February 18, 2004
One of the Top Three Worst Ideas
I much enjoyed your article "Why Drugs Fail" (Dec. 2003 Bio·IT World, page 1). Having worked for pharmaceutical companies small and large, I agree that projects certainly go further than they should for a number of reasons. In small companies, the product in the clinic may be all they have. Admitting failure of their only candidate (or the only one that has advanced very far) may result in the company folding. In large companies, it may be that people are emotionally wed to a project and simply will not let it die. I have seen countless projects that need to die, but someone is so attached to their preconceived notions that they will not let go.
Of particular interest to me was the notion in the article from Ray Lipicky that we should do away with Phase I and Phase II clinical trials. That may not be the worst idea I have ever heard, but it is certainly in the top three. Phase I is for one thing: safety. Nothing else. Everyone tries to squeeze efficacy blood out of the Phase I turnip, but in my mind they should not. Eliminating Phase I and Phase II trials will certainly lead to more serious adverse events (and maybe deaths), which would raise serious ethical issues. Even if you could do what Lipicky proposes for safety reasons, you could not possibly do it from a manufacturing perspective. Early clinical trials (up to Phase III) are run with small-scale materials (generally pilot plant or smaller). It would be financially irresponsible to scale up a process to make material that you do not even know would work (and probably would not work).
There are very valid reasons for running early phase trials. Lipicky probably has not been involved in anything but the evaluation of efficacy once all the trials are over. A better understanding of the entire process would lead him to understand that his proposal is not really practical.
Bret A. Shirley
Bioinformatics: Reasons to Believe
Richard Gill's commentary ("The Challenge for In Silico Drug Companies," Sept. 2003 Bio·IT World, page 36) paints a depressing picture of the future of bioinformatics. He writes, "Only a dozen or so of the roughly 150 informatics companies that hoped to make it into 2003 have survived." Further, he says, revenue potential for bioinformatics companies "probably only amounts to a $25-million-per-annum business" that "will not satisfy the venture capital crowd."
The sector's performance has been disappointing, but the reasons for optimism remain just as true today as they were three years ago. In fact, companies that have weathered this downturn are well poised to be successful. The long-term outlook of great optimism will inevitably prevail.
I would offer five reasons. First, bioinformatics is still important. It remains a huge challenge and opportunity for researchers and businesses. A paradigm shift is occurring throughout the life sciences. Pharmaceutical and biotechnology companies, as well as academic researchers, understand that they must harness the vast amount of information that is being created.
Second, the economy is recovering. The news of late is mostly encouraging and will improve investment in bioinformatics. It has been next to impossible for entrepreneurs to raise capital to fund bioinformatics in a field with few successes. Entrepreneurs have been paying the price for the errors underlying the dot-com devolution. Additional investment made possible by an improved economy will undoubtedly lead to successes that will encourage even more investment.
Third, the marketplace is maturing. New technologies, such as bioinformatics, are adopted in phases. The first adopters are innovators that invest in technology before commercial validation and often while it is still expensive. In the life sciences, these are scientists who have devoted their careers to the advancement of these new technologies.
For a new technology to be a business success, however, products must work for the larger part of the market. Geoffrey Moore calls these buyers the Early Majority. They are pragmatists. They do not care about being first, but they want their purchases to work. In the life sciences, these are scientists who use bioinformatics tools not as the focus of their careers but rather to advance their research.
Bioinformatics today is in the chasm between these two groups of buyers. Products today are often expensive, do not work as advertised, and remain in the domain of specialists. Useful tools that can be used outside of the bioinformatics department are rare. To be successful businesses, bioinformatics companies must develop products that address this larger market. As the market matures, business success will be more common.
Fourth, products are maturing. Bioinformatics companies have largely emphasized sophisticated, expensive systems sold as enterprisewide systems. In many cases, they have developed technology in the hope that a market would develop — instead of focusing on solving customer problems. An elegant solution for one enterprise, however, is often not workable for the next customer. As a result, many innovative and powerful solutions have a very limited market. Further, history has repeatedly demonstrated that much of the power of computing lies in delivering power to the nonspecialist user.
Fifth, companies are maturing. Technology companies typically begin by focusing on development, rather than solving customer problems. To be successful, though, companies must understand their customers, solve a problem that they have, and carry that message into the marketplace. Bioinformatics businesses that understand their customers and how to meet their needs will most certainly be the future winners.
The technology underlying this promising sector emerged just as the dot-com bubble burst. Overwhelming external factors have conspired to bring down many promising bioinformatics companies. In normal times, companies like AnVil would have had a chance to thrive. These factors cannot prevail over the long term. Over the longer term, the future for bioinformatics is still very, very bright — perhaps best shown by Dr. Gill's latest endeavor: a new bioinformatics company!
J. Thomas Ranken
CEO and co-founder