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Jim Jordan:
Welcome to the Chalk Talk Jim Podcast, where we explore insights into healthcare that help uncover new opportunities for growth and success. I’m your host, Jim Jordan.
Jim Jordan:
Our guest today is Dennis Gross, and Dennis is the CEO of the Pennsylvania Drug Discovery Institute. He’s also a professor at Jefferson College of Life Sciences. In addition to that, he has his own consulting business, but there’s so much more to him. So, Dennis, can you give us a little bit about your background?
Dennis Gross:
Thank you for inviting me to your podcast. I am a native of California, I was born in Los Angeles and I did my bachelor’s, master’s, and PhD at California schools, PhD from UCLA. Then I moved to Tulane University School of Medicine for an NIH postdoctoral fellowship in Hematopharmacology. When I finished my postdoc, it was a choice between do you stay in academics or do you go into industry. And I went into industry with my first job working at Merck Research Labs up in the West Point, Pennsylvania, partly because I really enjoyed thinking about the business aspects of science and doing science in a business-like manner, and so I stayed at Merck for almost 30 years.
Jim Jordan:
What was the benefit of that experience?
Dennis Gross:
As I tell my students now, I think one of the fascinating things about being in a large company, like a GSK or Merck or J&J, is there are so many opportunities there to go with things that interest you outside of what you started doing. And so I started at the bench, it was there, brought a number of drugs to the market, some of which are still the largest generics in the case of … Center. Then I moved into different roles. I ran a computer department for a while, then I became data security administrator for thousands of VCs for the laboratories worldwide. Then I moved into competitive intelligence, I was a manager for strategic planning, and then got involved with starting laboratories, and that I think is a fascinating area, what we call research administration. So I’m involved with starting labs in Japan, Canada, England, building there and then facilities United States and then dealing with as companies got acquired, onboarding them. How do you make that transition from being a startup company that’s spun out from an academic setting to getting them to think, how do you work in an industrial setting?
Jim Jordan:
So I know you have a couple organizations that you work with. Which one should we talk about today and what is your role within those organizations?
Dennis Gross:
One of them is, you know, I’m the CEO of a nonprofit called the Pennsylvania Drug Discovery Institute, and over the years, what we’ve done primarily is deal with education, trying to get groups together. And as part of what I do, I’ve been out there doing a lot of teaching at both the high school level and colleges, and I have for many years had an adjunct appointment at Jefferson and I do a graduate seminar at Harrisburg University in biotechnology. And part of that is, is trying to get people to think about positioning themselves for a future career.
Jim Jordan:
Dennis, how have you leveraged your big company relationships to help the Drug Discovery Institute fulfill its mission to help startup companies?
Dennis Gross:
We all know that a lot of companies have been downsizing, many of them have gone out of business. One of the services my nonprofit has done, for the past 5 or 6 years that I’ve been there, is rather than allowing things to say go into landfill as we work with them. So I work with GSK as they downsize and move down to what they call their West campus down in Upper Merion. And so I was able to, and I have a warehouse that local company let me use for free. I took all their disposables, test tubes, glassware, computer paper, and put it in a warehouse, and let startup companies come and take these materials. So the corollary to that is getting rid of things like reagents and chemicals. And so I have a very large collection of chemicals which is up at the Pennsylvania Biotechnology Center up in Doylestown, and I have probably about a couple of million dollars worth of reagent and we have a searchable database. So if you’re a small startup company and you need a chemical, maybe you only need ten grams of something, but you can’t afford to buy 100g right now, you come to our site, you search a database, we barcoded everything and you take the materials for free. So we act as a resource for not only startup companies, but also for universities.
Jim Jordan:
Your nonprofit also has an educational focus to create more scientists. Do you also provide support materials like you do for startups?
Dennis Gross:
We contribute a lot of it to biomanufacturing programs at local community colleges because they’re not working on a GMP, so the fact that some of these sterile test tubes have gone past their expiration date, it’s not important to them. But what is important is access to the materials to move things along, the glassware for a chemist starting up at a university who sometimes they don’t quite have the resources to buy some of these reagents they need. And for the past couple of years, we’ve done the same thing for some of the small undergraduate schools. For a number of years, we were providing reagents and glassware for Immaculata University for their organic chemistry class. All of a sudden they doubled the size of their class and they didn’t have a double budget, so we had a lot of the glassware that we got from some companies that downsize. People come in, they take what they want and they simply sign a waiver that we’re not going to sell it on eBay and we’re going to use it for the purpose that was defined. So we’re helping these startups find some of these things. Sometimes it can be just something as small as a distillation column that was custom made and it could cost $1,000, they don’t have that money, but it can move their program along if they have access to this. So that’s one of the things that the PDDI has been doing for the past couple of years, is giving them that leg up, helping them get started and have that, if you will, that welcome wagon kit to let something happen very quickly and get started. So we do that and then we also sponsor yearly awards for scientists who have made significant contributions.
Jim Jordan:
Dennis, you mentioned in our pre-talk that we’ve evolved from Pharma 1.0 to 4.0. So just for our audience, want to share that the concept of Pharma 1.0 was the age of the large blockbuster drugs, and Pharma 2.0 was the recognition that drugs were specializing and the pharma companies can no longer just have a few blockbuster drugs to attain profitability. Pharma 3.0 was the recognition that the drug alone doesn’t always optimize outcomes that pharma needed to recognize that the goal was to manage patient outcomes, not just produce a drug. And today we have pharma 4.0 and it’s really about digitization. Can you share with us what all this really means?
Dennis Gross:
Oh, most assuredly. It was, change is, the ability to acquire those large datasets has changed drastically. It’s not just the iWatch where you can take acquire a heartbeat every 5 minutes or 10 minutes, it’s the idea of, say, the digital diary.
Jim Jordan:
Dennis, I like this concept of a digital diary. Can you expand upon that a little bit?
Dennis Gross:
Getting better and more vigorous information from people, more in-depth information from people to guide a clinical study, but what it also means is by looking at prior problems, looking at lessons learned is letting people redefine how they look for developing the drugs, but also when they get into the clinic, fine-tuning the patient populations they go after, so you don’t need to expose 5 or 10,000 patients to a drug. Maybe you have, using big data and data analytics, you find that target population more quickly and get your answers more quickly.
Jim Jordan:
So do you have any cautions regarding this approach?
Dennis Gross:
The data scientists and the ability to acquire gigabytes of data is really important, but I will counter that, with all this data requires that you make actionable decisions. So it’s great to be able to acquire gigabytes and terabytes worth of data, but if you can’t make a decision out of it, it’s just this and this full of data. So it’s having people who not only can acquire the data but can produce decisions out of it. Should we do this, should we not do something? So you’re never going to go away from the fact that you need people that understand some of the heuristics, the drug discovery process.
Jim Jordan:
So when you’re consulting with these companies, my sense is part of what you’re bringing to the party is your system’s knowledge, both process.
Dennis Gross:
Yes.
Jim Jordan:
And information systems, right?
Dennis Gross:
Yep, and process is so important to this. Years ago, somebody once asked me who, as a hiring manager in pharma, who do you not want to lose as an employee. Do you not want to lose a biologist or do you not want to lose a chemist? And my response was, I don’t want to lose anybody, but if I lose a biologist, I can find more biologists and I can train them about the enterprise of drug discovery. If I lose a chemist, what I lose is memory. I lose some of those heuristics of what didn’t work, what didn’t function, where are those rabbit holes that we shouldn’t be going down because they’ve been there before, and saving 1 or 2 years in a program is millions and millions of dollars. So it’s those cooperative activities between the biologist and the chemist, those dialogues, and with the Internet and people being able to move and work remotely, it’s allowed people now to collaborate, create those strategic alliances with high-impact academic institutions that are at that cutting edge and can provide some of those insights that are going to be the next aha response for pharma to be able to say, we never would have thought of that, let’s collaborate.
Jim Jordan:
How do these data folks fit in? Do you define them as information management, big data scientists, computer scientists? How do we define these folks?
Dennis Gross:
Years ago, I think people used to call them knowledge engineers, and I think that’s still a valid term for what they’re doing because you can all acquire the same, but how do you make a decision out of it? So it’s creating those algorithms and creating those through machine learning. How do we make a decision out of all that data? What do we learn in the past? What didn’t work and how? How can we help it work in the future? How do we fine-tune the patient population? What are those insights? The human genome was looked at as a potential solution to everything. Well, it’s been, what, 10 years, 11 years since we sequenced the human genome? There have been some insights, but it’s also told us what we don’t. Now, awful lot about we don’t know. And I think right now, the aftermath of SARS-CoV-2, COVID-19 is really illustrated that. It’s illustrated what we don’t know.
Jim Jordan:
I’d like to try to express the pharmaceutical industry’s challenge in an analogy, if I may. And since I just baked an apple pie for my wife’s birthday, let me use that. So the pie itself represents a total market opportunity, a fixed annual market size. And so 30 years ago with big blockbuster drugs, my R&D investment could get me the whole pie. And with the advancement of science and realizing everybody is different, we realize one pie cannot provide the best patient outcomes. And so in my example, we moved to Pharma 2.0 where we cut the pie into four pieces. Now imagine for a moment that each piece of the pie took $70 million to make. As we continue to specialize and I start slicing the pie from 4 to 8 pieces, the revenue opportunity still hasn’t changed. Still, that 70 million necessary to create each piece of the pie continues. So actually, my R&D costs going from four pieces of pie to eight pieces of pie has doubled, and yet my revenue opportunity hasn’t. Is that the issue?
Dennis Gross:
It’s a calculus problem.
Jim Jordan:
And so it seems to me that one of the ways that the big pharmaceutical companies are solving that is, the start-up environment since 2005 for pharmaceutical companies, I think is materially bigger in my observation. Do you have any data on that or feeling for that?
Dennis Gross:
I think you’re right. One of the ways for pharmaceutical companies not to lose money is count on the start-up world to prove that their piece of the pie is going to turn into revenue.
Jim Jordan:
We’ve talked a little bit about Pharma 4.0 and albeit an oversimplification, it’s all about digitization and collaboration. Does the education system need to prepare our students differently?
Dennis Gross:
What we all hope is that we’re preparing that next generation, and it’s, I hate to say it, but I think it’s very spotty, it really depends on the school. And the glimmer of light has been this these concepts of what are called professional science master’s degrees, which was realized probably 25 years ago as a way of realizing that we’re training good people to be at that bench for the startups and be at the bench for large pharma, but what we weren’t training them for was actually working and contributing. In many of these startups where you have too many hats, you may be a bench biochemist or a bench pharmacologist, you’re going to wear many hats. The professional science master’s programs were started, and when I was at Jefferson, that’s what I was brought in to do was to advance … It’s not only to take the science, but what you also do to try and get that next generation of scientists ready, especially at that intermediate level between the bachelors and the PhD, which is the master’s level person, is those transferable skills, the soft skills that make them a better bench scientist as they truly appreciate the entire enterprise. So not only do they take the bench science, they take the biochemistry and they take physiology and they take drug discovery classes, they take classes in scientific writing. We run a class in which I’m teaching this summer or this semester in project management for pharmaceutical projects. We run classes in biosafety, clinical trials design, clinical trials management, all those other skill sets that they need, especially in a startup where they’re going to have to wear many hats. You’re running an assay and somebody comes to you from management says, you know, this assay really looks good, maybe we could sell it. How do you scale it up? How do you cost it out? What should we charge for it? How do you do a budget? How do you do something with Excel other than your expense account? So these programs now, they’re probably over 200 of them in the United States.
Jim Jordan:
So it seems like 20 or 30 years ago most graduates would enter a big pharmaceutical company and get their broader professional training, and if they were inclined to do a startup, they would leave and they would bring those skills to their startup. But today, because there’s less organic development in big pharmaceutical companies, are these skill gaps an issue for startups?
Dennis Gross:
Think so.
Jim Jordan:
Shifting the topic back to big pharmaceutical companies, how do they find and triage these startup companies?
Dennis Gross:
So more and more companies used to have people who would go to meetings and they’d look at poster presentations for novel ideas. Now many companies have what they call technology scouts, and they go out and they really are looking both domestically and internationally for those new novel ideas. They’re going to universities, they’re going to research institutes trying to get that leg up on frontiers of new technologies, emerging technologies, those aha responses and see how do they move their process forward, because what still hasn’t changed is 90% of projects in Big Pharma fail. Only about 10% succeed, and that hasn’t changed over 40 or 50 years, so how do you improve those odds?
Jim Jordan:
Given the length of time that you’ve been in the pharmaceutical industry, when do you think they went from the focus of totally designing drugs inside to partnering outside to acquisition? What years did you feel those transitions were made?
Dennis Gross:
I think 20 years ago you saw a real significant uptick in a lot of licensing in, but the barrier 20 years ago was what we in industry call the NIH syndrome, not invented here, and that put a lot of companies off, but I think as people realized that the low-hanging fruit were gone, you needed new ideas and you weren’t going to get all of them yourselves. And even 20 years ago, people started, Big Pharma started really seriously feeling the impact of the patent cliff. And how do you replace $15 billion a year drugs like Lipitor, when you lose that patent and you lose 70% of your market share in six weeks?
Jim Jordan:
So can you talk about what the patent cliff means to members of …?
Dennis Gross:
In the United States, we were very slow to sync with the rest of the world. The rest of the world’s patents were 20 years from when the patent was filed and granted, United States, ours was 17 years. And as a consequence with, before the, which is the Pharmaceutical Drug User Fee Act, drugs took a long time to get approved by the FDA, long enough that you lost a lot of patent protection. So the United States many years ago, not many, but a number of years ago, synchronized their patents because of the GATT treaty, generally accepted taxes and tariffs, at what was called the Uruguay Round, and our patents became 20 years also along with the rest of the world. But what people don’t realize, especially in Congress, is that 20-year Patent Protection starts when the drug is discovered and the chemist files the provisional patent and then the final patent request, it doesn’t start when the drug is approved. So many people in Congress think that 20 years is when the drug is approved and you start marketing it. So the average numbers from the Tufts University study is that when the drug is approved, you actually only have about 6.8 years of patent protection for your product, which means if you literally believe the Tufts numbers, it costs about 2.6 to bring a drug to market, which means you’ve got about 6.8 years to recoup your $2.6 billion of development costs before your drug goes generic. That becomes a problem as you’ve lost that entire market share and that allows then generics to come in and cannibalize everything that you’ve put in place with your concept of what I do with my product and why it’s being used. So as a consequence, the generic industry become very large. 70 to 80% of the drugs in the United States are generic, which saves the end users, the patients, an awful lot of money and saves health plans an awful lot of money. But that’s the consequence for pharma as you start losing, and for some companies, 30, 40, 50% of their bottom line is being right now at risk to generic competition because they’ve lost their patent protection.
Jim Jordan:
So does pharma have any other strategies for this other than buying startups?
Dennis Gross:
So you can try and extend your product life cycle by coming up with a new delivery technology for your existing product, come up with patent extensions by saying different combinations of products, or have a pipeline of backups that as you lose a patent on your key product, you’ve got something else back behind it that is perhaps a different way of delivering the drug or a more efficacious use for the drug or as you see now with the immunotherapy for cancer from either Opdivo from BMS, or Trudeau from Merck, going after more and more indications with turmeric agnostic drugs. So first indication was a non-resectable melanoma. Well, now you have one for lung cancer, one for kidney cancer, one for head and neck cancer. So you keep extending the product life cycle by coming up with new uses. But that all involves money, it involves extensive creativity on the part of people looking for new market. And what has become a really important new area these days is what’s called repurposing, repositioning the products in which the patent has already expired. But no one would have thought that IP used for something else. And so there are a number of companies in this area, there are a couple of companies that are taking a look at products that have been off-patent for years. And maybe the market is a little too small for Big Pharma to be interested in it, but for a small startup company, having a market segment of 100,000 or 200,000 may be of significant cash flow for them to be able to look at repurposing a particular type of drug and getting into that marketplace.
Jim Jordan:
Dennis and I have talked about a lot of adaptation and change that he’s made in his career. And so my question is, tell us about a time that you had to quickly adapt or shift your strategy, and given all the changes you’ve made in your career, maybe the scariest one might be, the boldest one that you made, what would that be? And thinking at the time, and what was that change?
Dennis Gross:
Great example. I did a three-year development assignment at Merck and I was made the manager for Strategic Planning. At the end of my three-year stint as manager of Strategic Planning, my vice president, my executive director came to me and said, nice job, but we don’t know what to do with you now. You’re free to find any job you want in the company, this is development and we can’t figure out what the heck do with you next. So I was interested in having some international experience, but my wife was not keen on moving overseas, so I found a vice president within my division who had suddenly been moved into a new job being put in response, given the responsible task of starting up joint venture laboratories overseas, one in Italy and one in Japan, and thought that really sounded interesting. So I went to him and I wrote a proposal, basically wrote a business plan for this vice president, said, here’s what I’m going to do for you in this new role, and here’s why you should hire me. And so I pitched myself to him and he hired me in a role in which I had a job, but I did not have a slot, and an industry you have to have slots to move into. And so he bit the bullet, said, I’ll have a slot for you in six months. You’ll get paid, but right now you are basically an invisible employee. So I took that chance rather than leave the company. But I went into this realizing in six months they may decide, no, we don’t have a slot for you, and then you’re out on the road trying to find another job for yourself.
Jim Jordan:
Dennis, I think this is so interesting because people often take risks by changing jobs, but they never think of taking a risk within their own company.
Dennis Gross:
When I tell many people who ask me for advice on career development, I did a lateral. I got a name change, but back in those days we had what we call hay points, the Hay Consulting Group. And I didn’t get an increase in hay points, I didn’t get an increase in salary, but I got a different title. But I did it, partly because I looked long term and I figured if I do this job managing strategic planning, it gave me exposure to the international divisions of the company. I went to medical directors’ meetings worldwide, understood what was going on in that entire enterprise of being, thinking outside of just my division. So from that standpoint, it was a fantastic learning experience, which if I hadn’t taken that gamble of taking that job in strategic planning, I never would expose to some of these other companies within the company, other divisions.
Jim Jordan:
So my next question starts with the confession. So one of the things that I’ve learned is that if I’m looking for current information, this is one of the things I enjoy about you, is getting, I’ve gotten on your mailing list somehow and every day I get pieces of information that I might have had to go spend hours to sort. So you’re amazing at being able to have a very broad view of the market. How do you keep current? Now my strategy is get on Dennis’s email list, but how do you keep current?
Dennis Gross:
I read a lot, and as you all know, and part of that is I get up early and I simply peruse all these online resources looking for things that I think might be of interest to me, might be of interest to you, and the rest of our team, but also might be of interest to my Dean, Donna Jefferson. Things that I know he’s never going to look at because he doesn’t have the time and sometimes doesn’t know where to look, even if.
Jim Jordan:
Can you give me some names?
Dennis Gross:
The fierce, Fierce Pharma, obviously. I can’t tell you how many people don’t read Business Week or don’t read The Wall Street Journal, Scientific American, because not just your field of life science, but physics, what’s going on with quantum computing that could impact what you’re doing, whether it’s creating a better model for finding the next drug or better modeling of a business process. I said, and then you need to read Business Week to find out what’s happening in the United States for the most part. Then you need to read The Economist because what’s going on worldwide impacts what’s going on here. Regulatory changes in the EU, regulatory changes in Southeast Asia, changes in transportation modes, the whole issue of the supply chain. So those three magazines will give you that global perspective and let you ask intelligent questions.
Jim Jordan:
I think you’re talking about Fierce Pharma. For our audience, Fierce has medical devices, pharma, biotech, it does in different areas of.
Dennis Gross:
It’s free.
Jim Jordan:
It’s free, and so you can get on that newsletter. And then for hospital systems, Becker’s has a wonderful resource. With all this, what’s the biggest lesson you’ve learned over your journey?
Dennis Gross:
… Just keep learning, keep reading, and think about how you apply.
Jim Jordan:
How many hours a day of reading do you do?
Dennis Gross:
I think probably about 2.5 hours, 3 hours a day. I get up very early and I simply start scanning. So maybe some of the emails I sent you might be at 6:00 in the morning. I think the biggest threat is disinformation. We went into this with COVID-19 and the World Health Organization called on the infodemic of a lot of misinformation out there about vaccines, drugs, and what, I think this industry as a whole lacks, Prof Fauci aside, is we don’t have really good explainers. Carl Sagans, the Lewis Thomases of the world don’t get the respect. Carl Sagan obviously is dead, Lewis Thomas wrote some significant books, but people aren’t out there explaining the enterprise. And I think part of it is trust in the system, and the general public doesn’t understand science. We need to explain the science that needs to be in terminology that the lay public who hasn’t taken these classes, didn’t take biology in high school, can understand and appreciate. So they understand why something truly is a breakthrough. We do DTC, direct-to-consumer, ads in the United States, we’re one of only three countries that permit it. I think New Zealand is another country. I forget the third. But those things are important because part of it is educating the general public about the drugs, and I don’t think also, the general public realizes that before that drug is actually approved, pharma can’t advertise it. You can’t go out and say, hey, we’re going to have a new vaccine for shingles, wait for it. Until the drug is approved for shingles, you can’t talk about it.
Jim Jordan:
You mentioned in a previous conversation that the public sees breakthroughs as happening overnight. And when, the truth is that this is expensive research that’s quietly going on for decades, can you give us an example?
Dennis Gross:
So a good example is this RSV, respiratory syncytial virus, that is now sending a lot of very small kids to the hospital. People are working on a vaccine for that for 30, 40 years, and it looks like just now Pfizer and GSK may have a hint of a really good vaccine that may be about 80% effective by vaccinating the mother, set the child. The infant doesn’t get it when it’s born, but that’s 30 or 40 years. So we are, in a way, victims of our own successes. The vaccines showed that, we got the vaccines out very quickly. Everybody said, I’m not taking this vaccine because it got discovered overnight. What they don’t realize is people are working on DNA vaccines for almost 30 years, messenger RNA vaccines for almost as long. The J&J vaccine with that AV, adenovirus vector, the original vector there was used for gene therapy 25 years ago, so these are not overnight responses. It’s realizing when you reach the point where it’s mature enough to actually take it forward, and that’s where I think where a lot of collaboration is really necessary. It’s not everybody has all the insights, not everybody has all the technology. So bringing people together, the synergies between industry, academics, research institutes, will be so important going forward, especially as we move into the Pharma 4.0 and more and more collaborations between pharma and research-intensive universities, and some of the spinoffs who have either interesting platform technology or have some really interesting tools that can move that process along more rapidly. So those are the things that I think are going to be really important as we move forward into 21st century with drug discovery for the future.
Jim Jordan:
Thanks for tuning in to the Chalk Talk Jim Podcast. For resources, show notes, and ways to get in touch, visit us at ChalkTalkJim.com.
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