Sponsors certainly have plenty of risk these days. For those that would prefer not to finance a compound through the early phase of its life cycle, there’s a contract research organization (CRO) willing to share the uncertainty and, should it materialize, the reward.

Wilmington, N.C.-based PPD has a compound-partnering program through which it aligns itself with discovery companies (say, biotech firms or other small drug innovators). Both companies then can choose to, together, take a compound through its pre-investigational new drug application (IND) process, Phase I/proof of concept stage. PPD finances that. If the compound proves successful, and is later licensed by a sponsor, the innovator gets a nice cut and so does PPD.

Everyone Wins, Maybe

“We take on the risk, increase the value of the asset, get more favorable terms for the innovator and PPD can share in the upside later on, usually through royalties,” explains Fred Eshelman, PPD’s founder and CEO.

Eshelman, who left his post as Glaxo‘s senior vice president of development in 1985 to start PPD, says the pre-IND, Phase I/proof of concept stage is the riskiest part of the development cycle—but it’s also the cheapest.

$30 Million Or So

Depending on the therapeutic area and the compound itself, he says it might cost $30 million to usher a compound through this stage. “From there on, Phase II is likely to cost in excess of $100 million, and then there are launching costs,” says Eshelman, who adds that he knows of no other CRO that does this.

How does it work? Sometimes PPD will seek out a compound to bring into their stable, and sometimes innovators, perhaps lacking the cash for Phase I/proof of concept, will come to PPD asking if they’d be interested in partnering on a particular compound. Thus, says Eshelman, PPD can serve as a licensee or a liscensor. The company could also do this for sponsors whose development pipelines are overwhelmed, though that hasn’t happened yet, says Eshelman.

A late-stage partner then takes over the compound at the end of Phase II.

High Hurdle

PPD, he says, is discriminating about which compounds it wants to take a risk on. “We sort through lots and lots of opportunities before we find one that fits our hurdle rate,” says Eshelman.

For instance, the compound can’t take too long to show that it works. The program wouldn’t, for instance, want to get involved with drugs like antidepressants, which don’t really show efficacy until almost Phase II, Eshelman says. Or drugs for osteoporosis, which require trials that last for five or six years. It has to be faster than that.

Good Chemistry

Also, the compound needs to have a reasonably clear regulatory pathway, acceptable cost of manufacturing, good patent protection, and, says Eshelman, “whoever we’re getting in bed with, there has to be good chemistry.”

Most important, though, is a supportable market forecast. “We’re not interested in drugs that don’t have a $750 million peak sales possibility,” declares Eshelman.

Guaranteed CRO Clients

The contracts all differ. Some may involve PPD owning the drug, others constitute a shared partnership with royalties built in. But all state that a portion (if not all) of the drug’s future trials must be conducted through PPD, which has 10,200 employees in 30 countries.

The four compounds currently in PPD’s nine-year-old compound-partnering pipeline are:

• Dapoxetine, for premature ejaculation. In Europe, late-stage partner Johnson & Johnson submitted a marketing authorization application (the European equivalent of a new drug application) at the end of last year. The NDA for dapoxetine was filed with the FDA when the Vioxx controversy broke and the furor began over suicidality risks of selective serotin reuptake inhibitors (SSRI). “It was a horrible time for an NDA to go in,” says Eshelman. The company, with its partner, decided to file overseas instead.

• Alogliptin, for the treatment of type 2 diabetes. PPD partnered with Takeda Pharmaceutical on this drug, receiving a milestone payment of $15 million in February when the drug’s new drug application filing was accepted by the FDA.

• Sinunase, for chronic sinusitis, is in Phase III trials. The late-state partner is Accentia Biopharmaceuticals. Accentia, says Eshelman, plans to file an NDA in late 2008.

• PPD 10558 (which is expected to be renamed by a late-stage partner), a statin for high cholesterol, is in Phase I trials PPD licensed it from India’s Ranbaxy last spring. No late-stage partner has signed on yet. The compound was attractive as it appeared to offer an improved safety profile over other statins on the market, said PPD in earlier published reports. 

Hunt Mode

Goals for the year?  Eshelman says he hopes to get two of the four compounds in the pipeline—dapoxetine and alogliptin—approved this year. Meantime, the program is, as always, in hunt mode. 

“We continue to look all over the place for other compounds,” Eshelman says. “Your guess is as good as mine where we’ll find one.”

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