Staff Writer

ATLANTA - When it comes to collaborations, there is no single way to structure a deal, but firms should carefully consider their strategic goals and long-term prospects before signing on the dotted line.

That was the theme in a panel discussion at the BIO VentureForum East conference here.

The conference began its final day with a breakfast session in the Windsor ballroom of the Intercontinental Hotel Buckhead. Panelists offered their perspectives on licensing and partnership opportunities.

"It's very difficult to get a drug through [to the market] and succeed," said John Richard, president of BioGrowth. That's well known, but in some cases, success does not benefit small biotech firms that partnered their drug. The "nice up-front check" they received at partnering is gone, and the remaining "2 percent royalty" is not going to be substantial enough to move them forward, he said.

Don Drakeman, president and CEO of Princeton, N.J.-based Medarex Inc., said flexibility is key, and referred to a recent collaboration in which his company has the ability to decide "as late as a [biologics license application] whether we want to have a royalty or a co-promotion, profit-sharing arrangement."

"[That deal] allows us to have the best data available to see whether profit-sharing is better than royalties," Drakeman added. It also allows the company to consider ongoing activities in the decision process. For example, as Medarex mulls building a marketing presence, it will consider whether it has other cancer drugs coming down its pipeline.

Medarex's most recent deal was signed in the fall with New York-based Bristol-Myers Squibb Co., which calls for the companies to jointly develop the fully human antibody MDX-010 for the treatment of metastatic melanoma. Terms included an initial cash payment of $50 million to Medarex, which could receive regulatory- and sales-related milestones totaling $480 million. If Medarex chooses to co-promote the product, the company would receive 45 percent of U.S. profits. (See BioWorld Today, Nov. 9, 2004.)

As important as the financial terms are, though, money should not be the only sticking point, said John Mendlein, chairman and CEO of Toronto-based Affinium Pharmaceuticals Inc., which has an ongoing drug discovery alliance with New York-based Pfizer Inc.

Affinium spent "about 12 months really working out what the deal was going to be about," he said. "Not just on the contract stuff - how big were the milestones and royalties - but about what we were going to do scientifically."

Firms can't expect to sign a deal, then "throw it in the drawer and [think] we'll all get along," Mendlein added. "That is a great way to miss set expectations and not have a touchstone to go back to."

Affinium's three-year alliance with Pfizer, valued at $30 million before royalties, was signed in 2002 and called for Affinium to use its functional, chemical and structural proteomics platform against Pfizer's targets. Under terms of the agreement, privately held Affinium will receive funding for research and development, as well as potential discovery and clinical milestones and royalties. (See BioWorld Today, May 9, 2002.)

Opinions on how to find partners differed. Drakeman said his approach is to cast a wide net, not setting sights on any particular company.

"Get out there, talk to everybody and see where the chips fall," he said. Don't focus on one big name, and if "you have offers from a bunch of people, then you can ask Who's the right one to pick?'"

Companies looking at a limited scope of partnership opportunities also might fall prey to some preconceived notions, said Robert Gould, vice president of licensing and external research for Merck Research Labs in Boston, the research facility for Whitehouse Station, N.J.-based Merck & Co. Inc., which has doubled the number of its external collaborations in the past three years.

"Merck has never been an oncology company," though its pipeline has grown to include several oncology products, Gould said. "So it would be an error in judgment to not consider Merck as a partner for oncology."

While partnering opportunities have changed in the past several years, as more pharma companies have become receptive to products such as monoclonal antibodies and recombinant proteins, it is too early to determine what's next for biotech - expansion of infrastructures in the quest to become fully integrated pharma companies, or more discovery efforts with an eye to partnering.

Mendlein said biotech companies likely will be acquired by other firms before they have a chance to become fully integrated. And the industry has been sidestepping some of the collaboration issues by going the acquisition route.

"Instead of going into collaborations-slash-strategic alliances, I think we're going to see more on the acquisition side," he said. The benefit of acquisitions is that "the control issues go away, but you may lose the benefit of having relationships with companies that think differently."

Becoming fully integrated - see Genentech Inc. or Amgen Inc. - would be "the biggest return for shareholders, if you can get from here to there in some sort of reasonable way," Drakeman said. "It either takes a lot of luck or hundreds and hundreds of millions of dollars."

Of Medarex, Drakeman said, "We're trying to get to that point. We haven't had the luck, so we're trying the raising-a-lot-of-money approach."