If pharmaceutical research and development were a movie, its title would be "Risky Business."
In the United States, it takes an average of 12 years for an experimental drug to travel from the laboratory to the market, according to Medicine Net. That is if it makes it that far.
Only five in 5,000 drugs that start preclinical testing advance to testing in humans and just one of these treatments that are tested in people gets the green light. That means the odds of a new drug to make it to market are 5,000 to one. At the beginning of the NFL season, the Jets had a better chance of winning the Super Bowl.
The perils of drug research and development are even greater for small companies and their investors. Too often these companies have put all their eggs in one basket, and if their marquee candidate falls short, there's little to fall back on, often leaving the company and its shareholders high and dry.
A good example of this is Unity Biotechnology Inc. (UBX, Financial). According to FierceBiotech, the San Francisco-based company topped the list of 10 companies with an R&D program that flopped this year.
Unity, which has the backing of Amazon.com Inc's. (AMZN, Financial) Jeff Bezos, started trading in 2018 after a $95 million initial public offering. The company had a challenging goal to say the least: to extend healthy human lifespans. Unfortunately—for Unity, its investors and mankind—its therapy was abandoned in August after a phase 2 study showed it didn't work. The news sent the shares plummeting more than 75% to about $3. It has since recovered to $5.42.
However, not all appears lost. The company has an ophthalmology drug that is just beginning phase 1 testing and several others in earlier stages of development. However, it's unlikely they'll be home runs like is top candidate might have been.
Another failure was voclosporin ophthalmic solution from Aurinia Pharmaceuticals Inc. (AUPH, Financial), which calls British Columbia home. The company hoped to challenge eye drug Retasis, the AbbVie Inc.(ABBV, Financial) blockbuster, but those plans hit the skids due to poor test results.
Aurinia's share price dipped only slightly on the news and now trades at $13, having hit a year-to-date high of more than $$21 in January. Perhaps the company's shares suffered less because while VOS is down, it doesn't appear to be out.
The company is marching on with a different formulation of VOS that outperformed a placebo in a phase 3 trial in lupus nephritis, an inflammation of the kidney that is caused by lupus, according to FierceBiotech. The treatment was granted accelerated review by the Food and Drug Administration, which is expected to make give the drug a yay or nay by late January.
Big players on the top 10 who had drug programs laid to rest in 2020 are GlaxoSmithKline (GSK, Financial), Roche (RHHBY, Financial), Astellas Pharma (ALPMY, Financial), Pfizer Inc. (PFE, Financial), Takeda Pharmaceuticals Inc. (TAK, Financial), Johnson & Johnson (JNJ, Financial) and Sanofi (SNY, Financial)/ Regeneron Pharmaceuticals Inc. (REGN).
Disclosure: The author has positions in AbbVie, Pfizer, Johnson & Johnson and Sanofi.
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