Business and Science for BD & others
#59, May 2011
Governments demand more than “just” safety and efficacy!
Government pressures to contain health care costs are being translated into ever more data being necessary for drugs to get to the market. Germany recently changed the rules so that drug prices will be negotiated based on cost-effectiveness, relative to the next effective intervention. http://www.nelm.nhs.uk/en/NeLM-Area/Evidence/Medicines-Management/References/2011---March/07/Germanys-decision-rule-for-setting-ceiling-prices-of-drugs-a-comparative-analysis-with-other-decision-rules/
The UK is moving toward a new Value Based Pricing system by 2014, adding additional criteria to the cost per Quality Adjusted Life Year (QALY) calculated now by NICE. Beyond QALY, pricing would consider experts’ appraisal of the drug’s ability to tackle a disease with a substantial burden of illness, offer greater therapeutic innovation, and demonstrate wider societal benefits. http://www.ohe.org/news/2011/01/11/update-value-based-pricing-in-the-uk/
Buying binge for biologics is coming?
Richard Snow, CEO of the pharmacy benefit manager Medco said that pure plays in biologics would be attractive acquisitions no matter how large their market caps. Pharma companies’ balance sheets have lots of cash available for acquisitions. Biotech drugs are expected to be 50% of all drug sales by 2020, up from 17% today. http://www.reuters.com/article/2011/05/10/us-summit-mergers-idUSTRE7496UH20110510?rpc=401&feedType=RSS&feedName=summitNews&rpc=401 J&J, Pfizer, Amgen, Roche, AstraZeneca, Merck are all sitting on at least $10B in cash. So far, however, many of the big M&A deals of 2011 have been bids for small molecule companies (Teva for Cephalon, Daiichi Sankyo for Plexxikon, and SuperGen for Astex). There have also been a few big antibody licensing deals so far in 2011 (Amgen and Xencor, Xoma and Servier, Lilly and Boehringer Ingelheim). I hope it is just the beginning!
Failures in Phase II- CV and Metabolism tough
A recent analysis by Thomson Reuters (in Nature Reviews: Drug Discovery, May 2011, p1) of 108 Phase II failures found
16 out the 25 failures due to strategic reasons were in validated target classes, suggesting that the need for a competitive profile might be the reason for the failure. Although cancer had the largest percentage of the failures (20%), it also has by far the largest number of programs in Phase II. When I look at the total number of compounds in Phase II (not just those analyzed by Thomson Reuters), CV and metabolism were the therapeutic areas had the highest proportion of failures compared to the number of compounds in Phase II. With the tremendous hurdles for regulatory approval and the huge trials needed in Phase III for the big CV and metabolic indications, it makes sense that tough criteria be applied in Phase II.
Returned drugs- termination clauses vital
Burrill reports on 3 new examples of pharma companies (Pfizer, AstraZeneca, Sanofi) returning drugs (to Rigel, Targacept and Metabolex) for what appear to be strategic reasons. http://www.burrillreport.com/article-losing_biobucks_as_pharma_reshuffles_its_deck.html. It is a good reminder to really negotiate terms to ensure that if a partnership comes to an end, the drug can keep moving forward.
New conditional gene mutation system in zebrafish
A team at the Mayo Zebrafish Core Facility reported using a gene-breaking RP2 transposon to insert and mutate genes, with an in vivo protein trap to tag the mutated proteins with a fluorescent tag. Thus the changes in genes are linked to visible protein expression, monitored in the translucent fish. The mutant alleles can be reverted in somatic tissues. The team reports that they have 350 loci tagged in zebrafish so far. http://www.nature.com/nmeth/journal/vaop/ncurrent/full/nmeth.1606.html
Check out my blog posting on getting a partnership
Taffy Williams asked me to post on tips to getting a partnership. Check it out and see other good posts on his website!
Can I help you?
Do you need a critical edit of your pitch to partners? Are you thinking about the relative rewards of partnering now versus later? Would you like your opportunity cost-effectively presented to partners at BIO or Biopharm America? My business model is “try it, you’ll like it” so there is no retainer or commitment, just a simple hourly rate. If you might be interested, we can chat about how we might work together.
See you at the next meeting?
4400 Paseo Santa Rosa, Newbury Park, CA 91320
This newsletter is a free service of Pullan Consulting. About 3300 readers, representing VCs, BD and CEOs of biotech and pharma companies, are on the list. Back issues are on the website www.PullanConsulting.com . Please add the email to your safe sender list to avoid it being treated as junk. To subscribe or unsubscribe, just send me an email.