Name: Phyllis Whiteley
Position: Senior Vice President of Business Development & Licensing, Perlegen Sciences, 2004 — the present
Background: Several positions within F. Hoffman La Roche: Vice President Business Development and Global Licensing Director in Basel, Switzerland; Vice President Global Alliances Research, North America; Vice President of Strategic Portfolio Management, Global Pharma Research Strategy; 1994 — 2004
Education: PhD in Pharmacology, Washington University in St. Louis, Mo.
During the BIO 2005 conference in Philadelphia last week, Phyllis Whiteley gave a popular talk as part of a session devoted to pharmacogenomics and personalized medicine. With a strong background in facilitating pharmaceutical-licensing deals, as well as in leading drug discovery research, Whiteley expounded upon the critical changes she sees overtaking the industry. In particular, the character of drug development and licensing is changing in ways that pharma needs to understand if it is to derive maximum value from personalized medicine.
In your BIO 2005 talk, you drew a sharp distinction between a "traditional" licensing deal and the kind of deals that pharmacogenomics will give rise to. What did you mean by a traditional licensing deal?
The concept that I was discussing is that almost everybody in business development knows how to put a value around a licensing deal for a therapeutic. So, if I had a phase I that I'm selling or looking to buy, or a phase II, or a phase III, or even a preclinical — everybody knows what the deal structure is. You kind of have a sense of what the up-front usually looks like, with the milestones, the royalties… I think that most people think they're better than everybody else, in terms of creativity.
But you know what the rules are. And I think it's a whole different game when you say, 'Well, how do I put value' — not around the therapeutic — but in personalized medicines, you think about which people to give it to. The business I'm in is really saying, 'For therapeutics, we'll identify which patients would benefit the most from that therapeutic.' Well, now you're not putting a value around the therapeutic, you're putting the value around the patient.
So, it's a really different way of looking at valuation — what are the rules? Is that a royalty bearing? Is that milestone? What kind of up-fronts are you talking about? In terms of the deal structure, it's a very different sort of model.
How do the rules differ, then?
First of all, when you're talking about personalizing medicines, probably the most important message is that you're not talking about personalizing every medicine. And so, in my talk, I went through the example of 'the one-size-fits-all doesn't fit everybody.' It's the idea where I'm not talking about every single medicine being tailored to each individual person, but that people come in groups.
The analogy I gave is that it's kind of like buying clothes. When you walk into a store, most people can fit into a small, a medium, a large — something that's fit by groups. That's really important, and that's a lot better than wearing a paper sack, but it's not about having a tailor [for] each medicine.
So part of it is understanding that when you go about doing these deals, [you] identify those medicines that would really benefit. And one of the important messages I like to give — particularly in deal-making — is, you're not talking about going up to a company and talking about 'nicheing' or decreasing the market for their compound.
That is often the concern, right?
It is. And [the reality] is really the opposite. I think what happens is, we get a little caught up in thinking that you'd personalize everything — I think that's the first message that's not true.
Second, that medicine has to really benefit from personalization, for it to get to the right patients.
So, [take] products that are relegated to fourth-line therapy, for example. Well, you'd personalize it to move it up to second-line therapy, because you'd know which patients to give it to.
[Another example is] 'me-toos' that really aren't differentiated. The way you differentiate a me-too is [by] order of entry. So, if you were putting a valuation on a compound that you wanted to license that was a me-too, you would [set] its valuation based on when you thought you could launch in the order of entry. But if you had a me-too that you could differentiate by knowing which people to give it to, your valuation would be very different — it would no longer be order of entry.
What's another difference?
Another key difference is, when you do deal valuation on helping someone with disease- or new-target discovery. Typically it's not royalty-bearing — it's pretty tough to get royalties, they're very low.
What I went through [in the BIO talk] is the process of making drugs, all the way from target discovery to a new launch. And typically, on that far-left end of new-target discovery, that's not a high-value proposition for a deal structure because it takes so long to get to the drug.
But in the case of personalized medicine — say, the sort of technology that Perlegen does, where we're really looking at the genetics behind diseases and the genetics behind which patients respond. Now, if you could identify or subsegment diseases, and really understand which forms of the disease would respond best to which therapies, that's a very different value proposition than the new-target discovery that now somebody has to make a small molecule on. Because now you've used this information to potentially change how you did development.
Well, by impacting development with patient stratification, or doing better and cheaper trials, how do you put a value on that? Is that royalty bearing?
But I imagine you do put a value on that.
That's right, and really that was the topic of my talk. You do — and so these are things that haven't been done before, where your valuations were based on how you did the clinical trial. Your valuations were based on which patients should get it, as opposed to the valuations that were based on, 'I have a phase I small-molecule compound.'
When you start thinking about commercialization, eventually the key message is to personalize those compounds [where] you can expand their market share, [and] expand the patient penetration. And the examples I gave are — Lipitor doesn't really need personalization, it's doing just fine getting to patients — but if you took an example of a statin that wasn't really breaking into the market, or had a bad side effect, or some other [factor] was limiting it. [If] it would be better for some patients, then it would benefit from personalization so that it could compete. Although your dream target product portfolio, your dream financial assessment from the marketing team is, 'This is a billion-dollar drug' — in fact it might not be. So, as far as personalization in getting it there — you might actually be able now to compete against a premiere statin.
So is part of the approach to try to convince drug makers to give up their dreams of reaching such a status in the market?
Yeah, I think it really is. Then we start to ask some questions that help people do that, because everbody has the dream vision. It's funny, if you've ever done valuations, you always have a $5 billion potential drug when you're preclinical. It's always amazing to me that it's potential valuation decreases, the further you get into development. And the more you learn, the more holes and the more problems. So, I think that is part of it, is being able to have that discussion about, 'I know what you want it to achieve, but what is the data doing?'
I think that becomes a very important discussion, where you can really start to talk about the valuation. So, one of the things I look for is patient variability. If all patients respond the same to this therapeutic, it's probably not terrific for personalization. But if you have the variability, and can really try to understand the genetics — there's probably a genetic and environmental component, but if we focus first just on the genetics — can you understand which patient population is most likely to respond?
Now, if there's no other therapy out there, the odds are physicians are going to want to try it, unless there's a real down side. But if you're [working] in a disease where there are options and choices, then you have the chance to change the treatment paradigm and the order of what's used [by doctors].
I'll give you another example — when I think of the TNF biologics, I look at them as [being] aimed for the severe population, moving down into the moderate population. Why aren't they given to the mild [population]? Not because they wouldn't work, but because they're very expensive, they don't work in everybody, and they have a side-effect profile that has to make you really think twice about giving it — with the increase in infections. But if you knew which patients would respond, the benefit they bring to the patients is really significant. You might choose to give it to mild populations, really saving them years of disease progression, because you were willing to take that risk on the side-effect profile, and were willing to spend that money, because you knew it would work for them.
How much resistance is there on the part of drug makers to see things this way?
I think it's changing. I guess there are a couple of pieces of evidence of that. One is the company I'm in — Perlegen Sciences — we have lots of partnerships. We can say there are early adopters — there are people who are really interested.
The other piece of evidence I would use is that most pharma companies are setting up pharmacogenomics groups — or have them. And so, they're beginning to do it. You can always say, 'How should you do it? How much should you invest in it?' But you're starting to see, in most companies, that they have real discussions about biomarkers, and about knowing which patients to give [a drug] to. You just find this as a common discussion.
And so the timing is right. A lot of it is based on the environment, with what happened with Vioxx and a lot of these products. When a product is withdrawn or a phase III fails, market caps just have tremendous reactions.
Is that the value of a scare story?
Scare stories are only scary if they're true. It's the value of the truth — it's one thing when things happen and there was no way to prevent it, or nothing you could do about it. Eventually, we're going to have to start asking those questions, 'Could I have done something about problems?' And if the answer is 'yes,' then you have to take advantage of it, and when the answer is 'no,' you keep going as you did before.