Pullan Consulting

Biotech Business Development Consulting

www.pullanconsulting.com and www.lindapullan.com

email:  lpullan@msn.com  805-558-0361

Issue #37, July 2009

Pullan's Pieces

Commentary on Science & Business of Drug Development

VC Funding Up in June

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OnBioVC (http://onbiovc.com/reports/ ) tracked 35 life science (including devices) financings for June ’09, versus 24 deals in June ‘08. June 2009 proceeds of bioscience investment proceeds totaled approximately $547M, an increase of roughly $104M over the $443M of investments tracked in June ’08, an increase of ~23%. The capital for the first six month suggests a 2009 run rate of $6,288M; if this value holds, then 2009 would be about $1.7B short of the total capital raised in 2008. 

PE Hub reported (www.pehub.com/.../shaking-the-moneytree-vc-investment-still-rises-in-q2/  ) that the  2nd quarter’s largest deal was for startup Clovis Oncology, which raised $146.3 million from Domain Associates, New Enterprise Associates (NEA), Versant Ventures, Aberdare Ventures, Abingworth, Frazier Healthcare Ventures, ProQuest Investments and the Company’s management team.   Northern California continued to dominate geographically, with its companies garnering 32.29% of all domestic VC investments. Runner-up New England grabbed just 12%.  The second quarter’s busiest firm was Canaan Partners, with 18 transactions.  It was followed Innovation Works (17), Kleiner Perkins (16), New Enterprise Associates (16), Polaris Venture Partners (13), DAG Ventures (11), U.S. Venture Partners (11) and First Round Capital (11).  The busiest seed/early stage investor was First round (apropos), with 9 such transactions.

Licensing deals are getting done

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I’m delighted to highlight the deal announcement of my client Airmid and Kineta on the preclinical peptide for autoimmune diseases.  http://www.reuters.com/article/pressRelease/idUS81992+07-Jul-2009+BW20090707 .  And judging from the term sheets my clients and I have been working upon, there will be more deals to come this year. 

2008 deal terms from Evaluate Pharma

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Evaluate Pharma (www.evaluatepharma.com) did a lovely analysis of 397 product licensing deals in 2008.  The total count was down 23% from 2007.  Of the 397 deals, 171 were at research or preclinical stage.  35% were biologics (accounting for 45% of the value).  Biologics had a 54% higher deal value.   Oncology and immunomodulators continued to lead in deal number (113) and value ($9.8B in upfront, equity, and milestones), with CNS second in value ($8B) and deal number with 58 deals.  The average upfronts for research deals was $20M, preclinical $15M, Phase 1 $31M, Phase 2 $36M, and Phase 3 $51M.  As expected, everyone is looking for those Phase 3 products and the upfronts for Phase 3 products increased compared to 2007. 

Royalty Rates from Deloitte Recap

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Mark Edwards and the team at Deloitte Recap did a great webinar providing analysis of royalty rates from un-redacted contracts obtained under the Freedom of Information Act.  Mark calculated effective royalty rates on an assumed $500M in net sales to be able to compare tiered royalty rates across deals.  (The effective royalty rate is the simple percentage of assumed sales that result from the sum of applying each tier of the royalties).  For discovery deals, the median effective royalty rate was 7%, for lead stage 8%, for preclinical 10.3%, for phase 1 it was 11.5%, for Phase 2 it was 15% and for Phase 3 it was 19.3%.  Antibodies get higher royalty rates (35%) at Phase 3.  For more lessons, check out the posted webinar.  http://www.recap.com/882575E5007F1AA1/WebinarInvite?OpenForm. 

Most partners do stick together for the contracted period

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The In Vivo Blog reported (http://invivoblog.blogspot.com/2009/07/dotw-do-deals-finish-race.html ) that of 201 deals signed from 2002 thru 2004 with upfronts of at least $1M, only 49 (or 24%) were withdrawn.  Older numbers I’ve seen had suggested about ½ of all deals fail and are terminated. 

Drug development after termination a source of real value

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In June, Mark Edwards of Deloitte Recap gave a presentation “Making yourself a Target”, available on the website http://www.recap.com/88256E8D0075D29B/RR_ANB_tab_slides?openform.  He highlighted the tremendous potential of re-partnering after a deal is terminated.  “Of BIO’s list of approximately 260 approved biotechnology drugs, 23 were partnered, terminated and then re-partnered in development; an additional 14 were partnered, terminated and then developed by the originator independently.”   This highlights the need for careful consideration of those termination clauses.   

Great partnering meeting coming up soon!

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The EBD Group has organized a great lineup of speakers at the upcoming BioPharm America partnering meeting September 16-18^th in San Francisco. 

In addition to hearing from these industry leaders, the meeting is a chance to work on partnering.  I will be there, and am eager to present opportunities on behalf of some of my clients.  Each time I go to one of the great meetings put on by the EBD Group, I find that the expense and time is worth it in new connections and prospects.  Hope to see you there, but if you can’t make it, I’d be happy to work for you, too.

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How can I help you?  

I offer help with all the aspects of partnering for therapeutics, from shaping a message or a presentation, to making contacts, to evaluation and valuation of product candidates, to negotiations. I can represent you at partnering meetings.  I can help with searches of pipeline databases for competition, sizes of clinical trials, or potential partners.  I can help you find deal comparables and help estimate or model deal values.  I have a great list of business development contacts.  You do not need to pay a minimum or a retainer, just use what you need when you need it.  Let’s chat and see if there is a fit.

Pullan Consulting

Linda M. Pullan, Ph.D.

Biotech Business Development

www.pullanconsulting.com and www.lindapullan.com

e-mail: lpullan@msn.com

805-558-0361

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