What is Digital Scouting?
The term “digital scouting” refers to an increasingly popular approach taken by multinational pharmaceutical companies to source and evaluate in-licensing opportunities.
As the name implies, it is a digital approach, designed to complement (and, perhaps, replace) analog (face to face) scouting.
What does this look like? And, how can prospective licensors adjust their processes accordingly?
BD: Before Digital
Once upon a time, we lived in an analog world…There was a time when email was not widespread outside internal corporate systems.
The Internet as we know it did not exist.
Hotels in San Francisco for JPM Week were cheap.
Back then, scouting was very much a meeting and people-driven process. JPMorgan…BIO…BIO-
Europe…all of these events were born and grew, in part, because of the need for face to face introductory meetings.
Emerging companies looking to partner simply had to meet someone within a multinational company in order to get the process started.
The Problem
The problem is that the influx of licensing opportunities is very large, especially for areas such as oncology, and growing rapidly. Even with business development-focused CRM systems, many companies struggled to keep track of everything during the entire process.
More importantly, multinational companies face the FOMO problem…Fear of Missing Out.
Consider the situation where Company A discovers (or in-licenses) a novel compound against a novel target in a valuable indication, then validates it through initial Phase II studies.
This process will attract other multinational competitors, and so the market for other candidates with that same mechanism of action (preferably with a better safety or efficacy profile) becomes highly active. (Hence driving hotel and conference prices upward). In-licensing scouts are then marshalled into action.
But what if the “best” candidate is hidden in the portfolio of a tiny company outside of the usual biotech centers?
Or, perhaps in a company which cannot send management to partnering conferences?
Perhaps that asset remains hidden within the bowels of academia?
Clearly, other methods of scouting are needed which are more thorough and less dependent on analog partnering conferences.
If this wasn’t enough, the problem is compounded during the diligence phase.
In-licensing analysts need to pull data from a variety of individual sources, like prescription data, scientific and medical articles, presentations, posters, press releases, videos, images…
All this data needs to be gathered, organized, analyzed, and easily shared in both raw and summary forms.
The Response
Many multinational companies have, in parallel, done a much better job of a) refining their inlicensing requirements, and b) making those requirements known publically (to the extent this is possible and desirable).
Visit any multinational pharmaceutical company web site, and there will be some description of the kinds of in-licensing candidates they are seeking.
Many are very specific. For example, you typically longer see “ophthalmology,” but instead see dry AMD, geographic atrophy, etc.
These companies are, for the most part, listed companies. So there may be limitations to what can be said publicly. And competitive signaling is and should be avoided.
Regardless, it is generally easier to understand what companies are looking for, and what they are not, compared to what it was a decade ago.
Now we may disagree with their preferences and choices. For example, we would like prospective partners to accept more early-stage risk. Or move into other therapeutic areas beyond cancer.
This is all true, of course.
But, for those of us on the licensor side, we may have little choice in this (assuming a license is even the right course of action, which is a separate issue).
So What is Digital Scouting?
Now imagine a single browser-based platform where all (and we mean, all) data sources are aggregated and presented in dashboards and customizable reports…filtered through the lens of corporate in-licensing strategy.
Let’s first define “data sources” as:
- Company and asset descriptions from conferences
- Publications (abstracts feed directly into the dashboard)
- Press releases
- Primary market research data
- Secondary market research data
- Epidemiology
- Financial models / valuation
- Preclinical and clinical data (imported from the data room)
- Memos from internal / external analysts and consultants
This is precisely what digital scouting looks like.
Companies are now importing all data sources into platforms and dashboards, sorting and prioritizing based on a variety of criteria which, in turn, are based on in-licensing strategy (hopefully).
As these systems are used, they can be “trained” to spot opportunities which would otherwise be missed via analog methods, becoming true examples of artificial intelligence.
Science fiction?
No.
This is very real, and has evolved over the past 10 years into an in-licensing machine for many companies.
Proactive Sourcing
One critical benefit for companies that have these systems is that they can proactively seek and ask for meetings at conferences with prospective licensors.
Indeed, many multinational companies are experiencing an increase in the number of meetings they are requesting. Are the scouts sitting at their desks trolling through rows and rows of company listings at a partnering conference?
No.
Instead, they are pulling these data feeds directly into their digital scouting systems. Profiles are then scanned for key words, alerting scouts of companies with assets of potential interest.
Scouts can easily prepare for these meetings by combining profile information with competitive intelligence data from any number of sources…all from their browser-based dashboard.
Are the robots taking over?
Will we see the day when all licensing is conducted digitally, via dashboards, data rooms, online video chat?
I suspect the accountants would like to move in this direction, at minimum because digital can save money, especially on travel, conferences, and related BD-expenses (especially BD personnel salaries and benefits).
Call us old-fashioned, but we believe that business development will remain a “people” business. Relationships will always matter, especially during late-stage due diligence, negotiations, and postagreement alliance management.
But it could mean that partnering conferences take on a different emphasis. They may be less about initial “naïve” meetings and more about follow up meetings and alliance management meetings.
Implications for Licensors
What does this mean for companies seeking partnerships?
Profiles…and Language
It is increasingly critical for all companies to have their non-confidential information in text form, across multiple platforms, using plain text (as opposed to hidden behind images, Flash, etc), loaded with keywords.
This will increase the chances of these databases and spiders to find and properly categorize company information.
This would apply to company web sites, but conference profiles are especially important for this machine reading.
But it is more than simply having a complete profile for a conference. The profile must be clearly written, with ample (even repetitive) descriptions of technology, drug candidate, and supporting data.
The same extends to company and candidate descriptions in databases, such as ADIS, PharmaProjects, Cortellis, and the like.
Many of these entries come from public sources, like press releases. So, again, these data must be accurate, keyword laden, and updated as needed.
We don’t know if companies can contact the database companies to confirm accuracy, but it may not be a bad idea to try.
Accept the Meeting…Always
Did you receive a meeting request from a multinational company?
Great.
Accept it.
There is no other correct response to this question.
Obviously, if you are looking to out-license, and you receive a message from a target company, you will accept it because you want to meet this company anyway.
But what if this company is not on your target list?
You should accept it because their outreach to you may be a signal that they are now looking for opportunities in your therapeutic area or indication.
In other words, you might conclude that BigPharma ABC is not investing in metabolic diseases based on public statements.
But if you are developing a candidate for metabolic disease, you should still take the meeting.
Why?
Because this may indicate an evolving change in their in-licensing strategy. Perhaps they are moving into your therapeutic space, and they are exploring what the in-licensing landscape looks like.
Or, perhaps they have already made a commitment to your therapeutic area, and want to move quickly.
Who knows?
The point is that there is little harm in accepting the meeting, even if the conversation is superficial. Certainly you would not want to disclose anything critical until you have a better understanding of their intentions.
Presentations
So called “pitch decks” (a term we loath) could be rendered useless, since prospective partners could already know much about the companies well in advance of a meeting at a conference.
This is one of the reasons we strongly recommend having multiple presentations, customized where necessary. Indeed, providing customized information at conferences before executing a confidentiality agreement could become the norm.
This assumes, of course, that the prospective partner communicates in advance with questions prior to a meeting, which we concede is unlikely. But it is more likely that you will receive detailed, specific questions, especially if you received the meeting request from a potential partner.
So ditch the introductory 10-slide “pitch deck” and prepare accordingly.
Conclusion
Artificial intelligence…machine learning…big data…these are terms which are frequently batted around without real meaning or context.
While their use is emerging in pharma R&D, we are already seeing their application in business development. Importantly, we’re not talking about new technologies, per se. Rather, we are talking about developing and implementing software-based tools to gather and organize existing data feeds in highly customized, intelligent ways.
The digitization has implications for those seeking licensing partners. Indeed, it becomes more complex when we are now dealing with two sets of potential partners: those employing digital scouting approaches and those who are not.
Management teams need to be aware of these trends, and plan their out-licensing tactics accordingly.