Biotech Startup Flexion Cuts Wasteful Big Pharma R&D -- Why Didn't We Think of That?

Last Updated Mar 2, 2010 7:36 AM EST

Flexion, Chorus, Eli Lilly and R&DA biotech start-up called Flexion Therapeutics is attracting big money and big partnerships with a stunningly obvious business model -- figure out if a drug actually works before spending millions of dollars perfecting it.

Everyone knows the pharmaceutical research and development process is notoriously inefficient. Commonly cited figures say it takes 10-14 years and roughly $800 million to develop a drug, and if you exclude just one successful company -- Genentech -- the cost comes closer to $2.5 billion per new drug.

Everyone also knows that is totally unsustainable... although figuring out how to fix it has been tricky.

One group that succeeded was Eli Lilly (LLY)'s Chorus, an autonomous R&D unit within the big pharma that vetted 19 molecules in five years, with four successes. Here's how Chorus founders Michael Clayman and Neil Bodick explained their approach to BioWorld Insight:

[The] team is "focused entirely on the so-called killer experiment." They only collect data needed to advance to an indisputable efficacy study. ...If the drug succeeds, formulation work and other skipped studies will have to be completed, but at that point the drug has a much higher chance of success and warrants the investment.
Seeking Alpha's Derek Lowe noted that another key to Chorus' business model is its use of contract research organizations:
The main reason that Lilly has been using CROs so much (through an R&D unit named Chorus) is that they feel that they can do the job more cheaply. The next most important reasons after that one are (1) that they can do the job for less money, (2) that they can do the job without Lilly spending so much cash, and (3) that they can do the job at lower cost. Have I left anything out?
OK, I've never worked inside big pharma... but doesn't the whole idea of minimizing upfront investment before you know your drug actually works sound kind of obvious? Ditto for giving the clinical work to whoever can do it most efficiently. Is there a reason all R&D isn't done this way?Chorus Flexion Eli Lilly
Maybe it will be soon.

Clayman and Bodick started Flexion a few years ago, claiming they could do in 2.5 years with $3 million to $5 million what it takes pharma three to four years and $15 million to $40 million to complete.

And pharma seems to be buying it. Flexion has $42 million in venture capital, including some money from Pfizer (PFE), and earlier this year the start-up inked deals with AstraZeneca, Merck KGaA of Germany and an undisclosed pharma firm. They said additional deals are in the works.

Scissors photo by Flickr user byoogle, CC 2.0.

  • Trista Morrison

    Trista Morrison is a staff writer at BioWorld Today, a daily newspaper that