If you follow biotech and pharma you know that in recent
months the FDA has rejected several high profile drugs. These were late or
later stage drugs for some very profitable indications, with reasonable amounts
of life left on the patents. The reason for the rejections were for side
effects that were highly unpleasant or lethal, but very rare, or the drug
worked really well but only for certain people. These are necessarily
insurmountable problems; given the ever decreasing cost of DNA sequencing it
will soon be possible to find variants and or other biomarkers to predict who
should get the drug with enough certainty for the FDA to approve the drug and
for CMS to pay for the companion diagnostic. You might be thinking this is old
news, and you are right, I’ll been chatting with people about doing this for 5-6
years.
The difference is right now we are in the sweet spot for
this type of activity, since the necessary sequencing technologies needed aren’t
ready yet but should be there soon, so the investors will only have to sit on
the IP for a year or two. This means it is not yet prohibitively expense for a
fund to pick up the rights to a few late stage failed drugs or biologicals for
10-25 cents on the dollar. Then in the 2015-16 timeframe hire CROs or academic
labs to figure out the companion diagnostic for predicting who should or
shouldn’t get the drug and bring the drug to market in the 2018 timeframe (this
assumes you have the ability to market and distribute the drug without eating
up the profits.) Less risky but also potentially less profitable would be to develop
the companion diagnostic and selling it and rights to the drug either back or
to a third party, and letting them bring the drug and companion diagnostic to
market. However, the window is closing since once the sequencing technologies
are mature enough to actually be useful the drug companies themselves will do
this, or hire special CROs to salvage drugs. If you are reading this a couple
years from now, and think this seems similar to something you read in Forbes/WSJ
or saw on TV, then it is way too late. (Hopefully by then we’ll start with the
diagnostic and make the drug.)
If you like the idea and have tens of millions of dollars
you are looking to turn into hundreds of millions dollars, I am available do
drop me a line
If you have a few million dollars you want to turn into tens
of millions you could partner with an information company like (Lexis Nexis,
Elsevier, etc) to do the research to find really good drugs that failed in the
late stages and are off patent, and develop the companion diagnostic and bring
the drug to market by leveraging the old safety with a small clinical trial. Since
there is no patent protection the business model is to license the diagnostic to
generic companies to do the actual manufacture and distribution.
Salvage Pharmaceuticals or Second Chance Pharmaceuticals
would be good names.
