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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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« DUCTS: Down with Useless Clinical Trial acronymS | Main | All Those Drug-Likeness Papers: A Bit Too Neat to be True? »

February 7, 2013

Addex Cuts Back: An Old Story, Told Again

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Posted by Derek

Addex Therapeutics has been trying to develop allosteric modulators as drugs. That's a worthy goal (albeit a tough one) - "allosteric" is a term that covers an awful lot of ground. The basic definition is a site that affects the activity of its protein, but is separate from the active or ligand-binding site itself. All sorts of regulatory sites, cofactors, protein-protein interaction motifs, and who knows what else can fit into that definition. It's safe to say that allosteric mechanisms account for a significant number of head-scratching assay results, but unraveling them can be quite a challenge.

It's proving to be one for Addex. They've announced that they're going to focus on a few clinical programs, targeting orphan diseases in the major markets, and to do that, well. . .:

In executing this strategy and to maximize potential clinical success in at least two programs over the next 12 months, the company will reduce its overall cost structure, particularly around its early-stage discovery efforts, while maintaining its core competency and expertise in allosteric modulation. The result will be a development-focused company with a year cash runway. In addition, the company will seek to increase its cash position through non-dilutive partnerships by monetizing its platform capability as well as current discovery programs via licensing and strategic transactions.

That is the sound of the hatches being battened down. And that noise can be heard pretty often in the small-company part of the drug business. Too often, it comes down to "We can advance this compound in the clinic, enough to try to get more money from someone, or we can continue to do discovery research. But not both. Not now." Some companies have gone through this cycles several times, laying off scientists and then eventually hiring people back (sometimes some of the same people) when the money starts flowing again. But in the majority of these cases, I'd say that this turns out to be the beginning of the end. The failure rates in the clinic see to that - if you have to have your compounds work there, the very next ones you have, the only things you have on hand in order to survive, then the odds are not with you.

But that's what every small biopharma company faces: something has to work, or the money will run out. A lot of the managing of such an outfit consists of working out strategies to keep things going long enough. You can start from a better position than usual, if that's an option. You can pursue deals with larger companies early on, if you actually have something that someone might want (but you won't get as good a deal as you would have later, if what you're partnering actually works out). You can beat all sorts of bushes to raise cash, and try all sorts of techniques to keep it from being spent so quickly, or on the wrong things (as much as you can tell what those are).

But eventually, something has to work, or the music stops. Ditching everything except the clinical candidates is one of the last resorts, so I wish Addex good luck, which they (and all of us) will need.

Comments (14) + TrackBacks (0) | Category: Business and Markets | Drug Development


COMMENTS

1. Ed on February 7, 2013 12:17 PM writes...

Commiserations to all concerned, especially the medicinal chemist they recruited in Q42012 (I was thankfully unsuccessful in my application). Sometimes you really have to wonder if the right hand knows what the left hand is doing....

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2. bbooooooya on February 7, 2013 12:28 PM writes...

To hear Addex' CEO tell the story, allosteric inhibitors are fantastic new technology! Clown.

Are there many examples of biotechs that got products on the market that did not go through this sadly inevitable phase of using seed corn for food? Off the top of my head I get BMRN, VRTX, and VPHM. I likely missed some.

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3. Chemjobber on February 7, 2013 12:35 PM writes...

Are there any cases where the opposite happened, i.e. clinical folks got laid off to keep the discovery scientists? I can think of one example.

Permalink to Comment

4. Chrispy on February 7, 2013 12:40 PM writes...


Early drug research is getting to be a real chump's profession. While you might expect to be shown the door if you fail, getting pushed out because you succeeded has got to have a special bitterness to it.

Permalink to Comment

5. gradstudent on February 7, 2013 1:33 PM writes...

Well don't hold out on us, CJ...

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6. Tom on February 7, 2013 1:54 PM writes...

@2 Didn't ViroPharm (VPHM) do exactly this ... lay off lots of discovery researchers to pay for development of the candidate they discovered? Circa 2002-2004 (my memory fails me).

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7. TX Raven on February 7, 2013 2:32 PM writes...

So, why do you think a company spends millions trying to develop a product, and then can find no buyers for it?

Any learnings to be had here?

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8. hn on February 7, 2013 5:54 PM writes...

That's one of the major reasons why I moved back from industry to academia. I can't think of anything less motivating than to be so successful at research that my company will lay me off.

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9. Windest on February 7, 2013 8:28 PM writes...

Best of luck to Addex scientists impacted. I know some of them: good people and good scientists...

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10. Nuclear Option on February 7, 2013 11:14 PM writes...

Interesting. In academia when the early creative work bears fruit an orchard is grown. In today's small creative biotechs is the squeeze applied too early to try and sell a few ounces of juice?

Permalink to Comment

11. Hap on February 7, 2013 11:48 PM writes...

1) I guess when you have enough money to make one bet, you don't have much of a choice, but since not many bets actually win or pay, well, this doesn't bode well for any small company's survival.

2) I think 4 has it. The business models that big pharma are trying to switch to all imply that discovery is a fool's game, because the real money is in development and marketing. In most cases, it seems, if you find a good drug, you'll get laid off, and if you don't find a good drug, you'll get laid off. Why play a game where you can't win? I don't think businesses will be able to make the "jobs aplenty" line stick when a simple search of the interwebs will make unemployment stories rain down like sour milk and honey. Who finds drugs then?

The problem for, it seems, just about every line of business, is that no one wants to discover things or pay for them if someone else discovers them, and everyone wants to sell them. Apparently no one in upper management seems to realize that misleading, lying, and otherwise misrepresenting what you have is not a particularly rare skill. The people who discover things can usually sell them, but the converse isn't true. Also, since anybody with a name (nonprofits and profits alike) is milking it for whatever money they can before it looks and smells like used toilet paper, the idea that a name is an irreplaceable selling point seems doomed to bloody, expensive failure. By the time drug companies have products, the toilet paper on which their reputations were written will have long been flushed down the toilet, been processed, and reentered the ecosystem.

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12. Chemjobber on February 8, 2013 1:28 AM writes...

@5: I am under the impression that Palatin Technologies let the clinical folks go first, and then only the discovery types.

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13. NJBiologist on February 8, 2013 12:33 PM writes...

@12 Chemjobber: They had deals with AZ that stipulated preclinical research.

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14. Lyle Langley on February 8, 2013 1:57 PM writes...

@#8, hn...
"I can't think of anything less motivating than to be so successful at research that my company will lay me off."

So true; however, not sure if this is the case with Addex. Have you seen any of the molecules they are trying to bring forward? Still on the alkyne bandwagon. Their management is not a pleasant group to work with.

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