BIO-Europe Spring 2023, Basel, Switzerland – Part One

Travelling to Basel, Switzerland for Informa Connect / EBD Group’s BIO-Europe Spring, taking place at the Messe Congress Center between the 20th and 22nd March, pharmaphorum listened to partnering insights and development from speakers across the industry, at the event supported by regional host sponsors Novartis and Roche.

Opening the record-breaking 17th edition of the conference were Anna Chrisman, MD and president of Life Sciences at Informa Connect, and David Thomas, senior VP of Industry Research at Biotechnology Innovation Organization (BIO). Their remarks being streamed into other rooms throughout the venue to avoid over-crowding of the presentation space, Chrisman noted that, on that exact date three years ago, she had been doing the same presentation – but from her living room in California, dog barking in the background, her husband as cameraman. In March 2020, as the pandemic fully took hold, she said, that had felt adventurous. 

Such a trip down memory lane was, of course, inevitable – and the voice over the tannoy at this point announced Room One was indeed at maximum capacity. But such mixed feelings were apt. With a lead time of two weeks to pivot from face-to-face to virtual back in 2020, it had been quite the task, but Chrisman had risen to the challenge in only the second week of global lockdown. 

Overall, 6,000 partnering meetings had been facilitated on the virtual plane, providing a sense of normalcy; determined that, despite the many differences, all would continue. And industry, in particular, made it through, she said, because it partnered. 

From virtual to face-to-face in Basel

BIO-Europe Spring, like industry, is currently stronger than ever. Attendance this year was up 30%, with some 19,000 partnering meetings scheduled across the three days. As Chrisman noted, clearly all felt it was good to be back, and to be back in person.

Having wanted to bring the event to Basel for a long time, but prevented from doing so by conflicting events, it was nevertheless the post-Covid environment that had enabled a slot. Working with local stakeholders was a “truly rewarding and unique” experience in Basel, Chrisman explained, noting the enthusiasm of industry giants Roche and Novartis in their collaborative sponsorship. 

Giving thanks also to the regional host delegation, which facilitated activities over the weekend and would be providing home-hosted dinners at people’s private houses that evening – the three days were to be centred around personal interaction, with fewer presentations and more regard for environmental sustainability, from carpeting to local and vegetarian food: “small choices,” Chrisman said, but necessary.

David Thomas, meanwhile, began his opening remarks by describing BIO-Europe Spring as an early inflexion point in the year, mulling on last year’s themes and deal-making, while turning to a new year’s trends. And it was all about the figures.

Investment figures and future green arrows

Coming from tough times, looking at the investment figures, recent collaborations in banks that specialise in biotechs, he said, had knocked figures back down. However, as follows drops in valuations, public markets pull back – and IPOs crater. In the private markets, from $44 billion in 2021, the figure dropped to $29 billion in 2022, in Europe far more than in the US. Then, turning to licensing – why most were at the event – for clinical stage deals, industry had seen the largest drop in the number of such deals in the last 15 years, with upfront payments plummeting and milestone payments becoming more common. However, pre-clinical stage deals worth over $10 million are up 4%, he said.

For more green arrows next year (his comments had been supported by slides), Thomas stated that industry needs to address the issues. His company, BIO – more than a convener and promoter of industry events – is, rather, an advocacy organisation, maintaining a positive environment around the world. With mention of the Innovation Reduction Act (although there was brief comment on an ‘Inflation Reduction Act’), David noted that someone had said to him 11 years ago that Europe would find its way to US – and so it has eventuated. Top-selling drugs will be subject to price negotiation and price fixing. 

Only the previous week to BIO-Europe Spring, the number of drugs to be affected by the bill had doubled. It couldn’t come at a worse time, he said, and small molecules and biologics – CNS, depression, pain, and addiction (small molecule) – will be significantly impacted by the bill. That area has already seen a 40% drop in industry pipeline. Meanwhile, for rare diseases, there are drugs that will lose exemption from price setting if they go on to have a second setting of usage. 

With mention of Bio Boston, to be held from 5th to 8th of June, David closed the event’s opening remarks with the call to challenge the bad ideas being dreamed up by politicians, the Inflation Reduction Act, and other bad policies.

From acquisitions to partnering?

Taking to the stage next to discuss some of the industry trends being seen were Melanie Senior, healthcare writer and analyst at Nature Biotech, Evaluate, and IN VIVO, together with Susanne Kreutz, global head of Corporate and Business Development at Novartis and James Sabry, global head of Roche Pharma Partnering at Roche.

Senior thus joined by deal-making chiefs local to Basel, and interestingly both panellists possessing PhDs in neuroscience, she noted the “torrid time” that it has recently been for biotechs, certainly in the public markets, and also mentioned that privately owned companies will have felt some of the malaise also – “Nobody needed the Silicon Valley [Bank] collapse, for sure!” Senior said. At the time she was speaking, nevertheless, Credit Suisse had just entered into a merger agreement with UBS, following the intervention of the Swiss Federal Department of Finance, the Swiss National Bank, and the Swiss Financial Market Supervisory Authority FINMA.

Conversely, speaking to biotechs and their investors in 2022, everyone had been hopeful – but M&A was significantly down on previous years. With Pfizer’s move for Seagen for $44 billion, and Sanofi’s smaller deal for Prevention, Senior urged that optimism be taken where it can, however. She noted that neither Novartis nor Roche had been particularly inquisitive over the past 18 months, though, and that Novartis had strategic rethinking going on and Roche its smaller, interesting deals, but not the big M&A the rest of the industry was hoping for. Senior enquired whether this marked a trend, a move away from M&A in favour of partnership.

A deal-type diagnostic approach and downward cycles

Susanne Kreutz replied that she would argue that “M&A is not really out”, and she expects it to continue, but “in a very focused manner, focused on the admittedly very few high-quality, high-impact late-stage assets, where reimbursements are secure, and the regulatory path is clear”. Kreutz continued to say that “there will be a massive emphasis on partnering this year and the years to come” and that even with a continued difficult funding environment, “what is happening now is the best solution”. Clarifying that, for Novartis, a “deal-type diagnostic approach” is best – after all, “the science matters” – Kreutz emphasised that, “if the science can really make a difference for patients, [Novartis] will go after it and wrap whatever structure makes sense around it.”

James Sabry, meanwhile, acknowledged that the industry is “going through a down cycle right now”, but that it is only a cycle. “It’s not the end of biotech, or of innovation, or the industry”, he said. Indeed, he noted that the depth of the downward cycle is a reflection of how far the industry has come in the past few years, and that some “tremendous innovations have occurred over the past four or five years”. 

“The best structure for innovation in our industry is a biotech industry,” Sabry continued. “The majority of what is eventually marketed and what’s in the pipeline is from pipeline.” He urged those listening to “keep innovating” and focus on “important decisions – what to work on, what technology, what target”. 

Indeed, “what’s evaporating are drugs that don’t really make a difference, and that’s good,” Sabry said. “We should welcome that. Secondly, [we] need to decide when to partner and who to partner with.” Mentioning that Novartis are good competitor friends of Roche, Sabry noted that each partner has a different set of attributes. “In the last 10 to 20 years, things have changed dramatically,” he continued. “When I was in your shoes, at least half of my career, I always wanted to talk to the pharma guys in front [he gestured to the audience], as opposed to biotech.”  

The importance of innovative science for partnerships

Senior interjected at this point, making it clear that Novartis and Roche were open to partnerships (important at BIO-Europe Spring), and asked Sabry what was on the wish list, modality-wise.

“The most important thing we look for is innovative science,” Sabry replied. “The future belongs to the innovators. We don’t need a new PD-1 or PD-L1: we need innovation, new ways of attacking the disease biology (large molecules, complex large molecules, etc.). Then, of course, cell and gene therapy – this will be a large part of material in 20 or 30 years from now.”

Senior noted the huge innovation within small molecules, though, and asked whether the Inflation Reduction Act had been influencing matters. To this, Sabry replied that “the biggest risk is not IRA, but biology”. He explained that risks are much more important to focus on. Kreutz also didn’t have much to add on the Inflation Reduction Act, choosing instead to focus on “the difference that can be made for patients”.

“As to our wish list,” Kreutz continued, “it is a very exciting time for Novartis at the minute.” This, with the Sandoz spin-off generics business, is transforming the journey into a pure-play, innovative medicines company. Indeed, the company has a “recently refreshed innovative medicines strategy, focused on five core Tas for depth and scale of success: cardio, immune, neuro, tumours, haemo (malignant).” 

Novartis is also maintaining a presence in ‘Therapeutic Area X’, Kreutz said, looking at emerging diseases, at the really cutting-edge science therein. Additionally, it has five tech platforms (the “magic number five”, Kreutz jested), including two established biologics and three emerging tech platforms “where ‘n’ is pioneer: radioligand, cell and gene, and xRNA. [All] inherently difficult to scale up and expand.” What Novartis wants, she said, is to have a dialogue and partner at every stage of the R&D process – “It’s never too early to talk to us!” she urged.

At this point, Senior enquired about deal-making structures, stating that “It’s a bear market, not the same as a bull market, but – being blunt – you two are the buyers, you can call the shots. How are you approaching this?” she asked. 

Kreutz expects “a massive increase and focus on partnering deals, particularly earlier stage assets”. She explained that Novartis likes “to take a long-term perspective” based on three things: “great science, a shared vision for the asset, and true commitment to the partnership”. Regarding deal structure, per se, Kreutz said that Novartis is “deal type agnostic” and again reiterated the importance of the science itself: “What the biotech brings to the table: that is the piece that matters, bringing innovation that will ultimately mean something for patients.”

Sabry added, “We don’t think about front foot, back foot, advantages this year or last year – [we’re] not as adversarial as that.” He said that it’s about looking for a social chemistry – which is why face-to-face is exciting, taking place between scientists in biotech and those that exist within Roche. Those are the alliances that work, Sabry noted, and emphasises that getting from an idea to a marketed drug is “an extremely complex process”. So it is that collaboration has to allow for flexibility for discussion and debate, pharma bringing operational stability and financial stability, too. The marriage, he said, is more important than the flash of the wedding: “the real value is in the marriage”.

“It’s a symbiosis,” Sabry continued. “Pharma needs biotech. The days where pharma made all their own medicines: those days have long gone. [Now], it’s a much more interesting and innovative environment in which innovation is core.”

Nurturing the collaborative relationship early on

And when it comes to biotechs approaching pharma, Senior wondered whether an elevator pitch worked best or a 25-slide presentation. To this, Sabry simply said, “Introduce yourself and, in a concise manner, tell us what the science is behind what you’re building.” Although easy whilst at a conference, such as BIO-Europe Spring – he nonetheless urged visiting pharma websites otherwise and getting in touch: “We want to know about you early and start a dialogue. We want to know how you think, if we’re going to get into a relationship with you. [The] best deals are where we have known companies for many years.”

Senior joked that it’s not all about the ‘first date’, before Kreutz described Novartis’ recent transformation, combining M&A and BD&L into ‘Corporate and Business Development’, restructuring BD to make it as easy as possible. She reiterated the ‘reach out and start a dialogue’ takeaway of the presentation.

Looking beyond Europe, beyond Brexit

Senior finally mentioned that, having spoken with a European investor “with lots of money”, they’d said that the story of 2023 would be all about Europe. Sabry corrected that it’s “all about the globe, not just Europe”, including for China and Japan. “Every country has its own characteristic,” Sabry said. Whilst optimistic that the “EU will continue to play an important part in innovation”, nonetheless, those innovators would come from China, Japan, and the US.

Concluding with questions, one member from the audience noted the huge challenges of reimbursement in the EU. Kreutz responded that maintaining a continuously high-quality market would assist in engaging with health authorities and other institutions in order to find a way forward, though a lot more work had yet to be done in this regard. Sabry agreed that Roche believes the issues are “worth a debate”. 

“One has to go into the industry insisting that you must ensure access to medicines. [It] doesn’t mean ensuring at lowest cost price,” he said. Rather, it is a process of getting to know governments and payers. “When we develop a medicine, [we] do so with the assumption of global launch and regardless of geography for patient access. Then, we debate and argue and go back and forth.”

Another audience member return to the issue of the Inflation Reduction Act, to which Sabry reiterated that, “We start out by looking at innovation. Fundamental human biology is more important […] Not that we won’t fight for access to medicines at the best possible price, [but the] real fight is with human biology, understanding whether the medicine will work. Clinical failure is the biggest headwind for this industry.”

Senior brought Brexit – “the gift that keeps on giving” – back into the conversation, asking whether is makes innovation from the UK less attractive. To this Sabry categorically said that it “doesn’t change it at all”, citing the Oxford, Cambridge, London triangle, and other parts of the UK as well. Kreutz agreed that it makes “absolutely no difference”.