By Jim Shrine

Managing Editor

BASEL, Switzerland - Most biotech companies continue to need their relationships with pharmaceutical companies, and the reverse is true also. But the pharma side of that interdependent relationship still holds the cards and isn't dealing out the winners like it once did.

"The genomics field is crowded. There's a lot of competition out there, a lot of new companies," said Arnoud Dijkstra, toxicogenomics group leader for F. Hoffmann-La Roche Ltd. in Basel. "Pharmaceutical companies underestimated with the first wave of genomics alliances how much work we'd have to do. A lot of money got pumped into big alliances. That's over.

"Now it's so broad and there are so many technologies out there. Right now, people are looking for more tailored solutions to complement in-house programs."

Dijkstra, though, did take the time Tuesday to scout out potential solutions in the partnering forum portion of the Allicense 2000 meeting here at the Messe Basel. The fourth annual conference, being held for the first time in Europe, is sponsored by the consulting firm Recombinant Capital Inc., of San Francisco, and co-sponsored by International Biomedicine Management Partners Inc., of Basel and San Francisco. The event runs through Thursday.

"We're looking for good science, not good slides," Dijkstra said. "The presentations are always good. The most difficult thing is to look through the presentations. They all make sense and are nice. But you have to go further to see what's behind it and what could be the interest for a big pharma company."

Dijkstra, who previously was group leader of Roche's bacterial genomics research, stressed he was speaking only from the research side of the equation. Those on the licensing end of the business might have different ideas.

"It makes sense to outsource certain things, such as those that smaller companies can do better or faster," Dijkstra said. "And the trend in preclinical research is to outsource more and more.

"I like it if [biotech] companies are realistic themselves," he said, meaning they should be willing to prove their worth in the research stage of a collaboration before expecting the big-money deals. "I think most smaller companies are now smart enough to do that."

Roland Tschannen, general manager of the consulting firm Alliances Catalyst Ltd. in the Basel suburb of Pfeffingen, agreed that biotech companies should no longer expect quick, major collaborations. He was part of the license and business development group at Sandoz Ltd. and then the merged company Novartis AG until starting his own business two years ago.

"The advantages for biotech companies have become smaller," Tschannen said. "The more realistic they are, the more confidence they will get from pharmaceutical companies. There's a tremendous overselling of projects that are at the idea stage. That does not build trust."

Japanese pharmaceutical companies in particular are turned off by hype, he said, and their European counterparts view overselling similarly. It goes over a little better in the U.S., he said, but still is not the right approach.

Biotech companies do best when they have assessed the risks, market potential and competition before presenting to a pharmaceutical company, said Tschannen, who said he has concluded eight projects in two years and is working on 12 deals involving European companies and three with Japanese pharmaceutical firms.

He said the entrepreneurial wave has come to Europe, resulting in a surge of new companies. And he said there is venture capital available to them. But those companies are not experienced in deal-making.

"Biotech companies underestimate the enormous cost and expertise needed to develop compounds," Tschannen said. "It's a very complex undertaking."

The best advice he can give for a biotech company entering a collaboration is to ensure there is a committee setup or some other mechanism in the relationship that forces the companies to talk regularly during the life of the agreement. Another key is for the biotech company to be frank and open, even if that means disclosing data that are not positive.

"That's not a deal killer" Tschannen said. "The biggest deal killer is the destruction of trust. Trust is the best way to get to success in a deal."

High-Profile Board Members Are Key

But the best way to get that deal in the first place? It doesn't hurt to have a board member who is respected and has connections, according to Peter Reiner, president and CEO of Active Pass Pharmaceuticals Inc., a two-year-old start-up in Vancouver, British Columbia. The company's platform includes molecular pumps transporting molecules that regulate ATP-binding cassette transporters, or ABC transporters.

Reiner and Andrew Rae, the company's vice president for corporate affairs, took one of 38 poster presentation spots at the conference as part of a recently stepped-up effort to attract partners. A mix of 30 European and U.S. companies presented their stories Tuesday at the meeting, which drew about 260 people, making it a little easier to get a message across than may have been the case at the packed Biotechnology Industry Organization and Chase H&Q conferences earlier this year.

"The first step is getting the door open," Reiner said, adding that means getting the attention of both the scientific and business development sides of a prospective collaborator.

Toward that end, a biotech company's "board members are extremely important," at least at Active Pass, which boasts of one member each from the Vancouver-based companies QLT PhotoTherapeutics Inc. and Angiotech Pharmaceuticals Inc. "They add credibility and open doors."

Another part of the strategy, Rae said, is to be seen regularly by the pharmaceutical executives in the specific area of interest, in this case the ABC transporters. "You want to be seen repeatedly by this group, to present your stories. Then when they look back they can see your track record of success," that you met milestones you set out earlier.

Both men pointed out that there are about a dozen large biotech companies now that have the money and capabilities to do deals as well as pharmaceutical companies. And that sort of alliance could have advantages because there are more cultural similarities between a start-up and a larger biotech firm.

"It's one thing to get a deal," Reiner said. "But what you really want is a successful alliance."