BioSpace Article – Published: Nov 22, 2023 By Nadia Bey
From Ali Pashazadeh’s perspective, many trials fail because of how they are designed. And as the CEO of financial advisory firm Treehill Partners, he has a plan to solve that. Treehill announced in October that it would provide a tailored service to biopharma companies to help them optimize their development and commercialization strategies.
The decision to offer the service came after a 24-month trial run where Treehill worked with 850 companies to review the outcomes of about 1,200 clinical studies that were planned with and without the firm’s involvement. Treehill found that 80% of companies that used the service could reduce their capital input by half.
BioSpace spoke with Pashazadeh about what he and his colleagues learned, and about how to improve the success rate of drug candidates. Responses are lightly edited for clarity.
BSp: What drove Treehill to consider offering this service in the first place?
AP: What we’ve noticed over the past 20 years of being a transaction advisory is that a lot of the companies that we were meeting . . . were companies that have already conducted a Phase I, Phase II or Phase III study, and they would voice an opinion that they probably . . . could have actually done it differently.
A lot of the decisions that are made are made three to four years before the study reads out. Looking at the 1,200 data points, we found that probably about 80% of the time, those decisions could be better worked through if the contract research organization or the adviser spends a little bit more time and a little bit more energy in bulletproofing the decisions that are going to be made.
So, if we think of it from a chain perspective, like links in a chain, each of the links in the chain is optimized for the timeframe that is relevant for the company. However, if you spend a little bit more time and a little bit more intensity, you realize that actually each of the links has an exponential effect on the subsequent links. And working with those companies, you can actually improve the decision-making process when you work with a [contract research organization, or] CRO and with an advisory firm who pressure tests the decision-making at that point.
BSp: The press release mentions that a lot of clinical trials fall short of investor or regulator expectations. Can you give examples of what those trials might miss?
AP: When a clinical study has been designed—if we think through the regular process—there is a scientific hypothesis, then there’s a medical application, and then there is a clinical need in that context. [Key opinion leaders] and clinical trial people are brought into the same room and they discuss what the clinical trial should look like. The optimization is, does the [European Medicines Agency] or does the FDA approve this drug?
If you then add the additional layer of, this drug isn’t going to be approved for six to eight years, what does the target product profile need to look like in six to eight years for this to be commercially effective and for this to be commercially viable? The hurdle that’s used currently in 90% of cases is, ‘can I get this approved?’ . . . ‘Can I get this to patients?’ isn’t the question that is typically layered on top.
In a capital-constrained environment, I think if we stop blaming the molecule for not succeeding . . . if we look at it the other way around and say, ‘What are we doing to fail these molecules? What could we do that’s better?’ And we need to have the regulatory pathway, absolutely. We need to have the clinical relevance pathway at the time of approval. And we then also have to have, if we run this study or go down this pathway, is it fundable?
BSp: What are some of the challenges that drugmakers might face in the current financial and licensing environment?
AP: I think we’re in the middle of a perfect storm. . . . We’re seeing some signs of improvement [in the equity capital markets], but overall they’ve been closed for a while. We now have a backlog of two to three years of companies that would have raised following capital or would have gone public. So if the markets open tomorrow, there’s probably about two to three years’ worth of backlog for American or European companies to go public or to raise significant parts of capital. That’s one, the availability of capital.
Two, the number of [investor relations] firms out there, the number of banks out there, the number of non-deal roadshows and deal roadshows [meetings with investors] you could run. In addition to that, . . . each of the indications that we look at, we have moved on from them being monotherapy to typically being combination therapies. We’ve seen indications sliced down into smaller and smaller patient subpopulations. We’re seeing the reimbursement environment becoming increasingly challenging.
I think that the VC model which was, ‘let me take ten programs, two will fail, six will do okay, two will have resounding success’—that resounding success, in our mind, has been muted. So, from a biotech perspective, companies are running fewer studies and those studies need to be impactful. . . . We don’t know any other industry where someone could make, say, ten real estate investments, two of those buildings will not get completed, six will do okay, and two of them I can sell at a massive profit. We don’t see that in any other sector. And I don’t think that once the market goes back to being normal, we should go back to that level of acceptance of either companies not making it or the 25% success rate at Phase II. A significant portion of that [high failure rate] is the way clinical trials are developed and the rigor that those clinical studies have around them.
BSp: For an organization that wants to partake in this service, how would they get started?
AP: Regardless of whether a compound is in preclinical or in Phase III, or even marketed, we always start off with the molecule. What does the molecule do? What is the hypothesis? How’s it been developed? What data do we have to substantiate the claims we’re making? Because a lot of times what you’ll find is, by the time that compound is in Phase III, there is su