Ali Pashazadeh, Treehill Partners CEO, recently joined Pharmaphorum’s podcast to discuss the unprecedented challenges facing biotech — and why this “perfect storm” may ultimately strengthen the sector.
The Current Crisis: A Multi-Layered Challenge
Dr Pashazadeh outlined the convergent pressures creating what he calls “the worst perfect storm in biotech history”:
Market Disruption Legacy: Since 2020, the pandemic created a generation of clinical studies that could not be completed due to recruitment and follow-up challenges. Meanwhile, biotech companies trade below cash value, need follow-on offerings or are awaiting IPO opportunities — creating a several-years backlog in opportunities that decay whilst moving sideways.
Operational Inefficiencies: Analysis of 1,200 clinical studies by Treehill revealed alarming statistics: only 5% had a commercially relevant target product profile when entering Phase II or III, with examples of 40+% data capture issues that affected whether studies read as positive or negative.
New Pressures: Layer-on tariffs, fill-and-finish operations, drug pricing pressures, and cuts to biomedical funding in the US and Europe—and the challenge becomes clear.
The Hidden Opportunity
Rather than capitulating, Dr Pashazadeh argues this crisis forces necessary evolution. Our central thesis: “If we stop blaming the molecule for failures and take ownership of clinical studies reading out positive and negative, we can design better studies.”
Based on 25 years of experience, Dr Pashazadeh estimates 80% of clinical failures could have been avoided — they were predictable problems of study design, not molecular inadequacy.
The Clinical Developer Optimization (CDO) Model
Treehill has pioneered what Dr Pashazadeh calls the CDO model — a fundamental shift from vertical drug development (optimizing each phase independently and each function working ‘in isolation’) to horizontal thinking (connecting preclinical work to commercial blockbuster potential taking a holistic interdisciplinary approach).
The Problem: Dr Pashazadeh cites a common example in today’s market: “During development, a patient is being exposed to an experimental drug in a combination regimen that does not have a commercialization partner. If they fail in Phase III, they don’t get to patients. If they succeed in Phase III, they also don’t get to patients. Why did we not think about that before when drafting the development strategy?”
The Role of the Outsourcing Industry and Potential for Improvement:
- Order-taking (80-85%): Running exactly what the client strategically requests, acting as honed execution engine.
- Protocol replication (10%): Applying previous protocols to new molecules instead of ‘thinking afresh’.
- Strategic partnership (<5%): Engaging deeply to designing studies with better commercial relevance and success probability.
Treehill works in that final 5% — challenging client companies on fundamental commercial questions before studies begin, capital being sought, and monetization transactions being contemplated.
A New Paradigm: Privilege, Not Right
Drawing on ongoing medical practice, Dr Pashazadeh emphasized an ethical framework often missing in drug development:
“Having access to patients who’ve got various conditions is a privilege, not a right, and only 11% of clinical data from investigator initiated studies is ever published. The same patient may be exposed to multiple therapeutics because the previous group didn’t publish the data.”
He noted that when breaking terminal diagnoses to patients, “the word that comes after that, which one would never predict, is ‘Thank you.’ They say thank you because you’ve empowered them to understand the truth.” Yet in drug development, programs resist negative data: “There’s almost never a thank you. There’s always a ‘well, actually, we just don’t know yet.'”
The Future: Leaner, Smarter, More Accountable
Dr Pashazadeh’s vision for post-storm biotech:
- Reduced operational expenses: Companies can operate at 20-25% less in 2015 OPEX levels
- Improved success rates: Phase success percentages should increase 10-15 percentage points through better study design
- Higher ROI requirements: Returns must be strongly higher than historical norms to attract capital back to the sector
- Unified stakeholder approach: Investors, management, and boards must align around discovering truth quickly—even negative truth
- Global innovation wave: Exciting first-in-class and best-in-class technologies emerging from China, Korea, and the US
The Bottom Line
“From our perspective, it’s a very exciting time,” Dr Pashazadeh concluded. “Those CEOs are now beginning to realize that as the world has changed and probably isn’t going to change back, the approach to drug development needs to be fundamentally different.”
The perfect storm, in Dr Pashazadeh’s view, is forcing biotech to return to first principles: develop drugs for genuine unmet medical needs, be honest about molecules with no chance of success, and avoid markets already satisfied by existing therapies. Companies that embrace this accountability will emerge stronger.
Listen to the full podcast: Pharmaphorum Podcast