Optimizing oncology asset value to investment partners

Maie Gall

Matems Consulting Ltd.

Oncology is currently experiencing an incredible boom in innovation and not just from large pharmaceutical companies. There are an increasing number of small to medium sized biotech companies that are not only very interested in this field but are also very capable, with amazing innovation coming from this sector every day.

These are mostly small to medium sized biotech companies that have one or many assets and are looking to answer multiple questions such as:

• To what stage of development do I need to take this on my own before I can look for partners or further investments?

• How do I go about doing this?

• What is the right information package that they want to see?

• How do I determine the value of my asset in order to determine a price level?

For many the decision to continue to phase III using VC money, or find a large pharma partner to help finance the next steps or simply license it out, is a difficult one and not one that is easily answered. The optimal solution lies in the strategic plans of the company but also very much in the compound’s own abilities and potential. Once a thorough analysis is done then one can clearly determine the optimal solution for that specific compound in that specific indication. This analysis has multiple steps and it is highly advisable to invest in it before proceeding to any activity past phase I development. 

 

“For many the decision to continue to phase III using VC money, or find a large pharma partner to help finance the next steps or simply license it out, is a difficult one…”

 

How do I make my asset attractive? Many small and medium sized companies are very much focused on determining value through clinical efficacy. Clearly this is a very important variable, however clinical efficacy alone will not stand out any more in the noisy and busy oncology market. However, very often a crude commercialization strategy is put into place in order to quantify the market size. This usually involves taking all patients within a specific indication and assuming that this is the total market potential. But this is an inaccurate picture as many variables are involved in determining the right market segment, which is not just based on the approved indication. It is therefore critical that the right components and the right analyses are put into place in order to present a complete and desirable picture for potential buyers. Indeed, many VCs insist on seeing a complete information package in order to invest in to a compound or idea. Licensing departments in big companies are also much more interested in a full package of information to assess a compound offering.

A thorough commercialization strategy actually has multiple components to it, with the target product profile (TPP) leading the way. It is the most essential component of putting together the right clinical plan as it defines the strategic direction of each compound. Once that is put into place then a clinical development strategy, a regulatory strategy and a marketing strategy can be created.

The TPP is comprised of the multiple parameters that define the desired product. These are then given three different probability rankings such as best, realistic and worst case. In each case the efficacy and safety requirements, dosing levels and schedules, type of administration and the competitive situation is described under the various probability cases. One is needed per indication for which the compound will be developed.

Once this is in place then the rest of the components of the commercialization strategy can be put into place. The clinical development strategy can then describe in detail what is needed to get the product through the optimal phase II trial and what the phase III trial might look like. As the cost of developing products today is significant in later-stage trials, then making sure that you have the right end points, trial design and the right comparator once in phase III is critical.

Deciding on a comparator is trickier than many companies realize as it requires you to have a “crystal ball” in order to determine the right comparator at the end of the trial some two to three years later. As many companies are realizing today, taking the standard of care at the time of trial design is not always the right choice. 

 

“Many VCs insist on seeing a complete information package in order to invest into a compound or idea.”

 

Another very important component is the regulatory strategy. This is basically a map on how to make sure that all the components are in place for approval. As development costs increase and the regulatory authorities are getting increasingly bombarded to approve many new innovative compounds, making sure as early as possible that your plans, whether developmental or clinical, are in the right direction definitely increases your value for acquisition or investment. The regulatory strategy should therefore be perfectly aligned with the clinical development strategy.

The last component of this is the marketing strategy. This strategy is the key to making sure that the market is also ready for, and indeed in need of, such a product long before it is ready to market. This strategy should also carefully consider when to present the compound to the public and how. This has the advantage of putting your compound on the radar screen of the largest possible partners. An additional very important part of the marketing strategy is the KOL (Key Opinion Leader) management plan. This is an essential component in making sure that your compound has the right advocates in the right universities. These advocates are very helpful in getting your protocols approved for clinical trials as well as helping solidify your value in the indication, all of which will increase your value as a compound for the potential buyers.

For large pharma this is all usually found in their standard operating procedures, but for small to medium sized companies short cuts are often being looked for due to limitations in either man power or budgets. However, taking the time, effort and money to do these analyses ensures that you are on the right track for not only maximizing your efforts toward getting the desired results but also in making your offering more professional and sound. Additionally, very often the selling price or investment price is based strongly on the market potential of the compound. With these analyses in place, the confidence that your potential partner can have in your market assessment, strategy and therefore the value of the asset is much greater, giving you a much stronger standpoint for negotiation on investment value.

As the competition for funds and partners increase, finding a way to stand out becomes essential for survival. Sometimes a simple, well planned analysis is the most time efficient and cost effective way to move forward, despite the investment required to do so.

About the author:

Maie Gall is a commercial strategy expert at Matems Consulting, a specialized consulting company focusing on haematology, oncology, rheumatology and diabetes. With offices in the US, Europe and the Middle East, they offer a broad service offering for these indications from Phase I to post patent expiry strategy as well as tactical implementation. Combined, they have more than 75 years of industry experience at large pharmaceutical companies in local, regional and global functions. For more information including the CVs of the partners, please visit their website at www.matems-consult.com or contact Maie at maiegall@matems-consult.com, tel +41 79 788 6523.

What are the key drivers of value for investment in oncology assets?