VANCOUVER, British Columbia - Since the advent of biotech almost three decades ago, pharmaceutical companies have kept a close eye on the science, looking for breakthroughs to help beef up their pipelines.
At first, the interest was limited. As curious executives watched the emergence of genetic modifications and cloning techniques, some were unsure of what was before them - an opportunity or a money pit.
But a bit of risk-taking and almost 30 years of experience have given them an answer. With due diligence, partnering with biotech can result in a blockbuster product, and deals sometimes have alleviated pressure on pharma's bottom line.
For biotechs, partnerships have served as financing vehicles and validations of platforms. They have provided much-needed capital, sales infrastructures and technology rights.
With tough biotech financing markets and dried-up pharmaceutical pipelines, both parties know that they need each other now more than ever.
"Over the years, those relationships have gone deeper and become more interdependent," said Barclay Kamb, a partner at Palo Alto, Calif.-based Cooley Godward LLP.
Kamb led a panel of pharmaceutical partnering experts Tuesday, the final day of the 4th annual BioPartnering North America Conference here. The panelists discussed their strategies in finding the right partner, looking not only at the assets but at the track record of management and the company's willingness to share in development risk.
At Merck & Co. Inc., of Whitehouse Station, N.J., more than 30 percent of the company's product revenue comes from in-licensed products. The company sees value in biotech innovation.
"There's a great competition of ideas out there," said Mervyn Turner, senior vice president of worldwide licensing and external research at Merck.
Turner said Merck executives "work hard to get inside our partner's head." The company sells itself to the partner by giving them "a vision for their product," Turner said. "We've been able to do that in a way that has worked to our competitive advantage."
Flexibility in partnering can make one pharmaceutical company more attractive than another. Perhaps there is no better example of that than the partnership between Hoffmann-La Roche Inc., of Nutley, N.J., and PDL BioPharma Inc., of Fremont, Calif.
Roche made a decision in the late 1980s to invest in antibody technologies. After reviewing the landscape, it learned of PDL, then a platform company called Protein Design Labs. In 1989, Roche licensed from PDL humanized IL-2 receptor antibodies.
"As far as we know, that was the first big pharma [humanized] antibody licensing arrangement in the industry," said Robert Silverman, global licensing director at Roche.
The agreement resulted in the first approval of a humanized antibody in 1997: Zenapax (daclizumab), for preventing renal allograft rejection in transplant patients, which has between $30 million and $50 million in sales each year.
Two years later, Roche and PDL restructured their agreement to include the development of Zenapax for psoriasis and ulcerative colitis, with PDL developing a manufacturing process and a new formulation. But the product failed in both indications.
In 2003, the relationship between the companies changed once again. With a new CEO, PDL expressed an interest in having a commercial infrastructure by 2007. Roche, in turn, returned all rights to the product except in transplantation - PDL retained a 2007 buyback option in that indication.
But Roche's view of the product changed once again in 2004, when PDL presented the pharmaceutical company with positive Phase II data of Zenapax in a large indication: asthma.
"Right after we spent four years trying to get away from them, we went back saying, 'Would you like to partner again?'" said Jaisim Shah, senior vice president of marketing and business affairs at PDL.
Roche picked up co-development rights of daclizumab subcutaneous in a $205 million deal for respiratory disorders. A Phase IIb study in asthma is expected to start this quarter. (See BioWorld Today, Sept. 17, 2004.)
Since then, PDL has acquired a 75-person sales force and some promising cardiac products through its January 2005 acquisition of ESP Pharma Inc., of Edison, N.J. In August, it partnered with Cambridge, Mass.-based Biogen Idec Inc. to develop Zenapax for multiple sclerosis - an area in which Roche was not interested. (See BioWorld Today, Aug. 4, 2005.)
Roche and PDL have built "a lot of trust" over the years, Shah said, explaining that trust is what gave PDL the leverage to partner Zenapax with another pharmaceutical company.
Last November, the final and most recent change to the partnership took place. PDL and Roche came to the table once again and signed a new agreement worth $155 million to further expand development of Zenapax for organ transplant patients on long-term, maintenance therapy. PDL gained a co-promotion option in the U.S., but gave up its 2007 option to reacquire marketing rights to Zenapax in the marketed transplantation indication. (See BioWorld Today, Nov. 2, 2005.)
If it keeps the recent track record, PDL and Roche will sign another new agreement sometime in 2006 - a possibility that Shah and Silverman joked could very well happen.
The relationship "continues to evolve," Silverman said. "It continues to maintain its flexibility over the years."
The conference ended Tuesday.