These past few weeks I have noticed how negative and bimodal we have become when clinical results are announced.
More and more, Phase II and III results are labeled #FAIL on Twitter, causing stock prices to plummet.
This is occurring even though management teams are not declaring these programs dead.
Why is this?
Since when did any product get through clinical development with one Phase II and two Phase III trials? Multiple Phase II trials are the norm, and not all of them hit their primary endpoints.
Isn’t that the purpose of these trials in the first place?
I think part of the reason is that arm chair quarterbacks who have never worked in industry (analysts, journalists, etc.) are looking for a headline and traffic.
Or, in the case of some analysts, they are looking to sell on the downswing (and tout their erudition in the process), even though the longer-term prospects for the company are still promising.
CEO Half Lives
The Biotech Showcase, BIO, and Bio-Europe Fall are my regular trifecta of partnering conferences every year. Having attended these conferences for a number of years, one phenomenon that I have noticed is what I call the circulating CEO.
This is the CEO of a company who has raised some funds and has advanced an asset to a certain point, i.e., Phase IIa. Now they are circulating endlessly from conference to conference seeking investors and/or partners to advance their programs (and, hence, their company and their own careers) further.
Now I concede the point that fundraising and partnering can indeed take a long time. While analysts and journalists become ebullient over a deal announcement, the reality is that it could have taken that company 18-24 months to reach that headline milestone (something it seems nobody wants to talk about).
So a long circulation half life amongst conferences is understandable, and perhaps appropriate.
However, the market is always our judge and jury.
If the investment community is not interested and the industry is not interested, then the reality is that it may be time to stop the program.
And why not? After all, drug development failure for commercial reasons happens all the time. It’s normal.
But, imagine you are the CEO of this company. How easy is it to simply pull the plug on your own program?
On your own job?
On perhaps your entire company?
How many CEOs of single-asset companies who are on the brink have the courage to stand up to their Board and say:
1. This asset is no longer viable
2. We should stop all development activities
3. We should unwind the company
Can you imagine the LinkedIn update?
John Smith was the CEO of HypeImmune, a leading cardioangio neotherapeutic (CANT) company which made it to Phase IIa until he realized that nobody was interested in the asset, so he had the guts to shut the company down, costing his investors and his friends and family millions in the process.
He is now available for consulting or interim management positions.
Who would hire Mr. Smith to run the next company?
Which venture fund would retain Mr. Smith as an entrepreneur-in-residence?
Note that this scenario has nothing to do with bad management. The program was likely attractive at inception, since it was advanced. And perhaps Mr. Smith ran a solid out-licensing and fundraising process.
Yet, competitive, reimbursement, and other shifts can cause opportunities to lose their early luster, resulting in a failure that is nobody’s fault, yet are very harmful to those involved.
The same can be said for program managers within Big Pharma R&D.
How many of them have the guts to admit defeat and shut their own programs down?
I agree that carrying doomed programs is one reason why R&D costs are so high.
But I can’t blame R&D heads who are championing an asset and what to do whatever it takes to “force” that asset to success.
After all, it’s their reputation and career that are at risk.
Schadenfreude
In our industry, we talk a lot about the importance of “failing fast.”
That is, we know the probability of getting a lead candidate to market is remote (something the arm chair quarterbacks seem to forget).
Therefore, the sooner we learn that an asset will never make it (ie., due to toxicity or other reason), then the better we collectively are because of the money saved…money which can then be invested in other projects.
Now this sounds great…in theory.
And if I’m a billionaire (Richard Branson comes to mind) or a college student (in a low-risk environment), then it’s easy to trumpet the “fail fast, fail often” mantra.
But, before we do so, we should stop and think about what that failure actually means, and how it affects individuals, employees, and entire communities.
The reality is that failure is neither pleasant nor desired.
Yes, it’s a natural part of our industry, but failure means there is one less therapeutic on the market, one less successful investment, one less successful company creating jobs.
Pursuing a path towards failure is highly counterintuitive. After all, who wants to fail? At any speed?
Failure is hard, folks. It is not pleasurable to anyone.
It takes courage to admit defeat, knowing that your professional and personal reputation will take a hit…one that can last for years.
Don’t believe me? Perform this little experiment.
Think about company executive you may have met, say 5-10 years ago. Now look for them on LinkedIn.
How many of them were leading a program or company which eventually failed?
How many of them are still in the industry?
This is when the Twitter arm chair quarterbacks come out, declaring that the CEO and the asset “flunked.” #FAIL
Why take pleasure in failure when failure is paradoxically normal and undesired in our industry?