Pharma Giants Urge Biotechs To Get In Touch As Early As Possible

Although money is too tight to mention for some biotechs, last year the value of preclinical partnerships actually went up and Switzerland’s big two pharma players are on the lookout for more.

Source: Scrip

 

These are clearly tough times for biotechs, be they publicly listed companies seeing their value sink or start-ups struggling to raise funds, but big pharma is very much open for business and the earlier the engagement the better.

That was the message from the Swiss powerhouses Novartis AG and Roche Holding AG as the BIO-Europe Spring meeting kicked off in Basel. James Sabry, global head of Roche pharma partnering, told attendees that "we're in a downward cycle but it's a cycle," and while it may be deep, "it is also a reflection of how far we have come in the last four to five years."

He added that while financially times are tough, the science has never been more exciting on both sides of the Atlantic and "the best structure for innovation is a biotech company."

Nevertheless, BIO-Europe Spring began with a sombre look at the state of the sector delivered by David Thomas, head of industry research at the Biotechnology Innovation Organization. Citing data from Citeline's Biomedtracker unit, he noted that the value of NASDAQ-listed companies had fallen by 73% in the past two years, while venture capital funding was down by around 45% in the last year in Europe and Asia.

However, Thomas said that "the one bright spot" has been biotech/pharma partnerships for preclinical assets which actually edged up 4% in value to $139m, with upfront payments rising. Susanne Kreutz, head of corporate and business development at Novartis, said she expected to see more early-stage deals being inked and encouraged start-ups to contact the firm regardless of whether their projects fall into Novartis's five priority therapeutic areas – cardiovascular, immunology, neuroscience, solid tumors and hematology – or not, as innovative science is always the main driver for any deals.

Sabry also urged companies to get in touch early, advising firms that establishing a relationship is more important than inking a deal which may come years down the line. He spoke about creating "social chemistry" with potential partners, stressing that it is not an adversarial situation and "working with us can be a way of stabilizing your company."

"Alliance management" is a key function at Roche, Sabry said, arguing that it is very much in the pharma company's interest that its smaller partner blooms. "It's no good to us if you die and we are left with the carcass," he quipped, saying that while exchanging contracts, like weddings, may be a great day out, a fruitful, durable marriage is infinitely preferable.

Few High-Quality Late-Stage Assets

Partnerships rather than large M&A will continue to be the major driver of dealmaking this year according to Kreutz who said that "admittedly there are very few high-quality late-stage assets" that offer a clear regulatory and reimbursement pathway to merit a huge spend. When asked by Scrip whether that pathway was going to get any smoother, given the stand-offs of late between big pharma and European states concerning pricing, she said: "If we keep bringing high quality medicines to the market, then it's really a matter of us engaging with health authorities and other institutions to find a way to get reimbursement to ensure access and I think we are spending a lot of time on this. I would view it as a journey and that there is a lot more work to be done."

Sabry concurred, saying that in the pharmaceutical industry, the starting point is that "you must ensure access to medicines to everyone who needs to get it, if you start with something else ... you're playing a different game. That doesn't mean we ensure access at the lowest possible price or the business goes away, there has to be a balance there and that balance requires a lot of people in companies like ours to get to know the governments and to get to know payers."

He concluded: "When we do a deal with a company to develop a medicine, we do so with the assumption that we will launch it globally. We will try as hard as we can to ensure access for all patients that need it regardless of their geographic location, I don't think we can really start with anything else."

Meantime, UK start-ups worried that Brexit could damage their future partnering plans were also reassured. Sabry said that the quality of science coming out of the country's 'Golden Triangle' life science hubs of Cambridge, London and Oxford and elsewhere is such that the exit from the European Union "doesn't change anything at all" in terms of research link-ups. Kreutz agreed, saying "it has made absolutely no difference."