The Value of Risk Reduction in CNS Drug Development:
Use of Expected Net Present Value (eNPV) as a Model
50% FAILURE RATE
$264,327,714
$269,614,269
Months in Registration
40
$370,058,800
36
eNPV cost
at Start
of Phase
III methods.
40
METHODS
*All estimates 40
before adjusting for the incremental
of risk
reduction
36
trials from Phase IIa to launch* $52,188,415
$52,188,415
eNPV at Start
of Phase IIa before cost of clinical trials$68,308,899
$264,327,714
$269,614,269
The economic impact of applying
risk reduction
methods
to
CNS $52,188,415
clinical trials is$52,188,415
Risk-adjusted
cost
of
clinical
trials
from
Phase
IIa
to
launch*
$212,139,299
$217,425,854
$301,749,901
estimated using expected Net Present
Value
all cash flow
eNPV at Start of
Phase IIa(eNPV). eNPV calculates
$212,139,299
$217,425,854
ed*
$5,286,555 of success.$89,610,602
expected, adjusted for time andRiskthe
probability
Reduction Value Added*
$5,286,555
the incrementalcost •
of riskFor
reduction
methods. a product that costs $20 to produce with a 50% chance of generating example,
*All estimates before adjusting for the incremental cost of risk reduction methods.
$120 of revenue immediately has an eNPV of $50 (($120 - $20)*50%).
• If there is any delay in the revenue, an annual discount rate must be applied to
cover the cost of capital.
Years 11 -16
Years 17 – 18
oods Sold (COGS; %)
d Marketing Expenses (MKTG; %)*
Rate (%) NPV is calculated as:
hase IV Commitment in Years 2-3 (per year) ($)**
and
Tax Rate (MTR;
%)
18
10
$1,000,000,000
6
4
0
$250,000,000
$500,000,000
$750,000,000
$100,000,000
$50,000,000
15
20
12
$2,000,000
25
Risk Reduction Value Added*
36
$370,058,800
$573,245.913
$7,950,686
*All estimates before adjusting for the incremental cost of risk reduction methods.
Next,
the risk adjusted value of the drug at the start of phase IIa is calculated as:
$68,308,899
$301,749,901
$89,610,602
Using the following probabilities of success for standard risk:
Probability of Success
Phase Duration
Cost
Phase Duration (in months) Cost
(%)
50 (in months)
$6,000,000
30
91
$30,000,000
$6,000,000
97
40
$96,000,000
30
96
36 $30,000,000
43
106 $96,000,000
$136,000,000
40
7.81%
6
$120,662,679
Cumulative Probability of Launch
Start of Phase18IIa
FinalatData
43%
44%
Cumulative Probability of Launch at 6Start
of
Phase
IIa
43%
44%
8
Analysis
6
Risk-Adjusted Value (eNPV)
$719,286,486
$733,672,215
Final Dataat Start of Phase IIa
Final Data
8
Risk-Adjusted Value (eNPV) atAnalysis
Start of Phase IIa
$719,286,486
$733,672,215
Analysis
Months in Phase II
30
30
Months in Phase II
30
30
Cumulative
probability
of
XX%
= of
Cumulative
probability
XX%
=
trials
Months in Phase III
40
40
two successful trials two successful
Months in Phase III
40
40
Months in Registration
36
36
Months in Registration
36
36
eNPV at Start of Phase IIa before cost of clinical trials
$264,327,714
$269,614,269
eNPV at Start of Phase IIa before cost of clinical trials
$264,327,714
$269,614,269
Risk-adjusted cost of clinical trials from Phase IIa to launch* $52,188,415
$52,188,415
Risk-adjusted cost of clinical trials from Phase IIa to launch* $52,188,415
$52,188,415
eNPV at Start of Phase IIa
$212,139,299
$217,425,854
eNPV at Start of Phase IIa
$212,139,299
$217,425,854
Risk Reduction Value Added*
$5,286,555
Risk Reduction Value Added*
$5,286,555
Risk-adjusted cost of clinical trials from Phase IIa to launch*
NPV is then adjusted for the Marginal
Tax
Rate
eNPV at Start
of Phase
IIa (MTR) such that:
$52,188,415
$52,188,415
$212,139,299
$217,425,854
Risk Reduction Value Added*
$5,286,555
18
=
to cost $30 million and $96 million respectively, a failure in phase IIb or phase III is assumed to cost $12 million and
$48 million respectively. A phase IIa failure is assumed to cost the same as a phase IIa success.
Finally, eNPV at the start of phase IIa subtracts from the risk adjusted value of
the drug, the time-discounted cost of bringing the drug from phase IIa to launch
using the phase durations and time-adjusted costs above.
n = # of years from study start to registration
CCT (risk adjusted)= attrition risk-adjusted, time-discounted cost of running clinical trials
eNPV at Start of Phase III before cost of clinical trials
$ 644,005,602
$651,956,288
of
development constant
Phase III
30
Risk-adjusted cost of clinical trials*
$78,710,375
$78,710,375
to
eNPV atof
Start of Phase III • 81% Probability of Success
$565,295,227
$573,245.913
(i.e., standard
risk)
40 isolate the impact
Risk Reduction Value Added*
$7,950,686
36
$ 771,216,585
$85,258,679
$685,957,906
$120,662,679
risk reduction in the
• 82% Probability of Success (i.e., a 1% reduction in failure rate)
*All estimates before adjusting for the incremental cost of risk reduction methods.
$370,058,800
phase manipulated.
• 97% Probability of Success (i.e., a 20% reduction in failure rate)
$68,308,899
$301,749,901
These
largely CNS-specific
$89,610,602
assumptions are consistent with published findings using similar models1.
*All estimates before adjusting for the incremental cost of risk reduction methods.
2
40
78%
29.40%
92%
18
97%
13.23%
3
99%
18
4
5
6
97%
of Drug
at Launch
NPVNPV
of Drug
at Launch
5.29%
Probability
of Success
after
PhaseIIIIIITrials
Trials
Probability of Success
after
FiveFive
Phase
99%
18 of Success through Registration
Probability
Probability of Success through Registration
1.98%
Cumulative
Probability
Launch
StartofofPhase
PhaseIIIIII
Cumulative
Probability
of of
Launch
at atStart
18
Risk-Adjusted
Value
(eNPV)
StartofofPhase
PhaseIIIIII
Risk-Adjusted
Value
(eNPV)
at at
Start
Months
in Phase
Months
in Phase
III III
Months in Registration
8
Months
in Registration
eNPV at Start of Phase III before cost of clinical trials
eNPV at Start of Phase III before cost of clinical trials
Risk-adjusted cost of clinical trials*
Risk-adjusted
costinofprobability
clinical trials*
increase
of
= Marginal
eNPV at Start
of Phase III
two
successful
studies
eNPV at Start of Phase III
Risk Reduction Value Added*
Risk Reduction Value Added*
StandardRisk
Risk
Standard
Risk Reduced by
by 1%
1%
$1,663,002,000
$1,663,002,000
81%
81%
98%
98%
79%
79%
$1,320,091,000
$1,320,091,000
4040
3636
$ 644,005,602
$ 644,005,602
$78,710,375
$78,710,375
$565,295,227
$565,295,227
$1,663,002,000
$1,663,002,000
82%
98%
98%
80%
80%
$1,336,388,000
$1,336,388,000
40
40
36
36
$651,956,288
$651,956,288
$78,710,375
$78,710,375
$573,245.913
$573,245.913
$7,950,686
$7,950,686
Risk
RiskReduced
Reducedbyby20%
20%
*All estimates before adjusting for the incremental cost of risk reduction methods.
*All estimates before adjusting for the incremental cost of risk reduction methods.
F
A
As a result of risk reduction in each phase III study, the overall probability of launching the drug rises from 79% to 95%.
The $1.663 billion value of the drug at launch is diminished to $1.320 million adjusting for the cumulative
probability of 79% under standard risk.
1,750
Sales
Prior to10 Reaching
Peak($)30
0
20
Months
1,500
40
Months
0
Year 2
Year
1
18
Year
3
25%
25%
1
1
Year 2
18
Year 4 50%
Year 3
2
25%
2
6 9%
Sales Post-Patent
Expiry ($): 81%
18
Year 4
18.75%Years 11 -16
3
3
89%
Sales Post-Patent18Expiry ($):
Years 17 – 18
4
4
12.50 %
Years 1118 -16
Cost of Goods Sold (COGS; %)
5
5
Years 17
– 18
7.81%
Sales and Marketing
Expenses (MKTG; %)*
18
Cost
of Goods Sold (COGS; %)
6
6
Discount
Rate
(%)
Final Data
Final Data
8
Analysis
Sales andCost
Marketing
Expenses
(MKTG;
%)*
Analysis
of Phase IV Commitment in Years 2-3 (per year) ($)**
DiscountMarginal
Rate Cumulative
(%)Tax Rate
probability
of %)
(MTR;
XX% =
two successful trials
Cost of Phase IV Commitment in Years 2-3 (per year) ($)**
Marginal Tax Rate (MTR; %)
10
20
$250,000,000
0
18
$500,000,000
49%
$250,000,000 49%
78%
18
$750,000,000
$500,000,000
29.40%
18
$750,000,000
30
40
92%
13.23%
$100,000,000
18
$50,000,000
5.29%
$100,000,000
1518
$50,000,0001.98%
20 18
15
12
8
20$2,000,000
12 25
Marginal
increase in probability of
=
two successful studies
$2,000,000
97%
99%
25
Reducing the risk of failed trials from 50% to 30% will yield a
78.4% cumulative probability of two successes after three trials
is $1.379 billion. The difference
between the eNPV of $1.663 billion
and the $1.379 billion investment
is just over $284 million. The $89.230
million value added by risk reduction
represents a 31% improvement. The
$89.611 million value added by risk
reduction in phase IIa represents a
32% improvement and the $120.663
million value added in phase III is a
43% improvement.
101
1,379
Including Cost of Capital
100
81
1,250
1,108
80
1,000
52
32
500
250
29
71
106
60
689
45
750
28
M
$1,663,002,000
$1,663,002,000
97%
97%
98%
98%
95%
95%
$1,580,849,000
$1,580,849,000
4040
36
36
$ 771,216,585
$ 771,216,585
$85,258,679
$85,258,679
$685,957,906
$685,957,906
$120,662,679
$120,662,679
Reducing the risk of failed trials from 50% to 30% will yield a
Portfolio
of Candidates
$48
million
respectively.
A
phase
IIa
failure
is
assumed
to
cost
the
same
as
a
phase
IIa
success.
Sales
Prior
to
Reaching
Peak($)
The cumulative cost of that one
Time to Peak Sales (in years)
4
and Cumulative Total Costs
78.4%
cumulative
probability
of
two
successes
after
three
trials
50% FAILURE RATE
30% FAILURE RATE
drug, including the cost of failures,
Year 1
0
Peak Sales ($)
$1,000,000,000
Clinical trial costs shown are for successful trials at each phase. Whereas successes in phase 2b and phase 3 are assumed
Duration
of
Peak
Sales
(in
years)
6
CIAS, AD and many other CNS disorders.
to cost $30 million and $96 million respectively, a failure in phase IIb or phase III is assumed to cost $12 million and
$48 million respectively. A phase IIa failure is assumed to cost the same as a phase IIa success.
Time to Peak Sales (in years)
4
SalesAll
Prior to
There are many limitations to this analysis.
ofReaching
the Peak($)
assumptions about sales, patent life, success rates of trials and phases, and development times are just that – assumptions. They may be very inappropriate for a specific drug development plan. However, all are within
Year 1
0
the range of published literature, and the general
be easily modified, for example, to fit a drug with 5 years of marketed patent life instead of 10, etc. The quantitative estimates (1%; 20%) of potential impact of employing risk reduction methods are
Year 2 approach taken here can$250,000,000
Year 3
$500,000,000
also illustrative assumptions that are easily modified
but are assumptions rather
than demonstrated results. Further, these estimates do not include the incremental costs of employing risk reduction methods in clinical trials. Lastly, the simulations of phase II and III value
Year 4
$750,000,000
increments assume the development of aSales
drug
which
is, in fact, safe and effective and ultimately approved for commercialization. However, additional simulations can be brought to bear across portfolios of successful and unsuccessful drugs, and there is also incremental
Post-Patent
Expiry ($):
11 -16
$100,000,000
value to improved signal detection in the case Years
of unsuccessful
drugs (i.e., fail
faster).
Years 17 – 18
$50,000,000
Cost of Goods Sold (COGS; %)
15
Worth considering is that many aspects of improved signal detection are not assessed here, and in these cases we attempted to err consistently on the conservative side. For example, more successful trials earlier could have several other positive impacts on NPV, such as
Sales and Marketing Expenses (MKTG; %)*
20
Discount Rate (%) review time, first-mover advantage
12
potential first-to-market advantages in regulatory
in marketing and sales, etc.
Cost of Phase IV Commitment in Years 2-3 (per year) ($)**
$2,000,000
Marginal Tax Rate (MTR; %)
25
©2012 MedAvante Inc.
RESULTS18
Probability
Success
Phase Duration
Increasing the probability of success in
phase IIIofby
20% increases
the value of theCost
drug at launch to $1.581 million
(%) of Success
(in months)
Probability
Phase
Duration
Cost
thus increasing the eNPV by $120.663 million.
(%)50
(in months)
Phase IIa
$6,000,000
When risk reduction is assumed to increase the probability of success to 61%, the value of the drug at
30
Phase
IIb
91 success increased eNPV by $7.951
$30,000,000
Phase
$6,000,000
A 1% improvement
inIIaphase
III probability50of
million.
launch increases to $1.007 billion. After adjusting the net present value by a 12% annual discount rate the
30
Phase
III
97
40
$96,000,000
Phase IIb
91
$30,000,000
Reducing
the
risk
of
failed
trials
from
50%
to
30%
will
yield
a
eNPV is increasedLifespan
by $89.611
of Drugmillion.
Post-Launch (in years)
18
Registration
36
Phase
III
9796
40
$96,000,000
78.4%
cumulative
probability
of
two
successes
after
three
trials
Patent
After
Launch(in(inyears)
of DrugLifePost-Launch
18 10point increased eNPV by
Increasing Lifespan
the probability
of success
inyears)
phase IIa by just one percentage
Cumulative
106
$136,000,000
Registration
9643
36
Using standard risk, a portfolio of
PeakAfter
SalesLaunch
($) for
$1,000,000,000
Patentafter
Life
(in years)
10
$5.286 million
adjusting
the discount rate.
Cumulative
43trials at each
106 inCosts
Clinical
trial
costsphase
shown are
for successful
phase. Cumulative
Whereas successes
phase 2bPer
and$136,000,000
phase
3 are assumed Generated
101
targets
(in
the
early
of
Total
Candidate
Duration
of
Peak
Sales
(in
years)
6
Peak
Sales
($)
$1,000,000,000
to cost $30 million and $96 million respectively, a failure Standard
in phase IIb or phase
III is assumed
to cost $12 million
and Case CNS
Phase III: If the failure rate is lowered from 50% to 30%, the overall probability of success in phase III,
Industry
Approach
Base
the discovery
is required
$48process)
million
respectively.
phase
IIa failure
is assumed
to cost Whereas
the same successes
as a phaseinIIaphase
success.
Clinical
trial
costs
shown
areAfor
successful
trials
at each phase.
2b and phase 3 are assumed
Time
to
Peak
Sales
(in
years)
4
(
Millions
of
Constant
Dollars
)
Duration
Peak two
Salessuccessful
(in years) trials out of five, increases from
6 81% to 97%.
modeled here
as atofleast
to yield one
successful
to cost
$30 milliondrug
and $96launch.
million respectively, a failure in phase IIb or phase III is assumed to cost $12 million and
Probability of Success
Phase Duration
Cost
(%)
(in months)
Phase IIa
50
$6,000,000
30
Phase IIb
91
$30,000,000
Phase III
97
40
$96,000,000
Lifespan
of Drug
years)
18
Quantifying the dollar value of reducing the
risk
ofPost-Launch
failure(inin
phases II and III underscores
the significant return on investment
afforded
by methods 36that can reduce clinical trial failure rates even slightly, not to mention their potential to advance medical science by averting false
Registration
96
Patent Life After Launch (in years)
10
Cumulative
43
106 perspective,
$136,000,000to methods for reducing attrition, especially in disease states with known high rates of failed trials, such as MDD,
negatives that keep important new drugs from patients who need them. Serious consideration should be given, from
both a financial
and medical
DISCUSSION
49%
49%
1
Data
61%61% Final
Analysis
$1,007,001,080
8
$1,007,001,080
30
30
Marginal increase in probability of
40
two successful studies
40
36
36
$370,058,800
$370,058,800
$68,308,899
$68,308,899
$301,749,901
$301,749,901
$89,610,602
$89,610,602
Probability of Success
Phase
(%) IIa
Phase IIb
Phase IIa
50
Phase III
Phase IIb
91
Registration
Cumulative
Phase III
97
Clinical
trial costs shown are for successful trials at each
phase. Whereas successes in phase 2b and phase 3 are assumed
Registration
96
36
*All estimates before adjusting for the incremental cost of risk reduction methods.
to cost $30 million and $96 million respectively, a failure in phase IIb or phase III is assumed to cost $12 million and
$48 million respectively. A phase IIa failure is assumed to cost the same as a phase IIa success.
Cumulative
43
106
$136,000,000
*All estimates before adjusting for the incremental cost of risk reduction methods.
In the standard risk approach, the $1.663 billion value of the drug at the time of launch is diminished to
$719.286 million when multiplied by the 43% cumulative probability.
Clinical trial costs shown are for successful trials at each phase. Whereas successes in phase 2b and phase 3 are assumed
$100,000,000
*Calculated as 20% of total expected sales over 18 years ($1,640,000); $50,000,000
Standard
Risk
Risk
Reduced by 1% by Risk Reduced
by 20%to assess the impact of applying risk reduction,
Standard Risk
by 1%
Risk Reduced by 20%
spent at a variable rate (% of total sales
& marketing
expenditures
Lastly,
eNPVRiskisReduced
calculated
under
in years 1 - 11): 5, 10, 20, 20, 15,$1,663,001,703
10, 10, 5, 2, 1, 1 $1,663,001,703
NPV of Drugyear
at15
Launch
$1,663,001,703
NPV of Drug at Launch
$1,663,002,000
$1,663,002,000
$1,663,002,000
the following 6 conditions:
Probability of Success after Five
Phase IIa
III Trials
81%
82%
97%
asPhase
$10,000
Probability**Calculated
of 20
Success after One
IIa Trial per patient X 200
50%patients per year
51%X 2 years
70%
Phase
Probability of Success through Registration
98%
98%
98%
Probability of Success through Phase IIb
91%
91%
91%
• 50%
Probability
of Success
(i.e., standard risk)
12
Cumulative
Probability
of
Launch
at
Start
of
Phase
III
79%
80%
95%
Probability of Success through Phase III
97%
97%
97% models are estimated
All
Risk-Adjusted Value (eNPV) •at Start
Phase III
$1,320,091,000
$1,336,388,000
$1,580,849,000
51%ofProbability
of Success
(i.e., a 1% reduction
in failure rate)
Probability
of
Success
through
Registration
98%
98%
98%
$2,000,000
holding the probability
Months in Phase III
40
40
40
•
70%
Probability
of
Success
(i.e.,
a
20%
reduction
in
failure
rate)
Cumulative Probability of Launch at Start of Phase IIa
43%
44%
61%
in Registration
36
36
36
of
success in otherMonths
stages
25
Risk-Adjusted Value (eNPV) at Start of Phase IIa
$719,286,486
$733,672,215
$1,007,001,080
t = time period of cash flow (i.e., year of sale) i = discount rate
Months in Phase II
30
R t = net cash flowS
t = sales at time period30
in Phase III
40
40 period
COGSt = cost of goods sold at timeMonths
period
PIVt = cost of phase IV commitment
at time
Months in Registration
36
36
MKTGt = sales and marketing expenses
eNPV at Start of Phase IIa before cost of clinical trials
$264,327,714
$269,614,269
at time period
1.98%
18
176
256
16
328
10.1
328
7.1
40
425
20
4.8
2.2
1
Number of Candidates in Portfolio
Lifespan of Drug Post-Launch (in years)
eNPV is commonly used in drug
Patent Life After Launch (in years)
development
of Drug Post-Launch
(in years)(and other industries)
18Peak Sales ($)
Duration of Peak Sales (in years)
where
one
must
estimate
the
fe After Launch (in years)
10Time to Peak Sales (in years)
probability
of
success
at
each
phase
es ($)
$1,000,000,000
Sales Prior to Reaching Peak($)
of development, as well as future
Year 1
of Peak Sales (in years)
6
revenues.
Year 2
eak Sales (in years)
4
Year 3
At
time
of
launch
the
NPV
of
a
Year 4
or to Reaching Peak($)
drug that will deliver $1 billion
Sales Post-Patent Expiry ($):
Year 1
0
Years 11 -16
peak annual sales is estimated
Year 2 under the conditions to the right1,4,5:$250,000,000 Years 17 – 18
Cost of Goods Sold (COGS; %)
Year 3
$500,000,000
Sales and Marketing Expenses (MKTG; %)*
Year 4
$750,000,000
Discount Rate (%)
Cost of Phase IV Commitment in Years 2-3 (per year) ($)**
t-Patent Expiry ($):
Marginal Tax Rate (MTR; %)
$565,295,227
40
Total Cumulative Costs
fore cost of clinical trials
Months in Phase III
18
$1,663,002,000
25%
25%
1
97%
50%
18
98%
50% FAILURE RATE
30% FAILURE RATE
2 10
25%
6 9% Months 0
95%
20
30
40
10
20
30
Months 0
The NPV
Risk Reduced
by 20% of a $1 billion drug at launch, using these assumptions, is estimated to be $1.663 billion.
$1,580,849,000
81%
18
18
18
$1,663,002,000
4097%
25%
49%
18.75%
3
89%
25%
1
49%
1
Standard
Risk Reduced
Reduced
by 20%
Standard
Risk Risk Risk Reduced
by 1%by 1%Risk Risk
Reduced
by 20%
50%
78%
18
18
3698%
18
NPVatofLaunch
Drug at Launch
$1,663,001,703 $1,663,001,703
$1,663,001,703
$1,663,001,703 92%
NPV of95%Drug
$1,663,001,703
$1,663,001,703
2
25%
2
29.40%
6 9%
$ 771,216,585
4
12.50%
$1,580,849,000
81%
18
18 70% 70%
Probability
ofafter
Success
after
OneIIaPhase
IIa Trial
50%
51%
Probability
of
Success
One
Phase
Trial
50%
51%
$85,258,679
40
18.75%
13.23%
3
3
89%
18
Success through
36 Probability
Probability
of Successofthrough
Phase IIbPhase IIb
91% 91%
91% 91%
91%91%
$685,957,906
18
18
5
7.81%
$ 771,216,585
4
4
12.50
%
5.29% 97%
Probability
of
Success
through
Phase
III
97%
97%
$120,662,679
Probability
97%
97%
97%
$85,258,679of Success through Phase III
18
18
18
Probability
Success through
$685,957,906
5 Registration
Probability
of Successofthrough
Registration
98% 98%
98% 98% 5
98%98%
Trial
NPV of Drug at Launch
$1,663,002,000
$1,663,002,000
Probability of Success after Five Phase III Trials
81%
82%
ne Phase IIa Trial
50%
51%
70%
INTRODUCTION
Probability of Success through Registration
98%
98%
gh Phase IIb
91%
91%
91%
Cumulative
Probability
of
Launch
at
Start
of
Phase
III
79%
80%
gh Phase III Recent data suggests
97%that the probability
97% of success in a phase
97%II clinical trial has the largest influence on R & D productivity of any of the features explored across all
Standard Risk
Risk Reduced by 1%
Risk Reduced by 20%
Risk
Risk Reduced by 1%
Risk-Adjusted
Value (eNPV) at Start of Phase III
$1,320,091,000 Standard$1,336,388,000
gh Registration
98%rates
of Drug at 98%
Launch 1. However, failure
$1,663,001,703
NPVphase
of Drug at Launch
$1,663,002,000
phases of discovery 98%
and clinicalNPV
development
in phase $1,663,001,703
II are quite high,$1,663,001,703
particularly in CNS. For
II and III CNS clinical trials
(e.g., major$1,663,002,000
depressive
Months in Phase III
40
40
Probability of Success after Five Phase III Trials
81%
82%
Probability of Success after One Phase IIa Trial
50%
51%
70%
2, much
unch at Startdisorder)
of Phase IIa when a drug
43%ultimately
44%
61%
demonstrated to be effective is compared vs. placeboMonths
the probability
of
a
statistically
significant
difference
is
approximately
50%
in Registration
36
36
Probability of Success through Registration
98%
98%
Probability of Success through Phase IIb
91%
91%
91%
Cumulative
Probability
of Launch$at644,005,602
Startto
of Phase
III
80%
lower
to 90% success
rate
expected
from the
statistical
of theseeNPV
studies.
have
been
reduce
the79%risk
of CNS trial
at Start of Phase
IIa than the 80%
$719,286,486
$733,672,215
$1,007,001,080
Probability
of Success
through Phase III
97% powering 97%
97%Several
at Start
of Phase IIImethods
before cost of
clinical
trials proposed
$651,956,288
Risk-Adjusted Value (eNPV) at Start of Phase III
$1,320,091,000
$1,336,388,000
3
Probability
of Success
Registration
98%
98% designs,
98% costRatings
failure . These methods
review
recorded
assessments,
clinical trial
Central
in lieuMonths
of site
ratings and$78,710,375
innovative statistical
methods, to
30 include
30of through
30 novel
Risk-adjusted
of clinical trials*
in Phase III
40 $78,710,375 40
Cumulative Probability of Launch at Start of Phase IIa
43%
44%
61%
in Registration
36$573,245.913
36
name a few. However,
to
our
knowledge,
quantitative
modeling
has
not
been
used
to
assess
how
reduction
methods
may add to the
R&D process.
eNPV at Start ofmuch
Phase IIIvalue risk Months
$565,295,227
40
40
40
Risk-Adjusted Value (eNPV) at Start of Phase IIa
$719,286,486
$733,672,215
$1,007,001,080
eNPV at Start of Phase III before cost of clinical trials
$ 644,005,602
$651,956,288
Risk Reduction
Value Added* Risk-adjusted cost of clinical trials*
$7,950,686$78,710,375
36
36
Months in Phase36
II
30
30
30
$78,710,375
Trial
$1,663,001,703
Trial
Risk Reduced by 20%
Trial
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0
10
20
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Risk3MedAvante,
Risk Reduced
by 1% of Physicians
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Walter Greenblatt and Associates, LLC; 2Eli Lilly Standard
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andbySurgeons,
Columbia University; 5The Zucker Hillside Hospital; 6The Albert Einstein College of Medicine; 7Indiana University School of Medicine
Trial
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Risk Reduced by 1%
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3
5,6
3,7
Greenblatt, W 1; Gilbert, P 3; Mallinckrodt, CH2; Williams,
JBW
;
Popp,
D
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Kane,
J
;
Detke,
MJ
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References: 1Paul SM, Mytelka DS, Dunwiddie CT, Persinger CC, Munos BH, Lindborg SR, Shacht AL. How to improve R&D productivity: the pharmaceutical industry’s grand challenge.
Nature Reviews Drug Discovery 2010; 9: 203-214. 2Khin Ni A. et al. (2011). Exploratory Analyses of Efficacy Data From Major Depressive Disorder Trials Submitted to the US Food and Drug
Administration in Support of New Drug Applications. Journal of Clinical Psychiatry. 72:4, 464-472. 3Mallinckrodt CH, Tamura RN, Tanaka Y. Recent developments in improving signal detection
and reducing placebo response in psychiatric clinical trials. Journal of Psychiatric Research 2011; 45(9): 1202-1207. 4Tufts Center for Drug Development, New Drug Success Rates at Top 10
Pharma Companies: A 2006 Study in Parexel’s Bio/Pharmaeceutical R&D Statistical Sourcebook 2006/7. Page 200; DiMasi, et al, Tufts Center for the Study of Drug Development, The price of
innovation: new estimates of drug development costs, Journal of Health Economics, 22(2003) pp151-185. 5Pharmaprojects Pharmapredict, Development Phase Lengths and Attrition Rates
for Selected Therapeutic Categories in Parexel’s Bio/Pharmaeceutical R&D Statistical Sourcebook 2006/7. Page 173. McKinsey/Lehman Brothers, The Fruits of Genomics. January 2001;
BCG: A Revolution in R&D: The Impact of Genomics. June 2001.
Disclosures: Walter Greenblatt: Part 1: MedAvante, Inc. Part 2: Walter Greenblatt & Associates, Callidus Biopharma, GPB Scientific, Taft & Partners, NAMSA, Lerner Medical Devices,
Hygeia Therapeutics, Seedlings Lifesciences, Cleo. Equity: MedAvante, Inc., WuXi Pharmatech, Merck, Pfizer, QuantumBio, Lerner Medical, CE Orthopaedics, Hygeia Therapeutics, Callidus Biopharma,
Azure Therapeutics. Part 3: MedAvante, Inc., Part 4: None, Part 5: No. Paul Gilbert: Part 1: MedAvante, Inc., Part 2: MedAvante, Inc., Part 3: MedAvante, Inc., Part 4: None, Part 5: MedAvante, Inc.
Craig Mallinckrodt: Part 1: Eli Lilly, Part 2: Eli Lilly, Part 3: Eli Lilly, Part 4: None, Part 5: Eli Lilly. Part 1: Janet BW Williams: Part 1: MedAvante, Inc., Part 2: MedAvante, Inc., Part 3: MedAvante, Inc.,
Part 4: None, Part 5: MedAvante, Inc. Danielle Popp: Part 1: MedAvante, Inc., Part 2: MedAvante, Inc., Part 3: MedAvante, Inc., Part 4: None, Part 5: MedAvante, Inc. John Kane: Part 1: Organon,
Eli Lilly, BMS, Intracellular Therapeutics, Boehringer , Rules Based Medicine, Astra Zeneca, Otsuka, Novartis, Merck, Myriad, Esai, Pfizer, Lundbeck, J & J, Targacept, Shire, Amgen, Sunovion,
Pierre Fabre, Janssen, Alkermes, Jazz, Forest Labs, Part 2: BMS, Otsuka, Merck, Novartis, Lilly, MedAvante, Inc. , Part 3 None, Part 4: None, Part 5: None. Michael Detke: Part 1: MedAvante, Inc.,
Sonkei, Inc., Rhine Pharmaceuticals, Columbia NW Pharmaceuticals, Naurex, Inc., Roche, Inc., Part 2: MedAvante, Inc., Part 3: MedAvante, Inc., Part 4: None, Part 5: MedAvante, Inc.
The authors would like to acknowledge the help of Lori M. Price, MS.
RESEARCH INSTITUTE