How To Connect Biotech Companies With Large Pharma07 February, 2017
James C. Greenwood is President and CEO of the Biotechnology Innovation Organization (BIO) in Washington, D.C., which represents more than 1,200 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations. We recently had the opportunity to sit down with him and get his perspective on the future of biopharma partnering.
How do you see the biopharma industry’s partnering needs, requirements and activities changing over the next five years?
Over the last several years we’ve seen a shift in who is having the discussions. It used to be between small and large companies. Now we see partnering among patient groups, investors, academia, regional development groups and even payers. We need to make sure all these players are meeting with the right people.
Do you see finding a partner becoming easier or harder, and even more essential to a biotech’s success?
I would say, yes, partnering has become essential and is very common now between the small biotechs and big pharma—both have something to gain. Did you know that 65% of recently approved drugs originated in small companies? Large pharma is increasingly realizing that the in-house R&D model doesn’t necessarily produce enough new products to justify the amount of investment. Combining this trend with older drugs coming off patent makes in-licensing—or partnering—even more attractive.
On the small company side, there are two drivers beyond capital requirements. First, is the lack of expertise in commercialization, manufacturing, or late-stage clinical programs, especially in the tech transfer space. Partnering with large companies can help close that gap. Secondly, small companies are realizing that they must prioritize multiple assets—choosing which to own and which to out-license. This approach to pipeline partnering, vs. go-it-alone portfolio building, has allowed more supply to meet the pharma demand.
How do you see BIO’s role evolving over time to better support partnering?
BIO has invested heavily to develop the best technologies for connecting potential partners. We arrange more than 50,000 partnering meetings annually with BIO’s One-On-One PartneringTM system. User feedback helps us continually enhance the user experience. For example, we are now in the process of enhancing our mobile app features to make the user experience even better. We also recognize that confidentiality of intellectual property is paramount to an effective partnering program. BIO’s relationship with ShareVault provides an excellent option to protect the confidentiality of intellectual property that needs to be shared before, during and after the partnering meetings.
From BIO’s perspective, what are the most important factors in successful biopharma deal making?
- At the top of the list would be to make sure the team tasked with running the project has “the right stuff” to take the product to the finish line. This could mean franchise expertise or deep knowledge within a specific pathway or molecular target.
- Second would be how much value does the team bring to the table. This ebbs and flows with economic conditions, but strong upfront payments and near-term clinical milestones to the licensee and a win/win on the royalty structure tend to create a successful partnership more often than not.
- Third is how much commitment does the large company have? This might be hard to gauge in the early negotiations, but having the right people to champion the program internally can mean a lot for funding.
- Fourth is paying attention to the relationships before and after signing. To get the deal done in the first place can require lengthy back and forth discussions, but to make the collaboration a success, productive relationships between the deal teams companies must be developed and nurtured.
What are the most common reasons that partnerships don’t come to fruition?
No-go decisions fall into three buckets. First is that the program simply does not fit into the strategic plans of the large company. Second is that the asset is too early-stage; and third, the asset has not been developed with the quality that the large company expected.
For example, if the small company has run a Phase 2 clinical trial with fewer patients and low bar endpoints than is typical for the large company, then this is an asset that is hard to get behind, even for a great product with high potential. Last but not least, the economics of the deal terms are such that where one party feels they are not getting the perceived or necessary value.