Maximizing Asset Value: The Importance of Commercialization Strategies for Early Stage Assets

Transcription

1 Maximizing Asset Value: The Importance of Commercialization Strategies for Early Stage Assets Fahti Khosrow-Shahi, Senior Vice President, Brand Management Practice, Campbell Alliance Emily Hua, Vice President, Brand Management Practice, Campbell Alliance Jemma Richards PhD, Consultant, Brand Management Practice, Campbell Alliance Introduction The era of the blockbuster product is rapidly dissipating and becoming a thing of the past. Quickly emerging, however, is a market that is infamous for its complexity. Characterized by increased government regulation, persistent generic competition, reduced periods of patent exclusivity, and the heavy weight of third-party payers, this new market has forced pharmaceutical executives to explore various options for maximizing product potential throughout the life cycle. By placing more emphasis on creating strategic commercialization plans earlier in the drug development process, these executives are hoping to prime each product for success. Excising the Myth that Company Size Determines the Need for Commercial Strategies at Early Stages of Development It is a myth that only large companies need to or can develop commercialization strategies for molecules in the early stages of development. Even for larger companies, though, early planning seems to be more of a Nice to Have than a definite Need. Independent of the size of the company, if the commercial potential of an asset in development is not understood early in the process, things can, and often do, go wrong. In today s evolving markets, spending millions of dollars on late-phase trials only to find that the asset is not commercially viable at the time of potential launch can be devastating even to the most experienced companies. Sometimes companies can be taken by surprise when another asset with stronger clinical data appears on the horizon. Potential events like this need to be anticipated and considered well before a company makes a significant investment in developing an asset. For smaller companies in particular, if an asset s market potential is not fully understood early in the development process, the opportunities for gaining additional venture funding or partnering at later stages my be severely limited if they wait until more data from later stage clinical trials becomes available. It is, therefore, critical to understand the market and the potential value of an asset well before committing to larger-scale, higher-cost development investments. Regardless of an organization s size, building a strategic commercialization plan for a product early in the development process is important to help maximize opportunities for return on investment (ROI). Dependent on the type of company (or product), commercial guidance can be provided for assets in development as early as phase I, if not sooner. Commercial input can help provide broad guidance on both potential disease states and indications that are viable commercial opportunities for the organization, company vision, and therapeutic focus. For example, if a company focuses only on diabetes, doing a phase I cardiovascular study may not be viable, unless the company plans to out-license the product. Issues like this need to be discussed early on before investments in development are made. Furthermore, commercial input into a phase I study that is aligned with the company focus can provide early input into developing appropriate phase II and III endpoints. This will ensure that the product will be commercially viable if the trials generate positive data. Product Life Cycle Stage Is Key The need for a commercial strategy is not defined by the type or size of company, but by the asset s phase of clinical development. As an asset progresses through each stage of development, the available data supporting its commercial value will build and evolve. However, without an end goal in mind, this data could stray far from the desired area. Understanding the different strategic requirements at each stage of development will ensure that although the commercialization strategy as a whole evolves over time, it remains geared toward a commercially viable product at the time of launch. Figure 1 represents the types of inputs required at each stage of development to ensure a robust commercial strategy is defined and developed and can ultimately be implemented.

2 Maximizing Asset Value: The Importance of Commercialization Strategies for Early Stage Assets Phase I Phase II Phase III Launch n Life Cycle Plan > What indication? n Phase II and Phase III Endpoints Defined n High-Level Opportunity Assessment n Deep Dive Market Assessment* n High-Level Product Profile* n High-Level Audience Segmentation* n Competitive Assesment (at time of potential launch) n Market Assessment Update n Detailed Product Profile n Segmentation Update n Detailed Forecast n Pricing n Commercial Strategy Update Implement Launch Plan n High-Level Forecast n Launch Plan Development *Helps devine endpoints for Phase III Figure 1. High-level outline of the components for a commercial strategy at each stage of development. The strategy begins in phase I and evolves throughout the development process as more data become available. The benefits of developing an early strategy lie in the alignment of commercial and development teams working toward a common goal a commercially viable product at the time of launch. Big Pharma or Emerging Biotech Commercial Input as a Factor of Company Size Although the need for a commercialization strategy does not depend on the size of the company, the reasons behind developing the strategy may vary by size. 1. Asset entering phase I Available clinical information may be limited because human data has not yet been generated. However, it is possible to conduct a high-level assessment to understand the commercial potential of similar products in the disease state of interest. At this stage of development, the level of commercial guidance may also depend on the therapeutic area of the asset in development. For example, in therapeutic oncology, the commercial team may have a higher level of involvement, even at such an early phase of development, because it can provide high-level guidance on tumor types for which the asset may be developed. In other therapeutic areas, the commercial team s involvement may be more limited. Large Company: A risk/reward assessment may help support sound investment decisions to ensure a viable, commercially attractive product in phase II/III. Small Company: Better understanding of the therapeutic area of interest is important even in phase I, as it will ensure completion of the required studies to justify a request for additional venture funding or partnering for phase II assets. 2. Asset exiting phase I and entering phase II Typically, once phase I trials have been completed, commercial involvement significantly increases. Although traditionally, phase II trials were designed by the development team alone, commercial teams are playing an increasingly greater role at this stage of development for a number of reasons: Phase III trials are governed by the design of the preceding phase II trial(s). Poorly designed phase III trials may not be able to provide the necessary data to support a viable commercial asset at launch. For example, if the phase II/III trials are designed with an inferior comparator or drug that may not be the standard of care at the time of expected launch, an asset may not be considered valuable, even if it demonstrates superiority in the trials conducted. At this stage of development, it is important to start developing a high-level product profile to help define the inputs and outputs required for successful phase II/III trials. In addition, comparing a potential asset with the current standard of care and the potential standard of care (at the expected time of launch) will help to define which endpoints will be required to support a commercially viable asset in phase III development. Large Company: Phase II trials must be conducted using the correct comparator (i.e., standard of care) to support phase III/registrational trials. If the phase II trials are poorly designed, they may limit the scope of phase III trials or lead to an asset that is not commercially viable and the need to redo phase II/III trials at a huge cost to the company. Small Company: It is important to do due diligence early. Conducting well-designed phase II trials will support attractive partnership and additional venture opportunities for phase III development. 3. Asset exiting phase II and entering phase III Developing a robust, compelling commercialization strategy at this stage of development is like playing a game of catch up. Most companies would expect to have the data from their phase III trials support an FDA registration, either immediately upon trial completion, or if the early data are extremely good, they may wish to file for early registration. Without having a solid strategy in place, companies may miss potential opportunities because of oversights

3 or a lack of preparedness for whatever situation arises from the phase III data generated. Large Company: Early commercial assessments and hypotheses from phase II should be built upon. This is essential to understanding the audience (segmentation), product positioning, and developing the finalized target product profile (TPP). Small Company: It is important to have a robust commercialization strategy in place for a number of reasons, especially if the company is looking for a third party to assist with the asset launch, opportunities to take the company public, or another round of financing. A strong commercialization strategy will help build a solid business case early on and provide opportunities for ongoing education of potential third-party partners. Risk/Reward Assessments Commercial and development teams are responsible for answering two very distinct questions: 1. Commercial Teams: What data do we need to ensure the asset is commercially viable at the time of potential launch? 2. Development Teams: What are the risks associated with obtaining the data to support a viable asset? A risk/reward assessment helps both commercial and development teams to understand the potential rewards and the level of risk involved in achieving such rewards. The level of reward is generally conveyed as the expected ROI. Companies must ask themselves many future-focused questions to help determine potential ROI, including the following: How much might the asset be worth on the market at launch? What is the estimated potential market size at launch? How much market share will we likely get, based on competition at launch? What will the likely adoption rate be? How much might it cost to get the asset to market? These questions should be answered in step with a timeline consistent with the asset s expected launch date. The last question in particular highlights the other side of the reward equation risk evaluation. Typically, as the level of potential reward increases, so does the associated risk. It is imperative to have any asset be commercially viable at time of launch, and viability is usually determined by the supporting clinical evidence package. When evaluating risk, there are two main questions that need to be answered: High Reward Low Low Develop Out-License Figure 2. Risk Reward Assessment Grid: Depending on the position of a product in the grid (risk vs. reward) a company can develop the most appropriate commercialization strategy for individual assets. 1. What will it take to run the clinical trials necessary to produce the level of evidence required to support a commercially viable asset? Number of patients, length of trials, significance, and cost of drug will all play into answering this question. 2. What is the likelihood the trials will fail or succeed? Dependent on the power of the study, how robust will the data be? An understanding of other trials in the same indication or for similar products will help to predict how likely a trial is to succeed or fail. Performing a risk/reward assessment early in an asset s development can help to drive the development of a robust commercialization strategy where all parties are focused on a common goal. In order to realistically answer the question, Does the reward justify the risk?, a risk/reward assessment can be conducted at the end of phase I, before going Risk Partner Deprioritize High into phase II. The reasons for performing the assessment at this time are simple: Data from the phase I trials can be used to support the assessment of future risks. Phase II trials need to be planned with the end product in mind because phase III trials cannot be conducted without direct phase II support. In any case, it is important for an organization to perform a deep-dive assessment to select which indications to develop directly vs. which indications should be out-licensed or developed in partnership with another company. This is particularly important if an asset has potential in multiple indications. Performing these types of assessments early in development allows a company to maximize its ability to make these decisions and capitalize on them at the appropriate time. The risk/reward assessment grid (Figure 2) can help guide a company in how to approach the development of both individual assets and multiple indications.

4 Maximizing Asset Value: The Importance of Commercialization Strategies for Early Stage Assets Expected Benefits From an Early Commercialization Strategy Input from a commercial aspect has multiple benefits. The commercial team can support the risk/reward assessment with the development team to better define the path moving forward. Commercial input can help define which clinical endpoints will be required for phase II and phase III trials based on the current and projected market. This input can help maximize the opportunities for asset commercialization and provide better leverage for potential partnership opportunities. The commercial viewpoint can also help to ensure that the development strategy and late-phase trials are proactively designed to ensure the asset is commercially viable at the time of launch. Finally, the commercial team can provide important insight necessary for making go/no-go decisions based on the market and financial opportunities, in addition to the development team s understanding of the potential clinical benefits. Industry Perspectives We asked a number of industry executives with experience in both large and small companies to provide us with some insights into the benefits of developing commercialization strategies at each stage of development. Small Company Perspective: Vice President of Commercialization, start-up biotech company, and previously Director of Strategic Planning-Medical Affairs, top-10 pharmaceutical company When is commercial input critical? Commercial input should start at the preclinical phase. Will the product be for acute or chronic use? The answer to this question will have significant bearing on the potential commercial value of the product. Is there a difference in commercial strategy requirements for large vs. small companies? Irrespective of company size, the development process is the same and is highly regulated for all new assets. The same elements will be required for all products. The differences in commercial involvement will depend on resource availability. For example, small companies may reach out to consultants for commercial and/or market assessments, whereas larger companies will utilize in-house capabilities. Why is it important to develop a commercialization strategy for assets in early-stage development? It is the role of the commercial team to provide the endgame emphasis which therapeutic area [is the focus,] what are the unmet needs, which endpoints do we need to show to be convincing and viable. The development team s role is to design the trials to find ways to produce the required data. The development team typically [oversees] the products, and the commercial team decides if a particular market is a viable option for the company to develop the products. Large Company Perspective: Executive Director of Global Marketing, top-10 pharmaceutical company When is commercial input critical? At the time of planning for phase II or even phase Ib/II, since those are contiguous. Phase Ib/II designs and choices may be directly applied to phase III registrational studies, [and it is] risky if they re not! Is there a difference in commercial strategy requirements for large vs. small companies? Small companies are generally looking for a partner, acquisition, or out-licensing opportunity. They are more interested in proof-of-concept than commercial viability. The need to generate interest in their product and/or company typically results in as much promotion as possible (e.g., press releases). Larger companies are more concerned with confidentiality and have a much greater emphasis on commercial viability. Why is it important to develop a commercialization strategy for assets in early-stage development? Once decisions are made, you are stuck with them! Multiple questions will [arise during] the course of developing an asset. [Companies] need to keep the end in mind, right from the start. What are some of the critical decision points where commercial input can be valuable for asset development? The commercial team can provide input for all kinds of decision making, from dosing strategies, SKUs, and formulation requirements, to indication prioritization, clinical study design, and positioning statements. For example: Dosing strategies need to be defined early on to prevent pricing conundrums down the line. SKUs and the product formulation also need to be defined early because once a path has been chosen, changing course can be very time consuming and costly. The disease state, patient status, etc. all need to be considered, as well as what competitor products are likely to offer at the time of launch. Indication prioritization is another area where commercial input can be invaluable during development. Deep dive market assessment and competitor profiling can help to make decisions on how to strategically develop a product in terms of the sequence of launches if a product may be viable in multiple indications. Planning early can help to save time and money down the line. Large and Small Company Perspective: President and CEO/COO for multiple start-up companies, President and CEO of a pharma/biotech consulting firm, with former senior management positions at three top-10 pharma companies At what stage of development does the commercial team have the most influence on how an asset is developed? [It] depends on the company structure. Communication between the commercial and R&D teams should occur as early as possible. R&D personnel should be involved at marketing meetings from an early stage to instill cross-functional understanding and maintain open lines of communication from both sides. Typically, when does the commercial team get involved? Historically, commercial input increases the further along the development process you go. I still don t think that the commercial team gets involved early enough. The decision makers need to be aware of what the development team has in the pipeline so that they are aware of where products are going. The commercial team can help to make sure the development team is actually developing products in line with the overall corporate strategy.

5 Are there any changes that have occurred in the commercial/development approach during the last decade? Or any changes that are likely to occur in the future? There has been a trend toward improved communication between the two sides, but it s still not where it should be. The commercial team needs to be involved earlier. The increasing costs of development mean decisions need to be made sooner; more input from more teams means decision makers can make better decisions. Today, more drugs are failing in phase III than ever before. Why? [Because of] financial pressure, drugs may be pushed too quickly through early phase development, and so during phase III, there is not enough evidence to support a commercially viable asset. Not knowing when to stop can be problematic. Which aspects of commercial input are critical for successful development of an asset? Market knowledge, demographics, disease state, associated morbidities and co-morbidities, etc. The commercial team can make sure it has considered all parameters of a potential market. Market research is important. The development team s tunnel vision needs to be widened, and the scientists need to be more aware of the big picture. them perform a commercial assessment to quantify the value of their product. Political financial pressures can also delay decision making and can inhibit taking action when needed, whatever that action might be. Are there any best practices from your past you would be willing to share? Dealing with no-go decisions. Someone needs to take responsibility for killing a program if the reason and logic are not supported by the data. Usually not R&D and commercial offside at the same time, so one side will always argue to keep going. Common sense is key. Overview of Industry Insights We spoke with experts who had experience in developing commercial strategies for assets in both large and small companies, from preclinical to in-line products. One comment that stood out from both perspectives was that there has been a definite leftward shift in the level of commercial involvement in the development process. Grove Matsuoka, Vice President Commercialization with CoDa Therapeutics, described it as a rectangle split into two triangles, from the bottom left to the top right corner. As development involvement decreases, commercial involvement increases. This analogy is described in more detail below and in Figure 3. Summary It is crucial for companies to develop robust commercialization strategies early in an asset s development. Open lines of communication between the commercial team and the development team are critical to the success of an asset. Although the size of the company is irrelevant to the business need, there are unique takeaways for both small and large companies. Early commercial planning helps: Large Companies 1. Maximize commercial opportunities for success 2. Maximize ROI Small Companies: 1. Maximize potential for additional venture funding 2. Maximize potential of finding quality partners 3. Maximize opportunities for taking the company public Whether a company is large or small, being well informed on all aspects of the commercialization process will help make critical go and no-go decisions more clear, which will ultimately lead to success. Are there any differences in approach to commercial involvement between large and small companies? Large companies have more assets and are able to do more work. They have more people power and more money to buy secondary reports. However, it depends on the teams and the interactions among groups. Small companies can sometimes do a better job, but they need to work smarter because they don t have the large budgets for research and focus groups available to bigger companies. In your experience, are there any common mistakes made by either large or small companies? Inappropriate utilization of resources. It s easy to burn money in the wrong direction. By developing a concise, well-defined development strategy, you can minimize wasted dollars and costs. Small companies hate to kill a program, and they may lack insight. Developing the most advanced product in the pipeline drives a need to keep that product live. They need to find someone to help Figure 3. The evolution of commercial involvement in the development process. The level of commercial input into asset development has evolved over time. Fifty years ago commercial input was seen as a marketing tool, utilized towards the end of Phase III as products were ready to launch. In today s environment it is not uncommon to have some level of commercial involvement even at the preclinical level, to help guide asset development towards a commercially viable end point. In the future, particularly for smaller companies commercial value may need to be proven upfront before going back to develop the basic science understanding of an asset. The one thread that remains true is that over the life time of an asset s development the role of the commercial team gains greater impetus the further into development the asset is. 100% Past 0% I II III Launch 100% Development Team Involvement Present 0% I II III Launch Phase of Development 100% Future 0% I II III Launch Commercial Team Involvement

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