How pharmaceutical industry financial modelers think about rare diseases • Hacker News Board

Re: How pharmaceutical industry financial modelers think about rare diseases

#101

Post by perfmode » Tue, Apr 30, 2019, 7:14 PM UTC

comment1 wrote: post #90

dcx wrote: post #84

Earlier quoted context omitted.

If you google for studies, at this point you'll see an abundance of research on this with positive results, which apparently was just getting started when they dug into it and perhaps not well known to the average doctor. My memory plus a quick look into one [1] suggests it's because brain tumor cells largely feed on glucose, whereas normal brain cells can also metabolise ketone bodies for energy. So you're starving…

[1] was a mouse study. Do you have any examples of human studies? I have this picture in my mind of someone showing up to a doctors office with a thumb drive of 30 PDFs of nonclinical studies they found through a Google search and demanding treatment x, diet y, and so on.

Why throwaway?

Re: How pharmaceutical industry financial modelers think about rare diseases

#102

Post by bluGill » Tue, Apr 30, 2019, 7:18 PM UTC

btown wrote: post #99

golergka wrote: post #24

Earlier quoted context omitted.

The more I learn about finance, and the better I grok money, the more I start to think of money as a substance that represents time-travel, in a sense. Current amount of money you have on your account is always tied up to your past decisions or to a space of your possible decisions about it, and so well-quantified, that the worth of basically anything is always tied up to a dynamic process which is always, in the end…

In certain ways the entire concept of retirement saving is an investment in the ability to time travel later in life!

Also a bet that you will live to later. I've known a few people who died young: on hindsight they should have lived life better and not saved so much (I have no idea how much they saved, but even 1 penny in their pocket...)

Re: How pharmaceutical industry financial modelers think about rare diseases

#103

Post by aaavl2821 » Tue, Apr 30, 2019, 7:18 PM UTC

gumby wrote: post #38

Having been through the early phases of this (both as bench scientist and management, up through Phase II) I can say that this author's analysis is right on. There is a macro wrinkle he doesn't mention and that makes things worse: as we increasingly succeed on stopping the big killers (e.g. lung cancer, CIs, various accidents that constituted most of the causes of death into the 1990s) the histogram of death starts t…

That's an interesting point, but I wonder how big of a problem it is? The way drug R&D dollars are currently allocated, it actually seems like we are steepening the histogram of death

These days it is actually easier and more financially viable to develop drugs for rare diseases than highly prevalent diseases. 58% of new FDA approved drugs in 2018 were for orphan disease [0]. This is consistent with other measures like % of pharma M&A, % of venture deals across indications, etc. This suggests that it's more profitable to develop drugs for rare disease -- otherwise we'd see more funding for more prevalent disease

Since we focus more on rare disease, we won't be making as much headway on "big killers". And since developing drugs for rare disease is more profitable, it seems the drug development model may actually work better in a world with more rare diseases.

Looking at some CDC numbers [1], in 1980 85% of total deaths were caused by a top 10 cause of death. In 2015, 74% of all deaths were caused by a top 10 cause of death. Cancer and heart disease are still up at the top, and cancer deaths have increased 43% since 1980 (with US population growth of 42%). We will make more progress on cancer, but the "big killers" will remain so for a while, esp as little is spent on cardiovascular disease R&D or mental health (which shows up in the top 10 as suicide, which in 90% of cases is mental-illness related, and "unintentional injuries" which include a lot of drug overdoses). Rare disease in aggregate would probably make the top 10 causes of death. It would be interesting to see how rare-disease related mortality has changed in the last decades

[0] http://www.hbmpartners.com/media/docs/industry-reports/Analy...

[1] https://www.cdc.gov/nchs/data/hus/hus16.pdf#019

Re: How pharmaceutical industry financial modelers think about rare diseases

#104

Post by boyband6666 » Tue, Apr 30, 2019, 7:37 PM UTC

jonlucc wrote: post #72

boyband6666 wrote: post #59

Earlier quoted context omitted.

The people who say pharma don't want cures generally don't understand the industry. A cure is worth more than a chronic treatment, and the article does an excellent job of explaining time preference (his 8% discount) - having a treatment you can sell for more years isn't worth much when you discount it all. Fundamentally companies have to follow the science. If the science is there for cures, that is what is pursued.…

I truly believe that people don't really understand how difficult cures are. It's not that we in pharma don't want to cure things, we just don't know how. Also, most pharma and biotech companies are built around a small number of mechanisms. Many pharma companies only make small molecules or large molecules, but don't touch potential siRNA, CRISPR, or stem cell therapies. Take diabetes for example. By the time a Type…

Fully agree - I work with pharma as an independent (and used to work at GSK & Sanofi before that - effectively medical statistics). I'm currently working on a gene therapy from a biotech, if it works it'll be amazing, and be a semi-cure, holding functionality where it is, but even that isn't a perfect cure.

I've also worked on 2-3 immunotherapies, they again can be amazing and turn previously uncurable cancer to long term survival (of duration unknown), but only in a fraction of patients - to work on them was an honour. Most therapies are incremental improvements, which can make a big difference to patients, but there is still unmet need.

GSK when I was there were explicit, half the drugs they wanted to develop internally, but using the commercial knowledge and experience guiding drugs though trial and approvals, also wanted half of drugs to be invented outside, and be commercialised by a company who knew how to do that!

Re: How pharmaceutical industry financial modelers think about rare diseases

#105

Post by refurb » Tue, Apr 30, 2019, 7:38 PM UTC

vibrio wrote: post #97

refurb wrote: post #88

Earlier quoted context omitted.

But you don't know option 2 would have been the outcome. Rather than both companies duking it out in court for a few years, the patient benefits when the generic entry happens quicker than if the patent held.

I guess the concern is that paying a company not to challenge the patent(and start the 6 month clock if the patent is lost) is anti-competitive and collusive.

I can see how that could be the perception. However, if the generic company is certain they could successfully challenge the patent, they'd never enter into such an agreement because there is a far higher payoff to move forward with the patent challenge.

It's the gray area cases that end up in pay for delay deals. The ones that neither party is sure they will win. So they cut their loses and negotiate middle ground where each of them get a piece of the pie.

Re: How pharmaceutical industry financial modelers think about rare diseases

#106

Post by gowld » Tue, Apr 30, 2019, 7:39 PM UTC

SirLuxuryYacht wrote: post #78

gumby wrote: post #38

Having been through the early phases of this (both as bench scientist and management, up through Phase II) I can say that this author's analysis is right on. There is a macro wrinkle he doesn't mention and that makes things worse: as we increasingly succeed on stopping the big killers (e.g. lung cancer, CIs, various accidents that constituted most of the causes of death into the 1990s) the histogram of death starts t…

> histogram of death Not something you read everyday! How does your "wrinkle" make things necessarily worse? All [men] must die (sorry) at some point so succeeding at removing the biggest killers would give more people a second chance to die of something else later. Just because we cure cancer won't mean that there are suddenly more causes of death, just that the people who would have died from cancer will die of a v…

It's not absolutely worse, but the first derivative is worse -- marginal improvements get worse ROI as time passes and progress gets made.

Re: How pharmaceutical industry financial modelers think about rare diseases

#107

Post by iandanforth » Tue, Apr 30, 2019, 7:54 PM UTC

jonlucc wrote: post #93

iandanforth wrote: post #67

This is a well researched, informative and infuriating article. Within the system I cannot think of a better or more determined approach to this problem, but as this is HN I need to lay out a few points. As we mint more billionaires they are going to do an end-run around the FDA. If I were a billionaire there is no way in hell I'd wait for a standard drug trial to progress on an FDA timeline. Eventually one or more o…

> If I were a billionaire there is no way in hell I'd wait for a standard drug trial to progress on an FDA timeline. You don't have to be a billionaire for this. There aren't many drugs which sit between proving efficacy in clinical trials and FDA approval, and ones that are like that only sit there for a few months. Of course, those could be important months for a particular patient, but there are ways to handle thi…

Your comment made me realized I forgot an important predicate.

I think we're near an explosion of drug targets. That the front-end of the pipeline is about to get very full very fast.

That's one of the forcing factors I didn't mention.

Re: How pharmaceutical industry financial modelers think about rare diseases

#108

Post by grandinj » Tue, Apr 30, 2019, 7:56 PM UTC

abtinf wrote: post #68

The author ignores two obvious, extremely high leverage changes that would solve the problems in his model. First, on the revenue side, extend patents on pharmaceuticals as long as possible. His model assumes a very narrow window of payback; quadrupling or quintupling that window would make many more drugs feasible to investigate. Second, to use the author’s word, “de-risk” all trials. The best way to do this would b…

Safety is the largest component the FDA analyses for, not exactly "orders of magnitude" less than efficacy.

Increasing the patent length, however, would increase the payback. Not as much as one might think, however, because the time-value-of-money analysis means that money far in the future is worth less, so there is diminishing returns at work.

Re: How pharmaceutical industry financial modelers think about rare diseases

#109

Post by integrate-this » Tue, Apr 30, 2019, 8:00 PM UTC

This is a pretty solid breakdown. IRR isn't mathematically valid though. I might take a run at cleaning up this spreadsheet tonight to make it look a little more professional. Need to include things like tax and exit valuations to get to the correct decision.

Re: How pharmaceutical industry financial modelers think about rare diseases

#110

Post by integrate-this » Tue, Apr 30, 2019, 8:07 PM UTC

integrate-this wrote: post #109

This is a pretty solid breakdown. IRR isn't mathematically valid though. I might take a run at cleaning up this spreadsheet tonight to make it look a little more professional. Need to include things like tax and exit valuations to get to the correct decision.

There are a few very important caveats that they miss though. Revenue determinants are heavily based on conversations with healthcare payers to determine market size which dramatically effects revenue projections. Most firms that do deep development plan to sell successful drugs and exit as early as possible so transaction costs need to be included in the terminal value, which isn't calculated terribly well in this model.