Are Software Technologies Going to be Pharma’s Creative Destructionists?

Three companies are causing some perturbation in healthcare diagnostics field. They are Theranos, 23andMe and Nanobiosym. I am sure there are others on the horizon. They are simplifying how diagnostic information can be used by individuals to stay healthy and prevent diseases before they become life threatening. Each company is using advances in software and information technology to create methods and devices that are useful to us. The testing costs are significantly lower than the traditional tests. Better and quicker information at lower costs suggest that there are possibilities.

Drug discovery is a cumbersome process and takes five to seven years to identify the molecules that could be used to cure a disease. Recently a friend Mr. Rohit Phansalkar ⁽¹⁾ brought Verseon Corporation ⁽²⁾ to my attention. Reviewing their information and some of the filed IP, it seems that they could do the same what is happening in the diagnostics area. The following is from company’s information package.

“More than a decade of intense research and development has yielded two key innovations: the Molecular Modeling Engine (MME) and the Molecule Creation Engine (MCE). The MME overcomes the accuracy barrier that has plagued other computational methods for virtual drug screening. The MCE enables the company to explore a vast and as yet undiscovered chemical space of potential drug candidates. When combined, these two technologies yield multiple, chemically-diverse drug candidates per program, which we believe will significantly increase the probability of success in the later stages of drug development. “

“Company’s Molecule Creation Engine comprises a large collection of novel algorithms and an encoded chemical reaction knowledge base that when combined together are capable of creating a practically unlimited supply of novel, drug-like and synthesisable compound designs. Secondly, the company’s Molecule Modeling Engine combines multiple breakthroughs in the computational modeling of small molecule-protein interactions to successfully predict which compound designs will be potent for a given disease target protein. Finally, by leveraging the capabilities of both engines, Verseon has discovered and assimilated the core competencies of how to accelerate lead drug optimization in a highly resource efficient and cost efficient manner in order to rapidly advance multiple promising lead candidates in multiple and unrelated disease indications.”

Reviewing their filed patents and other information I would conjecture that if Verseon can create/develop new and/or significantly better and effective molecules faster than the current methods that have less side effects, their software would be of immense value for curing diseases. Patients will benefit. Shortened drug discovery time would extend the patent’s commercial life i.e. additional revenue for the company. Better designed molecule could have wider use and would be an overall win through economies of scale leading to better business practices and manufacturing technologies.

An argument can be made against my observations about Verseons’s capabilities. It would be that National Institute of Health and pharma companies have established models and methods to develop new drug molecules, thus why we need other models. However, their recent results have not been astounding. Had they been successful, we would have seen new drugs that are significantly better than existing drugs rather than “me-too” or marginally better drugs. If the pharma companies were successful, we would not be looking at almost drying of the drug pipeline for the masses. Pharma most recent discoveries are catering to less than 0.05% of the global population.

Why Verseon claims to be succeeding? They believe that in their modeling they can quickly see the interaction of the molecules against set parameters to design a better drug molecule. Company believes that the therapeutic profile of the selected molecules has reduced drug interaction and they have higher performance. They will have to prove their hypothesis through clinical trials of the drugs under development. 

Verseon is working on drugs for Diabetic Retinopathy, Diabetic Macular Oedema and Age-related Macular Degeneration. Physicians inject current drugs for these diseases. This is an overall an expensive proposition. Verseon is looking at eye drop use. If that happens, it is expected the drugs could be priced lower due to reduced physician intervention and could benefit much larger global population than speculated.

Verseon could be the company that has a better idea about drugs and their administration. They could be Pharma’s “creative destructionist”.

Before the drugs get to clinical trials Verseon or their licensee will have to be mindful of how APIs of the discovered drugs are manufactured, formulated and priced. Unless the drugs are accessible to masses, new drugs will have limited use. Under current regulations, process improvements after drug commercialization are out of the question. This is due to the need of reconfirm drug efficacy and effectiveness.

I would not be surprised Verseon’s success could spill over to companies like Apple, Google and Microsoft etc. who could use their creative algorithm developing and modeling skills for better drug discoveries. Of the three companies mentioned earlier 23andMe ⁽³⁾ has recently announced their venture in drug discovery. Time will tell who all will change the playing filed, as there are opportunities.

Girish Malhotra, PE

EPCOT International

1. Phansalkar, Rohit: Chairman and CEO RKP Capital, Inc. Las Vegas, US private communication June 3, 2015
2. Verseon Corporation, http://www.verseon.com Accessed June 22, 2015
3. In Big Shift, 23andMe Will Invent Drugs Using Customer Data, http://www.forbes.com/sites/matthewherper/2015/03/12/23andme-enters-the-drug-business-just-as-apple-changes-it/ Accessed July 9, 2015