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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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June 3, 2011

Another Two-Person Drug Company

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Posted by Derek

It's not just the US where these single-digit-employee drug companies are going - here's an article from Cambridge (UK) on Sareum, which has two. Unfortunately, they got that way by shedding three dozen other employees, so it's not quite the same situation as I was talking about the other day, but it's interesting that the outsource-the-whole-thing model is alive in so many places.

If this is going to work, I think this is the scale it's going to work at. With a handful of people (and only one or two projects), you can keep a close eye on things, especially if you source as much of the crucial work as possible closer to home. I worry, though, that this is yet another idea that doesn't scale well, which is why I think Pfizer is asking for trouble.

Comments (9) + TrackBacks (0) | Category: Business and Markets


1. bbooooooya on June 3, 2011 9:24 AM writes...

It almost sounds like the old joke, "How do you make a small fortune investing in biotech?".

Start with a big one.

The goal of these virtual companies isn't to take a drug through, or likely even to, phase 3 clinical studies. These companies exist to pour in a few (hopefully less than 20) million dollars and end up with proof of concept that will tempt a big pharma player to buy them. This goal is often not realized, and (if economic conditions are right) the company may then be able to play the IPO lottery, though this has become a less beneficial outcome lately.

As long as there are investors willing to front these start-ups (and this is a diminishing pool), this model will continue. If played right by big pharma, this could be a boon.

As I see it, the ready access to capital in the late 90s/early 00s that enabled a bolus of biotechs to emerge really did chemistry students a disservice. It's tough to fill a 30+ year career on a 5 to 10 year cycle than may or may not recur.

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2. HelicalZz on June 3, 2011 12:45 PM writes...

This isn't a model for big pharma, it is one for selling to big pharma. Big pharma should have more of a focus on 'in-sourcing', but at a company/program, not project level. To my mind, M&A is little more than a capitalization of R&D expenses.

Zz - 1 of 8 and in charge of outsourcing CMC items (as well as other stuff).

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3. I'm a Computationalist on June 3, 2011 3:04 PM writes...

Why beat around the bush. Lots and lots and lots and lots of idiots want to buy harmless "natural" compounds that don't do jack. It happens every day.

Thats why the chemists are doomed. Apple doesn't sell the "brilliance" of medicinal chemist PHd's or a 10 year development process, it sells unimportant products to adult children.

In other words, a 1-person drug company is one too many. Just sell the bogus design software that will automatically design a random fantastic useless chemical entity that is well known to be completely harmless and rake in the profits.

What do you think Thomas Friedmans joke economy is besides rampant FRAUD?

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4. Felix on June 4, 2011 6:43 PM writes...

Hey Amgen laid off 150 more in Boulder.

On the Bright side, that's 150 more potential start ups by today's logic. My goodness mass unemployment will do wonders for innovation.

I don't things are quite competitive enough. I suggest a few more thousand h1-bs or foreign Post-docs from one of the Ivy league PhD farms.

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5. Richard on June 5, 2011 11:09 PM writes...

We are a three person company - that is, three who do the work and we have one lead candidate molecule that does everything but shine shoes. (You have to believe your own bullshit without a straight face or you won't last). Scale up is the issue and every false step is not just wrong, but disaster - it is also a matter of finding the right people to outsource or help push the oyster through the parking meter... the last "right person" with years of regulatory experience we offered 1% or $1 mill upon sale of the project for his help and withdrew that offer when it turned out he was too coked to keep his stories straight - There is only so much you can do this hit and miss way and it is very slow, mostly blind alleys - with always just enough tantalizing information to keep it going - and drive everyone bananas (It works!)- but no one has quit his day job - if he has one...

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6. Simon Hamer on June 6, 2011 4:11 AM writes...

I think you've missed the point ... they let go of employees because of financial pressure. It was not a choice, it was a financial imperative to survive.

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7. processchemist on June 6, 2011 6:11 AM writes...


"It was not a choice, it was a financial imperative to survive."

Sure, if you define survival 2 digits profits. Some time ago I read an analyst that was saying that tragedy was near: pharma like agrochemicals, with 5% profits. Terms like "tragedy" and "survival" can be really flexible in this brave new world.

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8. johnny stettin on June 6, 2011 9:16 AM writes...

We're a 2 person company - with one admin/office management support and a part time CEO from our investors to monitor the burn. We've been fortunate to have access to some great consultants who really know their stuff, but who don't demand a share of the company (see Richard no. 5).

Our experience is that, in many situations, we take a more conservative route than I did at big Pharma. The risks are so much higher so it's imperative that everything is done right the first time.

Also, I have a policy that I don't outsource to India or China and try to keep all the work in the US, if possible. The reason for this is that is that communication (and travel) is much much easier. This is particularly important when any problems arise. With juggling a few projects a time, there's no need to make life difficult!

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9. Bill on September 20, 2011 6:24 AM writes...

Sareum seem to be doing very well in England having developed a candidate for their Chk1 compound. Presentation at ECCP last week was very impressive. It would seem they will have a licencing deal with a top drug company soon.

Aurora compound is very exciting. Watch this space.

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