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Why We Need to Rethink the Regs

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Robert Oldham says pharmacogenomics and current FDA rules aren’t compatible

Robert Oldham is CEO of Cancer Therapeutics of Augusta, Ga. He was previously director of oncology at Vanderbilt University Medical Center and director of the Biological Response Modifiers Program at the National Cancer Institute. He has published more than 400 articles and 13 books in the scientific literature. He can be reached at [email protected]

Investors are constantly asking entrepreneurs when profits will come so they can begin to calculate their return on investment. In device, tool, and diagnostic companies, these calculations are relatively straightforward. But for therapy companies there is an elephant in the room that is often ignored or mentally downsized.

Therapy companies, including genomic and proteomic companies, may have good intellectual property, excellent science and management, and committed investors for their well-conceived business plans. When investment calculations are made to raise the first or second round of capital, amounts of between $5 million and $100 million are often envisioned and raised. How does that connect to the reality of the cost of developing new drugs for the market?

Industry figures point to at least $500 million and 15 years to take a drug to market. These figures include the cost of failures. As only one in 5,000 laboratory-tested drug candidates and only one in five that begin clinical trials become approved medicines for human use, the cost per approved drug is very high.

How many business plans, which often show a pipeline of five to 10 drug candidates, have realistic financing plans to approach this costly process? How do we in the biotech business think our 2,000 companies with 10 promising pipeline drugs each are going to raise the aggregate $10 trillion of capital to finance this pipeline?

There are various ways to deal with the elephant: Sell the company or drug candidate during “promising” preclinical or clinical trials; launch a huge IPO timed just right to finance clinical trials; form a joint venture with big pharma to cover clinical trial costs; or, just ignore it.

Most calculations of cost-to-market for new drugs are based on the one-size-fits-all paradigm. Yet genomic companies are touting personalized medicine and the concept of tailoring the drug to fit smaller and smaller subsets of patients, down to the individual SNP. This obviously drives out a smaller and smaller marketplace for the product sales and a lower return on investment. How does the investor reconcile $500 million per drug with personalized medicine?

Because a large majority of drug development costs are directly due to costs secondary to FDA regulations, the industry really needs to critically examine the necessity of each element of these costs. Congress formulated these regs for the safety of patients in the early 1990s and for proof of efficacy in the 1960s based on the one-size-fits-all large marketplace paradigm. None of this fits with the concept of personalized, genomic-based drug development. It is time for companies and their investors to take a serious look at these regulations and do some reality testing.

Genomic-based biological drugs are simply not analogous to chemicals being developed as drugs. These genomic-based drugs are part of our innate biological communication system and as such they are much more specific and less toxic than off-the-shelf chemicals. It is time to change the regulatory paradigm so that entrepreneurs and their investors can truly predict returns on their investments.

Continuing to ignore the elephant in the room will lead to expensive lessons for companies and investors. An important benefit from the process will be less expensive drugs that are more effective and less toxic for our patients.

 

Opposite Strand is a forum for readers to express opinions and ideas about trends and issues in genomics. Submissions should be kept to 550 words and may be submitted to [email protected]

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