Replies to post #143222 on Biotech Values

[DewDiligence]

You could make the same argument about drug development in general - clearly most drugs are going to fail.

It’s a matter of degree. Due to the overabundant supply of drug candidates in cancer, the probability of commercial success for a typical drug candidate in cancer is smaller than in most other areas of biotech.

[DewDiligence]

More on cancer-drug candidates as a sucker investment (from Bruce Booth, a VC who writes for Forbes):

http://www.forbes.com/sites/brucebooth/2012/06/07/cancer-drug-targets-the-march-of-the-lemmings/

Just in time for the annual ASCO cancer circus, PhRMA released a new report listing the nearly 1000 projects in the industry’s pipeline for oncology – it’s an impressively long list against a whole range of cancers.

…But the lemming behavior revealed by this list is frightening: a significant percentage of these programs are chasing the same targets. We used a different database than the PhRMA report (Thomson Pipeline vs ADIS Insights) but count roughly the same number of active programs in oncology (990 vs 981). Of those, the concentration of clinical development effort around a handful of targets is staggering: 8 targets are addressed by >20% of the projects, each of which has more than 24 projects in clinical development. Clinical projects that target VEGF lead the charge at an amazing 70 – and this only includes the one’s addressing oncology.

… How many winners are likely to emerge from this? Maybe a small handful per target, at most. That implies lots of zombie programs being funded by budgets and investors that will never be of value. This is of course always the case in R&D: programs more often than not fail. But the concentration of industry activity on these privileged targets feels way outside the norm, and in aggregate represents a lot of wasted energy.

… while biologic and chemical risk is often lower for projects in these crowded classes, the differentiation risks skyrocket…

I coudn’t agree more.

See the link above for a chart of the number of programs pursuing certain cancer targets.