Building great biopharma partnerships from A to D

Print 11 November 2016
Cormac Sheridan / BioWorld

COLOGNE, Germany – Alignment and differentiation emerged as the two key requirements for successful partnerships during a panel discussion on the transformational deals that shaped the biopharma industry during 2016, here at BIO-Europe on Tuesday.

Companies seeking to out-license an asset need not only to have a clear understanding of its efficacy in defined patient populations, but also an understanding of its positioning and its reimbursement potential in an increasingly crowded marketplace. "Show me where the therapeutic need is," said Jasper Bos, vice president, health care, at Merck Ventures, the €300 million venture capital arm of Darmstadt, Germany-based Merck KGaA.

"FDA approval is just one hurdle. It's not the endgame. The endgame is the payer," said Lubor Gaal, head of external innovation and licensing at Barcelona, Spain-based dermatology specialist Almirall SA. "Even if 10 percent of the oncology pipeline gets approved, it's going to be chaos," he added.

"The budgetary pressure is going to be enormous," agreed Bos.

"It's nice to talk about a cool mechanism or cool biology," said Constantine Chinoporos, chief business officer at Cambridge, Mass.-based Boston Pharmaceuticals Inc., the newly formed early stage drug development firm headed by former Sanofi SA chief Chris Viehbacher. But it's not enough. "Differentiation is the key word." (See BioWorld Today, Nov. 20, 2015.)

For Claudia Karnbach, head of business development and licensing of specialty medicines in Bayer AG's pharma division, even that may not be enough. "Even if you have great differentiation, don't think you'll get great reimbursement," she said, citing Novartis AG's disappointing launch of the heart failure drug Entresto (sacubitril/valsartan). The drug was "something really novel," she said, yet it has so far struggled to win support from payers.

Cardiovascular medicine is a particularly difficult area to operate in, Chinoporos said, noting the controversy around the cholesterol-lowering antibody-based PCSK9 inhibitors, which are still undergoing outcomes trials. "The uptake is tepid at this point without the data," he said. "That's why Pfizer [Inc.] walked away," Gaal noted, referencing the pharma's recent decision to terminate development of bococizumab. Significantly, the move was driven by the likelihood that it would not "provide value to patients, physicians, or shareholders." (See BioWorld Today, Nov. 2, 2016.)

Alignment is also an essential ingredient in successful partnerships. Boston, which has $600 million in cash for in-licensing deals, is both a buyer and a seller of assets. Either way, the two teams need to trust each other. "If this is about passing the rock off, it's probably not going to get very far," said Chinoporos.

The company completed its first in-licensing deal in June – it involved a preclinical antibody directed against an undisclosed autoimmune disease target. The asset was originally developed by a top 10 pharma firm, which had too many other priorities to take it forward. Chinoporos said key to winning the deal was a meeting between the two companies' respective clinical development teams.

He subsequently realized that the dealmaking process that he set up was overly complex, however – a single-page document can be enough to at least secure initial broad agreement before the final terms are hammered out. "As a former pharma guy I had to 'detoxify' myself," he said.

The contrasting dynamics between the U.S and European dermatology markets poses a particular challenge for Almirall's Gaal. In the U.S., the market is buoyant and the prices that companies can obtain – from investors and from payers – are far higher. That is reflected in the strong performance of recent dermatology IPOs, such as Durham, N.C.-based Novan Inc. (See BioWorld Today, Aug. 26, 2016.)

In Europe, pricing and reimbursement are pitched much lower. "In Europe, it's very, very difficult," Gaal said. Some American firms can have unrealistic expectations when seeking a European partner. "Everybody looks at you and says 'I'm the next Anacor' – and I say 'but I'm not Pfizer,'" he said, referencing Pfizer's $5.2 billion acquisition of Anacor Pharmaceuticals Inc., earlier this year. (See BioWorld Today, May 17, 2016.)

Curiously, for a session billed as being focused on 2016, Bayer's Karnbach opted to speak about a deal the firm completed in 2014 – its $2.9 billion acquisition of radiopharmaceuticals developer Algeta ASA, of Oslo, Norway. The deal gave it sole ownership of prostate cancer drug Xofigo (radium Ra 223 dichloride). "Bayer had, for the first time, unencumbered access to an asset in the U.S.," she said.

Leverkusen-based Bayer has, of course, completed another eye-catching deal in 2016, by investing $300 million in Cambridge, Mass.-based Casebia Therapeutics Inc., a joint venture with Crispr Therapeutics AG, of Basel, Switzerland.

The deal covers blood disorders, blindness and heart disease, all therapeutic focus areas for Bayer. But it will also enable the company to gain a deep understanding of CRISPR/Cas9 genome editing, a significant and emerging technology. Given the uncertainty surrounding the ongoing patent dispute among the various claimants, squaring the risk with the potential upside was a delicate calculation. "The uncertainty around the patent dispute was certainly discussed at board level," Karnbach said. "We went into the deal with both eyes open," she added. "The risk was reflected in the valuation."

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