Participants in the 23rd Annual NYPF General Assembly last Friday outlined the many challenges facing industry, and the importance of collaboration as a way to move forward.
It’s no secret that the pharmaceutical industry faces significant challenges. In his opening remarks as emcee of this year’s NYPF General Assembly, BIO president and CEO James Greenwood didn’t shy away from some of the starker realities, like the fact that annual venture capital funding for biotech hit an all time low this year, at $2.9 billion as of early November, compared with nearly double that amount in 2007.
The dream of “going public” as a start-up biotech is more or less a pipedream for most organizations these days; while capital raised from an IPO has slowly crept back up from almost nothing in 2008 to around $13 billion in 2011, the number of deals done hasn’t kept pace. Roughly 10 deals were done in 2011, according to Greenwood’s slides, compared with nearly 30 deals and $28 billion in capital raised through IPOs in 2004. FDA approvals are up, relatively speaking, but VCs once active in the biopharmaceutical space are now taking their dollars elsewhere, to industries with clear exits on investment and shorter periods to payoff.
In what appears to be a show of solidarity, however, companies are combating external market forces by working together. Greenwood cited a collaboration between Pfizer, Lilly and Merck to create a not-for-profit cancer research partnership, which pools resources to bring down the costs of developing new treatments.
Part of this collaboration, the Asian Cancer Research Group, is tasked with creating “one of the most extensive pharmacogenomics cancer databases known to date…composed of data from approximately 2,000 tissue samples from patients with lung and gastric cancer,” that will be made publically available to researchers.
But emerging markets represent more than an opportunity for growth, balanced against stagnant Western markets. People living in these geographies are “facing problems we don’t fully comprehend,” noted Tadataka Yamada, EVP, board member, and chief medical and scientific officer at Takeda Pharmaceuticals. “Eight million children” – three billion in India alone – “under the age of five die every year from diseases that could be treated,” said Yamada. “We must become a partner in finding solutions to these countries’ biggest problems.” Yamada said innovation comes in two forms: evolutionary innovation and revolutionary innovation. The latter is most desirable, as it represents fundamental change and progress.
But what kind of environment is needed to facilitate this kind of innovation? One that doesn’t rely on peer review, for starters, said Yamada. “Innovators have no peers.” In addition, companies need to facilitate an environment that’s willing to “challenge dogma, to fail and to fail often…success is built on the backs of failure.” Reflecting on his time with the Bill & Melinda Gates Foundation, and emphasizing the importance of collaboration among industry and other groups, Yamada offered an African proverb: “If you want to walk fast, walk alone. If you want to walk far, walk together.”
Alan Paau, vice provost, president of the Cornell Research Foundation and executive director at the Cornell Center for Technology Enterprise and Commercialization, acknowledged the importance of working with industry to translate academic research into new treatments, but said companies should keep things simple. “Universities are not your competitors…you don’t need a six-figure salaried lawyer to write a contract with a university,” said Paau. Companies interested in partnering with academic institutions need to understand the two basic tenets of the university with respect to IP: “If we create it or invent it, we own it,” and secondly, “use it or lose it.”
Bringing things back to a local context, Ann Li, EVP, business development for the New York City Economic Development Corporation, underscored the importance of the biopharmaceutical industry as an engine for economic growth in New York, adding that New York City is second only to Boston in the amount of grant money received from NIH. Li provided several examples of municipal investment – including the Alexandria Center, on the East River, which, when completed, will house 1.1 million square feet of laboratory and office space; BioBAT, a commercial life science research park in Brooklyn’s Sunset Park neighborhood, which will provide over 500,000 square feet of lab and office space when completed; the New York Genome Center, an organization designed to facilitate resource sharing in genomics and bioinformatics, of which nine academic medical centers in New York have already joined; and a series of Small Business Innovative Research (SBIR) workshops aimed at helping NYC-based biotechs get access to over $2 billion in federal SBIR funding each year.
Greg Wiederrecht, VP and head of external scientific affairs, worldwide licensing and acquisitions at Merck, wrapped up the speakers portion of the General Assembly, noting that 55% of Merck’s $49 billion in human health revenue for 2011 came from licensed products and patents. While Merck continues to invest in internal research – to the tune of $8.5 billion a year – the company still relies on partnerships to bring new drugs to market. “More than one third of our current pipeline is licensed in,” said Widerrecht. In addition to direct partnerships and licensing deals, Merck also funds the California Institute for Biomedical Research, or Calibr, a non-profit led by Peter Schultz, formerly the director of the Genomics Institute of the Novartis Research Foundation. Calibr is funded “mostly by Merck,” which has earmarked $92 million for the cause, over the next few years, said Widerrecht.
Despite the fact that VCs “aren’t so venturesome anymore,” as Widerrecht put it, when it comes to biotech and pharmaceutical drug development, there is reason to believe that collaboration is on the rise, as industry takes stock of its predicament and concludes that together we stand, divided we fall.