Strategic Drug Development in a Funding Crisis: Navigating Challenges and Innovating for Success

In the wake of the COVID-19 pandemic, the pharmaceutical and biotechnology industry finds itself in a precarious position, grappling with funding constraints and an evolving regulatory landscape. Industry experts Marina Galvani, vice president and scientific strategy leader at Evotec, and Joshua Gillum, vice president of business development at the same company, recently shared insights on how companies can adapt and thrive in this challenging environment.

Shifting Investment Landscape and Regulatory Uncertainty

The funding boom experienced during the pandemic has significantly retracted, with closing rounds now taking substantially longer than before. Gillum noted, "We have one client who's been waiting for 18 months for their funding to close." This slowdown reflects a broader shift in investor behavior, creating hurdles for innovators accustomed to shorter funding cycles.

Adding to the complexity, regulatory timelines have become less predictable, particularly in the United States due to ongoing changes within the FDA. This uncertainty has further dampened investor appetite in an already risk-averse market. Consequently, there's a noticeable shift away from the U.S. market, with Europe emerging as an attractive alternative due to its new EMEA-based structure, which offers greater stability.

Risk Mitigation and Investor Expectations

In response to these challenges, companies must demonstrate comprehensive due diligence to reduce investor risk. Galvani emphasized the importance of a thorough asset evaluation, stating, "When speaking or presenting to investors, it is important for companies to demonstrate that they have done a very diligent and comprehensive evaluation of their asset, not only focusing on the therapeutic potential, the advantage versus the competitors, and the marketability that are absolutely of keen importance, but also demonstrating that they have also assessed developability potential and understand a 'long-term development strategy.'"

This evaluation should extend beyond typical metrics to include manufacturing and controls (CMC) considerations such as scalability, API formulatability, and solid-state complexity. Galvani warned, "Issues in any part of the process could really lead to financially catastrophic delays if these things are discovered too late."

Innovation and Efficiency in Drug Development

Despite the current challenges, experts remain optimistic about the industry's future. The financial constraints are driving genuine innovation and "out of box solutions" rather than "me-too" approaches. Gillum observed a shift towards novel targets and more innovative platforms, such as AI-driven drug discovery that is agnostic to specific targets or indications.

Early characterization and de-risking strategies have become crucial, with biomarkers playing a significant role in anticipating Proof of Concept (PoC) readouts. This approach not only improves downstream efficiency but also satisfies investor needs for risk management.

Manufacturing considerations have also taken center stage, with experts advocating for an early manufacturing mindset. Galvani stressed, "Manufacturing is so impactful in terms of time and cost on the program that you really cannot underestimate its importance. You really need to address it as soon as possible."

In conclusion, success in the current pharmaceutical landscape requires a delicate balance of speed, cost, and quality, coupled with creative and collaborative approaches to navigate increased complexity and reduced funding availability. As Galvani aptly put it, "Science will always win. If you demonstrate good science, compelling data, well-structured things, I think these will win."