Regulatory Risk

There are lots of risks in drug development.

The drug may not work. Or perhaps the drug is not safe. In some cases the clinical trials were not well designed or conducted. And sometimes companies underestimate the costs and run out of money. And always there is the risk that the FDA (or similar government agencies in other countries) decides not to approve the drug.

In fact, the regulatory risks are much broader. The first engagement required with the regulators is to secure permission for the first clinical trial. Sometimes the FDA asks for something to be done that did not seem necessary, and at times this can be costly both in time and money. Many times the FDA asks important scientific or safety questions that need to be addressed. While the amount of each is hard to predict, this is an important part of the process. After all, people will be enrolling in the trial and taking the medicine. It needs to be as safe as possible. The trial needs to be as safe as possible. The regulatory risk of concern to a company such as ours is the risk of time. When will the FDA respond? Will the FDA's response be complete? These issues must be managed or a start up company like ours will run out of money if it were to be in limbo and still have costs.

A high priority for us it to reduce regulatory risks. One way is to meet with the FDA through a process called a pre-IND. The IND is the actual request to conduct the first study so this comes first. The pre-IND is less formal than the IND and the FDA does not make binding agreements here, but does provide incredibly valuable feedback on the plan. We completed a pre-IND and learned what the FDA would want prior to our launch of a Phase 2A clinical trial.

As a regulatory expert, I like to find a way to engage a second time with the FDA. You can only have one pre-IND meeting, so I asked them for something different - a Type C meeting. In that meeting, I confirmed several key takeaways from the pre-IND as well as asking several other questions (about safety assessments and manufacturing). By asking about those key takeaways a second time, I gained more confidence that the answer being the same both times was something I could count on.

So we were ready to work on the IND, which can't be submitted until the drug manufacturing is complete as well as full analytic testing. But then it became apparent that there was a new regulatory risk and I could not figure out how to mitigate that risk.

To manage a program or a company requires control of spending and establishing a realistic timeline, which feeds into the budget requirement. A drug developer needs to know it will receive a complete review of the IND application from the FDA within the first month or two. If the dialog drags along, the company will be spending money without making progress.

The risk that concerns me is related to the reduction in staffing at the FDA. It's likely that the effects are greatest in spots that the administration does not want to support such as vaccines, but the effects are being felt across the Agency from what I hear and infer.

I've read all sorts of estimates of the reduction in staffing and it's not possible for me to figure out how the staffing reductions are affecting the division of neurologic drugs, but it seems that almost 20% of the FDA employees are no longer FDA employees.

One of the major tasks for the drug center at the FDA is to review INDs. With 20% - or even 10% - less people, it seems hard to believe that the review of INDs will continue as efficiently and thoroughly as it was. The law stipulates that an IND not reviewed within 30 days it is automatically approved, which the FDA does not want to happen. So a response is provided within 30 days, historically a response that was very complete and required weeks to respond.

What do I think is happening with the staff reductions? I think the reviewers are completing partial reviews, finding questions that need to be answered and sending them as responses to the companies submitting the INDs at day 28 or 29 so that they are not automatically approved. These responses are not complete, so the company will realize that even after answering the first questions, there will be more (and perhaps more after that), instead of receiving them all within the first 30 days.

That's not how it used to work. You'd get questions, answer them within a couple of weeks and then in most cases, have the IND accepted by the FDA so the clinical trial could begin.

I think that the FDA reviewers are being asked to find difficult questions to allow them to postpone the need to make a decision or perhaps more likely, running out of time and submitting a partial response to their supervisors, which then are used as the day 28 or 29 response. I don't think it is an overt conspiracy but it works out as if it were.

Is there any option to reduce this regulatory risk?

Keep in mind that if we can't predict the time required to get through the IND process, then we could be spending money month after month just to keep the program and company together. That's not something that is good for a startup (or an established company) and certainly not a plan that investors would like.

So in search of a more predicatable regulatory landscape with first rate clinical trial infrastructure, I approached experts/regulators in several geographies. Canada, EU and UK each responded similarly. While our drug can go right into Phase 2A in the US, because it was never approved in these other geographies, it would be treated as a new molecule. We'd nee 5+ years and probably more than $10M to get to the point where we could consider a Phase 2A trial.

That ruled out those countries.

So we looked at Australia. I've worked in a trial there before, and the country is set up with clinicians equal to those in the US with a ton of clinical trial experience, including in particular in Parkinson's disease. The regulatory environment is one where starting with a Phase 2A trial is allowable for our drug. And we should be able to secure permission to do so within 3-4 months of completing our fund raise.

Making such a decision is painful. I've heard from patients, families and doctors who are excited about the possibility of participating in the first trial - under the assumption that it would be in the US. I feel a bit like I am abandoning people in need. But at the same time, I can't figure out a path that allows the trial to launch in a predicable time frame. And investors don't like that uncertainty. So we'll start in Australia with the expectation of seeing results within a year and then returning to the US.

By pointing to Australia, we expect to be able to secure permission for the trial and completing our funding in parallel.

And while a clinical trial in Australia is not my first choice, if that is what we need to do, then that is what we are going to do.