Building On Biotech Confidence With Strategic R&D

Contributed Commentary by Chris Smyth, President, ICON Biotech 

July 1, 2024 | The biotech sector has weathered some recent headwinds in the funding market but is marked by a general air of confidence as we come to close the first quarter of 2024. This confidence was noted in our recent survey of over 130 decision makers in biotech companies, where we found that despite challenging conditions, 87% of respondents reported at least some confidence and 38% were very confident in the overall success of their product. As the market shifts again, biotech companies can build on this confidence by utilizing their capital in the most effective and efficient way possible through improved trial designs, timelines and data-responsive strategies.  

R&D Across The Market 

The majority of our survey respondents, 60%, expected their R&D spending to increase in the next one to two years, 23% expected R&D to hold steady and only 2% expected a decrease in their spend. This increase in spend is correlated to the rising complexity and increased size of studies and is further complicated by the lingering funding challenges. Nearly half (47%) of the respondents marked the rising cost of capital as having the greatest influence on future operations, meaning biotech organisations will need to leverage more pragmatic fiscal strategies to support their scientific ambitions as their R&D increases.   

R&D spend is also trending upwards among large pharma companies as M&A activity has increased in recent years. The market’s recent downturn had essentially closed the IPO window for biotechs and lower valuations made acquisition more attractive for pharma that still need to fill their pipeline. In 2023, there were 29 disclosed deals with more than half of those reaching over $1bn each according to SVB’s reports. M&A also offers a more stable funding route for biotech companies, and our survey showed that nearly half of biotechs received their funding from large pharma while a third received VC funds. 

Our survey respondents were most active in oncology (42%), neurology (32%), cardiovascular (29%) and infectious disease (29%) therapeutic areas, which generally reflect wider trends. The therapeutic areas of high interest, and those that are receiving more VC capital, are still mainly oncology, CNS and immunology. These areas overlap with large pharma’s interests, where we see increasing spend in CNS, obesity, cardiovascular and immunology areas. Other hot spots include Cell and Gene Therapies (CGT), obesity and Alzheimer’s research following recent progress.  

Efficiency In Trial Designs  

Clinical trials were marked as the greatest challenge to biotech organisations’ operations (32%) and over half identified phase 3 as the most challenging clinical stage. Improving the efficiency of clinical trial designs to enhance outputs at early development stages will cut a clearer pathway to help biotech companies navigate the ever-present challenges associated with the increasing scale, complexity and associated execution burden of clinical trials.  

A key area for consideration is in streamlining protocol development. Only 5% of respondents marked this stage as posing the greatest challenge for their organisation, though the rising protocol complexity and increasing number of amendments across the industry would suggest that the importance of proactive protocol development strategy to mitigate operational risk and resource burden has been underestimated.  

Minding The Timelines 

Duration is a major cost driver, and it’s imperative that drug development programs advance quickly and efficiently to value inflection points. In highly competitive indications, accelerated programs can potentially enable first-to-market status. Optimising the development timeline can benefit R&D deployment, though it requires strategically shifting work to accommodate concurrent work and parallel decision-making at key points.   

Regulatory strategy is another aspect of development strategy that would benefit from early consideration and proactive engagement as associated delays or additional data requirements can be costly and time consuming. Prioritising registration-level data from early on will not only prepare biotech organisations for regulatory interactions, but it will also better position them against increasing diligence requirements and make their program more attractive to investors. 

Data-Responsive Strategies  

The industry is increasing its use of various datasets, from real-world to claims and EHR data, to optimise development strategies and inform ultimate positioning. As real-world datasets grow and artificial intelligence, machine learning and robotic process automation (RPA) continue to expand capabilities and applications, these technologies will impact the iterative process of data generation and evaluation throughout development.  

Building data-responsive strategies will be important for biotech moving forward, providing clarity on ultimate reimbursement potential and drug utility. Biotechs’ CRO partners should be able to assist in leveraging this healthcare intelligence to optimise trial designs, map inflection points and exit contingencies, which builds value into the asset. 

Conclusion 

Addressing the complexity of clinical trial execution and balancing rising capital costs with growing R&D spend requires longer-term, agile strategies. The confidence captured in the ICON Biotech survey is an important vital sign for the industry after the market correction, and biotech companies are recalibrating their approaches to maximise their R&D programs. The trend toward earlier engagement with strategic partners will support biotech in these operational optimisations, enabling their innovative therapeutic advancements and helping them to thrive in this competitive landscape.  

Dr. Chris Smyth is President of ICON Biotech. Dr. Smyth has 30 years' operational and therapeutic experience, most notably in biotech, MedTech and oncology. Prior to ICON, he spent 10 years in IQVIA Biotech, where he held EVP Oncology and Chief Operating Officer roles before assuming global leadership as President of the division. Dr. Smyth also previously led global clinical operations for 8 years at an oncology biotech company, Antisoma. Dr. Smyth holds a Bachelor of Science degree in Biochemistry from the University of Kent at Canterbury, a PhD in Reproductive Biology from the University of Edinburgh Medical School, and an MBA from Henley Management College. He can be reached at Chris.Smyth@iconplc.com.