Pullan Consulting
Biotech Business Development Consulting
www.pullanconsulting.com and www.lindapullan.com
email: lpullan@msn.com 805-558-0361
Issue #20
Pullan's Pieces
Commentary on Science & Business of Drug Development
For Business Development & Others
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A lack of replacement power in the anti-infectives pipeline
Despite the need for new drugs to address resistant infections, big pharmaceutical companies have pipelines that can’t replace the currently marketed anti-infective products. Sanofi-Aventis has the most launched products (93). GlaxoSmithKline has the most projects in pipeline (44). But comparing pipelines requires comparing products at different stages of development. If you multiply the industry probability of launch at each stage of development by the number of molecules at that stage and sum all the probability adjusted numbers, you can get a simple measure of the power of the pipeline to deliver new drugs. That is, the more drugs at later stages, the higher the power to deliver new drugs. Dividing the group into top and bottom half for number of launched drugs and for pipeline power score allows one to think about companies in clusters.
In the top half of pipeline power and in the top half of number of launched drugs are the “Committed” leaders in anti-infectives. GSK, is a “Committed” leader, with an anti-infective pipeline power score of 21 for its 44 drugs in the pipeline, and 77 drugs launched. Sanofi-Aventis, Pfizer and Merck also have leading franchises of launched products and substantial pipeline power. The “Fallen”, in the bottom half of pipeline power but in the top half of launched drugs, are Bayer and Astellas. Bayer has spun off its anti-infective pipeline in AiCuris. AstraZeneca and Johnson & Johnson, with better than average pipeline power and in the bottom half of number of launched drugs might be termed as “Growing” their franchise. Gilead, Abbott, Merck KGaA and Daiichi Sankyo are smaller players now, with smaller pipeline power.
It seems, however, the entire group does not have enough pipeline. The pipeline power of the entire group is only 16% of the number of launched drugs. For comparison, AstraZeneca’s oncology franchise has a pipeline power score of 10, but that is 88% of its 12 launched drugs. Pfizer’s oncology franchise has a pipeline power score of 11.3 and that is 56% of its 20 launched drugs.
What does all this mean for the small companies working in anti-infectives? For those companies still committed to anti-infectives, they will be relying on partnering to maintain their franchise. For those companies with little or no preclinical effort in anit-infectives (Abbott, Merck KGaA, Daiichi Sanyko), there may not be the internal resources to take on early projects.
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Mouse model for the dry form of AMD – a platform for new drugs
New animal models can test drug candidates before clinical trials, and can create new hypotheses for intervention. Keep your eyes out for new approaches to the more common dry form of AMD (Age-related Macular Degeneration) based on the new animal model reported out of the Cleveland Clinic (Hollyfield, et al, Nature Medicine, Feb, 2008). In the new model, the trigger for disease is the albumin adduct of an oxidation fragment of the fatty acid docosahexaenoic, which causes an immune response to mimic the lesions in the retinal pigment epithelium and the blinding end-stage condition characteristic of the dry form of AMD.
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Recession impact on biotech?
Talk of recession is everywhere with the subprime crisis and a volatile stock market. What might be the impact on biotech?
VCs may increase their focus on biotech. 2007 was a good year for VC investment in biotech. Biotech and medical-device deals took in $9.1 billion in venture cash last year, up nearly 20% from $7.6 billion in 2006, according to PriceWaterhouseCoopers, the National Venture Capital Association and Thomson Financial. Many expect investment in pharmaceuticals, biotechnology and medical devices to remain strong (possibly at the expense of computer technologies) even in a feeble economy because people won't stop getting sick or growing older http://news.wired.com/dynamic/stories/V/VENTURE_INVESTMENTS?SITE=WIRE&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2008-01-19-09-22-00 ).
Biotech IPOs may continue to be postponed. In January, only one IPO was filed (Phenomix). Burrill and Company forecast over 30 IPOs in 2008, most in the 2nd half. (http://www.newswire.ca/en/releases/archive/February2008/01/c6437.html ) The lack of IPOs means VCs look for exits by acquisition of the biotech company.
Big pharmaceutical companies may be come more sensitive to hits to the EPS (earnings per share). Although deals will continue because the pipelines are thin, for the last quarter of 2007, the earnings of major companies have been very mixed, with some reporting losses or declining earning and others reporting good growth rates. (For instance, BMS took a big hit due to their investments indirectly in subprime mortgages.) Those companies who continue to have strong earnings may gain in deal-making power. Younger companies with good pipelines (Celgene) may also use their strength to do more deals.
Biotech is likely to be one of the strongest economic sectors in 2008.
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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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