Shorter post today. I have to write a thesis proposal and prepare for a DAC meeting.
One thing that I think is painful about the current biotech ecosystem, specifically for therapeutics investing, is how difficult it is to have a detailed discussion about a target or a drug. The circle of competence for people that understand basic PK/PD, what aspects of a molecule design are worth paying attention to, how to interpret clinical datasets, etc. seems small to me. Biotech sits at a massive discount relative to other industries and if there ever was a time to buckle in and learn how to pick companies, it is now.
Having a clearer understanding of what makes a molecule good or bad, or how to critique a development plan gives you a leg up if you want to do anything useful yourself. Differentiating between the me-toos should be a learnable skill.
I don’t think I’m good by any means at being a biotech investor. Be gentle. This blog post is simply a list of questions I’ve found useful to help frame diligence. Even simply knowing certain key words for prompting makes ChatGPT way more useful to you. Garbage in, garbage out.
Questions to Ask Companies
Market
How large is the addressable patient population
What proportion of this is refractory to standard of care versus treatment naïve?
What are the major competitors and data readouts in the next 24 months
What are the major competitive differentiators of the molecule?
Are there any strategic advantages that the company has over competitors (IP, KOLs, BD relationships, etc.)
Molecule
What is the dosing interval?
What is the expected injection or pill burden?
Any formulation issues?
What is the off-target toxicity profile?
Any selectivity issues?
Any delivery issues if directed towards a specific tissue?
hERG, CYP, genotoxicity
What are the tox profiles of expected metabolites?
Has there been a clear PK/PD relationship identified?
Are there assays with good in vitro in vivo efficacy correlation?
Does the PK/PD relationship hold over disparate chemical matter?
What exposure is the molecule able to achieve? How does this compare with competitors?
Bioavailability (%F), Cmax, Cmin, T1/2, Koff, Kp
Does the molecule satisfy Lipinski’s rule of 5
More than 5 hydrogen bond donors (sum of OH and NH groups)
More than 10 hydrogen bond acceptors (sum of N and O atoms)
A molecular weight (MW) over 500 daltons
A logP (octanol–water partition coefficient) greater than 5 (indicates high lipophilicity). Or really logP or logD outside 1 - 3.5
Are there other small molecule red flags (thank you topical and vague)?
Unprotected amines (reactive, off target binding, metabolized readily)
Carboxylic acids (idiosyncratic tox)
Check basicity, whether it is a substrate of membrane transporters
Nitro or furan groups (reactive/toxic), sulfonamides or anilines?
Phenyls (easy hydroxylation)
Any structural alerts from in silico tox screens (e.g. Derek Nexus)?
Is there any CMC / manufacturability risk? E.g. Is the compound chemically tractable at large scale (multi-kg GMP)?
Does the molecule have a difficult synthetic route? tricyclic or higher-order fused system?
Are there tissue penetration considerations?
For antibodies, what kind of properties have been engineered / what mutations?
Biology
What is the expected on-target toxicity profile?
KO mice, previous clinical datasets
What does the human genetics evidence say? (GWAS of target and upstream/downstream pathways)
Are there clinical datasets that derisk the target?
What are the PD biomarkers and how good are they?
What are the known resistance pathways?
What is the rate of target turnover (e.g. half-life and resynthesis)? Any TMDD issues?
How important is the pathway and modulated target (effect size)
How compelling is the preclinical evidence?
Do the potency assays translate to clinical efficacy?
Is there a thesis for why modulating the target exceeds efficacy of existing treatments?
What is the level of target expression in various stages of disease, and after treatment with different therapies?
How easy is it to measure target expression and will a companion diagnostic need to be developed?
Can the biology be generalized to other novel indications?
Are there combinatorial strategies being tested or envisioned?
Clinical Strategy
What is the clinical development plan beyond the current stage? (esp. if moving from POC to pivotal)
What endpoints are being pursued in upcoming trials? Are they clinically meaningful or surrogate?
What is the likelihood of regulatory acceptance of the selected endpoints?
Any adaptive trial designs or enrichment strategies being used?
Has the company engaged with FDA or EMA? Any feedback from pre-IND/Type B meetings?
What are the potential bottlenecks in patient recruitment or trial site setup?
Company specific
Can you talk about your fundraising history, how you spent the money, how the story has changed over time.
If we could skip straight to the money slides: key proof of concept data for demonstrating why your asset or technology is a step up from competitors that would be great.
Can we walk through the TPP together step by step?
What have others shown about this target, what is the competition and why is your approach better?
What are the near-term inflection points for partnering or acquisition?
Has there been pharma diligence or interest in co-development?
What is the fallback plan if clinical data is mid? What is the bar for success?