you are viewing a single comment's thread.view the rest of the posts
Biotech is likely the most inefficient use of investment dollars outside of the federal government. It's become a crap shoot on which a return on the total investment becomes less likely with each passing quarter. Most Biotechs are run by researchers with only condescending lip service appreciation for the money investors have put into them. Big Pharma's reduced their own R&D expenditures and are just waiting to pick the bones of their Biotech brethren.
Vertex has about three years worth of cash left to bring one of their several candidates through development. What are their chances? Probably not bad for P38 and/or ICE, which are compounds that have already been through early development and show promise. But it's also important to note that those compounds are being brought through development by PARTNERS.
At this point, Vertex could just lay all of R&D off, sit on their hands, and see what's going to happen with those compounds. In the end, if things go well, they get a good (probably not incredible) revenue stream: A double but not the home run investors are gambing on.
But obviously that's not what they've decided to do. That isn't Josh Boger's plan. He wants to turn Vertex into a full-service drug company, and that means taking compounds all the way through development. From their PR, it seems that Vertex is now going to focus efforts on development. Seems like a lot of hubris from where I sit, since Vertex can hardly hope to compete with big pharma in terms of basic resources (cash, infrastructure). But I guess we'll see.
In the end: Yes, Vertex, and everyone else in the drug discovery biz, now has too many candidates and not enough resources to bring them all through development. But the big guys can better afford to bring SOME of them through development. It will be interesting (and scary) to watch the smaller guys try to compete. If they get lucky, they'll get a hit and will have the cash to become large. If they don't get lucky (more likely), they'll either get absorbed intact by big pharma before the end is near, or else they'll get bone-picked by big pharma past the point when they should have packed it in.
Those companies who at least had the good sense to partner some of their programs with big pharma (such as Vertex) will have more breathing room. But the end is still looming--something will have to change. You can't continue to sell the idea that you are going to become big pharma yourself forever. Either you need to make it happen or else capitulate.
Nice try. But it is clear that you never worked in biotech/pharmaceutical industry. You have no idea how research/drug discovery is done. You sound like somebody who read some kind of book and didn't understand.
Keep on living in your dream world.
Here is the real problem:
Most of the biotech companies sold themselves as being better, more nimble, more efficient, etc. at drug discovery than their bigger counterparts. And that is true: It doesn't take huge resources for drug discovery, and the smaller guys have a better idea. Actually, make that HAD a better idea. Because most of these smaller players were started between the mid '80s and mid '90s, when big pharma still hadn't fully embraced modern drug discovery/design ideas. But since that time, big pharma HAS come on board, and I would say that the small guys can't honestly claim any major advantages at this point.
Well, they can claim one advantage: As smaller entities, they can be more careful in who they hire, and don't usually have to deal with many of the turf war infrastructure issues that continue to plague the big guys (as it always has been and as it will always be). Of course, as the small guys get bigger, that advantage gets whittled away. Vertex is surely big enough now that they can't claim this type of superiority anymore. (The horror stories I've recently out of Vertex on both coasts surely rival anything I have seen in big pharma).
OK, so now the small guys, who got funding on the basis of a better idea, are now basically toiling in the same garden, with the same tools, as the big guys. So where is their edge? Well, they have smaller market capitalization, so if they have a hit, it represents a much larger boost in value of the company. That will appeal to gamblers.
Another thing to appreciate: The small guys sold themselves as superior DISCOVERERS of drug candidates. Probably true at one time, maybe so maybe not now. Even if we accept that they are better at it, the truth today is: EVERYONE is good at drug DISCOVERY. High throughput methods, along with the universal adoption of the more modern techiques once principally the domain of the smaller guys, has seen to that. So everyone can produce more candidates than they can handle. Read that again: EVERYONE can produce more candidates than they can handle. That's no longer the rate limiting step. Where's the bottleneck: Development. And that's a VERY EXPENSIVE nut to crack. The small guys can't afford it. The small guys can't win this race. They aren't better at it, they can't do it much more cheaply. Nope, this race goes to the competitor with the most money, with the biggest and best infrastructure. And that's big pharma. You can't get around that. There are no magic bullets. That's fact.
The small guys can try to play on the same field. They can whittle down their dozens of candidates to one or two, place their bet on those, and try to develop them. If they win, they (and you dear stockholder) win big. But if the dice don't fly their way, and that's a very possible scenario, then they wind up out of time and out of cash, probably purchased for intellectual property at firesale prices.
Interesting report bio - I'm curious about the "horror stories" you mentioned in part 1. There is a word missing in your bracketed statement: You said: "(the horror stories I've recently [?????] out of Vertex on both coasts rival anything I have seen in big Pharma).
That's a key word...."seen", "heard", "did", which is it?
And, can you provide some clue as to what these "horrors" might be?