February 13, 2018
What do we mean by ‘discharging translational risk’?
Decision-making in biotech and pharma is often governed through an analysis of risk (and reward) and much of my prior career has been focused on management of varying aspects of risk. How to best identify risk, how to balance it against potential reward, how to allocate it across a portfolio of programs/assets, and importantly how to ‘discharge it’ systematically and efficiently. In drafting the initial RFA for the CBC’s new Phase 2 translationally focused program, the Accelerator Award, I found that my colleagues liked the concept, but often found it somewhat poorly defined. And while we incorporated some of this language in the final RFA, ‘will approve projects based on significance, translational potential, marketability of the proposed product, preliminary data, and the soundness of the proposed milestones to discharge key elements of risk’ I still believe that it is necessary to have a better understanding of risk, and how risk factors into drug development, and importantly how it influences investment in drug development.
I recalled an article from Mike Gilman, now CEO of Arrakis and serial entrepreneur, that explained some important concepts with regard to risk. Among these concepts is included the investor perspective, ‘investors try to ensure that each new dollar they invest in a company is invested at lower risk.’ The second was the concept of disaggregating the [risk] problem to make it more manageable and to support the investor demands, ‘We accepted that we could not test the clinical hypothesis…in a short, small, and inexpensive Phase 2 study. But what we could do was to robustly test the biological hypothesis…. And we could do that for roughly a tenth of the cost. If the answer was no, we were done. But if it was yes, the next experiment… is a lower-risk and much more palatable investment.’ And finally, perhaps the most important, is that by more effectively managing risk, we can actually be bolder and less risk-aversive, ‘Imagine the great leaps forward in medicine if we enabled more aggressive and creative risk-taking by focusing on rigorous and rational risk management.’ This is our goal with the Accelerator Award. I hope that you enjoy reading Mike’s thoughts on the Awesome Power of Risk.
Jim Audia
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