The Two Hundred Million Dollar Dash

The story of how a pharmaceutical start-up turned to technology to bring its drugs to market quicker.

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Case Study

In the drug business, being first to market can make you rich. Isis Pharmaceuticals got wired to win

Before Mark Lotz can even gulp down his last swig of morning coffee, a message pops up on his computer screen. It's the sort of instant E-mail "you never want to see," says Lotz, the executive director of regulatory affairs for Isis Pharmaceuticals, a $26-million drug-development company in Carlsbad, Calif. A cancer patient who was participating in one of the company's clinical trials in Germany has just died. Lotz's mind begins to race.

He can almost hear the clock ticking. Lotz may have just 72 hours to fire off an explanation of the death not only to the U.S. Food and Drug Administration but also to numerous regulatory bodies throughout Europe, where the drug is currently in clinical trials. And that's not the worst of it: each of the European governments has its own guidelines for how a death must be reported. If Lotz fails to make the deadline, Isis could face substantial fines--even criminal liability.

Just a year ago, Lotz would have quickly become entangled in a world of frantic phone calls and faxes. It would have taken him days to sort out the details of the death and type them up in the proper format for each country. Today, fortunately, the process is much simpler. He just has to flip from his instant E-mail message to his Web browser, log on to the company's intranet server, and call up a detailed description of the death as reported by Jo Glover, Isis's European medical director, in Surrey, England. Lotz can then click on a button at the bottom of Glover's report and call up a menu that allows him to automatically format and print out the report according to the specifications of the FDA or any of the European agencies. Within 24 hours, regulatory bodies around the world could be notified. "We used to fear that we'd miss the deadline," says Lotz. "Now we can speed through the process in a day."

This morning, thankfully, Lotz is off the hook. From Glover's report it's clear that the death in Germany was neither caused by the company's drug nor unexpected--the patient was in the late stages of cancer even before he entered the study. According to the rules of the FDA and most of the other regulatory agencies, Lotz doesn't have to report the incident until the trials are completed. So now, instead of racing the clock, he scrolls to the bottom of the report and clicks on a button labeled "comments." He then types in his reason for not immediately reporting the death and posts it to an electronic bulletin board that keeps select Isis employees up to date.

This slick deployment of the company's intranet is just one of the many technological tricks that Isis does to meet the rigorous and costly bureaucratic demands of drug development and approval. Developing a single compound takes 15 years on average, according to the Center for the Study of Drug Development at Tufts University, and generally costs about $300 million. In the race to create new drugs, even one misspent day can easily add up to thousands of dollars lost to the bottom line. That's certainly the case for Isis. The small company is on track to be first to market with a revolutionary class of drugs known as antisense, which target and modify the strands of ribonucleic acid (RNA) in the body that produce disease-causing proteins. In the pharmaceutical industry, where physicians are slow to accept new medicines unless they offer dramatic advantages over existing ones, being first to introduce a drug is critical; it's the golden ring that can firmly establish a company as a market leader. "The importance of time can't be underestimated," says A. Paul Boni, a senior research analyst who covers the biotechnology industry for Genesis Merchant Group Securities, an investment banking firm in San Francisco. "Delaying a product's entrance into a new market for even a few months can mean millions lost."

Traditionally, large pharmaceutical companies have spent millions of dollars on data-crunching systems that will help them mitigate the expense and complexity of drug development--systems that have been far beyond the reach of small newcomers like Isis. But within the past three years, less expensive versions of these sophisticated systems have become available, enabling smaller outfits to compete more effectively not just with their counterparts but also with the behemoths who in the past have threatened to acquire them or profit from their discoveries through licensing agreements. Isis, for one, wasted no time in taking advantage of the affordable technology. Since 1995 it has invested $300,000 in computer equipment--everything from a document-management database and a local area network (LAN) to an intranet on the Web. Lotz can't imagine how the company could handle the FDA-mandated clinical trials--in which a new drug must be tested on thousands of patients through at least three clinical phases--without it.

Isis, of course, is not alone in its aggressive use of technology. Even its primary competitor--the $4-million Hybridon, in Cambridge, Mass.--has a similar system. But Isis has an edge: currently in the third phase of clinical testing for its first drug, Isis 2922, which halts the progression of cytomegalovirus (CMV) retinitis, a viral infection common among late-stage AIDS patients, the company may be one of the first pharmaceuticals--large or small--to piece together its clinical findings in the form of a fully electronic new drug application (NDA), which it will present to the FDA on a single CD-ROM. Isis's NDA is short--a mere 40,000 pages printed out, compared with the more standard 200,000--which makes it a perfect pilot case for the sleek electronic format.

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