Understanding the science is key to predicting biotech success

25 Mar Understanding the science is key to predicting biotech success

Madison, Wis. – An investor recently asked me to compare the technology behind two early-stage biotech companies he was thinking of investing in. Both companies had novel therapeutic products at similar stages of development, and the investor wanted to which company’s product had the greater chance of success.
In an earlier article on this topic, I cautioned that predicting success of a technology is impossible. Therefore, in my analyses, I look for scientific limitations that might portend failure of a new technology.
Here, I illustrate another way to evaluate emerging biotechnology – science-focused market analysis. I contend that one needs to assess the market, not only from a business perspective, but also with a scientifically critical eye in order to fully appraise the risks of a new technology. Let me use a real example to illustrate how this works.
Two companies, A and B, are at similar stages of developing novel therapies for treating cancer of the prostate (CaP). Prostate cancer is very difficult to treat successfully; hence, enormous efforts are underway to develop better therapeutic options. The competition is stiff.
In order to fully appreciate the market potential for these products, we first need to understand the biology and treatment of CaP.
Treatment options are limited for CaP
When CaP is detected, usually surgery or radiation is used first to reduce the size of the cancer. At this stage, cancer growth depends on androgens, or male hormones produced in the testes; therefore, after surgery or radiation, men are often chemically castrated in order to retard the re-growth of any remaining cancer cells. Despite this treatment, the cancer invariably returns and slowly progresses to a more aggressive malignancy.
CaP progression obviously means that androgen depletion no longer prevents the tumor from growing. The first indication of cancer progression is increasing blood levels of PSA (prostate specific antigen) which is secreted by prostate cells. At this stage in the disease, there is no therapeutic option and one simply waits (“watchful-waiting”) until the slowly re-growing cancer develops into end-stage carcinoma. Increasingly, patients with end-stage CaP are treated with chemotherapy, but this offers minimal, if any, results.
Experimental therapies
Because CaP is so difficult to treat, many experimental therapies are in various stages of development and mostly target the end-stage metastatic disease. It is in this milieu that companies A and B are working to develop new therapies.
Company A is developing a naturally occurring biological product that enters cells and kills them by preventing gene expression. For unknown reasons, the product selectively kills advanced-stage cancer cells and not normal cells. Therefore, this product is targeted for potential treatment of end-stage CaP.
This experimental product has stiff competition from the plethora of other experimental cancer therapies under development. Nevertheless, it is likely that multiple therapies that have different mechanisms of action will be needed to successfully treat end-stage CaP. This means that the uniqueness of Company A’s product is a significant advantage; however, the stiff competition also means that, in order to marketable, this product will need to show as good or better efficacy and side effects than other current and emerging therapies.
Company B has two novel therapies in development. The first therapy is derived from a natural dietary product that surprisingly blocks the androgen receptor. This drug is targeted toward prostate cancer patients who have undergone androgen deprivation therapy, but show rising PSA levels without having yet developed androgen-independent metastatic cancer. Currently, “watchful waiting” is the only clinical option available for these patients. So, this product is designed to throw another punch at the slowly growing cancer before it achieves full-blown androgen independence.
The second product that Company B is developing is based on careful understanding of the cell biochemistry that drives CaP progression. When androgen binds to its cellular receptor, many things happen in addition to stimulating growth of prostate cells. It is believed that a specific “side-activity” of androgen stimulation is responsible for turning normal prostate cells into cancer cells. Furthermore, this side-activity also likely drives the progression of CaP from a slow growing tumor to end-stage cancer.
Company B’s second product blocks this cancer-inducing side activity without affecting any other activity of androgen stimulation. For this reason, the drug is targeted for patients who have not yet undergone androgen depletion therapy. The goal is to retard early tumor progression and avoid the androgen depletion regimen, which comes with considerable side effects.
Which technology do you invest in?
All things being equal (or at least as much as possible between two different early-stage biotech companies), the decision comes down to predicting which technology has a better chance at success, or as I wrote previously, the least chance of failure. Here, science-focused market analysis tells you that the product under development by Company A, while unique and with good potential, nevertheless will compete with current therapies as well as with the many new experimental therapies in development.
In contrast, the products being developed by Company B specifically target stages in CaP where there is no good therapeutic option currently available. The competition for these products is negligible, which means that even if they are marginally effective or have side effects, there likely will be a significant market for them.
The unique biomedical niche targeted by company B’s products means that the significant risk factors company A faces due to competition are not likely to be a problem for Company B. Hence, market analysis through a scientific lens favors investing in company B over company A.
The example described here provides a good illustration of how scientific understanding of emerging biotechnology can add significantly to your market analysis. So, don’t forget to include your technical advisor when doing market research.
Related article by Steve Clark
• Steve Clark: Predicting success of early-stage biotechnology