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I recently had the opportunity to conduct a brief interview with Mireille Gingras, Ph.D. President and CEO of HUYA Bioscience on doing business with and in China:

Tell me about HUYA and what makes the company unique?
HUYA Bioscience International has pioneered the most innovative and productive approach for pharmaceutical co-development between the U.S. and China. We were one of the first companies to recognize the potential of China as a source for novel preclinical and clinical stage compounds. Through our partnerships with Chinese companies and institutes, HUYA can use preclinical and clinical stage data generated in China to guide drug development process in the West. Even though clinical trials must still be completed in the West, the process is streamlined, and risks are minimized because HUYA’s Western pharmaceutical partners will have access to critical data from China. Simultaneously, HUYA provides significant development assistance to our Chinese partners. As a result, I anticipate that HUYA will source compounds in China that may become important drugs globally.

What led you to target China as a source for compounds?
There is an urgent need in the global pharmaceutical industry for fresh new sources of novel compounds. As a licensing consultant for pharmaceutical and biotech companies, I was seeking to find novel preclinical and early clinical-stage compounds in Europe and Asia. Many of us were looking in the same places and the pools of novel compounds were depleted. I subsequently spent time in China meeting with heads of government research institutions, biotechnology parks, incubators and pharmaceutical companies. In China, I recognized that there were untapped and significant opportunities for drug discovery and development. To leverage these opportunities, I formed HUYA Bioscience International. HUYA’s business model, the Integrated Co-Development model (ICM), is designed to reduce the risk and cost of drug development in the U.S. by providing a framework for sourcing, licensing and developing validated, preclinical and clinical stage compounds from China. We currently have two compounds licensed from China that are in preclinical development in the U.S., thus validating our model.

What are the unique challenges/opportunities to developing compounds sourced from China?
One challenge, of course, is the language difference. We must have bilingual staff in both the US and China so that we are confident that our due diligence is performed with the utmost attention to detail. Another challenge is that I must spend a significant amount of time in China. This is crucial for developing trust, forging partnership agreements and licensing compounds. HUYA has the “first mover” advantage in China, having been there now for four years and developing critical personal relationships with the heads of the Chinese research institutions and pharmaceutical companies. The Chinese seem to prefer to do business with people they trust and with whom they have long-standing relationships. No other company has the breadth and depth of relationships that HUYA has developed in the Chinese research community.

Because of these relationships, we are able to take advantage of the enormous opportunities presented by China’s large community of world-class scientists, many of whom were educated in the U.S. and have returned to China to develop their careers. We are also able to draw from the well-established scientific infrastructure in China of research institutes, bioparks, and pharmaceutical companies that provides one of the world’s richest sources for novel compounds.

We have a truly unique opportunity to lower the risks and costs of Western drug development by providing access to data from the Chinese development process. Of course, all of the compounds that are developed in the U.S. will have to go through the same rigorous FDA process that they would have gone through had they been sourced from the U.S., including animal and human trials. But, this process is streamlined, and the risks are minimized because HUYA’s U.S. pharmaceutical partners will have access to critical data from our Chinese partners. For example, a U.S. pharmaceutical company that takes on one of the new compounds has access to efficacy, toxicology, and dosing data from Chinese clinical trials, so the trial is not started from scratch, but can be designed based on the information gathered through the Chinese trial. In addition, the Chinese clinical trial data can be used as supporting data to the FDA process here in the U.S.

For each promising new compound in development, HUYA assembles a world-class team of clinical advisors to direct the clinical trials and ensure that they meet U.S. FDA standards. In addition, because HUYA’s model is to co-develop compounds with our Chinese partners, we can help our Chinese partners design trials in China that will inform our trials in the U.S.

About Mireille Gingras, PhD, CEO and President of HUYA Bioscience International
Mireille is a seasoned entrepreneur, scientist and consultant with wide ranging experience in drug discovery, licensing programs (both in- and out-license), preclinical research design and academic partnering programs for top pharmaceutical and biotechnology companies including Organon, Cypress Bioscience, Phenomix, and GeminX. She has made major contributions to the study of complex addictive diseases, and has led research and drug development efforts in the areas of neuroactive steroids, and neurological and neurodegenerative diseases. Through her extensive work in China with HUYA, Mireille has developed unrivaled expertise in partnering with Chinese research institutions and pharmaceutical companies and building bridges into the Western development process.

About HUYA Bioscience International
The global pharmaceutical industry faces an urgent need for fresh new sources of novel compounds. HUYA Bioscience International, LLC, was one of the first companies to recognize China’s potential to help meet this need through its burgeoning biotechnology industry and world class talent pool. HUYA pioneered an innovative co-development model through which it identifies and licenses the most promising preclinical and clinical stage compounds in China, partners with Chinese research institutions to leverage and extend their research efforts, and provides a bridge into the U.S. development process and the Western biopharma market. Because the compounds have already been validated through a rigorous discovery, selection and development process in China, this model streamlines and accelerates product development in the West, while lowering risk. HUYA is now the leader in U.S./China pharmaceutical co-development, with three strategic offices in China, the broadest Chinese compound portfolio, and more exclusive agreements with premier Chinese biotech centers than any other company. HUYA has joint headquarters in San Diego, California, and Shanghai, China.

Guest content from Turner Investment Partners‘ Heather Flick McMeekin, Frank Sustersic, Vijay Shankaran, and Theresa Hoang:

Contract research helps keep drug pipeline flowing

Imagine a new-product development process that typically lasts 10 to 15 years, has only a one in 5,000 chance of succeeding, and costs at least $800 million. That’s the daunting reality that biopharmaceutical companies face in seeking to bring a new drug to market.

To help them navigate the time-consuming, risky, and costly waters of new product development, biopharmaceutical companies are turning to contract research organizations (CROs). The large CROs offer two kinds of services that in effect provide one-stop shopping for drug R&D: 1) preclinical services, which include chemistry and animal-testing services in laboratories to assess the safety of a drug candidate before it’s introduced to human patients; and 2) clinical services, which involve such functions as project planning and management, patient recruiting, and trial monitoring and analysis to test the safety and effectiveness of new drugs given to volunteer human patients.

500 CROs worldwide

Currently about 500 CROs compete around the world, with the smaller ones tending to specialize in either preclinical or clinical services. Most CROs work under fixed-price contracts. Preclinical contracts are typically smaller, $2 million or less, and shorter in duration, lasting for months. Clinical contracts, in contrast, can total $100 million or more and run for years. In general, preclinical contracts have been the most profitable.

The drug-development process has become so time-consuming, risky, and costly in part because of a growing risk aversion and preoccupation with safety by the Food and Drug Administration (FDA). The FDA in recent years has intensified its focus on safety and has shown a diminished tolerance for side effects in new drugs.

Consequently, last year the FDA approved just 19 new drugs, the fewest in 24 years, and issued more than 70 new or revised “black-box” warnings about potential side effects, twice the number in 2004. Also, the number of “approvable letters,” which typically require biopharmaceutical companies to submit more data before the FDA makes a decision on a drug, increased by 40% last year, as reported by Sagient Research Systems, which monitors drug approvals.

Drug applications slump

In turn, as the approval bar gets raised higher and higher, biopharmaceutical companies are submitting fewer new-drug applications to the FDA. In the past two years the number of applications submitted by the companies declined by more than 20%. And as the FDA requires more and more tests of new drugs, the development cycle is becoming more elongated. All of this has helped exacerbate financial and operational problems for biopharmaceutical companies — problems that the outsourcing services of CROs are proving uniquely able to address.

For instance, it was widely expected that pharmaceutical companies would launch a slew of new drugs to offset the revenue lost from their existing drugs that are going off patent. Obviously, that hasn’t happened, and the resulting financial pressures have compelled pharma companies to cut costs across the board. Pfizer, for instance, has reduced its number of R&D centers from 15 to 10 over the past three years. But here’s the challenge: pharma companies must innovate to survive, which means that while they are striving to control costs, they also need to keep spending on research and development to create profitable, proprietary new drugs and replenish the pipeline. R&D spending has in fact been increasing 8-10% annually over the past five years and should rise at a similar rate going forward, in our estimation.

In essence, pharma companies are turning to CROs as an outsourcing solution in an effort to optimize their R&D spending. The CROs can develop drugs faster than the pharmaceutical companies can, with comparable quality, the Tufts Center for the Study of Drug Development found. According to the pharma companies themselves, CROs deliver genuine value — a high level of technical expertise, improved productivity, and cost savings.

Smaller customers fuel growth

Another problem that CROs are helping to solve is that relatively small biopharmaceutical companies are hard-pressed to fund all the internal capabilities, laboratories, and equipment critical to developing new drugs, especially in the preclinical phase of development. As a result these smaller companies have found it more practical to pay CROs for their internal capabilities, laboratories, and equipment to handle preclinical testing. The volume of outsourcing from small firms has been central to CROs’ rapid growth. For instance, biotechnology companies now furnish more than 30% of CROs’ revenue, up from 21% in 2003. As we see it, that percentage should continue to rise steadily over the next few years.

What’s more, regulators worldwide prefer biopharmaceutical companies to conduct multi-center international drug trials. Also, it’s often much easier to enroll patients in certain types of clinical trials overseas. These trends are benefiting CROs that have dozens of international locations. Today more than 40% of CROs’ revenue is generated outside the U.S., according to industry data. Kendle International, a leading CRO, anticipates that more drug R&D will migrate from the U.S. to Europe, Asia, and Latin America, with the company’s revenue there rising to 60% by 2010.

So we think there’s a great deal of growth both domestically and internationally for CROs to pursue. Altogether, less than 25% of all drug R&D spending is outsourced, in our estimation. Managers at Covance, another leading CRO, say the company and its competitors may perform 50% of all drug R&D in the future.

Market poised to grow

In short, the CROs are in a fast-growing, highly profitable global business. The CRO market should grow at a 12.6% compound annual rate through 2011, to $29.4 billion, up from $16.3 billion in 2006, according to Goldman Sachs. And Goldman Sachs calculates that earnings before interest and taxes at CROs are more than $20,000 per employee — one of the highest rates in any industry. That level of profitability is even more remarkable in light of the heavy hiring that CROs have done since 2004; during that time the six largest CROs have increased their employee headcount by 57%, to 37,300 people. What’s more, the largest CROs have boosted their book-to-bill ratio to about 1.4 over the past year. Such a high book-to-bill ratio, in our judgment, provides high earnings visibility, i.e., a good picture of CROs’ favorable future profit trends.

Among CROs, we think five of them possess especially good growth prospects over the next two years: Covance (market capitalization: about $5 billion), Icon (about $2 billion), Kendle International (about $540 million), Parexel International (about $1.5 billion), and Charles River Laboratories International (about $4.4 billion). All five provide both preclinical and clinical services to varying degrees.

Covance, headquartered in Princeton, New Jersey, has been a profit pacesetter: its earnings growth has exceeded 20% annually for the past seven years. Its annual revenue exceeds $1.4 billion, and its services are as comprehensive as any in the industry. The company is currently involved in more than 14,000 clinical trials worldwide. A program-management service that’s designed to accelerate the early development of drugs is highly regarded in the medical community and generates revenue of more than $200 million per year.

Icon: an international presence

As international drug development becomes the norm, Icon would seem to be especially well-positioned: the company is based in Dublin, Ireland, and more than 40% of its $870 million in annual revenue is produced outside the U.S. To beef up its international presence further, the company in 2007 opened 18 new offices in six countries, including Japan, which it considers a potentially lucrative market. In customer surveys, Icon consistently ranks highly for the quality of service.

Kendle International, based in Cincinnati, derives about 54% of its $570 million in annual revenue overseas. The company expects much of its growth will be in Asia, where its customers’ R&D spending on drugs is expected to reach $20 billion by 2013 — nearly double the current level, according to the Frost & Sullivan consulting firm. By its own analysis, Kendle assisted 44 of the 50 largest biopharmaceutical companies in developing more than 600 new drugs last year, and its clinical business is growing at twice the average rate of the industry.

Parexel International gets 59% of its more than $740 million in annual revenue in foreign countries, a higher percentage than that of any competitor. Parexel’s clinical services account for more than 70% of revenue. The company does business in 51 countries and is admired for its skill in training new employees. Over the past five years the company’s net income has increased by 250%, powered by its expertise in four fast-growing fields of drug R&D: cardiovascular, central nervous system, infectious disease, and oncology. Based in Waltham, Massachusetts, and founded in 1982, Parexel was one of the first CROs to venture overseas.

Charles River Laboratories International is another CRO pioneer: its history dates to 1947. Through acquisition the company has built a far-flung network of preclinical operations, which account for most of its annual revenue of more than $1.2 billion. Headquartered in Wilmington, Massachusetts, the company plans to add about 1 million square feet of preclinical-laboratory space between 2007 and 2009. Its Charles River Dedicated Resources Unit, providing staffing and laboratory space to customers, has been a prime source of new business.

In sum, as long as the drug-development process remains costly and risky, as long as drug R&D spending continues to increase, and as long as cost control and outsourcing remain priorities with biopharmaceutical companies, we think CROs should flourish. In our analysis, if they fail to flourish going forward, it would likely be due to these reasons: a diminishing customer base, caused by consolidation among biopharmaceutical companies; an inability of early-stage, unprofitable biotechnology companies to obtain capital; or a surge in contract cancellations (which have averaged less than 6% annually).

But we think none of those risks are great in the near term, and we anticipate that CROs will continue to help their biopharmaceutical customers and apply technical expertise to the drug-development process in a highly cost-effective way.

The views expressed represent the opinions of Turner Investment Partners as of the date indicated and may change. They are not intended as a forecast, a guarantee of future results, investment recommendations, or an offer to buy or sell any securities. Opinions about individual securities mentioned may change, and there can be no guarantee that Turner will select and hold any particular security for its client portfolios. Earnings growth may not result in an increase in share price. Past performance is no guarantee of future results.

Turner Investment Partners, founded in 1990 and based in Berwyn, Pennsylvania, is an investment firm that manages more than $26 billion in stocks in separately managed accounts and mutual funds for institutions and individuals, as of June 30, 2008.optical communications

As of June 30, 2008, Turner held in client accounts 730,308 shares of Covance, 656,980 shares of Icon, 454,973 shares of Kendle International, 1.8 million shares of Parexel International, and 2.3 million shares of Charles River Laboratories International. Turner held no shares of Pfizer.

Guest content from Christopher Starr:

After years of confusion and neglect, translational research is now becoming institutionalized.

Citing the barriers between the lab and clinic, along with the difficulties and complexities of conducting clinical research, the NIH set up a major program to advance clinical and translational research. The Clinical and Translational Science Awards consortium, or CTSA consortium, was launched in October 2006. Its aims are no less than to “catalyze the development of a new discipline of clinical and translational science.”

The CTSA consortium consists of major academic health institutions, like the Mayo Clinic or John Hopkins University, who are given large grants by the NIH. The grants are used to develop centers for translational and clinical research. These centers set up graduate programs and advance research in a variety of ways, including developing partnerships with industry and other private and public institutions. By 2012, 60 institutions will be “linked together to energize the discipline of clinical and translational science.” The NIH is not skimping on this initiative, as it plans on funding the completed program to the tune of $500 million per year.

Although “translational research” is a varied term, the CTSA will mostly focus on research that is relevant to industry. According to an article by Steven H. Woolf in the Journal of the American Medical Association (JAMA), two major areas have been defined, called T1 and T2. T1 is more applicable to industry, as it involves “the transfer of new understandings of disease mechanisms gained in the laboratory into the development of new methods for diagnosis, therapy, and prevention and their first testing in humans.” T2 involves “the translation of results from clinical studies into everyday clinical practice and health decision making.” The CTSA program seems to mainly focus on T1.

Although the CTSA program is young, there have already been examples that show how partnering with CTSA researchers can benefit pharmaceutical companies. One is the Yale Clinical trial network, which should streamline and improve the clinical trials process for the companies that are part of it. Among other goals, the network will remove barriers to clinical trials and promote trial participation. There is also at least one example of a cross licensing agreement between a CTSA funded researcher and industry. Dr. Daniel Rader, at the University of Pennsylvania, took advantage of his university’s CTSA to develop an MTP inhibitor that was very effective in treating a rare disease called familial hypercholesterolemia. Seeing the potential of lower doses of the drug to treat patients at risk of heart disease, Aegerion Pharmaceuticals is developing the drug for this purpose.

CTSA consortium grants work as individualized cooperative agreements between the NIH and the grantee. This means that each CTSA institution will be organized differently. Individual CTSA’s will have varying degrees of openness to participants from industry. However, the ones that are very open to industry participation present extensive opportunities. One example of an industry-friendly CTSA is the Institute of Clinical and Translational Sciences (ICTS) in St. Louis. According to their website, individuals from companies that collaborate with an ICTS-affiliated academic researcher can register for ICTS membership. Benefits of membership include access to research facilities, access to consulting services, and increased potential for further collaboration with ICTS-affiliated academic researchers.

Further information, including a list of all current CTSA institutions, is available at www.ctsaweb.org.

Guest content from Nicolaj H. Nielsen, managing director of Biostrat.

A case-study on the recent licensing-deal between Myriad and Lundbeck: Information asymmetry, calculated bets and royalties in the biotech industry.

The share-price of Lundbeck has fallen with approximately 10 %, since the Danish pharmaceutical company announced an inlicensing deal with the US biotech company Myriad for a new drug named Flurizan aimed against mild Alzheimer. Why do investors not like the deal, and could the deal be (yet another) good sign for biotech companies?

What we know…
Flurizan has completed
phase II and the results from the two ongoing phase III studies will not be known until June 2008. Lundbeck will pay Myriad USD 100 million for the European commercialization rights + milestone payments + royalties in the range of 20-39 % of sales.

Lundbeck has clearly taken a calculated bet. Lundbeck believes so much in Flurizan that the company is willing to pay a large sum of money before the phase III data is known. The company is thereby trying to avoid a bidding-war against Big Pharma after positive phase III data, but is at the same time taking significant financial risk.

Why is the Market so skeptical?
Biotech is maybe the industry with the largest degree of information asymmetry. Biotech companies simply know much more about the strength and weaknesses of a potential product than outside investors/partners. This has been proven again and again by the lack of shareholder value creation in investment funds – even those that are managed by highly specialized investment companies.
The market believes that the information asymmetry is also in play in the Flurizan deal. If data from the ongoing phase III studies are so promising, why is Myriad outlicensing the product before the phase III data is available? Such a decision could of course be explained by a risk-minimizing strategy by Myriad – but again, if Myriad believes so much in the product, why not take the risk and wait 4 weeks for the data to be available?

The price…
The other thing that worries the market is the price of the drug. Taking the calculated bet could of course be defended if the acquisition price and royalties are very low. Many investors believe that not only have Lundbeck just spent USD 100 million on the roulette, but even if successful – the product will be very expensive for Lundbeck.
The parties have announced that Lundbeck will pay royalties in the range of
20-39 % of sales, which seems very high com compared to industry standards.

We don’t know the details of the agreement, and are therefore not in a position to judge whether the price is too high or not. We can just conclude that the market has voted with its feet, and the share-price has fallen with close to 10 % since the announcement. The market believes that Lundbeck’s bet is not generating shareholder-value.

Is the Myriad-deal good news for biotech companies in general?

We believe that the Myriad deal is yet another sign that the power between (inlicensing) Pharma companies and (outlicensing) biotech-companies are shifting to the favor of the latter.
In a time where many biotech companies, especially the companies with many early-stage projects, are struggling to get new funding, it is encouraging to see how good terms it is possible to negotiate only with phase II data. Most Pharma companies, like Lundbeck, is struggling to fill out their pipeline. The fight over good potential products is constantly getting tougher and tougher – for the benefit of biotech companies with the “right” products in their pipeline.

About the author:

This analysis was written by Nicolaj H. Nielsen, managing director of Biostrat, which provides management consulting services to the biotech industry.

Guest content from Sandy Graham, managing partner at Sequoyah Associates:

Can you “see the field” of opportunity? Have your clearly defined your plan to achieve your entrepreneurial dreams? Have you mapped out the strategic direction to attain your plan? Have you envisioned your market and know how to position your business to acquire it? Do you still have that “entrepreneurial flame” that caused you to spend nearly every wakening minute working ‘on” your business or have you succumbed to the daily chores of working “in” your business? Too often, new entrepreneurs and small business owners get caught up in the “day-to-day” running of their business, and find themselves unable to focus on their passion and keep the “entrepreneurial flame” going in the attainment of business initiatives, envisioning the market, reaching the optimal strategic direction, and seeing the field of opportunity.

The Golf Analogy

A new venture entrepreneur or small business owner who can “see the field” of opportunity is much like the PGA Professional who “sees the field” when he stands in the tee-box and looks down the fairway to the flag stick. He envisions the best approach to the green, determines the strategic direction to get there, and focuses all his efforts on attaining the goal of getting to the green and setting up a short birdie putt. The result is success, and if continuously repeated, will lead to a very strong finish. The great Bobby Jones was said to be the best at this. The present day version is Tiger Woods. In business, I believe we can achieve the same ‘vision’ as Tiger and Bobby if you can ‘see the field’ of opportunity.

How you ‘see the field’ of opportunity will largely determine your level of success. It is here you have the decision to make to either work ‘on’ your business, or work ‘in’ your business. Positioned to work ‘on’ your business keeps your entrepreneurial flame burning, fueled by the passion that first inspired you to leave corporate or blue-collar America and take that entrepreneurial leap-of-faith. Conversely, if the field of opportunity is clouded, foggy and difficult to see, then you likely will succumb to the notion that it is better to work ‘in’ your business to keep it going. There is certainly nothing wrong with that, except it means status quo and not growth.
компютри втора употребаThe Consequence of Not Seeing the Field

Now I am not a biology wiz, but I do know this; in the natural world, if an organism stops growing, assimilating and adapting to its environment, and basically reaches a point of accepting a natural status quo, decay sets in and the result is not good. The same goes for a new venture or small business enterprise. The ability to “see the field” of opportunity is critical to your ability to be successful; where growth, assimilation and adaptation come about through preparation, planning and execution which are extricably linked to how well you see the field of opportunity, followed by how you achieve it.

The Importance of Preparation and Planning

To “see the field” of opportunity, in my opinion, involves spending the requisite time to properly prepare and plan how you are going to attain your entrepreneurial goals, envision your market, and determine the strategic direction to achieve them. In business, any business be it biotech, telecommunications, software, medical, manufacturing, or even golf, preparation involves and includes sound strategic planning, market analysis, profitability assessment, and finally looking at your financing status, options and position.
At Sequoyah Associates we can work with you to review your business objectives and initiatives, and recommend the best strategy for attaining them, both in the near- and long-term. Of course, if there are current growth needs or issues, we can help with those as well. Our service offerings range from strategic planning that includes business plan development and business expansion strategy, to market and opportunity analysis, profitability analysis and financing assessment. Whatever your situation is as a new or growing small business, Sequoyah Associates provides the services that can help you attain your goals. Please feel free to peruse our site at www.sequoyahassociates.com and do give us a call for confidential, FREE, no obligation discussion of your business.

Gerald S. “Sandy” Graham
MBA, MS Economics
Sequoyah Associates
813-389-2725
sandygraham@sequoyahassociates.com
www.sequoyahassociates.com

Sandy Graham is Managing Partner at Sequoyah Associates, with over 20 years of progressive senior level experience with some of our Nation’s leading organizations and Fortune 50 companies, as well as new ventures and small business enterprises. His experience includes business strategy, planning and development; new business solution development and delivery; client services delivery; and engagement management. Sandy’s academic credentials include an MBA and an MS in Economics, and is a recipient of the Ewing Marion Kauffman Foundation Internship in Entrepreneurship. In addition, he is a contributing author on Free Cash Flow. Since 2005, Sandy has been driving winning business strategies that have met client needs using consultative, coaching and advising skills to deliver the right business solutions for the small business firm and new venture enterprise.

Guest content from John Avellanet, managing director and principal of Cerulean Associates:

John Avellanet

Follow-on biologics are a foregone conclusion in the US. Too much money is at stake. The more difficult discussion starts with how to prepare your company to compete.

Science Succumbs to Dollars
The financial pull on reimbursement organizations and the constituent push on Congress for less expensive biotechnology treatments will inevitably lead to a regulatory approval pathway for so-called follow-on or generic biologics.

Guest content from John Avellanet, managing director of Cerulean Associates:

The US Food and Drug Administration (FDA) intends to increase regulatory enforcement, extending the recent trend of laboratory and clinical site inspections to unapproved drugs and reformulations. How can you avoid compliance trouble?

At the Food and Drug Law Institute’s 5th Annual Enforcement and Litigation conference, several FDA compliance directors spoke out on FDA enforcement priorities and provided recommendations to improve compliance.

Laboratory & Clinical Inspections
The first two targets for enforcement are laboratories and clinical sites. Of the violations found, data integrity and policy/protocol adherence are the top two by a large margin, with data integrity involved in 95% of findings. Mitch Lazris, an industry defense attorney, noted that IT departments continue to be the weak link in the compliance chain.

Two main factors lead to inspections: problems with the integrity of the information submitted to the FDA and complaints by former employees, contractors, vendors, clinical trial participants and even the sponsors themselves.

Unapproved Drugs
The FDA estimates that approximately 2% of all prescriptions are for unapproved drugs or formulations. Priority will be given to those drugs that pose safety risks, with pediatric formulations at the top of the list. Drugs that lack evidence of efficacy are also considered to be “unapproved” now that all “generally recognized as safe” (GRAS) interpretations were revoked in 1968 (21 CFR 310.100).

Recommendations
Panel members made multiple concrete suggestions for executives:

  1. Conduct benefit-risk analyses for every product-related decision (such as labeling, reformulation, etc.); ask yourself how you’ll defend the decision in front of jurors increasingly suspicious of the high profits of (big) “pharma.”
  2. Train individuals to understand what they are committing to, not just the procedure or protocol steps.
  3. Clarify to IT their accountabilities for electronic data integrity—there are no magic bullet technological solutions, so be wary of “another system” to solve the problem; push for a “quality” approach, not a technological one.
  4. Use caution with universities that perform both the role of sponsor and investigator for clinical trials. Segregation of duties is critical.
  5. Do not use reputation or brand to select sites, vendors or systems; inspectors look for information integrity and process adherence.
  6. Rapidly respond to 483s as this shows you understand the gravity of the findings and have a positive attitude about the need for compliance.
  7. Use design control to your advantage to minimize risks during clinical trials, labeling decisions and so forth.
  8. Address all findings from audits, 483s and so on; remember to document the steps taken and the results. Expect the FDA to pursue court action if you insist on only fixing one or two items.

Following the panel’s recommendations will give you a stronger compliance program, minimize your costs, improve your bottom line and help you avoid enforcement action.
More recommendations and compliance strategies are on the Cerulean website.

About the Author
John Avellanet is a leading authority on simplifying and streamlining regulatory compliance and quality system programs so clients can achieve faster time-to-market. He can be reached through his independent consultancy, Cerulean Associates LLC (www.ceruleanllc.com) at: john[at]ceruleanllc.com.

Guest content Contributed by Jayme Norrie, Chief Strategic Officer, Incite World

From what we have experienced, angel investors are shoring up the gap in new innovations coming forward. However, they seem to be more naive than VC’s in terms of due diligence prior to investing. Scientists from the company march in with charts and scientific graphs 99% of angel investors don’t know anything about. The rule they seem to forget is: there is ALWAYS a patient market, and there is ALWAYS a scientific platform – that undoubtedly has competition. Will any new life science innovation get a percentage of the whole market? Absolutely not. They will get a percentage of a percentage based on third party reimbursement and their label. We end up doing this work for our clients and typically the results are startling to them.

Angels and VC’s tend to think that some phone calls to scientists to provide insight will help. This also hurts investments in the long run as they are asking strangers to give them financial advice. And most of these strangers – albiet with great CV’s – have never seen the data on the platform, or on other similar platforms that will ultimately compete with the innovation. More so – how can those “experts” who are brought in for evaluation on a particular scientific technology know everything about so many varying therapeutic areas? They can’t. So companies depending on a handful of “experts” to give them advice aren’t playing with a full deck – of common sense or investment strategic advice.

What I find the most amazing in the life science investment sector as a whole is the lack of investment review by true experts. Professionals who work for big pharma, biotechnology (of companies we’ve heard of), or big device. When interviewing “experts”, ask them how many successful products they’ve put on the market – Do they understand all of the nuances that lead to a successful life science product? Ask them what actual burn rates are to include FTE’s, clinical trials for THIS particular product, manufaturing and distribution costs – Do they understand and have they demonstrated their understanding above “costs of clinical trials = {blank}”; based on what? In other words, do they understand the regulatory path, the manufacturing, how this product will differentiate its label, and what strategies will be required to secure rapid product uptake?

It concerns me to look at the long term viability of the life science market as investors will continue to shy from it if they continue to get burned. The rate of new innovation discovery is tremendous; finding those that will attract IPO’s and licensing agreements means looking at them as ranking industry would – the big boys – and the only people that can do that are those that are internal to these organziations, or those who have been recently. When looking for advice on life science investments, start with the whole teams experience and make sure – if they have a cross-functional team – that its from a company you’ve heard of.

We’re grateful for the Angel community; without them emerging innovations wouldn’t get a chance in these days of upswing with tech investments. And we support the VC community as well. In the long run it will require better due diligence by ranking professionals and looking beyond level of education to level of documented experience.

Guest content contributed by Agnes Shanley, Editor in Chief, Pharmaceutical Manufacturing

Every day we read about severe shortages of skilled biotech workers in the U.S.. At the same time, the trend to pharma offshoring and outsourcing is becoming more pronounced, and is moving from traditional pharma to biopharma.

We recently touched on some of these issues in Pharmaceutical Manufacturing. One question is whether today’s skills shortages reflect a lack of alignment between biotech training and industry requirements.

We would welcome any comments, critiques and responses from the biotech community.

Here is the article (which includes, on the last page, a very brief and informal poll)

http://www.pharmamanufacturing.com/articles/2007/100.html

Thank you!