Virtue Of Being Virtual

The Virtues of Being Virtual

BioEurope, Barcelona

Monday 8 March

Grahaem Brown Michael Tansey

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There’s inherent inefficiency built into the

traditional drug development model. The

outsourced system allows you to do the same

development with much smaller teams and

many more products simultaneously

David Collier at CMEA Capital

Chakma, J. et al, Nat. Biotechnol. 27, 886-888 (2009)

deliveringintelligent drug development 2

Why Even Consider

Virtual Pharmaceutical Development?

deliveringintelligent drug development

A Definition of

Virtual Pharmaceutical Development

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The use of external professional,

experienced and flexible teams,

with the mix of skills relevant to

meeting the desired objective (POC, specific phase of development, acquisition, partnership, IPO etc.)

as an alternative to building infrastructure.


Situations Amenable to

Virtual Development

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• Single asset (any stage)

• Uncertainty about viability of compound

• Low-priority asset for which no in-house resources

• Drug repositioning

• Pre-clinical phase

• Intent to build a team if milestone (eg POC) reached

(low-cost initially, with no residual cost if fails)

• For start-ups and VCs geared to M&A


The Pros of Virtual Development 1

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• No, or low, office overheads and expenses

• Fewer staff overheads

• No recruitment costs

• No salary to pay if no work (use as needed)

• Reduced risk of over-run costs (greater efficiency)

• Avoid severance*

• Little legacy infrastructure*

Better capital efficiency and lower burn rate

*Especially if acquired, or if fail to be acquired



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More effective staff management

• Immediate availability

• Relevant expertise

• Better qualified

• Lower turnover



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• Simpler governance

• Faster decision-making; less bureaucracy

• Start to build permanent organisation when more certain

of outcome

• More time to recruit best staff

• Time to train new staff

Greater flexibility

Greater speed to objective

Greater productivity

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If you’re building for an acquisition, and your acquisition doesn’t

come around, then it’s “then what?”

How do you manage in that type of environment?

The acquirers are trying to spend less and less, which

represents a challenge to the model.

David Berry, Partner at Flagship Ventures



Acquisition: To Be or Not To Be?

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“The unmet need in the industry is drugs, not

companies.”… “If you look at the biotech industry,

about 90% of companies can be best described as

being marginal. Too many of them have had large

sums invested in them before delivering key data.”

Index Partner Francesco de Rubertis,

BioCentury, Nov 2009


Cost Savings and M&A Strategy

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But if the company may be an acquisition target, then by minimizing

infrastructure, it makes it more attractive and easier for a potential

acquirer to integrate what they want without worrying about shedding

infrastructure…

Especially if you have a single asset….the potential acquirer is largely

interested in the asset, and the infrastructure in support of that asset

may not be as important in the acquisition.

James Niedel, Managing Director at New Leaf Venture Partners



Infrastructure and Exit Strategy


Achieving Proof of Concept: a ComparisonFlexion

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22 People

10 New Medical Entities

6 Therapeutic Areas


The Cons of Virtual Development

(and how to manage them)

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• No direct control Primarily a management issue

Establish clear objectives and processes

Physical presence whenever possible

Communication

• Low level of commitment and urgency (not accountable) An issue when using any kind of contractor

Structure contract to pay by objectives

• Lack of creativity and efficiency due to physical separation Create effective communication plan

Ensure physical presence at relevant meetings (meetings do not necessary result in efficiency or creativity)

• Geographical and temporal delays An issue for any multinational project

Tried and tested ways exist to address these aspects

Virtual team should be international (when relevant)

Communication

The Traditional Development Model

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CROs

Site Management

IVRS

CTMS

Central Labs

Supplies

External VendorsThe Company

The CEO

CFO

Legal

HR

IT

CMC

Supply

QA

Preclinical

Analytical

Business Dev

CMO

Stats

Data Management

Safety

Medical

Clinical Pharm

Clinical Ops

Regulatory

Proj Management

Writers

Consultants

Therapeutic Experts, Advisory Boards, DMBs etc.


Intermediate or Semi-Virtual Models

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CROs

Site Management

IVRS

CTMS

Central Labs

Supplies

External Vendors The Company

The CEO

CFOBusiness Development

PreclinicalProject Manager

Admin

Legal

HR

IT

CMC

Supply

QA

Analytical

CMO

Stats

Data Management

Safety

Medical

Clinical Pharm

Clinical Ops

Regulatory

Proj Management

Writers

Therapeutic Experts

Advisory Boards

DMBs

Consultants


CROs

Site Management

IVRS

CTMS

Central Labs

Supplies

The Virtual Development Organisation

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Contract Operations

Finance, Legal, BD, IT, HR etc.

Consultants

Therapeutic Experts, Advisory Boards, DMBs etc.

External Vendors*Integrated Virtual

Development TeamThe Core Company

Dedicated Senior

Project Leader

CEO

Inventor

Board

VCs

Stats

& DMRegulatory

* Contracts with the Core Company

CMC &

Supply

Ops

Manager

Safety

Project

M/gement

QA

ClinPharm

Others



Essential Management Qualities for

Managing Virtual Development

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• Previous experience

• Ability to delegate

• Comfortable working without immediate infrastructure

• Excellent communicator

• Strong team and culture builder

• Good project manager

“A great molecule can be screwed up by a

mediocre management team”

Jeff Stein, CEO of Trius Therapeutics and Partner at Soffinova Ventures


• A global biotechnology and pharmaceutical consulting

company, with partners in US, Asia and Europe

• A full range of services, from IND to NDA and throughout

the product life-cycle

• Flexibility to meet your needs - whole programmes or

specific components.

• Founded and managed by senior executives with

extensive experience, both in Biotech and majorpharma

companies such as Glaxo, Pfizer, Novartis, Pharmacia

and Hoechst

competitive drug development international


About us

• cddi is led by seasoned Industry professionals who have

been personally accountable in some way for developing

more than 30 products globally from discovery to market.

• Our global network of partners have the functional and

therapeutic area skills needed for programs, from

strategic development to hands-on operational project

tasks

• We have a proven track record in reducing time lines

cost effectively

• We don’t just “consult”, but accept responsibility for

achieving your objectives……. reliably, quickly, and cost-

effectively

Why Is cddi Different?


• Highly experienced biopharmaceutical specialists

• Project evaluation / due diligence by experts

• Project management, with dedicated teams to take

projects effectively to the next inflexion point

• Optimisation of organisations, reduction in infrastructure

costs and operational excellence

• Ability to “rescue” projects with problems such as slow

patient recruitment

• Global reach with a worldwide network of partners

What we Provide

“You cannot create experience. You must

undergo it”

Albert Camus



Progress comes from looking in

alternative directions

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From strategy to outcome:

intelligent drug development

www.cdd-i.com

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Virtue Of Being Virtual