The journey from clinical success to commercial failure to compound curators

The Head of R&D at Arena Pharma shares how smart clinical choices took them from the verge of bankruptcy to a market cap of $2.8bn in just three years



Pharma IQ
10/22/2019

In the early 2000s, Arena Pharma brought its clinical development in house to focus its efforts on promising compounds for the obesity market. With strong results on both efficacy and safety, it secured approval. However, it did not predict that in the next decade, the obesity market would turn out to be a commercial failure for all companies involved.

As this 20-year-old biopharma discovery and development company verged on bankruptcy, it decided to take a risk and invest in a fresh perspective.

Preston Klassen, Executive Vice President and Head of Research and Development at Arena Pharma, was part of the new management team brought in to turn things around. As other companies with similar market efforts began to fail, Klassen got to work examining Arena’s compounds.

In the face of a commercially failing market, Arena turned their attention back to their discovery efforts to drive their clinical strategy forward.

Initially founded as a discovery research engine, Arena had earned success by focusing on small molecules and G-protein-coupled receptor targeted molecules. As it charged forward with an obesity-focused commercial efforts, work was still being completed behind the scenes on the discovery and development front.

It was by filtering through all of Arena’s data and historical research that Klassen was able to find the compounds that would kick-start Arena’s future success.

Facing limited resources, both in terms of staff and funding, Arena had to take a strategic approach to clinical development. It pumped additional resources into drug development, searching for strong early reads in Phase II trials across a number of compounds to guide their next move.

This resulted in a Phase III trial for an ulcerative colitis compound, a decision to license out another compound for an upfront payment of $800m to fund future development and a third compound moving forward in Phase II. Since Arena’s research engine was never turned off during this process, this still left a handful of promising compounds yet to advance.

Preston sums up that Arena was “on the verge of bankruptcy and down to 35 people, only a few of years ago. Now, we are back up to approximately 250 people, moving from a market cap of $300m in 2016 to around $2.8bn”.

By 2016, Arena was on the verge of bankruptcy, down to 35 people with a market cap of $300m. Following their change in strategy, they have reached 250 people and a $2.8bn valuation.

To enable this level of growth, Klassen has had to approach clinical development in a pragmatic way. As he explains, when it comes to clinical trials it is “first and foremost about determining the best and most specific objective”. The first challenge most companies will face is selecting the right endpoint. He recommends being very specific about the core objective you are testing for. He notes that “it’s very easy to fall into the trap of trying to test too much at once and then fail to get a clear answer”.

Arena decided to approach all trials in the most efficient manner. Klassen is keenly aware that some of the larger studies in certain disease areas can require upwards of 30,000 patients and cost more than $500m. When facing a resource intensive trial, Klassen believes that the focus should be on how to make your process as efficient as possible, whether that’s how you evaluate your patients, the design of your study or the information you lean on from health systems.

Klassen shares the example of Arena’s ulcerative colitis drug in Phase III. In past programs it has run two short studies, then taken those with positive responses and re-randomized them for one longer study. Seeing as its compound is a once-a-day pill with no dosing change, Arena realized that the drug would not really be used differently in the early stages compared to the later stages.

So, rather than having to overfill two short studies to try to ensure enough patients remained for a longer-term study, it decided to operate with efficiency in mind and conduct one long study.  Klassen explains that “by doing one long study and checking in at the early and later time point, we were able to use a 20% smaller patient sample size compared to traditional methods”.

Before every new study, Arena now brings in a panel of experts to simply ask 'what is the best way of moving forward?'

To source these innovative ideas before embarking on a new study, Arena bring in a panel of experts from academia, regulation and disease subject matter experts. The core goal of these meetings is to bring everyone together and simply ask ‘what it the best way of moving forward?’ Klassen notes that it is from these early discussions that the great ideas really start to percolate.

Klassen also leans on observational data, such as electronic health records and the broader healthcare systems. He believes that it’s “crucial to use this data in a more robust way to reduce the overall burden and cost of larger clinical trials”. He continues that “there’s a lot that can be done with existing data, it’s just about figuring out how to best link it across and be efficient with the information you have”.

For Klassen, the key to securing efficiency gains comes from the strategic use of what you have in hand and a willingness to re-think the traditional approach. After all, if Arena were to have followed the industry standard over the course of this process, it is highly likely it would not exist today.

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