The Big Red Biotech Blog

Is Pharma Dealmaking Becoming More Difficult?

Yes it is.  No it isn't.  Depends upon whom you ask and when.

In a survey of 18- business development executives considering deals from 2006 through 2010, the responses were remarkably split I thought. The majority of biotech respondents (36%) said they could drive terms with pharma (though you can see 64% thought they were on equal footing or were more takers than givers of terms).

So we turn over to pharma.  well, 44% of pharma respondents (again the majority) said their negotiating power had increased with biotechs.

Is Pharma Dealmaking Becoming More Difficult? // Pharmalot.

What about upfront payments?  Biotechs (55%) said they had dropped - though 31% reported an increase. Flip sides of the coin to pharma, and 51% saw an increase with only 32% seeing a drop.  We in the same deals?  A more objective third party analysis of the reported deals shows about a 5% decrease in the upfront value for the 2006-2010 time period.

Average deal volumes and payments seemed to be pretty steady over the period.  Any loss of leverage pharma experienced due to dwindling pipelines and perhaps some desparation to license short-term revenues seems to have been counterbalanced by a bad funding-environment for the biotechs.  Status Quo.

Posted by Bruce Lehr June 16th 2011.

 

 

Lilly’s New Biotech Company Builds on Alliance Strategy

This post from PharmaTech Talk discusses Lilly's exploration of new business models - spurred by this week's announcement that it is forming a new biotechnology company, called BioCritica, with private investors. BioCritica will focus on the development and commercialization of hospital-based, critical-care compounds including Lilly's Xigris for the treatment of severe sepsis. The company will also receive rights to acquire other compounds currently in prec-clinical development at Lilly.

PharmTech Talk » Eli Lilly’s New Biotech Company Builds on Alliance Strategy.

BioCritica is another model that Lilly is trying to help find an outlet for select products in its pipeline that might be better exploited by the alternative commercial strategy. It is a similar experiment to Lilly earlier this year committing $150 M to severall venture funds for early stage research and development. The arrangment is known as the Mirror Portfolio. Lilly continues to explore alternatives to its traditional model as it looks for novel ways to manage its pipeline and commercial portfolio to maximum effectiveness - with greater flexibility and better resource utilization.

 

Posted by Bruce Lehr May 24th 2011.

New Biotech Licensing Model to Pay Investors

Xconomy's Luke Timmerman did a nice piece this morning on the difficulty Biotech's are having with paying off their investors in the current economic climate.  He quotes, Jim Posada, a former dealmaker at Lilly and GlycoFi, as promoting a licensing based model. This is based on the observation that Biotech IPOs are non-existent and that Big Pharma outright purchases of Biotech companies is also becoming much more difficult.

Posada's model offers another way. Under it, new Biotech's would seek relatively small investments from its backers -- say $10-$15 million over 3 years.  The company would take a drug through animal testing and phase I -- demonstrating safety and efficacy to that point. Then it's time to take that package to Big Pharma to gain a licensing deal.  Big Pharma would be asked to offer upfronts in the $30-$50 million range with heavier multi-hundred million milestone based payouts. However, the upfronts would be sufficient to pay off the early investors of the $10-$15 million at a reasonable return for their risk.  The milestone based rewards might never be realized but aren't critical to paying off the intitial funders.

Posada recently structured such a deal with Resolve Therapeutics and its lupus property in development. They raised their first two million.  So relatively modest investments might get the ball rolling through early stage development until a Big Pharma partner can with more confidence make its licensing deal.  It cuts the risk for everyone involved and makes it match the reward in a reasonable time frame. The Biotech will still need to have good programs in the right disease areas and keep its capital investments under control until funding warrants more. In the first stage, these companies may take on a much more virtual look. It's a trend whose time has come.

Posted by Bruce Lehr May 23rd 2011. 

 

Insitutional Investors Play Tug-o-war with Actelion future

Who will win control of Actelion's board?  Will it be Elliott Advisors and sympathizers or their opponents BB Biotech AG, Rudolph Mag and allies?  Right now it looks like a neck and neck battle. The US consulting group Georgeson is working a straw poll with Actelion investors on Elliott's behalf in preparation for battle at the May 5th annual meeting.  They say a group of International Institutional investors will decide it.

Elliott tells the WSJ it has the upper hand now -- what else would they say?  We've lost?  They say International Shareholder Services will back their candidates.  It will come down to a close vote at the May 5th meeting and will hinge on a group of 18% in the middle who are primarily instituional investors. 

Again, we won't have to wait long -- May 5th hovers in the near future. See Fierce Biotech and warm up the ropes.

 

Posted by Bruce Lehr April 22nd 2011.

 

Will Academia-Pharma R&D Deals Threaten VCs?

This headline comes from the very good Life Sci VC blog.  It asks whether the large uptick in Big Pharma and Academia broad R&D pacts (see Sanofi-Harvard, Pfizer-Washington U, Bayer-UCSF, UCB-Harvard, Sanofi-Stanford, Gilead-Yale, Pfizer-UCSF, etc.) will exhaust VC opportunities for startup deals?

In a word, No!  In two words, Hell No! 

Life Sci concludes that this type of deal making still only impacts a very small proportion of the total academic projects out there.  For example, the Sanofi-Stanford deal announced this week is for a maximum of 5 programs per year in an institution with literally more than 100 with 50 departments and 100's of falculty. The pool is not exactly dry as a result of Sanofi's commitment.

Life Sci also argues that this new association of academia and pharma will help academia better understand the requirements for translational activities and what it really means to run a lead optimization program to industrial standards. Moreover, big pharma can help with academia funding gaps by covering more overhead in these deals and also fill a role in providing more early stage funding that VCs are shying away from in today's more risk-averse environment. VCs can jump in later on projects that may lose funding from their initial partners for a variety of "non-program" reasons.

Also while Big Pharma offers another alternative for academia partnerships and early funding, it may not be for everyone as there will be varying tolerances of academic groups for big pharma bureacracy as projects move inside the pharma R&D organization in later stages. Some good academic groups may choose not to engage with such a model.

The post concludes:

At the end of the day, I think there's a (mostly) healthy vetting process conducted by early stage VCs in evaluating, co-creating, funding and helping govern new startups out of academic labs. When done well, Pharma benefits from this,  as does academia.  I don't see these broader partnerships as threatening or significantly reshaping this important role of VC and their startups in the process of translating discoveries into clinical innovations. 

I would agree.  I think big pharma is adding not subtracting by entering these relatinships.  It's broadening the model.  It brings more commercial knowledge to earlier stages toward discovery. It has more of an evolutionary feel to big pharma R&D model than revolutionary feel to me. It may help create a more collaborative and open environment in the process -- that will hopefully result in more translational successes - that I think emboldens and actually helps everyone involved.  Success breeds success.

Posted by Bruce Lehr April 20th 2011.

Kinsella & More Vs. Hutton & Samuels on VC Biotech

In the Red corner, Kevin Kinsella and Bob More will speak to so-called big pharma bad behaviors in negotiating with biotechs - like "back-end" loaded deals, bad-faith negotiations, and no-risk partnerships.  Behaviors that they say cal into question whether "the partnership between Big Pharma and biotech can really continue"

In This Corner: Kinsella & More Vs. Hutton & Samuels on Venture Biotech.

In the Black corner, Camille Samuels and Wende Hutton will argue that if are a "have" versus a "have not" and you ARE selective, you can still drive value with big pharma in cutting a deal.  "We're not in some Pollyanna period where everything is up and to the right."

The debate happens at the San Diego Venture Group breakfast tommorrow (April 19th) at the Hyatt Regency, La Jolla.  In essence, is Big Pharma behaving badly or do VC's need a better class of clients to supply to market demand?

 "Let's Get Ready to Rumble!"

 

Posted by Bruce Lehr April 18th 2011.

Kinsella says Pharma needs Biotech

Xconomy continues its good series of articles spawned from Kevin Kinsella's comments that Big Pharma was becoming much more predatory in its behaviors within deals with biotechs.  His basic point is that Big Pharma is destroying the VC investment ecosystem that really has supported the biotech industry over the years.  Without that support, if Biotech VCs dry up - the capital to invest in "big projects" to attack the really tough diseases like cancers, neurodegenerative disorders, metabolic diseases, etc won't be there to take this to late stages.

The Kinsella Debate Continues over Pharma versus Biotech, Worlds in Collision.

Kinsella says that Antoine Papiernik's comments that this just reflects a weak point in history where pharma is in stronger financial position than biotech's and their VC backers misses the point. His contention is that this pharma behavior is unusual and is damaging the last of the VCs playing in the area.  When these VCs are gone - and they can direct their money elsewhere whenever they want - then much new biotech development will also be gone or endangered.  Then where will pharma get its new highly innovative products? 

If Kinsella's contentions are correct, and you look at how pharma (Sanofi's CEO today said they want to direct more investment to biotech) is actively trying to move into the biotech arena with deal making -- and if too high a percentage of these deals are bad for the biotech investors -- then one does indeed have to wonder where will the products come from? 

It is possible to kill this golden goose too.  Under this scenario, Big Pharma's short term gain is also its long term loss.

 

 

 

 

 

Posted by Bruce Lehr April 12th 2011.

Actelion Strikes Back!

Actelion, in the face of criticism and a board challenge from one of its biggest investors -- Elliott Advisors, took the offensive by nominating the former CEO of GSK, Jean-Pierre Garnier as deputy chairman to the board. They also nominated Robert Bertolini a long-time finance expert in the pharma industry.

In doing so, they hope to blunt or completely rebuff the effort of Elliott Advisors to put forth its own slate of 7 replacement board candidates for election at the May 5th shareholders meeting.  Most observers agree that the two Actelion candidates far outshine the Elliott nominees.  This late stage effort may be enough to do the trick to blunt criticism of Actelion management for being too dependent on Tracleer as a one-trick pony, and misuse of a large R&D budget being applied to too many areas.

In a statement, Mr. Garnier said, "I'm very impressed with the company's track record and where it stands today...I believe Actelion's record in translating superior drug discovery into meaningful therapeutic solutions is very exciting. I look forward to contributing to guiding the company through the next phase of growth."

Take that Elliott!  Time to phone home for next counter response. See FT.com.

 

 

Posted by Bruce Lehr April 7th 2011.  

A Biotech is Born! East meets West and $100 M

A seasoned GSK drug developer and a China money man have pooled resources to for a new biotech company with $100 M in venture funding. The new company, Ascletis, will have sites in Research Triangle Park, NC and Hangzhou, China.  The company will focus its development efforts on infectious diseases and everyone's new favorite - cancers.

Ascletis will pursue a two-pronged model in order to provide greater revenues for investors at an earlier stage - that being in-licensing of drugs that can be offered in the China market and development of its own pipeline from proof-of-concept through phase II before partnering, out-licensing or selling the property developed.

The company is curently starting to spend cash on building its scientific staff with plans of adding up to 50 this year and possibly reaching 100 by the end of next year.  The bulk of the staff will be situated in China to take advantage of a highly-trained work force at a more economical cost.  Maybe 10-20% of the staff will reside in RTP.  The founders say the strategy is formed in the US and the execution will occur in China. See Fierce Biotech.

Posted by Bruce Lehr April 6th 2011.

 

 

 

Shoot the Messenger: Do NOT Blame Big Pharma for Weak Biotech VCs

In response to Kevin Kinsella's charge last month that Big Pharma was engaging in "predatory" business tactics to a degree unseen in the last five years, Sofinnova Partner's Antoine Papiernik says don't jump to that conclusion just yet.

As Kinsella Affair Goes Global, Sofinnovas Papiernik Says Do not Blame Big Pharma for Weak Biotech Ventures.

In his view, Big Pharma, which has many of its own Big Problems, is merely taking advantage of a current state of affairs where VC funding for biotech is fairly weak.  Papiernik sees this as a temporary situtation in an environment that ebbs and flows. The "predatory" deals come about for a variety of factors and many are not the "fault" of Big Pharma per se he says. These include:

• VC funds under extreme cash pressure and inclined to accept any deal offered
• Lack of competition in some deals which implies the biotech property for sale in that case isn't that valuable and doesn't command a big upfront
• Syndicates behind VC backed companies that are weak and the principals need to get out are inclined to take worse deals

Papiernik says that biotechs should be proud that they've shown the ability to innovate and discover new drugs.  They've shown they are better at this with biologicals than Big Pharma R&D.  In situations when there are multiple suitors for a biotech property, the upfronts are higher, the earnouts good and biotech is able to negotiate what it wants. 

He believes the macro sector is in the favor of biotechs now, more than ever, For companies with value, good deals are there. And for those that can't show this?  Well they will for now have to take less upfront and higher back ends until the funding options change -- just wait they will change.

 
Posted by Bruce Lehr March 30th 2011.

Analysis of 2010 Biotech M&A's

Life Sci VC published excerpts of an analysis by HBM Partners of the 2010 Biotech M&A Survey. The post goes on to cite several observations from the survey/analysis:

• Acquisitions of VC-backed biotech companies were up in 2010 back to pre-crash 2007 levels.  The expectation is for M&A activity to accelerate in 2011
• ROI-capital multiples were good with several nice upfronts
• But...the average upfront payments were down to only 1.5-2x (3-4x for overall deal) which only represents 7-10% IRR.  This is not sustainable for most VC firms looking for 20+% IRR
• Small to mid-size PHARMA drove 60% of M&A activity - not big pharma or big biotech

In general, the environment seems to be improving but the greater unwillingness to pay large upfronts may ultimately result in a capital crunch - but this is unlikely to be the case in 2011.

Posted by Bruce Lehr March 27th 2011.

Elliott Nominates Its Own Slate for Actelion Board

Elliott Advisers, a US hedge fund that holds 6% of Actelion's stock, today nominated its own slate of candidates for Actelion's board.  Elliot has been pushing current Actelion management for some time to put the company up for sale and to entertain offers.  This move has been expected as Elliott attempts to apply more pressure.  Its 6 candidates if elected would constitute a majority of the 11-person board.

Analysts have said that Elliot's candidates would have to be a very impressive lot in order to pull this off.  After the announcment, several seemed underwhelmed.  Some of the following quotes were issued by analysts looking at the slate:

"A lot will depend on the candidates. If they get really big names, that will be a help.  But if it's mainly people who've been squeezed out, it will look less convincing."

"The track record of some of the recommended board members is hardly exemplary...We are underwhelmed by Elliot Adviser's attack on the members of the board in terms of quality"

Elliott characterized the slate as "independent members" should they be elected. And, further stated its nominees had proven their value with leading pharmaceutical companies in the world. Actelion said it had no immediate comment and is spending its time on a roadshow with investors.

The annual shareholder meeting is scheduled for May 5th. See Financial Times. 

 

Posted by Bruce Lehr March 19th 2011.

Is Big Pharma Strangling Biotech Startups in Their Cradles?

I commented on this story last week when it appeared in Xconomy-San Diego. 

PharmaGossip: Is Big Pharma Strangling Biotech Startups in Their Cradles? - The Atlantic.

I will stick with my gut reaction.  This is a fairly rational and expected response by Big Pharma companies suffering through their own trials and tibulations caused by expiring dugs patents and pipeline failures, i.e. they are laying off risk until a project looks more like a "sure thing" - though there never is such a thing.

I will take Kinsella at his word that the environment is getting even tougher out there and it is likely that this will reduce the amount of VC activity (also a rational response) and make biotech more dependent on more one-sided Big Pharma deals.  This implies Big Pharma as the new investment banks -- and also acting as the new Sheriff in town.

The only alternative might be more government investment in the area if they want to bolster the R&D efforts outside dependency on Big Pharma dollars.  Extension of R&D tax credits and grants anyone?

Posted by Bruce Lehr Feb 25th 2011.

Avalon's Kinsella says Big Pharma more 'Predatory' toward Biotech VC's

Avalon's founder, Kevin Kinsella, says that Big Pharma predatory deal practices are about to destroy the life science or biotech VC community (or ecosystem as he calls it).  Since 2000, Kinsella says the situation has deteriorated.  In an article in Xconomy-San Diego, he cites the following types of practices from Big Pharma's business development groups as particularly detrimental:

• Deals with biotech have become completely back-ended.  Big Pharma is only providing enough upfront payments in deals to compensate the original VC investment.  All other upside must come from future milestones that are in the distance.  [Ed. note: I don't find that surprising given some of the large front loaded deals of the past that didn't come close to paying off for Big Pharma.  Sounds like a little VC whining to me. Likely will reduce VC activity in this area though].  The upshot is that VC's will be less than enamored to invest in early stages and to provide follow on funding.
• Bad faith negotiations.  Kinsella cites an increase since 2005 in instances where Big Pharma negotiated acquisition deals to completion and then walked away with no explanation.  The motive appeared to be deal shopping in some instances.  [Ed note: I agree this is highly unethical practice - especially if occuring with increasing frequency. It will make biotech's and VC's gunshy]. 
• Partnerships without risk.  Big Pharma is increasingly leery of funding any early stage work. Kinsella characterizes anything being offered prior to phase III as a "crappy deals".  In many cases, he claims Big Pharma may be more interested in tying up IP than developing the property to commercial. That means VC's have to raise more money and absorb bigger risk. The liklihood is that fewer of these projects will get funded. [Ed. note: My take is that it is rational for Big Pharma to want to do this given the past failures.  However, Kinsella is undoubtedly correct that this will result in less VC activity and fewer funded projects in this area under those conditions.  Also Big Pharma will end up bidding against itself for those fewer phase III projects - driving up their price.  This is likely unsustainable if all Big Pharma tries this approach].

Kinsella says in the article, "One might say that all this is just the way capitalism works, and on a micro level, I can't argue that."  So don't, I'd say.

However, Kinsella warns that VC's are less willing to assume risk of developing early stage drugs in chronic disease areas - and are more inclined to go after more me-too applications in defined areas. That will reduce investment in innovation needed for areas like heart disease, neurological disorders, osteoporosis, and other chronic diseases.

Almost anything else requires too much capital, too much time and too much reliance on a predatory Big Pharma BD team.  This results in aversion to risk, lower innovation, fewer venture funds for life science, less capital to invest and fewer biotechs. 

Isn't that cheery?

Posted by Bruce Lehr Feb 19th 2011.

 

 

 

Lilly Expands R&D with Virtual Companies and VC Funding

Lilly announced a new program to expand its R&D reach through a new program that has established three VC funds to help allay risk. Lilly will contribute $50 M to each fund and will rely on VC partners to raise an additional $600 M.  See Fierce Biotech.

Targeted experimental drugs will be explored by virtual drug companies, with Lilly geting first right of refusal at licensing any properties that come out of the development program. In this manner, Lilly can expand its early stage pipeline without bearing all the financial risk. It can also cherry-pick the most promising candidates for advancement into phase II and III trials.  

Said John Lechleiter, LIlly CEO, "This way we are not limited by our own resources and we can have more 'shots on goal'."

It's nice to see a novel approach.

 

 

Posted by Bruce Lehr Feb 15th 2011.

Can Angels Save UK's Sandwich?

In the Pipeline reports that George Freeman, Tory MP and biotech expert, is mustering entrepreneurs, VC groups and angel investors to potentially save the Sandwich R&D site -- specifically it's experienced staff recently displaced by Pfizer's decision to leave.

As reported in The Independent, the investment groups will try to determine if small company investors can employ former Pfizer scientists to create a new crop of spin-out ventures.  Apparently, there is some precedence for an effort of this sort to bear fruit as evidenced by several small businesses to emerge from the R&D staff at the soon to close AZ Charnwood site in Leicestershire. Biocity Nottingham enabled some of this activity and is looking to do similar things with the Pfizer staff.

It remains to be seen how many staff want to or are able to make this type of transition from Big Pharma to small company - albeit certain that less than 100% will have the opportunity. How many Angels are out there to offer some chance at salvation?

 

 

 

 

Posted by Bruce Lehr Feb 8th 2011.

 

How Sanofi Could Start Off on the Right Foot in Cambridge

Here's an interesting post from Xconomy written by Steve Dickman, former venture capitalist and CEO of boutique consultants CBT Advisers.  In it, Dickman give Chris Viehbacher some unsolicited advice how to manage elements of the Genzyme R&D group that it will soon acquire and to spend Sanofi's money.

How Sanofi Could Start Off on the Right Foot in Cambridge.

The big idea proffered is for Sanofi to set up a "Sanofi Genzyme VC Fund" similar to those of big competitors like Lilly, GSK, J&J, Novartis, etc. In this fashion, Dickman argues that the value of Genzyme's R&D can be better preserved by transitioning some of its talent into new slots on the outside ushering in the next round of innovation in Boston.

The VC fund can also put Sanofi back on the corporate VC map and into a position of great influence amidst Boston life science innovation and link it to the active life science investment community in the area. The fund will help Sanofi managing innovation to augment its internal R&D efforts.

The article goes on to cite various characteristics the fund should think about in terms of the personnel who manage it, their compensation models, and the length of time (min 5-7 yrs) Sanofi gives the fund to bear fruits. It also suggests its total capitalization be in the $200 M range.

It may be a good idea, but it is easy to spend someone else's money. 

 

 

Posted by Bruce Lehr Feb 7th 2011.

Hedge Fund Urges Actelion to Seek Sale

Elliot Advisors, a Hedge Fund, has told Actelion's management that it should not try to maintain its independence but should be seeking buyers for the company.  Amgen has been rumored for several months to be looming in the background to acquire Actelion to provide it an better position in CVS markets. The fund controls 6% of Actelion stock.

Elliot Advisors also called for the resignation of Actelion's chairman and for its CEO to resign from the board.  If that weren't enough, GSK just pulled the plug on its joint development project with Actelion for an insomnia drug (almorexant). 

Actelion's CEO, Jean-Paul Clozel still seems to be clinging to the prospect that Actelion will remain an independent company in spite of any pressure or adversity. See Fierce Biotech.

 

 

Posted by Bruce Lehr Feb 5th 2011.

Sir Chris Decries Woeful State of UK VC Climate - No Bravehearts Here

Fierce Biotech published comments from Sir Chris Evans, one of the original investors in BioVex in the UK, decrying the state of VC investment their. BioVex pulled up stakes as a result to raise millions in Cambridge (sounds like it is in UK) in the US before it sold out to Amgen for $1 B in cash and milestones last week.

"BioVex were never going to raise the millions they needed in the UK. They were better off in the States where they raised 60 M pounds.  We don't put enough money into these firms in the long term.  There is too much pressure that they will pull off sensational results quickly." said Sir Chris.  

He added that this type of weak investment environment is hitting home in places like Scotland.  All the more reason for President Obama and the Congress to get behind calls to feature the biotechnology industry for more investment in the US to further push our leadership position.

Meanwhile with regard to Sir Chris' quest, he likely can keep talking till he's blue in the face.........

 

 

 

Posted by Bruce Lehr Jan 31st 2011.

 

Will This be "New Normal" Business Model for Biotech?

Xconomy published this article postulating a 'new normal' model for biotechs in this time of decreased venture funding.  The new model is based on several assumptions regarding the current state of funding and investment:

• Multi-hundred million dollar upfront payments to acquire early stage biotechs are going the way of the DoDo (despite BioVex pulling off trick this week with Amgen I'm inclined to agree. most deals seem to have upfronts in the 10's of millions range with backloaded milestones in the 100's of millions)
• Venture capital's easy exit strategy is blocked as a result decreasing the motivation for VC money to fund early stage biotechs
• Risk-sharing, earnouts, and CVRs will become the normal terms for these deals
• Pharma will attempt to fund more innovation at the University level - thus the spate of recent Big Pharma-University R&D deals

If these observations/assumptions are taken to be true, what is a sustainable business model that might emerge for new biotechs? 

The author proffers the "single-asset, infrastructure lite, development model" as one emerging trend. This model uses modest capital to develop a single compound to an early clinical package that can be partnered with Big Pharma. The model employs an LLC strructure.  The upfront royalty payments in the partnership are used to pay off the LLC members on a pro rata basis. The model only works if the right targets can be chosen to deliver the pre-clinical package attractive to Big Pharma -- thus de-risking the investment for them. This is only likley to work with certain molecules and is dependent on having biomarkers as surrogate endpoints in the clinic.

The model seems to be popular as the probability of an M&A exit is now less than 2% while a licensing activity for an attractive asset at an early clinical stage is in 30% to 50% range. This model is increasingly popular with investors and to founders/developers who might maintain undiluted equity ownership.

Posted by Bruce Lehr Jan 26th 2011.

So You Think Biotech has it Tough? What about VC investors?

Here's a piece from yesterday's Xconomy, by Jens Eckstein a general parner from the TVM Capital venture firm.  He provides his views from the recently concluded JP Morgan conference in San Francisco.

null.

In summary, negative indicators from the conference participants include:

• Fundamental business model has not been revamped yet to ensure success in drug development - especially with innovators
• IPOs induce a great deal of skepticism by investors in the health care sector - unless near term revenues are evident
• Pharma and biotech need to collaborate to share risk on early stage projects due to high risk profile that is perceived now
• Most new deals will be done under some type of "option" structure based on attaining milestones - no more big upfront payments! No in and out for VC investors.
• Big pharma is beginning to seek innovative or disruptive approaches in early stage pipelines.  They are looking for product platforms.  This may be mismatched to biotech's who have been trying to establish better "clinical proof-of-concept" previously sought by Big Guys

Where does this leave VC investors? Stuck in many cases with legacy portfolios with products in clinical development with a lack of funding -- with no funding in sight.  However, there is potentially breakthrough science aplenty.  Companies and investors just need to work on funding models in concert with business model changes.

Posted by Bruce Lehr Jan 22nd 2011.

 

India Rising!

There is no doubt that India is a coming force in biotechnology -- not only in biosimilars and generics - but in contract research and manufacturing as well.

India Rising - PharmaTech Talk .

Here we have a post in PharmaTech Talk written by Kiran Mazumdar Shaw, Chairman of BioCon, one of India's leading biotechnology entrants.  She notes that India has long strived to be recognized on the world's biotech stage -- and now it is here.  Shaw can lend that historic perspective.

She sees the big opportunity that biosimilars afford India biotech where it can grab a competitive advantage by streamlining an approval process that will be both rigorous and timely.  Shaw further notes that because India long lacked capital to fund drug discovery, it developed on a service model.  Now that model is well positioned to become a major player on the world stage as MNCs look to outsource -- and many Indian firms present themselves to be strong development partners.

India is on its way to being a global destination for biotechnology.

 
Posted by Bruce Lehr Jan 14th 2011.

BIO and AUTM Weigh-in with Brief on Myriad Case

BIO and AUTM filed an amici curiae brief in the Myriad case (AMP v USPTO) as analyzed in the Patent Doc blog.  The brief focuses on the patent-eligibility of isolated DNA.  The brief also argues that negative consequences will ensue if the Federal Circuit does not reverse the lower court's ruling with regard to the BRCA1 and BRCA2 patents.

The brief states three grounds for the Court to decide that isolated DNA is patent eligible. 

• First, that isolated DNA molecules are "man-made composition of matter" that are not naturally occurring
• Second, that the isolated DNA molecules are chemical compounds which have new and distinctive properties and uses as compared to naturally-occurring DNA
• Thirdly, the Court errored when it considered DNA as "mere information" rather than as a chemical compound

The brief addresses the confounding issue in this case, that being the failure of the US healthcare system and inequities in distribution [of diagnostic tests], with the limited exclusive rights granted by patents.  If a different balance between strong patent rights and diagnostic test availabilty needs to be struck, it should be done by Congress and not the courts.

In its Statement of Interest, BIO asserts that represents "over 1100 companies.  The "vast majority" of BIO members are "small companies that have yet to bring a product to market or attain profitability, and thus rely heavily on venture capital and other private investment."  This has made "critical" patenting on isolated DNA molecules to attract such investment.

AUTM, according to the Statement, is "the largest association of university technology transfer professionals, with members from over 350 universities, research institutions, teaching hospitals, and government agencies worldwide.  Its interests in the outcome of this case are self-evident:  universities own overwhelmingly numbers of patents on isolated DNA.

 

 

Posted by Bruce Lehr November 12th 2010.

Big Biotech to go the Way of the DoDo

Frederick Frank, the former vice chairman of Lehman Brothers, says Big Biotech is dead once Genzyme is successfully purchased by Sanofi and the few companies left like BiogenIdec meet a similar fate. According to Frank, no one else will ever rise "to fill their shoes".  The investment community is only interested in funding biotech through mid-level trials then they want to sell to earn their return.  See Fierce Biotech.

"You are not going to see a lot of new Amgens or Genentechs," he said. Only DoDos.

 

 Posted by Bruce Lehr November 9th 2010.

A Smorgasbord of Sam the Sham Stories

Sam Waksal is back in the news with the announcement last week that his new private biotech company, Kadmon Pharmaceuticals, purchased privately held Pittsburgh-area Three Rivers Pharmaceuticals for its manufacturing and distribution.

Sam is a colorful sort and his return to the limelight after his conviction in the wake of insider trading of Imclone stock makes for good copy. 

Here are some stories that are appearing this morning - BioJobBlog, Fierce Biotech, and PharmaGossip. Enjoy!

  

 

 

 

 

Posted by Bruce Lehr November 1st