Development and Approval of Drugs and Devices EPI260 Lecture 2: How to Assess an Early Stage Drug Candidate April 8, 2010 Richard Chin, M.D.

Lecture Outline Characteristics of a desirable drug candidate and the process of optimizing the molecule The players and the process for finding a partner for a drug candidate Case studies

Characteristics of a Good Drug Candidate Unmet medical need Validated target Biology and animal models Chemical characteristics Pharmacokinetics and other preclinical properties Clinical and regulatory path Good IP protection

Setting the Bar How do you know when the candidate is good enough (adequate potency, absorption, etc.) Target product profile –Similar to a package insert –Identifies the minimal, expected, and best case characteristics of the drug –Safety, efficacy, dosing, side effects, taste, etc.

Unmet Medical Need A disease with –Sufficient number of patients –Severe enough disease –Few treatment options –Few current and future competition Examples –Anti-VEGF antibody –Calcium channel blockers –Anti-Complement antibody

Validated Target Validation: positive and negative First in class drug by definition is unvalidated Me-too drugs target the validated target in the same manner as the first in class Second generation drugs target the validated target in a different way –Better affinity –Multiple targets –Better specificity

Biology: How can you handicap a drug candidate? Validated in-vitro assays –Binding assays –Cell based assays Validated animal models Validated biomarkers Epidemiological studies Natural human knockouts Unvalidated in vitro assays Unvalidated animal models –Knockouts –Conventional models

Chemical Characteristics Lipinski’s rule of 5 for oral drugs –Not more than 5 hydrogen bond donors –Not more than 10 hydrogen bond acceptors –A molecular weight under 500 daltons –An octanol-water partition coefficient log P of less than 5 Toxicophores Ease of synthesis Stability Solubility

Other preclinical characteristics PK/PD Metabolism Formulation Absorption Effect on myocyte conduction

Clinical and Regulatory Path Is a regulatory path defined? Is there a Phase 2 surrogate available? When can the program be de-risked? Are there clear ways to distinguish go from no-go along the way? How many other drugs have succeeded of failed in this indication(s)?

Intellectual Property Is there good IP protection? –Exclude other entrants Is there freedom to operate –Molecule –Target –Method of action –Surveillance systems

Partnering/Raising Funding Drug development is a high risk, capital intensive business Except for big pharma and big biotech, most drugs will need to be partnered Sources of capital –Angel investors –Venture capital –Public market –Partnering

What do they look for? Return on investment –Until the exit Exciting science Great unmet medical need Validation by their peers

Drivers for Partnering Explicit reasons –Need for innovative new products –Need to distribute and share risk –Need for capital –Need for expertise in development –Need for expertise in distribution –Tax considerations Secondary reasons –Need to block competition –Desire not to be left behind competition –Need for validation

How Partnering is supposed to work Small company or academic inventor comes up with a new candidate Larger pharma licenses technology Drug is developed Revenue is shared

How it actually works Technology or target becomes “hot” –e.g., publication in Science and SVP of research notices it Good relationship established between BD personnel between the parties Internal alignment and negotiation at the big pharma Champion at big pharma pushes the deal through

Typical Due Diligence Market analysis Examination of data –Chemistry –In vitro assays –Preclinical data including toxicology data –Clinical data –Regulatory documents Consultations –External experts in disease –External experts in technology –External experts in clinical/regulatory

Case Study 1 Small startup has excellent small molecules against CCR9 Excellent chemical properties Good results in animal models of Crohn’s disease Good patent position except for one composition of matter patent which is held by another company working in the GI space

Case Study 1: Results Multiple parties interested Multiple due diligences, all of which came to halt because of FTO issue Finally signed a deal with one of the top 5 big pharma, who could afford to fight their way through the patent

Case Study 2 Company has identified a botanical product with promise against Parkinson’s disease Long history of use in patients with dementia Available as a nutraceutical Good effect in animal studies Good effect in small studies conducted in Russia Difficult to manufacture reliably and consistently Method of use patent

Case Study 2: Result Despite years of effort, no partnering Method of use patent weak, especially given availability as nutraceutical Non-GCP data not reliable CMC issues also a major stumbling block

Case Study 3 Company has new formulation of gabapentin Delayed release technology allow once a day dosing rather than t.i.d. dosing Gabapentin is a multi-billion dollar product No improvement in efficacy or safety Technology risk substantial

Case Study 3: Result Multiple parties interested Large partnering deal signed, with >$25M upfront payment and multi-billion dollar milestone based payments

Case Study 4 Company has new technology to rapidly generate antibodies Antibodies are fully human and has excellent binding, half life, and antigenicity Multiple antibodies against promising target has been generated HHMI, National Academy of Science, Nobel laureate founders

Case Study 4: Results 1995: multiple investors, multiple partners, IPO, market capitalization of >$5 billion 2005: no investors, company runs out of money and shuts down 2009: multiple investors, though not at the same valuation as 1995