SAN FRANCISCO - While the Rubber Division of the American Chemical Society was holding its 163rd spring technical meeting just down the hall at the Westin St. Francis Hotel here, members of the biotechnology industry were learning about another kind of flexibility.
"Building to Last: Flexibility and Clarity in Pharma/Biotech Alliances" was the subject of a panel at Allicense 2003, a conference sponsored last week by the consulting firm Recombinant Capital.
Arlene Morris, president and CEO of Clearview Projects, which represents biopharmaceutical clients in strategic transactions, moderated the panel and - borrowing from a survey by PriceWaterhouseCoopers - pointed to several main reasons why deals go flat.
The main reason, of course, is that the technology doesn't work. Better due diligence might fix that, but "from what I'm seeing in the industry right now, people are doing a phenomenal job on due diligence and that's probably not going to add a great margin to whether deals are successful or not," Morris said.
Instead, the focus might better be on structuring and managing the deals, she said. Morris chose several collaborations that she said were admirably built to last and why, even if "these are not the hottest, new, sexy alliances that have been done in the last six to 12 months."
One was the pact between ICOS Corp. and Eli Lilly and Co. for Cialis, the phosphodiesterase type 5 inhibitor for erectile dysfunction.
"[ICOS] did not wait until they were at a very late stage and were ready to launch it to bring somebody in to just sell it," Morris noted. Instead, the company signed early with Lilly and structured the deal as a 50-50 joint venture for maximal ICOS participation, which, at the same time, let Lilly minimize the hit on its profit-and-loss ledger.
"At the time this deal was announced in 1998, this was a mega-deal, a huge deal, an over-the-top deal," Morris said. "Now we're seeing this product come forward in a marketplace that is huge, and will allow ICOS to benefit from all of the marketing and sales muscle," along with Lilly's development capability.
Another collaboration Morris favored is the 1995 agreement between IDEC Pharmaceuticals Inc. and Genentech Inc. on Rituxan (rituximab) for non-Hodgkin's lymphoma.
"What the two companies did to bring this product to market is very important - they worked together and had a great life-cycle plan," Morris said, noting that off-label use was "absolutely phenomenal."
When Genentech studied the drug, "they saw huge commercial potential that I know a lot of pharma companies [decided not to buy into]," she said. "They did the kind of market analysis that allowed them to know this was a huge product. The lymphoma market was believed to be a very small market."
Morris said the drug - and the deal around it - turned out to be so big that "if I were sitting in San Diego at IDEC, and I was a new employee and hadn't gone through the history of the company, would I like this deal? Probably. If I were the VP of marketing, I would wonder why we had given this wonderful product away."
The third deal goes all the way back to 1992, when Centocor Inc. signed with Lilly regarding the monoclonal antibody Centoxin (HA-1A, an anti-endotoxin antibody) for sepsis, which fizzled.
"I was just blown away by this deal when it was done," Morris said, adding that Centoxin was "a product that everybody believed was going to be an absolutely huge, blockbuster product."
The market was there, but the data weren't. Lilly, however, "had a call on another product" - the anti-platelet cardiovascular drug ReoPro (abciximab) - thanks to the way the Centoxin agreement was structured.
"Centocor had a huge burn rate" at the time, Morris said, and "after this product crashed and burned, they were having to regroup and retrench."
Among the panel members was Jack Anthony, senior vice president of business and commercial development for Tularik Inc., who spoke about the nitty-gritty details of how and why to enter a deal, right down to "look 'em in the eye" type of advice.
Complex as the science may be, Anthony said, the message to would-be partners must be as simple as possible. He cited the Biotechnology Industry Organization's Windhover Partnering Conference in Washington in April.
"It was just a solid, let's-talk-to-senior-management-of-big-pharma [meeting]," he said. "There were no glittering generality speeches, no 15-minutes-of-fame speeches. It was, make your appointment on the computer and then musical chairs after that, every 20 minutes."
Anthony said he attended with his laptop, slides and data - and didn't need them.
"What was important here was to have a very clear, concise message as to what you are all about, what you are doing," he said. "Just lay it out and say, Is there anything here that would be of interest to you?'"
Another speaker at the conference was Brad Margus, CEO of Perlegen Sciences Inc., who noted several major pharmaceutical companies have found his firm's technology - which analyzes single nucleotide polymorphisms - of interest.
"I know they're up to here with targets, but targets is a pretty dirty word," Margus said. "I only wish that I could sell targets as easily as some people have done in the past."
Targets, he noted, "can be just a gene that's differentially expressed in a disease, and you don't know if it's a cause or a downstream effect," whereas Perlegen has been able to find truly disease-linked genes for use in drug development.
"If you today could hold the 20 genes that explain 100 percent of the genetic variation in schizophrenia or any other CNS disease in particular where people are really hungry for new leads . . . I haven't met a pharmaceutical company yet that isn't interested in that," Margus said.
Allicense, an annual two-day event, listed about 315 registrants.