Project Leader Authority in Pharmaceutical Discovery &

Development is Inversely Proportional to Aggregate Project Risk

James SamanenPresidentJames Samanen Consulting

www. jamessamanenconsulting.com

2

Learning Objectives

• The differences between Discovery and Development Project Leadership come down to the Level of Aggregate Project Risk

• Project Leadership is no less important in Discovery than it is in Development

• It’s just different

3

Where’s the Research?• Its all research whether it’s the discovery of

- a new protein implicated in viral replication, or - a side effect in patients implicating a new potential indication.

• To investors its all research prior to Phase III.• There is so much Research in Development, we call

it Discovery & Development

Pharmaceuti-cal R&D

4

Discovery - early research leading to discovery of a biological target, first agents (leads) which interact with the target in the desired manner (agonist, antagonist, etc.), and clinical candidates through optimization of properties in subsequent analogs

Development - the focus is on a single agent.

Discovery vs. Development

Registration & Launch

TargetSelection

CandidateSelection

MarketAccess

ProductDifferentiation

Full DevelopmentPOCPreclinicalEvaluation

Lead OptimizationLead DiscoveryTarget Discovery

Drug Discovery Drug Development

Focus - Target Focus – Clinical Candidate

5

What Percent of Projects Move on to the Next Stage?• ~25% Target Discovery projects reach Candidate Selection, • 7% Candidates reach Launch• 2% success overall

Attrition = 1/Success

Phase1

Candidateto Clinic

Lead Optimization

Lead Discovery

Target Discovery

Phase2

Phase3

Stage: Regis-tration

Launch

61%63% 57%64% 44%56% 83%60%% Success

1.8%

24.5% 7%

Discovery Development

Based on data from Brown, Drug Disc Today, 8, 23 2003 and “Can the pharmaceutical industry reduce attrition rates?” I. Khola and J. Landis, Nature Reviews / Drug Discovery 3, 711, 2004.

6

• Working backwards - 57 projects are needed for 1 launch

– 75% of pipeline in Discovery (43), 25% in Development (14)

– 10 year avg. cycle time from Target Discovery to Registration

Phase1

Candidateto Clinic

Lead Optimization

Lead Discovery

Target Discovery

Phase2

Phase3

Stage:

3657 1422 4.58

Regis-tration

Launch

1.22 1No. Projects

For 1 Launch

61%63% 57%64% 44%56% 83%60%% Success

1.8%

2 yrs 6.5 yrs1.5 yrs

CycleTimes

Discovery Ph 1 - IIIPre-Clin

Based on data from Brown, Drug Disc Today, 8, 23 2003 and “Can the pharmaceutical industry reduce attrition rates?” I. Khola and J. Landis, Nature Reviews / Drug Discovery 3, 711, 2004.

How many projects provide 1 Launch?

7

• If 4 launches are needed due to future patent expiration of marketed blockbusters, the company would need 200+ projects in Target Discovery- Does it have the capacity??

• Historically acquisitions made up the difference, - but reducing attrition and cost would have dramatic impact on profitability. - 10% improvement in attrition would save $100 million dollars per drug (a)

Attrition-Based Pipeline is not scalable

a) FDA white paper “Innovation or Stagnation” , 2004

“All it takes is one good drug”

57

8

• Even the one good drug that got to launch, in the beginning was no “sure thing”. In Discovery, every project has the potential to be the next “blockbuster”. It’s the 10+ years of experimentation that prove it so.

The one sure thing pays for the rest

9

• Even the one good drug that got to launch, in the beginning was no “sure thing”. In Discovery, every project has the potential to be the next “blockbuster”. It’s the 10+ years of experimentation that prove it so.

The one sure thing pays for the rest

This drug pays for all of this

10

• Even the one good drug that got to launch, in the beginning was no “sure thing”. In Discovery, every project has the potential to be the next “blockbuster”. It’s the 10+ years of experimentation that prove it so.

This drug pays for all of this

This is why Discovery Project & Portfolio Management Is Important

The one sure thing pays for the rest

11

• At the start of a project, the risk that any aspect of it will succeed is unknown

• All of the potential project risk is loaded at the beginning – Aggregate Project Risk

• Every experiment is designed to answer one question about whether the target and related compounds will work against a disease. There is a risk that any experiment will fail.

• If the experiment is a success, that particular risk is eliminated and the probability of success is increased.

D&D is the removal of Risk

POSRisk

12

• “Risk Management is the systematic process of identifying, analyzing, and responding to project risk. It includes maximizing the probability and consequences of positive events and minimizing the probability and consequences of adverse events to project objectives.”

– Project Management Book of Knowledge (2000+)

Project Risk Mgmt – Increase POS

POSRisk

13

• As the project team works to reduce Aggregate Project Risk, • The project POS increases, and• The total project Cost increases,

Project Risk vs. POS, Cost

Cost

POSRisk

14

• As the project team works to reduce Aggregate Project Risk, • The project POS increases, and• The total project Cost increases, but• Because the POS increases, the “anticipated” value of the

project increases,

Project Risk vs. POS, Cost, Value

Cost

Value

POSRisk

15

• As the project team works to reduce Aggregate Project Risk, • The project POS increases, and• The total project Cost increases, but• Because the POS increases, the “potential” value of the

project increases, and • Corporate commitment increases.

Project Risk vs. POS, Cost, Value and Commitment

Cost

Value

POSRisk

Commitment

16

• At each stage of Discovery and Development, work is performed to reduce aggregate project risk and increase “potential” value.

Goal to Reduce Risk & Increase Value

Registration & Launch

TargetSelection

CandidateSelection

MarketAccess

ProductDifferentiation

Drug Discovery Drug Development

Full DevelopmentPOC

PreclinicalEvaluation

Lead Optimization

Lead Discovery

Target Discovery

Cost

Value

POSRisk

Commitment

• Project leader authority is influenced by line managers

Influence of Line Managers

Section 1.9.1 in The Standard for Portfolio Management, 2nd Ed. P. 17, Project Management Institute, 2008. See also Section 2.4.2 “Organizational Structure”, p. 28-32, in A Guide to the Project Management Body of Knowledge, Project Management Institute, 4 th Edition, 2008.

Functional Weak Matrix Strong Matrix Projectized

Autono-mousTeam

ProjectMgmtOffice

Full-TimeProjectLeader

Full-timeCoordinator

Part- timeCoordinator

NoCoordinator

Managementof

Projects

High

Med.

None

Infl

ue

nc

e o

f L

ine

Ma

na

ge

rs o

n P

roje

ct

Project Leader Authority High

Low

None

18

Influence of Line Managers

• Project leader authority can vary dramatically according to the impact of the project on the corporation

Functional Weak Matrix Strong Matrix Projectized

Autono-mousTeam

ProjectMgmtOffice

Full-TimeProjectLeader

Full-timeCoordinator

Part- timeCoordinator

NoCoordinator

Managementof

Projects

High

Med.

None

Infl

ue

nc

e o

f L

ine

Ma

na

ge

rs o

n P

roje

ct

Project Leader Authority High

Low

Cost

Value

POSRisk

Commitment

None

• In Pharma, Project Leader authority and effectiveness tends to increase from early Discovery to final Drug Development

Influence of Line Managers

20

Influence of Line Managers

• The lines tend to control resource in Discovery and early Development. In late Development the projects control resource

21

The Triangular Relationship

• There is a triangular relationship between line departments, the project leader and portfolio management, focused on the project team

LineFunctions

ProjectTeam

ProjectLeader

PortfolioManagement

22

Project Leaders as Matrix Managers

• When there are many projects, each competes for resource from the various line departments

    Line A Line B Line C Line D Line E Line F  Project 1                                           Project 2                                           Project 3                                         Project 4                                           Project 5                                           Project 6                                           Project 7                                           Project 8                                           Project 9                                           Project 10                                                     

23

The Triangular Relationship

• Line managers not only impact project teams through the contribution of resource to the teams,

• They also pick the project leaders and• They control much of the valuable project data needed by

portfolio management

LineFunctions

ProjectTeams

ProjectLeaders

PortfolioManagement

Some Differences Between Discovery & Development

24

Discovery Project Leader • Volunteer* from line departments• Averse to detailed project tracking &

reporting – keep it simple (Gantt charts a tough sell)

• Line managers needs to value this work

• The PL will be beholden to the line managers for resource and delivery dates

Development Project Leader• Professional project leader• Appreciates the value of project

tracking & reporting (Gantt charts a minimal necessity)

• Line managers will be influential in early Development.

• Project more important than line

* The consequences of a volunteer scientist project leaders may include less training, less visibility and accountability (not sure of their role), more interest in exploring science than meeting timelines.

25

Presentation Summary

• The differences between Discovery and Development Project Leadership come down to the Level of Aggregate Project Risk

• Project Leadership is no less important in Discovery than it is in Development

• It’s just different– These differences are further elaborated at

www.projectleadersolutions.comwww.portfoliomanagementsolutions.com

26

ContactInformation

James Samanen Consulting610-983-9602

www.jamessamanenconsulting.com