	Biotech Business Ramp-Up: Adding Credibility to Narrative 

Pharm Exec convenes a panel of financial leaders from clinical-stage biopharma to discuss the critical role of finance and accounting (F&A) in supporting and sustaining the promising science at the forefront of investor engagement

	At the recent CBI Finance and Accounting for Bioscience Companies conference, professionals from small- to mid-sized biopharma gathered to learn from each other and discuss their unique challenges. Typically, smaller-staffed organizations, with their smaller-staffed departments, require their executives to be accountable for much more than those serving at a larger pharma manufacturer. They wear multiple hats, get involved with diverse projects, and make decisions impacting the future financial vitality of their respective organizations-and their scientific prospects as well. RSM, hosting a breakfast roundtable for these professionals, graciously allowed 

to moderate “The Role of the Finance Leader in Scaling the Biotech Business.” What follows below are edited excerpts from a very insightful and robust discussion.

How do you stay on top of both the financial insights as well as the science information needed to do your job effectively?   

 In terms of obtaining the latest financial information, I use online systems like NetSuite and Coupa, where I can access up-to-the-minute information to stay informed on where we are. For the science, I talk to the professionals in our organization, many of whom are leaders in their field. I also read select publications like Pharmaceutical Executive and a number of blogs, such as the Luke Timmerman Report, Life Sci VC, and Endpoints.

 In our company, we’re relatively small still, about 30 people in the office. And because I have responsibility for HR, I have become more aware of the staff’s needs. Over the last two years, we have had a Lunch and Learn and invited our staff scientists to talk about what they do. In the past, I would try to pick up the science in the hallway or get myself invited to clinical team meetings or the project team meetings. 

	But the Lunch and Learns have been very successful for everyone. 

CBI’s Life Sciences Accounting and Reporting Congress 

March 20-22. The Largest and Highly-Acclaimed Life Sciences Event for CFOs, Controllers and Finance Executives.

 I consider what the company will need to finance and fund the operations for the long term. We will regularly consider what resources are required to continue progressing the science. I try to look well beyond the current plan. I am always looking to understand our budgeting and cash position, and making sure that the decisions we’re making today will enable us to be viable in 18 months to two years out. 

	Even for the early stage companies, and perhaps it’s actually more important, to make sure that you bring on the FP&A (financial planning and analysis) skillsets to instill financial responsibility throughout the organization. Because from the science standpoint, you need to know, are we really going to be able to do a trial with this number of patients? What does a CRO cost? What does a CMO cost? Try to make sure that you start that process very, very early on or else companies might find themselves in some pretty tight situations.  

 On top of what everybody else already brought up, our core management team meets at least twice a month to continually assess how the overall competitive landscape is changing. Our lead target is designed for the treatment of chronic HBV (hepatitis B virus), which is a highly competitive area following the recent success with the treatment of HCV. That said, we are strong believers that the HBV treatment paradigm will be a multi-mechanism approach that will require collaboration working with other companies and their mechanisms. 

Not only do I need to currently monitor our internal progress and clinical developments, but I’m regularly looking at the emerging issues and/or developments in the overall HBV space. 

	With regards to our lesser-known programs, we’re continuously monitoring organizations that develop targets or focus on indications where we are active. For example, our secondary program, a STING agonist for the potential treatment of certain cancers, is also in a very competitive space. There are many companies that have started to enter the clinic, but we have not yet done so. This timing allows us to look for their data to guide us a little bit.

	It’s not only staying on top of our internal developments with our own science and our own clinical trials, but really continuing to monitor the overall landscape. That’s important as we make decisions as to where we’re going to look to spend our funds over the course of the next 18 to 24 months.

How important is your company’s narrative-your story when you speak to investors, stakeholders, or potential business partners?

 It’s critical. We have a complex story, so it takes a little longer to tell. Sometimes I’d prefer to have a 60-second elevator pitch, but we are a dynamic, young company with a platform of targets, and we have to explain it well-and that’s not as straightforward as you might think. It’s not, “we’ve got one pill that’s going to cure it all.” It’s, “we’ve got to work with multiple mechanisms and collaborate with a few other companies and hopefully we’ll be the backbone therapy in those mixes that eventually move forward and provide a functional cure.” When we’re out on the road-whether it’s non-deal road shows or actively raising funds-that’s how we attract new investors. And if we can’t communicate that story effectively, we’re not going to be able to bring in the additional funds necessary.  

	Similarly, with existing investors, we have to continue to keep them engaged and show them where their investment is going, which allows us to continue to progress the science. And if we’re not telling that story in an effective way, we’re going to lose certain investors if they’re not happy with either the speed of development or the direction that we’re taking the development plan. Also, if you have delays, be able to explain those delays. Talk about challenges and how you’re overcoming them and moving the programs forward. 

	The story is critical. I’m on the road quite often and that story evolves regularly. That’s a big part of being able to continue to stay ahead of things; adapt your story to where not only the competitive landscape is going but where your company is going. I think that’s important for all of us as financial executives-being able to tell that story effectively.

The company’s story is very important. The investors are interested in the science and the portfolio’s prospects. They are also interested in the company’s cash position and runway, and if the company’s financing strategy can credibly support its narrative.  

 The Chiesi story is a very important component of these conversations, because most are focused on collaboration and partnership, where trust is at the center. 

	Chiesi is a family-owned company, and after more than 80 years, the second and third generations of the family still work here. So, when we’re talking about acquiring assets, or collaborating with a biotech company on its R&D, or becoming its commercial partner, our history of financial stability and commitment to the science are front and center. 

	The fact that our owners want to see medical innovation advanced to the next level is meaningful. In fact, more often than not, our story is the reason we are chosen as partner.

 We have a deck our team uses, but every so often we present it to the entire company so that our team inside knows what we’re saying out there in the market. Our teams on the inside really enjoy them, especially our team in the lab. They used to say, “Oh, the corporate world does a lot of things that we don’t know about. We don’t even know if they know the science.” But now they know and it’s a lot of fun because we have received very particular questions about the science from our internal staff. 

 Because we’re in the rare orphan disease area, engagement with the patient community is an area that we really strive to be a part of. That provides something to the employees as well. 

	We try to communicate with the staff as often as we can about what’s going on with the clinical trials and get them involved with the patient community as well. Whether that’s through Facebook, LinkedIn, online, other social media-getting them involved is something that strengthens the engagement and the story.  

I think one of the great advantages of a small company is that everybody is a bit closer to the science. And a lot of the scientists and research people love explaining what they’re doing and what’s going on, almost like a professor. Actually, some of them are professors.  

 All of your  companies are different. I’ve always wondered, if the founder is the scientist, do they talk differently versus a non-founder scientist? About numbers, cash, runway and spend, and all that?  

 Our founder, Giacomo Chiesi, was a scientist, and the second generation of the family has scientists among them as well. But what’s interesting about Chiesi is that the family has always been visionary about how to achieve their ultimate goal. If we’re going to develop therapeutic solutions that

 improve the quality of life and health of people, we’ve got to be financially and operationally healthy as well. 

	As the company grew, Chiesi hired non-family members in senior leadership to provide additional business acumen and balance. They knew they needed to have a CEO and CFO who would pursue the scientific vision from a business point of view.

What is interesting is that a lot of the security analysts now have PhDs and know the science inside out, so you need someone that is respected and can credibly talk with this community.

 We also have a couple different approaches and a couple different levels of our story. One of the things we do is assess to make sure we know our audience. Who are we talking to?  Sometimes even before we start, we have a conversation about their backgrounds and ask them about their level of scientific knowledge.

	Someone mentioned during the conference that you have to be careful whenever you speak. If you start throwing out medical buzzwords, be careful in case someone calls you on it. Our CEO is excellent at making sure he understands the scientific background for whomever he is speaking with and making sure the person is responding-and, if not, then take a different approach. Having a couple of different pitches works well.

What leadership skills do you draw on most in your role?

 For me, it’s adaptability. It’s critical. We’re a small company, 25+ employees. I wear many different hats, whether it’s finance, HR, investor relations, IT, facilities. Just recently we built out a new lab space and a new office space where we were moving two locations, consolidating into one; that entailed building out a 10,000 square foot lab facility.  

	Although the scientists are the most knowledgeable about lab requirements and where they want to build certain aspects of the chemistry lab versus the biology lab versus the NMR (nuclear magnetic resonance) room, etc., it was ultimately me that ended up participating in all the meetings, helping transition everything over to our contractor in working through the build-out.

	I learned more about the lab than I ever thought I would, which was great, but I think it’s having the ability to really just put on that different hat and focus on the task at hand and do what needs to get done. That’s critical, especially in a small company world. It’s being able to adapt and work with whatever aspect is coming my way that particular day and take that challenge head on.  

I’ve had the same experience early on in the company-needing somebody that can do just about everything and is comfortable with the uncertainty that comes with biotech. And the organization evolves over time. First, the company is a relatively simple early stage research organization. So you initially focus on accounts payable and managing expenses. Next, you may have collaborations or government grants, and then financial reporting becomes more complex because you have to work with your collaboration partner and provide them with timely planning and reporting. 

If successful, the company will then progress into clinical trials and the early stage research may become relatively less important. At this point, the company will need to begin hiring clinical and regulatory people that have a different skillset. That changes the culture as well because the company becomes a little more organized and regulatory oriented, and a little bit less academic. Once the company approaches commercialization, you will then need to bring in the salesforce, which is an entirely different group with a new personality.

	I think successful senior executives must be able to provide effective leadership across that continuum, adapt to each new phase of the business, and recruit people that embody the company’s core culture.

How much do you outsource to third-party providers and how does that experience go? 

 CROs are our largest source of cost and it’s very difficult to manage the costs. As a smaller player, we don’t have the same leverage as a large pharma. We bid all our CRO work through a competitive proposal process. It’s a challenge to keep them on budget as they’re rarely incentivized for efficiency. It’s definitely an area that will be difficult to improve on as a small player in the space.

It is hard. And we are challenged, as you said, because we’re small companies. We don’t have all the resources and the infrastructure to be able to do a lot of this work, so we need to contract out. I think some of the bigger mistakes that companies make is they assume that when it’s contracted out, it happens seamlessly. It’s my experience that when companies apply an internal resource to manage these relations, you have better luck. But for many small start-ups, it’s almost a luxury to bring in someone to provide oversight to these different contracts and contractors. It’s not easy. It’s a balancing act.  

We’ve seen that as well. When a company is small and developing, there are often a number of jobs that are not yet full-time positions. Outsourcing to a third-party provider, or  contractors, can be used to fill the current gaps and provide scale as the company grows. A contractor who works a couple days a week on quality or even in the finance department, can make sense for an early stage company. And for Spero, as we go back to the discussion about how the company evolves over time, our decision to have outsourced a lot of the early stage  research, as opposed to bringing it in-house, was beneficial, because we subsequently shifted our focus to clinical development and reduced our need for early stage research. 

	Rhonda is right, you really need to closely manage third-party providers and stay on top of them.    

You all have different pathways to your current role in a smaller biopharma. How do you feel about working in this industry?

I really enjoy my job and really love working in biotech. Cambridge is like the center of the universe in that respect-there’s so many opportunities and interesting things to do, and great people as well. Everyone that you work with and meet with are intelligent, nice people.  

Biotech, from my perspective, is by far the most collaborative industry out there. We’re all rooting for each other, because it’s for the right reason. 

	Even though we may be competitive in a certain space, we want to see others succeed, because the outcome obviously benefits a broader group. From that perspective, it’s exciting to be a part of the entire biotech space.  

You’re doing something that benefits people.  

 Our work is important and rewarding. We’re changing lives.

’s Editor-in-Chief. She can be reached at 

takes place March 20-22. Don't Miss the Largest and Highly-Acclaimed Life Sciences Event for CFOs, Controllers and Finance Executives.

Articles

Features

Financial leaders from clinical-stage biopharma gather to discuss the critical role of finance and accounting (F&A) in supporting and sustaining the science at the forefront of engagement with investors.

Science & Finance: The Biotech Blend

	The subject of health merits only one mention in the European Commission’s entire planning for next year-and that relates to electronic health records. Advocates of digital health might argue that this shows a belated European Union (EU) recognition of the ever-widening opportunities of digitalization. Cynics might counter that the choice shows how little the EU cares about health in general, and that it has merely taken the easy option of a nod toward a small corner of its wider strategy on the digital economy.

	The formal recommendation in the 2019 action plan is to establish a format for a European electronic health record (EHR) as from the first quarter of the year. This certainly fills an obvious gap in EU planning. Europe’s embryonic eHealth infrastructure is at present limited to patient summaries and e-prescriptions, and does not cover EHRs. Exchange of patient data from one EU country to another currently depends on the voluntary cooperation of health authorities, and is subject to all the challenges of non-standardized systems. 

	So the Commission is pushing for agreement among national authorities on an EHR exchange format based on open standards-and, of greater significance for pharmaceutical executives, it wants the infrastructure future-proofed to take account of the use of data for research. 

	The aim is to link EHRs to the currently scattered national and regional banks of -omics data, biobanks, and other registries across the EU. Already there are officials within the Commission who are talking of access to one million sequenced genomes in the EU by 2022, and to a prospective population-based cohort of at least 10 million people by 2025. They see the scope for links to integrated molecular profiling, diagnostic imaging, lifestyle, microbiological genomics, and environmental data.

	All very ambitious-in theory. The problem is, there is no real mandate for the EU to act here, and no real money either. Some EU countries-Estonia is always cited as the poster-child-are already heavily committed to taking advantage of digitalization in general, and on health in particular. Many show little enthusiasm. Most do not inject the resources into digital health to make a reality of it-and without that, no EU encouragement can make much difference. The Commission’s action plan makes only an imprecise passing reference to the EU’s own limited research and IT support programs-but as an expression of optimism rather than commitment.

	There has been plenty of lip-service over the last few years to the perceived potential of digital health. A European Parliament request back in 2015 urged “improving patient safety to be explored, 

electronic health records.” The EU Health Council remarked in December 2017 on the need to “remove obstacles to data exchange and sharing between health professionals for the safety and continuity of care.” And a Commission think-paper in April criticized the “incompatible formats and standards in electronic health record systems (that) continue to be used across the EU.” It mooted promoting interoperability of member states’ EHR systems “by supporting the development and adoption of a European EHR exchange format.”

	Now, all that has emerged is a skeletal item in the work plan for what is, in any case, a lame-duck administration. This is the last year in office of the current European Commission, before a new set of commissioners-and a new president-is appointed to take over for five years from next November. So the EHR initiative is as easy to depict as a glass half empty as a glass that is half full.

	What is absent from the Commission work plan for 2019 is perhaps as revealing as what is included in it-and particularly for pharmaceutical company executives.

	There is nothing, for instance, on what is going to happen to the EU’s drug-research incentive schemes. Despite all the fevered debate since the Netherlands suggested back in 2015 that  pharmaceutical companies were abusing orphan drug therapy awards or the benefits offered under the pediatric medicines scheme or the supplementary protection certificate, uncertainty will continue to hang over the future. 

	A Commission official involved in these lengthy reflections confirmed in November that no moves toward decisions would even begin to be discussed until 2020.

	There is nothing either on what the EU should or should not do in respect of drug pricing-despite increasingly loud clamoring for tighter controls, particular on high-priced innovative products. Hardly a day goes by in Brussels without a new call from some influential quarter for radical change, principally a stricter reimbursement system.

	There is nothing on how to reconcile the conflicts facing the research-based industry, which feels-as senior executives candidly admitted at a conference on pediatric medicines in Brussels in late October-under growing pressure, caught between governments and society demanding cheaper drugs, and physicians and patient advocates urging increased investment in R&D. 

	The pressure is intensified by the wave of concerns now sweeping European activist circles that society is paying twice for new medicines-not only in reimbursing pharmaceutical and biotechnology manufacturers, but in subsidizing their research through public funding of the underlying science they depend on. 

	Nor is there anything on how the Commission intends to square the circle of Europe’s health technology assessment (HTA) debate. 

	Its proposal of streamlining the multiple national HTAs into a single agreed joint assessment at EU level is stridently opposed by national governments and the European Parliament demanding any number of get-out clauses that would in essence perpetuate the current duplication, and defeat the object of the exercise. 

	The debate rumbles on without any sign of a breakthrough, leaving pharmaceutical executives facing persistent uncertainty over when they can expect a more rational European approach to evaluation of their products. 

	And there is nothing to signal any clear pathway toward adapting regulatory procedures that can accommodate the needs of the growing number of new therapeutic approaches, where classic randomized clinical trials may no longer be the best procedure for evidence generation to support marketing authorization applications for new treatments.

	For more than five years, the discussions flashing across Europe have illuminated the urgency of building on real-world evidence, even in small populations, and on opening up the rigid frameworks of 20th century regulation. 

	Innovative efforts, particularly in rare and complex diseases, could benefit from a more flexible and benign climate, but opposition from national regulators and payers, anxious over relinquishing their habits, seems to have stymied for the present the thinking that had been pioneered not just by industry but also by the European Medicines Agency (EMA).

	In other words, on many of the strategic issues of concern to the pharmaceutical industry right now, the Commission has little or nothing to say. In its defense, it must be acknowledged that the Commission’s own powers are limited, and especially on health. Much of it remains under national control-and therefore subject to agreement within the European Council of Ministers. 

	But those finer constitutional distinctions matter little to a company facing real-time decisions about its European future. Regardless of which EU institution or national government is to blame, the situation for companies seeking a conducive operating environment is always going to be judged on feasibility-and right now, feasibility is difficult to judge in European health policy.

Reflector is Pharmaceutical Executive’s correspondent in Brussels

Columns

The Commission’s gestures toward enacting formal standards to digitize health records are masking wider policy gaps.

Europe’s Digital Health Path Still at a Crossroads

	If you had to make a list of some of the most pressing issues that we’re facing as a society, cybersecurity would undoubtedly be right at the top. Cybersecurity is a critical and closely watched issue for pharmaceutical businesses in particular, for a number of reasons.

 conducted by Ponemon Institute revealed that about 54% of companies experienced one or more successful attacks that compromised data and/or their larger IT infrastructure at some point in the year. A massive 77% of those attacks utilized file-less techniques-meaning that instead of tricking someone into downloading and installing a virus, the attacks were executed using vulnerabilities that were already there. 

 conducted by Deloitte, the pharmaceutical industry is regularly the number one target of cyber criminals around the world-particularly when it comes to stealing intellectual property (IP). In the UK, for example, damages from IP theft totaled 9.2 billion GBP during 2017. A significant 1.8 billion of that was attributed to pharmaceutical, biotechnology, and healthcare organizations. 

	One of the biggest such attacks in recent memory struck Merck & Co. All told, the company employs more than 69,000 people and 

 had an operating income of about $6.52 billion in 2017 alone. If this type of attack can hit a company as large and as old as Merck, it can happen to anyone-which is why learning from situations like these is always of paramount importance.

	In June 2017, word first broke that Merck was just one of dozens of businesses that were hit with a massive ransomware attack that ultimately ended up 

affecting organizations all over the world

. On the morning of June 27, Merck employees arrived in the company’s offices across the globe to find a ransomware message on their computers. There was not a single location within the company that managed to get by unscathed, according to published reports at the time. 

	When the incident was said and done, the pharma giant suffered a total worldwide disruption of its operations, forcing a halt on the production of new drugs, which ultimately 

	Merck, of course, wasn’t the only entity affected by the cyber attack, which reportedly began in Ukraine, then spread quickly through corporate networks of multinationals with operations or suppliers in Eastern Europe.  Nevertheless, according to published reports four months later, it was estimated that insurers could pay out as much as 

 to cover the insured portion of Merck’s loss from the ransomware attack.

	To the industry’s credit, organizations do seem to have learned a great deal from the Merck incident-as evidenced by another high-profile intrusion attempt in July 2018, this time against North Carolina-based LabCorp.

	Fortunately, LabCorp officials were able to detect suspicious activity almost immediately-far sooner than the 206-day average. The medical testing company took 50 minutes to contain the damage, thus mitigating the major ramifications moving forward. 

	During that 50-minute window, some 7,000 LabCorp computers were affected-along with other resources, such as 300 production servers. The company says that it had 90% of those assets back online seven days after the attack.

	LabCorp had a detailed response plan that it was able to act on after the attack began. This helped the company contain and minimize the impact of the breach, and its own CEO cites this level of preparation as a big part of what saved the organization. As a preemptive measure, it also instantly shut down certain strategic services in an effort to protect the confidentiality of its data.

	All told, what happened in the aftermath of LabCorp’s attack looked far different than what immediately followed Merck’s. But how does a biopharma or life sciences organization make sure that its own cybersecurity situation can be contained with hopefully limited fallout? That, of course, requires one to keep a few key things in mind.

	In an effort to help mitigate risk from these types of  cyber attacks in the future, pharmaceutical companies need to be willing to learn from each other’s mistakes and respond accordingly. This isn’t something that affects one organization more than others based on size or location-this type of data breach can hit any company at any time, and, collectively, everyone needs to be ready. 

	Organizations must also be accountable, too. A company’s cybersecurity posture cannot singularly be 

dependent on an IT department. All employees and key stakeholders must take the situation equally seriously and they must engage in cybersecurity best practices every day to help the organization as a whole avoid these types of incidents in the future.

	First, it’s important to understand the industry-specific consequences that such a breach might entail. As the Merck case showed, a total disruption of an entire business is likely if you become the target of this type of significant breach-but that’s not the end of the story. Additional factors to consider include losses stemming from scenarios such as:

		Being forced to repeat costly and time-consuming clinical trials.

		Litigation stemming from the breach itself.

		Damages to products that are already in development or production.

		Significant production shortages in the supply chain.

	Experts agree that in terms of pharmaceutical businesses in particular, hackers are looking for a company’s 

 during an intrusion attempt. This includes elements like clinical data, IP, formulas for compounds, and, in some cases, patient or employee personal data. The amount of money that a hacker can get for a stolen proprietary formula on the black market significantly eclipses what they might be able to get for something like stolen credit card information. One 

 from the Security Strategy Risk & Compliance Division at IBM, for example, revealed that a stolen electronic medical record (EMR) by itself can be sold for up to $350 on the dark web.

	With 3.15 million records being exposed across 142 industry breaches in Q2 of 2018 alone, according to data cited by  Health IT Security, a network of Xtelligent Healthcare Media, one can quickly see how it can add up. The amount of money that people can make using health information to blackmail individuals is even 

	Therefore, it’s far more likely that hackers will target industries that yield bigger payouts than they would get by going after a private citizen via identity theft, for example.

	It’s also important for drug manufacturers to apply learnings from past cases in the industry, all of which involved systems, partners, contractors, and subcontractors. “Pharmaceutical businesses in particular need to understand that all of these systems are connected,” says Kenneth Sprague, senior security engineer at Technical Support International (TSI). “If any link in the chain is broken, the entire chain becomes compromised. You need to be on the ball. Yes, security and patching are an ongoing battle, especially when you 

consider the changing threat environment we’re dealing with. But it’s something you have to do in order to survive.”

	One of the issues with big pharma from an IT perspective is that oftentimes organizations are dealing with infrastructures that are a collection of legacy systems, multiple systems that are difficult to properly integrate (and secure), Excel spreadsheets, purpose-built cloud systems, and more. Gaining the level of visibility one would need to adequately secure these resources is an ongoing and reactive process that requires the coordination of a company’s vendors, operational methodologies, and culture. Challenges can arise when IT functions are siloed. Legacy systems, for example, often lack the vendor support needed to update them against the latest threats. That alone can leave an organization exposed, regardless of how large it is.

	This is a pressing issue for smaller pharma companies as well. Often, these organizations fail to believe that IT and planning for growth should be an area of immediate focus; in reality, it couldn’t be more important. IT can help empower the growth of an organization if properly built for agility and aligned with long-term goals.

	In the end, the most important thing for pharmaceutical companies, large or small, to understand is that getting hit with this type of cyber attack is no longer a question of “if,” but “when?” A company can invest in all of the cybersecurity measures that it wants-it still won’t prevent it from one day becoming the target of hackers with malicious intentions. 

	But if an organization knows what someone is after, the good news is that it’s now in a much better position to mount the specific defense needed to protect it. That insight will act as a company’s first line of defense against these types of cyber criminals in the future. 

 is the CEO of Technical Support International. He can be reached at 

Almost a year and a half later, key understandings have emerged to help companies better combat future data-breach attempts.

Lessons for Pharma from the Merck Cyber Attack

While the increasing importance of real-world evidence (RWE) is widely acknowledged, the dramatic shift required by biopharma companies to embed and secure an RWE capability effectively across the organization is still a work in progress

Second Annual Real-World Evidence (RWE) Benchmarking Survey

, published earlier this year, the authors highlighted how the proliferation of healthcare data, advancing technology and analytics capabilities, and an increased regulatory/pricing focus on value showed how “the use and importance” of RWE in the life sciences industry had evolved in just 12 months. More specifically, this year’s report pointed to how “RWE initiatives are increasing at the executive level,” not just in regard to generating evidence, but also in supporting other research, corporate, and commercial objectives. Almost all (90%) of the survey’s respondents, Deloitte reported, “have either established or are currently investing in building RWE capability for use across the entire product life cycle,” with 70% building or increasing their internal RWE capabilities. “As a result,” the authors wrote, “RWE spending on talent and technology in the future is anticipated to increase.”

	While the increasing use and importance of RWE is widely acknowledged, the shift required by biopharma companies to embed and secure an RWE capability effectively across the organization is still a work in progress. For Qin Ye, associate principal and global RWE lead at ZS Associates, in developing effective strategies, pharma companies still face a big hurdle “to overcome product-development-centric business models and be a lot more connected with the value they’re trying to bring to market and the problem they’re trying to solve for their stakeholders.” 

Addressing this, he says, involves a fundamental culture shift. Companies tend to have a need to compartmentalize their functions to gain the necessary focus and efficiency, but that is at the expense of a more holistic approach. While pharma companies need talented teams with specialized training and knowledge, these highly skilled teams tend to base a lot of their decision-making on their experiences in the past. 

	“It can be difficult to change that mindset to one that is more data-driven,” says Ye. 

	In helping companies implement an effective RWE strategy, ZS sees “the change management of culture shift as the key priority.” A lot of pharma companies currently have a siloed approach to gaining access to and leveraging data. “Looking end to end,” says Ye, “the question should be, how do you leverage data to help you to make decisions and better position your product from the very beginning of the development process?”

	This view is echoed by Saama Technologies, a clinical data integration platform company, who this year partnered with Informa Pharma Intelligence’s Citeline to bridge clinical trial information to RWE. Nekzad Shroff, Saama’s VP of field product management, told 

, “The adoption of RWE by pharma leaders is a different problem from developing the actual capabilities involved. Adoption requires a shift to an exploratory mindset. There needs to be a tolerance of ambiguity and imperfect data to be able to actually interpret and gain insights in spite of data gaps.” He says that, with challenges and fears around data quality and security and the constraints of data sharing, “some companies would rather have siloed data than shared data.”

	But Shroff believes the situation is slowly being overcome, as pharma organizations are building standards around how real-world data (RWD) is generated as well as interpreted. Similarly, the days when decision-making based on RWE “required an advanced understanding of mathematical statistical techniques as well as computer programming” are also changing, slowly. With increasing access to the “democratization” of these data sources and platforms providing actionable insight, Shroff says, companies “are now getting used to relying on these metrics to enhance their decision-making.”

	Once that happens, this mindset starts to become pervasive and embedded into day-to-day business processes. And when that culture shift begins, “analytics tools can definitely help,” Shroff explains, “with IT playing a big part in providing a platform with the right set of capabilities, access, and security levels.”

	Many large pharmas have identified the gaps in their real-world data and evidence capabilities and have the funding to fill them, bringing more data scientists into the talent pool. But, Ye warns, even when a company recruits talented data scientists, it can be difficult to leverage that talent, and equally difficult for the newcomers to gain an understanding of the business process. “It’s a merger of old and new, of two different scientific capabilities,” he says, “and that can be challenging if you don’t focus also on building the process transformation and enabling technologies. Just having new talent come into your team structure in a people-only approach will not solve the problems.”

	Karim Damji, Saama Technologies’ senior vice president of marketing, has seen big pharma “running into talent issues.” For companies trying to expand their in-house data-analytics capabilities, there are questions around the talent associated with achieving this the right way, he says. “Pharma companies have been doing it the hard way for a very long time. The tools and technologies that are available to other industries have

 not been widely adopted by pharma, simply because of a fear of taking that legal risk associated with doing something novel.” 

	In the meantime, Damji adds, companies liked Google, Apple, Facebook, Amazon, and Netflix have been “gobbling up all the talent that pharma needs in terms of expanding internally.” 

	That may be changing, as some firms are making high-profile moves to draw that talent into the pharma realm. Ye welcomes this, as such recruits are used to “thinking outside the box, have lots of experience dealing with a wide variety of data, and transforming how that data can be leveraged.” What’s more, he says, when these “outsiders” bring with them a “very humble mentality to engage with and learn life sciences, it helps to create a more impactful collaboration.” 

	However, says Shroff, for pharma, it is a question of solving the issue “non-traditionally.” Instead of pushing to hire more data scientists, Saama also looks at “the other side of the equation.” That is, “How can we enable the existing employees and executives of companies to start to make sense of some of this complexity without needing an advanced degree in data science?” He adds, “That’s not easy, because sometimes there’s a reluctance to take insights from a system that you don’t understand in and of itself.”

	While pharma grapples with these organizational questions, there is also the issue of navigating the myriad-and growing-data sources available for leverage. The industry should avoid simply “rushing in and buying data from the biggest data set in the market,” says Ye. 

	“Companies should start from their business need and their questions. While they do need some baseline data for the area they are focused on, they should have a more comprehensive view of the things they want to transform, and from that they can decide what specific data sources are needed.”

	For Damji, amid the myriad data sources, a key challenge for pharma is around longitudinal information and patient centricity. But it’s not just about looking at all the RWD sources and creating an intra-longitudinal view of the patient from a data source. “Creating inter-longitudinal views of the information is a bigger challenge,” Damji says. “And this is where I think modern aspects are being developed outside of pharma. Technology assets, to be precise, will significantly help mine that and stitch it together.” (See graphic; click to enlarge).

	Although Shroff points to a current lack of standards covering the use of RWE, he sees more standards being created around the interchangeability and exchangeability of data sets as the space evolves.

	“Once we standardize how patient records are used for insight generation and how technologies like blockchain can store that kind of data in a secure way, we start to get more consistent around generation, use, and interpretation,” he says. Further FDA involvement will see data sets become much more streamlined, Shroff notes, “as opposed to right now, where companies are looking at anything they can get their hands on.”

	As the rise of patient data continues apace, with more wearable devices continuously measuring the attributes that pharma companies are interested in, Shroff believes that companies will start to go straight to patients for an increasing number of data points, rather than going through the traditional trial route. “A lot of pharma’s questions are answerable through observational studies and through custom data sets that they’re able to create. So, there will need to be creativity on how to get to the patients and how to get patients to agree to share their data.” 

	There is work already being done in this area. Shroff points to California, where, by 2020, patients will be able to consent to have their own data used for a specific purpose without actually going through a third-

party consent mechanism. Shroff predicts there will be a consolidation of the companies that provide this kind of data.

	“As standards become more established, the large data providers will start to snap up the data assets wherever they exist, because providing the right data to the right people is going to be a business in itself,” he says. “We’ll see new industries looking at how that data can be monetized and used for competitive purposes. All of that will start to happen on a much grander scale than we’re seeing today.” While this will be a fragmented landscape that consolidates slowly, Shroff says that the winners and losers will be determined by the data’s ease of use and adaptability. 

	Meanwhile, the winners and losers in pharma’s quest to embed meaningful RWE strategies will be determined by their preparedness to make these dramatic organizational shifts, requiring trust-building and change management, along with investments in data sources, partnerships, and technology. According to ZS’s Ye and Abhay Jha, principal and R&D technology lead, it drills down to establishing a cross-functional operating model that considers how different teams

 leverage data, with a clear action plan to measure ROI, leadership support, and the appropriate level of technology to support a data-driven model (see sidebar). 

	“Without those driving factors in place,” they say, “efforts can remain motionless, which is where many pharma companies find themselves today.” 

European and Online Editor. He can be reached at 

While the increasing importance of real-world evidence (RWE) is widely acknowledged, the dramatic shift required by pharma to embed meaningful and holistic benefits from this capability is still a work in progress.

Securing a Winning Strategy for Real-World Evidence

	Founded in 2002, Alnylam is a biopharmaceutical company committed to the translation of transformative medicines based on RNA interference (RNAi) technology. The company’s discovery platform and pipeline of investigational medicines include three programs in late-stage clinical development. With the use of real-world evidence (RWE) key to the development and commercialization of Alnylam’s products, Sonalee Agarwal, head of value and evidence strategy, tells 

about RWE’s central role in the organization and its application to the rare and ultra-rare disease space. 

Can you outline the role of real-world evidence in Alnylam’s activities and how has it evolved over the years?

Given that our first three Alnylam-driven products-ONPATTRO (patisiran) for hATTR amyloidosis, givosiran for acute hepatic porphyrias, and lumasiran in primary hyperoxaluria 1-are 

in rare or ultra-rare diseases, we are currently using RWE to understand the unmet need, the disease burden, and the natural history of the disease, and we’ll be using it to see how the products perform in the real world. 

	We tend to think about RWE as this new thing, but when I joined Alnylam two-and-a-half years ago, it was already an integral part of the organization. On our website, for example, we have a natural history study in acute hepatic porphyrias; this is an observational study that has patients documenting their experience with the disease, which is real-world data.

	RWE has long been at the core of our product strategy, all the way from Phase I, where possible, and certainly from Phase III clinical trials. In recent years, of course, the volume of medical information collected in digital formats has increased tremendously. The evolution of technological and statistical methods have given us a greater confidence in the inferences we make from these data sets. We are not doing causative studies with these data sets, but correlational studies. They give us hypotheses and an understanding of what is happening in the real world. 

What do you look for in data scientists and analysts at Alnylam?

We look for people who are urgent, passionate, technically strong, and effective communicators. We are a science-based organization and we like to think about hypotheses, so not only do our analysts need to understand the data sets, but also understand the biases within them and effectively communicate what we are controlling for versus what we are not controlling for. In general, having past experience with big data sets is important and can help to establish clarity as we answer research questions. 

	In my own experience, I worked with a large database, and I gained an understanding, for example, of what is clean data and what is not. I think that experience helps you understand the biases of the data sets and then overcome those biases to answer the right research questions.

What challenges remain for Alnylam in analyzing and understanding data?

The biggest challenge in answering research questions in rare diseases is that we need to find sufficient number of patients and the right data sources to answer the critical questions. On the technical and the statistical side, we have the tools for this, and if not, we collaborate with people who do. We use a variety of data sources, including patient surveys, claims data, electronic medical records (EMRs), and observational studies. It can be difficult because claims databases, for example, give us the volume, but not the granularity of data that we need. EMRs gives us more of the information we’re looking for, but not the volume. So, it’s not once-size-fits-all. It all depends on the disease, how robust the data is, and the questions you’re trying to answer.

How do you see Alnylam’s RWE strategy evolving over the next three to four years?

We’ll be using RWE throughout the product life cycle. Earlier in the life cycle, we use RWE to focus on defining unmet need and the burden of the disease, as well as design effective clinical trials. Post-approval, we will be using RWE data to better understand how the product performs in the real world and to understand the value of these medicines. RWE will continue to be a very important part of our core product strategy.

Sonalee Agarwal, head of value and evidence strategy for Alnylam, talks with Pharm Exec about the role of real-world evidence in the rare and ultra-rare disease space. 

RWE: Answering Questions in Rare Disease

	This month, I encourage the readers of 

to read the December issue of our sister publication, 

. The issue focuses on technology and clinical trials software (eClinical), with an eye on where the clinical trials data collection process may have gone awry, may have caused inadvertent complications in the clinical trials process, but still with optimism on how future technologies

 can improve all aspects of drug development. 

	In  a previous article, Henry Levy, chief strategy officer for Veeva, provided a media roundtable with a brief history of clinical data. “Thirty years ago, electronic data wasn’t common and all of your data was in one place, and it was ugly, but it was centralized and managed in one place. And then EDC was a revolution, with companies like Oracle and Medidata coming in, which was a massive improvement-and that was a really good thing. But it actually broke everything else, because now you had a clinical data management system (CDMS) that was supposed to clean your data, and then you had an EDC system that was doing a part of the data, which at the time, 70% to 75% of your data was EDC data.” 

	Recent surveys, along with Levy’s anecdotal information, report an explosion in the number of clinical data sources, with EDC comprising only 20% to 30% of clinical data, along with ePRO, mHealth, lab data, and more-leaving CDMS trying to catch up in a decentralized and not-well-integrated landscape.

	In addition to the plethora of clinical data sources, David Connelly, CEO of Cmed Group, states, “Over the last decade or so, management of clinical data has been driven down the commodity route, with off-shoring encouraged to save money. In some cases, job roles have been made narrower to allow for a more task-based approach with rapid training of less experienced resources. Nothing wrong with reducing costs, but with clinical trials becoming more sophisticated, the number of data sources increasing and the types of data more complex, maybe this strategy needs to change. Surely we should be applying greater expertise and sophistication to derive valuable information from the data, and sooner? Clinical trial data is not an ancillary byproduct. It is the output of the clinical trial and arguably the whole purpose why the trial was conducted in the first place.” 

	Connelly continues with the fact that biopharma of all sizes take large risks and spend millions to billions of dollars on R&D for new and better treatments. And maybe spending resources on innovation and management of clinical trials would be well spent. 

, we will take a look at the trends that will impact the C-suite in 2019. We don’t discuss clinical trials but we do look at technology, specifically uses of AI that are currently in practice and ones that could easily be adapted to the pharma model. Sanjiv Sharma, VP, North America commercial operations, HLS Therapeutics, and 

Editorial Advisory Board (EAB) member, believes that AI is going to creep up faster than we think. “The permutations of AI, and adding in real-world evidence, will have impact on the drug and diagnostic areas for the next four to five years,” he says. John Furey, chief 

operating officer, Spark Therapeutics, and also an EAB member, agreed that AI is already being used to find patients as well as in determining the prospective care of patients. EAB member Jay Galeota, president and COO, G&W Laboratories, says that hospital systems are using phenotypic screening to determine high-responders for certain drugs so they can make P&T decisions based on these algorithms. 

	In many industries, it appears that technology and innovation is far surpassing individuals’ and companies’ ability to change course and adapt to the changes. Technology layers onto old practices that they were meant to eliminate or reduce. Technology that was meant to make efficient use of resources that then generates its own inefficient department. As in the cases cited by our EAB members, intelligent uses of technology are being implemented and will-gradually or extremely quickly-break down the status quo. 

	I was going to close with a comparison of protecting your archaic model vs. creating new models with a not-kind comparison to Comcast and its lack of transparency for its services and prices listed on its website. However, I have to travel overseas and call them when I get back, probably devoting one-third of my day to their sales team. Wish me luck as I try to bridge the new world of technology with the tried and true status quo. 

From the Editor

In pharma, there may be hope that companies' and the industry's ability to adapt to change may finally be catching up to the pace of new and intelligent uses of technology and clinical data. 


Can New Tech Outsmart Status Quo?

Many reports have chronicled the increasingly restrictive market access landscape and pricing pressure in the US and EU, but there is still no structured approach for assessing pricing and access risk. Presented here is a straightforward method for integrating pricing and access risk into portfolio planning and decision-making

	In 2014, mergers and acquisitions (M&A) among pharmaceutical and biotechnology companies hit a record-high deal value of ~$219 billion,

with ~220 deals completed. Yet in 2016, total deal value dropped to half that number, with $104 billion in total value and 200 agreements completed. With passage of US tax reform legislation, which generated tax savings and lowered barriers to repatriation of overseas cash reserves,22018 was anticipated to be the return of major deal activity.

However, halfway into 2018, M&A activity still looked relatively modest compared to 2014.

	This reluctance for major spending is not surprising given that biotech/pharma asset valuation is higher today. From 2013–2015, biotech companies benefited from an IPO boom, with high valuations and soaring stock prices. In 2015 and 2017, venture capital funding and follow-on public offerings reached new highs, providing additional sources of funding.6Altogether, biotech companies now have many more profitable alternatives to raise capital than selling or licensing assets, which means companies looking to acquire or license assets can expect to see a higher price tag. With this shifting landscape, portfolio decision-makers require additional tools to identify overvaluation risk. 

	Key valuation risks are technical and regulatory success. PTRS (probability of technical and regulatory success) is often used to approximate the potential risks of pre-market factors, ranging from likelihood of asset failure in clinical trials to likelihood of regulatory approval. A composite factor is generated based on the level of risk in areas such as clinical evidence (clinical target validation, drug class, mode of action novelty); trial robustness (including patient population used, selection strategy); and trial design (trial complexity). Notably, the risks according to these factors are highly variable between therapeutic areas. 

	Ultimately, PTRS can be integrated into an asset’s valuation to understand the impact of this risk on net present value (NPV),  and create a more risk-adjusted view of an asset’s worth. However, PTRS primarily accounts for risks from the research and technical perspective. On the commercial side, there are no standardized mechanisms for assessing risk. We propose that portfolio decision-makers consider pricing and access risk in a similar manner to PTRS, since gaining access through payers is viewed as similarly critical to regulatory approval.

	Payers across global markets are becoming more selective about which drugs to cover/reimburse. Additionally, payer consolidation in the US means that insurers now have more power in the healthcare market. Therefore, payers have significant negotiating power over manufacturers in pricing, contracting, and access conditions. When even paradigm-shifting drugs such as immunotherapies (e.g., PD-1s) face payer challenges to access, pricing and access success cannot be assured.

	European markets are difficult environments, where payer assessments can dramatically impact pricing and access (see Figure 1). In Europe, new products often face long negotiations to gain reimbursement, significant discounts to US prices, and scrutiny of clinical results. A Simon-Kucher & Partners EU oncology-reimbursement study found that after European Medicines Agency (EMA) marketing approval, products can face up to two years of price negotiations with payers before gaining reimbursement in certain markets.

	Through the course of negotiations, new products may require discounts as high as 70% to 85% off the US list price. Additionally, some payer agencies will delve into clinical trial data and restrict reimbursement to subgroups not intended by the manufacturers, further cutting into revenue (see Figure 1 “Subgroup benefit only” column). 

	Although US payer scrutiny is not at the level of Europe and other markets, payer pressure in the US is increasing as payers consolidate and exert their influence. Currently, the four largest national payers (Anthem Blue Cross and Blue Shield, UnitedHealthcare, Aetna, and Cigna) reportedly cover at least 85% of the US market, vs. 74% in 2006. Payer dominance is even greater on a local level. According to a report by Community Catalyst, citing data from the Kaiser Family Foundation, Blue Cross Blue Shield controls 93% of the commercial health insurance market in Rhode Island, 91% in Alabama, and 89% in Vermont. This gives the payer virtual monopoly power over the health insurance markets in each of these states. There is no signal that payer consolidation will stop anytime soon. In fact, the recent mergers of four of the largest US payers (CVS/Aetna and Cigna/ESI) indicate that consolidation will likely increase. With this new level of influence, payers request more concessions from manufacturers to gain market access, especially if a new product triggers budget impact concerns (e.g., PCSK9 inhibitors). 

	With these shifts in the payer landscape, pricing and market access are now C-level topics. In 2016, when the Tufts Center for the Study of Drug Development released R&D cost estimates, the authors acknowledged “efforts to gather health technology assessment (HTA) information” as a key factor driving costs associated with bringing drugs to market. 

	The 2017 Global Life Sciences Study by Simon-Kucher  found that in the most commercially successful companies (classified based on several key performance indicators, including EBITDA, hit rate of innovations, etc.), the C-suite provides clear guidance and direction on pricing decisions. Additionally, these companies more often have defined pricing roles and responsibilities, and dedicated processes, than other organizations surveyed in the study. Highly profitable companies (defined as EBITDA >20%) are also more likely to consider payers’ decisions and needs in early product development, compared to less profitable companies. 

	The study also found that involving the pricing and market access team in business development opportunity assessments, such as partnerships and licensing, was of high importance. However, only 32% of companies currently do so. The key reason that most fail to do so is a lack of alignment between senior management and other departments on the importance of pricing and market access, and low awareness of the internal resources and capabilities. 

There is still no structured method of assessing pricing and access risk for drug manufacturers. Presented here is a straightforward measure for
integrating pricing and access risk into portfolio planning and decision-making.

Pharmaceutical Executive-12-01-2018

Science & Finance: The Biotech Blend

Europe’s Digital Health Path Still at a Crossroads

Lessons for Pharma from the Merck Cyber Attack

Securing a Winning Strategy for Real-World Evidence

RWE: Answering Questions in Rare Disease

Can New Tech Outsmart Status Quo?

Measuring the Probability of Pricing and Access Success

Four Challenges for AI in the Life Sciences

Pharmaceutical Executive, December 2018 Issue (PDF)

Country Report: Malaysia

Attack Mounts on Biopharma Drug Prices