The International BIO Convention Discussed Two Key Fundamentals in Bringing Therapies to Market

BIO (Biotechnology Industry Organization) and OneMedPlace share many of the same goals. Both groups want to see innovative and effective life science therapies come to the marketplace. For emerging healthcare companies, the key to this is funding and partnering. While the 2012 International BIO Convention offered something educational for everyone in the biotech industry, of particular interest were the panels and sessions addressing alternative sources of non-dilutive funding, partnerships and other creative ways to secure financing.

Steven Bernitz, General Partner at EXTERA Partners moderated the panel 32 Flavors of Research Deal Structures: Looking Beyond Vanilla Term Sheets, sponsored by Foley and Hoag and Novozymes. The session consisted of panelists discussing deals that each found to be instrumental in their companies success, as well as other useful information to help guide emerging biotech companies in less conventional directions. The panelists presented to a standing room only crowd of more than 200 industry executives.

Forma Therapeutics, as a two and a half year old company, pondered the question, ‘How do you provide liquidity to stake holders with the often talked about IPO shortages?’ Forma struck a deal with Genentech where Genentech provided upfront payments with the opportunity to purchase the assets back at certain points. In spite of the legal work involved with making this tax efficient, there was clear value to their partner, in this case Genentech. Forma regarded their customers/partners as their patients, all the while keeping in mind, ‘what is the value proposition we bring to them’?  (Forma Therapeutics was 2.5 years old at this point, they have been in business longer now)

“It’s easy for big pharma to shoot ideas down and companies need to be convincing of the value proposition at a very early phase,” said Steven Tregay, the company’s President and CEO. “Pharma is becoming dependent on early stage for their pipeline, so the climate is becoming bi-modal.”

Epizyme advised the audience to look for pharma partners who have mutual goals. This sounds elementary, but Epizyme’s business model is primarily target-based: they have had 20 targets, more than most private companies. Because GlaxoSmithKline (GSK) is also target-based, they brought $20 million dollars to the table up front.

Interestingly, Epizyme kept their two lead programs out of the deal, so they were well-positioned for another partnership. Celgene was another such partnership, bringing $90 million up front. Epizyme had a very early histone methyltransferase inhibitors (HMTi) target class, which was highly essential to securing the Celgene deal.

Executive Vice-President and Chief Business Officer Jason Rhodes offered, “Epizyme’s partnerships are target based, not product-based. You need to be ambitious in these partnerships and each one is different.”

Ironwood Pharmaceuticals also had a unique strategy. They offered a 50/50 partnership with Forest Laboratories, who in turn handed over $70 million up front in 2007. The caveat? This was only binding in the United States.

Ironwood and Forest would work hand in hand when the drugs went to market in the US. Because Forest is a US based company this was agreeable to both sides and there was room for Ironwood’s therapies outside the US.  In this type of situation, the big pharma partner will have a very watchful eye – this can be unnerving for a privately held company.

Further, in this situation, not all deals outside the US were a success. When Ironwood went to Japan, for instance, the drug was maturing, and the deal no longer made sense.  Vice-President of Corporate Development James O’Mara imparted, “Big pharma really needs to find the right champion. Think about who is most interested in getting the deal done.” Many early stage companies become frustrated when deals don’t close. “Most deals don’t close, but you want the RIGHT one to close,” he said.

Rib-X Pharmaceuticals struck a partnership deal with Sanofi in discovery mode with one product – incidentally structured last year at the 2011 International BIO Convention. This was a $20 million deal for discovering novel classes of antibiotics resulting from Rib-X’s RX-04 program for the treatment of resistant Gram-positive and resistant Gram-negative pathogens.

According to the company, Rib-X’s RX-04 program employs a proprietary approach for rational drug design resulting in entirely new families of compounds that have demonstrated efficacy at low, single doses in murine infection models.

Because big pharma has lagged in developing a novel class of anti-biotics, a deal such as this was well needed – and Rib-X had the molecules to do it. Currently their focus is in creating new programs.

“What do you know and what does your potential collaborator know? What is the long-term market need that you are filling?” were two questions Vice-President of Corporate Development Jarrod Longcor posed to the audience.

“As you present to your partner, they need to trust that what you tell them is actual and truthful and both sides need to know their expectations,” he continued.  According to Longcor, Rib-X showed Sanofi the data and was honest and transparent every step of the way.

The International BIO Convention focuses on many areas to support the Biotech industry and in this case partnering for funding and development shaped this panel.

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