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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: Twitter: Dereklowe

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May 10, 2011

Phase II Failures

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Posted by Derek

We know what clinical trial success rates have been like for the last twenty years or so (hint: not so good). Are things turning around, or not? This Nature Reviews Drug Discovery piece takes a look at the 2008-2010 data. It's not necessarily reassuring:

At present, however, Phase II success rates are lower than at any other phase of development. Analysis by the Centre for Medicines Research (CMR) of projects from a group of 16 companies (representing approximately 60% of global R&D spending) in the CMR International Global R&D database reveals that the Phase II success rates for new development projects have fallen from 28% (2006–2007) to 18% (2008–2009), although these success rates do vary between therapeutic areas and between small molecules and biologics.

There were 108 Phase II failures in 2008-2010, and for 87 of those we have a stated reason. Half of those were good old lack of efficacy, another 19% failed on safety grounds, and the rest failed for "strategic reasons". The best guess there is that the compounds seem to have been targeting areas where there was already competition, and they didn't differentiate themselves enough from the standard of care to be worth continuing. That's worth thinking about in the context of the arguments about "me-too" drugs. To hear some of the industry's critics tell it, there shouldn't be any such failures at all, since they seem to believe that even most marketed drugs really don't differentiate themselves from their competition as it is.

Nearly 70% of those 108 failures, by the way, were in four therapeutic areas: cardiovascular, CNS, metabolics, and oncology. (What we don't have are the failures adjusted for how many drugs were taken into the clinic in the first place in those areas). CNS and oncology are traditional high-risk areas, of course, and I think that a lot of the metabolics failures were in diabetes. That's a tough field - big market, but pretty well-served, making efficacy versus the standard of care a high bar to clear, and this while the FDA's safety requirements have gotten very stiff indeed.

But cardiovascular - that's interesting, since that area has traditionally had one of the better trial success rates. Perhaps that one is also suffering from the standard of care being pretty good (and often generic, or soon to be). So the high-success-rate mechanisms of the old days are well covered, leaving you to try your luck in the riskier ideas, while still trying to beat some pretty good (and pretty cheap) drugs. . .

Update: it's been suggested that some of these "strategic" failures are a sign of what happens during merger/acquisition activity. Could be, but you'd have to run these down company-by-company. I'll see if I can contact the authors of this paper about that idea. . .

Comments (38) + TrackBacks (0) | Category: Cardiovascular Disease | Clinical Trials


1. Lacerta Bio on May 10, 2011 7:47 AM writes...

The "Strategic" failures are what really disturb us. How many innovative programs are being shelved because the forecasts don't hit some arbitrary hurdle? Or because of new management with different priorities?

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2. Still Scared of Dinosaurs on May 10, 2011 8:13 AM writes...

Are these trials that missed their endpoints or drugs that were discontinued? Killing a drug is a big deal but in big pharma if you don't miss on a Phase 2 trial or two you're not trying hard enough.

I agree about strategic failures, expecially when it's because a placebo-controlled trial failed to show a certain percentage response determined by market research. Don't kill the drug until you tell me why you expected that response rate in this population.

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3. Jose on May 10, 2011 8:37 AM writes...

Yeah, I'll be waiting with bated breath for "the terrible complexity of the global community to fight the terrible complexity of disease."

"The Rise of Backyard Biotech"

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4. johnnyboy on May 10, 2011 8:37 AM writes...

Low-hanging fruits... Amid the general panic about the ongoing increase in development failure rate and decrease in new drug approvals, I think it would bear stating, or repeating, that these are completely normal - they are actually built into the concept of drug development. Since new drug approval is predicated upon a drug needing to be better in some way than what is already on the market, and since the market is packed with the fruits of 100 years of drug development, with drugs that won't go away, it only stands to reason that new, better drugs will get harder, and harder, and harder to develop as time goes by.
Which means that as time goes by, MORE resources have to be devoted to drug development in order to just keep the success rate constant. Since companies are slashing their research budgets across the board, any sane person can see that the success rates will continue going to the dogs, for years to come.

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5. johnnyboy on May 10, 2011 8:59 AM writes...

@ Jose (#3): oh LOL. I love the fact that the main example in the article for the great usefulness of social networking, in this 'New Paradigm' of drug development, is... email debates over what color the capsules should be - for a drug that hasn't even passed phase 2.
But, as the author tells us, "that's the way science ought to work". He should know, as he's written about extreme body modification and DIY robots...

I suggest that we take a breather from discussions of the on-going disintegration of the pharma industry, and instead have a discussion of the on-going disintegration of the Atlantic Monthly...

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6. Hap on May 10, 2011 9:25 AM writes...

There are things that social media and increased cooperation can do, but if no one knows the critical things and has the equipment or knowledge to figure it out, then the mass of people still won't have the knowledge or capability to figure it out.

The problematic part in drug development is in trials, and that's the part that garage biotechers don't have access to, either. (although why doesn't the prospect of Facebook-run clinical trials fill me with joy?) I guess that anyone with a potential drug would be bought out before trials, but that seems like a nightmare for the VC/drug company people, and the uncertainty still lies ahead and is not assuaged by the use of social media.

Making cool things isn't nearly as hard as making drugs.

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7. drug_hunter on May 10, 2011 9:34 AM writes...

I've said it before: until we understand disease biology waaaay better than we do now, we aren't going to make a lot of improvements in Pharma / Biotech. It follows that all right-thinking chemists should be devoting themselves to doing whatever they can to help biologists (and clinicians) sort out disease biology. Chemistry is hard and fun and challenging and all that, but it is rarely the rate-limiting step.

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8. MoMo on May 10, 2011 10:19 AM writes...

Drug Hunter,

Why is it up to chemists to help the biologists do their job understanding disease states? Less than a hundred years ago you had us blood-letting and fought the notion of infectious diseases until Louey Pasteur, as the babes called him, a chemist fixed the problems.

We chemists understand the biology a lot better than you give us credit for, and we are always pointing out your mistakes. then and now.

We need less cryptic biology of course, so get get to work!

What we need are More Molecules (MoMo) not MoBo (more biologists).

And if you think the modern pharmaceutical industry was baswed on biology-study the history of the greats-Pfizer, Cyanamid, Merck-

All launched and prospered under chemists!

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9. pete on May 10, 2011 10:43 AM writes...

@8 MoMo
Well put EXCEPT, the rise of biologicals blows a grand canyon-sized hole in your diatribe.

Take a Biologist to lunch today :)

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10. lynn on May 10, 2011 11:03 AM writes...

@8 momo -
I'm not going to take up the biologist-chemist argument... but we microbiologists consider old Louis to be one of ours. I know he started out as a chemist [and he taught physics and had a degree in mathematics]- but he's considered one of the founders of microbiology. I'd say the best drug discovery comes from communication and cooperation between biologists and chemists.

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11. Still Scared of Dinosaurs on May 10, 2011 11:32 AM writes...

To what extent is the problem caused by cases where a company understands the biology just fine, it's just that this understanding leads them into someone else's patent area? What they actually put in the clinic is the best they can do with technology they have access to?

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12. MoMo on May 10, 2011 11:38 AM writes...

Pete and Lynn,

No doubt about those biologists! I love em' to death unless they start talking about extreme kinetics, molecular mechanisms or ghost impurities that mangle their results. Then they must be dealt with sharp and swift! BAM! POW!! No Mercy!

And then there are 10 biologists to every chemist in the room so we have to scream to be heard.

And then there is the 10:1 ratio in graduate schools-killing my funding chances just because biology is perceived as less difficult.

Lets go back to Chemists running the Pharma Industry....

Just like the old days.....

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13. Rick on May 10, 2011 11:40 AM writes...

Hey wait! What about the argument that it's all the FDA's fault??? Whenever the discussion of increasing costs and failures in drug discovery and development comes up, someone usually chimes in with their fresh-from-the-can "Blame the FDA" diatribe by now. Somehow this must be the FDA's fault...

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14. hal on May 10, 2011 11:41 AM writes...

The Atlantic article describes where BigPharma's strategic failures need to go, to small, cheap virtual companies that can advance the product by outsourcing strategically to where it's suddenly worth acquiring as the development risk's been wrung out. Many such products/companies will fail, and financing isn't easy. New indications might be found (even after approval, see FDA's potential orphan database) for such molecules and companies. We're doing this now, but without money, won't be for long.

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15. hal on May 10, 2011 11:42 AM writes...

The Atlantic article describes where BigPharma's strategic failures need to go, to small, cheap virtual companies that can advance the product by outsourcing strategically to where it's suddenly worth acquiring as the development risk's been wrung out. Many such products/companies will fail, and financing isn't easy. New indications might be found (even after approval, see FDA's potential orphan database) for such molecules and companies. We're doing this now, but without money, won't be for long.

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16. Hap on May 10, 2011 12:04 PM writes...

...and if you're paying chemists and biologists virtual startup money for the rest of their careers to make money for VCs and big pharma management, I suspect you'll run out of chemists and biologists.

While people at drug companies sure don't know everything about how to make drugs, they probably know a lot, and since neither the outsourcing targets nor the garage bio people nor the VCs and management know how to make them, it's hard to see where that knowledge is going to enter the process. We're missing something, and we don't know what it is (else drug companies wouldn't be in this bind), but going without that knowledge (because it isn't worth pharma, and us, paying for) seems like poking your eyes out because you can't afford glasses.

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17. hal on May 10, 2011 12:12 PM writes...

Hap, we spent venture (and other) money to manage chemists and biologists and keep them employed. Hiring them wouldn't be 'virtual.' Pharma is doing a good job firing enough to staff the contractors we use. You are correct that the knowledge isn't freely available, but Pharma strings us along in "strategic partnerships" and gets the R&D done with OPM and their insights. Doing the same on the academic side keeps them driving the bus. Watching for the patent cliff. Damn glasses.

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18. Hap on May 10, 2011 12:51 PM writes...

No, I assumed that somebody was paying them, and for the time being there's plenty of people to work in the world, so you can get what capabilities you can't make at home or in lab easily. I'm assuming, though, that if being in a drug development CRO or university drug development group is the only way for chemistry and bio drug people to be employed (which seems to be the way that drug companies as well are going), that there won't be many people to do those jobs in the long run. The benefits primarily accrue to others, so the risk doesn't fit the reward for people other than management.

The capacities that both big pharma and the build-from-scratch model seem to not value are the capacities that would seem to be important for developing drugs. They aren't working as well as they either should or were, but they are important. Unless there's a way to capture the information temporary arrangements of drug developers make, that information will likely be lost, and so most of the business will be blind (because there is no capacity to develop that information internally over the long-term).

There's room for lots of people to play, but everyone is hoping the diamonds are in the shallow end of the sandbox, and they probably aren't.

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19. Cellbio on May 10, 2011 12:57 PM writes...

My thinking aligns more with johnnyboy than drug hunter, though of course reasonable points can be made for the advantage of knowledge, but it is hard to reconcile with the past few decades. Knowing about disease mechanisms, targets, or human or mouse genetics has not helped keep approval rate steady. Perhaps without this knowledge, our older empirical methods (today's chemical biology to not be a dinosaur)would have had an even higher failure rate, so I can't wholly discount disease biology knowledge. But, one can point to examples that illustrate an understanding of mechanism is not associated with immediate therapeutic gains. Sickle-cell anemia is a good example. Molecular defect know long ago (1954?)does not lead to tractable med chem program.
On the other hand, my couple of decades has seen areas of opportunity change from wide open to well served, with programs having to change midstream from statistical benefit over placebo to bettering standard of care that works very well. I think the contribution of our prior successes to our current tough road to approval is not trivial at all, and influences many aspects of our business, most painful of which is the merger and lay-off cycles we are living through (dying through).
I think it also manifests itself in biotech taking on SM work, and pharma bringing in biotech. Both sides see the limitations to pursuit of certain paths with a dedication to one technology, and can no longer afford to abandon lines due to failure of technology fit, while both sides were willing to do this a while back.
When I started, there were only a few areas we did not pursue due to the markets being well served, including coagulation, blood pressure, analgesics. Now the prospects of bringing forth new meds in Psoriasis, Rheumatoid arthritis and asthma are daunting. Do others not have this same experience in your therapeutic areas? Either due to successes or numerous failures that explore and discard hypotheses from disease knowledge?

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20. Linda Pullan on May 10, 2011 1:18 PM writes...

Assuming the proportion of drugs by therapeutic area are about the same for the top companies as the industry as a whole, a quick calculation of the number of failures in this report for each therapeutic area against the total number of compounds in Phase II for each, says that the failure rate was highest for alimentary and metabolism with 23 failures here out of 343 compounds in Phase II. CV has the second highest rate relative to number of compounds in development and CNS and Oncology are tied, as there are 508 compounds in Phase II for oncology and 410 for neurology.

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21. Mike Sturgess on May 10, 2011 4:08 PM writes...

Although this data is quite depressing all around, a more detailed comparison by therapeutic area with the Phase II successes would have been valuable . 29% of failures due to "strategic' reasons seems high, but as has already been stated this is the price that is paid for trying to find a better patented drug vs an off patent existing treatment. This is the business side of the development equation and depends upon many factors that may, or may not, change during the development process.
Of greater concern to me are the other 71% of failures - safety and insufficient efficacy. Both of these could and should be better evaluated earlier in the process. Insufficient efficacy suggests a greater need for biological evaluation of the target and the drug prior to Phase II. Of course such studies would delay the program and add costs, potentially allowing a competitor to reach the market first.

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22. Oldtimer on May 10, 2011 4:11 PM writes...

Unedifying slanging matches between chemists and biologists won't find new drugs, you need each other. Re "the good old days" Sarett ran Merck R&D successfully but so did Vagelos after him, you can't argue from the particular to the general. PS what happened to Cyanamid?

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23. Cellbio on May 10, 2011 4:52 PM writes...

Mike, isn't Ph2 biological evaluation of the target and drug, specifically the drug? I don't think animal models yield predictive info. Is there more to add which really informs the probability of outcome in Ph2? And is it knowable in the timeframe of pipeline decisions? To be successful, we have to move forward with good decisions that future results prove right or wrong. Too high of a demand on certainty of clinical success freezes organizations and prevents generation of Ph2 data that, in my opinion, are the first true test of our assumptions about a target or pathway in human disease.

Hi Linda! (your secret admirer)

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24. pete on May 10, 2011 4:58 PM writes...

MoMo & Oldtimer
I like Chemists (...wouldn't lurk around here unless I did). Just standing up for us Bio-logicals in the crowd :)

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25. RespiSci on May 10, 2011 5:14 PM writes...

The article mentions "well conducted Phase II clinical trials" but should include well designed and crafted too. I've been involved with drugs where in a single study, the drug may miss its primary efficacy endpoint, but hit other endpoints, causing us to review the clinical study design, altering for example, patient inclusion/exlusion criteria, or the dosing regimen. No matter how solid your preclinical information, there are things that you just can't learn from in vitro or animal studies. And unlike preclinical work, where you can repeat and retweak an experimental design relatively quickly and easily, not so with clinical studies. Instead, these are very public and costly failures. "Public" by registering on but also, let's face it, often with company press releases. For some small biotechs a Phase II study may be their "one shot on goal" and they don't have the resources to go back and try again, although the drug in question may in fact have true potential.

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26. barry on May 10, 2011 6:14 PM writes...

re: Cellbio #19

Some areas that used to be wide open are now regarded as well served (and one can no longer run a Phase II trial against placebo, but only against the existing standard-of-care).
Others that had been regarded as well-served sometimes come back into play. Osteoporosis drug candidates e.g.that were sidelined because the bis-phosphonates owned that market should be advancing now that we know more about the shortcomings of those older drugs.

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27. Cellbio on May 10, 2011 6:47 PM writes...

Hi Barry,

Good point that situations are fluid. I think that until a compound has significant post-market experience it is too early to give up because of perceived market closure. I wonder about your example. Won't the new entrants face tougher regulatory environment with dictates to follow the outcomes recently noted for current therapy and show a better profile for ONJ or femur fractures, for example. I think so (though maybe have the wrong BP issues). Not that this doesn't present a clear, defined opportunity, but one with even greater demands for outcomes to be called a success in Ph2: efficacy and reduced side-effects compared to known agents. Today's regulatory demands are a change from prior regulatory environments where new drugs did not have this high a burden, and new mechanisms could be marketed with hints or beliefs that things would be superior. Not a bad thing in my opinion.

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28. Anonymous BMS Researcher on May 10, 2011 8:38 PM writes...

I'm a biologist myself, but I work with a lot of very smart chemists. Most of them understand the biology a heck of a lot better than I can follow the chemistry, actually, but of course neither side can do drug discovery without the other.

Rather than get into a chem-vs-bio slanging match, let's all throw stones at the MBAs :-)

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29. Kenneth on May 10, 2011 11:12 PM writes...

Since most research is trial and error in nature and only occasionally is innovation found, would a better management system which provides up to date trial info in real-time identify winners and losers much quicker and provide cost-avoidance and reduced waste. Identifying a better mousetrap has always been difficult and unrewarding. The inability to overcome market saturation is directly proportional to the history of data and results analysis which have built fences around areas where limited thinking is the result. When drug development is about helping the human condition and not about money will progress be made. Can the current approach to drug development and its associated costs ever be challenged as long as someone is willing to pay the bills?? And how long will this situation go unchallenged? A new paradigm is required if progress is to continue in quantum steps!!!

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30. Alan Crowe on May 11, 2011 5:07 AM writes...

When the result of a clinical trial is that the drug did nothing, it doesn't mean that literally. All we know with certainty is that the number of patients who benefited is roughly balanced by the number of patients who were harmed.

Guessing that zero patients benefited and zero patients were harmed is usually a good guess, but it is still a guess. Perhaps in years to come a more refined diagnosis will split the disease into two subtypes and a failed drug will come back to life as a valuable treatment for one subtype. Doctors will not be celebrate because such a drug is a diagnostic nightmare. You have to get the diagnosis of the subtype correct because the treatment actively harms patients suffering from the other subtype of the disease.

We already have that problem with strokes. Yes, your patient has a stroke, but you need to do a brain scan to find out it is the clot kind of stroke of a bleed-into-the-brain kind. Do you treat with a clot-buster or a clotting promoter? Getting it the right way round is a matter of life and death.

What are we up to with depression and schizophrenia? Does any-one think these are single illnesses? Perhaps they are single illness from a social point of view or from the view point of a general practioner trying to pick a consult to refer his patient to, but it is implausible that they are single illnesses from the biochemical point of view.

Perhaps the disordered thinking of schizophrenics is sometimes due to too much X and sometimes due to too little X; we might even have useful drugs that boost X and others that reduce X and we have discarded them all because we don't know what X is and cannot subtype our diagnosis into the too much and too little variants.

Obviously I am an outsider, looking in on the drug discovery business. As an outsider it is very striking how gnarly, intricate, and detailed the biochemistry side of things is. And as an outsider it is striking how vague and broad-brush the diagnostic/DSM IV side of things is. They don't match up.

All the insiders are talking the language of success rates: the problem is drugs failing. In the current state of medical knowledge it makes more sense to talk of diagnostic finesse: the problem is that all our diseases are too heterogeneous for our detailed chemical interventions. Don't say: the drug failed, Do say: the diagnosis was too vague.

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31. Great Molecular Crapshoot on May 11, 2011 7:14 AM writes...

Phase II typically represents the first encounter of the disease model with reality.

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32. Biotech Author on May 11, 2011 8:43 AM writes...

I wonder if in some way we're putting the cart before the horse in this debate.

To me, the real clue is the high rate of failure of safety and efficacy-related points in the Phase II failures. This doesn't lead me to think that "Oh, the biologist/chemist/toxicologist, et al, got it wrong" - Instead, this leads me to wonder where in the earlier stages of development (pre-clinical, Phase O, Phase I), we went wrong. Did we select endpoints that were simply unrealistic given our data to that point?

Maybe some of these Phase II candidates never actually should have gone into Phase II - they should've been halted earlier. Personally, I've sat in Big Pharma formulation meetings and listened as various scientists expressed extreme skepticism that the molecule would hit any of the endpoints, but they were over-ruled / out-concensused(?) by various directors in RA, Biz Dev, etc. who stated, "Well, we never make a decision on ending a development program until after Phase II trials. Until then, let's proceed."


On the other hand, I've sat in meetings with small biotechs and start-up pharmas as they struggled to understand why their drug - with dramatic successes in Phase I trials - stumbled in Phase II, only to find out that their CRO botched the monitoring jobs at trial sites, and lots of "good results" had to be tossed because the site data lacked provable integrity (I'm not saying the investigator was bad, just that a cynical reviewer could cast a LOT of aspersions on the reliability of the data). And thus, they recorded that Phase II failed.

I recognize that we are in this sort of catch-22 right now, where the more we learn about disease, the interplay of genetics, and so on, the more difficult it gets to hit acceptable levels of safety and efficacy. Indeed, I suspect that if we were to really run a lot of the drugs that were approved 10, 15, 20 years ago through trials today using the knowledge, the technologies, the techniques and the expectations we have now, some of those previously approved medicines would not make the cut.

The answer - it seems to me - is not to blame the science, but to look earlier in the pipeline and in the organization.

Looking earlier in the pipeline and improving how we make "go/no-go" decisions in the organization are how the firms I noted in my latest book were successful. Perhaps these strategies won't work for everyone, but it seems as though they do help some firms improve their odds to get to market.

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33. MoMo on May 11, 2011 9:16 AM writes...


Don't worry, we jettison anybody who starts fights these days with each other, no time for drama when you are making and testing molecules!

What happened to Cyanamid? It was one of the world's best at chemistry and natural products until it merged with Pfizer recently. Need I say more? Sure!

Then all the good chemists ran screaming with severance packages or "retirement" parachutes fit for immortals and now it is mere shell.

It will never be the same again.

But here's the story when it was a chemical company and blossoming into a fledgling pharmaceutical comapny. Its president said, in 1938
" You may come up with nothing, but you may discover a single drug that will conquer even one major disease, then the public will be well served and our company will prosper"

These are the kinds of leaders we need today, not those bent on cash flow and revenue projections and when they emerge I am sure you will read it here.

We will all be waiting.

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34. johnnyboy on May 11, 2011 11:30 AM writes...

@32: You are right in your last point, but you are also stating the obvious. Clearly, Phase 2 failure rates would be better if there had been better go-no go decision-making earlier in the process, but that's a bit of monday-morning quarterbacking. In this day and age, a drug candidate will have gone through a LOT of go-no go decision points before it gets to Ph2, and the people making the decisions were most likely doing them to the best of their knowledge at the time. The fact that better decision-making is necessary is not a secret; the difficulty is in figuring out HOW to improve this decision-making.

As to management types pushing bad drugs candidates along - I think that's a fact of life in pharma. It doesn't pay to be a pessimist in business - managers are mainly evaluated on how good a cheerleader they are. I don't think any manager's career can be helped by being the one who decides to kill a program (his self-respect maybe, but not his career). It's much better for his career to push it along, meet his numbers, and let the guys down the road be the ones with the bad news. Upper management sets quarterly objectives for total numbers of candidates having to move through the various checkpoints, and failing to achieve the numbers means that you're failing - even if your candidates have a much better chance of development than those of the department who meets their numbers with lemons. Is this a good model for managing drug development ? Probably not, but if someone knows of another one, i'd love to hear about it.

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35. cynical1 on May 11, 2011 12:57 PM writes...

One of the things I've observed over the past decade or so is the increase in Phase II studies using an approved drug in an indication for which it doesn't have a prayer, like using a statin for asthma or a nuclear receptor agonist in alzheimers. In particular, the big companies are doing this far more than the small guys.

Obviously, I don't have numbers but I have seen just so many stupid, retarded trials being done on approved drugs. Are those trials part of the analysis that was done? (I don't have access.) If they are, I wo