with positive diagnostic results, but no symptoms of a disease? What will this do to the R&D budget, especially for a small company?

Note that in the Lilly/GE example, there is a sharing of risk and reward. No company needs to undertake co-development on their own.

Fortunately, the FDA has recognized the need (and potential) for co-development. They recently released a draft concept paper on Drug-Diagnostic Co-Development: pharmacoconceptfn.pdf They recognize the emergence of imaging, pharmacogenomics, and other approaches which can be used in order to treat disease earlier.

I think this is a terrific philosophy which cuts across a number of major therapeutic areas and indications. Cancer, Alzheimer's, Parkinson's, Diabetes...and on and on.

 

Areas of Interest #1 - BioMEMS

I have recently been thinking about areas of research which may be interesting, future investment opportunities, and the level of research in these "themes" which is present in New York. Thus, I will spend some space on the blog thinking out loud on some of these themes.

The first theme which comes to mind is novel “biochips” or “BioMEMS” for use in drug development. A typical pharma company may crank out hundreds (if not thousands) of lead compounds and derivatives in order to find a single drug candidate which is potentially safe and effective. The trick is to rapidly eliminate those drugs which are unsafe or ineffective before conducting large-scale animal or human clinical trials. In addition, it is critical to minimize false negatives, that is, candidates which appear to have a problem in an early test when in fact it is safe if tested in animals or humans. So, being able to project what is likely to happen in humans is a critical component.

For each potential reason for dropping a candidate (e.g., liver toxicity, cardiac toxicity, lousy pharmacokinetics, etc.), there exist a number of in vitro, in vivo, and even in silico approaches, yet there is a need for better, faster, cheaper approaches. Some have advocated jumping right into small-scale animal studies with a limited number of representative compounds, but this is not only inefficient, but it raises the issue of going through an increased number of rats and mice, which is cruel. An alternative application for this type of research is in the development of diagnostic and monitoring devices such as blood glucose monitors.

I blogged yesterday about Solidus, a company which is developing a liver on a chip (my term) to screen candidates for potential liver toxicities. This is a good example of what I have in mind. Imagine, for example, a chip where drug candidates are exposed to enzymes (or even whole cells), and responses which signal potential toxicities are noted. Imagine how these chips might be manufactured. Lithography? Perhaps. Would silicon be used as the base? Other, novel materials? Note that this should not be confused with DNA microarrays already commonly used in genomics. I’m talking about complete systems (chips, detection devices, robotics, and data correlating results with animal studies).

This is a highly competitive and rapidly emerging area in academia. Fortunately, we have some of this research going on in New York. Cornell has several faculty members who are performing this type of research in the College of Engineering and their College of Engineering and School of Chemical and Biomolecular Engineering. In fact, Hurel emerged from tecnology developed at Cornell. Unfortunately, Hurel established corporate offices in California. Jonathan Dordick’s work at RPI (co-founder of Solidus) is another example. The University at Buffalo has similar research ongoing in their Engineering School.  And we cannot forget the  technology coming from Albany Nanotech which may have applicability here. 

Commercially, the challenges which Affymetrix faced with microarrays will be similar for companies developing and commercializing these types of products. R&D folks are notoriously conservative. Uptake for anything new is generally slow. Additionally, there is often a disconnect between the actual users (bench scientists) and purchasers (department heads). So, the sales cycle is long, requiring a “technical sell” with an emphasis on data, performance, and correlation with animal and/or human data. Once entrenched, however, I think the potential is significant.

Tennis Bison

Who knew they played tennis?

Solidus Still Alive

The recent issue of Tech Valley Times gives a brief report on Soludus here. Solidus is in a space which I particularly like, namely, the interface between drug testing and materials science/engineering. If successful, their MetaChip can be used to screen potential drugs in a high-throughput manner to test for potential toxicities. This "fail faster" approach can save pharma companies thousands to millions of dollars in animal and human safety trials which are NOT conducted.

But, I still don't buy the $800 MM DiMasi figure that everyone quotes...

Utility of Corporate Blogs

Much has been written on the utility/futility of corporate blogs, so I won't jump into the fray, other than to say that I think they can be a useful way to market products and services, while concurrently collecting instant (albeit limited) feedback.

One I like is Bob Lutz' blog, here. Note all the comments each post receives.

Innovation in Pharma

John Carroll is the Editor of FierceBiotech, a daily roundup of selected news events in the biotech and pharma industries. Today, John had this to say:

The real challenge that biopharma faces isn't low-cost competition, though. It's a lack of innovation. If the big drug companies can get their research activities back on track, they'll have the kind of products that command big and growing global markets. Nearly half of all Americans take some prescription medicine every month. That market isn't going to disappear overnight, even if consumers find ways to economize. If researchers find the cures, there will be no struggle identifying the market opportunity.

He's right, of course. Easier said than done, but nevertheless correct.

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On blogs, chemistry, Ghana, and Kindergarten

One of the benefits of blogging is that there is no shortage of smart people who are also blogging. This creates a wealth of material for my own blogging and thinking.

Such is the case of Derek Lowe's most recent post, The Globalization of Med Chem. He discusses the trend involving the emergence of contract medicinal chemistry "shops" which can replace some (all?) of the internal medicinal chemistry activities found in any pharmaceutical company or contract research organization. Quote:

That trend has been reaching its logical conclusion recently, with the entry of suppliers from India and China. Man, are these guys cheap. In many cases, they can underbid pretty much anyone here in the US, and they often do very good work (after all, there's plenty of well-trained scientific labor coming from both of those countries.)

It's gotten to the point that I don't see how the standard make-your-compounds-sir? contract houses are going to stay in business over here. Many of them have already been branching out, looking for some unusual type of chemistry to specialize in (nasty halogenations, high-pressure reactions) or getting into FDA-quality manufacturing for clinical trials, which is something that the Indian and Chinese companies can't yet provide - I think.

We see it in industry after industry, where competition based on geography and common language is shifting to one based on cost, speed, and mimicry. Mimicry? Think about how the Japanese economy emerged in the 70s, from imitation (e.g., the same VCRs and TVs as made in the US, only cheaper) to innovation (Sony Playstation, Lexus, Infiniti), and thus premium pricing. To quote Derek again:

Perhaps it would do us all good, here in the US-based Big Pharma labs, to find some useful med-chem skills that would be harder to outsource. . .

He's right. We now have to think more along the lines of what Tom Peters and others have suggested, which is that innovation and differentiation at a company AND personal level are drivers of success. It's no longer enough for a medicinal chemist (replace with any other profession you can think of) to have a degree from a top school with the best post-doctoral experience. That's just the price of entry.

Tom Peters makes these points in his book, Re-Imagine! Tom points out that as wages rise in India, work is being shifted to other English-speaking countries such as Ghana.

It all goes to show that our world is shifting much faster than most of us even realize. In fact, this thought crossed my mind as I was sitting in my son's school during his Kindergarten enrollment meetings yesterday. I looked around the school rooms and hallways, and realized that it did not look terribly different from my grammar school. Oh sure, there were a few computers in the classrooms (a policy which I strongly oppose, by the way), but it was all the same. I couldn't help but wonder if the teachers and administrators are thinking about these issues and adjusting their curricula accordingly.

No, of course not...

Seth shops at Lowe's

Seth Godin is one of my favorite bloggers and authors. I read his blogs regularly. Why? Here's a great example. And by the way, I too shop at Lowe's.

What is Big Pharma?

The April issue of Contract Pharma (subscription required) has an interesting article by Michael A. Martorelli entitled "Untapped Revenue Potential." To quote:

Most readers think of Big Pharma as representing the drug industry...Defining the drug industry only by referring to its largest participants may be appropriate for certain financial purposes. But those who use such a shortcut may not be given due respect to the small and mid-tier pharma companies-and it's that group of firms that's receiving the bulk of the NME and NDA approvals.

I think Mr. Martorelli has made a critical point. Many of us (especially the financial press) look to Pfizer, Merck, and Lilly as the bellwethers of the entire industry. Yet, 16 pages later, in the same issue, a table listing NDA approvals for 2004 show 7 out of 36 (<20%) coming from Big Pharma (defined as Boehringer Ingelheim, Lilly, Aventis, Novartis, and Pfizer). If you include "Big Biotech", that increases to 33% (toss Genentech, Amgen, Biogen Idec, and Genzyme into the mix).

So, where are the other 70% of NDA approvals coming from? NY-based ImClone, EyeTech, and OSI Pharma are there, illustrating what we can do in New York! Also included in the 70% are "biotechs" such as Sepracor, Shire, and Elan. The rest are from Japanese companies (Yamanouchi) and a variety of companies which I've never even heard of.

What does this mean? I think we're continuing to see the "long tailing" of the industry. To understand the Long Tail effect, review Chris Anderson's blog here. Think of Amazon.com. Before Amazon.com, book and music purchases were fairly limited to what was most popular and most appealing to the masses. Now, literally every book is available on line somewhere. Every band can record and publish their music online, thanks to the wide spread availability of high quality, low price digital recording equipment. In fact, somewhere I've heard that every song available on Apple's iPod music site has sold at least one copy. Has every book on Amazon.com sold at least one copy? I think it's quite possible.

From the industry perspective, we've entered an era where size and geography (physical location) is not a prerequisite for innovation. As a researcher, you can be just as innovative (more so?) in a small company, even with comparably fewer resources. Innovation is increasingly coming from the "long tail" of the industry, a large collection of small companies from all over the world, who may have limited resources, yet are able to develop drugs by tapping into the wealth of resources available to them on a contract basis.

Tom Peters discusses this general concept in his book, Re-Imagine! He envisions  multibillion dollar companies with less than 10 employees, with the rest being outsourced on a contract basis. How many physical bookstores would it take (and warehouses and trucks and...) to sell ALL of the books on amazon.com at least once? Could big pharma alone develop and commercialize 36 NDAs per year? No way.

From a New York State perspective, this is a terrific trend and opportunity. As I've said before, geography (physical company location) and scale are no longer prerequisites for innovation and job creation in the life sciences. Companies CAN be founded in, say, Albany or Buffalo, and they CAN innovate, and they CAN create jobs, and they CAN successfully commercialize products. Interestingly, repeated successes would stimulate a multiplier effect, creating a demand for "downstream" service jobs such as attorneys, IT professionals, food/vending, facilities maintenance, etc., etc., etc...tasks which are required, but not mission critical. Note that many of these jobs emerging from the multiplier effect are local.

Exciting? Yes. Challenging? Absolutely. Scary? You bet...