Deep Dive: A Primer on Drug Development
How do drugs interact with biological processes in the body? How does drug development work? Why have companies developing novel drugs seen poor returns over the past decade?
(Note to our readers: We decided to focus on drug development more broadly, as this provides the best foundation for understanding biotech, pharmaceuticals, and biological research.)
Countless biological processes are occurring within the human body at any given moment. These biological processes are often so complicated or happening so quickly that scientists today do not understand how they work.
The subset of biological processes that we can break down into a sequence of molecular interactions ultimately become targets for new drugs.
Drugs are substances that chemically alter biological processes in the body to treat and prevent disease. Companies developing new drugs engage in a structured process called drug development to ensure the safety and efficacy of these drugs for patients.
Drug development has undergone multiple paradigm shifts over the past 50 years as our scientific understanding of biological processes has deepened and our tools to uncover them have become more advanced. This has led to the discovery of many breakthrough drugs and innovations in the development process.
However, only a small percentage of drugs that go through this process successfully reach the market, and the way companies navigate public markets while developing novel drugs can result in outcomes that fall short of investor expectations.
How do we make sense of this?
This month's deep dive explores this tension between the scientific advancements in drug development and the mixed financial outcomes for investors from three interconnected approaches.
First, we explore what drugs are and how they are designed from first principles. This means that we start with the elements that make up living things and work up to how atoms of these elements bond to form the biomolecules in the body, to how cells composed of these biomolecules work, and ultimately to how drugs interact with these biomolecules to modulate cell behavior.
Next, we trace the evolution of 50 years of drug development through three distinct phases:
Drug Development 1.0: Traditional Drug Discovery – How early drug discovery relied on chance findings and observational methods before moving towards explicitly designing drugs based on an understanding of underlying molecular interactions.
Drug Development 1.5: Genomic Revolution – How high-throughput approaches and breakthroughs in genetics research led to new classes of drugs and innovation in the drug development process.
Drug Development 2.0: Computational Revolution – How advanced computing and machine learning are currently transforming the drug discovery process.
Finally, we discuss the business of drug development, including the challenges that companies face in the process of trying to bring a novel drug to market, the capital-intensive nature of these companies, and why returns for these companies have been poor over the last decade.
You can read our full deep dive in the attached files, both of which are available to our paid subscribers. I hope you enjoy reading our work, and I look forward to hearing what you think.