A new lens for investors: Three common clinical development pathway pitfalls
Many companies/development programs in which you are investing fail unnecessarily because of avoidable mistakes being made in architecting the therapeutic’s clinical pathway and designing of trials. The consequences of such errors can be costly to you. Exits that can otherwise be successful instead end up as write-offs, and any exit that does occur can be blunted and thus vastly smaller.
Pitfall #1: Getting off on the wrong foot by using the routine, defective, high-failure-rate process
Most companies use the same defective process to design their therapeutics’ clinical development pathways. Executive leadership often believes they’re perfectly architecting and optimizing their program—when in fact they’re not. The reality is that it’s clear in real-time, not just in hindsight. So why is this so common? Because company leaders are all engaging the same processes and checklists that everyone uses. But, just because the process is familiar doesn’t mean it’s effective. The clinical pathway is like a house’s foundation. If the foundation is poorly constructed or lies 50% on solid ground and 50% in a swamp, why should anyone be surprised when the house eventually collapses?
Our observation is that trusting a process that is significantly contributing to the 86% failure rate of development-stage clinical programs warrants revisiting, immediately.
They’re certainly not thinking of payers, commercialization, operational issues, and other key components—thus missing valuable opportunities, and unintentionally baking new risks into the program.
Pitfall #2: KOLs are a meaningful resource, but it’s important to understand the limits of their expertise
Companies use key opinion leaders (KOL) to assist them with the design of new therapeutics’ clinical pathways and trials. Each time, they’re relying on highly regarded clinical experts to examine the unique considerations of their therapeutic and design a pathway accordingly. However, KOLs frequently do not give programs the special attention they require, instead settling on a defensible but certainly uncreative and untailored fallback position. Further, KOLs can give advice only within the area of their clinical expertise. They often are not focused on multiple critical aspects of program development that affect other stakeholders. By design, they are likely to think of one stakeholder—the FDA—and at best pay only a passing nod to most everything else. And even with regards to the FDA (n.b., KOLs are not regulatory experts), they’re typically limited to the expected and the routine and are not searching for other aspects of potential clinical impact which can build healthcare and competitive value. They’re certainly not thinking of payers, commercialization, operational issues, and other key components—thus missing valuable opportunities, and unintentionally baking new risks into the program.
This process is typically augmented by internal staff, however inadequately. Physicians and scientists in the company can bring additional disease-area specialization. Sometimes a commercialization person will have some input as well, but that’s not typically the case because that function usually doesn’t exist in the early-stage development phase. Little if any credence is given to payer needs beyond some hand-waving to make people feel as if it’s included.
Thus, the routine process is a highly siloed, serial approach driven by a clinical group that relies on KOLs who usually lack regulatory compliance expertise and almost always miss out on significant clinical value.
Not infrequently, the resulting inadequate clinical design choices, regulatory missteps, and missed clinical value proves to be the difference between success and failure, or between breakthrough success and modest success.
Pitfall #3: Problems are often identified when it’s too late
The best time to make sure the clinical pathway is 100% correct is at the very start of the clinical development process. It is possible to correct many if not most misalignment issues prior to Phase II, but this generally costs both time and money. After Phase II, changes can still be implemented, but oftentimes they result in the need to introduce new clinical targets—and hence add clinical risk—or possibly to run another Phase II. There are good reasons why companies are loathe to do either at that later stage.
In the real world, the relatively few companies that realize they have a problem only become aware of it on the eve of the Phase III trial. At that point, whatever is done is at best a rescue operation, which even if successful only achieves a fraction of what would have been possible had the matter been engaged much earlier. This exposes the companies to lower valuations—not an investors’ ideal outcome.
In summary, providing a new lens to the clinical development of your portfolio company will considerably improve results. We encourage great rigor early in the process that aims to identify and question what hasn’t worked so many times before. Integrate the brain trust of your team with outside experts and any necessary talent to create a comprehensive and fortified view of your program’s development. It’s never too early to apply this, and the payback will be considerable when you’re at the FDA approval and payor access stages.
