Industry leaders predict the future of biotech
Assemble a panel of the biopharmaceutical industry’s elder statesmen to compare the last 15 years with the prognosis for the future and you risk hearing a rendition of the Kinks’ classic song, “Where Have all the Good Times Gone.”
Happily the four self-described grey beards on BioPharm America’s second plenary session of the day in San Francisco did not break into song. But each from his own perspective lamented the passing of a time when anything seemed possible, when the science was breaking through new boundaries every day, and eager investors hopped to get on board.
Today, it’s not enough to be innovative, a new drug also has to be cost-effective; it’s not enough to get Food and Drug Administration approval for your new molecule, you also have to make sure that insurance companies, governments and other payers will reimburse it; and it’s not enough to meet scientific and regulatory hurdles, you also have to keep increasingly impatient shareholders on board through the repeated financing rounds needed to meet your goals.
“Mechanistically, the tools available for study, both preclinical and clinical, are much better today,” said Louis Lange, a senior advisor at Gilead, and past CEO of CV Therapeutics. “Trials are more sophisticated. The FDA is demanding superiority to standard of care and that is in their risk/benefit evaluation. It’s also gotten a lot more expensive. You have to look at the bang for the buck and what are companies willing to do, what are their boards and investors willing to do with cash. Shareholders want more and more and more. They all want the next Amgen, and there aren’t that many Amgens out there.”
One aspect of today’s environment that is more favorable is that big pharma is totally engaged and more knowledgeable of biologics. The opportunistic hook-ups of the early 1980s have given way to strategic alliances and acquisitions. Nearly all pharmaceutical companies now have in-house biotech programs or bioventure units to seek out and finance promising start-ups. About 75 percent of liquidity events for privately held biotechs in the last 10 years were through acquisition by larger firms, not IPOs.
“The speed of change within large pharma is tremendous compared to the middle part of last decade,” said William Ringo, Pfizer’s Senior VP for world wide business development, strategy and innovation. “Consider our Wyeth acquisition: one of the key reasons for doing that was to move more into biotherapeutics. It’s an important place for us to be, because of patent protection, the possibility of biosimilars, and balancing our portfolio. I think large pharma got infatuated with small molecules because of the high profit margins, low manufacturing costs, and huge upside. We now have more research centers, we clearly recognize the importance of partnering with biotech companies.”
From a venture capital perspective, the lack of an IPO exit means that the companies most likely to get funded today are those that embrace an early partnering strategy from the outset. A company built to be acquired after achieving proof of concept—typically a successful phase 2 trial of its lead drug candidate—can be much smaller than one that aspires to taking its compound through approval, launch and marketing. That means venture investors can put up proportionately less cash, and see a return sooner.
Sam Colella, Managing Director of Versant Ventures, said the new accessibility of big pharma leaders is a definite plus for biotech. “We have more access to senior people in pharma than we ever did, and that is a positive sign for the future,” he said. But he added that big pharma dealmakers are more savvy today, and not interested in incremental improvements.
“From a VC standpoint, I already see a screening out of me-toos,” said Colella. “We need to see breakthroughs, we need to see innovation. I think you will see more of a discipline to do more innovative products, but that will cut down on the number of deals.”
Related Posts
No related posts.