During the FT Global Pharmaceutical and Biotechnology Conference earlier this week, four Big Pharma and biotech executives spoke about the changing power structure of the industry and the factors driving the evolution of the pharma innovation model. The session was moderated by Deloitte global life sciences and health care leader Greg Reh, and saw the participation of Bayer head of strategy, business development and licensing Dr Marianne De Backer; Pfizer senior vice president and head of strategy and consulting Gautam Gupta; Alnylam CEO Dr John Maraganore; and serial entrepreneur Edwin Moses, currently chairman of three companies, Achilles Therapeutics, Sensorion, and LabGenius.
Moderator Greg Reh kicked the session off by presenting a couple of statistics, including the noteworthy fact that novel therapies, including personalized cell and gene therapies, have grown to reach the same deal volume and value in half the time as that taken by previous breakthrough therapeutic modalities like monoclonal antibodies. In contrast to that, he pointed out, in a Deloitte survey, only 13 percent of respondents replied that they were prepared for next-generation therapies. What does this mean for the state of the industry innovation and partnership models?
Big Pharma [used to be] the most predominant option [but] now biotechs have all the possibilities in the world to access capital
Dr Marianne De Backer, Bayer
Bayer’s Dr Marianne De Backer commented, “we are going through a bio-revolution and a digital revolution at the same time,” adding, “no one company can tackle healthcare challenges on its own.” Having been directly accountable for over 200 strategic alliances during her over two decades within the industry, her view is that “as a pharma company, we make very conscious decisions about what we are going to buy versus what we are going to build. Partnering is going to be a competitive advantage for all of us,” especially when it comes to novel therapeutic modalities and platforms.
Taking the example of Bayer’s October 2020 acquisition of US-headquartered gene therapy company Asklepios BioPharmaceuticals (AskBio), she noted, “we found exactly what we were looking for.” As she described, their checklist included: an industry-leading adeno-associated virus (AAV)-based gene therapy platform; a capable team that innovate on that platform; proven track record of taking assets into the clinic; a modality already used in marketed products; and thorough understanding of the manufacturing process.
Through their conversations with the AskBio leadership team, she highlighted, “we realized that this was really their life’s work … they wanted to continue to progress innovation … at a pace they were used to.” As a result, “what was really important was to create a partnership model where they were given a level of independence to continue to do so.”
A critical characteristic of the current wave of novel modalities, particularly cell and gene therapies, that is very relevant to industry partnership models, is, as Alnylam’s Dr John Maraganore illuminated, the fact that “any of these therapies are generating striking results very early. [Where] historically with small molecules and antibodies, it may be prudent to wait [so that] more risk [can be] removed [and] more evidence [generated], cell and curative gene therapies are generating transformative data with relatively small patient subsets,” asserting, “that factors into the deal-making dynamic quite a bit.”
Bayer’s Dr De Backer concurred, adding, “[for instance], in the oncology space, you do not have the opportunity to wait until something is advanced in the clinical stage. The competition is so fierce [that] you have to go earlier and earlier to access innovation.”
From the perspective of the biotech, Edwin Moses pointed out, “going back ten years, the option of partnering with pharma was very important [in order] to gain access to financial resources, [Now], as the investor market becomes more sophisticated, like with cell and gene therapies, you can raise substantial amounts of money [by] talking to investors early and you can IPO quickly, so you can really access deep pockets of capital. It gives us many more options.”
Alnylam’s Dr Maraganore chimed in with another advantage of the maturation of capital markets: “the diversity of capital available is quite different [as well]. We did a USD two billion strategic financing with Blackstone, which included USD 1 billion for the monetization of half of the royalties on [global sales of inclisiran, an investigational RNAi therapeutic in-licensed from Novartis], and the other half was largely debt.” Overall, this meant “non-dilutive access to capital”, and he enthused, “those types of transaction are increasingly available to biotech companies”.
[Now], as the investor market becomes more sophisticated, like with cell and gene therapies, [biotech companies] can raise substantial amounts of money [by] talking to investors early and IPO quickly, so you can really access deep pockets of capital
With many of these innovations predicated on novel technology platforms, some industry observers expect to see an evolution in the way commercial deals are structured and financed too. As Pfizer’s Gautam Gupta cautioned, “I think that large pharma sometimes undervalue platform [though] industry and large pharma are getting better at not just valuing individual assets but also the valuing the platforms [that would ultimately drive future] assets and pipelines in the future.”
On a final note, Bayer’s Dr De Backer sent a strong message to other Big Pharma companies, warning against complacency: “Big Pharma [used to be] the most predominant option [but] now biotechs have all the possibilities in the world to access capital. The days of straight licensing deals are over, we need to be really creative and create win-win symbiosis, [looking at] what we are bringing and what the entrepreneur is bringing. Competition is extremely fierce [so] we need to up our game. It is a different world and we need to show our value.”