LEAD Therapeutics of California has a very unusual business model. “We want to
make drug discovery fundable in this environment by taking advantage of the best
parts of US and China life science,” says Sofie Qiao, PhD, founding president of
LEAD and head of operations. To do that, she first took a hard look at existing
state of drug discovery in the US.
“Drug discovery is being cut back in
the US, creating opportunities,” she said in an exclusive interview with
ChinaBio® Today. “Soon, the industry will experience an even more severe
shortage of early stage candidates. Late stage molecules are expensive to
in-license,” even though biopharma is willing at the moment to pay up for the
safety that late-stage candidates represent.
However, in the US, drug
discovery is generally not considered to make economic sense as a business model
because it is too expensive and takes too long to reach a “value-inflection
point.” When a company is finished with its discovery and early development
work, the market value of the result often is about equal to the money invested
– no value is added for all the work, risk and costs that were incurred to
advance the molecule.
LEAD’s Business Plan
As a way of limiting its risk, LEAD confines its drug discovery
to already validated targets for which the company thinks it can design a better
molecule, thereby creating a significantly improved new chemical entity.
“A convincing value proposition can be created by shortening the time
frame,” declared Dr. Qiao. To keep the time frame brief, the company intends to
seek partnership for its molecules at the pre-IND stage. In the biopharma world,
the conventional wisdom is that pre-clinical molecules have not reached their
maximum economic potential. But LEAD expects to keep three programs going at all
times, partnering off the initial candidates quickly, before they have consumed
large amounts of capital. LEAD thinks it can take a molecule to the pre-IND
stage in as little as just 18 months.
Besides, as Dr. Qiao points out,
early stage drug candidates can sometimes elicit very substantial offers. “I
worked in Business Development at Syrrx,” she said, “which was acquired by
Takeda for $270 million. Syrrx’s drug candidate against a clinically validated
target DPPIV was partnered with PPD at a preclinical stage, and still, Syrrx’
share of ownership of the DPPIV program was the major value driver in that
acquisition. In other words, early partnering does not preclude an attractive
long-term future for the company.”
To enhance the value proposition,
LEAD does the chemistry work in China, saving about 70-80% over the cost of
doing the work in the US. Because it wants drugs for sizable markets, LEAD will
initially concentrate on anti-infectives (resistance almost always develops,
according to Dr. Qiao) and oncology drugs. The company does not intend to
dethrone the frontrunner in any particular space. Instead, often through a
combination product, LEAD will design a new molecule that improves upon the
performance of the frontrunner. After all, as Dr.
