Integrated Platform Drug Discovery and Development Companies - Part 2: comparative analysis
Large pharmaceutical companies have struggled to efficiently implement tools, technologies and platforms into their drug discovery and development (DDD) programmes.
More recently there have been attempts by small-to-mediumsized pharmaceutical companies to create in-house, integrated platform-DDD (PD3) capabilities. This strategy does not come without risks, but has quietly been implemented to increase drug candidate efficacy/safety and pipeline numbers. In some cases this has resulted in much-vaunted success, as epitomised by the Moderna IPO in late 2018.
Although the complexities of such efforts should not be underestimated, it is clear that the new PD3 business model is being adopted and utilised. We evaluate this new paradigm and discuss the common traits and themes of successful PD3 companies.
Last year small-to-mid sized pharmaceutical companies were much more successful than their larger counterparts by 68% to 32% respectively, in producing FDA-approved New Molecular Entities (NMEs) and New Therapeutic Biological Products (NTBs) (1). The flexibility of small-to-mid sized companies facilitates dexterity of thinking and rapid adaption and adoption of new approaches. One such example is the development and utilisation of an integrated platform- DDD (PD3) model.
Recently, we described this phenomenon and discussed the vagaries of implementing a PD3 approach (1). We suggested that Moderna Inc and others have demonstrated that implementation of such efforts can significantly drive company valuation. Furthermore, initial case studies appear to suggest that the valuation is fuelled by an innovative and validated platform. Although the complexities of such efforts should not be underestimated, we concluded that “...it is clear that the new paradigm driven by PD3 efforts is here to stay” (1).
In stark contrast, Ben-Joseph and Manning have questioned the relevance and necessity of a PD3 approach for smaller companies (2). They argued that “...the platform concept, with a few notable exceptions, [is] seldom capital efficient” and has “...failed to offer a commercial return”. The focus of such companies should be on the “...lead product and allocation of time and money in a capital-efficient manner toward that very product”. In addition they opined that small-company management teams fail to differentiate the value of a technology- derived product, ie a therapeutic drug, versus the value of a specific platform technology.
This is an oft-cited criticism, and it has been argued that most small pharmaceutical companies do not have the bandwidth to carry out such an approach. The consequences are dilution of effort, poor tactical and strategic decision-making, lack of focus and considerable risk enhancement. Ben- Joseph and Manning concluded that such an approach is “...best left to big pharma” (2)! We discuss these contrarian viewpoints of companies utilising PD3 approaches and assess such contributions to valuation.
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