Factors related to drug pipeline success for oncology companies using stock performance as a surrogate.

Abstract

e19405 Background: Developing oncology drugs demands substantial investment despite high uncertainty of success and ultimate market value. High drug costs have become subject to recent controversy. We sought to analyze factors influencing success in bringing new drugs to market using stock performance as a surrogate. Methods: Stock screeners and lists of initial public offerings (IPOs) captured small and mid-cap drug companies with share price ≥ $1.00 on major US indices. Share price was obtained from IPO to 03/09/2019. Company websites provided: headquarters (HQ) location, number/nature of drug programs (oncology vs. not, immunotherapy, gene editing, RNA-targeted, CAR-T). Funding to physicians and teaching hospitals (CMS funding) was acquired via CMS.gov Open Payments, and categorized into contributions < or ≥ $100,000. Stock performance was considered good (+ ≥25%), average (+/- 25%), or poor (- ≥25%). Univariate and multivariate associations were assessed for all companies; a subset analysis included only oncology-focused companies. Results: 420 companies were included. 101 companies (24%) had good, 76 average (18%), and 243 poor (58%) performance. Associated with performance in univariate analysis: IPO price ( P < 0.001), time from IPO ( P < 0.001), number of drug programs ( P = 0.019), and CMS funding ( P = 0.00013), with a strong trend for diverse pipelines that included both oncology and non-oncology programs ( P = 0.069). On multivariable analysis, IPO price was inversely associated ( P < 0.0001), while CMS funding ( P < 0.0001) and greater number of drug programs ( P = 0.0025) were positively associated with performance. Within the sub-analysis of oncology companies, 178 were included. 44 (24.7%) had good, 30 (16.9%) average, and 104 (58.4%) poor performance. The following were associated with performance on univariate analysis: IPO price ( P < 0.001), time from IPO ( P < 0.001), HQ location ( P = 0.009), diverse pipelines (P = 0.016), and CMS funding ( P < 0.001). On multivariable analysis, IPO price was inversely associated ( P < 0.0001), while California HQ location ( P < 0.01), diverse pipelines ( P = 0.028), and CMS funding ( P = 0.0002) were positively associated with performance. Conclusions: The majority of included companies had lackluster stock performance suggestive of low potential for drug success and high probability of financial disaster during development. Diverse pipelines and academic collaboration seem to be strongly related to success. This is the first study to demonstrate association between CMS funding and pharmaceutical stock performance.