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This is biotech's real problem

Here's a challenge — name a biotech that's not a small company with one potential blockbuster in the works or an industry giant that's acquiring the hottest new technologies. Got one? Great! Now try to name four more.

Biotech
Jian Wan | Vetta | Getty Images

The fact is, midsize biotechs (Ironwood Pharmaceuticals and Medivation are couple of examples) are a rarity these days, and that's a problem for patients, doctors and investors. Start-ups that are in the process of developing and drawing from a foundation of knowledge are often acquired once they have a promising candidate in the pipeline. If the associated research teams aren't immediately jettisoned (just when their potential for broader breakthroughs is surging), the top innovators go off to launch another venture that doesn't build on their current research.

There's also enormous pressure to focus on that "next big thing" that can crowd out other innovations for patients, while blocking valuable, in-depth examination of existing treatments. In oncology, drug combinations (like Genentech's combination of Herceptin, pertuzumab and docetaxel to treat HER-2 breast cancer) are making huge strides in prolonging patients' lives. Such combinations require understanding how specific tumors grow, and designing diagnostics that tell doctors whether a patient's tumor fits that profile. The problem? Not enough small biotechs have the luxury of developing that understanding before they're acquired so that big biotechs can gain another drug candidate.


As the CEO of a cancer-focused biotech that's spent the last 15 years building a diverse product pipeline — the lead candidate is under FDA review with a decision expected next month — my view is that pursuing individual drug targets will bring limited success. Cancer is the ultimate engineering challenge, and effective treatments need to address more than a single facet of the problem.

The real winners in the industry will be the companies that understand how their therapies work in combinations with their own and competing therapies, and help physicians make sense of the explosion of new treatments via companion diagnostics. In fact, regulators could potentially require a more integrated approach to manage the ever-increasing influx of new drugs and data. In August, the American Society of Clinical Oncology issued guidelines for doctors on interpreting multi-gene tests for cancer susceptibility, acknowledging the need for more education and regulation.


Most oncology biotech start-ups dream of developing such an integrated approach. But it takes time and money, and an environment that prioritizes in-depth scientific research.

Doing well by patients, doctors and investors means pursuing sustainable innovation, not just one-offs or single-use purchases. Innovation drives value and can build on itself to address complex challenges. And while innovation takes time and entails risk, it mitigates that risk in the long term.

For example, if you have a deep understanding of how your drug works — say, the tumor-growth mechanisms it disrupts — you can determine whether there are signs that the mechanism it targets is present in a particular patient and then enroll only those patients in clinical trials. That allows for smaller, less expensive trials — and a higher chance of success.

An integrated approach across the industry would allow drug developers to identify responders, and then eliminate the non-responders from clinical trials and from the target population post-approval, ensuring patients only receive treatments likely to benefit them and don't waste their time enrolling in irrelevant trials.

The current cycle of big pharma acquiring start-ups and dismantling the research teams while divesting in their own R&D appears self-perpetuating, but cracks are showing in the high cost — now in the billions — of bringing a single drug to market.

These companies are dealing with outside pressures that stymie progress. Less than 10 percent of experimental oncology drugs ever get approved. A tactical approach to the pipeline makes sense from a risk-aversion perspective. But sustainable growth requires strategy and investments in the fundamental science work that drives innovation.


Commentary by Robert J. Mulroy, president and CEO of Merrimack, a biotech company focused on cancer treatments. Prior to joining Merrimack, Mr. Mulroy worked as a management consultant in the pharmaceutical and health-care industries. He has served as an advisor to multiple start-up companies in the biotechnology industry.