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Riding the wave of innovation: How to partner effectively with pharma companies

April 30, 2021

This article was co-authored by Raj Ganguly and Robert Mittendorff, MD.

The COVID vaccine has proven beyond a doubt that biopharmaceutical innovation can be spectacularly rapid and life-changing. What made it possible and how do we replicate its success? As biopharma entrepreneurs, how can you take advantage of the positive momentum in the industry to bring your technology to market?

The tech revolution underway in pharma

First, here’s why we are so invested in the biopharmaceutical industry here at B Capital Group. We are witnessing a tectonic shift in drug development. The model may seem unchanged on the surface, but under the hood, technological advances are reprogramming the long-time operating system powering the process. In short:

  • Drug targeting: Machine learning (ML) is helping researchers rapidly identify druggable targets inside cells and disease pathways. In-silico target identification relies upon the corpus of knowledge that has been created to date and in training ML models to recognize patterns of interactions.
  • Drug discovery: ML and AI are being used to build computer simulations of molecules and design chemical structures that have a higher probability of clinical success in the small molecule, antibody, peptide, and RNA domains.
  • Pre-clinical development: In-silico testing and the ability to simulate tissue on a chip have reduced the need to test in vivo in some cases, with the potential to dramatically improve efficiency in this stage of development.
  • Clinical development: Thanks to the 2009 HITECH Act and the 2016 21st Century Cures Act, electronic medical record data is enabling the use of real-world data (RWD) and real-world evidence (RWE) to assess the efficacy, cost effectiveness, and safety of a molecule. (The use of RWD was also pivotal in the development of the COVID vaccine.) Virtual clinical trials are also enabling clinical development on larger, more diverse populations, reducing enrollment speed and costs.
  • Post-market approval: RWD and RWE are being used in post-market studies to expand the labels of biopharmaceuticals to cover additional indications and patient populations. They are also being used to more precisely value the effects these incredible new therapies have from an economic perspective.

These examples are just the tip of the iceberg for how technology is transforming the business of biopharmaceutical companies.

But innovative technology is not enough to guarantee business success. Pharma entrepreneurs must also understand how to get their technology to market. Here are 3 key strategies we share with the companies we advise.

Show how your innovation fits within the current drug development process

For entrepreneurs starting out in this space, it can be tempting to envision an entirely different process for getting drugs into the hands of patients, given the inefficiencies of the current system.

But throughout history, the companies with the highest chance of success are the ones who start out by framing their innovation within the confines of their industry’s existing business model. Look at Netflix: before it became the streaming giant that it is today, the company started out by offering DVDs by mail and improving the delivery of video rentals. Each subsequent innovation evolved the entertainment business model one leap at a time.


Evolution of Netflix innovation. Source: Gartner

In the same way, you’ll find faster traction in pharma if you work within the current process and apply your technology to a specific phase or pain point. For example, next-gen pharma company Recursion is revolutionizing drug discovery but it will still take its drugs to market via the traditional path: develop them alone or partner with big pharma to do clinical development and ink business development deals. In contrast, 23andMe’s first foray with the FDA was an attempt at circumventing the process and they fared poorly; their follow-up ‘at bat,’ which improved efficiencies within the current regulatory model, was far more successful.

One day, technological advances may culminate in a complete transformation of drug development. But for now, the biggest opportunities lie in targeting inefficiencies within the current model, instead of skirting the process.

Seek out early partnerships with big pharma to drive scale

Tech entrepreneurs need to work with pharma companies to validate their technology. But oftentimes, we find that entrepreneurs shy away from working with big pharma, opting to partner with smaller firms instead. There’s a misconception that working with big pharma is laborious, slow, and risky.

But in the face of rising costs, big pharma is increasingly open to collaborating with non-traditional organizations to drastically scale the number of drug targets they can pursue. In return, they offer entrepreneurs critical access to proprietary data, regulatory advice, and business development resources. The right partnership can greatly accelerate the growth of early-stage companies.


Example of a network approach to pharmaceutical collaboration. Source: PwC

Case in point: health data analytics platform Evidation Health partnered with a large global pharmaceutical company a few years back to better understand the efficacy of an autoimmune disorder drug and its impact on patients. The drug failed, but what was fascinating was the fact that Evidation’s virtual clinical trial platform allowed the pharmaceutical company to unlock deeper, more powerful insights into the drug’s performance in just 6 months, in contrast to the traditional clinical trial that took 1.5 years to reach the same conclusion. Having proved the efficacy of its platform, Evidation now has a broad partnership with the pharmaceutical company where it will assist in better understanding the effects of a whole host of autoimmune disorder therapies.

Evidation’s experience offers some valuable pointers for creating successful partnerships:

  • Emphasize the value of your algorithms, not proprietary data. Publish open-source APIs and data to prove that the work you’re doing is repeatable.
  • Leverage industry relationships to get introductions to big pharma researchers (B Capital Group can help).
  • Start with two-way knowledge sharing. This creates a low-risk environment for identifying pilots that can turn into longer-term platform partnerships if successful.

Don’t discount “undruggable” diseases or “failed” drugs

Increasing clinical development costs, lower clinical success rates, and more complex trials have long prevented pharma companies from pursuing drugs for diseases that are thought to be “undruggable” or unprofitable. But with technology delivering efficiencies across all stages of drug development, the tide is turning. In 2019, drug discovery AI firm Atomwise and Eli Lilly embarked on a whopping $560 million partnership to find drug potential for 10 novel target proteins in diseases with high unmet need.

Entrepreneurs may also be wise to revisit “failed” drugs. Keep in mind that many drugs are still being tested on a very homogeneous population. In fact, the FDA recently reported that 75% of trial participants in 2020 were white. This means we have yet to understand the full potential of many drugs to address critical diseases affecting smaller populations.

Indeed, in 2015, Atomwise discovered a new Ebola treatment using a compound that had no known anti-viral activity previously. Evidation’s emphasis on building a diverse patient population for its clinical trial platform has also led to the discovery of drugs that don’t work for the general population but are effective for smaller target populations.

Pharma innovation is nowhere near its peak and the efficiencies it is introducing to drug development are bound to keep fueling life-changing discoveries for decades to come. We’ve barely scratched the surface.

At B Capital Group, we are deeply committed to partnering with entrepreneurs who are working to transform pharma. Our extensive relationships with pharma companies all over can help you bring your innovation to market. Let’s work together.

Learn how our strategies can help you grow.

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