The creative use of bio-bucks, trends in due diligence and the latest on the balance of power in the industry were the key takeaways Wednesday when dealmakers from four prominent companies shared their thoughts in a couple of sessions at The Deal's Healthcare Dealmaking Symposium in New York.
It's no secret that the medicine business has long been characterized by an elaborate pas de trois performed by Big Pharma, biotech and the financial markets. What attendees saw were some of the very latest moves in this long-running dance.
Representing big pharmas that are working to restructure, divest and replenish their pipelines were Robert Knowles, who works in biz dev for Pfizer Inc., and Charles Simmons, who does the same for Bristol-Myers Squibb Co. Also on hand was June Nguyen of Eisai Inc., who has played a big role as the Japanese pharma has built its U.S. presence and used biotech acquisitions to build an oncology business. On the biotech side was Annarie Lyles, head of biz dev for Genmab Inc.
Takeaways:
1. With IPO markets unreceptive, the preferred exit for biotech investors is selling to a strategic, usually a pharma. Yet they are selling later, as contract research organizations allow them to bring their compounds through stage two or even three.
2. Diligence from a Big Pharma point of view: An important issue is quality of patents.
3. Diligence from a biotech point of view: An important issue in licensing deals is how time-consuming diligence can be. A pharma may show up with 15 scientists -- the same number of senior scientists the biotech employs in total.
4. Virtual data rooms are starting to catch on in this sector.
5. When biotechs retain the right to co-promote a drug in a licensing deal, it may be more for investor perceptions than because there's a realistic plan to build the necessary sales force.
6. Ambitious sales milestones increase the bio-bucks component of the dollar total for an announced licensing deal. For the two companies, this is not necessarily a bad thing; the biotech has its bullish outlook recognized, and the pharma is only paying for sales if they materialize. As for investors -- well, homework pays.
- Kenneth Klee
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Juergen Lasowski
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