One of our three main investment areas at Creative Ventures is tackling rising healthcare costs. It’s disheartening to see just how broken the system is but also inspiring to have a front-row seat to the many innovative solutions companies are working on.
Recently, we’ve started looking into how to increase drug development success rates and optimize treatment efficacy for patients.
Source: https://www.statista.com/statistics/265054/pharmaceuticals-cost-of-development-in-the-us/
With low approval rates (10% – 20%) and high development costs (~$2.6 billion, 2013 dollars), our attention has turned to clinical trials. Trials generally make up ~50% of pharma’s R&D budget, and at the industry’s median gross profit margin of ~77% but median EBITDA margin of ~30%, they have the capital to invest in new technologies and are financially incentivized to do so.
Many pharma companies are actively pursuing ways to decrease trial failure rates with approaches like subject stratification, using improved biomarkers, etc. This is why companies like Foundation Medicine and Flatiron Health were acquired by Roche and valued at $5.3 billion and $1.9 billion, respectively.
There is still ample room for opportunities in this space. One of our recent investments, OncoPrecision, offers solutions that have the potential to address the hefty price tags of drug development and low cancer drug efficacy for patients. Using unique and cost-effective functional assays, their approach could unlock accurate predictions for patients’ responses to a range of cancer drugs.
The basis of looking at individual patient response profiles is the fact that we are all unique, biologically speaking. Similar to how our metabolisms work differently, our bodies do not respond to drugs in the same ways, nor do they have the same baselines for certain diagnostic values.
Though, taking a few steps back, today’s clinical trial participants are far from being representative of the population. The good news is that the industry has been witnessing movements toward increasing diversity in clinical trials over the past few years: guidance by the FDA to improve enrollment diversity, commitments from big pharmas like Novartis (including a short-term effort to evaluate diversity and inclusion principles in 100% of their Phase 3 studies), Lilly’s diversity and inclusion programs, Pfizer’s collaboration with Headlands to help recruit more diverse participants based on underrepresented sites.
Historically, there’s a not-so-secret fear that allowing the trials to be more inclusive will be too costly, and the results insignificant or hard to interpret. It is also a logistics issue, given that trial sites are not evenly distributed—but that’s far from ethical. When certain trials are the last hope for some, why shouldn’t all subpopulations have equal access and eligibility (especially when there are no other treatment alternatives)?
It may also not be the best financial move for biopharmas. As Chaudhry et al., 2022, wrote in Nature Medicine’s Correspondence last month:
On the contrary, inclusive research will be a valuable ally to financial budgets. Implementing a diverse recruitment strategy in early development can improve the accuracy of key stop/go decisions, halting costlier pivotal studies on ineffective treatments and leading to longer-term savings. Enrolling patients from historically under-represented groups will also afford an opportunity to make greater use of community hospitals. As these sites have reduced overhead costs and require fewer resources, this is a cost-effective strategy.
The actual economics remain to be worked out, but the point is worth pondering. Ultimately it may come down to a balance between early discovery that things don’t work (hence saving the Phase II/III trial costs) and planning for larger early trials (potentially higher costs upfront).
Only empirical data can support all these speculations. Fortunately, it looks like there should be some coming out in the next couple of years. Though, going back to the trial percent participation to population ratio above, knowing that individuals respond to drugs and environment differently, it’s only intuitive to make the trial as representative of the usage population as possible. In other words, representative trial enrollment is arguably necessary to legitimize trial results–in both safety and efficacy.
Now, while it is necessary, having a representative trial population is insufficient. Even twins do not respond to stimuli in the same way. Especially when patients more-or-less only have one shot (when secondary treatments rarely work like for certain cancer treatments), individuals’ biomarkers need to be incorporated into the drug development process and clinical practices. Higher drug approval rates, lower clinical trial costs, and improved efficacy are within reach with the right tools.
