BioTrinity – making love not war...
Liz Cole
PiR Interims
There is a “lack of happiness" in both pharma and biotech, claimed Colin Blakemore in his opening address to the recent BioTrinity conference. This was attributed in general to the global economic downturn, but specifically to the failure of the "old model" of developing drugs.
However, against this muted backdrop of limited product pipelines, lower valuations, and cost constraints, a common and more positive message began to emerge. Both pharma and biotech appeared to agree that more effective collaborations and a focus on novel approaches to deal-making may have a direct and beneficial impact on innovation in R&,D, and in turn productivity and profits. Below, we highlight some of the key panel discussions which took place at BioTrinity 2011 and the routes being explored by corporate venture funds, VCs, and ‘traditional’ Pharma licensing teams to overcome the challenges they face.
"Both pharma and biotech appeared to agree that more effective collaborations and a focus on novel approaches to deal-making may have a direct and beneficial impact on innovation in R&,D..."
Corporate venture funds
New entrants to this market, including Abbott Ventures, Merck Serono Ventures and Boehringer Ingelheim Venture Fund have created a livelier and more interesting market for biotech companies seeking investment.
While some of the venture funds preferred investments in platform technologies, which can feed into broad therapeutic applications, others were seeking investments in defined therapeutic areas where the wider company portfolio has a gap.
However, all parties agreed that a successful investment shares three key characteristics:- excellent science, strong management, and importantly, syndication. In relation to the latter point, one such corporate venture deal of recent times is Acacia Pharma, in which Lundbeckfondventures has invested alongside Gilde Healthcare Partners, a transatlantic venture and growth capital firm.
This type of collaboration is both common and desirable, as it increases the chances of successful outcomes. In another example, Bicycle Therapeutics is invested by a syndicate of four investors including two corporate venture funds, SR One and Novartis Venture Funds.
"…wariness from the biotech community, lack of awareness and publicity surrounding the venture funds, or uncertainty as to the key areas of investment focus are inhibiting biotech from making the first move."
It was a surprise to learn that the corporate venture funds are not overwhelmed with opportunities and approaches from entrepreneurs. Debbie Harland was keen to stress that SR One were ‘open for business’. One may speculate as to whether wariness from the biotech community, lack of awareness and publicity surrounding the venture funds, or uncertainty as to the key areas of investment focus are inhibiting biotech from making the first move.
In spite of this, the corporate investment channel is quantifiably more successful than others, with 75% of deals recouping their initial investment. This measure of success is leaving aside the strategic benefit to both biotech and pharma parties of engaging in early dialogue.
Where will VCs invest in 2012?
At the outset of this discussion, the audience were asked in a straw poll to indicate how many were seeking investment. Over 50% raised their hands. Therefore any guidance provided to the audience on investment trends was seized upon with great interest. Panellists touched upon areas of specific interest which included MedTech and diabetes management. The panel response to a question from the audience regarding investment in to stem cell research-related ventures was underwhelming. As yet, it seemed that no business plan in this area had fit with the panel’s investment strategy. It was encouraging though to hear from the panel that the UK was becoming a more promising market with interesting products and services coming down the line.
Innovative Pharma deal making
Tibor Papp from PharmaVentures as Chair highlighted the key challenges which are facing the lifescience sector. He noted that no pharma company had had more than one drug approval during the last year. With a drive for innovation therefore at the forefront, the pharma licensing representatives in the panel were keen to emphasise their openness and willingness to engage in dialogue, as well as take new approaches to licensing in order to fill the pipeline gap.
Margaret Beer from MSD described a well- evolved partnering and licensing process where all the late-stage opportunities have been ‘trawled over’. Therefore, in order to be successful in external R&,D they were turning to opportunities at a much earlier stage – as early as target identification.
As the discussion unfolded, it became clear that licensing is evolving into something earlier- stage, and more collaborative. Philip Oliver from Eli Lilly commented that they were undergoing a shift in model from a ‘Fully Integrated Pharmaceutical Company’ to a ‘Fully Integrated Pharmaceutical Network’. Shaun Grady from AstraZeneca added that AstraZeneca was targeting 40% of its pipeline to be generated from external sources.
So...where are the dealmakers looking to invest to generate this R&,D potential?
"…it became clear that licensing is evolving into something earlier- stage, and more collaborative."
Academic deals and collaborations are continuing to increase in importance. In a reflection of the market as a whole, the net is being cast wider to capture important academic opportunities within emerging markets. For example, AstraZeneca has recently entered into a collaboration with the University of Peking which focuses on diabetes, obesity, and cardiovascular indications. Reflecting their increasing importance, it was noted that academic deals were beginning to resemble commercial deals in their structure with inclusion of milestone payments.
The development of partnerships with bioscience hubs and incubators was also highlighted as a way of accessing these early-stage opportunities. One such high-profile collaboration of this kind is GSK’s involvement with the Stevenage Bioscience Catalyst.
Common elements of success
During the course of the programme two common strands of advice emerged for biotech companies wishing to achieve good outcomes :
Forward- planning
The pharma representatives urged the biotech companies to take a long term commercial perspective. They highlighted the necessity for a solid regulatory strategy to be reviewed and incorporated into their plans at an early stage. In addition, thoughtful consideration of payer issues as well as identifying biomarker and diagnostic partners in early development could avoid bumps in the road further down the line.
Teams
Contributors to the discussions consistently highlighted the importance of strong leadership, and specific operational expertise in ensuring a biotech success. This included the introduction of independent Non-Executive Directors and strong business development personnel at an early stage as well as specific niche skill-sets such as toxicology expertise. It was encouraging to hear reiterated time and again a recognition that good people, and positive relationships are of course, at the heart of successful biotech partnerships. During a discussion on cultural issues in global M&,A, Brian Morton, the President of transatlantic Eusa Pharma, summarised those fundamentals which create value in any business: world class systems, and good people who combine strong corporate experience with a flexible and can-do attitude.
"…no pharma company had had more than one drug approval during the last year."
Partnerships
Many attended the event primarily for the opportunities afforded by the biopartnering meetings and we will be watching with interest to see what relationships flourish out of conversations initiated at BioTrinity 2011.
Inspired by Royal wedding fever, during her address to delegates on the Tuesday evening, Gwen Melincoff from Shire Strategic Investment Group likened BioTrinity to love. Participants attend to search for, and find new partners. Some of these relationships will never get off the ground, others will last a few years then come to the end of the road.
But with good planning, realistic business plans, excellent teams, and open dialogue some of them might just live happily ever after...
About the author
Liz Cole is Senior Consultant with PiR Interims. PiR Interims has been providing Interim Management Solutions to international life science organisations since 2005. We identify and place some of the most highly regarded professional interims in the life science sector. PiR Interims works across a range of functions including: Medical, Clinical Development, Regulatory Affairs, Project Management, Commercial, Market Access, Manufacturing, Quality Operations, Supply Chain, HR and Finance.
The PiR Interims team has been on board with BioTrinity for a number of years, but inspired by the event’s growing size and importance, decided to attend as exhibitors this year for the first time and benefit as a team from the opportunities for networking and learning there.
Email: interims@pir-interims.com
Phone: +44 (0) 844 880 4340
Website: www.pir-interims.com
BioTrinity is now the largest bio-partnering event in the UK . With 750 registered delegates, it facilitates more meetings with investors than any other European conference.
Where do you think VCs will invest in 2011?
