Creating effective medicinal chemistry collaborations in drug discovery

Abstract

Future Medicinal ChemistryVol. 1, No. 1 EditorialFree AccessCreating effective medicinal chemistry collaborations in drug discoveryGiuseppe Arnaldo Maria Giardina and Luca Francesco RavegliaGiuseppe Arnaldo Maria Giardina† Author for correspondenceNiKem Research Srl, Via Zambeletti, 25 – 20021 Baranzate (MI) Italy. Search for more papers by this authorEmail the corresponding author at giuseppe.giardina@nikemresearch.com and Luca Francesco RavegliaNiKem Research Srl, Via Zambeletti, 25 – 20021 Baranzate (MI) ItalySearch for more papers by this authorPublished Online:1 Apr 2009https://doi.org/10.4155/fmc.09.1AboutSectionsPDF/EPUB ToolsAdd to favoritesDownload CitationsTrack CitationsPermissionsReprints ShareShare onFacebookTwitterLinkedInRedditEmail In the 1960s to 1990s, the outsourcing strategy was utilized by pharmaceutical companies to complete the profiling of potential drugs in late preclinical or clinical phases. However, the third millennium is witnessing the worldwide birth and consolidation of several novel, private contract research organizations that promote themselves as drug-discovery partners. With the current emphasis on saving costs, while remaining competitive, big pharmaceutical and biotechnology companies are being forced by their boards to scout new and, preferably, more competitive discovery models, as well as to outsource their most intimate drug discovery activity: medicinal chemistry. Their current issue is: “Who is as smart, productive, creative, secure and cheap as me?”Setting the sceneSince 1995, there has been an observable trend towards rapid growth in the involvement of Contract Research Organizations (CROs) in the pharmaceutical and biotechnology sector worldwide that reached a real explosion in 2002–2004, when companies in the far East – mainly from India, China and Russia – added themselves to the pool of consolidated and brand new service providers in Europe and the USA.Most of the consolidated Western countries’ CROs active in the field of medicinal chemistry have three possible origins: ▪ They originated from spin-off processes from big pharma as a result of mergers and acquisitions;▪ They came out from compound library providers that decided to integrate novel activities downstream in the pipeline of potential services being offered to clients;▪ They resulted from university spin-offs, or start ups, fully managed by well-recognized academics with sets of existent consultancy agreements in good standing prior to the new company kick off.Clearly, collaborations with these three types of Western medicinal chemistry CROs have various pros and cons depending on the client’s needs and expectations. Therefore, there is no default rule stating that one of them is better than another. Medicinal chemistry providers resulting from a big pharma spin-off process maintain a big pharma mindset, but should work at a biotech speed, meaning their management teams are perfectly aware of what, how and when things need to be done. This clearly helps companies that need to outsource an integrated set of activities to a ‘one-stop-shop’ partner, from computational chemistry and design of molecules to their synthesis, biochemical screening, absorption, distribution, metabolism, excretion, and toxicity and pharmacokinetic profiling (the so-called ‘multiparametric lead optimization’). Other companies may have different needs and, therefore, desire to outsource just a few aspects of the process, such as, for example, targeted library synthesis and hit explosion/validation for the lead-generation phase. These types of needs are well accommodated by CROs with background experience in compound library syntheses. On the other hand, university spin-offs and start-ups are more often of value for niche activities associated with a specific issue to be solved (e.g., difficult multistep custom syntheses, enantiospecific syntheses and enantiomeric separations).Over the last 6 years, emerging service providers from the far East have aggressively entered the field of medicinal chemistry, claiming themselves to be ideal partners for big pharma and biotech companies in progressing their projects from discovery to candidate selection. On one hand, over the years, most of these companies have put together quite a good collection of equipment and technology and are located in attractive brand-new facilities. Yet, on the other hand, most of their researchers are completely ignoring the sense, meaning and issues of the entire drug-discovery process and are simply good manpower for chemical syntheses and purification processes. Very often, only the team leader has a PhD (usually returning from the UK or USA) and oversees six to eight chemists. The team leader plays a significant role and holds great responsibility within the team as he or she must address many kinds of issues (managerial, bureaucratic or scientific).While the above situation describes India and China quite accurately, a slightly different scenario should be envisaged for East European countries, such as Russia, Ukraine, Lithuania, Poland, Czech and Hungary, where the training and expertise of chemists are more robust, as witnessed by their publication in the scientific literature.All these companies in emerging countries are, however, missing a long-standing culture of drug discovery meaning that expectations from outsourcing companies would be more satisfied in the area of chemical synthesis than integrated medicinal chemistry.Fulfilling expectationsA good criterion to discriminate between a medicinal chemistry service provider and a simple synthetic chemistry provider is to look at the number of patents and patent applications filed in the name of various assignees (the clients) with service provider employees’ names as inventors. This is because in pharmaceutical patents that claim new chemical entities, it is only the patent’s inventive step – which derives from the inventiveness of the design – that is normally acknowledged and recognized by law.The trick for success for pharma and biotech companies that are outsourcing their medicinal and synthetic chemistry activities is to very clearly identify the objective they want to achieve and the deliverables that the CRO should provide. This is the reason why, in theory, these types of outsourcing activities should be managed and controlled exclusively by people from scientific areas, such as directors of chemistry, medicinal chemistry or outsourcing chemistry. Unfortunately, more often, decision makers from the purchasing department are strongly involved and drive the negotiation, focusing on economics or issues of productivity based on metrics rather than real quality. Quality is not only referred to as the chemical purity of a compound or the success rate of a library synthesis. The ‘quality’ of the medicinal chemistry collaboration also refers to the planning and execution of the synthesis and the biochemical characterization of those compounds that will have a greater chance of success downstream, based on a good potential for developability, which results in their entering the clinical phase of development to become successful drugs in the marketplace. Finally, in the broadest concept of ‘quality’, the fulfilment of any agreed timeline should also be taken into account.Pharma & biotech companies’ strategiesIn the last 3 years, we have seen a trend by big pharma companies to move their outsourcing scenarios from the EU and USA to Asia. This has also happened quite robustly in synthetic and medicinal chemistry. Most of the big pharma companies have built off-shore facilities in Hyderabad or Bangalore, Beijing or Shanghai or Hong-Kong, following the dual logic to decrease costs and acquire those marketplaces for the future successful sale of medicines. This is not something new, it is exactly the same strategy that was adopted in the 1970s and 1980s, when several European governments – such as France, Italy and Spain – made agreements with big pharmaceutical multinational corporate organizations to allow the sale of their medicine with a 10–15% premium price in exchange for the establishment of a fully operating research and development facility in the territory.There is clearly no way, even for exceptionally high-quality medicinal chemistry service providers, to fight against this logic as the price big pharma companies are gambling for their futures is frightfully high. However, limiting our judgment on the potential contribution that these outsourced activities will provide to the entire discovery process, we do not think this strategy is (or will be) repaying the investment. Very soon, there will be a rethinking of the entire business model, based on a real quality revival. In fact, while everybody is mentioning the magic word ‘quality’ and claiming that there is no compromise, saving money is still in the forefront of decision makers’ minds, as they are constantly encouraged by Chief Executive Officers and board members to decrease costs in discovery.In addition, a recent trend is visible in the industrial world, in which the delocalization of important industrial activities to the far East (China and India) now appears much less appealing than in the past. Big enterprises in various sectors (computers, high-tech electronic devices and administrative services) have already changed their route and redirected their activities to internal resources in their own country or in other geographically closed countries. This new trend could be attributed to several factors (varying from country to country), which include increases in labor costs (e.g., China has witnessed a three–fourfold increase in 5 years), significant problems associated with the political situation in the region (terrorist attacks in India or the scarcity of a truly democratic open environment in China) and the potential social/legal/economic implications resulting from activities conducted in a manner not fully compliant with required Western industrial rules, regulations or protocols.Following the strategy of cost reduction, the entire pharma system appears allied to try to shift to a business model for which part or most of the risk of failure in the drug-discovery process is taken on by a partner (usually a small company in the biotech sector) or even by a service provider. The standard deal in such a context is to decrease or cancel upfront (in the case of small biotech) or fee-for-service (in the case of service providers) payments in exchange for one or more milestone and royalty payments downstream. Service providers are clearly unable to sustain this agreement as their business sustainability should come from a quite robust cash flow that needs to be enough to pay for salaries and make the necessary investments to remain competitive. Most of them have no venture capitals amongst the shareholders because the return on investment in the medium term for service companies is not sufficiently satisfactory for venture capitals and a successful exit strategy is often hampered. As a matter of fact, a big pharma company, composed of more than 10,000 employees, that is transferring the industrial risk to a small biotech or a service provider (very often with no more than 50–100 employees) is clearly a nonsense. This model will only result in success in a very small number of cases, but will more often contribute to the failure of the small company itself.Conversely, as small biotechnology companies might have only one shot at their disposal and quality is very much needed for survival, they often decide to outsource medicinal chemistry to the EU or USA, in order to look for a flexible partner able to drive most of the drug-discovery process. In some European countries, such as Germany, France and Spain, there is a plethora of biology-driven spin-offs and start-ups, which have no medicinal chemistry on site, and so rely almost entirely on outsourcing. In the last decade, most of these biotech companies received large amounts of money from local governments (directly or indirectly) through insurance companies leveraging on detaxation. Those companies that have intelligently addressed the issue of ‘to whom to outsource what’ are still alive, as they made returns on the money spent in outsourcing and, through their science and technology progresses, were able to convince their boards to reinvest through additional fund raising or to go public via an initial public offering.The last case to be considered is that of medium-sized pharma companies, which in some European countries are often family owned. These are unable to capitalize on the economy of scale offered by large proprietary R&D facilities in the far East, as their steady-state outsourcing needs in medicinal chemistry are met by 10–20 full-time equivalents. In addition, they are not usually attracted by the future marketplace opportunities offered by the far East. Very often, the commercialization strategy for their medicines (or the medicines they were able to in-license) is to retain marketing and commercialization rights in the EU, while leaving the rights for commercialization in the rest of the world to big multinational or local companies.In conclusion, medium-sized pharma and biotech companies are an excellent source of potential clients for exceptionally high-quality, flexible and price-competitive providers based in the EU and the USA.Suggestions for a win–win collaborationThere are many suggestions for what can really make the difference in a medicinal chemistry collaboration, the most important of which are as follows: ▪ Build on relationships and trust between parties;▪ Appoint communicative and experienced team leaders on both sides;▪ Balance formal and friendly relationships;▪ Be flexible and willing to accommodate changes in objectives on the basis of new findings;▪ Have immediate, open and frank discussions about any outstanding issues (or items that clients perceive to be issues);▪ Accept suggestions even when not requested;▪ Respect and capitalize on opinions that come from experience (grey-haired medicinal chemists!);▪ Actively protect all confidential information;▪ Avoid any conflicts of interest that could jeopardize the value delivered to the client;▪ Think in the long-term perspective rather than tomorrow’s interests;▪ Generate as much client interest as possible.All of the above items relate to three key concepts: flexibility, communicability and trustworthiness. Our advice to all players and decision makers in this field is to embrace these concepts in order to obtain successful medicinal chemistry collaborations.Once established, this can be a truly win–win collaboration, in which perceptions take the place of reality. For instance, from the outsourcing company’s viewpoint, the perception is that of having an additional laboratory next door. Conversely, for the supplier, it is all about working hard on a proprietary research project, while in reality, the laboratory is most likely located in another country and the intellectual property given to the client is in exchange for a certain fee.The ‘hybrid’ modelWithin the last 4 years, some particularly smart service providers in medicinal chemistry have implemented an interesting business model that makes the best use of the far East challenge, thus creating an opportunity for growth.The so-called hybrid model involves subcontracting part of the outsourced project to a third party in an emerging country (usually from India or China) in full openness with the client in order to decrease the average price of the collaboration. For the provider, the most successful way to manage this model is to keep all sensitive and confidential information related to the target, IP position, computational design, biological data and, most importantly, structure–activity relationships, in house while subcontracting routine synthetic chemistry operations. The latter might range from building blocks and intermediate synthesis to the synthesis and characterization of final compounds. For the client, the advantage of this model, when compared with direct outsourcing to the far East, is that the provider is 100% responsible for the entire work, including work carried out in India or China. The provider will be the sole point of contact for the client, who should not be concerned with any managerial or technical issue arising from the third party collaboration. This ought to save a lot of time that is normally spent in monitoring and supervising activities. In terms of prices, the implementation of the hybrid business model is able to offer a competitive price reduction of approximately 30% for chemistry-related activities.Importantly, the chosen provider should have an excellent relationship with the third-party service company and know the personnel very well, particularly, the team leaders who, as already anticipated, are the real ‘scientists’ running the chemistry.The way this model is conceived offers an excellent balance between quality, defense of confidentiality and price, and should be viewed as a successful compromise and an intelligent use of the resources on a global level.Financial & competing interests disclosureGiuseppe Giardina is the Chief Executive Officer of NiKem Research srl. The opinions expressed in this editorial are entirely personal and do not reflect those of the company. The authors have no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.No writing assistance was utilized in the production of this manuscript.FiguresReferencesRelatedDetailsCited ByAccessing external innovation in drug discovery and development24 April 2015 | Expert Opinion on Drug Discovery, Vol. 10, No. 6Virtual pharmaceutical companies: collaborating flexibly in pharmaceutical developmentDrug Discovery Today, Vol. 19, No. 3 Vol. 1, No. 1 Follow us on social media for the latest updates Metrics History Published online 1 April 2009 Published in print April 2009 Information© Future Science LtdFinancial & competing interests disclosureGiuseppe Giardina is the Chief Executive Officer of NiKem Research srl. The opinions expressed in this editorial are entirely personal and do not reflect those of the company. The authors have no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.No writing assistance was utilized in the production of this manuscript.PDF download