Pfizer’s Idea to Fix the Drug Development Crisis, Which Probably Won’t Work (But Just Might)

6/20/11Follow @xconomy

Big companies love acronyms, and Pfizer is no exception. So when I heard the world’s biggest drugmaker talk about using its CTI network to validate POMs, it sounded like some Dilbert-style, soul-crushing initiative going nowhere.

Writing off this latest initiative would be the safe bet, as many have tried and failed to revitalize the unproductive business of early-stage drug development. After taking a closer look at Pfizer’s big new alliance with eight of Boston’s leading biomedical research centers, my guess is there’s a 90 percent chance it won’t work. But it is a clever strategy that balances the interest of all parties, and if executed well, it could change how drugs get developed for the better.

For those just tuning in, Pfizer made headlines earlier this month when it established a new Center for Therapeutic Innovation (CTI) in Boston, which represents a five-year, potential $100 million investment in early-stage R&D. This is the third such agreement Pfizer has formed in the past year, following similar deals with academic centers in San Francisco and New York.

Pharma collaborations with academic institutions aren’t new, but these Pfizer deals do establish new rules of the road. In the old days, a big drug company with a shiny headquarters far away would pour in some money to support basic research. The scientists looked at Big Pharma sort of like Uncle Sam, as just another rich benefactor to hit up for cash. Once the checks arrived, the scientists would explore the way genes and cells work. When they learned something important, they’d publish it, and move on to the next exciting problem.

The Big Pharma company, in return for its largesse, would usually get a chance to license any inventions from the academic lab that could lead to new drugs. But rarely did any new drugs come out the other end. The drugmakers often saw esoteric advances of knowledge, or half-baked ideas that couldn’t be reproduced. Sometimes the company would make headway for a while, until corporate priorities would shift, leaving once-promising drug candidates sitting on a shelf.

But now it’s clear that Pfizer, despite all its well-documented problems with patent expirations on aging blockbusters, is showing some long-term, creative thinking about how to fill up its pipeline (and even the whole industry’s) with innovative new drugs.

J.C. Gutierrez-Ramos of Pfizer

Here’s how the new plan is supposed to work, based on a chat last week with J.C. Gutierrez-Ramos, a senior vice president at Pfizer in Cambridge, MA, who is overseeing the Centers for Therapeutic Innovation in Boston, San Francisco, and New York.

Instead of being set up in a distant headquarters, the new Pfizer centers are being established right across the street or down the hall from some of the top minds in biomedicine. The centers will be staffed by SWAT teams of about 40 people with entrepreneurial experience in biotech, venture capital, or in one of the more aggressive corners of Pfizer itself. Their job starts with watching for seminal publications on new drug targets. Then they will identify the subset of researchers with the most motivation to test their new proposed drug mechanism in people, rather than just move on to the next line of research.

The job of these Pfizer people is to ride herd on these early stage drug development projects, to make sure they have the money and manpower needed to get to a “proof of mechanism,” or POM, as Gutierrez-Ramos says. The Pfizer teams will have access to plenty of cash to push forward each project, Gutierrez-Ramos says. The teams will also be able to lean on Pfizer’s global network of people who know how to synthesize drug candidates, and run animal tests. The Pfizer innovation centers will be evaluated based on whether they can get these “proof of mechanism” questions answered on time, in three years, instead of the usual 10 years it takes now, Gutierrez-Ramos.

“The goal when we get together with an investigator is only one,” Gutierrez-Ramos says. “To try to demonstrate that we might have a new medicine.”

If a project shows promise, then Pfizer has the option to license in the program for its internal R&D, and go off to the races through the usual series of clinical trials needed for FDA approval. But if the biological mechanism is outside Pfizer’s development portfolio, or looks too risky, then the intellectual property reverts back to the academic institution. The university can then license it out to another company, or use it to form a new startup. When the project goes back to the academic institution, which Gutierrez-Ramos says should happen quite often, Pfizer will retain the right to co-invest along with VCs.

This is clearly a new way of doing business between pharma and academia. One former dealmaker there told me that in the old days, Pfizer would rather let drug candidates sit on its shelf than let them go back to a university, and end up potentially doing something good in another company’s pipeline. One venture capitalist told me he’s hopeful that it could help stir more entrepreneurial spirit in academic medicine, if investigators can gain confidence in the bushwhackers who are working on their behalf in a big company with multiple layers like Pfizer.

The odds would almost surely say this effort is doomed to fail. The organizations have different goals, in that academia wants to advance knowledge, and pharma wants to make money. Pharma companies have been known to try to censor or heavily edit academic publications that cast a negative light on their products—a major source of tension and distrust in academia. Most academics and most people inside Big Pharma aren’t entrepreneurs with the monomaniacal focus and drive that comes from not knowing if you can make payroll next month. There are cultural and personal differences too, in which academics sometimes look at businesspeople as overpaid hacks, and businesspeople see academics as undisciplined spoiled brats who have no clue about drug development.

The main enemy Gutierrez-Ramos sees is cultural inertia, i.e., the old way of doing business. The CTIs need to be staffed with the very best people to pull this off, he says. Trusting, professional relationships need to be forged on both sides. That sort of trust doesn’t get built overnight, and can be lost in a heartbeat.

There’s no doubt that Gutierrez-Ramos is a thoughtful guy, and knows he needs a potent motivating force to counteract all the negative vibes that could drag this down. He told me last week that he wants academics to feel like they’ve won the “lottery” and signed up for a once-in-a-lifetime opportunity to see if they can prove whether their ideas are right.

Pfizer, of course, needs lots of big new drugs to keep its business going in its current form, and it’s not finding enough of them from its internal R&D. In a worst case scenario, Pfizer flushes a few hundred million dollars down the tubes, which isn’t much for a company with an $8 billion annual R&D budget. But if it does work, Pfizer expects it could get 20 to 30 percent of its R&D done through these academic collaborations, Gutierrez-Ramos says.

It also could establish a new template for other companies, and other academic centers, to do a better job of taking drugs all the way from early research through development. If that happens, it could revitalize the whole creaky engine of pharma R&D, which would be good for more than just Pfizer.

“My responsibility is to make sure Pfizer improves the quality of the medicines going forward in our pipeline,” Gutierrez-Ramos says. “But unless we increase the overall level of biomedical research, then Pfizer as a whole can’t win.”

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  • RespiSci

    “The odds would almost surely say this effort is doomed to fail. The organizations have different goals, in that academia wants to advance knowledge, and pharma wants to make money.” I would remind pharma that their goal is to make drugs (which then makes them $). I agree that this initiative seems doomed to fail because of the disconnect between the academic pursuit of interesting research and the steps required to take an interesting idea, identifying a drug candidate that works and developing that drug candidate into an actual drug that is safe (toxicology and bioavailability)and effective (beyond POM). I think the success will come down to how efficient the SWAT team is in interacting with the academic researchers.

  • Peter Payne

    An academic researcher’s promotion still hinges on publication score and teaching portfolio. If these are negatively impacted, the motivation to spend time on Pfizer’s needs is reduced. The University administration would have to assure the researchers that their career will not be compromised. Will the ability to get other grants etc. be negatively impacted?

  • http://www.clarksearch.com/blog Ellen Clark, Clark Executive Search

    “The CTIs need to be staffed with the very best people to pull this off”.If the best go to these Centers, then the internal R&D at Pfizer will continue to go downhill.I say hire new innovative staff for these centers and leave the best and brightest right where they are!

  • Jack L

    It’s an interesting concept and I applaud the innovative model that helps connect industry and academia.

    What I’m curious about is details of the IP ownership structure as well as if many researchers will choose to participate or just move on with the more defined academic structure they are familiar with (i.e. publish, get funding, get tenure).

    I’m also curious whether lab heads being funded from outside sources already such as Howard Hughes (HHMI) would be able to participate. Usually HHMI does not allow for concurrent industry sponsorship of lab research and I doubt many labs with HHMI would give it up to pursue the CTI program. Unfortunately for CTI these HHMI professors are also often the cutting edge leaders of their fields.

  • Frank Cooke

    This might work but JC, as he called himself during his brief and chaotic reign at GSK, does not inspire much confidence. If you want an example of what is wrong with modern Big Pharma take Senor JC: arrogant, egotistical, bad scientist…. etc.

  • http://www.xconomy.com/author/ltimmerman/ Luke Timmerman

    Thanks for all the comments.

    @PeterPayne—interesting point you raise about whether investigators will lose out on federal and foundation funding if they spend too much time working on deals supported by Pfizer. I don’t know the answer to this. I think it’s possible that if the company-funded work is successful, it could help investigators justify even more federal/state/foundation funding.

    @EllenClark—I doubt that Pfizer will deplete its internal R&D talent pool in any serious way, because the CTIs have small staffs, and most of the people will be recruited from outside.

    @JackL—I hadn’t thought of the HHMI co-mingling of funds issue that you raise, and I think it could be a real snag. I’ll be curious to see if any HHMI investigators get actively involved with the company, and if so, how that gets structured

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