Much appreciated, Namaskaar!

I would be kidding if I say the thought never crosses my mind, it does too…..,

Like many, I’m privy to regular counsel on what’s actually right for me vis-à-vis’ what I feel is right for me. A lot of what comes my way is a casual reflection, some of it indeed is a studied observation and all of it out of genuine concern --- Like hell I’d like to believe, but didn't George Carlin say, it’s all about ‘their stuff is shit & my shit is stuff’? & the other way around?……..this is when the thought sweeps-in, of resorting to the very western gesture involving closing my fingers tightly & raising the middle one.

Then again equanimity trumps aggression and of late I’m tending to using more (mentally) this very eastern gesture of closing my palms together & raising them to my head - after all, Thyagaraja swami did say a long time ago, ‘endaro mahaanubhaavulu, andarikee vandanamulu’, to mean  ~Great souls galore, I salute them all.

Namaskaar!

                  /\

                 / I \

                /  II \

     -------/  /  \  \---------

 __________/   \____________

So what's wrong if your drug-candidate is likely better-off as a dietary-supplement?

In a case-study, the Nov '13 issue of HBR showcases the dilemma of a R&D head grappling with the prospect of a failing clinical program & simultaneously a likely re-positioning of the candidate in question as a dietary supplement and asks its readers if the company should market it as a supplement.  The few 'responses' of some experts below the case-study expectedly range from saying aye to nay and in between.

Here's my response that I posted as a comment at the above link.

* I actually first accessed the full article through my Kindle subscription of HBR & not through the blog, hence the delay in my comment. 

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Should Caliska market L-39 as a nutraceutical?.....

A unexpectedly simplistic question at the end of a rather complex case-study by Toby E. Stuart. The question would’ve been a lot more appropriate had the case-study focused more on Caliska’s capability & track-record in development, marketing of probiotics instead of giving it a passing mention.

The question is also inappropriate since the immediate decision is not about marketing, but is about developing – Since it has been established that the launch of L-39 as a nutraceutical/ dietary supplement/ medical food is at least a year or two away (two independent, placebo controlled, randomized trials), the question should’ve been “Should Caliska develop L-39 as a nutraceutical”?

Nonetheless, here’s what I have to say against original question;

My answer is a NO & YES!

NO --> Caliska should not market the current strain of L-39 since the translocation risk can prove a greater calamity in the uncontrolled scenario of nutritional supplements.

YES --> Caliska should eventually & simultaneously market L-39 as a nutraceutical too, the why, what & how of it is as follows;

      Why?

• Few investigational drug candidates have the potential to be developed as a drug as well as a supplement & foregoing one against the other is sure a lost opportunity
• Caliska’s primary strength & track-record seems to be that of (successfully) developing and marketing nutraceuticals while also understanding the rigors of the pharmaceutical development (the very same ‘split-personality’ Hilde took an unkind and unnecessary dig at…)
• Given the super-high rates of clinical attrition in general & specifically for probiotics (quoted by the author in context of EMA never till date approving any probiotic as a therapeutic….) the odds of L-39, even as a new improved strain, of making it to the market are very low & it makes immense sense to let the consumer get some benefit of the scientific rigor that Genbac got to Caliska – If the plan-B for L-39 is a nutraceutical launch, the chances of Genbac’s science going waste are already minimized
• Finally, the fortunes L-39 would bring in as a therapeutic are limited by admission

     What?

• A new strain of L-39 that minimizes the risks associated with Bacterial Translocation (BT) – Since it’s a given that scope of translocation cannot be eliminated fully as it happens for most other native flora (within the gut) too when the subject is immunosuppressed, the developmental focus should be on the L-39's relative non-proliferative nature outside it's natural ecosystem.

     How?

• Caliska should continue the current clinical program of L-39, while in parallel registering the dietary supplement  trials with European Food safety Authority.
• The efforts of Hilde’s team at identifying the right strain will benefit both the trials above and that’s a good use of funds in these lean-times
• Caliska’s plan for both the above trials should factor-in the possibility of they having to repeat whenever the strain under evaluation is found to be inadequate & Hilde’s team comes up with a better strain
• Once some positive results are in place, Caliska should seek partners for the drug program with an intention to finance its trials (just drug not the supplement) & eventually out-license the same to the partner for marketing

Les Propheties Pharmaceuticale : Prophesying on where the pharmaceutical outsourcing is headed

It is either an after-effect of all that powwow with the old-worldly Chippewa (the ‘real-Indians’, who aren’t Indian really ;-)) in the round house OR, it’s the paradoxical audacity stemming from my ironic inability to predict my own future!! - Either way…….,

......I have this compelling urge to play an oracle for once & mouth some prophecies!

My prophesying though is limited to pharmaceutical manufacture, outsourcing & is inspired by what’s going on right now all around in the pharmaceutical industry. While on first-look most of the recent happenings appear to be standalone in nature, there is a tangible pattern that isn’t too tough to decipher. My attempt is merely to speculate on what this pattern means for pharmaceutical manufacturing scenario, a few years from now, albeit a little prophetically.

Listed below are a some of my observations, statements & surmises (not still prophecies....), in no particular order, based on a handful but trend-indicative news alerts that I received over the past two weeks;

• Big pharma shutting-down small molecule manufacturing sites but investing in Biologics facilities - Merck, Pfizer, Novartis, AstraZeneca etc in shutting-down mode & Roche, Genzyme (Sanofi) et al in investment spree

• CMOs & Pharma companies scramble to strengthen ADC manufacturing capabilities in an apparent response to the visible thrust by drug developers to biologify (sic) unsuccessful small molecule candidates as ADCs & reposition them as targeted therapy candidates - SAFC, Lonza & Roche strengthening ADC capacities

• Indications that compulsory license issuance in developing countries is driven more by ‘access to cost-effective first-line therapies’ than ‘access to later-generation therapies’  - Indian Patent office Upholding CL for Imatinib & rejecting CL application for Dasatinib

• Federal complicity (vis-à-vis’ regulatory) with the innovator belief that biosimilar is an Oxymoron – The recent passage of SB-598 bill constraining use of biosimilars by State of California

• Regulators mellowing, but playing-safe with approval of biosimilars? - The first ever biosimilar approval by EMEA is for Remicade (infliximab) indicated in the ‘relatively non-fatal” auto-immune disorders

• Geographical re-alignment and consolidation of biosimilar manufacturing assets - Dr. Reddy’s  signing a deal for getting it’s biosimilars manufactured & marketed within the USA by Merck-Serono; Lonza’s scrapping of biosimilar venture with Teva and it’s going slow on India expansion; DSM launching a large-scale biosimilar facility in Australia et al

• The increased focus of Big-pharma on having a lean & integrated supply chain for their off-patent assets – As indicated by the on-going race of backward-integration by formulation CMOs & forward integration by API CMOs

• Drug Discovery & Development (primarily chemistry, biology & clinical) service providers progressively getting consolidated within NA, EU with clinical development centers in low-cost countries – As indicated by the flurry of activity each passing day

• Clinical API synthesis tending to be retained within the shores by the partly to de-risk late-stage regulatory risks & mostly to engage residual in-house R&D facilities – As indicated by the outsourcing strategy adopted by most Big & Mid-sized pharma

• Spurred-on by increasing regulatory wariness, high focus by the outsourcer' on ensuring supply chain integrity for key Intermediates and starting material for both marketed as well as developmental drugs – As indicated by the uncharacteristically massive press-coverage of  WuXi successfully facing a FDA pre-approval inspection for the ‘Intermediate’ of a new drug under review for approval

While the observations tell a story of their own, here’s my promised prophecy in the form of three quatrains, which very unlike the good old Nos’, I went about decoding myself – so much for my quest to be understood in my lifetime!

Quatrain 1

Decoded:

The Indian &/or Chinese CMO/ CDMO/ CROs will see the outsourcing getting limited to;

·        Manufacture of generic, low-tech (applicable to DP) small molecule, high volume & predominantly disease-maintenance/ management therapeutics (as against curative therapeutics)

·        Manufacture of (ideally integrated) potent, cytotoxic therapeutics    

·        Non-GMP/ GMP manufacture of key intermediates requiring large capacities/ ~ economies of scale of both patent-case & generic APIs for big/ mid-sized pharma

·        Large-scale manufacture of OTCs & Medicinal Products (components of med devices)

·        Early development (preclinical through PIII) of investigational drugs belonging to small/ mid & big-pharma (since this stage demands a lean-cost model)

·        Late-stage development (leading to NDA) of investigational drugs for small/ virtual biotechs

Quatrain 2

Decoded:

The North American, European CMO/ CDMO/ CROs will see the consolidation of the following opportunities in their favor;

·        Manufacture of Biologics, Biosimilars(authorized?)  

·        Manufacture of high-tech, specialty small-molecule APIs (ADCs, PDCs et al); formulations & devices

·        Late-stage development (leading to NDA) of investigational drugs for Mid & Large-sized pharma

·        Integrated Drug-discovery, development for Big pharma

Quatrain 3

Decoded:

Finally & a tad controversially – the Indian pharmaceutical players (& probably Chinese too) in general will aggressively pursue;

·        Compulsory licensing opportunities for the first-line therapies of small-molecule drugs for the NON-orphan disease segments

·        Biosimilar/ biogeneric development (for potential global alliances) and for eventual direct commercialization (with likely alliances again..) within India – with emphasis on curative biologics for non-fatal disease segments not addressed by small-molecule therapeutics    

As is evident, this list of predictions is by no means exhaustive & is only a brief compilation based on some core-opportunity types focused on within the outsourcing domain.

I know Nostradamus has more detractors than believers, so go ahead and flame me, I’m all game! ............ Only, make sure your rebuttals are in Quatrains too…., Just kidding :-)

    

Deal-Flow : Value-addition :: Silicon-rapids : Organic back-waters

Reacting to the rather weird scenario wherein some VCs are trashing their own brotherhood, Bruce Booth wonders in his latest article if this is an outcome of a Lake Wobegon-like illusion or if it is the Dunning-Kruger effect in action.

In my comment against this post, I offered my own little suggestion for this apparent case self-deprecation (OR is it not) and more....

My comment:

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If I go by what Mahendra Ramsinghani said here on LPs bothering more about deal sourcing capability than value-add by VCs, Khosla’s indictment of ‘95% zero-value add VCs’ shouldn’t really rock the boat more than the supposed shake-up caused by the AngelLists’ & Kickstarters’ of the world – The ‘80% negative-value-add’ rhetoric though is way below the belt & confounding.

Perhaps these intriguing proclamations are a manifestation of nervous energy of the PE biggies that are ‘but-of-course rattled too’ by the progressive warming of the PE globe and thus eager to reaffirm their value-add alternate asset investor status to the larger LP universe.

Can’t help but note again that a lot of the above paradigms, shake-ups, prophesies & reactions are all still relevant mostly to the 'silicon-rapids' (IT et al) and much less to the 'organic-back-waters' (~biotech) – taking a cue from what you said about the CEO, I’d think the loneliest job in the world at present probably is that of a biotech venture capitalist :-)

Isn't 'Syndicate' a worrisome term on an online crowd-funding platform?

A recent article by Lora Kolodny on Venture Capital Dispatch raises some interesting aspects on how VCs perceive the impact of likes of AngelList (online crowd funding platforms) on VCs - all but the potentially most impactful feature of investment 'Syndicates'

Below's my comment on the above article;   

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I was waiting for something on this – a much needed & timely insight.

It’s good to see all four VCs cautiously optimistic & none too worried about the online equity participation platforms impacting the role of a VC – couldn’t agree more!

From what has been said by the VCs, my key takeaways are as follows;

1. Fundamental changes to the proprietary-deal-flow showcase of the VCs ~Rory Eakin, CircleUp

1. The additional costs of investing associated with online platforms ~Annie Kadavy, Charles River Venture

1. ‘Tragedy of the commons’ Risk – to mean the relative disengagement of investors owing to a portfolio comprising of multiple small investments ~Jeremy Liew, Lightspeed Venture Partners

1. The risk of misreading or missing a signal by investors – owing to low signal to noise ratio of all online leads ~Alfred Lin, Sequoia Capital

While all these pose some but varying levels of risk, I feel the evolving ecosystem (of online equity platforms) will soon equalize the same & make the impact minimal.

One aspect that hasn’t been discussed is the potential risk of ‘investment bias’ stemming from the syndicate approach – which may inadvertently shift focus from a few worthy signals that already suffer a low S/N ratio - What say Alfred Lin (& AngelList)?

End of the day it's all about the Benjamins', impressive TVPIs not withstanding!

In a wake-up call of sorts, Super LP Chris Douvos cautions GP universe that end of the day it's 'all about the Benjamins', impressive TVPIs not withstanding!...

'tis the central dogma of investing alright, but still leaves enough scope for a small repartee of my own - here goes;

My comment

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Not sure if it’s a norm, but it’d surely surprise me if the GP takes an investment call in a particular portfolio company without as much as doing a cursory review of its exit potential & potential exit valuation – they probably do too, but don’t necessarily assign a value, given the magnitude of arbitrariness in doing so. It hence is somewhat ironic that the exit valuation in this model is merely a derivative of the overall size/ value of the fund raised by the VC and doesn’t factor-in anything that’d determine the potential of an individual investee enterprise – confounding this  further is the VC having to justify this derived value.

So while the proposed analysis does sound like a non-nonsense approach to assessing the fund performance, that part about “reality checking those putative outcomes” would still remain the single most challenging & expectedly the most contentious aspect even as LP-GP engage with an intent to cracking the funding arithmetic.

Nonetheless, it’s good to be reminded that for all practical reasons the sum of individual valuations of portfolio companies in a particular fund is but an unexciting statistic to the PE Portfolio manager in the LP organization keen on showcasing something akin to the promise of an ‘absolute return’ his hedge-fund counterpart typically presents :-)

We are all just prisoners here, of our own device!

Where does this notion that every mild ache or pain might be the harbinger of something particularly nasty, or even fatal, come from? asks drug baron in a recent post pondering on the Origins of Hypochondria

Since hypochondriacs too are prisoners of their own device**, I wondered in my comment if one can choose a device of well-being than of ill-health...

**Thank you Eagles, for penning such profound lyrics (and of course out-of-the-world music...) one can interpret in a zillion ways & still love.

My Comment

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A brave admission and a sound rationale...

Psychologically speaking…,

I'll try and link the three plausible reasons stated for being a hypochondriac to three personality types using the widely known MBTI system;

Domain Knowledge & (over)Exposure to Information - THE THINKER (INTP)
........applies knowledge & available information to connect the dots and map the domains - and at times create phantoms

(Supreme) Self-Confidence - THE SCIENTIST (INTJ)
.........pragmatic, believes in things that can be explained through well validated scientific rationale - at times negating viable but unsubstantiated dogmas

An Entrepreneurial Spirit - THE DOER (ESTP)
..........the risk-taker who's not always a conformer & who takes things into own hands with an intention of chasing the desired outcome - at times not reaching the goal

Probably being a hypochondriac is an outcome of the incremental edge the SCIENTIST has over the DOER in a quest set-out by the THINKER. What could probably change the equation is spooning-in a dollop of a few other personalities from the 14 others to choose from :-) (MBTI types again)

Physiologically speaking…,

I think though that one needs to believe in things for them to work for them - particularly so in matters of health & well-being! If the SCIENTIST questions how?, I'd try saying that since most disease conditions are manifestations of biochemical & ion-channel imbalances & brain plays a understandably important role, influencing the thought/ brain is perhaps important too as medicine is? Perhaps, there’s some rationale behind why placebo's routinely give new drug candidates a run for their money when it comes to efficacy?

Hippocrates did say... "Men ought to know that from nothing else but the brain come joys, delights, laughter and sports, and sorrows, griefs, despondency, and lamentations”

Just perhaps.... he also meant to include disease?