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Janis Machala is founder and managing partner of Paladin Partners, an executive search and business...
Biotech is a high-risk, high-reward business. Years of very expensive research into the properties of certain molecules may result in a finding that your humble heart drug is actually a very effective treatment for erectile dysfunction, leading eventually to a $3.2 billion buyout.
Then again, years of equally expensive research into converting drugs into nasal sprays can go nowhere, leaving your company teetering on the verge of extinction.
It's not a sector for the faint of heart: New drugs are in the test and development stage for a decade or more. CEOs need to be science or medical professionals - and skilled fundraisers. Market forces and circumstance typically mean each company must bet its future on one drug, and if that one drug comes up short, the company's in jeopardy, and highly specialized researchers earning six-figure salaries find themselves jobless, with skills and knowledge so specifically linked to one suite of molecules that it's hard for them to find comparable work.
And for investors without a science background, it's hard to know whether a company is one round of funding away from being the next Icos, or is the next Cell Therapeutics. That makes some wary of investing in the sector - maybe too wary, according to some who complain that Northwest companies are starved for venture funding.
Fortunes rise and fall on the turn of a page. As Sonus Pharmaceuticals Chief Executive Mike Martino quipped recently: "Nothing so wonderfully concentrates the mind as the prospect of missing a Phase 3 endpoint."
Seattle-based Dendreon is engaged in a high-profile effort to win certification of its prostate cancer treatment Provenge. The pharma investment community was abuzz last week on news that the company had agreed to an accelerated testing plan, which some are calling a risky roll of the dice. (We'll have more on Dendreon in May's issue of Washington CEO Magazine.)
At last week's Invest Northwest event, several biotech CEOs explained their strategies for recouping from research setbacks. Sonus' Martino said one goal is to get better data earlier, so the company will know whether a particular drug will fail after spending $4 million on a second-stage study, rather than $50 million on phase 3 research.
And Nastech Pharmaceutical is struggling to survive after losing a joint venture partnership with Procter & Gamble last year. Auditors warn it may not remain viable.
On the other hand, Seattle Genetics is expanding, with major drug companies investing cash into it to help develop its technology that uses antibodies to fight cancer.
And while most biotech research in the state has come out of the University of Washington and Fred Hutchison Cancer Research Center, WSU landed its first drug-licensing deal last week, for an anti-cancer treatment. Most WSU biotech research to date has focused on agriculture and biofuels.
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A very sad state of affairs.
Richard Freese
Briefly (and simplified), "power" is the chance a clinical trial will show a positive result assuming the drug being tested actually works. Most oncology trials are powered around 90%. If your drug works, this means your trial has a 90% chance of coming back positive with a 10% of a false negative.
Dendreon's timeline shifting holds the power of their interim and final analyses nearly constant. The shifting neither increases nor decreases the power for either peek at the data.
As a covering analyst on Dendreon for over seven years, I can personally attest this has not been an easy story. While the power hasn't changed, some worry that advancing the final analysis will dampen the ability of the trial to be successful since Provenge has shown its biggest effect is later in the survival curve.
With a potential market in the billions of dollars for Provenge, it's safe to say all eyes will be on the results -- both here locally and on Wall Street.