How much my cat drug has cost

A crowdinvesting story

Intro

Those of you who have been following me for a while know that my day job is running a drug repurposing startup, Highway Pharmaceuticals. We’re developing an immunosuppressant drug combination that we’re planning on using for a cat autoimmune disease (feline stomatitis), human autoimmune diseases, and, eventually, human neurodegenerative diseases. If you’re unfamiliar with this part of my story, I wrote a whole post about it!

This is not a picture of a cat with feline stomatitis, as that would be a really distressing header image. Instead, this is a Wikipedia image titled “Alan, my cute cat”.

Our first big milestone starts this Monday, 9/19. We’re testing our combination in healthy cats to make sure that we’ve actually developed the longer-lasting, higher efficacy, lower side effect immunosuppressant that we think we have. 

It’ll also give us reassurance that our combination is reasonably safe in cats, although we’ll have to do a formal safety trial to know its exact safety profile. Because the immunosuppressive part of our drug is well-understood (it’s only the other half of the combination that’s less well-understood), this will be a huge milestone. Basically, if our drug works here, it will almost certainly work in sick cats.

I’m writing this post for two reasons. First, I wanted to give all of you an update on the story so far, and pull back the kimono on exactly how much it all costs. This is information that, for obvious reasons, is very difficult to find online, so I thought it’d be interesting. 

Second, as you’ll find out in this post, we’re about $100k short of fully funding the trial, so this also serves as a launch post for my crowdinvesting drive. That link will take you to my Wefunder page, where I’m currently taking soft commitments to help fund the trial.

If you find this story interesting and my efforts useful, and you’re in a financial position to invest, I’d very much appreciate if you did so. You don’t have to be an accredited investor to put in money (although if you are, and you’re looking to invest $25k or more, please email me directly).

The costs so far

People often wonder how I’ve brought my cat drug as far as I have with the resources that I have. Bright-eyed and bushy-tailed PhD students and slightly duller-eyed and flatter-tailed postdocs tell me that they, too, have some ideas for drugs that could help people (or animals), but they can’t imagine having the funds necessary to bring the drug to market.

They’re not off-base. Most drug development is insanely expensive. The absolute cheapest all-in development costs I’ve found for a drug has been $348 million for Trulance, an IBS drug ¹. Even at my stage, phase 1, Trulance had already spent $16.6 million on development costs.

So how did I, a guy whose previous career as a small business owner/tutor is not known for being exceptionally lucrative, take my drug this far? Was I left $16.6 million by a great-uncle who died in mysterious circumstances? Did I find a treasure map to $16.6 million worth of gold pieces on the back of the Declaration of Independence?

In short, no. Instead, I’ve used the small amount of money at my disposal in clever ways. In this post, I’m going to talk about the money I have, how I’ve used it, and then (spoiler alert) ask for a soft commitment to my crowdfunding campaign to make it to my next milestone. If you make the soft commitment, I’ll follow up with some additional information so you can make an informed decision on whether you actually want to follow-through.

So, how much money I actually have:

1. $20k of my own money from aforementioned tutoring business

2. $20k from ACX grants

3. $170k from angel investors

And…that’s it! If you do the math, my total amount of cash is about 1.2% of the cost to get Trulance to the same stage. So, given this extreme lack of capital, I’ve had to be very conservative with how I’ve spent my money. Even more importantly, I’ve had to be very clever about how I don’t spend my money.

As I’ve mentioned before, I saved a lot of money by repurposing drugs that had been used before². Not only did this mean that I could have more confidence that my drug was going to be safe and effective than someone working with a new chemical entity, it also meant that I was able to reuse previous work on my drugs’ manufacturing, toxicology, formulation, and bioanalytics. Each of those four items can easily have price tags that run into the millions, so this is a huge cost saver. 

Those were the costs I avoided. The big costs I still needed to cover were the costs for:

1. Legal fees

2. Patent fees

3. Patent-enabling work

4. Physiologically-based pharmacokinetics, which I’ll explain below

5. Consulting

6. The trial itself

7. Bioanalytics for the trial

Let’s break these down. First up, I needed to cover legal fees, which includes costs for incorporation, all the basic forms (NDAs, contracting agreements, etc.), and costs for looking over everyone else’s contracts. I worked with a lawyer who’s used to working with startups, so he allowed me to defer these fees, which technically I still haven’t paid. This only comes out to about $4k.

The patent fees could also be deferred, but only for so long. Patents are everything in biotech, and for what I’m doing, doubly so. Because I’m working with already-known drugs, the bar for the results of the combination to be “novel and non-obvious” is very high. There’s also a huge incentive for other companies to try to piggyback off of/steal my work, as there’s no technical barrier for them to do so. 

As such, I got the most prestigious, expensive patent lawyers I could and worked closely with them to make sure my patents were airtight. While I still tried to save money by doing as much of the grunt work as possible (e.g. writing the patent myself and having them correct it rather than having them write the patent), patent work is still not cheap. I’ve already paid $22k to them, and expect to pay more in the coming months.

Part of getting a patent awarded is having concrete work to patent. You’re not supposed to patent an idea, but an invention. Now, in biotech, that distinction is blurred, given that all biotech patents are based on an effect in patients that won’t be seen until years after the patent is awarded. That’s the way it has to be, too, because nobody will give you funding to test a drug in patients until your drug has a rock-solid patent.

So, biotech patents are generally based on reasonably plausible evidence. It’s totally ok to do an in vitro study in a petri dish, and then say, “Based on this, we assume this drug will have x effect in people”. By the time your drug gets to market, it’ll either have that effect or it won’t.

Doing experiments in petri dishes is definitely cheaper than doing a full-on trial in animals or humans. This is especially true for drugs that are both available and well-understood, like the drugs I’m working with. This is especially, especially true when you just need the experiment to be “good enough” to get a patent, rather than discover any deep scientific truth³. However, it’s still not cheap, as you’re paying for the time and resources of multiple scientists. This ended up being around $13k all told.

After this, I wanted to jump straight into humans. I knew I could skip animal testing as the drugs had a history of being used in humans, and I got some free consulting around toxicology that told me I could skip tox as well⁴. However, human testing is way more expensive (it eventually ended up being quoted at around $1.4 million), and I wasn’t confident on dose or dose intervals. So I ended up shelling out some money for physiologically-based pharmacokinetic modeling (PBPK).

PBPK is basically a way of modeling the metabolism of a drug in the body using differential equations to represent all the different ways the drug is transformed, diffused, and transported as it goes from ingestion to excretion. It’s a really neat technology. Unfortunately, as I found out, the hype of PBPK has definitely outrun its actual usefulness, and I ended up getting only a limited amount of data from all of this. 

In the course of exploring the assumptions that we’d need for the model, though, the consultant and I did figure out that I’d need to change up the combo. So, it ended up being a useful exercise, in a weird way. The quoted cost for the PBPK modeling was $20k, but we ended up not being able to finish the project, so the total cost was $10k.

This was the time that I realized I needed a serious clinical trials consultant, as there were a lot of details that I didn’t feel I had a firm grasp on. So, I ended up hiring a clinical trials consultant, who I still talk to pretty regularly. The running cost so far is about $7k.

After talking with the clinical trials consultant, finding a good clinical research organization (CRO) that could do human trials, and getting a quote for the human trial, the bottom fell out of the biotech market. Funding dried up, and I realized it was highly unlikely I was going to get the extra money necessary to do the full human trial. So I decided to take the money I had to do a cat trial instead, which is a decision I talked about in my previous post.

Eventually, I did connect with a really excellent cat CRO. They could handle everything on the trial side: animal housing and husbandry⁵, administering the drug, taking the blood samples, and eventually reporting the results. For all this, they charged about $120,000, with 25% up front. You’ll notice this is an order of magnitude more expensive than anything else I spent money on so far, and an order of magnitude less expensive than the human trial. That’s pretty much how it goes.

What they couldn’t handle, on the other hand, was bioanalytics: analyzing the blood samples to see the drug concentration over time. This is pretty complicated, especially when it comes to analyzing drugs that haven’t been administered to cats before, as the lab has to develop a new method suitable for cat blood. The cat CRO did point me in the direction of a good lab that they had worked with before for handling that sort of stuff, though, and that ended up running about $130k all told, with 40% up front⁶. Bioanalytics is expensive.

And that’s a brief summary of all the money I’ve spent so far! Now, for those of you who are into addition, you might have noticed that, once the money comes due for the cat study and the bioanalytical analysis, it’s going to be about $300k, all told. You may also notice that I’ve only raised about $210k, including $20k of my own money.

The ask

So here comes the ask. I need your help to cover that gap. Now, I’m not asking for your lunch money or your rent money. This is definitely not more important than that.

However, if you have extra funds and are looking to invest in a company that’s trying to do a lot of good for a lot of animals (and eventually a lot of humans), please consider helping up with our crowd-investing campaign. You’ll be investing in a SAFE alongside our lead investor, Nathan Savir, who’s investing additional funds to help us with our vision. You’ll be getting the exact same terms at the exact same valuation that he is.

If this is something you can help with, head to our Wefunder page to make a soft commitment on how much you’d be willing to invest (or, if you're an accredited investor who wants to invest $25k or more, contact me directly). We’ll be using this information to help us launch our actual crowd-investing campaign on Wefunder. Formal disclaimer is below.⁷

1. To be fair, this information doesn’t tend to be public, so this is almost certainly not the absolute cheapest a drug’s been developed for. It gives you a good idea of the orders of magnitude, at least.

2. And by valuing my own time at zero while spending hundreds of hours searching for drugs to repurpose.

3. In case you can’t tell, I went with literally the lowest possible cost lab that didn’t seem like a total ripoff, which ended up being a lab in Oregon. This proved to be a headache. While they weren’t a ripoff, I did have to call the cellphone of the guy running the lab repeatedly in order to get my results, which I ended up getting 3 months after they were promised. To paraphrase Dilbert, in order to get things done, sometimes you need to charm them, and sometimes you just need to hound them until they recoil in pain at the sound of your voice.

4. One of the more useful pieces of advice I used was to continually talk to consultants and service providers. They all have free intro calls before they start charging you, and it’s very easy to just use those as free consulting.

5. This includes being really ethical, which I appreciated. They train the cats to be ok taking drugs and getting their blood drawn. When the cats reach a certain age, they get adopted out to loving families.

6. I should probably mention that the human trial cost of $1.4 million had the bioanalytics included. CROs vary in what they consider part of their duties. Some are literally only oversight, and require you to separately contract out housing, pharmacists, doctors, etc, while others handle much more. Given how small a team we are, we obviously preferred the latter kind.

7. We are 'testing the waters' to gauge investor interest in an offering under Regulation Crowdfunding. No money or other consideration is being solicited. If sent, it will not be accepted. No offer to buy securities will be accepted. No part of the purchase price will be received until a Form C is filed and only through Wefunder’s platform. Any indication of interest involves no obligation or commitment of any kind.