When Should R&D Turn Back?
By David Adler, M.D./Ph.D., MBA
Why passing a development milestone does not necessarily justify the next investment
Pharmaceutical R&D organizations are built to advance programs. But as a program moves from discovery into clinical development, one question can become surprisingly difficult to ask: “Given what we know today, would we still make the next investment?”
A program may have reached an important milestone. It may have generated encouraging clinical data, attracted senior sponsorship, consumed significant resources, and become deeply embedded in the organization’s plans. Yet none of those facts, by themselves, determine whether the program remains the best use of the next dollar, the next patient, or the next year of development.
Drug development is not a journey in which reaching one milestone automatically validates the path ahead. Conditions change. Competitors emerge. Standards of care evolve. New evidence can alter the probability of success or the potential value of an asset.
The challenge for R&D leadership is therefore not simply to determine whether a program has progressed according to plan. It is to determine whether the investment thesis remains attractive.
A Milestone Is Not A New Investment Thesis
Pharmaceutical companies have sophisticated mechanisms for making go/no-go decisions. Stage gates, portfolio reviews, development milestones, and investment committees are embedded throughout R&D organizations.
Yet a subtle problem can emerge as a program advances.
Early in a program's life, discontinuation may be relatively straightforward. Investment and organizational commitment are limited, and the consequences of stopping are contained.
Years later, the decision can look very different. An oncology program may have generated substantial clinical data, consumed significant capital, established clinical infrastructure, attracted senior sponsorship, and become an important part of a company's future plans.
At that point, the question can unconsciously shift from “Given what we know today, should we continue?” to “Can we find enough evidence to justify continuing what we have already started?”
Those are fundamentally different questions.
A program can meet a development milestone and still no longer represent an attractive investment. Conversely, a program can miss an original expectation while retaining significant future value if the development strategy can be changed.
The important distinction is between progress against the original plan, and the attractiveness of the next investment.
Passing a milestone should earn the program another decision, not automatically another investment.
The Next Dollar Has To Earn Its Place
The sunk-cost problem is well understood. Money already spent cannot be recovered. But the more consequential question for R&D leadership is not what has already been invested. It is what has yet to be invested.
Consider a program approaching a major inflection point. The next step might require a pivotal Phase 3 trial, a new indication, a combination strategy, global development infrastructure, or substantial manufacturing investment. By then, the organization knows considerably more than it did when the program entered development.
That new information should change the decision. A useful test question is:
“If we encountered this program for the first time today, knowing what we know now, would we choose to start it?”
If the answer is no, the organization should be able to explain why the remaining investment nevertheless creates greater future value than the alternatives.
This does not mean ignoring what the program has already produced. Previous investment may have generated valuable scientific knowledge, clinical insights, biomarkers, platform capabilities, or intellectual property. It means separating the value of what has already been learned from the justification for spending more.
An investment thesis can change even when the underlying science does not — a development program can become less attractive even when its underlying scientific hypothesis remains credible. This can happen for several reasons: the external environment changes; competitors emerge; standards of care evolve; new mechanisms are discovered; patient populations become better defined; development costs increase; expected clinical differentiation diminishes; or commercial assumptions change.
Consider an oncology program that entered the clinic with a compelling biological rationale and an attractive treatment population. Two years later, competitors have produced substantially better outcomes, the standard of care has changed, enrollment has become more difficult, and the remaining development program requires a large Phase 3 investment.
The question is no longer whether the original investment was reasonable. It is whether the program still deserves the next investment.
This distinction becomes particularly important in therapeutic areas where the competitive landscape can change faster than a clinical development program can be completed. A program that looked differentiated when it entered the clinic may be considerably less differentiated by the time it is ready for pivotal development.
The original thesis may have been right. The current thesis may simply no longer be attractive enough.
That is why development milestones should be treated as opportunities to reassess the investment thesis, not merely as checkpoints confirming that a program remains on its original path.
At each major inflection point, leadership should be willing to reach one of three conclusions:
- Continue. The evidence still supports the opportunity and the current development strategy.
- Change course. The asset remains attractive, but new information suggests that the population, indication, combination, development strategy, or route to value should change.
- Return to base. The remaining investment is no longer justified by the future value the program can realistically create.
The ability to make all three decisions is a sign of strong R&D governance.
Make Every Continuation Decision A New Investment Decision
No framework can eliminate uncertainty from drug development. Important medicines sometimes emerge from programs whose evidence is incomplete or ambiguous. But organizations can make their decision architecture more disciplined.
At each major development inflection point, leadership should treat the continuation decision as a new investment decision and ask five questions:
- What do we know now? What does the accumulated evidence actually tell us about safety, efficacy, biology, probability of success, and the intended patient population? The assessment should begin with current evidence rather than the assumptions that justified the original investment.
- Is the opportunity still worth pursuing? Has the scientific, clinical, competitive, and commercial landscape changed? Would the potential medicine still provide meaningful differentiation for patients and sufficient value for the organization? Passing a milestone is not itself an answer to these questions.
- What will the next investment buy us? What additional capital, time, patients, infrastructure, and organizational resources are required? More importantly, what uncertainty will that investment resolve? A development step that consumes substantial resources but provides little ability to change the ultimate decision deserves a high degree of scrutiny. Organizations should understand not only what the next study will cost, but what decision it will enable.
- What is the best alternative use of those resources? This is the opportunity-cost question. A program does not have to be worthless to be the wrong investment. Capital, clinical capacity, scientific talent, management attention, and patient participation are finite. Every decision to continue one program is also a decision not to allocate those resources elsewhere. The relevant comparison is therefore not simply "Does this program still have value?" It is "Is continuing this program the best use of the resources required to pursue it?"
- Who is making the decision, and who carries the burden of proof? Program teams should be expected to advocate strongly for their programs. Their scientific conviction and commitment are essential to innovation. But the people most invested in a program should not necessarily be the only people responsible for determining whether it deserves further investment. Major continuation decisions benefit from independent challenges that can distinguish scientific conviction from organizational momentum. The goal is not to remove the program team from the decision. It is to ensure that the decision process creates enough independence for uncomfortable evidence to be heard.
Design The Governance For Changing Your Mind
This is where R&D governance becomes particularly important.
Program teams should make the strongest possible case for their programs. But major investment decisions should include sufficient independent challenge to ensure that negative, ambiguous, or inconvenient evidence receives the same attention as positive findings.
This does not necessarily require another bureaucratic layer. It requires designing the decision process so that changing one's mind is both possible and acceptable.
Most importantly, the conditions for a credible stopping decision should be established before a program reaches the point at which stopping becomes politically or emotionally difficult. If the organization waits until a program has consumed years of work, accumulated substantial internal sponsorship, and become associated with the careers of senior leaders, an objective decision becomes harder.
Good governance therefore does not simply define when a program can advance. It creates an environment in which continuing, changing course, and stopping are all legitimate outcomes.
Stopping A Program Can Create Value
"Return to base" can sound like failure. It should not. A program terminated after generating important evidence may have disproved a biological hypothesis, identified an unacceptable safety risk, demonstrated insufficient clinical differentiation, or shown that another investment offers greater potential. The molecule may never become a medicine, but the R&D decision may still have been excellent.
This distinction matters because organizations learn from what they reward. If advancing programs is consistently associated with success while termination is associated with failure, organizations will naturally become better at defending continuation. Over time, an organization can become optimized for persistence rather than learning.
A stronger R&D culture recognizes that rigorous termination can be evidence of excellent portfolio stewardship. The objective is not to kill programs earlier for the sake of killing programs earlier. Nor is it to eliminate the persistence that drug development requires. The objective is to ensure that resources continue to flow toward the opportunities with the greatest potential to create value for patients and the organization.
Make Changing Course A Leadership Capability
Pharmaceutical R&D depends on persistence. Without the willingness to pursue uncertain hypotheses and continue through setbacks, many important medicines would never reach patients. The answer is therefore not less ambition, it’s better navigation.
The strongest R&D organizations should be able to distinguish persistence from inertia, scientific uncertainty from organizational attachment, and future value from sunk investment.
At every major development decision, one question should remain central: “If we were making this investment decision today, with what we know today, would we invest again?”
If the answer is yes, continue with conviction. If the answer is no, leadership should have the governance and courage to change course or return to base. If the answer is uncertain, that uncertainty should be made explicit and weighed against the value of the alternatives.
The objective is not to ensure that every program reaches its original destination. It is to ensure that an R&D organization can recognize when the destination has changed, when another route is better, and when the journey should end.
Good R&D leadership is not simply knowing what to advance. It is knowing when to keep investing, when to change course, and when to return to base.
About The Author:
Professor David Adler, M.D./Ph.D., MBA, is a senior pharmaceutical leader in oncology clinical drug development and translational medicine with more than 15 years of industry and academic leadership experience. He spent a decade in senior leadership at Bayer AG’s Global Oncology Clinical Development organization and currently serves as Chief Scientific & Medical Officer of the PATHORA Institute of Pathology & Tissue Medicine. He also holds academic appointments at the Hebrew University of Jerusalem, Ben-Gurion University of the Negev, and the University of Bonn.