LONDON - The traditional collaboration structure, in which big pharma picks up worldwide rights to a biotech product in exchange for the usual up-front, milestone and royalty arrangement, could become a thing of the past.
That's what panelists suggested Tuesday during a morning session here at the 14th annual BioPartnering Europe conference at the Queen Elizabeth II Conference Center. The discussion looked at recent collaboration structures and asked the question: Has the balance of power shifted to biotech?
From the perspective of big pharma, "times are certainly changing," said Janette Dean, senior director of business development at New York-based Bristol-Myers Squibb Co.
While "pharma still prefers to do straight in-licensing deals," she said, it's becoming more common for their prospective biotech partners to make additional demands, such as co-development and co-promotion options, or retaining rights to certain indications or certain territories.
Those demands also are occurring "much earlier in the continuum," Dean added. For example, BMS signed a deal last month with Medivir AB involving the preclinical compound MIV-170, a non-nucleoside reverse transcriptase inhibitor aimed at HIV. In that deal, Huddinge, Sweden-based Medivir asked to keep the rights to the drug in the Nordic countries.
Part of the biotech sector's newfound power comes from the fact that big pharma, which is desperate to build up pipelines, now is having to compete with the larger biotech firms for collaboration opportunities.
"Bigger biotechs [such as Thousand Oaks, Calif.-based] Amgen or [South San Francisco-based] Genentech are cash rich," Dean said, "so it is getting more challenging."
Gerrit Klaerner, vice president of business and corporate development at Ilypsa Inc., said the structure of deals has evolved as the capital requirements for small biotech have changed. Companies no longer can expect to file an initial public offering as soon as their lead product hits Phase II, so rather than seeking additional VC funding, companies look toward partnerships as a way to gain non-dilutive funding.
Ilypsa, a VC-backed firm out of Santa Clara, Calif., has a lead program, ILY101, in Phase II development for hyperphosphatemia in dialysis patients. The company holds all rights to the compound, except for Japan. In April, Ilypsa licensed rights to ILY101 to Tokyo-based Astellas Pharma in exchange for $22 million up front, up to $70 million in potential milestones and royalties in the mid-teen range. (See BioWorld Today, April 28, 2006.)
"That was a company-changing event for us," Klaerner said, adding that "we retain significant value by retaining all the other territories."
Many biotechs seem loathe these days to give away too much downstream revenue, and often seek co-marketing/co-promotion options with plans to build their own sales forces. But that approach can backfire, especially if the collaboration encounters delays in development or bumps in the regulatory road. For instance, Neurocrine Biosciences Inc., which had partnered its insomnia drug Indiplon with New York-based Pfizer Inc., had built a sales staff, only to cut those positions following a mixed reaction from the FDA in May followed by Pfizer's decision to terminate the partnership. (See BioWorld Today, June 26, 2006.)
There's no question that the loss of a collaboration can be damaging to young firms, but sometimes the converse also holds true.
Barclay Kamb, a partner at Cooley Godward LLP, used Emeryville, Calif.-based Onyx Pharmaceuticals Inc. as an example. Onyx signed an early stage deal with BMS years ago, a collaboration that produced the now approved Nexavar (sorafenib), an oral multikinase inhibitor for kidney cancer. That deal called for the companies to share U.S. profits on a 50/50 basis.
But outside of that product, Onyx's history has been plagued with "all kinds of travails," Kamb said. The Bayer deal "is the only reason Onxy is still alive."
The conference ended Tuesday.