The Shape of A Biotech Pipeline

19 Mar

By Lucy Parkinson, Senior Research Manager, LSN

lucy 10*10In our recent explorations of the life science innovation landscape in various areas of the U.S., we’ve looked at how different regions shape up in terms of pipeline assets, key indication areas, and the kind of investors active in each region. One metric in which we saw substantial distinctions is where assets fall in the pipeline. Not every area with an abundance of preclinical assets also has a large amount of Phase III assets that may become marketed products in the near future.

The LSN Company Platform tracks over 30,000 life science companies globally.  From this data, we took a sample of the asset distribution in five states with substantial biotech pipelines: California, Massachusetts, New York, New Jersey, and Maryland (see Figure 1). This data reveals patterns that challenge key assumptions about what a regional biotech pipeline looks like.

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Figure 1 | Source: LSN Company Platform, Data as of March 18, 2015

It’s natural to assume that a state that generates many preclinical assets, perhaps from a base of universities and research hospitals, will see these assets gradually winnowed through the trial process, with a certain proportion failing to progress at each stage of development. What we find is somewhat different, with diverse pathways occurring across the range of biotech hubs. In California, Massachusetts, and Maryland, we see a major drop-off after the preclinical stage of development, perhaps due to assets failing in animal trials. We don’t see this in New York and New Jersey; these states have fewer preclinical assets than the other states sampled, but healthy late stage pipelines. It’s been noted that the New York area may be a difficult place to found a biotech start-up due to factors such as high expenses and a lack of lab space in the region. However, a more established biotech company that has developed or in-licensed clinical-stage assets might have gathered the resources to thrive in this area.

The states sampled all show either a similar number of Phase I and Phase II assets, or a markedly greater number of Phase II assets. Of course, many assets undergo combined Phase I/II trials (particularly in the cancer field, which is the largest area of life science innovation in the U.S.), testing both toxicity and efficacy in their first-in-human trials. We mark these assets as being in Phase II. California, Massachusetts, and New Jersey all show an uptick in Phase II. Many small companies look for a larger partner at the Phase II stage, and these three states are all host to large pharma companies.

Another way to consider the pipeline is to ask how many preclinical, Phase I, and Phase II assets there are in each state for every asset that reaches Phase III. While in New Jersey (as previously observed) we track more Phase III assets than early stage assets, the state is a true outlier in this regard. Massachusetts, with its deep bench of early stage biotech companies, has over four preclinical assets for every asset that reaches Phase III. Maryland has a very steep pipeline funnel, with almost nine preclinical assets for every Phase III asset.

From a look into the LSN Investor Platform, we find that investors are interested in companies at every stage of the pipeline. The following figure (Figure 2) shows investors interviewed by LSN who have stated an interest in therapeutics under development in the U.S.:

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Figure 2 | Source: LSN Investor Platform, Data as of March 18, 2015

America’s many life science hubs have strikingly different profiles, and emerging regions without a large pharma presence might nevertheless sustain a thriving early stage biotech landscape. Early stage companies must work hard to find the investments that will keep their assets moving toward the marketplace. It’s notable that only two-thirds of investors interested in U.S. biotech companies are based within the country; the search for capital might extend globally, far from the local biotech hub where an asset began.

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