DEFINITION of 'Biotech Compound'

A chemical entity that forms the starting point in the drug development process. A compound has the ability to modify the action of a target molecule involved in a disease. Identifying a compound that has the potential to be developed into a drug is an extremely laborious and time-consuming process, as numerous compounds lack the properties required for a drug. In order to identify such a compound, a pharmaceutical or biotech’s research team has to develop synthetic analogs of many compounds and test them until they find one with the required attributes. New compounds are generally classified as new molecular entities (NMEs) for Food and Drug Administration (FDA) review purposes. Also called “lead compound.”

BREAKING DOWN 'Biotech Compound'

A compound has to satisfy numerous tests before it can be marketed as a new medication or therapy. A compound may show a lot of promise in treating a specific disease or indication at the initial stages, but it may fail to clear any of the numerous hurdles that it has to surmount before it becomes a marketable drug. Not many compounds can pass these rigorous tests. In fact, less than 1 in 20 compounds will end up getting marketing approval from the FDA.

A successful compound has to be safe, effective, and have no major side effects. A compound that is initially safe and effective may prove to have unexpected side effects when it is administered to tens of thousands of patients upon approval. If it is subsequently withdrawn, this may cost the sponsor company hundreds of millions, if not billions, in terms of lost future revenues and unrecoverable drug development expenses.

Since the costs involved in the drug development process increase exponentially as the compound moves further along the FDA approval path, pharmaceutical and biotech companies have been exploring ways to identify potential problems with compounds sooner rather than later. In order to expedite screening of as many compounds as possible, companies use methods such as genomics-based screening, rational drug design, combinatorial chemistry, and high throughput screening (HTS) systems. The development of these methods, which has enabled researchers to better understand cell processes and optimal ways to synthesize compounds, has resulted in a huge increase in the number of compounds in the human clinical trials stage that originated from the field of biotechnology.


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