Commercialization: From Bench to Bedside

Robin D. Campbell, Ph.D. President and CEO Naryx Pharma, Inc. April 2007

A Common Opinion of “Commercialization”…

What is Commercialization?

Default Definition: Sales & Marketing
• Missing:

Tradeoffs between development decisions, manufacturing, and sales forecast, e.g.
• Product positioning alternatives as a function of product characteristics, such as formulation, delivery alternatives, clinical plan, and labeling • Target market alternatives and pricing

Business model options
• Launch strategies • Partnering alternatives

Tradeoffs against fund-raising

A Suggested Definition

Commercialization in biotechnology is an integrated business strategy that optimizes potential profitability by considering and balancing medical need, scientific feasibility, commercial reality, time to market, resource requirements, and investor expectations in development of a product.

“Why integrate commercialization into product development?”

We already know it’s a big market We’ll ask marketing for a forecast with 3 scenarios-most likely, best case, worst case At this stage, clinical, regulatory and manufacturing issues drive value – marketing comes later, after those problems are solved An exercise in futility – how can you know the market 5 years from now? We’re going to find a partner for sales and marketing

The “better mousetrap” fallacy

Unique products and science will virtually sell themselves
• Certainly desirable, but:
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Nothing to model against Blazing new trails in preclinical, clinical, and launch “Inertia” may be the biggest barrier to adoption

• A truly unique product or therapeutic approach may be more complex (i.e., expensive) to commercialize, at least in the early stages

Why is this so important early in a company’s/product’s lifecycle?

Drug development takes time and big money…

Development of one drug can take up to 10 years (or more) Odds are not with you
• • • • • IND: 10% chance of approval Phase I: 20-30% Phase II: 40-50% Phase III: 70-80% NDA: 80-90%

…and making the wrong decision is very expensive

Financial impact
• Early d/c in Phase I • Early d/c in Phase IIa = = $180 M $240 M $470 M

• Late d/c in Phase IIb/III =

Opportunity cost


• Really late d/c in NDA


$500 M

Opportunity cost

Business model and portfolio decisions are better informed…

If going alone (for as long as possible):
• Less likely to underestimate capital needs • Provides basis for better decision making (tradeoffs and choices)

If partnering:
• A better understanding of the true market value • Better prepared for a negotiation

Sales Impact
Strategy Integration FDA Approval Follow on Studies First year sales Five year market share Product A Early on Broad Extensive $219 MM 90% Product B ?? Narrow Minimal $10 MM 10%

Biotech “reality” intrudes…

Financial pressures in conducting clinical trials
• Fastest path to regulatory approval (so that investors don’t get impatient for “results”) • Lowest cost (smallest, fewest possible trials) (so that you don’t have to go back to financial markets too often and risk too much dilution) • Highest probability of success (so that negative clinical results don’t send the stock spiraling) • “Good science” (so that investors perceive value creation even if they don’t understand the specifics)

“Marketing” is not a priority
• Clinical development (and perhaps manufacturing) are largely unproven and mission-critical (“we’ll worry about marketing once we know we have a product”)

…but must be balanced by marketplace reality
The decisions made early in clinical development - while expeditious and perceived as critical to company survival may compromise the long-term market potential for the product

• The easiest/fastest indication is often not the largest market • A single indication focus may miss the broad positioning potential for the product • The easiest endpoints may not be the ones customers value most (or will pay to achieve) • “Good science” may not translate into real customer benefits (e.g., clinical outcomes, QOL, cost effectiveness, etc.)

By the time you reach Phase II, it may be too late to optimize product positioning

• • •

Clinical pathway is set - significant delays required to adjust Changing direction will scare investors Inertia

What you can deliver, and what the marketplace needs, has to be balanced…

Three main considerations for successful products

•Compelling preclinical science •Logical biology •Reasonable development path

Unmet Medical Need

•Underserved patients •Few alternative therapies •Poor outcomes w/existing TX

Scientific Feasibility Commercial Reality
•Competitive landscape •Delivery issues •Reimbursement considerations

Companies that integrate their commercial and development plans early are good at…

Effective integration of product development and unmet marketplace needs Making the science important to external audiences Dealing effectively with the FDA

Positioning hierarchy
BASIC  PROMISE          

Key differentiating attributes



Believable arguments

Data Requirements



Available or  Realistically Obtainable Scientific Data

The optimal market positioning is the set of differentiating attributes with the greatest positive  impact on physician preference share while still having believable supporting arguments  based on available or realistically obtainable scientific data

Positioning degrees of freedom
Ultimate positioning for the product is largely determined by “scientific” decisions

• Product development decisions  Mode of administration  Formulation  Dosing  Packaging • Clinical development decisions  Indications  Patient inclusion/exclusion criteria  Endpoints, outcomes  Comparators  Treatment settings  Physician specialties  Specific investigators • Labeling

Effective integration

An “ideal” package insert as a blueprint Product development plans that integrate clinical, operations, and marketplace considerations A follow-on plan to increase addressable patients

Ideal package insert

    

Create early (sometimes as a statement of commercial interest) Scientifically rational, but optimistic Reflects desired commercial positioning Can help guide clinical development Can clarify follow-on study needs Provides the blueprint of a negotiation with the FDA

Market research has to be “real” to be useful…

Various techniques for market analysis

Early stage market opportunity
• Secondary research for incidence, prevalence, treatment options, competition, etc. • Thought leader attitudes and awareness (magnitude of medical need) • Quantitative research and conjoint analysis (“ideal” product characteristics)

Later stage
• Health economics • Channel strategy • Message testing

Applying early research to target indications

Trade-offs abound
• Fast vs. broad indication
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Cost and time Scientific “sexiness” Unmet need Stability Ease of use (utilization barriers) Reimbursement barriers

• Dosage and administration
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Follow-on plan/lifecycle management should be considered relatively early

Indicates commitment to the field
• Attracts key opinion leaders • Attracts talent

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Keeps product fresh and newsworthy Expands indications and usage (thus growth) Creates competitive barriers Costs/resource needs can be managed

Make the science important

Appropriate communications with various audiences
• • • • Investigators Healthcare providers Wall Street General public

Benefits if done well
• Builds excitement about potential therapies • Builds allies in the medical community • Builds credibility on Wall Street

Necessary components for effective early communications

A clear corporate vision
• • • • Values Commitment Expertise Reality-based (underpromise & overdeliver)

Clear product positioning
• Signals the value to patients, providers, and payers • But not so much to signal strategy details to competitors

Dealing with the FDA

Everything is a negotiation Knowing your commercialization goals will guide you in your FDA discussions (and filings) Early recognition that a a good P.I. is the prize
• The Package Insert determines what you can claim and promote

What does it take to have a commercial mindset?

Mandate from the top
• • Business plans that require integration Cross-functional teams with outstanding team leaders

Marketers and product developers willing to work together (with clearly understood and mutual goals) Patient benefit is the holy grail

In summary
 

Commercialization is broader than just sales and marketing An integrated business strategy should start early in product development Product development plans should integrate medical need, commercial reality, and scientific feasibility Effective corporate communications should be part of any commercialization plan FDA communications and negotiations should be informed by your commercial plan

Make sure the view is worth the climb…