This short report summarize the big pharmaceutical companies’ strategies towards the microbiome therapeutic area. We analyzed how pharmaceutical companies succeed to manage the opportunities of the field while managing the risk in the same time

1. BIG PHARMACEUTICAL COMPANIES’ STRATEGIES
TOWARDS THE MICROBIOME THERAPEUTIC AREA
Diane Bugeaud – Alexandre Trichies
INTRODUCTION
Nobel laureate Joshua Lederberg defined the microbiome as the “ecological community of commensal,
symbiotic and pathogenic microorganisms that literally share our body space and have been all but
ignored as determinants of health and disease” (Lederberg 2001). This field has been ignored for too
long because of a lack of technology. It was only recently discovered thanks to next generation
sequencing. Most of these microbes live in symbiosis with us and maintain our bodies healthy. An
imbalance of this complex system, also called dysbiosis, has a strong impact on our health and is
related to various diseases as diabetes, obesity, cancer, or skin diseases.
With more than fifty biotech-based companies focusing on this field and an exponential number of
submitted patents, going from 100 in 2013 to 600 in 2018, microbiome could be a new field where
pharmaceutical companies could develop potential blockbusters (Patbase software 2019).
However, as a new therapeutic area, microbiome based treatments represent a great opportunity but
also a high risk. Many companies have a product in clinical phase but none of them has succeeded to
reach the market with a product so far. Among those companies, Seres Therapeutics was the first
company to go public in 2015 in the microbiome field. However in 2016, its price per share dropped
by 69% after its phase 2 failure (SeekingAlpha 2016). This decrease in market cap might has projected
a negative perception of this field, increasing the risk it represents (LaMotta 2018).
With this new risky area yet full of potential, the question we can ask ourselves is what kind of
strategies do big pharmaceuticals companies adopt towards the microbiome?
Through different examples, we will illustrate those strategies and look at the risk/benefit ratio
associated to each of them inside this new therapeutic area.
OPEN INNOVATION & RESEARCH ALLIANCE : THE EXAMPLE OF JOHNSON & JOHNSON
Johnson & Johnson (J&J) launched at the beginning of 2015 the Janssen Human Microbiome Institute
(JHMI), an open innovation center to explore the potential of the microbiome in a wide array of
diseases, from lung cancer to diabetes. With R&D sites both in Europe and USA, this institute is creating
an international network involving people from academic centers and young biotechnology
companies. As companies can’t go by themselves on the development of microbiome-based product,

2. the JHMI is a powerful way for them to overcome the challenges of delivering innovative solution in a
risky field.
An illustration of JHMI involvement is its vehicle JLINX, which is “A New Company Incubation Model”.
Based in Belgium, this model is designed to give entrepreneurs opportunities to share ideas while
accessing different resources such as infrastructure, investment and scientific, technical and business
expertise (Johnson&Johnson 2016).
This model is expected to give J&J a competitive advantage by identifying and advancing the best
science in microbiome and bring healthcare solutions to the market. Indeed by actively partnering with
many innovators, J&J is increasing its chance of finding the most promising technologies and develop
it before the other pharmaceutical companies.
While J&J is the most active pharmaceutical company using this strategy, other companies have
started to develop similar open innovation platforms and research partnerships, such as
GlaxoSmithKline, Pfizer and Merck (OECD 2017).
NON-EQUITY ALLIANCES: TAKEDA AND BMS
Alongside J&J’s strategy which aims to develop collaborations with multiple startups, other big
pharmaceutical companies choose to focus on alliances strategies involving just one other firm.
Indeed, both Takeda and Bristol-Myers Squibb have signed generous partnerships with microbiome
companies.
In April 2017, Takeda decided to develop a partnership with NuBiyota on oral microbial consortia
products. NuBiyota provides a microbiome platform for gastroenterology (GI) indications, for which
the company will receive an upfront payment. NuBiyota represents for Takeda an entry point for the
clinical evaluation of microbiome based therapeutics. This will enable Takeda to better understand the
role of microbiota in GI disease. Through this partnership and others, Takeda hopes to find new ways
for the treatment of GI diseases, for which the company is a world leader (Takeda 2017).
In November 2016, Bristol-Myers Squibb (BMS) and Enterome announced an immuno-oncology
collaboration. This partnership is designed to focus on the discovery and development of microbiome-
derived biomarkers, drug targets and bioactive molecules that could be companion diagnostics and
therapeutics for cancer. BMS has exclusive rights to intellectual property and therapies generated
during the collaboration. Enterome received an upfront payment of $15 million for access to its
technology as well as R&D funding (Bristol-Myers Squibb 2016).
BMS’ strategy is very different from Takeda’s one because unlike Takeda, BMS is specialized in
oncology. The microbiome has evident and direct links with gastroenterology whereas its links to
oncology treatments are much more speculative and therefore much more risky. BMS is taking a bet
on Enterome but would definitely be a step ahead of other big pharma companies if this collaboration
leads to interesting results.
Those partnerships are non-equity alliances which means the partners pool their resources and
capabilities together. It is the most common strategic alliance with the advantage of flexibility. As the

3. relationship is easy to initiate and terminate, BMS and Takeda have a low level of commitment and
limit the risks to a minimum.
EQUITY ALLIANCES: ROCHE AND PFIZER
As venture capital firms, pharmaceutical companies have specific venture funds to invest in promising
startups working on new drug technologies. In such forms of alliance, the pharmaceutical company
purchases a certain equity percentage of the other company. Less common than non-equity, this
alliance is a stronger tie but will also decrease the flexibility and entail significant investment. This
alliance will mostly be done with microbiome based companies having an advanced pipeline of
molecules.
In April 2016, Pfizer Venture Investments and Roche Venture Fund invested in Second Genome, a
clinical stage pharmaceutical company specialized in microbiome medicine, having one lead candidate,
SGM-1019, in phase 2. This company managed to raise $42.6 million (Timmerman 2016). This strategy
ensures Pfizer and Roche to have a say in the future decisions that Second Genome will make.
JOINT VENTURE: THE EXAMPLE OF NESTLÉ HEALTH SCIENCE
A joint venture is established when two (or more) parent companies establish a new child company.
This strategy is the least common one of the alliances. However, it is the one with the strongest tie
between the companies. It also needs long negotiations, significant investment and is adapted for a
long term solution.
In July 2017, Nestlé Health Science entered the microbiome field by entering a 50-50 joint venture with
Enterome. The company produced through this partnership is Microbiome Diagnostics Partners
(MDP), an entity specialized in the development and commercialization of innovative microbiome-
based diagnostics (in all therapeutic areas except immuno-oncology since Enterome has a partnership
with BMS). This new company is expected to develop differentiated diagnostics, originally coming from
Enterome, but also to prepare the ground for nutritional therapies and therapeutics. The agreement
was defined with Nestlé Health Science contributing to this project through the diagnostics
development and commercialization expertise of ones of its companies named Prometheus.
Enterome’s contribution was its programs and intellectual property (Nestlé Health Science 2017).
ACQUISITION: A RARE ACTION
To our knowledge, only one acquisition by a big company has occurred in the microbiome field. Indeed,
in April 2018, Ferring Pharmaceuticals bought Rebiotix. Ferring Pharmaceuticals is not considered as a
“big pharma” but still had $1.9 billion in revenues in 2017. However, this acquisition is a particular case
because Ferring Pharmaceuticals is already specialized in gastroenterology, urology and reproductive
medicine which are areas of expertise already in close relation with the microbiome. Prior to this
acquisition, the firm had formed partnerships with microbiome specialized companies such as

4. MetaboGen and MyBiotics. Rebiotix had promising pipeline candidates for the treatment and
prevention of recurrent C. difficile infections which represents a high unmet medical need
(Pharmaceutical Technology 2018).
CONCLUSION
As we have seen through these different examples, only one acquisition has been made in the field.
Because of the risks it represents, big companies are still fearful when it comes to invest in this new
therapeutic area. Indeed, they will prefer to choose partnerships rather than a merger or an
acquisition. Pharmaceutical companies use different types of strategy to become closer to microbiome
companies and their innovative technologies with a limited risk. It is important to stress that although
the examples given in this article are focused on one kind of strategy at once, most companies use
different alliances at the same time to enter the microbiome field.
Also, most of the events described in this article are really recent. All the examples happened between
2015 and 2018, underlining once again the novelty of microbiome. It can be noted that microbiome
presents similarities to the biotechnology’s evolution. As the biotech field in the 70’s, chemical industry
was the only way to develop therapeutics. The success of some companies with innovative biological
products had opened the way and today, 7 out of 10 of the largest selling pharmaceutical products are
biologics. Microbiome could become the biotech of the year 2020. With most advanced companies
having a product in phase 2 and 3, 2019 and 2020 will be pivotal years for the field.
A success or a failure will be decisive for the field and for the next strategy adopted by pharmaceutical
companies. As what happened in 2016 with Seres Therapeutics, the outcome of clinical trials will have
a strong impact on the whole domain, pushing pharmaceutical companies to invest heavily in the field
or to give up on this therapeutic area.

5. BIBLIOGRAPHY
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