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Early asset development and commercialization: Partnering for success
The document discusses early asset development and commercialization, and partnering arrangements. It introduces Cello Health and their services in market research, strategic consulting and scientific communications. It then discusses evaluating potential partners based on their capabilities and how they match a company's needs, as well as considering different types of partnering arrangements like licensing, acquisitions, joint ventures and more. Managing the value of early assets across development is also emphasized.
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Early asset development and commercialization: Partnering for success
- 1. EARLY ASSET DEVELOPMENT ANDCOMMERCIALIZATION: PARTNERING FOR SUCCESS © CELLO HEALTH
- 2. © CELLO HEALTH2 Introduce Cello Health Discuss Early Asset Development and Commercialization Discuss Partnering Arrangements
- 3. © CELLO HEALTH3 INSIGHT CONSULTING COMMUNICATIONS Cello Health services the global pharmaceutical, biotechnology and health sectors World class Market research Strategic Consulting Medical and scientific knowledge With over 400 professionals world-wide, Cello Health brings together three core capabilities of market research, strategic consulting and scientific communications.
- 4. © CELLO HEALTH4 There are almost 4,000 Pharma and Biotech companies worldwide 1,198 1,313 1,503 1,576 1,621 1,633 1,769 1,965 2,084 2,207 2,387 2,705 2,745 2,984 3,286 3,687 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 2001 2006 2011 2016 Numberofcompanies Source: Pharmaprojects, January 2016 »The US remains the largest pharmaceutical market, housing 48% of pharmaceutical companies worldwide Total number of companies worldwide with active pipelines 2001–2016 48% 17% 12% 3% 5% 4% 4% 3% 3% 1% Distribution of R&D companies by HQ country / region in 2015 and 2016 48% 17% 12% 3% 5% 4% 4% 3% 3% 1% USA Rest of Europe Rest of Asia Pacific China UK Canada Japan Germany France C and S America 48% 18% 9% 4% 5% 4% 3% 3% 3% 2% 2015 2016 57% have only 1 or 2 drugs in their pipelines
- 5. © CELLO HEALTH5 Source: EY, BioCentury, Capital IQ and VentureSource 0 2 4 6 8 10 12 0.0 0.5 1.0 1.5 2.0 2.5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Averagedealsize(US$m) Totalamountraised(US$bn) Total amount raised Average deal size Which is driving an increase in venture funding Source: Biotechnology Industry Report 2015: Beyond Borders Reaching New Heights by EY US Venture Capital 0 3 6 9 12 15 18 0 1 2 3 4 5 6 7 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Averagedealsize(US$m) Capitalraised(US$bn) Total amount raised Average deal size Source: EY, BioCentury, Capital IQ and VentureSource EU Venture Capital
- 6. © CELLO HEALTH6 Source: Biotechnology Industry Report 2015: Beyond Borders Reaching New Heights by EY And has resulted in some companies demonstrating or creating very high perceived value Celator Parlays Leukemia Drug Data into $1.5B Buyout From Jazz Pharma Xconomy New York All it takes to become an acquisition target in biotech is some promising data. Take Ewing, NJ, and Vancouver- based Celator Pharmaceuticals, which Jazz Pharmaceuticals just agreed to buy this morning for $1.5 billion Companies that do not have marketed products but have achieved market caps over $1bn There is a buzz (and lots of investment) in these companies
- 7. © CELLO HEALTH7 Putting even more pressure on realizing value Biotech Stock Mailbag: Sarepta! Always More Sarepta. And Gilead, Too TheStreet's Adam Feuerstein answers reader questions about biotech stocks.
- 8. © CELLO HEALTH8 How do you realize the value from the asset? Understand the source of value ▪ scientific ▪ clinical ▪ commercial Manage value actively Know your limitations ▪ financially ▪ operationally
- 9. © CELLO HEALTH9 The sources of value Scientific difference Patient / clinical need Commercial relevance 3 Variables
- 10. © CELLO HEALTH10 Clinical Physician acceptance Medical relevance TPP (Target Product Profile) PDUFA (regulatory success) Scientific feasibility Novel MOA Value Source Addresses unmet need Patient acceptance Payer policy PatientCommercial Revenue Potential Growth potential Anticipated market access Reimbursability Competitive differentiation Market position Value is derived from all three sources
- 11. © CELLO HEALTH11 Launch And has to be managed across the early asset development process ▪ Does this asset fit a gap in our portfolio? ▪ Can this asset be developed for success? ▪ What is the value proposition? ▪ What is the proof of concept? ▪ What is the market opportunity? ▪ What are the commercial endpoints? ▪ What are the clinical endpoints? ▪ Does the market understand the value proposition? ▪ Have the clinical and commercial endpoints been met? ▪ Epidemiology Models ▪ High Level Forecast ▪ Value Proposition ▪ Target Product Profile ▪ Epidemiology Models ▪ High Level Forecast ▪ Proof of Concept ▪ Value proposition ▪ Commercial Endpoints ▪ Forecast and Valuation ▪ Investment Strategy ▪ Market Assessment ▪ Payor Acceptance ▪ Target Product Profile ▪ Competitive Positioning ▪ Forecast and Valuation ▪ Launch Readiness ▪ Go to Market Plan ▪ Pricing Strategy ▪ Unmet Need ▪ Early Economic Models ▪ Clinical Endpoints ▪ Burden of Disease ▪ Clinical Endpoints ▪ Early Economic Models ▪ Patient Need ▪ Clinical/PRO Endpoints ▪ Core Economic Model ▪ KOL Engagement ▪ Evidence Gap Analysis ▪ Target Product Profile ▪ Disease Awareness ▪ HEOR Evidence ▪ Stakeholder Mapping ▪ Market Models ▪ Patient Segmentation Asset Identification or Acquisition Phase I Phase IIA and IIB Phase III Key value questions Commercial Clinical
- 12. © CELLO HEALTH12 $200 $400 $600 $800 $1,000 Totalpotentialvalueofcompound(US$mn) Define weak TPP Inadequate Value Proposition Pick wrong opportunity Ineffectively communicate value and endpoints Select wrong payer targets / poor cost benefit Late market preparation Underfunded Commercialization We must make earlier critical decisions. Poor decisions can lead to significant loss in value Full exploration of the future landscape and patient environment Strong clinical relevance Deep foresight into customers needs of the future Compelling Value Proposition Clinical and health outcomes align and support commercial strategy Discovery Pre- clinical development Clinical development Pre- launch
- 13. © CELLO HEALTH13 For those that can’t make it alone, there are options, either before… 11.8 18.1 52.7 46.7 123 7.6 5.6 6.7 10.5 14.2 10.8 13 7.2 14.6 58.9 1.2 19.5 3.7 0.4 0.7 0.2 3.3 0.4 6.3 US$0 US$50 US$100 US$150 US$200 US$250 Q1 2016 Q4 2015 Q3 2015 Q2 2015 Q1 2015 Deal value (US$ bn) Total closed deal value by industry sector (Q1 2015 – Q1 2016, US$ bn) Source: PWC Pharmaceutical and Life Sciences Deals Insights Quarterly Reports (2Q 2015 – 1Q 2016) 13 32 24 24 19 10 13 14 11 11 11 20 15 8 11 2 7 11 3 2 3 3 2 4 0 10 20 30 40 50 60 70 80 Q1 2016 Q4 2015 Q3 2015 Q2 2015 Q1 2015 Number of deals Total closed deal volume by industry sector (Q1 2015 – Q1 2016, US$ bn) 123 14.2 58 US$0 US$50 US$100 US$150 Q1 2015 Deal value (USD (bn Pharmaceuticals Biotechnology Medical devices Diagnostics Services Thomson Reuters numbers may not equal exact total due to rounding
- 14. © CELLO HEALTH14 0 10 20 30 40 50 60 0 15 30 45 60 75 Numberofdeals Potentialvalue(US$bn) Pharma-biotech Biotech-biotech Pharma-biotech megadeals (>US$ 5bn) Biotech-biotech megadeals (>US$ 5bn) Number of deals Or after success US M&As, 2007–2014 2007 2008 2009 2010 2011 2012 2013 2014 Source: EY, Capital IQ, Medtrack and company news Chart excludes transactions where deal terms are not publicly disclosed
- 15. © CELLO HEALTH15 Investment and timing Assetvalue Or you can always find a partner Option out License out Commercial partner Development partner Go it alone Low Med High LowMedHigh
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- 17. © CELLO HEALTH17 Options to consider Each scenario will drive a unique set of strategies for growth High InfluenceLow Influence Option Type Go it Alone Development Partner Commercial Partner Sell Out Factor Time to commercialization Competitive dynamics Revenue realization Investment needed Infrastructure development Valuation
- 18. © CELLO HEALTH18 Agreement covers R&D funding of collaboration as well as marketing rights R&D Collaboration, Marketing & LicensingTypes of partnering arrangements Marketing rights granted; agreement does not involve significant further product R&D Marketing & Licensing Acquisition of shares included within dealEquity Investment Two or more partners market product in the same territory under separate or same brand names Co-Marketing / Co-Promotion Joint ownership of a new entity by partnersJoint Venture Companies acquire exclusive rights to a product. In a swap, Company A gets rights to a product owned by Company B; at the same time, B gets rights to a product from A Product Acquisition / Product Swap One partner performs manufacturing for another or agrees to supply a product to the other Manufacturing / Supply Contract manufacturing, distribution, sales Contractual Relationships
- 19. © CELLO HEALTH19 TOP OPTIONS Understand partner market Overall – Understand relative attractiveness of company Company specific analysis – Market, financial, development, commercial Partner options – License, acquisition Establish screening criteria for partners Establish absolute and relative importance of multiple financial, regulatory, scientific variables in evaluating partner potential Set decision drivers for partnering On a company by company basis evaluate high potential partners Partnering evaluation process Seller’s perspective
- 20. © CELLO HEALTH20 Orphan drug example Buyer’s perspective The opportunity for partnering 15* Total drugs under development Phase I-III orphan drugs under development Phase II orphan drugs under development Possible fit with portfolio 17556016,662
- 21. © CELLO HEALTH21 Screening criteria for partners Other reward factors Other risk factors Strategic Fit Capability fit Business fit Market attractiveness Potential size Ease of entry Financial potential Estimated payoffs and NPV Partner Capability Breadth of functions and reach Regulatory climate Standards Ease of approval Ability to execute Internal capabilities External capabilities Competition Market saturation and size of players Failure rates Failure rates of similar ventures / Cost of failure Reward Factors Risk Factors 6 5 4 3 2 1 Hi Hi 1 2 3 4 5 6 6 5 4 3 2 1 Hi Hi 1 2 3 4 5 6 6 5 4 3 2 1 Hi Hi 1 2 3 4 5 6 6 5 4 3 2 1 Hi Hi 1 2 3 4 5 6 6 5 4 3 2 1 Hi Hi 1 2 3 4 5 6
- 22. © CELLO HEALTH22 Market leadershipNot player Established leader Financial strengthWeak AAA+ Distribution and deliveryNo capability Full capability Competitive positioningMinor Major Ability to penetrate multiple countriesOne country All targeted Knowledge of marketNone Strong Decision drivers for partnering Based on capabilities and needs
- 23. © CELLO HEALTH23 Market leadershipMinor player Established leader Financial strengthWeak AAA+ Distribution and deliveryNo capability Full capability Competitive positioningMinor Major Ability to penetrate multiple countriesOne country Global Knowledge of marketNone Strong Decision drivers for partnering Evaluate the candidates and structures in depth
- 24. © CELLO HEALTH24 Passion and Profit Product and Partner
- 25. © CELLO HEALTH25 Any questions? freshthinking@cellohealth.com