1. PROGRAMA DE ESTRATÉGIA EM P&D
DE MEDICAMENTOS PARA
FARMANGUINHOS

3. ESTRATÉGIA NA PROTEÇÃO DE
RESULTADOS

5. Custos de desenvolvimento de
uma droga
• Custos podem alcançar US$ 800 milhões
para uma droga
• O prazo de desenvolvimento aproximado é
de 15-16 anos
• 75% deste custo é atribuído às taxas de
falha
• 90% de todas as drogas desenvolvimento
não chegam ao mercado

6. Onde, como e quando investir
nossos recursos de forma
satisfatória?

10. Alocação de Recursos

11. Alocação de tempo (em anos)

14. TIME
DegreeofInterest
Idea
Research
Proof
Of
Concept
Demonstration
Pre-production
Success
in market
Academic interest
Commercial
interest
After Chisholm
O Enigma

15. Quem tem interesse em preencher o gap?
TIME
DegreeofInterest
Academic interest Commercial
interest

16. O desafio: ausência de valor para preencher o gap!
TIME
DegreeofInterest
After Chisholm

17. 138
318
802
1318
0
200
400
600
800
1000
1200
1400
$million
1975 1987 2001 2006
Year
Estimated full cost of bringing a new
chemical or biological entity to market
($ million – year 2005 $)
Source: J.A. Di Masi and H.G. Grabowski, ‘The Cost of
Biopharmaceutical R&D: Is biotech Different? Managerial
and Decision Economics 28 (2007): 469-479
 São 15 anos para desenvolver uma nova
droga
 De cada 5-10,000 moléculas sintetisadas
& separadas por sua atividade, apenas
250 chegam ao pré-clinico, apenas 5
chegam a pesq. Clínica e apenas 1 alcança
o mercado
 Custo de P&D em 2006: $ 1.318 bilhões
 Apenas 2 de 10 drogas disponíveis
comercialmente produzem retorno que
correspondam aos custos de P&D
 Fármacos são geralmente baratos e fáceis
de copiar – empresas de genéricos
acessam mercados maduros
desenvolvidos pelo 1o. Entrante, sem
custo de entrada
Desenvolvimento de drogas é caro e arriscado

18. Drug Discovery Pipeline
Target
Identification
and
Validation
Assay
Development
Lead
Generation
Hypothesis
Generation
Candidate Development Commercialization
Phase
III
Submit Global
Launch
Global
Optimization
Lead
Optimization
First
Human
Dose
Phase
IA
Phase
IB/II
Compound patent filed at Lead Op
Subsequent patents filed over 10-15 years

19. Função das Patentes na Inovação
Competitiva

20. Product A
75 80 85 90 95 00
A
B C
D E
F G JHI K L M
Q
R
N
O
P
Basic patent/product lifecycle
Patent filings leading to granted patents

21. Classe de compostos, sais, formas cristalinas, usos (1o uso e
subsequentes), formulações, processo de obtenção, métodos de
purificação, rotas de administração, perfis de liberação e
combinações
Tipos de Patentes que refletem
o processo de P&D

22.  O escritório Europeu conduz um dos exames mais rigorosos
 Estatísticas de 2005:
128,754 depósitos
163,144 buscas empreendidas
104,433 exames
 Apenas 53% das patentes foram concedidas
 O prazo médio de aprovação é de 44.3 meses
 Um portfólio de patentes de um produto pode ter entre 20 e 40 patentes
Obter uma Patente não é um processo trivial

23.  No USPTO
 Estatísticas de 2005:
417,508 depósitos
207,867 depósitos (nacionais)
143,806 depósitos estrangeiros
 Apenas 48% das patentes foram concedidas
 O prazo médio de aprovação é de 35 meses
Obter uma Patente não é um processo trivial

24. Obter uma Patente não é um processo trivial
INPI

25. Obter uma Patente não é um processo trivial
Tempo médio 8,1 anos com tendência de redução para 6 anos

26. Competition in Therapeutic
Innovation
• The first mover is rarely the most successful
• The period of exclusivity for first movers is
shrinking

27. The period of exclusivity for first entrants to
a therapeutic class is decreasing (US data)
Source: DiMasi & Paquette (2004)
1.2
3
4.1
7.2
10.2
7.7
1.8
2.8
5.1
5.9
8.2
7.2
1995-98 (n=18)
1990-94 (n=15)
1985-89 (n=14)
1980-84 (n=5)
1970s* (n=9)
1960s (n=8)
First-in-ClassApprovalPeriod
Years
Mean
Median

28. Without patents there would be no
innovation
• Given the costs & risks of drug development,
without a period of exclusivity against copyists
there would be no investment in pharmaceutical
innovation
• Pharma do not seek therapeutic area exclusivity
(anti-virals, antibiotics)
Patent protection promotes therapeutic &
innovative competition

29. Compound differentiation
• New drugs tested against “gold standards”
• Patent competition drives improvements:
Increased Efficacy
Decreased Side-effects
Decreases ADRs
Decreased drug-drug interactions
Decreased dosing
Specialised drug delivery systems
• Patients benefit from a range of products with
differing characteristics

30. Quarterly Enalapril Sales in the UK
0
5,000
10,000
15,000
20,000
25,000
Q
TR
SEP
1992
Q
TR
M
AR
1993
Q
TR
SEP
1993
Q
TR
M
AR
1994
Q
TR
SEP
1994
Q
TR
M
AR
1995
Q
TR
SEP
1995
Q
TR
M
AR
1996
Q
TR
SEP
1996
Q
TR
M
AR
1997
Q
TR
SEP
1997
Q
TR
M
AR
1998
Q
TR
SEP
1998
Q
TR
M
AR
1999
Q
TR
SEP
1999
Q
TR
M
AR
2000
Q
TR
SEP
2000
Q
TR
M
AR
2001
Q
TR
SEP
2001
Q
TR
M
AR
2002
Sales(£million)
Protection
Expiry
Source: IMS Health MIDAS database

31. Changing face of Innovation
• The Past….Large Corporate R&D facilities
Secretive smart scientists, low level of collaboration
Closed Innovation
• The Present…..leaner business units
Increased levels of collaboration
More outsourcing, more partnerships
Open Innovation

32. “Closed” Innovation “Open” Innovation
“No matter who you are, most of the smartest
people work for someone else”
Bill Joy, Sun Microsystems

33. Changing Landscape of I.P
• More small companies owning & licensing basic
IP
• Many companies not in manufacturing, only
generating technology/IP
• More patent aggregators, who take on patents
from universities & small companies
• Patents used as bargaining chips

34. Patent strategy and
biotechnology
• Biotech industry (and sometimes universities) use
broad and basic and research-tool patents in
marketing to Pharma and seek “reach-through
royalties,” to obtain a share of the ultimate rent.

35. Observations on the Academic IP

36. Technology Strategy
• Must concentrate on seeking competitive advantage, not on
scientific interest
• Must be consistent with overall strategy
– e.g. R&D programs shouldn't focus on product performance if the firm is
pursuing a cost leadership strategy
• Shouldn't focus exclusively on product design or manufacturing
technology if this means ignoring other areas of the firm (info
systems, materials handling, office automation)
• Must recognize risk/return tradeoffs
• Must be consistent with industry/product lifecycle

37. Sustainability of the technological lead
• Depends on:
– Faster, more successful innovation than competitors
• managing internal vs external sources
• scale and scope economies in R&D
• superior technological skills
– Slowing the rate of diffusion to competitors
• preventing reverse engineering
• restricting technology transfer
• obtain/enforce IP
• loyalty of employees, non-disclosure agreements etc
• vertical integration
– Lock-in of customers
• building in buyer switching costs
• control of standards

38. Mechanisms undermining first-
mover advantage
• Free-riding by late-comers
• First-mover locked in to the wrong strategy
• Competition

39. Free-riding
Latecomers can use the first-mover’s investments in:
• R&D
• moving down the learning curve
• employee training
• infrastructure development
• obtaining regulatory approval
• finding, educating customers & suppliers

40. Lock-in to the wrong strategy
• ex ante choices may prove to be wrong ex post
• First mover can be locked in to the wrong technology or
marketing strategy because of
– incumbent inertia
• sunk costs: plant and equipment, marketing and distribution
channels, advertising and reputation
• reluctance to cannibalize existing product lines
– organizational inflexibility
• organizational routines
• corporate culture doesn't prize innovation
• doctrinal views about the world
• internal political dynamics
– established relations/contracts with other organizations

41. R&D Budgeting
• Technology strategy usually implemented by
R&D budgeting decisions
– How much to spend?
– Where to spend it?

42. Where do R&D budgets go?
Breakdown for US manufacturing
• long run v. short run 25:75
• fundamental v. incremental 8:92
• product v. process 65:35
• basic v. applied v. development 5:25:70
– “basic” means advancement of knowledge without specific commercial objectives
– “applied” means research with specified commercial objectives
– “development” means embodiment of research results into products/processes

43. R&D Budgeting: General
Considerations
• R&D is an investment, not an expense
– evaluate R&D projects like any other investment project?
• R&D budgeting decisions entail making trade-offs against competing
uses of funds
– should R&D always over-ride other claimants?
• Continuing commitment to high levels of R&D spending often
distinguishes leaders from followers
– can a firm become a technology leader just by increasing R&D/Sales ratio?
• Adoption of a formal budgeting process often marks start-up
companies’ transition to “adolescence”
• Can the firm find a project selection process which promotes
innovative success?

44. Industry Practice in R&D Project
Selection
• Diversity: no standard practice
– most firms use home grown techniques
• Ambivalence towards quantification
– many R&D managers are predisposed by background to seek objective
quantitative criteria for decision-making, but the weakness of available
techniques and complexity of problems make them reluctant to give
these a dominant role
• Some lessons: pay close attention to the process -- who should
be involved? what weight should be placed on various inputs?
how should conflicts be resolved?

45. Some Analytical Techniques for R&D
Project Selection
• index models: compare probability-weighted benefit/cost ratios
• discounted cash flow models: recognize impact of distribution of
costs and benefits over time, incorporate appropriate risk
premium
• portfolio models: risk and return tradeoffs. CAPM ???
• scoring/profile models: compare projects against checklist of
desired characteristics
• real options: “financial engineering at Merck”, recognize option
value of continued funding, use Monte Carlo simulations to
bound likely returns

46. Example: pharmaceutical R&D
portfolios
• Typical firm runs 8-10 major research programs
• Discovery phase: $2m-$25m / year
• Development phase: $50m+ / year
• Manager’s problem:
– How much to spend on each program?
– How to select new projects?
– How to know when to stop projects?

47. Why is this tough?
• Very risky:
– 10,000 candidate molecules
– 10 go into development phase
– 1 makes it to the market place
• Hard to measure performance
• Spillovers: project successes are correlated
• Economies of scope and scale

48. Implications for real life R&D strategy
• In head-to-head competition:
– Try not to enter a race you aren't sure of winning: if
you have to work too hard to win, it wasn't
worthwhile
– Have eyes in the back of your head: be well-
informed of your competitor's position, and let
them know it

49. Effective strategies answer three
key questions:
How will we
Create value?
How will we
Capture value?
How will we
Deliver value?

50. • How will we create value?
– How will the technology evolve?
– How will the market change?
• How will we capture value?
– How should we design the business model?
– Where should we compete in the value chain?
– How should we compete if standards are important?
• How will we deliver value?
– How do we manage the core business and growth simultaneously?
– How do we use our strategy to drive real resource allocation?

51. Outline:
• Why do I need an innovation strategy?
• How will we create value?
• How will we capture value?
• How will we deliver value?
• Doing strategy in practice

52. Why have a strategy?

53. The Timing and Impact of
Management Attention
Phases
Influence
High
Low
ACTUAL
ACTIVITY
MANAGEMENT
PROFILE
Acquisition Investigation
Basic
Building Production
Manufacturing
ABILITY
TO INFLUENCE
OUTCOME

54. Why is it so hard to kill
project #26?
• It’s a “good” project!
• Good managers can meet stretch goals
(and I’m a good manager)
• Making difficult decisions takes time &
energy
It’s very hard to kill projects without a
strategy

55. Reasons to have a strategy:
2. To be able to change it

57. Simple
molecules
<1nm
IBM PowerPC 750TM
Microprocessor
7.56mm×8.799mm
6.35×106 transistors
semiconductor
nanocrystal (CdSe)
5nm
10-10 10-510-9 10-7 10-610-8 10-4 10-3 10-2
m
Circuit design
Copper wiring
width 0.2m
red blood cell
~5 m (SEM)DNA
proteins
nm
bacteria
1 m
Nanometer memory element
(Lieber)
1012 bits/cm2 (1Tbit/cm2)
SOI transistor
width 0.12m
diatom
30 m

58. Inventors
Authors
Universities
Governments
Companies
Traditional IP Stakeholders
New Stakeholders are focusing on IP

59. Regulators Companies Start-ups
Universities
Technology
Transfer
Companies
VCs
Investors
GovernmentsBanks
Financial
New IP Stakeholders + New interests =
More confusion and disputes
Multiple
Inventors
Authors
Indigenous
Populations

60. E.g., Pharma Industry Requires Strong IP Protection
Source: Boston Consulting Group: “A Revolution in R&D” 2001
• 70% of R&D Costs Are Incurred before Clinical Trials
• Cannot raise money without IP and cannot afford to get IP wrong!
Stage of Development
$165 $205 $40 $120 $90 $260
$165
$410
$530
$620
$880
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
Target ID
1 yr
Target
Validation
2 yrs
Screening
1.1 yrs
Optimization
2 yrs
Pre-clinical
1.6 yrs
Clinical
7 yrs
DollarsinMillions
Stage Cost
Cumulative Cost
$370
Biology
3 years
Chemistry
3.1 years
Development
8.6 years
= TOTAL
14.7 years

61. The Increased Visibility Of IP: What Is At Stake?
The value of IP is growing but cannot be accurately forecast in an
increasingly global and technological world. Our valuation
methodologies and laws are inefficient. This will lead to more IP
disputes
“It is estimated that by 2007, as much as 90% of the value of the
world’s top 2000 enterprises will consist of intellectual property”
Building and Enforcing Intellectual Property Value,
An International Guide for the Boardroom 2003
PriceWaterhouseCoopers
“How appropriate is our system – developed for a world in which
physical assets predominated – for an economy in which value
increasingly is embodied in ideas rather than tangible capital?”
Alan Greenspan April 4, 2003

62. What is the nature of an IP asset?
• Bundles of national and territorial rights
• Rights to exclude others (NB, not to practise)
• Rights considered as property (financial assets),
which can be pledged and securitized
THE CHALLENGE = How to convert national, legal
« rights to exclude » into global, commercial
revenue-generating assets?

63. Invention
Protection of
invention Transfer of technology
Entrepreneur
Start-up creation
Seed funding
Business plan
Proof of concept
Development of technology / product
First round financing
Management/Structure of company
Strategic partnerships
More rounds of financing
Company grows
Traditional Thinking: IP is done at the beginning
Product development
Sales & markets
Regulatory strategy & clinics
EXIT TO SUCCESS!

64. EXIT TO SUCCESS!
Invention
Protection of
invention Transfer of technology
Entrepreneur
Start-up creation
Seed funding
Business plan
Proof of concept
Development of technology / product
First round financing
Management/Structure of company
Strategic partnerships
More rounds of financing
Company grows
But, IP is important throughout
IP + Money = O2: Lifeline of the company
Product development
Sales & markets

66. Possible Revenue-Generating Strategies Using IP
• Sell Products: Usually a “one-way” street, with all IP rights exhausted
(internationally or domestically) (e.g., INTEL)
• License/Rent Product: Better to retain rights & maintain some control (e.g.,
transgenic mice, software: restrict access to source code & use)
• Sale of IP: a) Assignment of IP assets: May be simplest (e.g., 3M Post-It)
b) License of IP Assets: How?
• M&A: Sell company including the IP in it (e.g., a holding entity)
• Joint Ventures: Alliances that pool their IP resources into a new company (e.g.,
Nanonics)
• Franchise: Package concept (e.g., McDonalds): what is the IP bundle (TM + © +
Know-How + patents)? Quality Control and brand management issues?
• Create Market: Offer for free and then charge using installed base (e.g., Skype)
• Open Source/Freeware/Shareware & then charge for improvements (e.g., .php)
• Covenant not to sue? (e.g., Two start-ups to avoid depleting resources)
• IP Holding companies? Who should hold IP? Tax and financing issues: inter-
company pricing and royalty considerations.

67. San Francisco (CN), February 24, 2012
Verinata Health and Stanford University sued
Sequenom, in a dispute to determine who owns the
rights to a noninvasive prenatal test that uses DNA
sequencing to search for abnormal fetal chromosomes.
The context: a case study
Patent Fight Over Fetal DNA Sampling

68. • Verinata has just completed clinical trials of the test for
aneuploidy, a genetic defect.
– The most common birth defect associated with aneuploidy
is Down syndrome.
– Verinata claims the new test is more accurate than the
maternal serum screening tests now available and less
dangerous to the fetus than amniocentesis.
– Verinata licensed-in this technology from Stanford
University.
– The company has spent "tens of millions of dollars in the
research, evaluation, and development”.
Patent Fight Over Fetal DNA Sampling

69. • Sequenom has a patent (licensed-in) for "Non-Invasive
Prenatal Diagnosis," which was issued in 2001 (the so-called
'540 patent).
– in 2010 Sequenom's lawyers sent a letter alleging that "'the
practice of non-invasive prenatal diagnostics, including diagnosis
of the Down Syndrome and other genetic disorders, using cell-
free nucleic acids in a sample of maternal blood infringes' the
'540 patent.“
– Verinata's predecessor, Artemis Health, responded by stating
that Sequenom's infringement claims were "unsupported by the
patent".
Patent Fight Over Fetal DNA Sampling

70. • Verinata says that:
– since then, "Sequenom has repeatedly stated to the public
that anyone who performs a non-invasive prenatal test using cell-
free DNA circulating in the blood of a pregnant woman would
infringe the '540 patent.
– these statements, which misrepresent the scope of the '540
patent, are intended to broadly convey that:
– no one other than Sequenom has the freedom to
perform non-invasive prenatal testing under the '540
patent
– with the goal of deterring potential competitors from
entering the market and deterring doctors and healthcare
providers from using anyone other than Sequenom for
those services."
Patent Fight Over Fetal DNA Sampling

71. NOW…
• Verinata seeks declaratory judgment that its test does not
infringe on Sequenom's patent.
• And it claims that Sequenom itself infringes on Verinata's
patents for determining chromosomal abnormalities (two
patents), by manufacturing and marketing its test.
– Sequenom's infringement of both patents has been
"deliberate and willful, warranting increased damages and
attorney's fees," Verinata says.
– Verinata and Stanford University seek declaratory
judgment that both patents have been infringed, a
permanent enjoinder from further infringements,
damages and treble damages.
Patent Fight Over Fetal DNA Sampling

72. Patent Fight Over Fetal DNA Sampling
The Message
• The key point is not the patents as a way to block
competitors
– Few SMEs can afford litigation to enforce anyway
– Few SMEs care about controlling a monopoly!
• The patents protection (strength) of the actual
business (product) is essential
• Freedom to operate is the key (this
is the real value of your patents)

74. Translational Application of Novel
Withanolides for the Treatment of
Advanced and Drug-Resistant Cancers
Mark S. Cohen, MD, FACS
Associate Professor of Surgery and Pharmacology
University of Kansas Medical Center
Barbara N. Timmermann, PhD
University Distinguished Professor and Chair
Dept. of Medicinal Chemistry, The University of Kansas

75. Portfolio of Novel Compounds
• We have identified many of the important
anticancer activities of the withanolide,
Withaferin A.
• Our strong medicinal chemistry team has
recently identified 40 natural and semi-
synthetic withanolide analogs from the local
Physalis plant
– Unique properties through structure-activity
relationships (SAR)
– Each has a unique anticancer activity profile

76. Benefits of Novel Withanolides
Novel Withanolides
from Physalis
Potent, highly selective anticancer
activity, orally bioavailable
Induces apoptosis, cell cycle shift to G2M
(potential radiosensitizer) and down-
regulates several key signaling
pathways(RET, BRAF, mTOR, notch, BRCA,
HSF-1) in melanoma, breast CA, thyroid
CA, Head and Neck CA, and leukemias
Low Toxicity Profile,
clean hERG and AMES
Standard
Chemotherapy
Potent, majority given i.v. which are
often non-selective, resistance is
common (imatinib, cisplatin)
Targeted agents as monotherapies
have problems with resistance through
alternative survival pathways
Systemic toxicities common (often
dose- and treatment-limiting)
Novel withanolides effectively treat resistant cells and can synergize with imatinib
or cisplatin to decrease dose/toxicity

77. Natural withanolide X001 inhibits notch signaling
in breast cancers (even triple-negative tumors)
Novel withanolides induce apoptosis, shift the cell cycle to G2M,
and inhibit key signaling pathways in multiple cancer cell-lines

78. Withanolides are highly effective
vs. MTC in vivo
________

79. Withanolides Effectively Treat
Melanomas in vivo with
Reversal of Metastatic Disease
Balb-C mice injected with aggressive B16F10 murine melanoma cells develop metastatic disease in controls (top
right figure) but treatment with low dose WA(2.5 mg/kg/d) results in partial response (top left) with prevention of
metastases or complete response with high dose treatment (5mg/kg/d) with reversal and cure of
metastatic disease (right bottom figure). Graph shows complete tumor response in 60% of low dose and 80% of
high dose treated mice sustained even 5 weeks after treatment ceased.
2.5mg/kg/d Control
Pre-treatment
After 5mg/kg/d x 3 wks

80. Market Analysis
• Melanoma, head
& neck CA, ALL,
glioblastoma,
MTC, breast,
pancreatic CA
• 350k
patients/year in
US, 2.5M
worldwide
Potential Cancers
for Withanolide
Treatment
• Orphan indication
• US market of 20K
pts/year
• Currently PEGylated IFN
is $20K per course,
Yervoy is $120K per
patient and Zelboraf is
$112k/year
Current Novel
Melanoma
Therapies
•$50k per complete course of
therapy due to superior
safety & efficacy
• Withaolides are safer than
other cytotoxics and
targeted agents
• Can synergize with either
cytotoxics, BRAFi or other
TKIs for combo therapy
• Phase 1 human trial
anticipated for 2014
Melanoma
Treatment with
Withanolides
2018 2019 2020 2021 2022
Market share 5% 15% 30% 40% 50%
# of courses
of therapy
1,000 3,000 6,000 8,000 10,000
Revenue @
$50k per
$50M $150M $300M $400M $500M

81. Business Development Strategy
• IP
– University has both composition of matter and method-of- use
patents filed for novel withanolides from Withania and Physalis
(licensing arrangement for partner/start up)
• Capitalization
– $150K grant from Inst. for Advancing Medical Innovation
– Seeking additional $5M to get orphan status, IND, and
complete phase 1 data in melanoma
• Development Model
– Start-up to move lead withanolide (already identified for
potency in melanoma/ pathway specificity and solubility by
SAR) through Phase I and then partner with larger pharma
company to reach market
– Early partnership/licensing opportunity with pharma company

82. Withanolide Development Milestones

83. Reasons to Invest in Novel
Withanolides• Strong Scientific Validation
– In vitro / in vivo anticancer mechanism, potent
efficacy, low tox
– Orally bioavailable analogs with enhanced solubility
and potency for cancers (melanoma, thyroid, ALL)
• Solid IP portfolio
– 40 novel anticancer compounds with composition of
matter and method-of-use patents filed (licensing
arrangement for partner/start up)
• Accelerated Market Entry Timeline
– Orphan drug pathway in advanced melanomas, GLP
scalability to start human Phase I in 2014, potential

85. Summary
• Strong I.P essential & is the foundation of any
technology driven organisation
• Portfolios of multiple patents held by different parties
do not impede innovation
• There would be no competitive therapeutic innovation
without patents
• To be successful in taking new medicines into the clinic
we need to dramatically increase our partnering activity
to drive innovation through new business models