The Streetlight Effect and 505(b)(2) approvals

It is a surprisingly common peril among analysts: we don’t have the data to answer the question we’re interested in, so we answer a related question where we do have data. Unfortunately, the new answer turns out to shed no light on the original interesting question.

This is sometimes referred to as the Streetlight Effect – a phenomenon aptly illustrated by Mutt and Jeff over half a century ago:

This is the situation that the Tufts Center for the Study of Drug Development seems to have gotten itself into in its latest "Impact Report".  It’s worth walking through the process of how an interesting question ends up in an uninteresting answer.

So, here’s an interesting question:

My company owns a drug that may be approvable through FDA’s 505(b)(2) pathway. What is the estimated time and cost difference between pursuing 505(b)(2) approval and conventional approval?

That’s "interesting", I suppose I should add, for a certain subset of folks working in drug development and commercialization. It’s only interesting to that peculiar niche, but for those people I suspect it’s extremely interesting - because it is a real situation that a drug company may find itself in, and there are concrete consequences to the decision.

Unfortunately, this is also a really difficult question to answer. As phrased, you'd almost need a randomized trial to answer it. Let’s create a version which is less interesting but easier to answer:

What are the overall development time and cost differences between drugs seeking approval via 505(b)(2) and conventional pathways?

This is much easier to answer, as pharmaceutical companies could look back on development times and costs of all their compounds, and directly compare the different types. It is, however, a much less useful question. Many new drugs are simply not eligible for 505(b)(2) approval. If those drugs

Extreme qualitative differences of 505(b)(2) drugs.
Source: Thomson Reuters analysis via RAPS

are substantially different in any way (riskier, more novel, etc.), then they will change the comparison in highly non-useful ways. In fact, in 2014, only 1 drug classified as a New Molecular Entity (NME) went through 505(b)(2) approval, versus 32 that went through conventional approval. And in fact, there are many qualities that set 505(b)(2) drugs apart.

So we’re likely to get a lot of confounding factors in our comparison, and it’s unclear how the answer would (or should) guide us if we were truly trying to decide which route to take for a particular new drug. It might help us if we were trying to evaluate a large-scale shift to prioritizing 505(b)(2) eligible drugs, however.

Unfortunately, even this question is apparently too difficult to answer. Instead, the Tufts CSDD chose to ask and answer yet another variant:

What is the difference in time that it takes the FDA for its internal review process between 505(b)(2) and conventionally-approved drugs?

This question has the supreme virtue of being answerable. In fact, I believe that all of the data you’d need is contained within the approval letter that FDA posts publishes for each new approved drug.

But at the same time, it isn’t a particularly interesting question anymore. The promise of the 505(b)(2) pathway is that it should reduce total development time and cost, but on both those dimensions, the report appears to fall flat.

• Cost: This analysis says nothing about reduced costs – those savings would mostly come in the form of fewer clinical trials, and this focuses entirely on the FDA review process.
• Time: FDA review and approval is only a fraction of a drug’s journey from patent to market. In fact, it often takes up less than 10% of the time from initial IND to approval. So any differences in approval times will likely easily be overshadowed by differences in time spent in development. 

But even more fundamentally, the problem here is that this study gives the appearance of providing an answer to our original question, but in fact is entirely uninformative in this regard. The accompanying press release states:

The 505(b)(2) approval pathway for new drug applications in the United States, aimed at avoiding unnecessary duplication of studies performed on a previously approved drug, has not led to shorter approval times.

This is more than a bit misleading. The 505(b)(2) statute does not in any way address approval timelines – that’s not it’s intent. So showing that it hasn’t led to shorter approval times is less of an insight than it is a natural consequence of the law as written.

Most importantly, showing that 505(b)(2) drugs had a longer average approval time than conventionally-approved drugs in no way should be interpreted as adding any evidence to the idea that those drugs were slowed down by the 505(b)(2) process itself. Because 505(b)(2) drugs are qualitatively different from other new molecules, this study can’t claim that they would have been developed faster had their owners initially chosen to go the route of conventional approval. In fact, such a decision might have resulted in both increased time in trials and increased approval time.

This study simply is not designed to provide an answer to the truly interesting underlying question.

[Disclosure: the above review is based entirely on a CSDD press release and summary page. The actual report costs $125, which is well in excess of this blog’s expense limit. It is entirely possible that the report itself contains more-informative insights, and I’ll happily update that post if that should come to my attention.]

Establishing efficacy - without humans?

The decade following passage of FDAAA has been one of easing standards for drug approvals in the US, most notably with the advent of “breakthrough” designation created by FDASIA in 2012 and the 21st Century Cures Act in 2016.

Although, as of this writing, there is no nominee for FDA Commissioner, it appears to be safe to say that the current administration intends to accelerate the pace of deregulation, mostly through further lowering of approval requirements. In fact, some of the leading contenders for the position are on record as supporting a return to pre-Kefauver-Harris days, when drug efficacy was not even considered for approval.

Build a better mouse model, and pharma will
beat a path to your door - no laws needed.

In this context, it is at least refreshing to read a proposal to increase efficacy standards. This comes from two bioethicists at McGill University, who make the somewhat-startling case for a higher degree of efficacy evaluation before a drug begins any testing in humans.

We contend that a lack of emphasis on evidence for the efficacy of drug candidates is all too common in decisions about whether an experimental medicine can be tested in humans. We call for infrastructure, resources and better methods to rigorously evaluate the clinical promise of new interventions before testing them on humans for the first time.

The author propose some sort of centralized clearinghouse to evaluate efficacy more rigorously. It is unclear what they envision this new multispecialty review body’s standards for green-lighting a drug to enter human testing. Instead they propose three questions:

• What is the likelihood that the drug will prove clinically useful?
• Assume the drug works in humans. What is the likelihood of observing the preclinical results?
• Assume the drug does not work in humans. What is the likelihood of observing the preclinical results?

These seem like reasonable questions, I suppose – and are likely questions that are already being asked of preclinical data. They certainly do not rise to the level of providing a clear standard for regulatory approval, though perhaps it’s a reasonable place to start.

The most obvious counterargument here is one that the authors curiously don’t pick up on at all: if we had the ability to accurately (or even semiaccurately) predict efficacy preclinically, pharma sponsors would already be doing it. The comment notes: “More-thorough assessments of clinical potential before trials begin could lower failure rates and drug-development costs.” And it’s hard not to agree: every pharmaceutical company would love to have even an incrementally-better sense of whether their early pipeline drugs will be shown to work as hoped.

The authors note

Commercial interests cannot be trusted to ensure that human trials are launched only when the case for clinical potential is robust. We believe that many FIH studies are launched on the basis of flimsy, underscrutinized evidence.

However, they do not produce any evidence that industry is in any way deliberately underperforming their preclinical work, merely that preclinical efficacy is often difficult to reproduce and is poorly correlated with drug performance in humans.

Pharmaceutical companies have many times more candidate compounds than they can possibly afford to put into clinical trials. Figuring out how to lower failure rates – or at least the total cost of failure - is a prominent industry obsession, and efficacy remains the largest source of late-stage trial failure. This quest to “fail faster” has resulted in larger and more expensive phase 2 trials, and even to increased efficacy testing in some phase 1 trials. And we do this not because of regulatory pressure, but because of hopes that these efforts will save overall costs. So it seems beyond probable that companies would immediately invest more in preclinical efficacy testing, if such testing could be shown to have any real predictive power. But generally speaking, it does not.

As a general rule, we don’t need regulations that are firmly aligned with market incentives, we need regulations if and when we think those incentives might run counter to the general good. In this case, there are already incredibly strong market incentives to improve preclinical assessments. Where companies have attempted to do something with limited success, it would seem quixotic to think that regulatory fiat will accomplish more.

(One further point. The authors try to link the need for preclinical efficacy testing to the 2016 Bial tragedy. This seems incredibly tenuous: the authors speculate that perhaps trial participants would not have been harmed and killed if Bial had been required to produce more evidence of BIA102474’s clinical efficacy before embarking on their phase 1 trials. But that would have been entirely coincidental in this case: if the drug had in fact more evidence of therapeutic promise, the tragedy still would have happened, because it had nothing at all to do with the drug’s efficacy.

This is to some extent a minor nitpick, since the argument in favor of earlier efficacy testing does not depend on a link to Bial. However, I bring it up because a) the authors dedicate the first four paragraphs of their comment to the link, and b) there appears to be a minor trend of using the death and injuries of that trial to justify an array of otherwise-unrelated initiatives. This seems like a trend we should discourage.)

[Update 2/23: I posted this last night, not realizing that only a few hours earlier, John LaMattina had published on this same article. His take is similar to mine, in that he is suspicious of the idea that pharmaceutical companies would knowingly push ineffective drugs up their pipeline.]

Kimmelman, J., & Federico, C. (2017). Consider drug efficacy before first-in-human trials Nature, 542 (7639), 25-27 DOI: 10.1038/542025a

Megafund versus Megalosaurus: Funding Drug Development

This new 10-minute TEDMED talk is getting quite a bit of attention:


 (if embedded video does not work, try the TED site itself.)

In it, Roger Stein claims to have created an approach to advancing drugs through clinical trials that will "fundamentally change the way research for cancer and lots of other things gets done".

Because the costs of bringing a drug to market are so high, time from discovery to marketing is so long, and the chances of success of any individual drug are so grim, betting on any individual drug is foolish, according to Stein. Instead, risks for a large number of potential assets should be pooled, with the eventual winners paying for the losers.

To do this, Stein proposes what he calls a "megafund" - a large collection of assets (candidate therapies). Through some modeling and simulations, Stein suggests some of the qualities of an ideal megafund: it would need in the neighborhood of $3-15 billion to acquire and manage 80-150 drugs. A fund of this size and with these assets would be able to provide an equity yield of about 12%, which would be "right in the investment sweet spot of pension funds and 401(k) plans".

Here's what I find striking about those numbers: let's compare Stein's Megafund to everyone's favorite Megalosaurus, the old-fashioned Big Pharma dinosaur sometimes known as Pfizer:

	Megafund (Stein)	Megalosaurus (Pfizer)
Funding	$3-15 billion	$9 billion estimated 2013 R&D spend
Assets	80-150	81 (in pipeline, plus many more in preclinical)
Return on Equity	12% (estimated)	9.2% (last 10 years) to 13.2% (last 5)

Since Pfizer's a dinosaur, it can't possibly compete with
the sleek, modern Megafund, right? Right?

These numbers look remarkably similar. Pfizer - and a number of its peers - are spending Megafund-sized budget each year to shepherd through a Megafund-sized number of compounds. (Note many of Pfizer's peers have substantially fewer drugs in their published pipelines, but they own many times more compounds - the pipeline is just the drugs what they've elected to file an IND on.)

What am I missing here? I understand that a fund is not a company, and there may be some benefits to decoupling asset management decisions from actual operations, but this won't be a tremendous gain, and would presumably be at least partially offset by increased transaction costs (Megafund has to source, contract, manage, and audit vendors to design and run all its trials, after all, and I don't know why I'd think it could do that any more cheaply than Big Pharma can). And having a giant drug pipeline's go/no go decisions made by "financial engineers" rather than pharma industry folks would seem like a scenario that's only really seen as an upgrade by the financial engineers themselves.

A tweet from V.S. Schulz pointed me to a post on Derek Lowe's In the Pipeline blog. which lead to a link to this paper by Stein and 2 others in Nature Biotechnology from a year and a half ago. The authors spend most of their time differentiating themselves from other structures in the technical, financial details rather than explaining why megafund would work better at finding new drugs. However, they definitely think this is qualitatively different from existing pharma companies, and offer a couple reasons. First,

[D]ebt financing can be structured to be more “patient” than private or public equity by specifying longer maturities; 10- to 20-year maturities are not atypical for corporate bonds. ... Such long horizons contrast sharply with the considerably shorter horizons of venture capitalists, and the even shorter quarterly earnings cycle and intra-daily price fluctuations faced by public companies.

I'm not sure where this line of though is coming from. Certainly all big pharma companies' plans extend decades into the future - there may be quarterly earnings reports to file, but that's a force exerted far more on sales and marketing teams than on drug development. The financing of pharmaceutical development is already extremely long term.

Even in the venture-backed world, Stein and team are wrong if they believe there is pervasive pressure to magically deliver drugs in record time. Investors and biotech management are both keenly aware of the tradeoffs between speed and regulatory success. Even this week's came-from-nowhere Cinderella story, Intercept Pharmaceuticals, was founded with venture money over a decade ago - these "longer maturities" are standard issue in biotech. We aren't making iPhone apps here, guys.

Second,

Although big pharma companies are central to the later stages of drug development and the marketing and distributing of approved drugs, they do not currently play as active a role at the riskier preclinical and early stages of development

Again, I'm unsure why this is supposed to be so. Of Pfizer's 81 pipeline compounds, 55 are in Phase 1 or 2 - a ratio that's pretty heavy on early, risky project, and that's not too different from industry as a whole. Pfizer does not publish data on the number of compounds it currently has undergoing preclinical testing, but there's no clear reason I can think of to assume it's a small number.

So, is Megafund truly a revolutionary idea, or is it basically a mathematical deck-chair-rearrangement for the "efficiencies of scale" behemoths we've already got?

[Image: the world's first known dino, Megalosaurus, via Wikipedia.]

Brave New Biopharm Blogging

Although a few articles on this site are older, I really only began blogging in earnest about 15 months ago. However, I suppose that's long enough that I can count myself as at least somewhat established, and take a moment to welcome and encourage some interesting newcomers to the scene.

 

Bloggers in dank basements their natural habitat.

There are 3 relative newcomers that I've found really interesting, all with very different perspectives on drug development and clinical research:

Pharmagellan 

The Big Pharma insider.

With the exception of John LaMattina (the former Pfizer exec who regularly provides seriously thought provoking ideas over on Forbes), I don’t know of anyone from the ranks of Big Pharma who writes both consistently and well. Which is a shame, given how many major past, current, and future therapies pass through those halls.

Enter Frank David, the Director of Strategy at AstraZeneca's Oncology Innovative Medicines unit. Frank started his Pharmagellan blog this April, and has been putting out a couple thoughtful perspective pieces a month since then.

Frank also gets my vote for most under-followed Twitter account in the industry, as he’s putting out a steady stream of interesting material.

ClinOps Toolkit

Getting trials done.

Clinical operations – the actual execution of the clinical trials we all talk about – is seriously underrepresented in the blogosphere. There are a number of industry blogs, but none that aren’t trying first and foremost to sell you something.

I met Nadia Bracken on my last trip out to the San Francisco bay area. To say Nadia is driven is to make a rather silly understatement. Nadia is driven. She thinks fast and she talks fast. ClinOps Toolkit is a blog (or resource? or community?) that is still very much in development, but I think it holds a tremendous amount of potential. People working in ClinOps should be embracing her, and those of us who depend on operations teams getting the job done should keep a close eye on the website.

Other Secrets of the Buy Side

Watching the money.

I am not a stock trader. I am a data person, and data says trust big sample sizes. And, honestly, I just don't have the time.

But that doesn't stop me from realizing that a lot of great insight about drug development – especially when it concerns small biotechs – is coming from the investment community. So I tend to follow a number of financial writers, as I've found that they do a much better job of digging through the hype than can ever be expected of the mainstream media.

One stock writer who I've been following for a while is Andrew Goodwin, who maintains the Biotech Due Diligence website and blog. Andrew clearly has a great grasp on a number of topics, so when he described a new blog as a “must-have addition” to one's reading list, I had to take a look.

And the brand-new-this-month blog, by David Sable at Special Situations Fund, does seem like a great read. David looks both at the corporate dynamics and scientific stories of biotechs with a firmly skeptical view. I know most blogs this new will not be around 6 months from now (and David admits as much in his opening post), but I’m hoping this one lasts.

. . . . .

So, I encourage you to take a look at the above 3 blogs. I'm happy to see more and diverse perspectives on the drug development process starting to emerge, and hope that all 3 of these authors stick around for quite a while – we need their ideas.

[Bloggerhole photo courtesy of Flikr user second_mouse.]

The FDA’s Magic Meeting

Can you shed three years of pipeline flab with this one simple trick?

"There’s no trick to it ... it’s just a simple trick!" -Brad Goodman

Getting a drug to market is hard. It is hard in every way a thing can be hard: it takes a long time, it's expensive, it involves a process that is opaque and frustrating, and failure is a much more likely outcome than success. Boston pioneers pointing their wagons west in 1820 had far better prospects for seeing the Pacific Ocean than a new drug, freshly launched into human trials, will ever have for earning a single dollar in sales.

Exact numbers are hard to come by, but the semi-official industry estimates are: about 6-8 years, a couple billion dollars, and more than 80% chance of ultimate failure.

Is there a secret handshake? Should we bring doughnuts?
(We should probably bring doughnuts.)

Finding ways to reduce any of those numbers is one of the premier obsessions of the pharma R&D world. We explore new technologies and standards, consider moving our trials to sites in other countries, consider skipping the sites altogether and going straight to the patient, and hire patient recruitment firms* to speed up trial enrollment. We even invent words to describe our latest and awesomest attempts at making development faster, better, and cheaper.

But perhaps all we needed was another meeting.

A recent blog post from Anne Pariser, an Associate Director at FDA's Center for Drug Evaluation and Research suggests that attending a pre-IND meeting can shave a whopping 3 years off your clinical development timeline:

For instance, for all new drugs approved between 2010 and 2012, the average clinical development time was more than 3 years faster when a pre-IND meeting was held than it was for drugs approved without a pre-IND meeting. 

For orphan drugs used to treat rare diseases, the development time for products with a pre-IND meeting was 6 years shorter on average or about half of what it was for those orphan drugs that did not have such a meeting.

That's it? A meeting? Cancel the massive CTMS integration – all we need are a couple tickets to DC?

Pariser's post appears to be an extension of an FDA presentation made at a joint NORD/DIA meeting last October. As far as I can tell, that presentation's not public, but it was covered by the Pink Sheet's Derrick Gingery on November 1.  That presentation covered just 2010 and 2011, and actually showed a 5 year benefit for drugs with pre-IND meetings (Pariser references 2010-2012).

Consider the fact that one VC-funded vendor** was recently spotted aggressively hyping the fact that its software reduced one trial’s timeline by 6 weeks. And here the FDA is telling us that a single sit-down saves an additional 150 weeks.

In addition, a second meeting – the End of Phase II meeting – saves another year, according to the NORD presentation.  Pariser does not include EOP2 data in her blog post.

So, time to charter a bus, load up the clinical and regulatory teams, and hit the road to Silver Spring?

Well, maybe. It probably couldn't hurt, and I'm sure it would be a great bonding experience, but there are some reasons to not take the numbers at face value.

• We’re dealing with really small numbers here. The NORD presentation covers 54 drugs, and Pariser's appears to add 39 to that total. The fact that the time-savings data shifted so dramatically – from 5 years to 3 – tips us off to the fact that we probably have a lot of variance in the data. We also have no idea how many pre-IND meetings there were, so we don't know the relative sizes of the comparison groups.
  
• It's a survivor-only data set. It doesn't include drugs that were terminated or rejected. FDA would never approve a clinical trial that only looked at patients who responded, then retroactively determined differences between them.  That approach is clearly susceptible to survivorship bias.
  
• It reports means. This is especially a problem given the small numbers being studied. It's entirely plausible that just one or two drugs that took a really long time are badly skewing the results. Medians with quartile ranges would have been a lot more enlightening here.

All of the above make me question how big an impact this one meeting can really have. I'm sure it's a good thing, but it can't be quite this amazing, can it?

However, it would be great to see more of these metrics, produced in more detail, by the FDA. The agency does a pretty good job of reporting on its own performance – the PDUFA performance reports are a worthwhile read – but it doesn't publish much in the way of sponsor metrics. Given the constant clamor for new pathways and concessions from the FDA, it would be truly enlightening to see how well the industry is actually taking advantage of the tools it currently has.

As Gingery wrote in his article, "Data showing that the existing FDA processes, if used, can reduce development time is interesting given the strong effort by industry to create new methods to streamline the approval process." Gingery also notes that two new official sponsor-FDA meeting points have been added in the recently-passed FDASIA, so it would seem extremely worthwhile to have some ongoing, rigorous measurement of the usage of, and benefit from, these meetings.

Of course, even if these meetings are strongly associated with faster pipeline times, don’t be so sure that simply adding the meeting will cut your development so dramatically. Goodhart's Law tells us that performance metrics, when turned into targets, have a tendency to fail: in this case, whatever it was about the drug, or the drug company leadership, that prevented the meeting from happening in the first place may still prove to be the real factor in the delay.

I suppose the ultimate lesson here might be: If your drug doesn't have a pre-IND meeting because your executive management has the hubris to believe it doesn't need FDA input, then you probably need new executives more than you need a meeting.

[Image: Meeting pictured may not contain actual magic. Photo from FDA's Flikr stream.]

*  Disclosure: the author works for one of those.
** Under the theory that there is no such thing as bad publicity, no link will be provided.