University of Illinois at Chicago Corporate Venturing Discussion

1. It has become more and more difficult for large pharmaceutical companies to find late-stage development candidates to in-license.  This has led to investment in late-stage preclinical and early-stage development candidates.  Which segment of the industry is likely to grow the fastest as a consequence of this trend: academic drug discovery, start-up and early stage biotech, or contract research organizations?  Briefly explain your rationale.

2.The Nature Biotechnology article on the changing face of corporate venturing (von Krogh, et al.) describes the increasing prevalence and changing nature of corporate venture investing.  In the long run, do you think that corporate investment in early stage biotechs will stifle innovation by implementing corporate processes and decision-making or will the additional resources successfully fuel innovation.  Please include information from the article to support your position.

Business Development: Building R&D
Pipelines by Licensing and Partnering
Paul McGonigle, Ph.D.
Drexel University College
of Medicine
Innovation gap driving change
• Rising costs coupled with declining productivity
• Approval deficit coupled with patent expirations
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Pressures driving R&D changes
• Faced with declining internal R&D productivity and under pressure to
reduce fixed costs, pharma co’s have been developing new strategies and
restructuring to access external talent and innovation, regardless of
source.
• Many biotechs have disappeared or are in distress and VC’s are
increasingly reluctant to finance early stage preclinical programs,
resulting in a shortage of early stage products and technologies.
• Under pressure from increased competition for public funding,
Universities are becoming more engaged in drug discovery and
translational research
• Perfect storm or a new ecosystem of open innovation?
3
External Open Innovation
•“Open innovation is a paradigm that assumes that firms can and
should use external ideas as well as internal ideas, and internal
and external paths to market, as the firms look to advance their
technology ”(Chesbrough, 2003).
•Strategic drivers:
• Availability of external opportunities
• Capital and cost efficiencies
• Knowledge & Alliance management
• Business Development capabilities
4
Availability of external innovation
Location of prioritised Alzheimer’s researchers
Europe represents 25% of
total prioritised
researchers
They are scattered
throughout Europe
Entrepreneurs are
scattered, the
Southern California
region represents 5%
of all prioritised
entrepreneurs
U.S. represents a total of
66% of all prioritised
researchers with clusters
in the East and West
coast;
Boston and NY area
represents 12% of
established and 40% of
up and coming prioritised
researchers
External scientists
Entrepreneurial1
Established1
Up and Coming1
Cluster of
entrepreneurs in
Japan, representing
13% of all prioritised
entrepreneurs
Three established
researchers in
Australia
Locate industry scientists in clusters to
access innovation and facilitate
partnerships?
5
Externalization is critical for innovation
• Due to the complexity, risk and cost of R&D today, a key
strategy is leveraging complementary external resources and
strengths to advance health care and address diseases that
pose global health challenges.
•Externalization is a now a core competence in R&D
– Capabilities: scouting, sourcing, negotiating, managing external
partnerships and relationships
– Strategic outsourcing to manage cost & capacity
– Strategic alliances to leverage science & business assets
•In reality, external opportunities are increasingly less abundant
and less well developed
– Opportunities need be created rather than found
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Industry Growth by Strategic Activity
Source: Wood Mackenzie
7
Success rates higher for licensed compounds
147%
138%
114%
100%
In-licensed
relative
success rate
vs. in-house
discovered
compounds
(index=100)
In-licensed
more
successful
100
In-house
Pre-clinical
Phase I/II
Phase III
Success rates of in-licensed compounds versus in-house compounds
Source: Office of Health Economics (OHE)
8
Licensed drugs yield higher returns and
cost less to develop
…. the cash generated by investing $1 billion every year in in-house
discovered compounds is $14 billion, while the cash generated from
spending $1 billion a year licensing compounds in phase III of
clinical trials is $22 billion ….
8.2%
Internal rate of return (IRR) for
different methods of accessing
new product.
Source: Mercer Management
Consulting analysis.
4.0%
3.1%
Internal rate of
return (IRR)
Note: IRR calculated over 30
years with a Total Value to
perpetuity.
2.3%
In-house
Pre-clinical
Phase I/II
Phase III
9
Pharma and Academia are at a nexus
• Pharma is outsourcing more early stage discovery research to
sites of excellent science, agnostic to source
• Universities and Faculty are more engaged in Translational
Research and Drug Discovery
• Universities feel increasing pressure for $ return on research
investment
• Governments expect universities to be drivers of the
“innovation economy”
• Deal structures are evolving but subject to university and
government policies and regulations
10
New trends in University/Industry partnerships
• Financial pressures driving step-change in industry/university
partnering
• Strategic alignment of University and Pharma interests
• Deal making scope and structure evolving rapidly
» Drug Discovery and Repurposing Deals
» Academic Drug Discovery Centers
» Pharmaceutical R&D Centers and Incubators
» Institution-wide strategic alliances
» Resource and service-sharing outreach
» Pre-competitive consortia and data-sharing
» Special-purpose university incubator funds
» Government sponsored initiatives
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Academic Drug Discovery Centers
• Examples:
– Vanderbilt Center for Drug Discovery, Nashville
– Broad Institute, Boston
– Burnham Center, La Jolla
• Key features and issues
– Significant investments in drug discovery capabilities
– Key staff recruited from industry
– Need to balance commercial drive and academic mission
– Attractive risk/benefit for pharma partner
– Will need to improve on industry success rates to be sustainable
– Policies on ownership of IP and results
– Outlicensing deals create significant revenues
12
Pharmaceutical R&D co-located with
academic centers
• Examples:
– Pfizer CTI
– Merck Research –Boston
– Novartis Institutes-Boston/ San Diego
• Key features and issues
– Strategic co-location in key areas of scientific activity with
close proximity to numerous research institutes, hospitals
and biotech companies
– Leverage company capabilities and resources by
engagement with top academic researchers
– High costs for infrastructure, relocation etc
– Tend to use standard deal templates
13
Institution-wide strategic alliances
• Examples:
– Pfizer/Scripps (2006-2011)
– AZ/Penn 2006-2010
– Sanofi Aventis/UCS, Harvard, Columbia, Stanford
– Bayer Innovation Center /UCSF Mission Bay
• Key features and issues
– Joint governance, close mutual engagement with possibility
for direct interaction
– Broad framework agreements
– Financial incentives in contracts
– Alliance/project management required
14
Future U/I Partnerships: Disease Area Networks
Primary Institution
•Provides unique expertise in key
areas of disease biology and
technology
•Principle Investigator plans and
leads cross-network research
Joint Steering Committee
•Responsible for oversight & governance
•Staffed by Company, PI & Partners
Primary
Institution
Company
Partner
•Contractual agreements
between Primary Institution,
Partners & Company are a
challenge
Partner
Network Partners
Partner
• Academic laboratories (and
possibly CROs) providing key
expertise and services to the
Network
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Externalization Process: Discovery – Ph II
Specify
Search
Evaluate
Secure
Manage
Specify strategic priorities and external investment needs with
internal clients.
Search and evaluate opportunities to meet need
Progressive evaluation of technical, commercial and strategic
merits
Develop deal proposition, negotiate terms, prepare contracts,
execute, secure the deal
Manage the collaboration to monitor progress against technical
milestones, ensure prompt payment and budgeting for the deal
and facilitate regular interaction with external collaborator
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Stakeholders in Externalization
•Technical Skills
•Project Manager
•Modeling
•Valuation
•Tax
Legal
BD
Finance
IP
•Budget
VetMed
Chem
Science
Global
Licensing
DMPK
Biol
Sponsor
Management
Tox
IT
Budget Holders
PR Press release
17
The transition between the Evaluation Team and the Deal Team is gradual, and many of t
members of one will also serve on the other. However, there are some basic differences
its constitution, and these are shown below:
Business Development Teams
Evaluation Team
•
Evaluation Director, Scientific Sponsor, and people with necessary competence for the evaluation, such as Biology,
Pharmacology, Chemistry, Clinical, Pharmaceutical and Analytical Research and Development (PARD), Commercial,
Finance, Legal, Global Intellectual Property (GIP), Human Resources (HR), Emerging Product Directors (EPDs), Global
Product Directors (GPDs), etc.
Deal Team
• Transaction Director, Evaluation Director, Scientific Sponsor, Commercial Lead, Legal,
GIP, Finance, EPDs, GPDs, etc.
Due Diligence Team
• Due Diligence Teams are selected on the basis of the scope of the Due Diligence
agreed, consistent with the functional expertise that Due Diligence requires
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Approved by:
Gate B
Initial Mgmt
Approval
Proceed to Due
Diligence
Deal Process Overview
Evaluation/ SPBD
Discovery Director
TAPT/ PST
Clearly
articulated
strategy &
prioritisation
Gate C
Gate A
Evaluation
go-ahead
SET Sponsor/Nominee & CFO/Nominee
Gate D
Gate E
Proceed to
detailed
negotiation
Final approval/
signature
PST Delegated Authority,
Relevant DoA, Relevant
Legal Entity, Board of
Directors
PST
p15
p21
p23
p27
p31
p34
p39
p42
Stage
Stage
Stage
Stage
Stage
Stage
Stage
Stage
1
2
3
4
5
6
7
8
Initial
Evaluation
Initial
‘sniff
test’
review to
fit with
strategy
and
quality
Scientific
Evaluation
Business
Evaluation
In-depth
scientific
evaluation
using
expertise
across
required
functions
Commercial
and business
evaluation;
thorough
assessment of
attractiveness,
key issues and
risks
Business
Case
Initial
Negotiation
Pre duediligence
negotiation.
In principle
agreement
reached
subject to
Due
Diligence
Due
Diligence
—>
“36”
• Unaffected average [CAG]n = 22
• HD affected [CAG]n = 44
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HD symptomatology is linked to the length of the CAG
mutation expansion
HD affects ~1 in 10,000; average onset is mid 40s; Duration ~ 20 years
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CONFIDENTIAL INFORMATION
We are uniquely poised
HD is monogenetic, HD is dominant
All of HD can be explained by a single gene, a single mutation
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67
Htt gene: chromosome 4
(CAG)23
(CAG)36+
Normal
HD
Other CNS diseases are genetically very complex
schizophrenia
ALS
Susceptibility loci + environment
~10-15% Familial
SOD1, FUS, TDP,
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CONFIDENTIAL INFORMATION
candidate
loci
~5% eFAD
APP, PS1, PS2
Candidate loci
Huntington’s Disease
• Inherited Neurodegenerative disease
– The striatum shrinks 50% by the time a patient
exhibits their first motor symptom
• Prevalence
– “Late” onset, ~30-50
– 1:10,000 affected, 1:2000 at risk
• Symptoms
– Behavioral/Emotional
• Depression, Personality Changes, Mood
Swings, Social Withdrawal
– Cognitive Deficits
• Short-term Memory Deficits
• Forgetfulness, Difficulty Concentrating,
Impaired Judgment
• Delayed responsiveness
– Motor
• Chorea: Involuntary Movements
• Rigidity in subset
• Lack of Coordination
• Difficulty Walking (“intoxicated” appearance)
• Slurred Speech and Difficulty Swallowing
• Disease modifying therapy
– None
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Chronology of CHDI
Clinical group established
for study management
1968
1974
1993
1997
2003
2005
2017
2009
Founded by Milton Wexler
Wife diagnosed with HD
Started as branch of HDSA
Chapter, LA
Gov’t funding
HDF and Nancy Wexler
lead efforts to clone
HD gene
HDF broke off from HDSA to
become independent Foundation
Seek private funding
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CONFIDENTIAL INFORMATION
CHDI donors pull out
Establish High Q
Foundation
HDF receives substantial anonymous gift
For “practical drug discovery”
Cure Huntington’s Disease Initiative
CHDI
3 offices
86 staff
High Q rebrands as CHDI
A fully integrated virtual
biotech foundation
($150MM/yr)
Driven by science
Not by hype, press releases, stock prices or trial
initiations
Exclusively dedicated to
Huntington’s disease
–
–
–
Removes serendipitous indications discovery
Unambiguous continuity, focus, passion
IP, legal, business terms all designed to protect
our primary indication (allows others)
–
Approximately 73 internal FTEs across three sites
(NY, NJ, & LA) covering all scientific and G&A
competencies
No internal wet-labs. All experimentation is done
externally via collaborative partners and contract
research organizations. Circa 600 FTE
Select the “best-of-the-best”; yet fungible
Utilizing the “virtual” or
outsourced model
–
–
A Disease Foundation’s “Wish List”
Enable the best academic investigators to contribute
• Provide research funding
– CHDI has funded millions of dollars of support
– Thousands of milestone driven contracts executed
– Business structure tailored to match the scientific needs
Mice
• Centralized repositories
– Harvest existing and de novo generation
– One-click MTA
– Quality control / Standardization
• Information exchange
– PLoS Currents HD
– HDinHD.org
– Annual Therapeutics Conference
Best Practices in pre-clinical testing requires standardization
and understanding of models
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CONFIDENTIAL INFORMATION
Identify & characterize every affected subject on earth
• Huntington’s is a rare disease
– Important to have the largest possible catch basin
• Sub populations may have unique features
– Genetic modifiers
– Environmental factors
– Large isolated kindred’s
• Enroll HD
– A global prospective observational study
– Worldwide registry of patients and physicians
– Integrated global clinical research infrastructure
• Informatics
• Bio-banking
– A platform to facilitate clinical studies in experimental medicine,
observational studies and therapeutic trials
Access the most innovative Biotech approaches
• Survey the landscape for the most applicable
technologies
– Leverage existing platform, people, and intellectual property
– True collaborative partnership: money and know-how
– We share the (new) intellectual property
– De-risk the program to make it attractive for licensing
• Identified (htt) gene modulation as an unmet need
– Ionis’s 20 years of experience on antisense oligonucleotides
– First gene therapy clinical trial for HD underway
– Sangamo’s novel zinc-finger transcription factors
Leverage the billions of dollars that Pharma has spent
• Large multi-national firms have hundreds of “parked” assets
– Potent, selective, ligands with good “tool-like” properties allow rapid POC
– They bring: IP, knowledge of the mechanism, and the molecule
• Foundations de-risk or lower the barrier to entry into the target
disease
– Disease domain knowledge
– Preclinical testing
• Win – Win scenario
Pde10a inhibitor clinical trial in HD just completed
– Pharmacological (in) validation of the target/mechanism
– New indication for “sunk cost” asset
Develop the capabilities to drive campaigns
• Foundations can not rely solely on:
– Repurposing existing compounds
– Reactively minding the “in box”
• If the biology is compelling
– Persevere where others have failed or abandoned
– Initiate de novo efforts if needed
• Orchestrated across a network of fee-for-service
contract research organizations
– We design and oversee the research
– CHDI owns the intellectual property
For HD: Targeting the causative gene, its mRNA and
protein for therapeutics
26
CONFIDENTIAL INFORMATION
A worldwide observational study
for HD families
Clinical infrastructure – the critical component
Clinicians/physicians AND patients/families
• CHDI’s internal clinical group coordinates activities worldwide
• Build infrastructure for clinical trials
28
What is Enroll-HD?
• a global longitudinal, observational study of Huntington’s
disease
• collects a common set of data for all participants across
all sites around the world
• also collects blood samples for DNA and cell lines
• all data and samples is made available for researchers to
answer important questions about HD
Human phenomenology trumps ALL model systems
Study Goals
1. To improve our understanding of HD and find out what
factors influence progression > new drugs and strategies
2. To improve the design and speed the conduct of clinical
trials > faster recruitment
3. To foster good clinical care and improve the health of the
participants > best clinical practice
CHDI is using human genetics to identify modifiers of age of
onset
44% of variance in
onset age is not
explained by CAG
size as continuous
trait
Illumina Omni2.5 Quad chipset
CHDI
NIH-CIDR
Registry mAOO 1700
MGH mAOO 1700
PREDICT-HD
~1000 (mAOO 100)
Well phenotyped dataset
A community-wide effort, funded
by CHDI and NINDS, is using
detailed genotyping to find gene
variants that can modulate the
onset age of disease
DNA repair genes
CHDI is working on an open forum
for experts & analysts to evaluate
data
31
Spinal Muscular Atrophy
• A genetic neuromuscular disorder: muscle atrophy and
weakness
• Leading genetic cause of death in infants and toddlers
– Affects 10,000-25,000 children in US
– 1 to 6000-10,000 prevalence
• Due to inactivation of Survival Motor Neuron (SMN1) gene;
critical to health and survival of motor neurons
– Autosomal recessive
• Type 1: manifests before 6 months, death before age 2
• Milder forms (II, III) and IV (adult form) manifest later and are
less severe
• Severity generally predicted by levels of a second gene:
SMN2, that can compensate for SMN1
• Many therapeutic strategies aimed at increasing SMN2 levels
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CONFIDENTIAL INFORMATION
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CONFIDENTIAL INFORMATION
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CONFIDENTIAL INFORMATION
SMA Foundation
• Since 2000, SMA has spent > $100M on basic,
translational and clinical research towards finding a
treatment for SMA
• Internal and external research collaborations
• Focus on developing essential research tools and data
to drive novel drug development
• Major accomplishments include initiation and support of
novel drug discovery and biomarker programs and the
development of standardized assays.
35
CONFIDENTIAL INFORMATION
SMA Foundation Funding POC ASO therapies
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CONFIDENTIAL INFORMATION
Antisense oligonucleotide (ASO) therapy aimed at
increasing SMN2 levels
A C>T transition in SMN2 at position 6 of exon 7, together with an intronic splicing silencer
(ISS) in intron 7, suppresses inclusion of exon 7, thereby encoding a truncated protein product
SMNΔ7, which is essentially non-functional and rapidly degraded.
However, at some frequency, SMN2 does generate transcripts that include exon 7 and
encode a full-length SMN protein identical to that encoded by SMN1.
ASO targets the exon 7/intron 7 sequences
that modulate splicing
Increases full length SMN2
37
MJFF: Improving Access and Providing
Standardization for PD Animal Models for Research
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CONFIDENTIAL INFORMATION
Research and Advocacy
Over 9 million donors“Advocacy and research”
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CONFIDENTIAL INFORMATION
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CONFIDENTIAL INFORMATION
Cystic Fibrosis
• Chronic disease that affects lungs and digestive system of
about 30,000 children and adults in US (70K worldwide)
• Caused by defect in the CFTR gene
– Cystic fibrosis transmembrane conductance regulator
– Regulates chloride and water transport
– very salty-tasting skin;
– persistent coughing, at times with phlegm;
– frequent lung infections;
– Wheezing or shortness of breath;
– poor growth/weight gain in spite of a good appetite; and
– frequent greasy, bulky stools or difficulty in bowel
movements
• In 1950s, few CF children live to attend elementary school
• Today most patients live into their 30s, 40s and beyond
• Cystic Fibrosis Foundation founded in 1955
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CONFIDENTIAL INFORMATION
An Integrated Approach for CF
CF Academic Basic Research Centers
Pool intellectual resource
Share common tools and reagents
Investigator Initiated Research
RFAs and RFPs
Cystic Fibrosis
Foundation
Patient
assistance
and
advocacy
74 CF Foundation-accredited care centers
with demonstrated expertise in clinical
research,
recruit study participants and conduct
clinical trials
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CONFIDENTIAL INFORMATION
CF Foundation
Therapeutics
CF
Therapeutics
Development
Network
CFF Drug Pipeline
CF Foundation
Therapeutics
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CONFIDENTIAL INFORMATION
CF: From Gene to Therapy
Kalydeco (ivacaftor)
CF Foundation
Therapeutics
Targets CFTR G551D patients
(4-5% of all cases)
Chloride channel opener (potentiator)
FDA approved in January 2012
Culminates more than a decade of CFT
funding to Vertex
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CONFIDENTIAL INFORMATION
CF Foundation turns profit immediately to fuel more
research
Business Day |​​NYT Now
Payout From Drug Raises Questions for Cystic
Fibrosis Group
By ANDREW POLLACKNOV. 19, 2014
THE URGENCY OF FOUNDATIONS
Robert J. Beall, chief executive of the Cystic Fibrosis Foundation, which helped finance the
development of a treatment. Credit T.J. Kirkpatrick for The New York Times
“CF Funding, a total commitment of $150 million, has now paid off enormously. The
foundation is to announce on Wednesday that it will receive $3.3 billion from
selling the rights to the royalties to those drugs. That is 20 times the foundation’s
budget last year.
Rather than receiving royalties on sales of those drugs over the next two decades,
the foundation decided to cash in now so it could have more money to put into
research quickly. So it sold the rights to future royalties to Royalty Pharma, an
investment firm that specializes in buying such assets, for a one-time $3.3 billion
payment”.
45
CONFIDENTIAL INFORMATION
Summary
•
•
•
•
•
•
•
•
•
•
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Disease Foundations are critical to advance drug discovery and therapeutics
for many disease indications
Raise Awareness
Advocacy for patients – FDA and legal issues
Patient care
Seed money into academics for not well studied diseases
But in last decade…..
Foundations actively involved in shaping and directing translational and
clinical research
Successes are being documented
More cases of biotech and pharma partnering with Foundations
Lowers threshold and reduces risk for these approaches in Pharma
CONFIDENTIAL INFORMATION
THANKS! QUESTIONS?
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CONFIDENTIAL INFORMATION