Virtual dev needs blockbusters to sway herd, proponent says

By Nick Taylor

- Last updated on GMT

Virtual dev needs blockbusters to sway herd, proponent says
The virtual development model needs a string of successes or blockbusters to convince the ‘herd’ of its merits, an expert said.

Outsourcing and forgoing physical infrastructure to quickly reach proof-of-concept (POC) has allowed some companies to make time and cost savings in drug development. However, after decades of vertical integration, some feel conservatism and inertia are restricting adoption of the virtual model.

There’s a herd mentality. If there’s a string of successes then the herd will follow​”,Allan Cohen, lead counsel at Celtic Pharma, said at Partnerships in Clinical Trials. Celtic Pharma uses the model to move drugs it acquires in late phase towards approval, at which time it will seek buyers for the compounds.

For emerging biotechs focused on earlier development the string of successes is already forming. Last week Shire bought Ferrokin Biosciences to continue what Pfizer began when it acquired Angiosyn in 2005.

In both cases a small team with a promising compound commanded big fees, up to $325m (€246m) and $527m respectively, after outsourcing their way to POC. The financing climate means others are likely to pursue the virtual model.

Biotech investors do not want to build infrastructure​”, Neil MacAllister, chief business officer at INC Research, said. Equally, large pharmaceutical companies, many of which have cut internal capacity, often have little interest in taking on facilities when they buy an emerging biopharma business.

Big and virtual

These same large pharmaceutical companies are also looking at the virtual model. “You don’t need to be a vertically integrated pharma company to develop drugs​”, Cohen said. Roche and Eli Lilly were among the first to test this, creating virtual development subsidiaries in 1996 and 2002 respectively.

Kenneth Olovich, chief procurement and financial officer at Lilly’s virtual unit, Chorus, said the aim is to do just enough toxicology and CMC (chemistry, manufacturing and control) to reach POC. If the compound progresses to later phase development more toxicology and CMC work is done.

While there may still be some resistance to the virtual model, the strategy of postponing some CMC and toxicology work until later in development has gained popularity. Some CROs, such as Charles River Laboratories, have said the strategy has led to lower demand for certain toxicology services.

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