Part I: Assessing Early Stage Candidate

1. Development and Approval ofDrugs and DevicesEPI260 Lecture 2: How to Assess an Early Stage Drug CandidateandDrug Development LessonsApril 4, 2012Richard Chin, M.D.

2. Part I: Assessing Early Stage Candidate • Characteristics of a desirable drug candidate and the process of optimizing the molecule • The players and the process for finding a partner for a drug candidate • Case studies

3. Characteristics of a Good Drug Candidate • Unmet medical need • Validated target • Biology and animal models • Chemical characteristics • Pharmacokinetics and other preclinical properties • Clinical and regulatory path • Good IP protection

4. Setting the Bar • How do you know when the candidate is good enough (adequate potency, absorption, etc.) • Target product profile • Similar to a package insert • Identifies the minimal, expected, and best case characteristics of the drug • Safety, efficacy, dosing, side effects, taste, etc.

5. Unmet Medical Need • A disease with • Sufficient number of patients • Severe enough disease • Few treatment options • Few current and future competition • Examples • Anti-VEGF antibody • Calcium channel blockers • Anti-Complement antibody

6. Validated Target • Validation: positive and negative • First in class drug by definition is unvalidated • Me-too drugs target the validated target in the same manner as the first in class • Second generation drugs target the validated target in a different way • Better affinity • Multiple targets • Better specificity

7. Biology: How can you handicap a drug candidate? • Validated in-vitro assays • Binding assays • Cell based assays • Validated animal models • Validated biomarkers • Epidemiological studies • Natural human knockouts • Unvalidated in vitro assays • Unvalidated animal models • Knockouts • Conventional models

8. Chemical Characteristics • Lipinski’s rule (hypothesis?) of 5 for oral drugs • Not more than 5 hydrogen bond donors • Not more than 10 hydrogen bond acceptors • A molecular weight under 500 daltons • An octanol-water partition coefficient log P of less than 5 • Toxicophores • Ease of synthesis • Stability • Solubility

9. Unintended Consequences? • Does Lipinski’s Rule work? Kola and Landis NRDD, Aug 2004.

10. Other preclinical characteristics • PK/PD • Metabolism • Formulation • Absorption • Effect on myocyte conduction

11. Clinical and Regulatory Path • Is a regulatory path defined? • Is there a Phase 2 surrogate available? • When can the program be de-risked? • Are there clear ways to distinguish go from no-go along the way? • How many other drugs have succeeded of failed in this indication(s)?

12. Intellectual Property • Is there good IP protection? • Exclude other entrants • Is there freedom to operate • Molecule • Target • Method of action • Surveillance systems

13. Partnering/Raising Funding • Drug development is a high risk, capital intensive business • Except for big pharma and big biotech, most drugs will need to be partnered • Sources of capital • Angel investors • Venture capital • Public market • Partnering

14. What do they look for? • Return on investment • Until the exit • Exciting science • Great unmet medical need • Validation by their peers

15. Drivers for Partnering • Explicit reasons • Need for innovative new products • Need to distribute and share risk • Need for capital • Need for expertise in development • Need for expertise in distribution • Tax considerations • Secondary reasons • Need to block competition • Desire not to be left behind competition • Need for validation

16. How Partnering is supposed to work • Small company or academic inventor comes up with a new candidate • Larger pharma licenses technology • Drug is developed • Revenue is shared

17. How it actually works • Technology or target becomes “hot” • e.g., publication in Science and SVP of research notices it • Good relationship established between BD personnel between the parties • Internal alignment and negotiation at the big pharma • Champion at big pharma pushes the deal through

18. Typical Due Diligence • Market analysis • Examination of data • Chemistry • In vitro assays • Preclinical data including toxicology data • Clinical data • Regulatory documents • Consultations • External experts in disease • External experts in technology • External experts in clinical/regulatory

19. Case Study 1 • Small startup has excellent small molecules against CCR9 • Excellent chemical properties • Good results in animal models of Crohn’s disease • Good patent position except for one composition of matter patent which is held by another company working in the GI space

20. Case Study 1: Results • Multiple parties interested • Multiple due diligences, all of which came to halt because of FTO issue • Finally signed a deal with one of the top 5 big pharma, who could afford to fight their way through the patent

21. Case Study 2 • Company has identified a botanical product with promise against Parkinson’s disease • Long history of use in patients with dementia • Available as a nutraceutical • Good effect in animal studies • Good effect in small studies conducted in Russia • Difficult to manufacture reliably and consistently • Method of use patent

22. Case Study 2: Result • Despite years of effort, no partnering • Method of use patent weak, especially given availability as nutraceutical • Non-GCP data not reliable • CMC issues also a major stumbling block

23. Case Study 3 • Company has new formulation of gabapentin • Delayed release technology allow once a day dosing rather than t.i.d. dosing • Gabapentin is a multi-billion dollar product • No improvement in efficacy or safety • Technology risk substantial

24. Case Study 3: Result • Multiple parties interested • Large partnering deal signed, with >$25M upfront payment and multi-billion dollar milestone based payments

25. Case Study 4 • Company has new technology to rapidly generate antibodies • Antibodies are fully human and has excellent binding, half life, and antigenicity • Multiple antibodies against promising target has been generated • HHMI, National Academy of Science, Nobel laureate founders

26. Case Study 4: Results • 1995: multiple investors, multiple partners, IPO, market capitalization of >$5 billion • 2005: no investors, company runs out of money and shuts down • 2009: multiple investors, though not at the same valuation as 1995

27. Part 2: Lessons from Drug Development • How regulations evolve • Risks of drug development • CAST • FIAU • University of Pennsylvania • Vioxx • Tysabri • TeGenero

28. Regulations • Regulations tend to be reactive • Elixir of Sulfanilamide • Thalidomide • CAST • Risk management • New tools for FDA • Practice of medicine • Difference in other countries

29. Risks of Drugs and Drug Development • Drugs are poisonous • Clinical trials are dangerous by design • Testing limits • Testing new drugs and indications • Informed consent and IRBs • No direct relationship with patients • Social benefits outweigh risks

30. CAST • Post-MI patients are at risk for sudden death • Ectopy predictive of death • Antiarrhythmic drugs reduce ectopy

31. CAST

32. FIAU • Fialuridine was a Hep B drug candidate • 15 patients exposed • 5 died • 2 required liver transplantation • Study conducted at NIH – NIDDK • Investigations by IOM, FDA, NIH • Conclusion was that studies were justified, consents were obtained properly, the studies were adequately monitored for the most part

33. University of Pennsylvania Gene Therapy • Gene therapy study of ornithine transcarbamylase deficiency, an X-linked genetic disease of the liver • Jesse Gelsinger volunteered for the study, and died • Multiple failures in conduct of the study • Improper informed consent (key information missing) • Protocol violation in enrollment (Jesse has high ammonia levels) • Other failures • Significant financial conflict of interest

34. Tysabri • Alpha 4/Beta 7 inhibitor • Highly effective for MS • Approved on basis of reduction in relapses • PML found in several patients • Drug pulled from market • Now back on with closed distribution channel

35. TeGenero • TGN1412 – agonist antibody to CD28 (BAD idea!) • 6 patients enrolled rapidly into Phase I • All developed DIC and cytokine storm • All admitted into ICU, all survived • TeGenero out of business • New rules for Phase I studies