Small and large pharma companies do not operate in the same manner. According to John Gainer, CSO of Diffusion Pharmaceuticals, those operational differences are critical when it comes to new treatments making it to patients. In fact, he believes many treatments, especially those for rare and orphan diseases, would never make it to market were it not for small pharma and biotech firms.
“They are several treatments currently on the market that I don’t think would have ever come out of a large pharma company,” says Gainer. “In my experience, there is a lot more novelty and creativity coming out of small companies than large. I’m not saying large companies lack creativity. But that creativity is certainly a lot more constrained in larger companies than it is in smaller ones.”
There are other reasons why many rare disease trials originate in small companies. Gainer believes if a large pharma company specializes in a few therapeutic areas, it will tend to only focus on treatments that fall into their area of expertise. Small companies, on the other hand, pursue any treatment that can be monetized or lead to a company acquisition.
Flexibility is also important. Right now Diffusion is working on stroke treatments in its internal lab while also working on an Alzheimer’s treatment at a contract lab. “I have the flexibility to do something different every day,” states Gainer. “I don’t feel many of the larger companies have that same flexibility.”
Both Positives And Negatives
There is a common path whereby molecules in small companies make it to market. The current model typically starts with small companies coming up with new molecules. Those companies will take it to a certain point in the development process (often the completion of a Phase 2 trial) at which time it will be acquired by a larger company specializing in that therapeutic area. The larger company has the financial resources to take the drug through a large (and more expensive) Phase 3 trial, and then submit the data to FDA for approval. Unfortunately, there are problems with this model.
“Large companies have the financial resources to bring almost any new drug to market,” says Gainer. “But if they have a drug that does not quite fit into their pipeline or long-term plan, development of that molecule will often come to an end. I am aware of promising drugs that were purchased by large companies, only to have their development come to an end because they were not a fit for the company’s pipeline. At the same time, a smaller company might have a greater desire to take that molecule all the way through the development cycle, but might lack the financial resources to do so.”
Even if a large company is interested in a molecule, it might ask the small company to take the molecule through Phase 2 testing before offering to purchase it. Unfortunately, many smaller companies do not have the financial resources or expertise to do so. As a result, we may be losing out on many potentially life-saving medicines.
“Even a Phase 2 trial can cost a lot of money, especially if you want to put enough patients in the study to actually get meaningful data from it,” says Gainer. “The cost of a Phase 2 trial is generally around $100,000 per patient, regardless of the therapeutic area. For 100 patients, that equates to $10 million. That is affordable for a large company, but a pretty steep cost for any small company. And if the risk is high, that could keep needed investors away as well.”
Gainer believes the best situation would combine both the financial benefits accrued in large companies with the dedication to a new treatment often seen in smaller firms. Unfortunately, he does not believe we are at that point.
“We still have a large number of diseases for which there is no cure,” notes Gainer. “Every one of those diseases represents hundreds or thousands of patients who are suffering. Coming up with cures for them will be a huge task to overcome, but we are capable of doing it. We could more easily come to a completion of that task if somehow the good attributes of companies could be synergistic. But the barriers to that are huge, so it isn’t realistic.
Can Large/Small Pharma Work Together?
Both large and small companies clearly have benefits they can bring to the drug process. But, is there a solution that will help them to better collaborate, and thereby allow more molecules to make it through the lengthy, complicated, and expensive clinical trials process?
“I certainly don’t believe the solution is for large companies to purchase smaller companies,” states Gainer. “Doing that will lose the creativity that exists in the smaller company. At the same time, relying on large companies to explore rare and orphan drugs is not the best solution either. Every large, publicly-held company is responsible to their shareholders and investors. That will always force executives to closely evaluate the amount of risk they are taking on. While understandable, that is also a reason why large companies might be less willing to take a chance on a new drug that does not have the potential to be the next blockbuster.”
“Anyone in the industry will tell you never to do a stroke trial,” says Gainer. “They will tell you these trials are all failures. I actually believe that to be a true statement. But if a company has a new drug with the potential to prevent strokes, do we really want them to abandon any effort to develop it, knowing that stroke is the second leading cause of death in the U.S.? Right now there are only three stroke trials recruiting patients in the U.S., and all of them are device oriented. None of them deal with a drug. It would seem that with all of the talent in both the large and small companies that there might be another, different model of drug development. I don’t have any answers – so maybe we need more “out-of-the-box” ideas here – or are we simply left with incurable diseases?
If we need some way to encourage companies to take on greater risk in the discovery process, and to help reduce their costs, is government the ultimate solution?
“It’s an interesting topic to discuss,” says Gainer. “Additional funding could help, but I don’t believe government involvement is any type of a panacea. For example, NIH has an emphasis on certain types of approaches. But that means if your drug has a different mechanism or approach, it will be difficult for you to get funding.”
Ultimately, partnerships between large and small companies that occur earlier on in the discovery process (Phase 1 or earlier) might be the best solution. This will require a change in mindset on the part of the large companies and a requirement that they take on a greater level of risk in identifying new molecules of interest. Gainer believes we are still far from that vision becoming a reality. “I think there is a solution out there, but it is one we have not yet achieved,” he says.