Project Leader Authority in Pharmaceutical Discovery & Development is Inversely Proportional to Aggregate Project Risk James Samanen President James Samanen Consulting www. jamessamanenconsulting.com

2 Learning Objectives The differences between Discovery and Development Project Leadership come down to the Level of Aggregate Project Risk Project Leadership is no less important in Discovery than it is in Development It’s just different

3 Where’s the Research? Its all research whether it’s the discovery of - a new protein implicated in viral replication, or - a side effect in patients implicating a new potential indication. To investors its all research prior to Phase III. There is so much Research in Development, we call it Discovery & Development Pharmaceuti- cal R&D

4 Discovery - early research leading to discovery of a biological target, first agents (leads) which interact with the target in the desired manner (agonist, antagonist, etc.), and clinical candidates through optimization of properties in subsequent analogs Development - the focus is on a single agent. Discovery vs. Development Registration & Launch Target Selection Candidate Selection Market Access Product Differentiation Full Development POC Preclinical Evaluation Lead OptimizationLead DiscoveryTarget Discovery Drug DiscoveryDrug Development Focus - TargetFocus – Clinical Candidate

5 What Percent of Projects Move on to the Next Stage? ~25% Target Discovery projects reach Candidate Selection, 7% Candidates reach Launch 2% success overall Attrition = 1/Success Phase 1 Candidate to Clinic Lead Optimization Lead Discovery Target Discovery Phase 2 Phase 3 Stage: Regis- tration Launch 61%63% 57%64% 44%56% 83%60% % Success 1.8% 24.5% 7% Discovery Development Based on data from Brown, Drug Disc Today, 8, and “Can the pharmaceutical industry reduce attrition rates?” I. Khola and J. Landis, Nature Reviews / Drug Discovery 3, 711, 2004.

6 Working backwards - 57 projects are needed for 1 launch –75% of pipeline in Discovery (43), 25% in Development (14) –10 year avg. cycle time from Target Discovery to Registration Phase 1 Candidate to Clinic Lead Optimization Lead Discovery Target Discovery Phase 2 Phase 3 Stage: Regis- tration Launch No. Projects For 1 Launch 61%63% 57%64% 44%56% 83%60% % Success 1.8% 2 yrs 6.5 yrs 1.5 yrs Cycle Times Discovery Ph 1 - III Pre- Clin Based on data from Brown, Drug Disc Today, 8, and “Can the pharmaceutical industry reduce attrition rates?” I. Khola and J. Landis, Nature Reviews / Drug Discovery 3, 711, How many projects provide 1 Launch?

7 If 4 launches are needed due to future patent expiration of marketed blockbusters, the company would need 200+ projects in Target Discovery - Does it have the capacity?? Historically acquisitions made up the difference, - but reducing attrition and cost would have dramatic impact on profitability. - 10% improvement in attrition would save $100 million dollars per drug (a) Attrition-Based Pipeline is not scalable a)FDA white paper “Innovation or Stagnation”, 2004 “All it takes is one good drug” 57

8 Even the one good drug that got to launch, in the beginning was no “sure thing”. In Discovery, every project has the potential to be the next “blockbuster”. It’s the 10+ years of experimentation that prove it so. The one sure thing pays for the rest

9 Even the one good drug that got to launch, in the beginning was no “sure thing”. In Discovery, every project has the potential to be the next “blockbuster”. It’s the 10+ years of experimentation that prove it so. The one sure thing pays for the rest This drug pays for all of this

10 Even the one good drug that got to launch, in the beginning was no “sure thing”. In Discovery, every project has the potential to be the next “blockbuster”. It’s the 10+ years of experimentation that prove it so. This drug pays for all of this This is why Discovery Project & Portfolio Management Is Important The one sure thing pays for the rest

11 At the start of a project, the risk that any aspect of it will succeed is unknown All of the potential project risk is loaded at the beginning – Aggregate Project Risk Every experiment is designed to answer one question about whether the target and related compounds will work against a disease. There is a risk that any experiment will fail. If the experiment is a success, that particular risk is eliminated and the probability of success is increased. D&D is the removal of Risk POS Risk

12 “Risk Management is the systematic process of identifying, analyzing, and responding to project risk. It includes maximizing the probability and consequences of positive events and minimizing the probability and consequences of adverse events to project objectives.” –Project Management Book of Knowledge (2000+) Project Risk Mgmt – Increase POS POS Risk

13 As the project team works to reduce Aggregate Project Risk, The project POS increases, and The total project Cost increases, Project Risk vs. POS, Cost Cost POS Risk

14 As the project team works to reduce Aggregate Project Risk, The project POS increases, and The total project Cost increases, but Because the POS increases, the “anticipated” value of the project increases, Project Risk vs. POS, Cost, Value Cost Value POS Risk

15 As the project team works to reduce Aggregate Project Risk, The project POS increases, and The total project Cost increases, but Because the POS increases, the “potential” value of the project increases, and Corporate commitment increases. Project Risk vs. POS, Cost, Value and Commitment Cost Value POS Risk Commitment

16 At each stage of Discovery and Development, work is performed to reduce aggregate project risk and increase “potential” value. Goal to Reduce Risk & Increase Value Registration & Launch Target Selection Candidate Selection Market Access Product Differentiation Drug Discovery Drug Development Full Development POC Preclinical Evaluation Lead Optimization Lead Discovery Target Discovery Cost Value POS Risk Commitment

Project leader authority is influenced by line managers Influence of Line Managers Section in The Standard for Portfolio Management, 2 nd Ed. P. 17, Project Management Institute, See also Section “Organizational Structure”, p , in A Guide to the Project Management Body of Knowledge, Project Management Institute, 4 th Edition, FunctionalWeak MatrixStrong MatrixProjectized Autono- mous Team Project Mgmt Office Full-Time Project Leader Full-time Coordinator Part- time Coordinator No Coordinator Management of Projects High Med. None Influence of Line Managers on Project Project Leader AuthorityHigh Low None

18 Influence of Line Managers Project leader authority can vary dramatically according to the impact of the project on the corporation FunctionalWeak MatrixStrong MatrixProjectized Autono- mous Team Project Mgmt Office Full-Time Project Leader Full-time Coordinator Part- time Coordinator No Coordinator Management of Projects High Med. None Influence of Line Managers on Project Project Leader AuthorityHigh Low Cost Value POS Risk Commitment None

In Pharma, Project Leader authority and effectiveness tends to increase from early Discovery to final Drug Development Influence of Line Managers

20 Influence of Line Managers The lines tend to control resource in Discovery and early Development. In late Development the projects control resource

21 The Triangular Relationship There is a triangular relationship between line departments, the project leader and portfolio management, focused on the project team Line Functions Project Team Project Leader Portfolio Management

22 Project Leaders as Matrix Managers When there are many projects, each competes for resource from the various line departments Line ALine BLine CLine DLine ELine F Project 1 Project 2 Project 3 Project 4 Project 5 Project 6 Project 7 Project 8 Project 9 Project 10

23 The Triangular Relationship Line managers not only impact project teams through the contribution of resource to the teams, They also pick the project leaders and They control much of the valuable project data needed by portfolio management Line Functions Project Teams Project Leaders Portfolio Management

Some Differences Between Discovery & Development 24 Discovery Project Leader Volunteer* from line departments Averse to detailed project tracking & reporting – keep it simple (Gantt charts a tough sell) Line managers needs to value this work The PL will be beholden to the line managers for resource and delivery dates Development Project Leader Professional project leader Appreciates the value of project tracking & reporting (Gantt charts a minimal necessity) Line managers will be influential in early Development. Project more important than line * The consequences of a volunteer scientist project leaders may include less training, less visibility and accountability (not sure of their role), more interest in exploring science than meeting timelines.

25 Presentation Summary The differences between Discovery and Development Project Leadership come down to the Level of Aggregate Project Risk Project Leadership is no less important in Discovery than it is in Development It’s just different –These differences are further elaborated at

26 Contact Information James Samanen Consulting