Yesterday, North Carolina-based Pozen gave a detailed Investor Update, focused
on PA32540, a “Coordinated-Delivery Tablet Containing Enteric-Coated Aspirin and Immediate-RElease Omeprazole.”
At Lacerta Bio, we follow the drug delivery/reformulation space quite closely. We happen to have a lot of experience in this space. Plus, we believe that there can be a lot of therapeutic value gained from these approaches, especially if this therapeutic value can be achieved using an efficient development plan and reasonable drug pricing.
So with PA32540, it appears that Pozen has really latched onto this second point (reasonable drug pricing). But first, a little background…
There is no question that aspirin is a valuable agent to prevent cardiovascular and cerebrovascular events. However, as Pozen points out, nearly 70% of patients who should be on aspirin therapy are actually taking it. So even though aspirin is very cheap, the side effects make long-term aspirin therapy prohibitive for many patients.
In fact, Pozen’s clinical data support this. They demonstrated that nearly 12% of their subjects on enteric coated aspirin experiences gastric and/or duodenal ulcers. Further, over 11% of subjects discontinued enteric-coated aspirin due to any adverse event.
Now that’s not to say aht PA32540 is perfectly safe either. For example, Pozen’s own data demonstrate a 17.5% incidence of gastritis, versus 16% for enteric coated aspirin.
Nevertheless, the safety data, coupled with the well-established efficacy data supporting aspirin in this population, make PA32540 a compelling product.
But what about cost?
As one would suspect, Payers responded with little enthusiasm when initially presented with the PA32540 profile.
What changed their minds?
Pozen correctly noted that pricing is the key component to having a successful reformulation product.
Specifically, at $1 a day, this makes PA32540 cost neutral to the Payers. Even better, the product will likely be on Tier 2 on the formularies, instead of Tier III.
In fact, since Tier II copays are around $30 a month anyway, a contracting approach will likely not be required.
Now stop and think about this for a second. Let’s suppose you currently sell a branded product in a category where there are generic alternatives (statins, for example). With a generic available, the brand would have to have compelling clinical evidence of superiority to have Tier II pricing, and even that will be a challenge.
The way many companies handle this is through bundling a basket of products, offering different prices on the products in a basket in order to make that branded Tier III product more compelling for the Payers.
So while a Pfizer or an AstraZeneca can do this, a small company without a substantial portfolio of products cannot.
This is critically important from a business development perspective (and hence another reason why we’re so interested). Time and time again we see plans and business models which do not have substantive payer research supporting the model. There is a real danger that products can be approved, yet fail miserably in the marketplace, partly due to unreasonable pricing and revenue expectations.
The “Affordable Medicine” concept Pozen is supporting can really resonate with a number of Payers. Importantly, if a developer can execute on a plan while maintaining an Affordable Medicine mindset, and not the Wall Street/Investor-driven blockbuster mindset, then we may see more approved products on the market, with broader usage for each product.
Further, by moving aspirin from OTC to Rx, we will now have a much better tracking system for aspirin prescribing, usage, adverse events, etc. Again, this is another way the entire system benefits from their approach.
We can’t say whether or not Pozen (or their commercial partner) will hit their Revenue targets. We dont’ even know if Pozen will successfully out-license this asset to strong commercial partners. However, given some of the plans we’ve seen recently, we have to commend Pozen for their pricing and commercial strategy.
Consider the following situation:
…and you are met by a complete lack of response from your best leads.
After all, you have a desirable asset, and the initial meetings were enthusiastic, with promises of follow-up calls, exchange of confidentiality agreements, etc., etc.
Why are you being met with silence? With a lack of responsiveness?
Where was the enthusiasm that you felt during that 30 minute meeting in the grey numbered cubicle?
In our experience, there are three general reasons why your desirable asset is met with enthusiasm, then silence. In this post, we discuss these three reasons, but there may be others! Please feel free to offer alternatives.
Wrong Audience – This is one reason why so many company executives argue against the use of networking conferences. Namely, that the person you met is simply the wrong person for that meeting.
Now what do we mean by wrong person? It could be that the person on the other side of the table:
Moved On – We recently ran into a situation where our key contact on the other side of the table suddenly became unavailable for an extended period of time due to a death in his immediate family. In another case, a key contact went on an extended maternity leave without notifying us. When situations like this happen, it can be weeks to months before a company responds, especially if the person who has moved on has not communicated the situation internally.
Wrong Asset – It’s entirely possible that the asset presented was simply not a fit, but the meeting was held for any number of reasons, such as:
So what can you do to reduce the amount of BD&L radio silence? Here are a few tips:
1. Pay very close attention to the exact person(s) you are meeting. Where possible, try to schedule a meeting directly with an individual, not a company.
2. Be choosy when deciding which companies you want to meet. Blanket conference coverage will likely result in a lower percentage of quality leads.
3. Keep your presentation very short, and leave a lot of time to ask questions about their internal process. For example, will the person you are speaking with lead the process internally? If not, who is that internal champion? What are the key criteria or questions that can be addressed immediately?
4. In select cases, if the meeting goes very well, you can schedule a follow-up meeting right on the spot. Suggest picking a date 2 weeks after the conference for a follow up. After all, isn’t that what smartphones are for?
5. Send a LinkedIn invitation soon after that initial meeting.
6. Mail a hand-written thank you note, along with a hard (bound) copy of the slides. Trust us. You will likely be the only person mailing a paper copy! For a greater impact, use overnight delivery.
These are but a few techniques we have used to overcome the “radio silence” problem sometimes seen in business development.
What techniques have you used in the past? What has worked for you?
At Lacerta Bio, we’re in the middle of several international out-licensing projects. This process is enabling us to re-connect with many companies around the world. In addition, we’re making new contacts in other companies, especially in Central/South America, Korea, China, and Japan.
The benefits for you are:
If you have a late-stage asset and are looking for help out-licensing your asset, let us know…we can help.
So said Shams Ruston from Labopharm at last week’s Interphex conference in New York.
We happen to agree.
In fact, there are two ways to look at this.
From the branded side, drug delivery can help extend the patent life of existing assets…a far less risky and less costly approach than trying to in-license the next blockbuster. A reformulation approach buys the innovator time to reap the fruits of earlier investments, or make the necessary ones in the near term to sustain growth. The underlying challenge may be an organizational one, as companies fixated on acquiring safe, effecting Phase II+ assets for a pittance continue to struggle to execute in-licensing deals. Broadening the in-licensing mandate (or the in-licensing mindset) would help companies tremendously.
From the other side, generic companies are competing on price, service, and distribution, and not the actual asset. Drug delivery & reformulation approaches enable generic companies to develop a branded product line. However, we recognize that reformulations require a clinical benefit in order to garner acceptable reimbursement levels.
As we’ve talked about before, drug delivery is far from dead. If anything, the current patent cliff can result in innovative ideas for companies willing to look for them.
As FiercePharma correctly points out, GSK’s Q II report reflects the overall industry trends quite accurately:
The rest of Glaxo’s report, like the rest of Big Pharma’s Q2 results so far, reflect current industry trends; sales in U.S. and Europe are on the wane, thanks in part to pricing pressures from cash-strapped governments. Cost-cutting helped deliver bottom-line improvements, and that drive will continue. The company has already identified another £300 million worth of cuts to annual spending, bringing the restructuring savings to £2.5 billion a year. Plus, GSK is eyeing more cost reductions, some of which mimic Novartis’ efficiency efforts, namely supply-chain and procurement efficiencies, and cash-conversion improvements.
Luke Timmerman at Xconomy wrote a provocative piece today entitled The Missing Ingredient in Today’s Biotech: Guts. His thesis is that the industry is so paralyzed by fear and insecurity that it lacks the collective fortitude to take risks, even if they seem delusional. To quote:
If the industry–VCs, scientists, entrepreneurs, everybody—can’t get the mojo back, then we could be sitting around with a lot of scientific insights in the lab that nobody really knows how to turn into products for human health. Everybody will be fixated on the 100 reasons why something won’t work, and failing to see the one reason why it might.
It’s interesting to think about this. Who lacks the guts? Is it the academic scientist who doesn’t want to pursue a potential dead end in the lab, but instead wants to pursue more low-risk projects to get publications and tenure? Is it the VCs, feeling the pressure from the LPs, who want to take fewer scientific and clinical risks? Are the entrepreneurs (especially the ones merely thinking about taking the leap into entrepreneurship) feeling insecure about being paycheck-less for awhile? Is it management, fearing to take risks for fear of losing their jobs or next round of financing?
Is it all of the above?
The answer might lie in Seth Godin’s post today on waiting for fear to subside:
By the time the fear subsides, it will be too late. By the time you’re not afraid of what you were planning to start/say/do, someone else will have already done it, it will already be said or it will be irrelevant. The reason you’re afraid is that there’s leverage here, something might happen. Which is exactly the signal you’re looking for.
We previously posted our comments on BIO 2011. However, one aspect of the conference that really stood out was the use of social media. Attendees were encouraged to provide links to our LinkedIn, FaceBook, Twitter, and other accounts for the myBio web site. The velocity of tweets from the convention was astounding (and continues). And, of course, an informal tweetup was held at a local pub on Monday night.
There is already a lot of banter on the web on how pharma/biotech companies should/should not use social media tools. But what about employees and professionals affiliated with the industry?
BIO demonstrated that private, personal, and professional lives will continue to blur. As we share more personal information on Facebook/Google Plus, professional information will begin to creep into our personal profiles. Conversely, we already see LinkedIn (the “professional” site) encourage users to include personal information, hobbies, interests, etc.
As more of us become more comfortable exposing ourselves online, more of us will be more readily found and accessible. We concede that this is not always a good thing, and some things should definitely be off limits. But, those who are increasingly active and easy to find will likely have access to opportunities that “off line” folks will never see through traditional channels.
This doesn’t mark the end of traditional networking. Far from it. An increasingly noisy blogosphere/twitterverse will make traditional networking functions like BIO increasingly important, especially to build long-term relationships.
In other words, business networking will become more social, and social media will involve business/professional contact points even more. As BIO 2011 demonstrated, a balance of digital and face-to-face approaches will have to be managed (and encouraged) over time.
The Lacerta Bio team attended the annual BIO Convention in Washington, DC last week. BIO has become one of the key conventions for pharma/biotech business development, and is a “must attend” event for many of us in business development.
Our observations are somewhat limited, as we spent the bulk of our time in one-on-one partnering meetings. For broader coverage of the event, we recommend the official BIO press release, report by LES, and one by Popper and Co.
Generally speaking, the conference was well-attended and well-organized. The cavernous Convention Center never felt crowded, especially since the Exhibition and the Partnering areas were so far apart. Attendance “felt” reduced compared to previous meetings in Chicago and Atlanta, but this may have been due to the size of the convention center itself. But even in the partnering sessions, we noticed more companies were sending one delegate instead of two or three. This is not necessarily a bad thing, as there were plenty of decision makers at meetings. The speed of the follow up which is taking place this week is a testament to the enthusiasm of the folks we met with.
Demand for clinical and/or commercial assets appeared strong, with many companies seeking assets in areas such as CNS and pain. Niche areas such as parenteral hospital products appeared to be of interest. Our impression is that if a product is ~1 year or less from the market, then it will garner interest, irrespective of therapeutic area. In other words, companies seem to be more willing to shift their strategy and organization in order to embrace a near-term revenue opportunity, even a small one.
BIO usually attracts a strong ex-US contingent, and this year was no different. Over 70% of our meetings were with companies based outside the US. If you exclude Canada and Mexico, 64% of our meetings were with companies from Europe, Asia, and South America. We’re curious if the major European conferences attract such a large US contingency.
BIO continued to encourage the use of social media such as Twitter both prior and during the convention. The tweetup on Monday evening was well attended, and we were pleased to meet @3NT, @FierceBiotech, @IAmBiotech, @InVivoBlogChris, @ldtimmerman, and others. We believe BIO should continue to push for increased use of social media across our industry as a way to foster dialogue and communication amongst all of our industry stakeholders. Events like the 5K race on Monday were also a good way to stimulate social/informal discussion amongst attendees.
The Exhibition felt rather quiet at times (flash mob excepted). We think this was in part due to the East/West orientation of the hall. Exhibitors along the North wall away from the entrances may have suffered traffic-wise…at least it felt this way as we traversed the floor.
BIO 2012 returns to Boston next year. You can keep up with the action on Twitter by following @BostonBIO2012. See you in Boston!
The June, 2011 issue of Nature Drug Discovery has a interesting short article based on a survey conducted by our good friends at PharmaVentures. The authors surveyed 180 business development executives on their perceptions surrounding deal making.
One of the survey’s findings is that biotech BD executives believe that pharma licensees have greater power in driving deal terms due to their purchasing power. Conversely, pharma licensors believe that the biotechs have the power to drive terms because they are selling a scare asset(s). Another observation was that biotechs generally believed that upfront payments have dropped, while pharma executives believes that upfront payments have risen.
However, data from the PharmaVentures database suggest that these perceptions are not supported by the facts. According to PharmaVentures, the mean upfront deal value from 2006 is very close to the value in 2010.
The authors conclude (correctly, in our opinion) that these data reflect the real tensions existing in today’s market between desperate pharma companies looking to fill pipelines and desperate biotechs looking to monetize assets. While the former may cause bidding wars for highly sought after assets, the latter may cause downward pricing pressure from biotechs looking to remain financially alive (and hence willing to strike deals at lower values).
A singular observation made by the authors was:
We conclude that deal-making is strongly affected by issues other than the recent, persisting pressures in the financial environment – in particular, it is affected by the long standing failure of the research and development model of licensee pharmaceutical companies to produce sufficient late-stage assets, even through deal-making. [Emphasis added]
In other words, the authors note that pharma licensees have been unable to develop assets, irrespective of their source (internal discovery or external discovery). Thus, deal-making, even for “derisked” assets, does not actually increase the probability of successfully completing product development.
But why? Is it because big company bureaucracy interferes with product development? Is is that drug development is simply a remarkably difficult undertaking? Do we not understand pathophysiology well enough? Are the regulatory agencies becoming barriers to innovation?
The truth probably lies somewhere in between all of these factors, and likely others.
Now these results can be influenced by any number of factors, such as respondent experience, NCE versus non-NCE deals, therapeutic area, geographic scope of deals, asset maturity, etc. However, the results clearly point to issues that many of us in business development have noticed over the past few years, namely, that deal-making is more difficult, but not necessarily more rewarding, for either set of parties involved.
Today we learn that Rigel has raised $130 million in financing, in part, to develop candidates in rheumatoid arthritis and other areas. But, as reported by Xconomy, the real gem may be R343 for the treatment of asthma.
Essentially, the Big Pharma partner, as part of its cost-cutting and portfolio review, took a Rigel drug for allergy-induced asthma through early-stage clinical trials, prepared it for Phase 2, then decided to bail out on allergy and respiratory drugs entirely. So Pfizer, after investing its money in critical early stage tests, gave a much more valuable drug, called R343, back to Rigel.
The moral of the story is that a “divorce” from Big Pharma is not necessarily a bad thing, especially when the partner has made value-creating investments in the asset. Whether Rigel decides to invest in R343 or not, Rigel has a much more valuable, de-risked asset in their portfolio. Other prospective partners have undoubtedly started calling Rigel already.
Flowtown has a terrific (and large!) graphic entitled “The New Marketing Trifecta.” The trifecta refers to the three ways companies should (or could) be marketing their products and services. These are eMail, Mobile Devices, and Social Media.
This trifecta is clearly an approach that pharma/biotech companies will have to use in order to reach physicians with their messages. Indeed, the increasing number of “no-rep” physicians has been well documented elsewhere. So a lower-cost, digital approach makes sense (although whether pharma can be successful is an open question). What we notice from the Flowtown graphic is:
We believe that the use of this trifecta will extend beyond the company-physician relationship. In our field (business development), we already see a number of small innovator companies who are using social media to “promote” their technologies and projects. Their aim, in part, is to establish themselves in the eyes of potential licensing partners and even future acquirers and investors. In fact, we typically advise our clients to develop a social media strategy for the company and their products or services as early as possible. This gets their names into the digital information flow, and can result in inquiries from all over the world at lower cost.
Hat Tip to Karl Schmieder and our friends at Bridge6, who discuss this graphic in their most recent newsletter.
11beta-HSD1 converts inactive cortisone to active cortisol. It is a well-understood mechanism of action, where inhibition has demonstrated potential in diabetes (insulin sensitization), obesity, cognitive disorders, and glaucoma. However, efforts to inhibit this enzyme have been hampered by a lack of selectivity for HSD1 compared to HSD2. Fortunately, our client’s candidate appears to have overcome thisRead More»
Lacerta Bio is pleased to offer a novel ALK Inhibitor for licensing to companies in China and surrounding countries. ALK Inhibition is an established mechanism of action for the treatment of non-small cell lung cancer. However, the Chinese market has several interesting characteristics which make this a unique opportunity: Incidence – The incidence of NSCLCRead More»
Background GPR119 Activation leads to glucose-dependent insulin secretion and the release of GIP and GLP-1. This mechanism has generated a great deal of excitement in the diabetes research community, as it strongly mimics processes which take place during digestion. Additionally, this mechanism is superior to GLP-1 only approaches, without the problems associated with sulfonylureas andRead More»
Today, Bruce Booth published yet another terrific post, where he discusses the current biotech investment bubble from the private word of venture backed biotechs (and, he puts many mainstream journalists to shame with this analysis).
We think one of the more interesting insights in the post is this one,
One would think with a big spike in aggregate funding that lots more biotechs would be getting financed. As the chart below reveals, the same number of private biotech companies got funded in venture rounds during the lean bunker-mode of 2009 as got funded in the bubblicious climate of 2014…So with the increase in funding and steady number of funded biotechs, the same number of companies simply raised more money (our emphasis added).
As part of our new relationship with Ventac Partners, we’re knee-deep into a year-long plan to start a new life science company from a university technology or asset. You can review the current portfolio here.
A major portion of our time is being spent reviewing technologies from universities and research institutions here in the US. Even with our focus on a selected number of therapeutic areas (gastroenterology, ophthalmology, and dermatology), there is no shortage of ideas.
So what’s the problem?
From the buy side perspective, we’re noted a few reasons why there is a discrepancy between funding and new company formation:
Shortage of Fundable Assets – There are assets, and then there are fundable assets. By fundable assets we simply mean that an asset has to move beyond a patent or a research paper in order to be fundable. Even basic things such as competitive and pipeline analyses are not a routine part of the data packages we are seeing. This means someone, either within technology transfer or an entrepreneur with an option on the technology, has to put the data package together. This takes time, money, and expertise.
Importantly, we’re not simply suggesting that a competitive analysis will result in more companies being formed. There is a surprising number of academic research programs which are simply not competitive compared to products already on the market.
The current trend of pharma and biotech professionals going to work in university technology transfer offices is a very positive step in this regard.
Biology Is Hard – I love this quote from a post by Michael Gilman,
The last two or three decades of immunology have been about finer and finer subdivisions — of cell types, of ILs, of CDs. In drug development, that kind of precision can stop helping you. After all, most of our successful immunological drugs are pretty blunt instruments, taking out whole swaths of the immune system. Although elegance and selectivity are intellectually compelling, when it comes to an enemy like autoimmune disease you need heavy weapons (our emphasis).
He’s quite right. When I studied undergraduate immunology, it was fairly straightforward. Even the one graduate-level course was certainly manageable for a non-immunologist like me.
But our increasing level of understanding of biology in general leaves us both in awe at its elegance and its complexity. Gone are the days when you can dose beta blockers and measure blood pressure in rats. Now you read a paper and there is a single sentence on the knock out mouse created for that particular experiment, almost in passing, as if creating a new life form is another routine assay system.
It’s amazing what we can do scientifically, but this all comes back to the same issue that the lay press simply cannot understand; that biology (and hence, drug discovery) is damned hard.
The advances made in genomics, combinatorial sciences, robotics, genetics, etc., etc. have reduced R&D productivity across the board because the more we understand, the more we realize how difficult drug discovery and development are.
Now smart investors know all this. VCs hire smart people and retain smart consultants to help them make sense of it all. Since they have to be smart about the bets they place (because they have LPs who demand ROI), they have to be very picky. And, since there are a limited number of VCs (especially early-stage VCs), it’s even tougher to find novel, investable biologies.
Take the Michael Gilman post mentioned above. Even with the years of work already done to understand PADs, the first issue his company had to address was whether or not PADs are druggable. Now stop and think about this. Years of work has taken place to understand a very specific biology, and yet we do not know (at least not publicly) if this is even a druggable space. So we are still years away from a commercial PAD inhibitor.
And we’re not even addressing the issues of predictive models, regulatory challenges, etc., etc.
Even in our own little corner of the industry, it’s difficult. Take diabetic retinopathy, for example. Chronic hyperglycemia leads to AGE formation, oxidative stress, and vascular damage. But AGE formation is not the only mechanism which can do this. In fact, there are at least four others that we can find in the literature.
So how do you choose? Where do you place your bet? How much would it cost to perform the “killer” experiments to sort this biology out? And who is willing to finance that bet?
But that’s the nature of biology/pharmacology/drug discovery. It’s hard, rarely successful, risky, and therefore valuable and precious when successful.
Talent Shortage – There are a few ways to look at this issue. One, it’s never as simple as grabbing 4-5 ex-pharma execs and handing them the keys to a new company. Going from a large company to a very small one is never easy. Secondly, investors are rightly biased towards corporate executives who they have worked with before, thereby reducing the opportunities for first-time C-level executives. Investors have a lather/rinse/repeat attitude when it comes to management teams, reducing the pool of talent that would even be considered for a new company.
So this year, as our Inboxes burst with the latest news on “monster rounds,” IPOs, etc., let’s keep things in perspective.
Let’s remember that for all of the new companies which are financed, a much larger proportion of them are not financed, and many will shut down.
Similarly, for every drug approval, there are hundreds that are not …and patients pay the price for lack of therapeutic options.
So let’s celebrate drug approvals, remember that financings are just that, financings, and try not to get too distracted by the CTR-driver journalists in our industry.
It’s hard to believe that a week has passed since we were dashing from meeting to meeting in San Francisco. We conducted 29 scheduled meetings at the Biotech Showcase, had 15 other scheduled or impromptu meetings elsewhere, attended 4 dinner meetings, 5 receptions, and walked (or ran) 36 kilometers (that’s 22.4 miles if you’re keeping
The decks have been prepared, edited, and uploaded to the cloud. The meeting schedule is finalized. The objective of each meeting is clear. Air, hotel, and ground transportation is all set. Business cards…comfortable shoes…running gear…all set. Looks like we’re good to go! Here are a few of our thoughts before we end our week and
In Part One of his series, Dr. Garrett Lindemann discussed some of the challenges facing Wyoming as it grows its life science industry. In Part Two of this series, Dr. Lindemann highlights some of the life science companies which are already operating in Wyoming. Now, in the third and final installment, Dr. Lindemann summarizes some of the life science companies