From The Editor | May 16, 2018

Lessons Learned From 7 Years Of Pharma Partnering

Ed Miseta

By Ed Miseta, Chief Editor, Clinical Leader
Follow Me On Twitter @EdClinical

Lessons Learned From 7 Years Of Pharma Partnering

Ron Squarer believes for a company to be successful, especially in a capital-intensive area such as biotechnology, it has to know what it is good at and target those skills. Squarer is the CEO of Array BioPharma, a company focused on the discovery, development, and commercialization of targeted, small-molecule drugs to treat patients with cancer. Focusing on the company’s primary expertise in small-molecule chemistry has allowed it to produce 23 molecules that have had INDs filed and been put into human studies.

“Our attrition rates are lower than industry standards, which lets us know we are successful at making drugs for patients who have no effective drugs available to them,” he states. “Our focus on small-molecule chemistry in the early days of the company was critical, because it is the area where we felt we had a unique and special core competency.”

The company has come a long way since those early days. As its products progressed over time, the company got to the point where it did not have sufficient resources to pursue every molecule in its pipeline. Array was involved in several therapeutic areas, including oncology, inflammatory disease, pain, respiratory conditions, and blood disorders. Array would need to decide what it wanted to pursue from a development point of view.

“We had a lot of options to choose from,” says Squarer, “And, we knew we had to make a choice. Around six years ago when I joined the company we saw a growing interest in oncology. We decided that was where we wanted to focus our development activities.”  

Today the company has two NDAs in BRAF melanoma currently with the FDA. Array also has a Phase III trial running for those two drugs for BRAF colorectal cancer, which presents a greater opportunity and is an area of greater unmet need. Array is currently investigating the potential of one of the drugs to potentiate immunotherapy with partners BMS, Merck and Pfizer.

Partners Provide Needed Resources

Array is now approaching a transformational milestone, as the company’s first FDA approval approaches. Squarer notes the commercialization and medical affairs teams are already in place. But he wondered what the company should do with the assets that do not fall under the oncology umbrella. Squarer felt this is where partnerships become an important component of the company’s strategy, and this is especially true in areas where it can be expensive to get to proof-of-concept.

“There are some therapeutic areas, such as asthma or pain, where you need to study a large number of patients,” says Squarer. “You need to study their activity and gain a very clear understanding of tolerability and safety. That can be expensive and is a big challenge for biotechnology companies. It’s an area where it pays to find a partner.”

It’s believed that small companies conduct research and Big Pharma is where the marketing and commercialization expertise exists. This results in small companies developing molecules and taking them from discovery through Phase 2 testing. Those companies then partner with a large pharma entity to take the product through the larger and more expensive Phase 3 trials and into commercialization. Squarer believes the actual situation is much more complex and that industry trends are forcing continual change.

“The rare disease area has really changed the landscape from research through to commercialization,” he states. “Right now, some of the greatest success stories in our field, both from a patient benefit and commercial point of view, are in the rare disease space with relatively small patient populations. Companies select those patients carefully based on their disease characteristics and genetic composition. This allows even the smallest pharma and biotech companies to pursue large treatment effects in small populations.”

Research Is A Tough Game

Throughout the world, rare disease still commands what Squarer calls “value pricing.” Although rare diseases impact a small number of patients, they can be debilitating and continue throughout a patient’s life. Therefore, the willingness of health systems and governments to pay for treatments is quite strong.

“That is something that can really level the playing field between smaller firms and the large pharma companies,” says Squarer. “Even the largest companies in the world have had to evolve from primary care-type diseases, like cardiovascular and respiratory conditions that treat tens or hundreds of millions around the world, into rare conditions.”

Still, Squarer notes one thing about large companies has not changed: They have an intense need to generate revenue. Those large companies understand the world is moving more towards small population/high-burden diseases, and that patents are expiring on blockbuster drugs. As companies lose revenue on those products, they will need to bring innovative, new products to market.

“Research is a tough game,” adds Squarer. “Big Pharma companies spend billions annually and their risk-adjusted return on investment has been poor. The attrition rate is high and the expected return is low. Yet they pursue research because of that quest for revenue. You need to have an extensive portfolio and place a lot of bets before you find a winner. That’s why it often pays for those companies to look at the hundreds of biotechnology companies doing research to find de-risked products that demonstrate proof-of-concept. That is often a better strategy for them.”

Timing Is Everything

When it comes to partnering with Big Pharma, timing is everything. Make a deal too soon and you might get a lot less than if you had waited for more promising results. But if you wait too long, you could end up losing everything. While that is a concern for Squarer, it is also an area where he feels he has a lot of experience.

He notes that when it comes to collaborating early, you really want to have as much evidence as possible. Make a deal too early – with simply the concept of a molecule and scientific rationale in animal data – and your prospects for getting meaningful value are poor. Squarer recommends, at a minimum, waiting until you get the molecule into humans.

“Phase I studies used to be all about safety,” he states. “But today, Phase I trials can very well be about early signs of activity in small populations, especially in high-burden diseases where you may have the opportunity to see a high percentage of patients benefiting from the treatment.”

Still, Squarer is quick to note that things are never black and white. There are certainly sectors of the industry that can be very hot at any given time. When that situation arises, it is a rare opportunity for a company that may have one-of-a-kind product. If that happens, it creates an opportunity to get high value for a molecule (cash and possibly a portion of future earnings) early in the process.

To determine where you stand, resources are critical. According to Squarer, without sufficient resources to truly explore the value of an asset, you may end up with a false negative. “You may have a great asset, but can only afford to test it very narrowly,” he says. “If you don’t get a hit, the research comes to an end. Had more resources been put into testing, you may have been able to produce evidence of success. Without the required resources, you’re forced to rely more on luck than science. In that case, your odds of success are quite poor.” 

Culture Is Critical

When selecting a collaboration partner, the price has to be right. But Squarer believes culture and fit are absolutely critical. Array currently has about a dozen ongoing collaborations and had many more in the past. The first thing he evaluates is whether a potential partner truly needs and values what his company offers. If they don’t, the companies cannot have a healthy relationship.

“When a company recognizes the value of what we have and wants to utilize Array for what we are uniquely qualified to do, especially our intensive development and commercial capabilities, then we generally find the relationships to be very healthy,” he says. “Those partnerships bring great value to this company. These collaborations have taught our scientists and our organization to be flexible and open minded to many different approaches.”

Array has had multiple research and development collaborations with companies like Roche, Genentech, Amgen, Celgene, and Biogen. Each company tends to be different in their approach. That variation in approaches has allowed Array to hone its own approach to development. Squarer notes scientists at Array also enjoy working with world-class R&D organizations.

“That human element is very important,” says Squarer. “By working with other companies, our organization continues to learn and be excited, motivated, and captivated by the work they do. Partnering allows you to retain remarkable people. We have had a very high retention rate amongst the individuals working in our research group. I partially attribute that to the breadth of exciting work they have been involved in.”

Array’s strategy has certainly been successful for the company. When Squarer joined Array it had a market capitalization of $300 million. Today it is valued at around $3.5 billion. “People will occasionally ask me if the company would have been better off keeping our research in-house and not partnering with other companies,” adds Squarer. “I tell them no. We would not have been able to progress the way we have if we didn’t put our focus and resources on certain assets. There is only so much you can do with the resources available to you. When you run out of resources, partnerships become a necessity.”