Sept 15, 2003 | AS SURGING HEALTHCARE costs outstrip the value of medical treatment, there has been a growing consumer demand for cost-effective, evidence-based medicine — fully developed treatment regimens based on actual evidence of successful outcomes, rather than mere anecdote.
The field of in silico drug discovery and development was spawned to service this need, bolstered by the reams of genomic data now available for analysis. Traditionally, treatment needs in the marketplace have been serviced through the "on the job" experience of big pharmaceutical and biotechnology companies identifying gaps in the market, rather than by rigorous process. in silico drug discovery and development sets out to provide such a process and, through analysis and visualization, enable knowledge-based medicine.
In the case of AnVil, an informatics company founded in 2000 and built around analysis and visualization intellectual property licensed from the University of Massachusetts, our avowed mission was to be the pre-eminent commercialization partner to the life science industry focused on in silico drug discovery and development solutions. This was accomplished by integrating a team of physicians and data miners (richly experienced in life sciences) with excellent healthcare data feeds and an award-winning technology platform: ADAPT (AnVil Data Analysis Platform Technology).
AnVil was assembled with the realization that healthcare companies are hungry to monetize their data, now possible with the advent of electronic medical records. The technology platform was built to service clients rather than to provide shrink-wrapped software or even an enterprise solution. Clients included HealthSouth, Genomics Collaborative, and Eclipsys/SunClinical, as well as Applied Biosystems and several top-tier pharmaceutical and biotechnology companies. We also serviced academia.
From a technology perspective, several companies supply software and enterprise solutions, while many others build service businesses. In AnVil's case, a brand was built to outlicense the solutions and information gleaned from analysis.
But the past couple of years have seen a severe downturn in market sentiment for platform companies in the life sciences. During this decline, informatics took a particularly severe hit, as molecules shifted to the market's flavor du jour. This has led to the inevitable Darwinism — Viagen and Molecular Mining being just two notable examples of companies that ran out of runway due to cash constraints. Indeed, only a dozen or so of the roughly 150 informatics companies that hoped to make it into 2003 have survived.
AnVil was, until recently, among the dozen ... so why no more?
Software companies have come to realize that, in this financial environment, the "seats" are limited. Even if you can sell an enterprise product at list price to top companies, it probably amounts to only a $25-million-per-annum business. This will not satisfy the venture capital crowd, fatigued by current portfolios and looking for big returns to average funds, many of which are reaching maturity.
The service sector seems to be the only way to hope to get the kind of returns needed and expected, particularly by providing third-party findings under license to the pharmaceutical and biotechnology client sector. But how to create the "must have" versus "nice to have"? What if the knowledge solutions provided allow for improvement in efficacy of drugs, identification of counter- indications, off-label use, co-morbidities, and so on? Surely that brings real commercial value for the client.
It appeared so for AnVil, at least for a while. But who could have predicted that the energy and accounting scandals would spill over into healthcare (as they did with HealthSouth, Tenent, etc.)? Moreover, who would have thought that several large alliance deals completed recently would be seen as not delivering sufficient upside, as appears to be the case?
All this has led to severe softening of the investment market, even for the service informatics companies, which until now have survived the Darwinism era. In AnVil's case, the sales cycles of Big Pharma, in large part resulting from the ongoing merger and acquisition activity, together with unpaid accounts receivable, led to a terminal softening as we attempted to close C-round financing. The company shut its doors on May 2, running a skeleton team to service some commercial deals until May 30, and moved to dissolution on July 1, 2003.
The 80:20 Rule
But is this really the end of the in silico drug discovery and development market?
Maybe the 80:20 rule should apply and the focus should shift to 80 percent on a more integrated approach to the development of commercial findings inhouse — particularly if the investment community can be persuaded to throw one of its "Hail Mary" passes at evidence-based medicine. The investment market does, after all, seem to be focusing on vision rather than early income.
The remaining 20 percent of focus should be on selling the information and knowledge resulting from the analyses to healthcare clients, likely in report form, in order to implement the findings for health management improvements, and provide additional cash flow to fund the integrated enterprise.
Whatever the commercial knowledge-based solution, it is time to create the integrated in silico drug discovery and development company — our concept is called EviMed — that would internally develop "nouveau" drugs at least into the clinic, before seeking out commercialization partners. That is, of course, assuming we can attract investment ...
Richard D. Gill is the former CEO of AnVil. He can be reached at RIKI4455@aol.com.