Biopharma should choose targets using a baseball-style draft

All opinions my own and do not necessarily reflect those of Novo Nordisk

I was sitting around last evening checking out how the end of my fantasy baseball season is working out (for the record, first out of ten in one league and fourth in the league I wrote about here) and I starting thinking again about the parallels between baseball and drug development (which I previously wrote about here and here for example, and also Stewart Lyman has a nice piece on a similar theme here). And it hit me that there’s another way in which biopharma could take a  page from baseball: fantasy and Major League Baseball both.

Biopharma could institute a draft for drug targets.  And to explore this I’m going to employ the time-honored, not to mention trite and artificial, format of a series of questions and answers.

What are you smoking?

Nothing!  Although, given that I live in the State of Washington, this is an understandable question…

It’s just that you can’t flip open a journal or industry website these days without hearing how Biopharma is struggling to come up with new drugs.  External pressures from regulators and others for novel and better drugs are getting stronger.  There’s a very real problem that we don’t have a great understanding of the etiology of many diseases and it doesn’t seem like that’s going away any time soon.  A recent interview of Roger Perlmutter of Merck by Matthew Herper of Forbes had this fascinating quote: “We really understand very little about human physiology. We don’t know how the machine works, so it’s not a surprise that when it’s broken, we don’t know how to fix it.”  In addition drug development is costing Biopharma more than before to develop each new drug.  I think that instituting a draft is one way to try and help the system.

How?

A draft could serve to reduce duplicated efforts, thus leading to greater efficiency.  It could remove many of the barriers to setting up collaborations in the preclinical and even clinical space, thus allowing more sharing of techniques and knowledge across the industry–more transparency.  It might allow a different, more efficient and effective alignment of small biotech companies with the large biopharma.  And it could ultimately benefit patients.

Uh-huh.  Will it also freshen your breath and give pigs wings?

Now now.  Let me explain how this would work.  In year one of the draft, all companies involved (let’s say it’s the top 30 Biopharma by market cap) put together a collective list of their top 3oo potential drug targets.  Anything that is in an official pipeline of a company at that point (probably done by vetting via a third party) will be excluded.  Next, the companies draft.  This could be done in a variety of ways. Initial order could be set at random and picks made in a Serpentine Fashion (that is, after the first round the draft order reverses with last picking first in the following round) or by auction, with each company holding a specific number of fantasy dollars to bid on one or more targets.  At the end of the draft each company would come away with ten drug targets. The agreement among the participants would be that a drafted target initially can only be developed by the company that drafted it.  Additional drafts would be held probably every three to five years.

Why would companies do this?

It’s a trade-off.  A company loses the opportunity to work on other targets in the list of 300 in immediate terms, but gains exclusivity for the ten it picks.  Therefore the company can publish freely, communicate widely about its targets, and doesn’t have to worry about competition.  This may allow progress to be made more quickly because work can be done in the open.  As Laura Strong pointed out in a recent post on her blog, The Next Element, one of the problems of trying to network as a biopharma worker is that so many things are verboten to speak of, or at least are perceived that way.  I view the draft terms as trading broad uncertainty for more limited certainty.

What about the rest of the genes in the genome?

They aren’t covered by the agreement and can be worked on just as targets are worked on currently.  But here’s the catch.  After the first year, in subsequent drafts a company can choose whether to put something new that the company is working on into the draft pool or not.  But there will no longer be exceptions for targets a company has started working on between drafts, so the draft-eligible list could include that target if another company nominates it.

Well doesn’t that mean there’s no incentive for a company to work on something that isn’t one of their exclusive genes from a previous draft?

Not at all.  The essence of a draft is information, and  in specific, information asymmetry.  If a company has spent a few years working on a potential target in secret, it will have a much better idea of the value of that asset than another company.  Therefore, when bidding or picking, the company with more information will have an advantage.  In fact, if a company feels strongly about a novel candidate, it would probably want to have that target on the auction list so that the company could bid/win exclusive rights to it.

This sounds like some kind of game.

Yes!  Exactly!  A whole lot of elements of game-like play come into this, which is one thing that could provide additional motivation to research teams.  There are also the elements of game theory that are involved in things like trading draft picks and assets.  Also adding to the game-like elements is that exclusivity will be limited, and targets can become free agents.

Now you’re being silly.

Well, not really free agents per se.  But, in analogy to free agents in baseball, after a period of time (6 or 8 years?) the exclusivity would end and the target would once again be available for anyone to work on, or to be put back into the draft pool to be redrafted, possibly by someone else.  This encourages companies to try to get a compound as far as possible during the exclusive period.  Now, it’s true that a competitor might try to block the original owner by drafting a target when it becomes available again, so some mechanism would probably have to be put into place to allow the original company to retain the services of that target, probably for a premium.  Maybe losing one of their draft slots in the current draft?

What other game-like elements would come into play?

Anyone who’s a fan of the major league sports drafts knows already about how much gamesmanship is involved in those drafts in terms of hiding intent, trading picks, mortgaging the future for the present and so on.  I could see similar things going on with a biopharma draft.  For example, companies could draft targets they have no intention of working on just to have an asset to trade with another company at a later date. Another game-like aspect would relate to how companies deal with each other after the draft.  Say Company A gets a target that Company B really also wants and for which Company B has some useful information.  The structure of the draft agreement means that the only way Company B can work on the target is by offering to collaborate with Company A, possibly using their knowledge as an inducement.  In this way, collaborations are encouraged among companies.

Wait. This is starting to sound kind of collusive.  Wouldn’t the government have something to say about this?

That depends.  The ultimate concern of government is the public good, and in that context, government is on the lookout for whether an agreement among companies decreases competition to the detriment of the consumer.  Would this meet that standard?  One of the issues that is relevant here is the proliferation of “me-too” drugs and the perception that they are not truly incremental innovations in care.  This draft system would actually force a broader exploration of the space of available drug targets, presumably making it more likely that novel therapies be developed.  In addition, if a company only had exclusivity for a small set of targets, this may provide an incentive to more carefully examine each target’s potential, which may in turn lead to more targeted and personalized therapies.

To keep the government satisfied, maybe a commissioner’s office of some sort would have to be established, as a neutral party charged solely with making sure things are on the up and up.  That the good of the drug discovery enterprise and the spirit of the agreement are being upheld. The commissioner would have the ability to levy fines and disciplinary actions.

You mentioned other benefits.

Yes, let’s go through some of those.  I’ve already mentioned that it frees companies to be more open about their research, it encourages collaboration, and it broadens the scope of drug targets being worked on while potentially providing more choice and targeted therapies for customers.  From the biopharma and academic side of thing it also clarifies relationships and agreements.  If an academic is working on a given drafted target, they will know whom to talk to.  One might argue this puts academics at a disadvantage and one might be right, but on the other hand, with exclusivity for a target, a biopharma would be much more willing to allow collaborative research to be published, to the advantage of the academic.  Right now there is a real tug-of-war between biopharma and academics on publishing shared research.

Another advantage, and one I can’t stress strongly enough, is transparency.  We just don’t know what the various biopharma are working on, and if you don’t know, it’s really hard to figure out how well the system is working.  A draft provides a very specific measure of how highly-thought-of a drug target was at a specific point in time.  Over time the accumulated data on successful drafts, good targets, washouts, and poor performers can be compared to the original draft position of each target to help us better understand why targets are viewed as good at a given time, and whether that view was right or wrong.  As it is, each company does this internally for their own targets but can’t benefit from a broader perspective.  If you don’t have good metrics for a system, you can’t figure out what’s going right and what’s going wrong and how to fix it all.

What about small biotechs?

They would be left alone, on the outside.  And they might (haven’t figured out for sure yet) be free to work on anything.  This accomplishes three things.  First, as with academics, it allows the small biotechs to align with a larger biopharma with known needs.  This hearkens back to some interesting thinking about a Supply Chain approach to drug development espoused in Xconomy by Noubar Afeyan of Flagship Ventures, among others.  In this view, greater clarity by the big biopharma of what they’re looking for allows smaller biotechs to craft their efforts in a way that more cleanly aligns with that of their customers.  Like farm teams in Major League Baseball.

Second, leaving the small biotechs alone maintains the existing ecosystem for the creation of truly new and innovative ideas.  And third, having the smaller biotechs on the outside gives them an incentive to grow and possibly become a member of the established top group–like Promotion and Relegation in the Premier League.

Okay, so do you honestly think this could ever happen?

Well no.  There are a lot of barriers, including the aforementioned anti-trust concerns and also the question of getting all or even most pharma interested and willing.  Essentially, you’d have to convince the heads of all the pharma that not only are things not working that great (not so hard an argument) but that holding a draft would really make things better (much harder argument).  As with anything that hasn’t been tried before, there is no evidence that it would work. And the basic reason to have a draft in sports is to try and achieve competitive balance.  In sports this makes sense, as competitive balance leads to entertainment.  Would competitive balance lead to better drug development?  How would one even measure success?  By numbers of successful phase trials as a proportion of candidates maybe?

Still, while this is a tongue-in-cheek thought exercise done mostly for entertainment purposes, my underlying concern is real.  If most of the biopharma would agree that the industry is facing difficulty in meeting internal and external stakeholder requirements, and furthermore agree that this state of affairs has been going on for several years (at least as long as I’ve been in industry), then isn’t it time to really try to find ways to fundamentally change the way we do drug development?  I’m not talking about tweaks or Kaizen or Six-Sigma (although I’m not saying they’re not useful).  I’ve tried to frame this idea as a way to fundamentally change the incentives and the environment of drug development to make the previously unthinkable, thinkable.  As anyone who’s read this blog might guess, I have a strong interest in open science, crowdsourcing, and other ways of trying to move beyond traditional ways of doing science.  So, maybe not a draft, but something?  I keep thinking about the quote from Bill Joy of Sun Microsystems, who said, “No matter who you are most of the smartest people work for someone else.”  In Biopharma just like elsewhere. So why not try to make the environment friendlier for collaboration with those other smart people?

Because like the guy on the hundred dollar bill once said, “We must all hang together, or assuredly we will all hang separately.”

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