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Redx Pharma - Neil Murray
- 1. 1 The Future for Drug Discovery – Keynes or Hayek? BioDundee 30th May 2013
- 2. 2Bio Dundee May 2013 Redx Pharma Established September 2010 Pre-clinical drug development company Focused in Oncology and Infectious Disease Currently employ ca. 110 staff Facilities in Liverpool and Alderley Park Raised ca. $ 35m to date from combination of high net worth investors and grant sources
- 3. 3Bio Dundee May 2013 Keynes v Hayek J.M. Keynes —Believed that markets should be steered through interventionist policies —Father of fiscal stimulus F.A. Hayek —Believed that markets should be allowed freedom to find their own level and self-regulate —Classical libertarian
- 4. 4Bio Dundee May 2013 The Challenge & Opportunity • Big Pharma: Downsizing and reorganisation in R&D being driven by perceived inefficiencies and poor returns Increasingly looking outside to Biotech and University R&D Regulatory hurdles continually getting higher Behold the patent cliff…
- 5. 5Bio Dundee May 2013 Real US per capita Spending Growth 2002-2017
- 6. 6Bio Dundee May 2013 US % share of prescriptions for generic medicines 2003-2017
- 7. 7Bio Dundee May 2013 US % retail prescriptions by out-of- pocket cost 2007 v. 2012
- 8. 8Bio Dundee May 2013 The Challenge & Opportunity • Biotech: Traditional Biotech model leaves companies ill-equipped to pick up the R&D gauntlet Companies tend to be paradigm driven Dependent on venture risk capital • Academia: University R&D stalled by lack of translational research funding
- 9. 9Bio Dundee May 2013 Key Indices US VC Funding to Biotech 2000-2012: Source – NASDAQ
- 10. 10Bio Dundee May 2013 Key Indices US VC Funding to Biotech 2000-2012: Source – NASDAQ ?
- 11. 11Bio Dundee May 2013 Key Indices First time venture funding in 1Q2013: —USD 98m – down 58% from prior quarter —Poorest quarterly sum for life sciences since 3Q1996 —Lowest number of investments since 2Q1995
- 12. 12Bio Dundee May 2013 Key Indices
- 13. 13Bio Dundee May 2013 Key Indices
- 14. 14Bio Dundee May 2013 Key Indices NASDAQ Biotech Index 2004-2013: Source – NASDAQ
- 15. 15Bio Dundee May 2013 Key Indices Drivers of NASDAQ Biotech Index: Source – Bio, Factset
- 16. 16Bio Dundee May 2013 Key Indices Performance for each biotech IPO class since 2009: Source – Bio, Factset
- 17. 17Bio Dundee May 2013 The Challenge & Opportunity Is the model broken? − Is the industry sustainable in its current form? − Are patients getting the best products quickly enough? Antibacterials Neglected diseases Opportunity for a new model…
- 18. 18Bio Dundee May 2013 Are times changing? •Building a new R&D model: − Providing a sustainable source of early-stage small molecule therapeutics for subsequent development by partners •Driven by Science, Expertise and Capacity: − Fast-follower drugs based on proprietary technology − Early-stage Biotech/University drugs requiring translational research and development − Extensive in-house Medicinal Chemistry, in vitro pharmacology and DMPK, project management and BD •Maximise the use of non-dilutive financing: − Utilize funding from UK, EU, US Govt and charities − Achieve sustainability through industry partnering
- 19. 19Bio Dundee May 2013 Redx Pharma Business Model Science and Technology Expertise and Capacity Non-dilutive Capital Sustainable Early Pipeline of attractive assets for Partners
- 20. 20Bio Dundee May 2013 Are times changing? •Evidence of push by large Pharma towards more collaborative arrangements such as open source innovation •Pharma venture funds investing in collaborative funds with VCs − Merck/Flagship Ventures − GlaxoSmithKline/Janssen/Index Ventures •Commercial partnering landscape changing − Pharma engaging earlier than before − New, more innovative deal structures •Regulatory authorities playing their part − Breakthrough Therapy designation − GAIN Act …but much remains to be done!
- 21. 21Bio Dundee May 2013 Are times changing? “Biomedical R&D in the 21st century is rapidly evolving; indeed it must evolve to assure the sustainability of an industry critically important to patients around the world. Public private partnerships and consortia are vital to this transformation as they bring great minds together to accelerate breakthrough discoveries and improve the efficiency and cost-effectiveness of delivering medicines to patients, who we know are desperately waiting.” Dale M. Edgar Lilly Distinguished Research Fellow and Global Head of Science and Technology Partnerships Eli Lilly and Company, April 2013
- 22. 22Bio Dundee May 2013 “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” Friedrich Hayek, “The Fatal Conceit: The Errors of Socialism” 1988 “Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” John Maynard Keynes, “The General Theory of Employment, Interest and Money” 1936
- 23. 23Confidential
Editor's Notes
- ASKED TO TALK ABOUT GROWING REDX IN A CHALLENGING ENVIRONMENT BEGAN TO THINK MORE ABOUT THE CHALLENGES THAT FACE ANY BUSINESS IN DRUG DISCOVERY AND DEVELOPMENT GIVEN THE RADICAL CHANGES THAT ARE TAKING PLACE IN OUR INDUSTRY AND PLACING THEM IN AN ECONOMIC CONTEXT TO THAT END, I’D LIKE TO OFFER A DIFFERENT WAY OF APPROACHING THE INDUSTRY’S PROBLEMS AND HOPEFULLY PROVOKE SOME THOUGHT AND DISCUSSION BEFORE CONSIDERING THIS – THE COMMERCIAL…
- GRANT INCOME IS KEY TO BOTH RAPID GROWTH OF BUSINESS AND OUR ABILITY TO ATTRACT HIGH NET WORTHS AS THEY LOVE NON-DILUTIVE CAPITAL
- OFTEN PORTRAYED AS BITTER ENEMIES FROM EITHER END OF THE ECONOMIC SPECTRUM, IN FACT THEY HAD HUGE RESPOECT FOR ONE ANOTHER WHEN HEARING THAT KEYNES HAD DIED, HAYEK DESCRIBED HIM AS THE ONE TRULY GREAT MAN THAT HE HAD MET ONLY HAYEK WON A NOBEL PRIZE BUT KEYNES HAD BEEN DEAD FOR OVER 20 YEARS BEFORE THE NOBEL PRIZE FOR ECONOMICS WAS ESTABLISHED IN 1969
- AZ, ROCHE, PFIZER, NOVARTIS, MERCK, ETC. ALL CUTTING R&D JOBS AVERAGE SPEND BY THE TOP 10 LARGE PHARMA COMPANIES ON R&D HAS REACHED USD 8BN PER ANNUM 10 USD 200M DEALS GETS 10 THINGS INTO THE PIPELINE FOR A FRACTION OF THE COST AND LOTS LESS RISK BECOMING MORE EXPENSIVE, MORE DIFFICULT AND MORE RISKY TO DEVELOP A DRUG AND BRING IT TO MARKET PATENT CLIFF HAS BEEN TALKED ABOUT FOR YEARS – REALITY IS FINALLY HERE
- GENERAL TREND IS DOWNWARDS DIP IN 2007 RELATED TO ECONOMIC FACTORS
- MORE IMPORTANT THAN OVERALL SPENDING THOUGH IS HOW THE MONEY IS SPENT KEY TO NOTE DROP-OFF IN BRANDED GENERIC SALES AS WELL AS OVERALL RISE IN GENERIC SALES
- OUT OF POCKET COSTS TRENDING TOWARDS LOWER VALUE ITEMS
- LARGE NUMBERS OF COMPANIES ARE REQUIRED TO TAKE UP THE SLACK CREATED BY LARGE PHARMA CUTBACKS THE VALLEY OF DEATH IS NOT ONLY GETTING WIDER, BUT IT IS MOVING EARLIER IN THE PROCESS FUNDING OUTLOOK FOR BIOTECH IS MORE CHALLENGING THAN EVER BEFORE
- LOOKING AT SOME KEY INDICES OF BIOTECH FUNDING USING US DATA FROM THE NATIONAL VENTURE CAPITAL ASSOCIATION AS IT IS MOST RELEVANT AS A MARKER OF THE SECTOR OVERALL FUNDING NAD NUMBERS OF DEALS ARE PRETTY FLAT – PARTICULARLY IF YOU DO ANY KIND OF ADJUSTMENT FOR INCERASED DISCOVERY AND DEVELOPMENT COSTS
- MORE CRUCIALLY, THERE MAY BE EVIDENCE EMERGING THAT START-UP FUNDING IS DRYING UP
- WHILST THIS MAY BE A BLIP, MOST IMPORTANT POINTS ARE 1995 AND 1996 REFERENCES
- AND IT’S NOT JUST FUNDING – ONE EXIT MEASURE IS TIME TO ACQUISITION WHICH IS GETTING LONGER AND LONGER HOWEVER NOT ALL BAD NEWS…
- EARLY STAGE FUNDING MAY BE TOUGH BUT IPO WINDOW SEEMS TO BE OPENING FOR THOS COMPANIES WHO HAVE MANAGED TO BECOME ESTABLISHED
- AND EVIDENCE APPEARS TO SHOW THAT THOSE COMPANIES THAT DO GET TO THE PUBLIC MARKETS PERFORM REASONABLY WELL CHART COMPARES NASDAQ BIOTECH INDEX WITH STANDARD & POOR 500 INDEX ALL IS NOT AS IT SEEMS THOUGH…
- LARGE AND MID-SIZE COMPANIES ACCOUNT FOR 80% OF INDEX BY VALUE AND 28% BY NUMBER OF COMPANIES
- THE AVERAGE PERFORMANCE OF STOCKS COMING TO THE MARKET SINCE 2009 IS POOR ALL OF THIS AFFECTS INVESTOR APPETITE FOR THE SECTOR
- SO WE HAVE THIS YAWNING TRANSLATIONAL GAP IS THE CURRENT MODEL CAPABLE OF RESPONDING TO BIG PHARMAS’ NEW DEMANDS? IF THE INDUSTRY IS NOT SUSTAINABLE WE HAVE NO INDUSTRY AND WHAT ABOUT PATIENTS? NOT ENOUGH TIME TO LOOK AT THE IMPACT OF CURRENT INDUSTRY BUSINESS STRATEGIES ON AREAS SUCH AS ANTIBIOTICS AND NEGLECTED DISEASE BUT AS AN INDUSTRY, WE MUST NOT LOSE SIGHT OF THE GOAL OF PROVIDING THE BEST PRODUCTS FOR PATIENTS ONE COULD ARGUE THAT UNTIL NOW, THE INDUSTRY HAS BEEN ALL ABOUT HAYEK’S FREE-MARKET APPROACH AND SURVIVAL OF THE FITTEST
- AND SO THAT IS WHAT WE ARE TRYING TO ACHIEVE WITHIN REDX PHARMA BUILDING A NEW MODEL FOCUSED ON A SUSTAINABLE APPROACH TO GENERATING A PIPELINE OF EARLY-STAGE ASSETS FOR PHARMA CAPABILITY TARGETED ON MEDICINAL CHEMISTRY AND IN VITRO BIOLOGY USING NON-DILUTIVE FINANCE TO SUPPORT THE BASE WHILST GENERATING SUSTAINABILITY THROUGH PARTNERING REVENUES FINDING DIFFERENT WAYS OF APPROACHING DRUG DEVELOPMENT IN A MORE COLLABORATIVE FASHION THAN PREVIOUSLY, E.G. NHS
- WILL IT WORK? TIME WILL TELL BUT THERE ARE CLEAR SIGNS THAT TIMES ARE CHANGING MORE COLLABORATION FROM LARGE PHARMA GREATER WILLINGNESS TO GET INVOLVED IN VENTURE FUNDING EARLIER DEAL-MAKING, E.G. A LARGE PHARMA WHO ARE SETTING UP A UNIT WITHIN BD SPECIFICALLY TASKED WITH ESTABLISHING EARLY-RESEARCH COLLABORATIONS, ANOTHER LAERGE PHARMA SPECIFICALLY LOOKING FOR TWO OR THREE COMPANIES TO DO THEIR EARLY-STAGE RESEARCH – NOT ON A CRO-BASIS BUT AS EQUAL PARTNERS WHILST THERE IS A WILLINGNESS TO LOOK AT NEW MODELS, THIS IS UNCHARTED TERRITORY FOR PHARMA AND WE KNOW HOW QUICKLY SUPER-TANKERS CHANGE COURSE! EVEN THE REGULATORS ARE TRYING TO HELP! WHO’D HAVE THOUGHT IT?
- QUOTE FROM DALE EDGAR SHOWS THAT LARGE PHARMA REALISES THE PREDICAMENT THAT THE INDUSTRY IS IN AND WITH ALL THIS TALK OF COLLABORATION, INTERVENTION FROM REGULATORS AND GOVERNMENT FUNDING, IT LOOKS LIKE KEYNES IS GOING TO WIN – AT LEAST FOR THE NEXT STAGE OF THE INDUSTRY’S LIFE IN TRUTH, AS WITH ALL OF THESE THINGS, THERE IS A BALANCE TO BE STRUCK YOU CAN’T FUND ALL COMPANIES – THERE HAS TO BE AN ELEMENT OF COMPETITION TO MAKE SURETHAT THE BEST SURVIVE AND PROSPER BUT THE FRAMEWORK NEEDS TO BE THERE TO GIVE THOSE COMPANIES THE OPPORTUNITY TO SURVIVE AND THAT’S WHERE WHAT MIGHT BE CALLED INTERVENTIONIST POLICIES COME IN
- I’LL LEAVE YOU WITH 2 COMMENTS FROM THE GREAT MEN THEMSELVES AND LET YOU MAKE UP YOUR OWN MINDS