Developing Drugs in Chile

Except for the security and ID badges, the lab on the second floor of a concrete building in Santiago’s Ñuñoa neighborhood has the feel of a high school chemistry class. A dozen researchers in lab coats are peering through microscopes or squirting brightly colored liquids into racks of test tubes. But close the blinds on the majestic Andes Mountains visible through the large east-facing windows, and you could be anywhere in the United States – or India.

“This is where it all happens, this is where we have fun,” says Sebastián Bernales, a Chilean biochemist and director of research at US biopharmaceutical company Medivation.

Despite being stuck indoors on a sunny afternoon, Bernales and his team are all smiles. That’s because Medivation, and its US partner Astellas Pharma, are on the verge of launching a prostate cancer drug they helped to develop called Enzalutamide (a.k.a. MDV 3100). The drug, which could extend the lifespan of patients by 40%, is expected to get US regulatory approval in the coming months, says Bernales.

And that means potentially huge profits. After positive results of clinical trials were announced last November, shares for Medivation (NASDAQ:MDVN), which is based in San Francisco, rocketed from US$16 last November to US$88 in May and the company’s market valuation has soared to over US$3 billion.

The drug wasn’t created in Chile – it was licensed by Medivation’s president and CEO, David Hung, from a professor at the University of California five years ago – but Bernales’ team played a key role in gathering data on how the drug works, which is required for its approval.

They discovered that it works, at a molecular level, by acting as a plug to block testosterone from acting on “androgen receptors” and causing malignant tumors.

But why did Medivation come to Chile for this? It all started in California, recalls Bernales, who has a PhD in biochemistry from the University of California and worked as an intern at the biopharmaceutical firm Chiron, co-founded by world-renowned Chilean biochemist Pablo Valenzuela.

When Valenzuela returned to Chile and established the non-profit Life Sciences Foundation (Fundación Ciencia Para La Vida) in 1997, he stayed in touch with former colleagues in California. Years later, when Medivation’s Hung was looking to outsource research to cheaper locations, he thought of Valenzuela.

In 2007, Hung asked Bernales to lead Medivation’s first lab outside the United States – using facilities provided by Valenzuela’s Life Sciences Foundation which charges a small overhead. Bernales jumped at the chance and has never looked back.

“Opening a lab in Chile for a US company was a crazy idea, but you never know where the next discovery will come from,” he says.

Chile’s main advantage, according to Bernales, is the high quality and low cost of its scientists. “There is a limited pool of people to hire from and supplies are more expensive, but human resources are much cheaper and our scientists are really well prepared,” he says.

Bernales himself doesn’t spend much time in the lab these days. He spends half his day on the phone and Skype talking to colleagues in the United States and India.

“The time difference with Chile is no excuse, I try to be online all the time,” he says. But he stresses that personal relationships are important and are a big part of the reason why Medivation chose Chile: “It’s all virtual so you have to trust people on the other side of the world.”

The strong ties forged by Valenzuela in California are another reason. The Foundation continues to promote this relationship through its Science and Friendship program that brings graduates from California’s universities to Chile to work and study.

One thing Bernales learned in California is that companies need the freedom to fail. For example, Medivation’s Alzheimer drug Dimebon recently fizzled in advanced clinical trials, but the company did not give up and now it is in good shape.

Innovation is another crucial ingredient. Public funding for research and innovation is available in Chile, for example the Foundation receives funds from the Scientific and Technological Development Fund (FONDEF) and the Basal Program, but it must continually reapply and there are too many rules that inhibit the development of new ideas, says Bernales.

“Pablo Valenzuela has given us freedom from regulations, which you need for innovation because you have to be able to work very fast,” he says.

This need for quick results is why Medivation works with a dozen Contract Research Organizations (CROs) in Taiwan, France, the United States and India amongst other countries. The advantage of these organizations, basically labs-for-hire, is that they do specific experiments quickly, confidentially and efficiently, but often at a high price, says Bernales.

It’s easier if the CRO is across the road, as in the case of Medivation’s lab in India, but in Chile there are no such research organizations. This presents a business opportunity for Chilean companies, points out Bernales.

With an office in the United States to receive orders, a Chilean research lab could offer this type of service at a discount, he suggests. Sending samples abroad can be expensive and time-consuming for companies like Medivation, but the Free Trade Agreement between Chile and the United States could help speed up the process.

Then there is the issue of intellectual property. Some companies in Chile produce and sell generic drugs for less than the original, which is a sore point in relations with the United States. But companies like Medivation are mainly concerned about protecting their products in key markets, which is why it patents any product developed in Chile in the United States.

Intellectual property is especially important as Medivation continues to look for new drug opportunities, or what Bernales calls “biological pathways”, that could be discovered in Chile. “It’s important for us to have new programs, we cannot live on one drug alone,” he says.

Medivation’s experience in Chile has been a striking success, but Bernales is careful not to look too far ahead or to overstate the importance of hard work, wherever it is done. “Too much publicity is not good; you have to do the work first.”

Julian Dowling is Editor of bUSiness CHILE