On the Hunt for Compelling Science: Big Pharma Panelists Discuss Early Stage Partnering

2 Feb

By Christine A. Wu, Senior Research Analyst, LSN


Big pharmaceutical companies have been a major player in the life science investment space for decades, yet historically they have been known to “just license, and say goodbye.” Today, these large corporations have taken new partnership models in the form of smaller funds set aside, innovation centers, and the like. Strategies and approach to these strategies have been changing in the last 5-7 years. With 40-60% of successful assets having come from external opportunities, it is with great note that big pharma is very closely following and adapting along the trends within the biotech ecosystem.

On January 10th, LSN gathered five highly experienced big pharma representatives for the Redefining Early Stage Investments panel in San Francisco around JPM. Moderated by Barbara Sosnowski, Vice President, External R&D Innovation, WRD of Pfizer and panelists representing Johnson & Johnson, Gilead, and Amgen shared insights around these trends in a variety of topics well-recommended for entrepreneurs and players in the space to take careful note.

Transformative Science is Worth Looking At, Though It’s An Upstream Battle

While all big pharmaceutical companies have their strategic angles – oncology, cardiovascular/metabolic, neuroscience, inflammation, to name a few – panelists added that, to be truthful, if the science is compelling enough, they will look at it.

“It’s all about influencing change,” Jeremy Grunstein, Executive Director of BD at Amgen, began. “The reality is, if you have something that makes a major difference for an unmet disease, that’s something that ought to be interesting to everybody.”

Sosnowski added that her team will definitely assess these disruptive technologies, but “it’s like a salmon swimming upstream” to put it through the governance process, due to its strategic misalignment. “But if the science is so compelling that it could be a game-changer, I think it’s worth the energy to swim upstream and get it through the senior leaders.”

Carolyne Zimmermann, Senior Director in Transactions at Johnson & Johnson described that a process “swimming upstream” would require heavy lifting and will require contacts within the pharma to champion the technology. Champions or not, Zimmermann added the importance of a contact who can articulate the pharma’s activity level: “we are going to the review board, here is our committee process, the people involved, etc.”

It Takes Time for Market Assessment

Especially for technology outside of their core strategies, Sosnowski outlined the market assessment and target product profile to take at least six months overall – three months for qualitative assessment, and three months quantitative assessment. Sosnowski understands the time frustration from the biotech perspective, but she explained that assessment “must come de novo,” especially as a lot changes over time (market, competition). “If we communicate how long that’s going to take and you and we understand that, then we are all in line,” Sosnowski added.

There is an Emphasis in External Opportunities

If there is any doubt in the matter, the panelists assured the huge emphasis in scouting external opportunities. For Amgen, Grunstein stated 50% of their commercialized products came from licensing and M&A. For J&J, Zimmermann stated that 40% of assets going into Phase II or III were externally innovated.

“I hear 40%, 50%, even 60%,” Zimmermann exclaimed, “It’s that we recognized that external innovation is crucial in our ecosystem.” Furthermore, Zimmermann added that “smaller companies can move cheaper, faster, and better than larger organizations.”

Partnering Models

In the past, partnership models for big pharma had a habit to just in-license. “Thank you very much, we will take over the development,” Zimmermann mimicked. The panelists, however, noted that within the last 5 to 7 years, there has been a real change to how these big pharmaceutical companies are striving to “be more biotech-like. “

Sosnowski outlined Pfizer’s creative funding model that keeps the firm from “just licensing.” Part of the strategy includes a seed fund, which acts as a convertible debt to pre-Series A companies to support the companies to be validated and off the ground. “It’s a great way to get in early and help guide the company moving forward… [and] think more creatively and out-of-the-box to how we can get earlier where there is higher risk.”

Zimmermann added the reasoning behind this outlook: “What I see emerging is the recognition that the entrepreneurs are deeply embedded in this particular science and are world-class leaders in that science.” She further elaborated that working with the entrepreneur by providing advice and resources may even be a better way to collaborate than a traditional license deal.

Monica Viziano, Senior Director, Alliance Management at Gilead Sciences explained that the in-licensing model is not scalable, “Licensing and complete control is a limitation in what we can even do. There is a recognition that we have to move on with a big change in mentality, particularly in R&D.”

Final Advice

  1. Send your data – “We all know there are unknowns, but there are also established preclinical models in therapeutic indications,” said Zimmermann. Furthermore, if you have a novel asset, “show that your drug is working in the way you think it is with some mechanism of action data,” added Grunstien. Sosnowski outlined receptor engagement, how much coverage you will need, and specificity of target as major points to address.
  2. Focus your material – “Be able to put it in a framework and story. If [the technology] is asset A, then don’t spend time talking about BCD,” described Viziano.
  3. Have a conversation rather than email – “You can get a lot more from a conversation than an e-mail,” said Zimmermann. “Pick up the phone or find them in the next conference.” Sosnowski added that coming from her biotech background, she works hard to address feedback as thorough as possible.

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