BioWorld International Correspondent
LILLE, France - The potential advantages and pitfalls of technology and discovery/development collaborations between biotechnology companies and third parties were a major theme of the European Biotechnology Crossroads Conference that took place here Oct. 15-16.
The current partnering landscape was described by Ken Noonan, vice president of L.E.K. Consulting LLC, of Boston, who said a shift was taking place toward broader discovery deals and away from pure technology transfer deals. The technological collaborations being concluded were in the area of "toxicogenomics," which represented the "latest wave" and succeeded those centered on gene sequencing, genomic data mining and validation tools.
"Generally though, technology platforms are out and leads and lead scaffolds are in," he said. "Genomic and proteomic deals have fallen off sharply in the U.S. this year," although the broader discovery deals now being concluded "may incorporate a genomic/proteomic technology element."
A biotechnology company needs to meet four fundamental criteria to negotiate a successful discovery deal, Noonan said. It has to have an integrated discovery platform; it needs to have a prior relationship with the licensee; it has to be a proven innovator in an emerging discovery area; and it has to have a specific therapeutic focus. In particular, it had to be prepared to "conclude a small deal first in order to be able to negotiate a bigger one later."
Moreover, while "pharmaceutical companies rely heavily on the biotechnology industry for both technology and products, established biotechnology companies are emerging as increasingly important partners for small biotechnology firms," Noonan said. "Biotech-biotech deals are thus replacing pharma-biotech deals."
Christopher Piggott, senior director, global business development, at the Strasbourg-based Franco-German company Aventis SA, agreed that big pharma "relies increasingly on small companies to keep moving ahead" and thus plays the role of an "integrator of knowledge." But while the declared value as well as the number of pharma-biotech deals was increasing, the value figures were specious because they were based on "potential milestones," he said. "The real value is the satisfaction of the strategic goals of the companies involved in the alliance."
For Aventis, partnering was an "integral and essential part of its business strategy and is based on a win-win outcome for both sides," Piggott went on. But negotiating collaborations with third parties was only the first step. "An alliance also has to be managed because it hardly ever develops the way the negotiators envisaged."
The German company Schering AG, of Berlin, also takes partnering seriously, its executive director for research and development, Günther Stock, told the conference. It had set up an Office of Technology to explore both partnership and joint venture opportunities for spinning out certain activities.
"Partnering has become an essential part of our business, especially in the area of target discovery and early stage development," Stock said. Big pharma needed these kinds of partnerships, he said, but warned that negotiations with start-ups had to strike a balance between biotechnology companies' keenness to "front-load" the financial terms of the deal and big pharma's preference for "back-loading."
For his part, Marc de Garidel, CEO of Amgen SA, of Neuilly-sur-Seine, stressed that his was an industrial company in the biotechnology sector and had a lot to contribute to small biotechnology firms. It gave them financial support, for one thing, and it shared its know-how with them, for another. That know-how spanned science, new product development, industrial-scale manufacturing, regulatory filing and branding, de Garidel said, but he singled out manufacturing methods as an area in which large companies could play a particularly important role in collaborations with small firms.
On the other side of the fence, Jean-François Mouney, CEO of the Lille-based drug discovery company Genfit, suggested that small biotechnology companies could help big pharma cope with the problems of falling earnings, high research and development costs and low success rates by giving them access to new technology, complementary expertise in specific therapeutic fields, and therapeutic targets and products. But pharmaceutical companies expected their biotech partners to share their know-how, to have a truly innovative culture, and to display flexibility and reactivity.
As for the biotechnology company, he said, "an alliance [with a larger organization] can be a true engine of growth," since it encourages it to organize itself properly and "gives it credibility in its relations with other partners, investors, suppliers and researchers." And the financial aspect should not be ignored, since alliances that included research funding could accelerate the company's growth and release more resources for in-house research.
Michel Kaczorek, CEO of Synt:em, a N mes-based company utilizing sophisticated computer-based optimization and vectorization technologies to develop novel drugs for the central nervous system, said it was in a biotechnology company's interest to share both the costs and benefits of drug discovery programs, since "it is better to share than to die." A shared-cost/shared-risk model could help technology platform companies move forward to new product discovery and development, he said.
Synt:em's policy was to share the costs of developing products up to Phase I and II and then to license them out for the Phase III and commercialization stages, Kaczorek said. He stressed that "you have to be really impressed by your partner's technology, product or people and be convinced it really has the resources." A collaboration had to be based on "agreed endpoints" and both sides had to be prepared to kill a project at an early stage, if necessary.
While collaborating with other companies is an essential component of any biotechnology firm's business plan, much of the industry's technology is derived from academic and public research institutions, especially in France. Various sessions of the Lille conference were thus devoted to the benefits of such partnerships, as well as to the policies pursued by national governments and the European Commission for developing the biotechnology industry in Europe. Other topics on the agenda were new therapeutic approaches to cancer, cardiovascular disease and the neurosciences, new tools in genomics, proteomics and bioinformatics, and the protection of intellectual property.