The Big Red Biotech Blog

Pharma Corporate VC Investment Increases Odds of Success

Burrill & Company’s June 2012 report indicates that that pharma corporate venture capital (CVC)-backed companies have a higher rate of overall success than those without their involvement.  The analysis includes 2907 therapeutics companies that raised VC dollars between 2000-2010 across 5100 rounds of financing.  Corporate VCs were investors in about 10% of companies, and this pool of 286 companies had what appears to be a markedly higher hit rate: a ~60% higher rate of licensing deals, M&As and IPOs. See Life Sci VC blog.

These new data from Burrill are entirely consistent with pharma corporate VC playing an important role in the ecosystem, and that they seem to get involved in good companies that possess better than average probabilities of success.  It is uncertain whether corporate VCs are just good company pickers because they look for things their Pharma  R&D organizations may want, or if they actually help shape a better outcome once they get involved either through the value-added “stamp” of Pharma validation or through active deal management contributions. 

I suspect they add value both by picking companies working in areas where they have keen interest and knowledge -- and by helping to shape and manage deals in areas where they have honed expertise. One thing for sure, it looks like having a CVC on your side heightens your odds of success.

Posted by Bruce Lehr June 1st 2012.

Where The Deals Are… Cancer Remains Hot

This is a nice summary by the Pharmalot blog (via Deloitte) indicating where biopharma dealmaking occurred last year relative to disease areas.  Not surprisingly, cancer was in the number one slot with 161 deals and represented nearly 25% of the total. More than half the deals were signed during the discovery or pre-clinical phases.

Where The Deals Are… Cancer Remains Hot // Pharmalot.

Median deal sizes (at least those disclosed) were higher in areas other than cancer -- autoimmune and inflammatory -- followed by endocrine and metabolic -- were one and two. Not surprisingly, upfront payments rose in alignment with phase in the pipeline.  Phase I earned median payments $8.4 million, phase II $19.5 million and phase III $25 million. Registration stage compounds were more than double that at $59 million.

The five largest deals (out of 714 total) had an announced aggregate value of $8.2 billion with upfront payments totaling $738 million. So now you know where the money went, will it keep going there in coming years?

Posted by Bruce Lehr May 31st 2012.

VC Funding Down in Qtr 1 a Problem?

An analysis of venture capital funding for biotechs in Qtr 1 showed it dropped by 43%.   PricewaterhouseCoopers did further work to show that companies who received their first round of funding dropped by 53% and dollars invested in deals dropped 38%.

This has been taken by some as an indication that the biotech arena is starving for cash to support the growth of new companies.  Of course, the movement of VCs out of this area has also been a hot topic the past few years. 

However, Bruce Booth of Atlas Venture is less worried. And......he actually makes his living in VC.  Booth says that one shouldn't get too upset over quarter to quarter variations in investments.  He notes that Qtr 1 2012 is still within 10% of Qtr 1 2011 -- which turned out to be a good VC year in life sciences.  Finally, he says that VC investing in biotech as a percentage of total VC capital has remained pretty stable over the last decade at approximately 25%. See Fierce Biotech. Not to worry.

 

 

 

 

 

Posted by Bruce Lehr May 10th 2012

Biotech Markets and Funding

Here's a good article by Bruce Booth of the Life Sci VC blog discussing the heyday of IPOs in the 1991-1994 span versus, the history of these deals to date, and the current investment environment.  What's the story?

IPOs of that era paid handsomely to the VC backers of the time.  The average step-up in valuation over the private invested capital was -- 4x.   There was a very low cost-of-capital provided by public equity investors in that period. Much lower than today.  For most of the past decade, step-ups on total invested capital have typically been only 1.5x or so.  Sadly, high capital intensity has been the signature of many of the past decade’s IPO stories.

The playing field has changed since then as investors realized over that time span that only a subset of the 1991-1994 IPO window have accrued real value over time.  Gilead, MedImmune and Vertex might be considered notable exceptions.  Most of the other IPOs have underperformed all the major indices.

 Booth instructs that there is a major flaw in the former IPO model that 3 main features:

• high capital intensity funding large portfolios, requiring serial public equity, with little focus on capital efficiency
• endless cycles of “rinse and repeat” anti-shareholder behaviors where new investors are recruited to fund the promise at the expense of existing shareholder dilution
• management teams too focused on “built-to-last” company survival vs shareholder value maximization, even when the best outcome for existing shareholders, and often patients, is to sell now and access the balance sheet resources of a bigger company

These flaws have led to IPOs a less attractive means of fudning.  As Booth says, if most IPOs trade down after their IPOs, why bother buying at the offering.  Seems rational.  So in the current environment, private backers are becoming more activist and push for strategies that maximize their return in these companies -- which includes the proposition of selling the company "realtively early" to big pharma players. This avoids the dilution problem described above if trying to go the long haul.  The old IPO model is gone.

In the current situation, one of the big change drivers is Big Pharma R&D productivity issues and their increasingly active M&A interests.  Big Pharma in recent weeks has tried to make deals for Human Genome Sciences, Amylin and Illumina -- but were thwarted by big shareholder interests. As described above, activist big shareholders are playing a larger role in trying to maximize their investments and have resisted these perceived "low ball" offers. With more buyers crowding into the market, the pressure to pay a premium is just going to go higher. That's a trend with which biotech investors are well attuned.  See Fierce Biotech. 

Posted by Bruce Lehr May 5th 2012

 

 

New Drug Development Financing Tool?

Andrew Lo, an MIT finance engineering professor, when he floated idea of funding new drug development with CDOs -- collateralized drug obligations.  The CDOs would be able to invest in a series of drug development projects that would pay returns if they resulted in successful treatments reaching the market.

The idea would be for investors to put up $50 B to $100 B to fund 150 drug projects over 10 years.  Hopefully, this would be another funding mechanism and would relieve pressure on getting all the funding from government sources, weakened VC networks and Big Pharma itself.

Naysayers may point out that the CDO concept didn't work out too well for housing and mortgages -- but Lo counters that he forsees a big funding gap for drugs in the coming years and that this would mean a drop in new treatments. 

Lo says, "If there's a cancer bubble, I can live with that."  I don't know if CDOs are viable but I like the novel thinking to bring an idea like that to the table for consideration. See Fierce Biotech.

Posted by Bruce Lehr May 4th 2012.  

NIH Cuts First Translational Science Deal

Yesterday, Francis Collins announced that the NIH has secured a deal with Pfizer, AZ and Eli Lilly to collaborate on existing compounds to look for new uses (disease treatments) for them. The four-way partnership will be led by the NIH's new National Center for Advancing Translational Sciences (NCATS).  Collins of course has been a major proponent of the center and the need to speed up the pace at which discoveries are turned to medicines.

This pilot program has legal templates established among the players which should clear IP hurdles that could bog things down. The rationale for looking at exisiting drugs is that sometimes a drug developed for one disease does work for another -- e.g. AZT developed for cance rbut was ultimately applied to AIDS.  These existing drugs have many times also undergone previous safety testing so not having to redo safety work can also speed the development process.

Collins is excited to get started. He notes that researchers have identified the causes of 4500 diseases but only 250 have developed treatments.  Collins says, "The future has never looked brighter in terms of the promise of biomedical research, but we have to be smarter than ever, and we have to look for new partnerships."

It is expected that other members of Big Pharma will join the party when the pilot program gets underway and especially if it bears some early fruit.  See Xconomy and Fierce Biotech.

Posted by Bruce Lehr May 4th 2012.

New Drugs -- If You Can't Make 'Em, Buy 'Em

That seems to be the current motto of many big pharma companies and describes their relationship to biotechs.  But if you go that route, you will pay handsomely.  Fierce Biotech reports (via Bloomberg) that pharma companies are forking over on average a 71% premium in picking up new biotechs (worth > $500 M) for their pipelines.  This is reportdly the highest premium since 2000. 

So if you read the previous post about "bad culture" in Big Pharma, another cost (beyond poor R&D productivity) seems to be having to pay the piper when it comes to buying from the biotechs. Cutting the R&D budget likely won't help rectify that -- although it may help fund it a bit. 

Supply and demand is taking over and the acquisition prices will keep rising as a result in the short term.

Posted by Bruce Lehr Apr 25th 2012.

Lilly Can't Save Its Way to Prosperity Says CEO

Lilly's John Lechleiter says the company can't solve its upcoming revenue woes, due to expiring patents on some of its biggest sellers, by cutting staff and otherwise saving costs. He says that Lilly has no plans to follow companies like Pfizer in cutting $1B from operations in 2012.

Eli Lilly CEO Says Cost Cutting Won’t Solve Drug Sales Loss - Bloomberg .

Lechleiter continues to state his mantra that Lilly has to develop its way of its problem by bringing winners from its pipeline to market.  The next candidate is solanezumab -- a putative Alzheimer's treatment in phase III -- one that some analysts indicate could be worth as much as $9 B in peak sales.  But, he is also quick to point out that solanezumab is high risk and it is NOT a make or break proposition for Lilly.  Nevertheless, the pressure is on to bring home some winners soon from Lilly's pipeline.

AZ's chief, David Brennan, on the other hand is following a plan of reduced spending on internal R&D and is hoping to boost that company's flagging pipeline in the near term by acquiring smaller bolt on acquisitions (can anybody say "string of pearls"). They've also struck a recent deal with Amgen to help take some of the latter's Mab drugs through the pipeline.  However, AZ still needs more to right its ship -- given its patent cliff and dreadful recent record in developing drugs in its own R&D groups. Can they find enough "bolt-ons" to buy their way out of trouble appears to be the salient question?  See Fierce Biotech.

Will either strategy work?  Both appear to be tenuous at best.

Posted by Bruce Lehr Apr 13 2012.  

 

Biotech Investment Returns: Diversified Fund vs Healthcare-only Fund

Will I earn more if I invest in biotech ventures through a Diversified investment fund or one that specializes in Healthcare only investments? 

Perhaps surprisingly (perhaps not), the Life Sci VC blog's shows that Diversified funds have done better from 2002-2011, 12.3% to 7.1% total value (realized + unrealized returns).

There is no certainty as to why this may be the case, but a leading hypothesis is that diversified funds may have a bias towards "leaner, more capital efficient biotech bets."  Because they have competing tech deals they may do instead, these funds may also avoid "big burn regulatory bets" and "big science platform deals that lack a product-focus". 

Or it may just be a statistical fluke.  Read for yourself. It is an interesting result regardless given that healthcare funds are supposed to the the investment experts in this area.

Posted by Bruce Lehr Apr 12th 2012.

Bio Drug World is a Changin'

Nothing Earth-shattering here by any means, but a couple interesting reads in the blogs by Derek Lowe (via Matthew Herper) and an article by Luke Timmerman dealing with CHANGE in the world of drug development and commercialization.

The Herper/Lowe, piece to a degree, laments that the heads of drug companies may not value the "human capital, i.e. scientists" involved in the drug discovery process.  And as the economic gap widens between the number of new drug approvals (bringing in much needed revenue) and the high cost of developing and marketing new drugs -- well at present it looks like R&D scientists are paying for it with their jobs. The observation is made that maybe this isn't the best strategy to employ in a research/discovery driven business.  Nevertheless, there is also a hard economic reality and SOMETHING different clearly has to be done -- as the current model isn't sustainable any longer.

The Timmerman piece talks about some of the changes that are taking place on the commercialization of drugs that contributes to lower sales and higher costs - exacerbating a potential need to cut R&D staff (though that response is a choice).  On the comercialization side, it is not good enough to just get your drug to the market anymore.  You actually need to show it meets an unmet need and quite frankly works better than exisiting alternatives -- otherwise me, you, the insurance companies and the government don't want to pay for it. The whole concept of "comparative effectiveness" is bringing a new discipline to drug development -- and sets a higher bar too.

The two articles demonstate the World has changed.  An for an industry to survive in response to meaningful change -- it has to adapt or head for extinction (in this case layoffs or ceasing to exist as an independent business).  It has always been thus.  Just not in the (bio)pharma industry up till now.

Posted by Bruce Lehr Apr 2nd 2012.

 

Acquire, Acquire, Acquire......No, Divest, Divest, Divest

The tide has officially no turned it seems.  Over the past decade (or more) Big Pharma wanted to get BIGGER and BIGGER through mergers and acquisitions.  Now, as pipelines dwindle, patent cliffs are reached, and revenue holes develop --- its time to turn the ocean liner many pharma companies have become to get smaller smaller smaller and fast.

Abbott officially kicked off the activity with its break up into a diagnostic and pharma company (now called AbbVie).  Reports are now circulating that Pfizer's Ian Read wants to to begin his break up plan first discussed way back in March of last year.  See In the Pipeline and Bloomberg for more.

In general, the market has thus far rewarded Pfizer's stock price for this proposed move, and the closer it seems to reality the more the investors seem to like it.  Analysts seem more torn on the long-term (not short term) wisdom of such a move as Pfizer's portfolio does appear to provide some diversification protection and one could argue that the non-pharma businesses are doing better than the "core pharma" property that Read wants to invest in.

Needless to say, in a monkey see monkey do world, if two very large players decide to follow this path, many more lemmings are sure to follow.

Posted by Bruce Lehr Mar 29th 2012.

Is it Safe to go FAST with Drug Approvals?

Xconomy's Luke Timmerman wrote a post today in his blog about the FAST (Faster Access to Specialized Treatments) legislation that is currently in the House. Advocates of FAST are pushing for more drugs to be approved sooner by FDA for serious diseases -- that is after they've been shown to be safe and likely with some sort of surrogate endpoint data pointing to their possible effectiveness. Proponents liken this to speedier approvals given to AIDs drugs during the early days of that crisis.

The conundrum for regulators of course is if they approve drugs more rapidly without as much efficacy data, there is a possibility that the drugs may not perform as advertised in real (and usually larger) patients populations (ala Avastin for breast cancer).  The quid quo pro for this type of program therefore has to be the industry's diligence in doing and reporting post-market follow up.  Less than sterling drugs could then have their approval revoked.

The post also quotes people like Alnylam's CEO, John Maraganore, as being an advocate as it may offer his company a way of getting drugs to market faster and at less expense in more abbreviated clinical trials. Maraganore argues this in turn woudl make investing in smaller and mid-sized biotech's more attractive -- due to lower costs and heightened regulatory predictability. 

An In the Pipeline piece this week, points out the problems the drug industry has had with it's productivity as fewer and fewr drugs are introduced at greater and greater expense -- a sort of reverse Moore's law or Eroom's Law as th epost explains.

In addition to FAST in the House, the Senate has its version too, known as TREAT (Transforming the Regulatory Environment to Accelerate Access to Treatments). It looks like this idea's time may have come - and with desires to reduce health care costs, and boost the health of the US Biotech industry momentum is building to give this idea a try.

Posted by Bruce Lehr Mar 12th 2012.

BioTech Funding Update

There were a couple of interesting articles on various aspects of biotech funding out there today.  Firstly, Pharmalot related that VC funding for biotechs was actually up 16% in 2011 over 2010 despite all articles about it being unavailable. Q4 was actually up 90% YOY from 2010 and 160 deals closed in 2011 compared to 153 in 2010. What is apparently true are there are a lot more early stage spin-outs from Universities and all of these can't (aren't) be funded with current mechanisms.  The question is do they all deserve funding?  Probably not.  Bottom line, biotechs received $3.5 B in funding in 2011 with an average round raking in $21.8 M versus $19.7 M in 2010. So much for a no funding perception.

Secondly, Life Sci VC blog talks about the milestone payouts that are actually being achieved in these M&A deals with relatively small upfronts and big backend milestone payout schedules. Data for this analysis is hard to come by by the blog's author (Bruce Booth) has estimated the results on 35 deals where public info (or his network) was available for period 2005-2009. The deals represented in $4.3 B in upfront payments with milestones promising up to another $7.0B.  The results?

• At least 24% ($1.7 B) in milestones have paid out
• Approximately 40% ($2.8 B) may still pay out in part or total -- though some milestones may have already been missed
• And 37% of milestones are dead as the projects have been killed. That results in $2.6 B worth of no pay out
• Only 3 of the milestones were actually paid for product approvals (Salmedix, Ovation and Gloucester).

The data is incomplete and the author is asking those in the know to help build a better picture through crowd sourcing.  Until then, the amount being paid on backend milestones in biotech M&A deals will remain somewhat murky.

Posted by Bruce Lehr Feb 23rd 2012.

 

 

 

 

The Costly Myths about Pharmaceutical R&D

I love this back and forth debate about how much drugs cost to bring to market -- focusing ostensibly on the R&D costs.  Problem is -- apparently -- no one can agree on where R&D costs start and finish.  Nor can they agree on which drugs are coming to market.  Is it NMEs?  Is it variations on existing drugs? Both? Neither?

The Costly Myths about Pharmaceutical R&D - Health News Watchdog .

We also get to argue about whether discovery is included or not.  Whether the cost of capital should be considered or not.  Whether the government or public subsidizes the process, to what degree, and whether that should be deducted from the costs in the analysis.  We can't even agree whether we're including biotechs or not in our analyses.

That's how we end up with an estimate of the cost of developing a new drug falling somewhere between $56 M and $11.9 B.  We might be able to just barely slide a piece of paper through that crack.  More like dozens and dozens of reams.

Posted by Bruce Lehr Feb 17th 2012.

Which Pharma Spent The Most R&D On Each Drug?

Pharmalot just published (via Forbes) an analysis of Big Pharma R&D spending for period 1997-2011.  The data was provided by InnoThink Center For Research In Biomedical Innovation and Thomson Reuters Fundamentals via FactSet Research Systems.

Which Pharma Spent The Most R&D On Each Drug? // Pharmalot.

From this, one could calculate the dollars spent on R&D/new drug approved for each company concerned.  The link above provides a Table of the results for 12 Big Pharma (biotech).  Amgen, it turns out spent the least at $3.7 B per new drug (11) approved during this period.  AstraZeneca, it turns out spent the most at $11.8 B per new drug (5) approved during this period - OUCH!  This coupled with products reaching the patent cliff helps explain why the latter is experiencing really tough times now and cut over 30,000 jobs during the period.

Even $3.7 B per drug at Amgen seems like an astronomical amount of money.  It's no wonder the industry it trying to rethink its business and R&D model.  Clearly something better change when you are spending$3.7 B to $11.8 B PER DRUG.

One can't help but think to some degree this "ranking" over the period has a little to do with luck as well given some of the vaguaries in the approval process and perhaps timing of some projects relative to submission dates in this period.  I'm not certain you can state one company has any better development model than any other based on this data.  You can say Amgen made out slightly better than its peers for the period -- but who's to say that will hold up over the next period?  We're going to have to track some of these "new models" at companies like Novartis, GSK and Sanofi to see if they really see improvements.

Posted by Bruce Lehr Feb 10th 2012.

SEE some more commentary on this subject from In the Pipeline.

13 Pharma, WHO & Gates To Tackle Tropical Diseases

The Gates Foundation announced that it is teaming with 13 of the largest pharma companies to find treatments for 10 neglected tropical diseases by the self-imposd deadline of 2020.  The Gates Foundation itself is pledging $363 M of the total $785 M earmarked for the project.  

Pharma, WHO & Gates To Tackle Tropical Diseases // Pharmalot.

Participating companies include, many of the world's heavy weight in drug development, many of whom have had at least some efforts for some time in going after these diseases.

• Bayer - Chagas disease
• Abbott, J&J, Pfizer, Sanofi, GSK, Eisai - lymphatic filariasis
• MSD - river blindness
• Sanofi, Bayer - sleeping sickness
• Gilead - visceral leishmaniasis
• GSK, J&J - soil helminthes
• Novartis - leprosy
• Pfizer - blinding trachoma
• Merck KGaA - schistosomiasis

Additionally, Abbott, AstraZeneca, Bayer, BMS, Eisai, GSK, J&J, MSD, Novartis, Pfizer, and Sanofi are working with the Drugs for Neglected Diseases Initiative (DNDI) to provide access to proprietary compound libraries to develop new drugs.  

"As an industry, we have the capabilies and the know-how and resources that can improve the state of the world, especially the developing world," said Paul Stoffels, worlwdie chair of the J&J pharmaceuticals business. 

Of course, others weren't quite as optimistic. Medecins Sans Frontieres (aka Doctors without Borders) argues that more research is needed and that these companies only spend a pittance on tropical diseases each year at $18.3 M -- compared to their oft cited figure of $1.3 B on a single approved drug.  See Fierce Biotech and the press release.

As Nike would say, "Just Do It".

Posted by Bruce Lehr Jan 30th 2012.

RNAi Woes Continue to Force Cut Backs

Alnylam announced that it will need to trim back its staff by another 33% so that it can conserve cash and focus on its two lead candidates in the clinic.  The Company stated it will trim 56 persons' jobs -- saving about $20 M per year.  It will also focus on its phase I development programs with amyloidosis and hemophilia. 

The whole RNAi field has been thrown in disarray over the past couple years as the drugs have proven to be difficult to deliver into cells.  Roche, Merck and Novartis among big players have deeply curtailed or stopped their RNAi programs. No current RNAi drugs are on the market despite billions of dollars in development funding.

Undeterred (Ok maybe deterred), Alnylam will take its $260 M in the bank and push forward on its two candidates.  It says it will become less of a platform company and try to make the transition to a product company.  In the meantime, focus and austerity are the catch phrases until better clinical success and more investment is forthcoming. See Xconomy and Fierce Biotech.

Posted by Bruce Lehr Jan 23rd 2012.

Why is CEO of Onyx smiling?

There is news today that Bayer's new colorectal cancer drug, regorafenib (aka "son of Nexavar') will be submitted to the FDA for approval in 2012. Not only is this a potential blockbuster for Bayer, but this is likely to inspire some smiles at Onyx too. The biotech landed a $160 million payday and won a 20% royalty stake in the drug last fall after prevailing in a bitter dispute over the rights to regorafenib, which bears a close resemblance to the jointly-owned Nexavar. Onyx had accused Bayer researchers of secretly developing analogs of Nexavar before the two partners finally managed to reach an agreement on ownership.

Winning in court and then in the clinic is likely to inspire smiles -- especially for a $160 M plus payday -- and if the analysts are right about the drugs' billion dollar potential the 20% royalty will be worth A LOT.

As Onyx CEO Tony Coles put it, “we are in position to go from one product for two tumors (Nexavar) to potentially three products with strong data or [an FDA clearance] for seven different cancers by the end of this year,” Coles says. The other drug besides Nexavar and regorafenib is known as carfilzomib, which is being reviewed by the FDA as a new treatment for multiple myeloma.

“When you see that kind of momentum in the business in such a short period of time, it’s unrivaled,” Coles says. “We think the future is very bright.”

Say Cheese Tony.

See Fierce Biotech and Xconomy articles.

Posted by Bruce Lehr Jan 18th 2012.

 

China Wants to Boost Its Local Vaccine Industry

China has a goal of making itself the primary producer of vaccines that are used domestically.  To further that aim, the government is encouraging the development of production processes with proprietary IP rights. China is supporting the creation of new strains and technologies within this program.

China wants vaccine production innovation to boost local sector.

"It is clear from the plan that the Chinese government intends to create a favorable environment for the growth and development of China's domestic vaccine industry and to achieve self-reliance in the supply of vaccines", law firm Sidley Austin LLP released.

This is another example where the East is rapidly investing to make itself more market competitive.  It is also another example of where government policy is used in a strong way to drive economic development and technological advancement in a programmed direction.  The US policies need to support similar initiatives in the US biotechnology industry.

Posted by Bruce Lehr Jan 16th 2012.

Pharmalot Follows Pharma Investments

I liked this article from Pharmalot today that tracked Big Pharma's investment in R&D and Manufacturing facilities in the periods 2003-2006 and 2007-2010 respectively and collated the top 10 countries of the world where this occurred for each period.  The results are interesting (at least to me). 

Follow The Money: Where Pharma Is Investing // Pharmalot.

Top 10 Countries 2003-2006

1. USA  - $38.7 B
2. Ireland - $37.1 B
3. Singapore - $27.6 B
4. China - $19.7 B
5. Germany - $14.8 B

Rounding out the top 10 for this period were Spain, France, Puerto Rico, India and Sweden. Let's look at how the picture has changed over the next period.

Top 10 Countries 2007-2010

1. USA - $73.3 B
2. China - $29.8 B
3. Singapore - $17.7 B
4. India - $16.8 B
5. Ireland - $16.0 B

Rounding out the top 10 for this period are Italy, Germany, Switzerland, Canada and Brazil. You can see that the Asia-Pacific region is being enriched in the top 10.  European countries are dropping on the list, and 4 fell out of the 2007-2010 top 10 though 2 new Euro countries snuck in. 

The USA still is the lead country for investment though.  Someone please take note.  We have a leadership position and it would be a good time to implement policies that helped to cement that lead.  European financial issues and controls may be eroding their position as we write -- and Puerto Rico's new tax policy may hasten their further demise as well.

It appears indisputable to me that activity will continue to flow to the East if that's where the new investment in R&D and manufacturing is gaining momentum.

Posted by Bruce Lehr Jan 12th 2012.

 

 

Top 10 Biotech Deal Terminations in 2011

Fierce Biotech recounts the Top 10 biotech deals with big pharma partners that were axed in 2011.  They state that the right deal can make a company and when it sours it can break it too. Pharma partners look to pull the plug ASAP on souring deals to save as much money as possible. It's a "Terminate often, terminate early" philosophy at work many times.

Analysts (passing out advice & when don't they) say under that scenario, it is critical that the biotech gets back all licensing rights without paying reverse royalties -- so they can repartner the deal!  Many deals are repartnered in just this manner. With regard to blockbusters coming from these type of deals, analysis reveals that 8% had been partnered, re[partner4d and launched to successful outcomes.

Top 10 Terminate Deals for 2011:

• GSK and Targacept (neuronal nicotine receptors)
• Shire and Renovo (Justiva for scarring)
•  Merck and Addex Pharmaceuticals (ADX63365 for schizophrenia)
• Janssen Pharmaceuticals (J&J) and Diamyd Medical (GAD65 for type I diabetes)
• Cephalon and ImmuPharma (lupus)
• Novartis and Peptimmune (PI-2301 for MS)
• Novartis and Paratek Pharmaceuticals (PTK 0796 wide spectrum antibiotic)
• Merck and Portola Pharmaceuticals (Betrixaban anticoagulant)
• Eli Lilly and Amylin (Byetta for type 2 diabetes)
• Solvay and Depomed (DM-1796 for pain)

Time to repartner up.

Posted by Bruce Lehr Dec 19th 2011.

 

 

GE Enters Turnkey Bioplant Partnership for Emerging Nations

GE and engineering firm, M+W Group, announced that they will team up on a complete biomanufacturing plant development service to serve the growing global demand in the emerging markets. The partnership will provide a single point of contact for customers, primarily governments, including IP access, financing, plant start-up, construction, and staff training. 

GE wont say if turnkey bioplant partnership will cut prices for emerging nations.

The partnership's goal is (to make money) to aid emerging nations in satisfying their unmet needs for the biological products that are predicted to have major positive health impacts. The regional focus of the partnership will highlight the Middle East, Central and Latin America, and SouthEast Asia. They will also sell to Big Pharma looking to upgrade vaccine manufacturing capabilities in emerging nations.

Posted by Bruce Lehr Dec 19th 2011.

 

Atlas Shire's Up Investors Rare Disease Portfolio

Yesterday, Atlas Ventures announced a new alliance with Shire Pharmaceuticals to explore investment opportunities in early-stage rare disease therapeutics. The partnership leverages Shire’s capabilities and knowledge in the research and development of rare diseases with Atlas’ expertise in the formation and growth of early stage companies. 

The creative alliance structure provides an opportunity early in the venture process to utilize all of Shires capabilities in rare diseases from research to commercialization, while leveraging the extensive Atlas network and experience in company formation. Under the agreement, professionals from both Shire and Atlas will be dedicated to work closely together to advance the collaboration effort.

Financial terms of the deal aren’t being disclosed. But Atlas indicated that Atlas and Shire will seek to create a small portfolio of investments over the years of the partnership. Shire will also get option rights in these deals, through which it will have the opportunity to acquire the companies at a pre-determined price if the startups reach certain scientific goals. 

By structuring the investments to give Shire the option to acquire, the partnership “secures access to these innovations for Shire, while mitigating the downstream liquidity risk for the team and investors." An Atlas spokesman said,  “We are quite excited about how these unique platforms will enable us to further experiment with the early stage venture model.”

See Life Sci VC Blog, Xconomy, and Fierce Biotech.

 

ADC Biotechnolgy Wins Grant for new ADC Production Technology

ADC Bio received a new development grant from the Welsh government for its new antibody drug conjugate manufacturing technology that it hopes will make drug production cheaper.  The new "lock and release" method will minimize production steps and cut costs.

ADC Bio wins development grant for new ADC production tech.

The new technology is performed on a solid support versus current methods done in solution at high dilution. Binding the antibody to a solid support prior to the conjugation step provides some of the following advantages according to ADC Bio:

•  column binding of the antibody followed by conjugation to the cytoxic drug allows all superfluous reactants to be washed away from the immobilized antibody
• structural integrity of the antibody binding activity is maintained
• the antibody is protected throughout the process and can't be lost by leakage providing signficant risk management for pricey material
• reportedly production yields are increased in the new process by minimizing antibody aggregation

ADC Bio expects to begin testing commercial scale production in the next year and a half.  It plans to license the technology to CMOs and drug companies. The prospect of ADC's making a much bigger splash in cancer therapeutics over the next decade bodes well for demand for ADC manufacturing services and technologies.

Posted by Bruce Lehr Dec 13th 2011.

 

Venture Funding Decrease is Big Pharma's Gain

From Fierce Biotech, it seems that big pharma has happily stepped into the funding void created by the collapse of venture funding for biotechs to do more deals earlier and cheaper than before.  Says Dan Zabrowski, head of Roche's drug partnership unit,  "We are doing around 50 to 60 partnership deals a year now, compared to around 30 deals per year before the crisis [of 2008]. Today, we start deals earlier with less upfront payments and share the risk with our partners."

Who says a funding crunch is so bad?  This is not exactly a hardship for big pharma.

Posted by Bruce Lehr Dec 12th 2011.