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To Phase III or not to Phase III?

In the Pipeline's Derek Lowe talks about the occasional "perverse incentives" in oncology drug development. Lowe references an article from 2007 in the Journal of Clinical Oncology written by an investor, Tony Fiorino, who talks about the motives behind oncology research at large pharmaceutical companies versus small biotech start-ups. Larger companies have more of an incentive to be careful about what drug candidates they test, Fiorino suggests, because clinical trials eat up profits quickly. Start-ups biotech companies, on the other hand, are valued by how many candidates they have in the pipeline, and so they tend to take more risks. "This factor often leads development-stage companies to make very poor assessments with their own product candidates and to radically misjudge their likelihood of success," Fiorino wrote. "Indeed, if the fortunes of the entire company depend on the fate of a single phase II compound, and the interests of those deciding whether or not to enter phase III are tied entirely to the ongoing viability of the company, it would hardly seem surprising that companies push forward with the development of drugs when to objective outside observers further development seems futile." If small biotechs take caution in what they do, Fiorino suggests, they are punished by the market, and their stocks drop. Dubious results from Phase II trials aren't enough to keep small companies from wasting time and money on Phase III tests, he adds, and indeed that oncology clinical development programs seem to be designed specifically not to provide accurate information on the likelihood of success in Phase III. "Remind you of any events of the last few years?" Lowe asks. "In a better world, we'd be running better Phase IIs."

The Scan

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