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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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In the Pipeline: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline

In the Pipeline

« More Avandia, And More on Marketing | Main | The Avandia Wars Continue »

May 29, 2007

Knowing What You Know. . .

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Posted by Derek

Here's a question for people working in the industry: when you see your own company's press releases, just how close to reality do you feel they come? Could someone wanting to invest in your company's stock form an accurate picture of your drug pipeline's potential by reading them, or not?

I ask because (in my experience) the answer to that second question is very much in doubt. There are several reasons: First, from what I've seen, many companies have their official pipelines cluttered with compounds that aren't being developed - at least, not in the same way that the really important ones are. (Projects can get sent "into the clinic" for many reasons, not all of them productive). And canceled projects often linger on the list before they're removed, too. A dedicated reader of the company's SEC filings and press releases can work some of these things out, but no one makes it easy.

Then there are the press releases about specific projects, which. . .well, they're press releases, if you know what I mean. The bad news is skulking in a subordinate clause somewhere in the fifth paragraph, while the good news is up on stage, expensive spotlights reflecting off its refined makeup and tasteful clothes. This isn't a particular failing of the drug industry; it's a failing of press releases (or, more likely, of human nature).

This has a bearing on the issue of disclosure of clinical trial information, naturally. I think that we're moving toward some sort of standardized disclosure, and that there's little that can be done (in the long run) to stop it. I think the positives outweigh the negatives, although it's not as easy a match to score as you'd guess. (Lack of knowledge of statistics, to pick one big issue, could make the whole thing a pile of dry wood for fools to make bonfires of). More on this in a future post. . .

Comments (12) + TrackBacks (0) | Category: Business and Markets | Clinical Trials


COMMENTS

1. Jamie on May 29, 2007 9:38 AM writes...

Wow, I really disagree with this post. Any company that gives up and still lists a program is asking for SEC investigation. Also, Clinical trials are so risky, you'd be a fool to bet on just one or a few of your favorite programs. It is much smarter to carefully design experiements, spend money when you need to and move all the projects forward.
I have seen poor alignment in some companies on what the discovery/clinical portion of the organizations does and what the marketing arm thinks that they could sell (stranding potential drugs in the abyss) is that what you are talking about?

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2. Still Scared of Dinosaurs on May 29, 2007 9:58 AM writes...

My favorite bit that always shows up in company press releases is the "quotation" from a Sr. Executive that usually start paragraph 3. You know the "We are excited at the prospect of bringing a new therapeutic option to this long-suffering population..."
One big issue in favor of standardized press releases of clinical trials results would be if the lawyers were convinced that such adherence would reduce the liabilities of any "forward looking" components they contain. The closest you usually get currently is the release with a smattering of top-line results announcing presentation or publication of the full trial in another venue.

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3. Derek Lowe on May 29, 2007 12:56 PM writes...

Jaime, I agree with your points - but I really have seen programs which were officially "taken into clinical development" but which were basically dead on arrival. This is the sort of thing that can happen when there's an over-emphasis on meeting numerical targets. I mean, you have to meet some of them, but they shouldn't be ends in themselves.

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4. milkshake on May 29, 2007 3:16 PM writes...

The difficulty is that the top management people are awarded obscene stock option packages and bonuses - to keep the stock price high. So they keep it high.

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5. Green Koala on May 29, 2007 3:51 PM writes...

Responding to the lead questions would put me pretty close to the edge, or over the edge, of the confidentiality agreement most of us in industry have with our employers.
I can respond regarding a previous large pharma employer, where the organization was typically pretty conservative and generally provided accurate depictions of the programs ongoing. But, press releases on programs was very rare; these were usually limited to collaborations, programs partnered, etc.
The fuzziness usually came in how to interpret a program in clinical trials that seemed to get "stuck" for many quarters in the same clinical phase. There the explanations were across the board, from it was going well but prioritized low in the queue to there's troubling data we're trying to figure out, to everything in between. But I don't think I ever saw a program still on the list if it was truly terminated.
The obvious problem is that the public, and also most internal employees, know nothing of the true status of the program, and therefore cannot have the info to make a "informed bet" on the outcome.

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6. NJBiologist on May 29, 2007 5:43 PM writes...

The press releases can be pretty uninformative, but so are some of the SEC filings. I've recently spent a very frustrating couple of weeks doing a little competitive intelligence, and it's convinced me that the big guys don't consider phase II (or even phase II) all that materially significant. For an extreme case, look at the most recent JNJ annual report. They detail (sort of) their ten biggest drugs--clearly the most materially significant ten things going on in the pharmaceuticals arm. But this dividing line cuts off anything not doing somewhere above $850 million in annual sales. Below that, you'll hear nothing, no matter how many 10Ks you read.

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7. Anonymous BMS Researcher on May 29, 2007 10:02 PM writes...


In many cases nowadays there will be multiple SETS of legal and PR people involved, since we have so many deals with other companies at various stages of our pipeline. Usually in such cases ALL parties must agree to the wording of the press release.


And of course if we give up on an in-licensed candidate from some biotech, the press release doesn't exactly say it's a failure, it uses lots of weasel words to say we gave full rights back to the smaller company. Usually Wall Street figures this out pretty quickly, though.


Another common -- but rarely effective -- tactic is to bury an item of major bad news on Page 37 of some 79-page SEC filing or whatever. Usually it takes Wall Street all of half an hour to notice this sort of thing.

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8. Chrispy on May 29, 2007 11:00 PM writes...

All corporate press releases are biased: the drug industry is not the only player here.

The rosy picture is EXACTLY what an investor should expect from a document like this. The smaller the business, the bigger the hype. This is especially true of speculative ventures (like drug discovery).

Does anyone even take these seriously if they are not releasing data (e.g. clinical trial results)?

As for pipleline accuracy, I believe you have it right, Green Koala: even people on the inside have trouble telling what's going on. Who cares, anyway -- early stage programs will almost certainly fail, and late-stage programs will have clinical trial data (as opposed to just corporate B.S.).

It should alarm all of us that the model of total clinical trial disclosure which has caused such grief with Avandia is likely to expand -- especially since the risks of doing so have now been demonstrated to be real. Were we not already risk averse enough?!? I am sure we all want to see all the data released, but it is worrying that the industry could suffer from Truth.

There is no investing in this business: there is only speculation.

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9. Petros on May 30, 2007 2:05 AM writes...

You raise some inetersting points and it is fascinating to contrast the public disclosure, e.g. on their website, that the big companies provide, and compare these with the trials listed on cliniclatrials.org. Some comapnies also do pit greater disclousres into their 10K/20F reports

Since last November's disaster even Pfizer has listed its whole clinicla development pipeline, at least compound no and indication, on its website.

Of the rest of the top 10 companies' websites
GSK provides an annual listing
Sanofi-aventis list nothing!
Novartis provides a comprhenneisve listing in its 20F
A-Z provides aquarterly update and list preclinical candidates. Roche also lists preclinical candidates and updates its website peioidcally. Merck updates its pipeline at roughly quarterly intervals.

Lilly, Wyeth, JNJ and BMS provide limited listings and generally only list those agents in late stage development. JNJ provides quarterly updates the other three appear to update on an ad hoc basis.

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10. Yttrai on May 30, 2007 12:13 PM writes...

Yeah, working in biotech, i just have never been with a company that had the luxury to invest a cent in a compound that didn't have an actual shot on goal.

Also, the short term benefit of appearing to be successful would never in a million years offset the hit that the company would take when they had to announce the eventual bad news.

So, of the three places i've worked, all in a 3 block radius in Cambridge, MA, i might see some optimism that wasn't entirely warranted, but not to the point of finding the press releases to be misleading. This is probably not a good cross section of a person's experience in Big Pharma though.

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11. Marian on May 30, 2007 9:22 PM writes...

It's R&D. It's pharma R&D. High attrition rates. It's a business so risky that no-one in their right mind would hang around for long. What good would it do to talk about products in Phase 1 or Phase 2? Here today (and if the company is making the right decisions,) most of them gone tomorrow.
Although on the other hand, if the average person had a better idea of how many compounds it takes to end up with one or marketed products they might have more sympathy for us...or realize how crazy we are.

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12. Benjamin on May 31, 2007 8:57 AM writes...

Jamie (first response) hit the nail on the head...I, too, disagree with this post. Press releases have a PR function and usually are issued to convey certain points. When the news is positive, they sound great. However, when the news is negative, the best face that can be shown is portrayed. True of all industries.

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