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The importance of developing rTPP to build biotech asset value

Typically, a biotech company’s primary goal is to complete the most expeditious drug development program possible to keep costs down while showing the potential utility of the asset they are developing. It is a tight line to walk. The focus is often on moving quickly through the next stage gate, releasing positive data and attracting new funding. While this may be a laudable approach, shifting focus from quicker and cheaper processes to a more value-oriented strategy will benefit the asset development process. Biotechs can build value into their asset by way of developing a reimbursable Target Product Profile (rTPP), no matter where they are in the process.

Where a conventional TPP serves as a roadmap to gain regulatory approval, a reimbursable TPP extends to valuation, market positioning, patient access and reimbursement strategies. An rTPP builds greater value into your long-term goals, which is key information for investors, buyers or payers. Whether looking for early or late-stage investment, M&A or taking a drug all the way through clinical development, biotechs should utilise an rTPP to determine the economic viability of the asset and make it more attractive.

Even so, many biotechs don’t.

Why don’t they? – Short-term cost focus.

Many emerging biotechs are keen on progressing high-end science into clinical studies and are acutely focused on achieving their next milestone. They are enthusiastic about the potential of their drug and pour their efforts into progressing through stage gates. They may have a generalised idea of where they may position their product, but when the focus is on the next step, things like the patient access and differentiation of their product can often seem too far away to merit access to their time and resources during the early stages. As the sky-high funding landscape of 2021 settles into a more controlled flow of funds, biotech companies are beginning to reconsider how and when they value their assets. Although we have seen more early economic evaluations being performed at proof-of-concept or pre-regulatory approval stages, we still don’t see enough rTPP strategy to support value-building and long-term positioning.

Biotechs will put off rTPP because it may require primary reimbursement research and/or initial evidence generation in phase 2, which costs them more in the short-term. During the evidence generation phase, studies may include a comparator arm that will serve to prove the drug’s safety and effectiveness compared to the standard of care. Together with the rTPP, this evidence helps biotechs understand how economically viable their asset is compared to the market. An rTPP also helps you to establish clear kill points – if your drug doesn’t demonstrate utility, meet a previously unmet need or have a strong projected ROI, then it becomes clear that there is not much point in continuing development. This clarity can prevent you from burning through your funding.

Why should they? – In short, it builds value.

When we consult with biotech companies, one of our first questions is, “Do you have an rTPP?”. It’s that important. Ultimately, the end-goal isn’t approval, it’s the position with the payers and access to patients. When telling the story of your drug, you need to point to exactly who your patients are, how your asset meets their needs and how it provides value for the price within a standard of care. This shift in focus requires you to demonstrate the utility of your drug.

Due diligence and investor confidence

We regularly perform due diligence for clients, be it potential acquirers of an asset or institutions looking to invest. In either case, they will perform due diligence on an asset. What investors look for, particularly in late stage is not just approval but pricing and reimbursement. The real question for them is, once we get to approval, will it be reimbursed, and will it be valuable?

When we conduct due diligence for clients, we inspect the gaps in the package and how that will be perceived either by an investor or by a payer, which ultimately reflects the success in the market. By developing an rTPP, you can develop a clearer picture of the return on investment overtime. It's important for investors to see that you've considered the end game. Whether you incorporated it into your early strategy or not, it's more important to demonstrate that you are thinking long term.

Detailed and dynamic data-responsive strategy

Data, along with literature and landscape reviews, can help you identify unmet medical needs to target when you develop an asset, which drives the value of the product. However, a comprehensive rTPP should be data-responsive instead of a fixed target. New data, including changes in regulation or standard of care, should constantly be leveraged to enrich or refocus your rTPP. Claims data and real-world data provide insights into comorbidity and invaluable information on the way drugs are prescribed, providing richer patient profiles that will shape your strategy.

As you revise your rTPP with new outside data, it should also be responsive to your own data. The TPP will outline base case, target and upside scenarios, but data we get may either add or detract from those positions and you will need to respond accordingly. Changes in the standard of care due to new market entries, emerging safety data from certain classes of drugs or changes in regulatory positions may all potentially impact your rTPP and overall development strategy. Using the rTPP as a reference can help to navigate these changes can keep you from chasing results that won’t bring value in the long run.

Conclusion

At ICON, we work with biotech companies and large pharmaceutical companies and have a strong network of investment banks and venture capital firms that affords us a unique perspective on what builds value into your asset development process. Developing a reimbursable Target Product Profile is a clear way to demonstrate the economic viability and potential return on investment by exploring the real-world use, patient and market positioning. We recommend building an rTPP into your development strategy as early as possible and we provide tailored teams from our 8,000 biotech specialists to assist you in this process.

For more information on how ICON can assist in developing a reimbursable Target Product Profile or building value into your biotech asset, contact us.

Authored by: Colin Orford

Senior VP Drug Development Services

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