Jeffrey M. Marra09.13.06
Depending upon whose numbers you believe, the market for outsourcing drug discovery activities will be $7 to $8 billion by 2009. Before your budget becomes part of this statistic, there are a number of things you need to know. And if your budget is already part of this pie, you should be looking for ways to more effectively leverage your resources to gain more value.
Every segment of the drug discovery process can be outsourced, so your strategy should reflect your core competencies, resources and stage of drug development. The outsourcing manager needs to be acutely aware of the constantly shifting status of ongoing programs in order to make sure that the outsourcing priorities match the project priorities. The outsourcing manager should also stay current with available services provided by contract research organizations (CROs) as well as emerging services and technologies.
This article is not about the drug discovery process; we will consider a simplified process in order to demonstrate the potential for outsourcing. Similar considerations must be weighed regardless of the nature of the developing drug; for this article, we will focus on small molecular entities.
In our example, your company has a bright idea; some novel insight or expertise that provides your core value. Next, you prove the principle of that insight through a medical indication, an assay or some functional system. This results in a potential drug discovery, which leads to typical activities such as library screening and the determination of structure activity relationships. If successful, you wind up with a series from which you can select a lead candidate. In short, "Congratulations! You got a hit!"
Some companies are truly virtual and anything requiring laboratory space is outsourced. In a more common business model, the pharmacology is present to determine activity, and a small chemistry group makes the desired compounds in milligram quantities. Larger pharmaceutical companies add more chemistry as well as in vivo pharmacology, and of course Big Pharma companies have resources to conduct the entire discovery process. Regardless of the kind of company for which you work, the opportunities to outsource will present themselves. Whether outsourcing is your sole resource for a particular function or you outsource to fill internal resource gaps, you will need to approach outsourcing with caution and thorough consideration of many factors. To illustrate the challenges involved with outsourcing we will consider several aspects of outsourcing discovery research.
One common task often outsourced is the preparation of chemical libraries; in fact, many companies exist solely for the production of libraries. Purchasing libraries needs to be approached with caution. Most companies that provide the synthesis of libraries offer the option of a proprietary library. So what exactly is a proprietary library? For any x1,x2 . . . xn by y1,y2 . . . ym matrix, no two matrices will contain the same exact population. For example, if both company A and company B request a 10-by-10 matrix of amides, the series of reagents can be identical except that for one, p-chlorobenzoic acid is replaced with p-fluorobenzoic acid. The two matrices are not identical, therefore, they are both "proprietary."
Please note: This is NOT illegal, immoral, unethical or improper in any way. The advantages in purchasing a library include a relatively low price and an instant increase in the diversity of your screening library. The challenges are those of quality control and the fact that anyone else can design a similar library. One way to help insure that your library is unique is to supply the CRO with building blocks that are protected by some form of intellectual property (IP) in your portfolio.
Once a member of a library shows interesting activity, more substance is often needed. Most libraries are designed to make only 10-20 mg, and once a hit is noted, the compound is usually re-synthesized to confirm the hit, determine the binding constant, run the functional assay and for submission into any other selectivity and/or risk assessment assays in the screening tree. In addition, for a new program, a hit can turn into the new positive control in your screen. You can easily need from 150 mg to 1.5 g of this new compound. This is another potential for the utilization of a CRO. When choosing a CRO for scaleup of your leads, a number of important factors need to be considered. If your library came from a company that specializes in solid phase synthesis, it is unlikely that they will be the best choice for scaleup, but they might not turn down the business if you offer it to them. A CRO that has experience with scaleup and process research would make a better choice.
Once you've chosen the right CRO, you need to make sure that the agreement covers all IP around your molecule. The agreement needs to cover not only the secrecy of the molecules being made but also any novel or efficient syntheses of the molecule. The story is almost legendary of the CRO that developed a more efficient synthesis of a Big Pharma drug and received millions of dollars during the years of patent protection with which to fund its growth and international expansion. Working with a CRO that has a reputation for doing good synthetic scale up -- with a proper agreement -- can pay long-term benefits. Even if the contract calls for 1 or 2 grams of a compound, you can't -- and shouldn't -- stop the CRO's chemists from coming up with an easier way to make the compound. Any headstart you can get on the process research for a developmental drug can be invaluable later on.
When choosing the CRO, you need to consider its capabilities and how they fit with your needs. You need to know what types of chemistry they have done, how many people it has, how large a scale it's worked on, what equipment it has and the status of its inspections and licenses. It's important to know where it is located, if it has more than one facility, and if it is domestic or off-shore. The reputation of the CRO is also important. A reputable CRO will often provide references, and you can sometimes find information on line.
When it comes to using CROs, one of the most important considerations is time. From the day you decide to work with a CRO for the first time to the day when you can sign off on a purchase order, a month or more can pass. If time is critical and you don't have agreements and relationships with appropriate CROs, serious delays can result. I like to use a golfing analogy, but I don't believe you need to be a golfer to get it.
You Can't Play the Entire Course with One Club
You Can't Hit a Club with Confidence Unless You Practice
The Same Course Will Play Differently Each Time
Sign Your Scorecard
Once you've determined that a particular CRO is a good match, you need to determine the type of agreement to establish. While many CROs can be flexible, the two usual and distinct relations are the "full time employee" (FTE) and the "one-up," or fee-for-service. Both have advantages and disadvantages that will become more or less important depending upon your needs and resources. The FTE is usually a longer term, somewhat open-ended agreement. You essentially hire a member or members of the CRO to work for you for a fixed period of time. This provides maximum flexibility in the course of work that is done and generally promotes a close working relationship with both the CRO and the person or persons actually doing the work. This is an ideal relationship if you are working in a general area, such as SAR; you have a series that shows activity and represents IP and you want to prepare compounds based on ever-evolving data. The risks with the FTE arrangement are that the employee may not be fully utilized if you don't have frequent and detailed communication. In addition, you end up paying for the vacation, training time and so on for the employee, and if you've made a judgment error, you're pretty much going to have to ride out the length of the contract.
Fee-for-service arrangements are usually shorter, more clearly defined projects. This scenario works well for the synthesis of a compound reported in the literature or a compound to be used as a scaffold for internal focused libraries. Sometimes one-ups can lead to a mercenary-like relationship that does not leverage the full potential of the CRO. There can also be a time delay as you wait for your project to fit into the CRO's schedule.
Another key area to address when preparing the agreement with the CRO is protection of your company's IP. You absolutely must have confidentiality agreements in place before you share any sensitive information with a CRO. If you don't have a lawyer involved in the contract negotiations, at least consult with one before you sign. Depending upon the location of the CRO, you may need to consider whether or not the CRO is legally bound by US/WTO patent laws. You also need to specify that both the product and the process are your exclusive IP. All reputable CROs are likely to agree with that, unless you are using the CRO's previously attained IP in your process. For example, if a CRO uses its proprietary chiral hydrogenation technology to prepare your target, that part of the process is not your IP, even though the compounds are. And prior to the use of the proprietary process, you should have some idea of the cost to you if that compound ends up being your next API.
Now that you have the agreement in place and the CRO is productively churning out compounds, the next thing to start considering is process development. You might be wondering what a discussion about process development is doing in an article about discovery research. The reason is simple; manufacturability is an important data point in determination of your final developmental candidate. A rough cost estimate and feasibility of scaleup can help minimize the risks of candidate failure due to supply chain issues. For example, in the development of a potential drug with a steroid backbone, the six-step synthesis wasn't the key in determining the manufacturability. The cost of the starting material was initially more than that of most finished APIs. If the synthetic scheme used to make the first 10-100 grams includes a cryogenic step, a chromatography, or a reagent not noted for its use on a large scale, you are likely to need process research before you enter the next stage of discovery.
Process chemistry is also a crucial part of your IP. Having a great drug for which someone else has the best synthesis compromises the value of your portfolio. Many of these issues can be dealt with in a timely fashion in your favor if you choose a CRO with process experience, develop a good relationship with the contractor, and maintain comprehensive documentation. Not every company that outsources discovery chemistry fits the biotech model of drug discovery, but for those that do, the development of a process for your lead candidates is even more critical. With a lead molecule and some interesting biological activity, you can certainly stir up interest with potential investors. If you have a potential process that has been demonstrated by putting a couple of kilograms of your compound in a bottle, the value of your discovery program will significantly increase.
In most drug discovery timelines, material supply lies along the critical path. As a candidate moves along the screening tree, it usually encounters branches, and more material will be needed. The results that drive this iterative process rely upon samples being available for testing; unless you have a one-step, one-hour reaction to prepare your compound and your test takes weeks of development and study, the synthesis of compounds will be the most time-sensitive part in the process. Typically, a series of compounds -- say 10-20 -- has been selected based upon initial screening results. At this point 250 mg of each compound is needed for the next stage of screening. Critical information -- such as off-target risk assessment, initial toxicological and pharmacokinetic data, and stability data -- is being obtained at this time. The decision to move forward with one of the candidates or to go back and search for more leads cannot be made without the successful synthesis of these compounds. That seems obvious, of course, but let us examine the timeframe in more detail when the synthesis of these compounds is part of your outsourcing strategy.
First, the agreement to prepare the compounds and any pertinent technical transfer documents need to be prepared. If you happen to have FTEs somewhere, this can take as little as a week. If you have a CDA and laboratory service agreement with a CRO, then this could be two weeks. If you are starting from the beginning, then you have a month or more to wait. With the chemistry underway, as compounds are prepared, shipping arrangements need to be prepared. Does your CRO ship Monday through Friday? Many won't ship on Friday, and some only have one day a week for shipping samples. If the CRO is not domestic, then the issue of customs clearance can add an additional week or two to the arrival date of the compounds. Furthermore, if the compounds are being prepared by a CRO, there is a good chance that some of the testing is being done by a CRO. And remember, the CRO is not always available exactly when you need it, and it often does not share your sense of urgency; these factors can easily add a week to a month to the time it takes to get your data.
Many of these challenges are part of drug discovery, regardless of whether you outsource or not; if outsourcing is a significant part of your drug discovery strategy, these time issues can become a millstone around the neck of your program. Only through careful planning, overlapping supplier strategy, properly drafted agreements, and good working relationships with capable CROs will you be able to successfully navigate the treacherous waters of drug discovery outsourcing.
Photo courtesy of Tandem Laboratories |
This article is not about the drug discovery process; we will consider a simplified process in order to demonstrate the potential for outsourcing. Similar considerations must be weighed regardless of the nature of the developing drug; for this article, we will focus on small molecular entities.
In our example, your company has a bright idea; some novel insight or expertise that provides your core value. Next, you prove the principle of that insight through a medical indication, an assay or some functional system. This results in a potential drug discovery, which leads to typical activities such as library screening and the determination of structure activity relationships. If successful, you wind up with a series from which you can select a lead candidate. In short, "Congratulations! You got a hit!"
Some companies are truly virtual and anything requiring laboratory space is outsourced. In a more common business model, the pharmacology is present to determine activity, and a small chemistry group makes the desired compounds in milligram quantities. Larger pharmaceutical companies add more chemistry as well as in vivo pharmacology, and of course Big Pharma companies have resources to conduct the entire discovery process. Regardless of the kind of company for which you work, the opportunities to outsource will present themselves. Whether outsourcing is your sole resource for a particular function or you outsource to fill internal resource gaps, you will need to approach outsourcing with caution and thorough consideration of many factors. To illustrate the challenges involved with outsourcing we will consider several aspects of outsourcing discovery research.
One common task often outsourced is the preparation of chemical libraries; in fact, many companies exist solely for the production of libraries. Purchasing libraries needs to be approached with caution. Most companies that provide the synthesis of libraries offer the option of a proprietary library. So what exactly is a proprietary library? For any x1,x2 . . . xn by y1,y2 . . . ym matrix, no two matrices will contain the same exact population. For example, if both company A and company B request a 10-by-10 matrix of amides, the series of reagents can be identical except that for one, p-chlorobenzoic acid is replaced with p-fluorobenzoic acid. The two matrices are not identical, therefore, they are both "proprietary."
Please note: This is NOT illegal, immoral, unethical or improper in any way. The advantages in purchasing a library include a relatively low price and an instant increase in the diversity of your screening library. The challenges are those of quality control and the fact that anyone else can design a similar library. One way to help insure that your library is unique is to supply the CRO with building blocks that are protected by some form of intellectual property (IP) in your portfolio.
Once a member of a library shows interesting activity, more substance is often needed. Most libraries are designed to make only 10-20 mg, and once a hit is noted, the compound is usually re-synthesized to confirm the hit, determine the binding constant, run the functional assay and for submission into any other selectivity and/or risk assessment assays in the screening tree. In addition, for a new program, a hit can turn into the new positive control in your screen. You can easily need from 150 mg to 1.5 g of this new compound. This is another potential for the utilization of a CRO. When choosing a CRO for scaleup of your leads, a number of important factors need to be considered. If your library came from a company that specializes in solid phase synthesis, it is unlikely that they will be the best choice for scaleup, but they might not turn down the business if you offer it to them. A CRO that has experience with scaleup and process research would make a better choice.
Once you've chosen the right CRO, you need to make sure that the agreement covers all IP around your molecule. The agreement needs to cover not only the secrecy of the molecules being made but also any novel or efficient syntheses of the molecule. The story is almost legendary of the CRO that developed a more efficient synthesis of a Big Pharma drug and received millions of dollars during the years of patent protection with which to fund its growth and international expansion. Working with a CRO that has a reputation for doing good synthetic scale up -- with a proper agreement -- can pay long-term benefits. Even if the contract calls for 1 or 2 grams of a compound, you can't -- and shouldn't -- stop the CRO's chemists from coming up with an easier way to make the compound. Any headstart you can get on the process research for a developmental drug can be invaluable later on.
When choosing the CRO, you need to consider its capabilities and how they fit with your needs. You need to know what types of chemistry they have done, how many people it has, how large a scale it's worked on, what equipment it has and the status of its inspections and licenses. It's important to know where it is located, if it has more than one facility, and if it is domestic or off-shore. The reputation of the CRO is also important. A reputable CRO will often provide references, and you can sometimes find information on line.
When it comes to using CROs, one of the most important considerations is time. From the day you decide to work with a CRO for the first time to the day when you can sign off on a purchase order, a month or more can pass. If time is critical and you don't have agreements and relationships with appropriate CROs, serious delays can result. I like to use a golfing analogy, but I don't believe you need to be a golfer to get it.
Golfing Analogy
You Can't Play the Entire Course with One Club
- Develop a list of CROs with overlapping capabilities
You Can't Hit a Club with Confidence Unless You Practice
- Use fee for service to test a CRO before committing FTEs
- Send the same project to two CROs
The Same Course Will Play Differently Each Time
- CROs change over time
- 500 mg of a compound and 1 kg of a compound are not the same
Sign Your Scorecard
- Get weekly or biweekly updates
- Written reports must be part of the agreement
- Obtain supporting documentation (NMR, LC/MS, elemental analyses, etc.)
Once you've determined that a particular CRO is a good match, you need to determine the type of agreement to establish. While many CROs can be flexible, the two usual and distinct relations are the "full time employee" (FTE) and the "one-up," or fee-for-service. Both have advantages and disadvantages that will become more or less important depending upon your needs and resources. The FTE is usually a longer term, somewhat open-ended agreement. You essentially hire a member or members of the CRO to work for you for a fixed period of time. This provides maximum flexibility in the course of work that is done and generally promotes a close working relationship with both the CRO and the person or persons actually doing the work. This is an ideal relationship if you are working in a general area, such as SAR; you have a series that shows activity and represents IP and you want to prepare compounds based on ever-evolving data. The risks with the FTE arrangement are that the employee may not be fully utilized if you don't have frequent and detailed communication. In addition, you end up paying for the vacation, training time and so on for the employee, and if you've made a judgment error, you're pretty much going to have to ride out the length of the contract.
Fee-for-service arrangements are usually shorter, more clearly defined projects. This scenario works well for the synthesis of a compound reported in the literature or a compound to be used as a scaffold for internal focused libraries. Sometimes one-ups can lead to a mercenary-like relationship that does not leverage the full potential of the CRO. There can also be a time delay as you wait for your project to fit into the CRO's schedule.
Another key area to address when preparing the agreement with the CRO is protection of your company's IP. You absolutely must have confidentiality agreements in place before you share any sensitive information with a CRO. If you don't have a lawyer involved in the contract negotiations, at least consult with one before you sign. Depending upon the location of the CRO, you may need to consider whether or not the CRO is legally bound by US/WTO patent laws. You also need to specify that both the product and the process are your exclusive IP. All reputable CROs are likely to agree with that, unless you are using the CRO's previously attained IP in your process. For example, if a CRO uses its proprietary chiral hydrogenation technology to prepare your target, that part of the process is not your IP, even though the compounds are. And prior to the use of the proprietary process, you should have some idea of the cost to you if that compound ends up being your next API.
Now that you have the agreement in place and the CRO is productively churning out compounds, the next thing to start considering is process development. You might be wondering what a discussion about process development is doing in an article about discovery research. The reason is simple; manufacturability is an important data point in determination of your final developmental candidate. A rough cost estimate and feasibility of scaleup can help minimize the risks of candidate failure due to supply chain issues. For example, in the development of a potential drug with a steroid backbone, the six-step synthesis wasn't the key in determining the manufacturability. The cost of the starting material was initially more than that of most finished APIs. If the synthetic scheme used to make the first 10-100 grams includes a cryogenic step, a chromatography, or a reagent not noted for its use on a large scale, you are likely to need process research before you enter the next stage of discovery.
Process chemistry is also a crucial part of your IP. Having a great drug for which someone else has the best synthesis compromises the value of your portfolio. Many of these issues can be dealt with in a timely fashion in your favor if you choose a CRO with process experience, develop a good relationship with the contractor, and maintain comprehensive documentation. Not every company that outsources discovery chemistry fits the biotech model of drug discovery, but for those that do, the development of a process for your lead candidates is even more critical. With a lead molecule and some interesting biological activity, you can certainly stir up interest with potential investors. If you have a potential process that has been demonstrated by putting a couple of kilograms of your compound in a bottle, the value of your discovery program will significantly increase.
In most drug discovery timelines, material supply lies along the critical path. As a candidate moves along the screening tree, it usually encounters branches, and more material will be needed. The results that drive this iterative process rely upon samples being available for testing; unless you have a one-step, one-hour reaction to prepare your compound and your test takes weeks of development and study, the synthesis of compounds will be the most time-sensitive part in the process. Typically, a series of compounds -- say 10-20 -- has been selected based upon initial screening results. At this point 250 mg of each compound is needed for the next stage of screening. Critical information -- such as off-target risk assessment, initial toxicological and pharmacokinetic data, and stability data -- is being obtained at this time. The decision to move forward with one of the candidates or to go back and search for more leads cannot be made without the successful synthesis of these compounds. That seems obvious, of course, but let us examine the timeframe in more detail when the synthesis of these compounds is part of your outsourcing strategy.
First, the agreement to prepare the compounds and any pertinent technical transfer documents need to be prepared. If you happen to have FTEs somewhere, this can take as little as a week. If you have a CDA and laboratory service agreement with a CRO, then this could be two weeks. If you are starting from the beginning, then you have a month or more to wait. With the chemistry underway, as compounds are prepared, shipping arrangements need to be prepared. Does your CRO ship Monday through Friday? Many won't ship on Friday, and some only have one day a week for shipping samples. If the CRO is not domestic, then the issue of customs clearance can add an additional week or two to the arrival date of the compounds. Furthermore, if the compounds are being prepared by a CRO, there is a good chance that some of the testing is being done by a CRO. And remember, the CRO is not always available exactly when you need it, and it often does not share your sense of urgency; these factors can easily add a week to a month to the time it takes to get your data.
Many of these challenges are part of drug discovery, regardless of whether you outsource or not; if outsourcing is a significant part of your drug discovery strategy, these time issues can become a millstone around the neck of your program. Only through careful planning, overlapping supplier strategy, properly drafted agreements, and good working relationships with capable CROs will you be able to successfully navigate the treacherous waters of drug discovery outsourcing.