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The short-term hit to company financials as reported in the 2020 second quarter earnings season, with patient visits greatly reduced during April and May, will be compounded by a longer-term loss of R&D momentum as clinical trial sponsors have been forced to take defensive measures. While it is still too early within the lifetime of the pandemic to point toward any slowdown in regulatory filings and drug approvals, this article quantifies the disruption to clinical trials and the accompanying slowdown to pipeline progression.

The pandemic has certainly wounded biopharma R&D, and with an acceleration back to normal levels unlikely in the immediate future, there will leave a noticeable COVID-shaped scar heading into 2021. It is certainly not all doom and gloom. Due to the incredible influx of capital into the sector in 2020 to fuel new innovations, the longer-term outlook is more positive. If this investment can be sustained, the scars caused by COVID-19 will fade over time, leaving the industry in rude health.

Clinical Trial Activity Recovering

Eli Lilly was among the first big pharma companies to publicly announce the disruption to and temporary closure of a portion of its clinical trials in late March 2020, as a wave of industry players disclosed their business continuity measures. While several of Lilly’s peers shied away from comparably broad statements and blanket decisions concerning their trial portfolios, the reality was that the whole clinical trials ecosystem faced disruption. The considerable point-of-care burden at trial sites necessitated hospitals prioritizing resources towards the influx of COVID-19 patients, and many outpatients were also unable or unwilling to travel for scheduled follow-up visits. (Also see "Lilly, Galapagos Put Some Trials On Hold Due To Coronavirus Concerns" - Scrip, 23 Mar, 2020.)

The net result was that large numbers of trials faced temporary closure to new patients, and fewer new trials were able to start during the initial pandemic months, with research into COVID-19 treatments the obvious exception. Digital solutions such as remote monitoring, telehealth and electronic informed consent have been employed at scale to enable continuity where possible, although slow uptake of these tools prior to the pandemic meant that pharma’s collective experience of virtual trials was modest.

In total, Trialtrove analysts can identify approximately 1,000 separate clinical trials that have been directly affected by the pandemic, each with a publicly available reference pin-pointing the blame on COVID-19 and lockdown measures. In reality, the true scale is near-universal, as regulators issued guidances allowing sponsors to make trial-by-trial judgements on whether halting or continuing each study was in the best interests of patients.

An alternative way of measuring the pandemic’s effect on clinical trial activity is to calculate the proportion of all ongoing studies that have temporarily closed recruitment. There are a variety of clinical, commercial and strategic reasons why this might be the case, and of course a global pandemic is certainly a compelling addition into the mix. At any given point in time, around 1% of the biopharma industry’s currently ongoing trials are listed as temporarily closed across the various registries, although there is likely underreporting. As Exhibit 1 shows, this metric increased to nearly 4% in mid-May at the height of hospital pressures and lockdown measures in the West, when 554 of the industry’s 14,843 ongoing trials were temporarily closed.

As the concentration of COVID-19 patients began to ease in the most common trial locations, and social distancing was loosened, clinical activity steadily returned with the re-opening of certain studies and initiation of new trials that were previously held back. As of 28 September 2020, the total number of ongoing industry trials reached a peak of 15,285, 333 of which remain closed, equivalent to a reduction of nearly 2%, beginning to approach the pre-coronavirus baseline.

Exhibit 1.
Effect Of COVID-19 On Industry Trial Status

Source: Trialtrove, September 2020

Pipeline Momentum Continues To Lag

There has clearly been disruption to clinical trials, but patient enrolment and trial timelines tend to be quite elastic in nature. While a site may not be adding new patients for a period of a few months, logically demand will build up in the intervening period and missed progress can be caught up. However, it is more complicated to account for the missed diagnoses, referrals and general decline in health care-seeking behaviors witnessed through the pandemic. There has undoubtedly been a toll beyond simple clinical trial activity, extending into general pipeline momentum, as shown in Exhibit 2. Left unchecked, this will trickle down into downstream measures such as delayed pivotal events, regulatory filings and fewer approvals.

One clear measure of pipeline momentum is the flow of drugs sequentially through the various stages of clinical development. Of course, the later stages of clinical development are that much more expensive, and R&D spending can only sustain so many Phase III assets. Nevertheless, as the industry’s collective pipeline continues to swell the number of phase transitions should increase accordingly. To measure this, data were calculated by Pharmapremia, a probability of success benchmarking tool based on historical development programs in the US. (Also see "Pharma’s Record-Breaking Pipeline Hits New Heights" - Scrip, 13 Apr, 2020.)

Through 2019, when a variety of different metrics pointed towards the biopharma industry being at its largest ever, there were an average of 40 successful phase transitions each month. Around half of these related to drugs completing Phase I trials and entering mid-stage development, and there was a fair degree of volatility, in part driven by the annual conference calendar of medical and investor meetings.

By contrast, 2020 saw at over 30% fewer phase transitions, with notable underperformance during the start of the pandemic. As of November 20201, only one month of the year– June – had seen a performance reach the average benchmark set in 2019, while subsequent months failed to restore any lost R&D momentum. With the pandemic yet to be brought under control in many countries with therapeutic and behavioral interventions, it is highly unlikely that 2020 will outperform the previous year, resulting in considerable lost progress for the year as a whole. The longer the slowdown continues, the greater the scar will be in terms of subsequent missed catalysts, delayed regulatory filings and fewer drug launches.

Exhibit 2.
Successful Phase Transitions, Pre- And Mid-Pandemic

Source: Pharmapremia, September 2020

Long-Term Opportunity Will Outweigh Near-Term Detriment

Another impressive year for new products reaching the market, 2020 saw 45 drugs cleared by the Centers for Drug/Biologics Evaluation and Research (CDER and CBER) as of the end of September – with more expected before the year’s close. However, the huge focus that COVID-19 has demanded of the industry and its regulators has necessitated a reprioritization of resources.

Clinical trial disruption and stalling R&D momentum may take a year or more to have tangible effects, although there is undoubtedly an immediate and short-term hit too. For industry, there is lost productivity from the switch to homeworking and inability to run labs at full capacity, not to mention the strategic focus that the pandemic response has demanded of executives. R&D investment into COVID-19 has to a certain extent been subsidized by governments, but many companies are still incurring considerable financial risk, with no certainty of a return on investment.

On the regulatory side, there is a compensatory cost associated with actions such as the Coronavirus Treatment Acceleration Program, a reallocation of FDA scientific staff in order to progress new treatments into COVID-19 patients as soon as possible. On a practical level, this involves rapid pre-IND consultation and regular communication through the development process, with staff aiming to triage and acknowledge requests within 24 hours. The FDA itself has conceded that, “With many staff members working on COVID-19 activities, it is possible that we will not be able to sustain our current performance level in meeting goal dates indefinitely.”

It is nevertheless a period of huge opportunity, both immediate in terms of demonstrating the value of biopharmaceutical R&D through innovative treatments, and long-term as a result of the huge influx of capital into the sector. The year so far has seen buoyant biotech valuations as the sector is seen as an offensive investment, in contrast to its usual role as a defensive play during times of economic uncertainty. By the end of July, total fundraising activity in 2020 had already exceeded the totals of 2018 and 2019, as companies took advantage of available capital. In particular, the key pandemic months during Q2 saw an incredible $45bn raised, commonly achieved through venture financing and initial (IPO) or follow-on public offerings (FOPO). PIPEs, which have also seen elevated activities in recent months, refers to private investment in public equity.

Exhibit 3.
Quarterly Biopharma Financing Trends


Source: Biomedtracker, September 2020

This cash-rich environment allows biotech to progress and sustain greater levels of innovation, with the freedom of the knowledge that big pharma is always on the lookout for external partnerships or acquisition opportunities. In turn, this will create new clinical-stage assets and drug platforms, powering further pipeline progression to make any scarring left by the pandemic a distant memory. Now, more than ever, it is important for biotech investor confidence to remain strong and concentrated on the long-term value that the sector provides. Continued success with COVID-19 therapeutics and vaccines will be an important indicator and set solid foundations for the decade ahead.


This article is based on a series of presentations prepared by Daniel Chancellor, Thought Leadership Director, Pharma Intelligence and Duncan Emerton, Custom Intelligence Director, Informa Pharma Consulting in September and October 2020. Access the full recorded version of the presentation here. . If you have any questions about any of the themes discussed in this article, or would like to learn more about Pharma Intelligence’s products and consulting offerings, please contact Daniel or Duncan.

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