	The productivity and efficiency of the US biomedical research enterprise is undergoing a broad reexamination, including how FDA regulation serves to bring-or block-new medicines from the market. The announcement of FDA Commissioner Margaret Hamburg's departure at the end of January further heightens the focus on recent agency accomplishments and options for change.

	FDA's role in encouraging new medical technology appears in President Obama's "Precision Medicine Initiative," a $215 million program to create a massive database of patient genomic information to support future biomedical research. The proposal provides $130 million for the National Institutes of Health (NIH) to develop the data system, $70 million for the National Cancer Institute to identify genomic factors important for developing effective oncology treatments, and $10 million for FDA to devise new strategies for regulating next generation sequencing (NGS) technologies.

	Despite its high-profile announcement, the White House plan faces serious hurdles. Linking together data on one million patients held in diverse systems is no easy task, particularly with the need to protect patient privacy while facilitating researcher access to the information. The administration's budget plan for 2016 highlights the "Precision" program, along with proposals to bolster research on new drugs to combat antibiotic resistance, and to modestly increase NIH and FDA funding.

	The Obama plan comes on the heels of the "21st Century Cures Act," a massive document offered by House Energy & Commerce Committee chairman Fred Upton (R-Mich) designed to launch a broad discussion about multiple reform proposals. The package features numerous patent and exclusivity provisions that aim to encourage private sector investment in biomedical research activities, along with measures to streamline clinical trial operations, reform oversight of medical devices, and expand incentives for antibiotic development.

	The "Cures" package also proposes to loosen controls on drug marketing. One measure would permit a "one-click" policy that simplifies how pharma companies can provide links to risk information when discussing approved products via Twitter, Facebook and other Internet platforms. And it alters the Sunshine Act so that journal articles and medical textbooks, as well as funding of independent continuing medical education, would not have to be reported as "gifts" to prescribers. Compassionate access to not-yet-approved therapies for severely ill patients gets a nod by requiring pharma companies to be more "transparent" about access programs and forming a new task force to recommend further access reforms.

	The unveiling of Upton's 400-page "discussion draft" was muted, however, by an absence of the bipartisan support that has been important to building interest in this broad initiative, and by its failure to mention any funding strategies for its many programs. Rep. Frank Pallone (D-NJ) expressed disappointment with the plan, and "Cures" co-chair Diana DeGette (D-Colo.) withheld her endorsement. Health and biopharma organizations issued perfunctory statements supporting the effort, and DeGette left the door open for continuing negotiations to reach bipartisan consensus.

	The House Cures proposal could gain from a related initiative by the Senate Health, Education, Labor and Pensions (HELP) Committee to examine FDA and NIH programs for speeding new treatments to patients. The effort began in January with HELP Committee chairman Lamar Alexander (R-Tenn.) and Sen. Richard Burr (R-NC) issuing a lengthy report on FDA regulatory inefficiencies that delay medical product development and on how NIH could improve its strategies for funding and conducting biomedical research. This report on "Innovation for Healthier Americans" describes a number of well-established collaborative strategies for overcoming R&D barriers, such as streamlining clinical trials, updating research standards, and making regulatory pathways more predictable.

	Now the initiative is moving forward with bipartisan support from HELP Committee ranking Democrat Patty Murray (D-Wash), who joined in announcing a series of hearings on the HELP proposals beginning this month. But fast consensus on a few specific measures agreeable to both sides of the aisle is needed to enact any FDA reform bill this year. Leading Republicans and Democrats on the E&C panel have backed a measure to reduce delays blamed on the Drug Enforcement Agency in developing and approving drugs classified as controlled substances. That and other targeted policy changes, along with added antibiotic incentives, could form a narrow measure able to move through Congress quickly. Otherwise, there won't be any new FDA legislation until 2016, when Congress will face a deadline for authorizing the next round of FDA user fees. And that probably will be just fine with agency leaders.

	Many of the legislative proposals for improving the return on the federal government's investment in biomedical R&D are not new and already are being implemented by FDA. For example, the agency stole the thunder from the House compassionate access request by unveiling last month a shorter and simpler form for physicians to seek access to investigational drugs for individual patients. Compassionate use advocates still criticized the change as "window dressing," but the FDA guidance addresses charges of administrative overkill.

	FDA also hopes to deflect difficult new requirements by touting recent accomplishments, as summarized by Hamburg in a posting last month. She highlights the agency's surge in new drug approvals and progress in curbing opioid abuse, encouraging new antibiotics, tackling unsafe pharmacy compounding, and facilitating development of new vaccines against Ebola and other infectious diseases. Initiatives to encourage development of "precision" medicine top the agency's agenda, as it continues to expand consideration of patient perspectives in testing and evaluating more targeted therapies for critical diseases.

	FDA officials would like to do more to support development of biomarkers and innovative clinical research strategies, and additional resources would bolster such efforts. The Obama administration has proposed a small increase in FDA funding for 2016, but most new dollars for oversight of drugs and biologics comes from higher user fees. FDA officials have reason to be wary of new bills from Congress that require multiple new activities for ensuring the efficacy and safety of medical products-but not much money to finance those programs.

's Washington correspondent. She can be reached at 

Articles

Columns

Congress, Obama offer strategies to reduce regulatory roadblocks to new breakthroughs.

Will FDA Fixes Spur Innovation?

 with an expanding, play-it-forward agenda grounded in the many new obligations that system reform now places on the individual consumer of healthcare: as an active, co-equal partner to the clinician in successful diagnosis and treatment, and-most importantly-as a direct contributor to financing the cost of that care.

	But less is known about the growing prominence of patient organizations in the crowded and intensely competitive business of scientific research. Among other things, the movement has embraced a new model-venture philanthropy -that strives to go places where risk-averse private enterprise fears to tread. The biggest and latest example is the Cystic Fibrosis Foundation's sale of its royalty rights to portions of Vertex Pharmaceutical's CF portfolio for the whopping sum of $3.3 billion, which the Foundation will use to finance what it calls "daring opportunities for a life-long, permanent cure to this disease."

 to cast around for similarly transformative models that fuse patient awareness and activism with a business objective. That led us to our lead feature this month: an in-depth look at the patient genome partnering advocate 23andMe, which has re-emerged from a period of bad karma with the FDA to ink some potentially ground-breaking and mutually profitable collaborations with big Pharma. That inauspicious start with regulators, which resulted in an FDA ban on 23andMe's first product, a genetic test kit for patients, proved a useful corrective to the company's initial broad lens business model, with a script written by A-list veterans of the open-access Googleplex but no fixed choreography to channel what patients might practically do as consumers of healthcare services, once they obtained information to their own genetic future. There was a risk element around inappropriate medical treatments that no amount of gloss about patient empowerment could conceal, a fact that both the FDA and 23andMe have quietly taken to heart.

	Two years on, 23andMe stands out as a fast-maturing enterprise with an adaptive learning culture. Indeed, Senior Editor Casey McDonald's profile highlights how quickly the company's leadership has regrouped around a commitment to data mining as a source of researchable insights to a healthcare business whose survival now depends on treating patients not as "covered lives," but as active, choosy consumers-and as viable research subjects for industry, too.

	Specifically, 23andMe's remit now sees real synergies between drugmakers, academic researchers, and the activist patient. Bringing 23andMe's motivated consumers interested in research into contact with the business side of genomics can expand the supply of useful data for industry and help drive progress in biomedical research. It's a simple proposition, with 23andMe facilitating the entry of self-selected, re-conctactable individuals into industry studies for which they have relevant genetic markers, by offering such patients genomic and genealogical services to keep them interested and involved over time. The risk of consumers making poor medical choices from disaggregated genetic information has been addressed, with a scrubbed and refined counter message: information and the services that surround it need to be precisely targeted and supported for analysis and interpretation; only then can these be productively applied to the goal of improving personal health and well-being.

	With signed collaboration agreements in hand, Pfizer, Roche, and other industry giants with the money to spend on the hypothetical now seem to be buying in to the adapted 23andMe model, at least for a test drive. Self-interests are converging. The industry's voracious needs for data to help generate targets and validate the growing number of test compounds derived from de-coding of the human genome shows no signs of slack. There is a ready market waiting for anyone who can fill the gap with willing, accessible subjects.

	Of course, only time will tell if this 21st century proposition for a struggling 20th century research system finds its roots. To us at 

	The first relates to standards: are all genomic sequencing technologies created equal-and are all genetic interpretations equally valid?

	The second is more basic: will the personal genomics platform that 23andMe is building lead to measurable improvements in treatments and outcomes, or end up as just another faddish exercise, involving a few interested people willing to pay to send a sample of their own spit through the mail?

From the Editor

Pharma jumps on board personal genomics train-at least for test drive-but will journey ultimately help transform treatment or stall out as just another fad?

Is There Gold in the DNA Selfie?

Patient DNA partnering advocate 23andMe kicked off the new year with a double whammy, announcing a pair of data collaborations with Genentech and Pfizer. It's a precedent dogged by questions: is this a trend-the beginning of something big and blooming? What other firms in the life sciences will dip their toes in the consumer genomics company's re-contactable database? Is cross-pollinating with 23andMe destined to become a must-have for any aspirant to a stake in personalized medicine? Finally, aside from its prowess in cultivating partnerships, what does 23andMe have to teach the industry about putting patients at the center of the modern research-based enterprise?

	Clicking through 23andMe's website and blog feels a bit like clicking through the vast emotional roller coaster of cable television: from the Hallmark Channel, to Style, to Discovery, and maybe mixing in a bit of Maury Povich-it's all about a family reconnected, or a quick lesson about blondes and redheads, mixed in with a DNA video while finding out who's the baby's real biological daddy, if you're lucky.


	Andrew Page, president of 23andMe, and Emily Drabant Conley, the company's director of business development. (PHOTOS: JOSEPH SCHELL)

	But without coming across as cynical, the sappy stories are real, and the individuals are learning about their ancestry across generations, a feat achievable with megabytes of data and staggering analytical fire power.

	What's more powerful, in addition to connecting people to their ancestral stories, 23andMe is taking a circuitous route to connect them to something far more fundamental: their own health. And doing it in an interesting, educational, and interactive way.

	The uplifting TV feel is more than just story telling. It's a portal enabling real people (who may be slightly more science literate and proactive than the average Joe) to step into the strange world of genealogy and genomes. And if they click that research-consent box, to get them beyond their family trees, 23andMe will transport its customers to the world of life science research and drug development, resulting in an aggregation of numbers that spell influence, with the potential to impact the healthcare industry in ways entirely unforeseen. The path also leads individuals and their genomes into yet unexplored jungles of personal data privacy, theft through hacking, and the profit motive that drives the big Pharma enterprise.

	23andMe kicked off 2015 with an announcement that let everyone in on what the Mountain View, Calif.-based personal genetics company has been up to since it fell under the scrutiny of the FDA in 2013.

, Andrew Page, president, and Emily Drabant Conley, Ph.D., director of business development, stressed that the two disclosures would not be the last this year. In 2014, the company signed 14 deals and anticipates announcing several more this year, though not all will be made public.

	The first announcement, on Jan. 6, is reported to earn the company $10 million upfront and may tack on $50 million if the company achieves certain milestones with Genentech/Roche. The goal is to identify new therapeutic targets for Parkinson's disease by generating whole genome sequencing data for roughly 3,000 people in 23andMe's Parkinson's disease community. 23andMe followed up on the Genentech deal by announcing an agreement with Pfizer on Jan. 12. The bulletin was timed for maximum buzz as it came on day one of the JP Morgan Healthcare Conference in San Francisco, a four-day affair known for industry deal brokering.

	Though the release regarding the Pfizer pact does not disclose dollars, it promises to be wider reaching than the Genentech deal. 23andMe will allow Pfizer to access its "research platforms, including services and research portal analysis of 23andMe's genotyped population of over 850,000 individuals," according to the announcement. Eighty percent of the individuals in the database have granted the company research consent, it notes.

	In addition to the broad platform agreement, the deal with Pfizer also includes a more narrowly directed mandate to enroll and genotype 5,000 people into a new lupus research community, which will integrate medical records and targeted bio-samples.

	The two agreements illustrate just a portion of the spectrum of deals that 23andMe can make, noted Page. The two pacts are different in depth and focus. With Genentech, the collaboration is narrow, centered on Parkinson's disease. The deal with Pfizer provides the company with access to 23andMe's research platform, including services and Research Portal analysis of 23andMe's genotyped population who have consented to participate in research. As a part of the agreement, the companies will collaborate on certain genome-wide association studies, surveys, and clinical trial recruitment. One of these collaborations will be a longitudinal study to better understand the genetics of lupus. The remaining unannounced deals inked in 2014 promise to embody a fairly even split of narrow and broad collaborations, Page told 

	In addition to working with biotech and pharma companies, Page added that 23andMe's allies will also extend to include academia. The company expects to make several more announcements on these arrangements in 2015. Lastly, one of 23andMe's agreements is with a company in "another category," which should be announced in the near future, he said. Whether this deal is with a contract research organization (CRO,) a device or diagnostics firm, or something else entirely, the conclusion to be drawn is that quarrying 23andMe's heaps of data is emerging as a true source of competitive advantage for big Pharma.

	The announcements seem substantial in scale considering 23andMe is still somewhat of an unknown to many in the industry. Its operations and offerings are just beginning to crystalize, and the disruptive potential across healthcare remains theoretical. Given the deals in place-and those yet disclosed-the industry now sees the 23andMe story as more than a pleasing narrative. Instead, companies are kicking the tires in anticipation of an exhilarating test drive.

	23andMe has enjoyed the limelight thanks to its A-list founders, Linda Avey, Paul Cusenza, and Anne Wojcicki, the latter now separated from her billionaire Google co-founder husband, Sergey Brin. Its deep-pocketed financial backers include Yuri Milner, Johnson & Johnson Development Corporation, MPM Capital, The Roche Venture Fund, Google Ventures, and New Enterprise Associates. The association with Silicon Valley's financial elite has certainly helped it build credibility as an industry innovator. But since its launch in 2006, many leading opinion makers in healthcare have viewed 23andMe skeptically; questioning how a company pitching a superficial message around genomics linked to genealogy kits could ever impact the healthcare industry.

	In fact, forging complex research agreements with biopharma firms has been a major part of the company's strategy all along, explained Drabant Conley. With the support of two biotech and pharma giants, the urge to partner means that 23andMe is positioning to do a lot more than simply sell genetic and genealogy services to the genome-literate mass consumer, at $99 a pop.

	"We've been preaching since inception the impact that learning about genetics can have on the individual and on the research or target discovery process for pharmaceutical and biotech companies," said Page.

	The agreements are a "natural outgrowth of what the company has been focusing on since our inception," said Page. "Stepping back, we first focused on engaging and empowering individuals around taking control of their own genome. With this engagement, the database grew, and as it grew we started to have statistically significant epidemiological cohorts of certain rare diseases for pharma and biotech to take an interest in," he explained. That's when 23andMe's deals started to be formulated. Early collaborations were small and geared to validation work, with the 23andMe's team of PhDs offering products designed to facilitate information exchange, answering questions posed by its customers in a highly collaborative and interactive way.

	As the company ramped up its capabilities in 2013, the database became large enough (now with around 850,000 individuals and 80% consented into R&D testing activities) for the firm to categorize and automate its offerings so that it no longer needs any manual consulting service. However, the company still does a great deal of custom analysis and consulting. These more automated offerings are what 23andMe are starting to roll out now, Page said.

	"What used to take months or years, or may have been impossible, can now be done very quickly with sophisticated searches," he explained. "2014 was a great validation year for our database proving the value of genetic and phenotypic data and re-contactability of patient cohorts working in concert. But it's just the beginning."

	23andMe sees "individuals as partners" not study subjects. With some 650,000 partners opting in, the company can apply the largest data set of its kind to any number of platforms. Its research services also include the 23andMe Research Portal, which allows qualified researchers outside of 23andMe to run queries on de-identified, aggregate data. With this information, researchers can search for and potentially identify new associations between genes, diseases, and traits more quickly than through the traditional research model, according to the company.

	23andMe opts for diversity in working with collaborators, including academics and scientists, non-profit organizations, and for-profit companies. By partnering with the greater scientific community, 23andMe's goal is to accelerate meaningful discoveries through the accessibility of its data. Building and maintaining this powerful research platform, safeguarding participants' data, and allowing researchers to access this resource for even more scientific discovery are core to the company's mission.

	Even though 80% of 23andMe's data base population opted to sign research consent, many may not have grasped the fact that data from their saliva sample might be sold to companies like Pfizer. But the clear consent protocols and evident awareness of 23andMe about real diseases and the suffering, difficult-to-treat patient populations should help pacify those who have been critical of 23andMe on data privacy.

	Up to now, 23andMe's primary headline grabbing moments have highlighted its struggle with the FDA over just what it can tell its customers about themselves. In November 2013, the FDA sent the company a warning letter demanding it stop marketing its saliva collection kit and genome services, stating it was "intended for use in the diagnosis of disease or other conditions or in the cure, mitigation, treatment, or prevention of disease, or is intended to affect the structure or function of the body"-uses for which 23andMe had not gained marketing clearance or approval.

	In its early days, 23andMe strove to be an interpretation platform across a bunch of different modalities, from ancestry to disease carrier status and health risk, explained Jason Bobe, director of the Sharing Lab in the Department of Genetics and Genomic Sciences of Icahn School of Medicine at Mount Sinai in New York. But that goal clashed with the FDA's authority to regulate genetic tests and health risk reporting.

	Both criticism and support rained down on the company. Some have called the company out for its moxie in dealing with the FDA, claiming that the company's raffish approach to regulatory compliance would be its undoing.

	Others support the 23andMe mission to get individuals involved in their own healthcare through greater knowledge of their own genomes. Scores of devotees petitioned for the FDA to allow the personal genomic service, both to encourage people taking action for their own health as well as those with a more libertarian bent that the government should let the firm operate, explained Mike Jones, a senior campaign director at 

in January 2014 called FDA's crackdown unwarranted with little evidence of damage to patients, stating the agency was "acting on the basis of speculations of potential harm rather than reported harm."

	Following the FDA's forceful response letter, with which the company quickly complied, 23andMe said it would continue to provide "ancestry-related information and raw genetic data without any interpretation." 23andMe has continued to work with the agency on refining its test. Resolving the dispute is a top priority, the company states.

	This February did offer a harbinger of détente with the agency as the company announced it had been granted authority to market the first direct-to-consumer genetic test under a novel devices regulatory classification. FDA will allow 23andMe to market the Personal Genome Service (PGS) for carrier status testing of Bloom syndrome through 

 classification, according to the Feb. 19 release.

	Since the FDA put the skids on its personal genomics opt-in plan, 23andMe has struggled to walk a tightrope between public praise for its transparency and concern with the implications of this for protection of individual privacy. A stubbed toe occurred in September last year when 

 profiled a less-than-happy ending to a genealogical search conducted through 23and Me. Newly found familial connections might not be the joyous occasion we often envision. Just picture a call or email informing you of different parentage than you previously thought, or maybe your child turned out to have a different birth parent.

	The article caused a change in strategy, which had been shifting to "giving people fewer warnings about the secrets they may unlock in their DNA." Instead, Wojcicki wrote customers that the company had erred, saying, "I do not think it was the right call to promise we would automatically opt-in those customers. Core to our philosophy is giving customers maximum choice and empowerment through data." The apology also included a promise to be more vigilant by creating a new position of company privacy officer.

	23andMe followed through by hiring former federal privacy watchdog Kate Black, with the title of privacy officer and corporate counsel. In case you're wondering what kind of resume a privacy position might require, Black has extensive experience in the burgeoning field of healthcare IT and privacy. She was employed at the Office of the National Coordinator for HIT, U.S. Dept. of Health and Human Services, and prior to that, as health privacy counsel for the Center for Democracy and Technology in San Francisco.

	"What excites me is the ability to take genomics to the masses. By providing education, the company is essentially providing genomic services attached to a bicycle on training wheels," quipped Bobe. There is great appetite from the public to be able to access this information at all levels, from people looking at their genomes strictly for genealogy, and, of course, it goes without saying that people want to tailor their backgrounds to obtain better, more effective therapies, said Bobe.

	Even if there is a reticence on the part of some genealogy clients to check all boxes "yes", 23andMe is counting on the majority of its customers to stay interested enough to want to contribute to the expanding database.

	In some cases where the company is working with a third party, like the deal with Genentech, 23andMe will go through a re-consent process. When an individual initially purchases and registers a genealogy kit, 23andMe has readied a specific and clear consent document that will establish that the individual agrees to participate in research, Page said.

	23andMe is all about transparency to consumers, noted Page. It's all about consumer choice to participate or not. And they can change their mind at any point in the process. There's also institutional review board (IRB) oversight, which is essential, added Page. "The integrity with which we conduct research is paramount. Otherwise we don't believe the research partners contracting with us would be comfortable trusting mission critical research on any relationship with us."

	Most patients are taking the stance of willing to be a small part of a large study, on the understanding that their identifying information won't be shared without additional consent, Page noted.

	For the Parkinson's study with Genentech, all participants have consented, and the company will be re-consenting them for this program, he said. This will give 23andMe the opportunity to further engage around this active patient community, looking not just at the information it has, but to ask more questions and add greater detail. We'll also be sequencing whole genomes of roughly 3,000 of that study cohort and doing additional studies on them."

	Page is optimistic that patients will largely agree to re-consent even if patients understand that their de-identified data is being shared with a third party pharma company. One reason for publicizing the Genentech deal is that, "we're hoping that the awareness of this study will cause our Parkinson's community to increase in size so that we then have even more participants in this study," said Page. This particular community has been around for a while. But it's unclear what the re-consent rates will be. "We hope it will be healthy, although something up to the 80 or 85% level might be on the high side," he noted.

, 23andMe is now positioned to be successful because patients are looking to be active participants in research. Getting involved and taking action in one's own health, or that of a loved one, is probably one of the "top five trends we are seeing at 

, "said Jones. Patients want more control and more say over decisions about their own health so they are demanding more information, Jones added.

	"Everyone talks about big data and its enormous potential value. But what 23andMe's story shows is that there is also real value in relationships," said Bobe. "You really want both. The ability to have trusting relationships with individual patients, particularly around matters of health and medicine is huge," he said.

	There is great value in being able to form a relationship with research participants and analyze them over time, as they go through their lives, take medications, experience disease and other health changes, rather than just a snapshot of a brief moment in a patient's life. It's akin to the power of social media to connect people, bring together groups, and to maintain trusting relationships over extended periods of time.

	What has been the interest level from pharma companies in getting involved with 23andMe? Who has approached the 23andMe for collaboration and who has been hesitant? The answers depend on the organizations and their ability to reform their processes, replied Page. Certain organizations have had breakthroughs using genetics in their own discovery processes, so building on that, a partnership with 23andMe is a natural step.

	But 23andMe carries its own ambitious agenda in to these relationships: to be a disruptive force, accelerating innovation into virtually all aspects of drug development. The notion of 23andMe's introducing genetics into the research process is disruptive to the traditionally slow, procedurally dense, toxicity animal-based testing process of drug development, said Page. Given this bold pledge to disrupt and accelerate time to market, as well as the company's commitment to bolstering this with financial and scientific backing, there's little doubt there is interest from big Pharma and the biotech companies to bang down the door, at least to see what's on the other side.

	Some companies have seen the information assets that 23andMe has developed and have approached the company for that reason. In the case of Genentech, "we've been very publicly committed to Parkinson's and have built the largest Parkinson's community in the world by a significant margin, and they're intrigued by that," said Drabant Conley. Building these assets, as well as work the company has published, has been the impetus to opening many of these partnership doors.

	For other companies, as in the context of the collaboration with Pfizer, they've been interested in developing drugs where there are challenges and limitations based on current methods and tools. They see 23andMe as greatly enabling some things that are very challenging to do in the current, more traditional clinical trial setting.

	Clinical trials in some indications might define success by getting a drug to work in 30% of a patient population. But if you could figure out on the backend before launching a trial covering that 30% and not the other 70%, and thereby target a trial in patients with a specific symptom profile or genetic background, you can really increase your odds of success, explained Drabant Conley.

	In the case of lupus, it's really not so much about target discovery, but about patient segmentation and understanding the underlying disease, she agreed. Many of these patients suffer because they try drugs that don't work, or that have really negative side effects. So being able to predict what drug might work precisely will be a win for these patients.

	Lupus, with its heterogeneous patient population, wide-ranging symptomatology, and for which there have been very little drug success, may be the perfect example of a disease that needs to flip the script of traditionally drug development – hence the rationale for the new agreement with Pfizer.

	Additionally, it can be hard to pull people into clinical research if they don't live near a clinical center and don't have the means to get there. But with the 23andMe platform, the goal is to make research accessible to anyone who wants to participate, even from home via the Internet, making research easier and faster, noted Drabant Conley.

	Getting patients involved as more active participants can be truly disruptive to pharma's traditional research mindset. Given the resources online and the ability to convene people around a cause via social media, a new day is at hand for patients. It's fair to say that 23andMe can be a leading driver in this movement.

	In the lupus study, individuals will receive 23andMe content for free, and they'll do it all virtually from home, said Drabant Conley. They will get updates about the study, and the Personal Genome Service will inform them about their own genetic background, she added. "I think that's the 'secret sauce' of 23andMe's research method. Rather than just taking data from patients when they come to a clinical center, which is the old method, now we're going to give you data about yourself, about your genetic heritage, and about the study and how it progresses, creating a rich database that benefits everybody and is more effective."

	If there was uncertainty about 23andMe's approach, the Genentech and Pfizer announcements show that at least two big players are willing to take a shot.

	The sale cycle to close the deals, which was once six to nine months, has been cut to close to two to four months, noted Page. "There's a general acceptance we're seeing in that pharma and biotech companies are going from being hesitant about incorporating genetics to realizing that they need to, because there is no more effective path toward understanding the biologic origins of disease."

	In addition to the big players, the company has exhibited the ability to play with the smaller kids on the block as well. One example that may not have had the same market impact as the Genentech and Pfizer deals, but still illustrates 23andMe's potential role in building data scale across scale is the firm's agreement to work with Reset Therapeutics to study circadian clock genes, according to a Jan. 7 press release.

	23andMe enables smaller organizations to leverage its data that before now would have been cost prohibitive. "They can have access to our portal and incorporate our database into their research program, and it's almost a pay as you go setup," noted Page.

	And if drug developers do in fact need to become aligned with a company offering a genomics database, 23andMe doesn't see much competition.

	There are other databases out there, but they are limited to single areas, they are not re-contactable, they are static, they are not nearly as big, and do not have the phenotypic information, noted the executives.

	"I don't think it makes sense for pharma to build this themselves," added Drabant Conley. "It's ideal because we have this big platform that many other companies can access. They don't have to recruit patients alone and reinvent the wheel."

	Looking ahead, the big question is will 23andMe get over its growing pains and learn to get along with FDA? If 23andMe's deals don't convince you that the company will get past its regulatory stumbles, just listen to the Commander in Chief. President Obama sure sounds like he's been drinking the same Mountain View water. Or maybe his speechwriter follows Anne Wojcicki's Twitter feed. Regardless, the President's Precision Medicine Initiative announced in his State of the Union address seems to fit awfully well with 23andMe's vision for "transformative" healthcare initiatives focused on individual awareness and empowerment.

	In response to the President's declaration, 23andMe said in a statement, "We are excited to see the country moving toward recognition of the importance of engaging more Americans in genetics and advancing precision medicine. 23andMe is supportive of the goals outlined and looks forward to participating in the initiative."

	"Having the blue print for your body seems to be an important piece of information that every doctor could have in the future," noted Bobe. "With the falling cost of sequencing a genome, and the new Precision Medicine Initiative, we should all anticipate greater access to this kind of data about ourselves coming much sooner than many realize."

	We'll wait and see what more this will mean for 23andMe, but one guess is that the company will get over it's issues with Washington, DC. Or maybe Washington will get over its issues with 23andMe first.

Features

Pharm Exec profiles patient DNA partnering advocate 23andMe, which recently struck data deals with a pair
of big Pharmas, thrusting the debate over personal genomics and patient treatment back into high gear.

23andMe’s Double Play: Making Science & Patients Partners

	
	On the margins of January's annual JP Morgan investorfest, 

, with logistical support from health communications firm Russo Partners, convened a Roundtable discussion with nine company aspirants for leadership in the hard science of small biotech. The dialogue reveals the rigors of building a modern medicines enterprise, where calculated tolerance for risk is the essential nutrient of success. The shared narrative is about the ruthless logic imposed by market demands for differentiated therapies that fill the vacant spaces of patient need, with no place for the come-by-chance serendipity-and easy profits-associated with a broader public image that amounts to warmed-over science fiction.

 President and CEO, Cempra Pharmaceuticals

, Chief Commercial Officer, PTC Therapeutics

, President and CEO, Cyclacel Pharmaceuticals

, President, Alder Biopharmaceuticals
	 

Biopharmaceuticals are a highly competitive sector, so I'd like to begin by asking each of you to highlight your company's differentiating "pitch" to investors. Can you summarize the business mission, key therapeutic areas, market potential, and strategic/operational objectives across the three-year planning cycle? 

Prabha Fernandes, Cempra Pharmaceuticals:

 We address a critical unmet medical need, which is the threat of drug-resistant bacteria in the hospital and community settings. Cempra has two oral antibiotic compounds undergoing Phase III clinical trials: solithromycin (CEM-101) and 

 (CEM-102, sodium fusidate). Solithromycin is demonstrating superior efficacy compared to one of the most potent existing antibiotics, moxifloxacin. 

 is a novel product to combat chronic infections of the bone or joint that requires long-term suppression rather than the standard treatment course of five to 10 days.

	The world is in an arms race against microbes. Big Pharma has largely abandoned the antibiotics segment, and all the generic drugs currently in use are less and less effective against infections. Government has entered the picture with incentives to stimulate development of new, more powerful anti-infective drugs, but the economics of pricing continues to shape where research dollars are spent.

	Pricing means that most private-sector R&D is still geared toward intravenous drugs administered in acute care settings-Cempra's model is different. Our take on the patient perspective leads us to conclude that the highest value attaches to drugs that will work best in the community, rather than in the hospital. Patients want to take their medicine in a familiar place, at home, where there is low risk of complication or additional infection. This accounts for our interest in oral, in addition to intravenous delivery. It underscores our business mission to develop products that will prove equally effective in diverse treatment settings as well as across the patient population, including children and pregnant women. Financially we are strong, having just last week raised about $150 million from investors; the offer was four-and-a-half times oversubscribed.

Randall Schatzman, Alder Biopharmaceuticals: 

Alder was founded in 2004. Our expertise is using monoclonal antibodies for disease indications where this novel technology platform has not yet played a role-our lead clinical program (MAb ALD403) is a therapy for migraine, but we are also exploring applications in autoimmune and inflammatory conditions.

	Migraine is a debilitating condition that afflicts 36 million Americans, who suffer an average of five such headaches per month. Current treatments embody an abortive approach, in which triptan drugs are taken at the onset of pain in the hope that it will not progress.

	Our strategy is to develop a safe, long-acting agent that will prevent migraine from initiating altogether. The drug targets a neuropeptide that transmits pain signals into the central nervous system. This appears to be optimal therapy for patients whose symptoms are frequent and recurrent; in our trials to date, of three- to six-month duration, a single intravenous administration of the drug has suppressed the rate of migraines from as many as 14 per month down to zero, in 40% of the patients enrolled. We are confident that our focus on preventive drug technology will be well received by patients and the clinical community. It's going to change the way migraine is treated-a major improvement in the standard of care. The confidence of investors is underscored by a well-received IPO as well as Alder's inclusion in the NASDAQ Biotechnology Index last month.

Spiro Rombotis, Cyclacel Pharmaceuticals:

 Cyclacel's mission is focused on oral therapies that target the various phases of cell cycle control to suppress cancerous tumors, hematological conditions and other serious diseases. We were founded in 1996 by Sir David Lane, a prominent UK researcher best known for his discovery of the p53 gene as a major tumor suppressor master switch. Our operations are split between New Jersey and Scotland, where we enjoy strong support from government and academia.

	Cyclacel has two compounds in clinical development, addressing some of the most challenging areas of cancer therapy. Sapacitabine, a cell cycle modulating nucleoside analogue, is being investigated for treatment of acute myeloid leukemia in elderly patients over age 70. It is currently in Phase III trial, under a Special Protocol Assessment agreement with the FDA. We are also pursuing indications for sapacitabine in myelodysplastic syndromes, a bone marrow impairment most common among the elderly, as well as chronic lymphocytic leukemia.

	The other compound, seliciclib, is a cyclin-dependent kinase (CDK) inhibitor being investigated for lung cancer and nasopharyngeal cancer. CDK inhibitors are an R&D priority for several big Pharmas, including Pfizer, whose drug for metastatic breast cancer, palbociclib, is likely to be the first such product approved by the FDA. (Editor's note: palbociclib, brand name 

	Led by Professor Lane, CDK inhibition has been the focus of Cyclacel's work for 17 years. Investors often told us this investigational platform had no future. Our contrarian stance on the science behind seliciclib and follow-on molecules has now been validated. But it took a lot of tolerance for risk to get here. The analogy I like to cite is of being that soldier in boot camp where the drill sergeant says not to befriend your fellow GI's-because only half will be around when you get back.

I serve as chief commercial officer and have been working to build a global commercialization strategy to bring the first therapy from our pipeline to patients. Our science is based on a deep understanding of RNA biology and is centered on development of orally bioavailable therapies that modulate protein expression for patients who are missing an essential protein that can cause a variety of diseases, such as Duchenne muscular dystrophy (DMD), cystic fibrosis, and spinal muscular atrophy.

	The last two years have been transformational for PTC, with a successful IPO and follow-on rounds that gives us a stable position for our research and development plans through 2017. We have worldwide rights to our first drug, 

, which enables production of essential proteins through read-through of a premature stop codon caused by a nonsense mutation in the mRNA. T

 is indicated against DMD, but the science behind it is potentially applicable to approximately 2,000 rare monogenic disorders. Assuming successful read-out of our confirmatory Phase III trial in DMD, we plan to launch 

in the US in 2016, following FDA approval; we are currently launching it in Europe and supplying other regions through early access programs.

	In addition, we have a confirmatory Phase III clinical trial on a second indication in nonsense mutation cystic fibrosis, are in the process of initiating a proof-of-concept study in MPS I, and plan to initiate a proof-of-concept study for 

in an additional indication this year. We hope to file a marketing authorization application with the EMA in the second half of this year for 

 in cystic fibrosis based on data from a previous Phase III trial. Finally, something I am very excited about is PTC's pursuit of another RNA platform, which we call alternative splicing, that holds significant promise in treating spinal muscular atrophy through an oral small molecule drug. An ongoing Phase Ia/IIb trial on a drug candidate is underway in partnership with Roche and the SMA Foundation.

 I manage the Bayer HealthCare US Science Hub, an externally focused R&D partnering and licensing program that the company established in 2011 to leverage the great science here in the Bay Area. Among other projects, I manage our CoLaborator unit, which provides space, equipment, and expertise to a select number of start-up biotechs. We are located in the Mission Bay district, in close proximity to the UCSF academic programs in life sciences, with whom we signed a master agreement on partnering in 2010. The Hub's therapeutic efforts center on oncology, cardiology, hematology, and, increasingly, ophthalmology, due to the 

 macular degeneration franchise we manage with Regeneron.

	Like other big Pharma, Bayer understands that good ideas are not found solely in our own labs; we have to be proactive in a scientific community that is increasingly cross-functional and diverse. As scientific discovery expands into new areas, we seek innovators with the platform technologies best positioned to yield drugs that advance the standard of care. We bring these innovators closer together, engage with them, and sign deals that aren't your traditional one-off option licensing contracts. It's a strategic approach to licensing, in which academic scientists and industry professionals with deep knowledge of various therapeutic areas work on projects with our research staff. Our approach to partnerships is to be flexible and mutually reinforcing, without the pre-conditions that often discourage ideas that turn out to be commercially promising.

I am a geneticist who worked on the mapping of the human genome and helped co-found the company, Millennium, now part of Takeda. I founded Pharnext in Paris in 2007; it is very small, privately held, with only 35 full-time employees. We seek to apply our knowledge of the human genome to identify disease molecular networks containing various molecular targets that could lead to drugs for common and rare CNS disorders. This platform we refer to as pleotherapy, which relies on gene mapping to identify the best low dose combinations of medicines to safely fight most any chronic disease.

	Our lead drug candidate, PXT-3003, is a three-drug combination indicated for Charcot-Marie-Tooth disease, a rare neurological disease afflicting around 100,000 patients in the US and Europe that causes atrophy of muscles in the arms and limbs, resulting in severe disability. A small 80-patient trial of PXT-3003 has confirmed improvement beyond stabilization; a larger, 300-patient trial of PXT-3003 is planned to confirm these results. We are evaluating sites, choosing the participants, and hope to communicate the results sometime in the next several years.

Biocodex is a family-owned French pharmaceutical company founded in Paris 60 years ago, with operations in 128 countries. I manage the US and Canada, which has become our largest commercial region. While our worldwide legacy business is in gastroenterology, we've begun to pursue other areas, including neurology and oncology. Our lead product, 

 (saccharmoyces boulardii), is the world's top-selling probiotic (available in over 27 different brand names worldwide); 

 (dexrazoxane) is an oncology supportive-care product, and the only FDA-approved treatment for anthracycline extravasation.

	Biocodex has a distinct marketing model that relies on professional selling and high-touch pharmacy, where we combine digital access technology with extensive private pharmacy services that are regulatory-compliant. Based on this model, Biocodex is now expanding to oncology supportive care, where we believe there are great opportunities in making clinical activities more productive, providing higher patient compliance, and potentially lowering costs of treatment. Our major business development challenge is anonymity, particularly as we seek to expand our portfolio worldwide. Many in the industry remain unaware of Biocodex's underlying strengths: private ownership, zero debt, significant cash reserves, and a strong, well-positioned commercial sales force. We are actively seeking product acquisitions, scientific partnerships, and in-licensing opportunities.

.: I lead a cell therapy company, so our pathway is distinctive from companies in small molecules or biologics. Stem Cells pioneered the discovery and development of a highly purified, expandable population of human neural stem cells derived from human brain tissue. We have created a commercial model that we believe will yield three product-based applications: neuroprotection, neurogenesis, and neuroregeneration. Our clinical/therapeutic targets include vision loss from dry eye age-related macular degeneration (AMD); chronic spinal cord injury; and various myelin-related disorders of the CNS. The novelty of our approach is in relying on the inherent natural properties of the cells, which, when transplanted, are regulated by the host environment. Thus, the same active biological ingredient, i.e., the human neural stem cell, can be directed in different ways to create useful therapies.

	To date, we have completed two Phase I trials for rare pediatric neurodegenerative disorders and have recently completed enrollment in Phase I trials in dry AMD and thoracic spinal cord injury. Enrollment is underway for a Phase II trial in cervical spinal cord injury and we will shortly initiate a Phase II trial in dry AMD. There is enormous market potential in dry AMD, which accounts for 90 % of all cases of AMD, and for which, in contrast to wet AMD, there are currently no therapeutic interventions. Finally, a Phase II trial for Pelizaeus-Merzbacher disease, a fatal inherited pediatric myelination disorder, is of great interest to us, but we lack the resources to fund three Phase II trials concurrently.

ACADIA is building a CNS specialty franchise on the foundation of our lead drug candidate, 

, which, if approved, will establish a novel pharmacological approach to treating psychosis as well as being the first drug approved in the US for the indication of Parkinson's disease psychosis. About 40% of all Parkinson's patients have this condition, and their only option at present is off-label use of antipsychotic drugs, which carry a black box warning and are associated with increased mortality in elderly patients with dementia. 

 selectively blocs the activity of receptor interactions that cause some of the unpleasant and dangerous side effects of broad-spectrum antipsychotics. FDA has given the compound breakthrough status-I believe it is the first time the FDA has accorded such status for an antipsychotic drug. On the basis of this and some encouraging Phase III trial results, we plan to submit a new drug application for

during the first quarter of 2015; if approved, we intend to commercialize 

 for the indication in the US by establishing a specialty sales force. Looking forward, we see 

as a platform for additional development programs in neurology and psychiatry, including Alzheimer's psychosis, where the market is much bigger than for Parkinson's, and which is the focus of another trial we have underway, and for maintenance therapy in schizophrenia, where the need for better compliance is great.

The common thread in these brief comments is the challenging nature of the science you are pursuing. The science is big, the ambition is outsize, but your companies are small. How do you manage the low points when the problems mount and resources are eclipsed by investor expectations? 

Is there a day in any week when we don't face this dilemma? I have worked in the industry for 30 years. Experience has taught me to be a contrarian because, in this business, the risks are always high-but the rewards can be tremendous. And I am not speaking from a purely financial perspective. When a physician tells me our drug pulled a patient back from the brink, and that three years later she is still in remission because of one small pill taken prior to every meal- ell, then, what we have done is actually a big deal. It's well worth those risks.

The major pharma companies have a different perception of risk. It is important not to follow their lead but to stick to your own convictions. We certainly faced some skeptics when we pitched the idea of investing in an expensive large-molecule design when the migraine market was being commoditized through generics. Some biologists questioned the logic of using monoclonal antibodies in CNS. Our response emphasized the treatment implications that would follow from our success: we are building a medicine not for patients with that one-off occasional migraine, but for truly desperate patients suffering from 20-plus migraines a month. It's an entirely different space in terms of medical need, one that drives our will to succeed.

 Years ago, when I began working in biotech, I was often refused a hearing by physicians who doubted there was any clinical value in antibody-based treatments. Today, this segment is a $30 billion dollar business. My lesson from this is to be wary of conventional wisdom, and to pursue objectives based on what the science tells you.

All of you are making big bets on truly novel technologies that require long lead times for validation. Down in the trenches, as you are, is the regulatory process fit for purpose in helping small companies build that validation case and speed time to market? 

 Some recent FDA reforms could be helpful to our field, including fast-track designation and accelerated approval status based on Phase II data. Both sponsors and the FDA carry an obligation to make the process work. Companies must focus on educating all stakeholders, including the regulator, about the science and clinical merits of their technology. The stem cell field has a heavy responsibility here. This is the only way to build trust: to show the FDA that your data is strong and verifiable, and when there is a problem you will come forward and 'fess up to it.

	It's equally important to create a "no surprises" reputation with regulators, who frankly confront the same challenges as we do in keeping up with the constant, rapid changes, in technology and science. As CEO, I prefer a "no hype" stance where we simply let the data speak for itself. I can't say this works for everyone-Stem Cells may be paying a price in the marketplace, with a lower valuation among investors than might be the case were we to try to oversell ourselves.

Small companies have to differentiate their value proposition to a degree that the major players do not. Positive investor sentiment is critical to our growth prospects. You must spend time with them, creating a strong narrative where you tell them what you have done and what you are going to do, and do it repeatedly until you obtain their trust. I usually meet with potential investors as many as 10 times until I can be certain they understand our story. If you nurture the relationship and keep things honest, there is the opportunity to get them on board.

 Further to Chris Haskell's point, investors and companies alike have not yet realized the potential for positive impact deriving from the initiatives of regulators to improve incentives for medicines for small populations or diseases for which there is no therapy. Literally, the old clinical trial nomenclatures attached to Phase I to Phase II to Phase III are fading. There are numerous examples where one single trial has been sufficient to obtain FDA approval. It means that the regulator is demonstrating a much higher degree of flexibility. A successful innovator will study that trend very carefully and adjust its strategy for approval. But it's even more important today to think beyond the regulatory proposition to the value proposition in the marketplace. Cell therapy companies have stumbled repeatedly here, either due to cost of goods or manufacturing and reimbursement issues.

 Investing in clinical trials can be a high-stakes game. Often a company enters uncharted territory in determining which endpoint to select for regulatory approval while also striving to meet the needs of payers. European regulators are pilot-testing a concept called adaptive licensing, designed to bring down the cost of rare disease medicines by focusing on very small populations where the drug is expected to have the greatest benefit, and focusing on analyzing the risk/benefit ratio to speed access to the therapy for patients with high unmet need-in return for a lower introductory price. The catch is that the licensing decision can be revisited over time, in the light of evidence from real world use of the product. This could require additional investments in observational studies or follow-up trials, as well as the possibility that the therapy's initial indication could be changed or even withdrawn. Clearly, for this program to work, there must be a high level of trust and cooperation between regulators, the company, and, in particular, the reimbursement authorities.

 I wonder about the feasibility of combining the scientific complexity of licensing approval with the economics of drug pricing. Industry lacks the evidence and information base to anticipate the expectations of the other stakeholders. Payers and registration bodies have different grounds for decision-making, which may-or may not-be based on legislative authority. From a purely political point of view, industry also has to recognize that payers operate within fixed global budgets for medicine. That single fact can trump what registration authorities might see in the clinical dossier.

	Every other industry except our own is pursuing a market access strategy based on the principle of satisfaction guaranteed-or your money back. It's time to proactively shape the process instead of waiting for change like ostriches, heads in the sand. This means presenting a clear, value-based proposition to regulators and payers, and managing clinical development to avoid front loading all the risks and costs to Phase III, which virtually guarantees your offer price is going to be unaffordable for many constituencies.

Let's move to P&R issues. How well is payer activism translating to more options for patients, at affordable prices? 

Government is supporting some of the development costs of new antibiotics but this is countered by a misaligned approach to reimbursement. Volume sales potential is a key driver of how an anti-infective medicine developed in the private sector gets priced. Public actions like out-of-pocket tiering of reimbursement means that physicians are not empowered to choose the best antibiotic for the patient's condition. You have to try all the weaker drugs first before the patient is really ill and one of the newer, more potent drugs is authorized. I understand the argument about demonstrating value, but restricting access to the full clinical armamentarium can raise the overall cost of treating a runaway infection.

This trend is driving much of the effort to personalize medicine, by targeting small patient populations for drugs whose benefits can more easily be demonstrated using available data. Everyone talks about a "global price." The reality is that not only are geographic markets very different, with variable delivery systems and levels of affordability, but so, too, are the product/therapeutic segments-these are being sliced and diced, according to genotypes or other measures of clinical differentiation, to a level not seen before. Technology now allows that.

 Small companies are highly vulnerable to industry-wide pressures on pricing. All it takes is one letter from a senator complaining about prices for one product or a therapeutic category to raise questions about the sustainability of our entire business model. Some categories have seen price adjustments in the double digits due to concerns raised in Congress. In practical terms, that means you cannot raise the money you need, which over time affects the pace of innovation in the industry at large. It's counterproductive.

 What can be done to build a more positive consensus on the link between pricing and support for innovation? Sick fund payers in Germany are suggesting companies could voluntarily furnish more data on the R&D costs they incur in development as a way to justify a premium on price. This concept is embedded in the US ACA reform law for insurers, who must certify that 85% of their revenues are earmarked to support patient claims. Might this provide a possible way forward? 

As a small company with an expensive development program for an oral antibiotic, where there are few other alternatives, I know we are going to be pushed on the link between cost and price. We are keeping detailed records of these costs. Our costs are significantly higher today, precisely because of the priority that government attaches to our progress. The FDA, for example, is constantly requesting more information and data to support our dossier submissions.

Asking industry to account for its R&D costs on a per-product basis raises some questions. Is there an agreed methodology to address the unallocated costs of "dry holes?" Do we add the funding of the extensive post-marketing study commitments that are increasingly made contingent on the grant of the registration license? What about the infrastructure that we must build to actually bring the new drug to patients, a cost which weighs most heavily on smaller companies?

 The main cost driver can never be allocated: it's the nine companies that failed to bring a compound to market, for every one that succeeded. Drug development is expensive because there is no consolation prize-the failures become part of our official P&L statement and are thus borne entirely by the company investing in them.

 Little is said about the cost of exploratory research not tied to the development of a particular compound. Yet this is critical to advancing medicines innovation overall. In addition, the stakeholder interests outside the drug industry are a major source of inefficiency. We rarely hear about the pricing distortions in oncology, whereby physicians benefit from an add-on percentage to the ex-factory price of an injectable chemotherapy drug because it is administered in-office, as opposed to being dispensed in pill form. I suggest our industry might be better off in working to remove these distortions through the commercial process rather than trying to educate a politician in a debate that will die out because there is no substance to the interchange, only rhetoric.

: Another item is why perceptions of what our industry does are so different than other industries facing similar circumstances. The perfect analogy is the oil and gas trade, where companies drill 10 dry wells for every gusher. That's the same for us, but we face an added social and political challenge because biopharma investments are expected to accomplish something fundamental: to improve the health of humanity and be accessible to all.

 There is a disconnect between the price of a drug and its cost. Most people are unable to distinguish between these two terms. In particular, there is a lack of understanding as to how development time cycles and failures in our industry raise the cost of a new drug. One of the unstated arguments in favor of innovation is that innovation, viewed over the long-term, actually contributes to lower costs where it really counts, which is in the health outcomes experienced by patients.

 Is IP still a mission-critical function in biotech today? 

 There is no doubt as to its importance, especially in my business, where US law offers developers of new antibiotics an additional five years of patent protection. This has had a measurable impact on the pace of innovation in our field. Actually, the patent system can contribute to the quest for better access at affordable prices, for all medicines. Innovative approaches like extending the patent term for therapies already on the market in return for investing in an area of unmet medical need is one way to accomplish that goal.

An interesting dilemma has emerged between an approach that focuses on protecting know-how as a trade secret and the traditional strategy of filing a patent, which of course requires disclosure of the innovative step behind an invention. Some of the technology being pursued now will take more than the life of the patent to get approved, much less commercialized. This is certainly true in stem cells, where the perceived value of patents is declining. On top of that, there is a disconcerting trend in the courts where the "common good" argument appears to sway judges and juries over the rights of patent holders.

 Pressures are mounting to disclose more about the technologies you are attempting to bring to market, especially among potential investors. The message is "if you won't tell me exactly how it works, I won't play."

Everyone wants to know about your manufacturing technology for a compound in development. Process patenting is more prominent than ever to successful commercialization; the details have to be kept close at hand.

Years ago, in one IP case I was involved in, we realized at an early stage in the patenting process that we were required to deposit our master cell line with a tissue-type culture collection. That's like handing another interested party the keys to your factory. We took a courageous decision to delay filing for a discovery patent on the compound. We lobbied the US patent office to change the cell line deposit requirements and allow us to deposit the actual antibody, instead of the parent cell line. It took four years of delay to accomplish that-a huge extra risk with regard to being able to attract any funding over that time.

IP issues are among the first things to come up in our negotiations. We want to know how the IP runway for the asset was laid out, how effectively you have built out from that, in terms of patent coverage, whether it is formulation or use patents, in addition to discovery protection. The big challenge right now is protection against commercial rivals who are moving in the same space or even running ahead of it-the science is advancing rapidly in areas like cell and gene therapy. So we are going to have to learn how to do some things differently in IP. But we have no doubt as to its overall importance to the business.

 Patient groups are becoming more involved in biotech's drug development activities. An example is the recent decision of the Cystic Fibrosis Foundation to sell its royalty rights from an initial investment it made in Kalydeco, the new potential breakthrough treatment from Vertex, to another drug company. Is this a positive trend or will it create more complications for inventors? 

It surely is an extraordinary development, simply from the vantage point of seeing a patient organization with the resources the Foundation will now have to promote its work. The $3.3 billion windfall creates the opportunity to invest in a whole series of activities around different technologies. It also leverages the strength the Foundation already has through its networks and connections in clinical trials and academic research. As a longtime advocate for more investment in a cure for cystic fibrosis, the Foundation now has the assets to do so directly.

I have a concern that direct patient group engagement in research may skew the system in unpredictable ways. I like competition, but the point must be made that when patient organizations invest capital to influence R&D, they cede their neutrality and develop conflicts of interest.

I see patient organizations simply as a catalyst to draw more attention to a disease. On balance, that is a good thing.

 I'd like to ask Chris Haskell, as a big Pharma interlocutor with the small biotech community, what you identify as the key criteria for a strong partnership. 

The principle that underlines all our relationships-from early academic post-ops to multi-target options deals at the preclinical phase to licensing of late stage assets-is knowing the people involved well and leveraging that trust to align Bayer's value proposition with their own capabilities and interests. As such, initial contacts and scouting with no specific deal in mind are very important. It builds the base for a productive deal, when the other party knows firsthand about what we are bringing to the table, and vice versa. It also helps us in our work to get out in front and identify where that next cycle of innovation is going to be.

Biotech vs. big Pharma: Size, scale, and culture 

From a personal point of view, what would you identify as the single biggest barrier that big Pharma has in placing risky bets on unproven emerging technologies that might drive this next cycle of innovation? 

For most big companies, research is a zero sum game. Resources are not infinite. In our case, we have a structured decision process founded on the principle that we don't take on anything new without giving up something we are already doing internally. What this means in practice is we take a very hard look at emerging technologies because, if we invest there, we take away from activities that perhaps we know more about.

Risk aversion is not unique to pharma, big or small. My company is privately held, quite small, and very entrepreneurial, yet our ownership is cautious in assessing ventures. This is a strategy that has paid off well for us for six decades. We don't have the luxuries that larger companies have to spread their risk across several speculative scientific and commercial opportunities. 

 There is a human element to this issue. In many organizations, large and small, you put your career on the line when going forward with any innovation-by definition, the action will challenge the way thing are done. Failure might mean diminished career prospects or even the loss of your job. In other words, it's easier in these organizations just to say "no." Truly innovative companies have an ethos that encourages employees to get to a "yes." These are two radically different approaches to doing business.

 What calculations come to mind when evaluating the merits of staying private or being publicly held? 

Publicly held companies in biotech have to face down the unrelenting pressure that assumes they will be acquired by someone bigger, who is only interested in gaining control of an asset, not the company. When you are private, the pressure is much less.

One thing I have learned from being in both situations is that as a privately held company, our key people spent an undue amount of time worrying about capturing that next few million dollars from collaborations and VC funding. Frankly, the focus on short-term capital was a drain on more important activities. As a public company, you have access to a much more significant stream of funding. This makes it possible to think more strategically about the long-term value creation vital to market success.

Small companies face a stark reality: everyone around the negotiating table is counting their eggs in expectation of being acquired. The less stock you have out floating in the market, the better the return for shareholders when that big deal comes through. When we were privately held, the discussion with investors always seem to lead to dilution of the offer-if you want $25 million, they counter by asking us to take $20 million. Being public means having greater accessibility to larger amounts of cash. At the same time, there are those regular quarterly results and the calls you have to make to shareholders, where the trade off is more pressure to perform. And you face share price setbacks caused by external forces you don't control, like a drop in shares after a congressional hearing on biotech pricing. If you are private, you don't have to confront that kind of shock.

Can we identify the key emerging areas of growth in biotech? What interesting plays can we expect from science in the next five years? 

Immunooncology (IO) is finally hitting its stride, particularly as a pathway to more targeted and less invasive cancer treatments. The challenge remains in understanding how to combine immune therapies, with each other or small molecules, to enhance their effectiveness around specific cancer mutations. The typical evolution of science is you get some early adopters who attract the attention of other researchers, which leads to a better understanding of what it takes to tackle the hard issues in the field. Then you have a decade or more of incubation where work proceeds quietly, culminating in a real breakthrough that spawns its own imitations, that together define clinical benefit for patients. I think within five years we will see more combinations of small molecules and IO biologics. This is important, because IO biologics and small molecules may play complementary roles in blocking the ability of cancer cells to multiply, while also reprogramming-re-sensitizing-cells that have become resistant to therapy as a result of the process of mutation or clonal evolution.

We are also at an exciting stage of understanding RNA, which is leading to many alternative approaches to treatment for diseases, from rare to chronic. The interesting fact is that companies are not pursuing a uniform approach, which will stimulate innovation overall.

Decoding of the human genome is unleashing a flood of genetic data that can be applied to study populations of patients, large and small. Such data allows for a better understanding of disease mechanisms, which are key to finding efficient drugs. Gene therapy and stem cell therapies are less sensitive to the lack of precise molecular knowledge, as both approaches replace deficient systems in the body. However, as it is unlikely that any approach will be 100% efficient, combining these different methods-for example, plenotherapy with stem cell therapy-could greatly benefit patients. This holds real promise for progress in treating diseases.

 What is the one priority that you would propose to fellow stakeholders in the biotech sector in helping to improve the industry's growth prospects and enhance the conditions for innovation in drug development? 

 Elimination of regulatory hurdles to speed the time to market is critically important to our future. The FDA is aware of this and is reaching out to industry to examine additional ways we can make innovation happen faster in its journey to the patient. One of the more promising inquiries is for more flexibility and creativity in the design of clinical trials, which is the major area of expense for most compounds in development.

Behind the Boom in Biotech

	Faced with a changing commercial marketplace, pharmaceutical leaders are investing heavily in new but largely unproven selling strategies-and they will continue doing so even though many of these new approaches are producing mixed results. That's the key finding from Strategy&'s (part of the PwC network) 2014 Global Pharma Marketing and Sales Survey, which surveyed more than 150 senior sales, marketing, and strategy executives to find how pharma companies are wrestling with a marketplace in flux.

	Much of the uncertainty stems from the decline of the in-person sales rep model that has been the industry's standard approach for decades. And while there have been clear successes in making evolutionary improvements to that model-such as the increased use of key account managers (KAMs)-pharma executives intend to devote more resources to novel methods of reaching customers, despite the fact that success metrics for those methods remain largely undefined.

	In placing their bets on new techniques with transformative potential, companies must recognize that the efforts to date have not adequately taken into account customer needs. At the same time, too little attention has been paid to establishing effective metrics to assess their validity and identify best practices. In short, before throwing good money after bad, the pharmaceutical industry needs a more basic understanding of its strategic objective and of how it can use new practices aligned to a measurable return on investment. Industry leaders must also become more outcomes oriented and overcome stubborn organizational and operational barriers that slow the pace of innovation in interacting effectively with a new breed of customer.

	In previous years, our surveys focused on the future-for example, asking pharma executives where they planned to invest. While a number of predictions can be drawn from this year's survey, it primarily paints a picture of where the industry and its players stand at the moment. Where are they finding success and how are they building the right strategy or metric by which to accurately assess that strategy? Our goal was to scrutinize conventional wisdom, and to separate some of the industry's myths from its realities.

A new PwC survey reveals a strong need to fully embrace alternative commercial methods-not in a blind frenzy but through careful evaluation of which new sales strategies have true innovative potential.

Pharmaceutical Executive-03-01-2015

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