Pullan Consulting
Biotech Business Development Consulting
lpullan@msn.com 805-558-0361
Issue #17
Pullan's Pieces
Commentary on Science & Business of Drug Development
For Business Development & Others
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Deal Values Grew 45% Annually!
A recent analysis by Lehman Brothers (Biotechnology: A milestone for pharma pipelines, Sept 19, 2007) suggests that milestones now amount to an average of 25% of the drug NPV. The Compound Annual Growth Rate (CAGR) of the total reported deal value has been an astounding 45% over the 2004 to 2007 period, bringing the average total deal value for those deals with disclosed terms to $400 million. However, preclinical deals have the highest average total value, with many milestones never to be realized (“BioWorld dollars”).
Upfronts, the real money, have averaged about 15% of total deal value and have grown less rapidly than the total deal value. The upfronts of the disclosed preclinical deals are higher (~$42 million) than for Phase I deals (~$25 million) and comparable to Phase II deals, perhaps a skewed perception due to the lower proportion of preclinical deals with disclosed deal terms.
Applying the probability adjustments of the timed payments, the expected NPV of the average preclinical deal is just 2% of the total stated deal value, while the expected NPV of the average deal at Phase III is 25% of the total stated deal value.
Fat fear was bad public science.
The tale of how bad science became accepted public policy on fat in the diet is frightening.
In 1988, the Surgeon General, C. Everett Koop, pronounced that fat in the American diet was a health threat comparable to smoking, and that, “The depth of the science base underlying its findings is even more impressive than that for tobacco and health in 1964.” Apparently, that was not even close to true. Instead, there was a cascade of consensus that overwhelmed voices of scientific uncertainty.
According to a NY Times article (John Tierny, Oct 9, 2007) discussing the book, Good Calories, Bad Calories: Challenging the Conventional Wisdom on Diet, Weight Control, and Disease, by Gary Taubes, the start of the “Fat Fear Fad” was a diet researcher (Ancel Keys) who became convinced in the 1950’s that Americans were suffering from a new epidemic of heart disease because they were eating more fat than their ancestors. But our ancestors were big meat eaters, and the apparent epidemic of heart disease owed more to diagnosis than diet. Government figures and committees issued reports and pronouncements, and ignored the contradictory evidence. The National Academy of Science issued a report stating there was not enough evidence for a low fat guideline, but the authors were attacked for their associations with the food industry. The NIH had a consensus conference and concluded there was no doubt that a low fat diet diets “will afford significant protection against coronary heart disease”. But clinical trials did not confirm the link and a meta analysis found no association with mortality. Indeed, a New York Times article (Gina Kolata, Nov 7, 2007), reports that overweight people have a lower death rate because they are much less likely to die from a grab bag of diseases that includes Alzheimer’s and Parkinson’s, infections and lung disease. And that lower risk is not counteracted by increased risks of dying from any other disease, including cancer, diabetes or heart disease.
I’ve not read the Gary Taubes book nor studied the clinical results, but I think the conviction of policy makers without solid evidence is something we should all consider for other issues that should be based on solid science.
Most detailed oncology drugs
The oncology drugs with the most sales calls or details in 2006, were Taxotere, Abraxane, Avastin, Aranesp, Velcade and Arimidex, each taking somewhere between 5% and 3% of all the details for oncologists (Oncology Business Review, June 2007). The most detailed drugs represent quite a range of sales and ages. Taxotere (launched in 1996) had 3rd quarter 2007 sales of $475 million for Sanofi-Aventis. Abraxane (launched in 2005) had $69.6 million in sales for Abraxis in the 2nd quarter of 2007. Avastin (launched in 2004) sales of $597 million surpassed those of Rituxan for Genentech in the 3rd quarter of 2007. Amgen’s Aranesp (launched in 2001), still had $818 million in sales in the 3rd quarter of 2007, after a 23% decline from a year ago. Millennium’s Velcade (launched in 2003) had sales of $70.4 million in the 3rd quarter. AstraZeneca’s top cancer drug Arimidex (launched in 1996) had sales of $425 million in the 3rd quarter of 2007. But each drug is the top selling cancer drug for their respective companies.
Biotech tour: Germany, part 1 of 2
Germany has a large and active biotech industry, roughly comparable to that of the UK in number of companies. With 10 years passing since start of the government funding in the BioRegio competition, followed by the subsequent pain of failures in 2001 to 2004, the biotech industry in Germany seems to have now evolved to a solid base. Half of all the biotech companies in Germany were founded in the years (1997 to 2004) of the government funding from BioRegio program (The German Biotechnology Sector, 2007, www.biotechnologie.de).
Today, there are 391 German biotechnology companies and 9,670 employees in German biotech companies, according to the Ernst & Young report of 2007. If the German subsidiaries of foreign biotech companies are included in these calculations, the German biotechnology industry currently has a workforce of more than 12,000 people. In 2007, the German biotech industry is expected to achieve revenues of more than a billion euros.
However, financing is not easy. In 2006, equity financing was down 11% from the year before. While public companies had four initial public offerings and twelve secondary financings, the volume of venture capital investments in private biotechnology companies dropped by 35% from 326 million euros to 213 million euros. (http://www.biopro.de/en/life/magazin/03429/index.html). As in the US, more money is going to fewer companies and clinical candidates are nearly essential to get funding (www.biotechnologie.de). For access to the US market, Micromet did a reverse merger with CancerVax, and GPC listed on the NASDAQ in addition to listing in Germany.
However, in a sign of success, there are so many drugs in clinical development from German companies, that I will report only the first half here!
Companies with drugs in clinical trials according to PharmaProjects include:
4SC – in Phase II: dihydroorotate dehydrogenase inhibitor for RA
Antisense Pharma – in Phase II: antisense to TGFbeta2 for glioblastomas
Avontec – in Phase II: STAT-1 transcription factor decoys for asthma and psoriasis (partnered with AnGes for Japan and Asia)
Axxonis Pharma – I n Phase III: isoergoline dopamine agonist for Parkinson’s Disease and restless leg syndrome (partnered with Prestwick for US and Canada)
Bayer - 35 compounds in Phase I thru III
Biofrontera – in Phase III: nanocalloid formulation of aminolevulinic acid for photodynamic therapy of skin lesions
in Phase II: histidine decarboxylase inhibitor for inflammatory skin disease, an ion channel T cell modulator for atopic dermatitis
in Phase I: 5HT2B antagonist for migraine
Biopharm GmbH – in Phase II: recombinant human growth & differentiation factor-5 for spine and bone disorders (Partnered with Depuy and Scil)
Biotest – in Phase I: mAb for RA and psoriasis
Boerhinger Ingelheim - 13 compounds in Phase I thru III
Cellgenix Technologie Transfer – in Phase II: recombinant patient-specific lymphoma vaccine
DeveloGen – in Phase III: Hsp60 peptide for type I diabetes
DoNatur- in Phase II: plant derived anti-inflammatory for arthritis
Evotec – in Phase II: GABA A allosteric modulator for insomnia
in Phase I: MAO-B inhibitor for smoking cessation (Roche has an option)
GenPat77 – in Phase I: topoisomerase inhibitor for cancer
GPC Biotech – in Phase I: Mab against MHC class II positive B cell lymphomas and leukemias (Morphosys and Lilly)
Gruenthal - in Phase III: dual mu opioid and NE uptake inhibitor for pain (with J&J)
in Phase I: mu opioid agonist for urinary incontinence (with KeyNeurotek), and an unidentified mechanism for multiple myeloma
Heidelberg Pharma – in Phase II: produrug of an antiviral for HIV/AIDS, a 5FU conjugate for cancer and keratosis
IDEA – in Phase III: transdermal ketoprofen for pain (licensed to Alpharma for the US)
in Phase II: transdermal corticosteroid for atopic dermatitis and psoriasis, an unidentified mechanism for psoriasis, and an unspecified agent for toe nail fungus (all with TDT/Celtic worldwide)
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What are you concerned about?
How to best tell your story?
What kind of deal terms to consider?
Where is your next product candidate?
What experiments are needed to partner?
Let’s talk about it! Maybe I can help.
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Pullan Consulting
Linda M. Pullan, Ph.D.
Biotech Business Development
lpullan@msn.com
805-558-0361
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