Home Archives 2012 March

Monthly Archives: March 2012

Non-dilutive funding and equity capital are two key reasons why life sciences companies pursue strategic partnerships. In fact alliances are also strong contributors to successful “exits”, whether Mergers and Acquisitions (M&A) (~ 40% of partnerships ultimately resulted in acquisition by the partner) or stand-alone market entry (80% of approved biopharmaceutical products from 2000-2010 had a commercial partner on board)1. In the current environment, strategic alliances and funding can come from many sources, including the traditional “large pharma” universe – but the question remains: How best for a small management team to gain access to and maximize success with these sources? The focus of this article is to describe how entrepreneurs can leverage external expertise, intermediaries to achieve their near term and longer-term objectives.

Full details at the Journal of Commercial Biotechnology

Abstract

 

The biopharmaceutical industry has been undergoing change for a number of years and that change is accelerating.  Larger pharmaceutical companies are acquiring smaller ones, companies are merging, laboratories are being closed, and the number of scientists performing research in the pharmaceutical industry is declining.  Overall, commercial industry, including the biotechnology industry, is becoming more interested in the benefits of collaboration with research institutions.

Universities are also changing their view of relationships with industry.  Shrinking federal budgets are causing universities to look at other sources of revenue, including collaborations with industry.  Federal and state governments are also looking closely at the benefits of sponsoring university research, and in particular are seeking to accelerate commercialization of university discoveries not only to obtain the benefit of invested research dollars, but also for economic development and job growth.  Universities, and in particular university technology transfer offices, must understand these changes and adapt to them. 

This paper discusses the university/industry relationships, and the particular issues important to universities which shape that interface. 

Full details at the Journal of Commercial Biotechnology

This issue of the Journal of Commercial Biotechnology focuses on the proceedings of the Seventh Annual Biotechnology Entrepreneurship Boot Camp held in conjunction with the Biotechnology Industry Organization (BIO) annual conference in Washington, DC in June, 2011.

The Biotechnology Entrepreneurship Boot Camp was launched for the 2005 BIO Industry Organization’s Annual Meeting in Philadelphia. The Boot Camp was originally designed as a program for CSOs but is now expanded in scope and design to address a broad range of issues for entrepreneurs more generally. The Boot Camp was created in response to the growing need in the managerial, scientific and academic community to learn about the necessary elements and skills to transform technology and invention into a viable company. The insight and energy required for entrepreneurial success can be developed by anyone motivated to do the following: think strategically, select projects and plan for expeditious and cost-effective management, understand the requirements of all the involved stakeholders, and oversee the essential components of the commercialization process.

The Boot Camp travels from year to year to each of the BIO Annual Meeting venues – a veritable “moveable feast.” Previously, the Boot Camp was offered at BIO’s annual meetings in Chicago in 2006 and 2010, Boston in 2007, San Diego in 2008, and Atlanta in 2009. The creation of the syllabus, the recruitment of faculty, and the faculty’s extensive preparation suggested that wherever possible there should be core faculty, i.e., a portion of the faculty from the Philadelphia Boot Camp who would volunteer from year to year. This approach has the added benefit of improving the presentations and the material from year to year as the faculty themselves identify what works, as well as how to teach together. Each year, additional faculty members are recruited from the host region.

Over the seven years of the boot camp, over 500 entrepreneurs have attended and taken away a broad spectrum of insights from the faculty.

The Boot Camp was founded and co-chaired by Professors Arthur Boni of the Tepper School of Carnegie Mellon University, Stephen Sammut of the Wharton School and Burrill & Company, and Jeffrey Libson, Partner, Pepper Hamilton LLP  and Lecturer at  Wharton School Health Care Management Program. The law firm, PepperHamilton has also served as the Boot Camp’s sponsor since its inception.

Full details at the Journal of Commercial Biotechnology

Special Issue: Biotechnology Entrepreneurship Bootcamp

 

Journal of Commercial Biotechnology Vol 18, Issue 2 (2012)

Editorial: The Biotechnology Entrepreneurship Boot Camp: From Lectern to Printing Press
Stephen M Sammut, Arthur A Boni
This issue of the Journal of Commercial Biotechnology focuses on the proceedings of the Seventh Annual Biotechnology Entrepreneurship Boot Camp held in conjunction with the Biotechnology Industry Organization (BIO) annual conference in Washington, DC in June, 2011.The Biotechnology Entrepreneurship Boot Camp was launched for the 2005 BIO Industry Organization’s Annual Meeting in Philadelphia…
Full details at the Journal of Commercial Biotechnology

New pradigms in drug R&D: A personal perspective
David C U’Prichard
The Author discusses the recent productivity problems in the pharmaceutical industry, in the context of his 30 year career, and the current responses of the industry driven strongly by disaggregation of the historic R&D model, new fluidites of capital access, and the impacts of genomics and globalization…
Full details at the Journal of Commercial Biotechnology

Project, Product or Company
Arthur Boni
This article focuses on the essentials of building effective, collaborative, team-based organizations. The entrepreneurs and innovators who found and build technology-based organizations comprise out target audience, but most specifically we address the biotechnology and biomedical field.  Two perspectives are provided in the article: 1) advice based on the experiential learning provided by years of experience of building and growing entrepreneurial organizations; and 2) identifying the keys to building effective teams based on some selected the academic or scholarly literature on building effective teams…
Full details at the Journal of Commercial Biotechnology

The Basics of Coverage, Coding, and Reimbursement
Robert Wanerman
The process of commercializing a new item or service in the U.S. health care market involves three distinct but necessary components: coverage, coding, and reimbursement.  This article provides an overview of these processes and the challenges in successfully navigating the course and spotting the particular issues for individual items and services…
Full details at the Journal of Commercial Biotechnology

Transition from the Lab to the Clinic
James G Kenimer, James Ackland
Before considering the specific regulatory requirements and expectations relating to your product it is informative to understand who regulates and why. Full details at the Journal of Commercial Biotechnology

Building Teams in Entrepreneurial Companies
Arthur Boni, Laurie Weingart
This article focuses on the essentials of building effective, collaborative, team-based organizations. The entrepreneurs and innovators who found and build technology-based organizations comprise out target audience, but most specifically we address the biotechnology and biomedical field.  Two perspectives are provided in the article: 1) advice based on the experiential learning provided by years of experience of building and growing entrepreneurial organizations; and 2) identifying the keys to building effective teams based on some selected the academic or scholarly literature on building effective teams…
Full details at the Journal of Commercial Biotechnology

The Pitch to Investors and Partners
Arthur Boni
This article covers the essentials of constructing and delivering a “pitch” of a business opportunity to potential investors or corporate partners.  We advocate constructing an effective pitch first and then using that as a guide to prepare your business plan.  The content of the pitch itself as described herein in effect comprises the elements to be incorporated into a business plan as a more comprehensive documentation of the business…
Full details at the Journal of Commercial Biotechnology

Strategic Engagement of the Science-Business Media
Moira A. Gunn
As surely as the bio-enterprise can benefit from positive media coverage, it cannot thrive in the face of unanswered negative and/or inaccurate media attention. On all counts, the bio-enterprise must be able to strategically engage with the media at every stage in its life cycle. This article describes the global science-business media landscape, including traditional media and emergent social media and information in the online space…
Full details at the Journal of Commercial Biotechnology

Achieving optimal financial and strategic transaction outcomes for small to mid-sized privately funded start-ups
Benjamin P Chen, Christa Nicholas
Non-dilutive funding and equity capital are two key reasons why life sciences companies pursue strategic partnerships…
Full details at the Journal of Commercial Biotechnology

Partnering With the NIH: Now Part of the “Value Proposition” for Start-ups
Steve Ferguson
For many years the United States has led the world in government support for non-military research and development (R&D), especially support for work that directly relates to health and human development.  A focal point for such federal investments to date in biomedical research has been the National Institutes of Health (NIH) along with other government laboratories and university-based research programs…
Full details at the Journal of Commercial Biotechnology

Licensing, Partnering, Strategic Alliances and University Relationships
Wesley Daniel Blakeslee
Abstract The biopharmaceutical industry has been undergoing change for a number of years and that change is accelerating.  Larger pharmaceutical companies are acquiring smaller ones, companies are merging, laboratories are being closed, and the number of scientists performing research in the pharmaceutical industry is declining…
Full details at the Journal of Commercial Biotechnology

What Every Biotech Entrepreneur Needs to Know about VC Due Diligence
Stephen M Sammut
Due diligence, as it applies to venture capital, is actually imprecise. Origins of the term are based in banking case law. Due diligence to the attorney is more of a precise concept. A better term is “homework.” Better indeed, because the burden of this homework weighs far more heavily on the entrepreneur than on the venture capitalist…
Full details at the Journal of Commercial Biotechnology

Valuation Methods in Early-Stage Biotechnology Enterprises: The “Venture Capital Method” at Work
Stephen M. Sammut
Valuation approaches to biotechnology companies by angel investors and venture capitalists often appear to the entrepreneurs to be based on voodoo rather than sound principles of finance. While there may be some truth to that perception, there is actually a very sound, somewhat complex, internal logic to the way private biotechnology companies are valued…
Full details at the Journal of Commercial Biotechnology

The Art of the Cap Table
Ashley John Stevens
This article provides an overview of the impact of raising capital on the equity ownership structure of a biotechnology company. The equity ownership structure as captured in a table of capitalization determines how the fruits of success will be divided between founders, management and investors at an exit event such as an acquisition or initial public offering…
Full details at the Journal of Commercial Biotechnology

 

For more information, see the Journal of Commercial Biotechnology

This is a guest post from the BiotechBlog Intern, Fintan Burke. Fintan is a student at the School of Biotechnology at Dublin City University. Do you have a response to Fintan’s post? Respond in the comments section below.

In Europe the 1998 EU Biotechnology directive (98/44/EC) states that Totipotent stem cells (stem cells that develop into a foetus) are unpatentable on human dignity grounds. The issue of pluripotent stem cell (those that develop tissues and organs, and the focus of research) patentability is vague, and there have been no amendments or replacements since the directive was passed. A further obstacle for stem cell patenting comes from a 2008 decision made by the European Patent Office to disallow any patent that requires the disruption or destruction of human embryos.

This vague patent legislation was finally called into question in October 2011, when Greenpeace brought German researcher Dr. Oliver Brüstle to the Court of Justice of the European Union (CJEU) over his patent for specialised stem cells to treat neurological conditions. Dr. Brüstle, perhaps aware of the EU directive, did not mention that the stem cells used in the patent originated from embryonic cells. The case brought up vital questions about the directive that needed to be elucidated, such as a clear legal definition for the term “human embryo”, their use in industry and in Dr. Brüstle’s case the eligibility of a patent that does not explicitly mention the use of stem cells. The court, following the Advocate General’s opinion, ruled that any fertilised human ovum can be regarded as an embryo and thus any stem cells gathered from them cannot be protected by patent law.

The decision also highlights the differences between the US and EU stem cell patent laws. While the US Patent office allows patents for stem cell generation, the 1996 Dickey-Wicker Amendment banned government funding to programs where human embryos are created or destroyed for research. This amendment has been effectively muted by the executive orders issued by President Bush in 2001 and President Obama in 2009, both of which allowed federal funds to be spent on human embryo research under strict terms. These orders were in turn suspended by a preliminary injunction by US District Court Judge Royce Lamberth (which has since been overruled).

Before the ban on federally sponsored stem cell research, most funding came from private firms. Perhaps one of the most prolific patent applicants under this model was Dr. James Thompson of the University of Wisconsin, whose innovative stem cell patents were acquired for the Wisconsin Alumni Research Foundation (WARF) and funded for by the pharmaceutical company Geron. Over the years, however, WARF have had to revise and abandon their patents, due to pressure from consumer watchdogs who claimed that the patents detailed processes that were too obvious to be patented in the first place.

While EU and US legislation are in place to protect the origins of a human, the advent of induced Pluripotent Stem Cells (iPSCs) may cause a radical rethink of policy. iPSCs, which are derived from somatic cells, eliminate the concern of interfering or destroying the human embryo. Though many existing stem cell policies still apply to iPSCs, Timothy Caulfield et al outline existing laws that are hindering iPSC research.  In the paper, the authors note “the regulatory field in California is in a state of flux at present”, with researchers having to deal with three overlapping Californian stem cell research guidelines as well as the National Academy of Science guidelines. The paper also mentions that some of the state guidelines seem to deliberately exclude iPSC research in their guidelines, adding to the confusion. Legislation does not improve in the UK either. Since iPSCs are derived from somatic cells, they are covered by the broad UK Human Tissue Act instead of the 1990 Human Fertilisation and Embryology Act, which covers embryonic stem cells. Furthermore should iPSC go on from research, there are increasingly complex applications to multiple regulators before it can undergo clinical trials.

Stem cell patenting legislation is in a unique position; it is governed not only by commercial concerns, but ethical ones too.  The consequence of this is a potentially prolonged development time due to the myriad of regulatory bodies and ambiguous legislation that exist in the EU and US. It remains to be seen whether the EU’s ban on patents will stifle future competitiveness in this international market, though the development on iPSCs go a long way to quell many ethical concerns. In a review published in Nature this year Daisy Robinton and George Daley note that should a new, uniform guideline emerge for these more ethically agreeable stem cells researchers may be able to realise their full medical and commercial potential.

The January 2012 issue of the Journal of Commercial Biotechnology is ready to go to press. The table of contents is posted below. Like what you see? Subscribe or recommend the journalto your library

Vol 18, Issue 2 (2012) (Preview)

Special Issue: Biotechnology Entrepreneurship Bootcamp

Table of Contents

Editorial

Editorial: The Biotechnology Entrepreneurship Boot Camp: From Lectern to Printing Press
Stephen M Sammut, Arthur A Boni

Commentary

New pradigms in drug R&D: A personal perspective
David C U’Prichard

Special Section

Project, Product or Company
Arthur Boni
The Basics of Coverage, Coding, and Reimbursement
Robert Wanerman
Transition from the Lab to the Clinic
James G Kenimer, James Ackland
Building Teams in Entrepreneurial Companies
Arthur Boni, Laurie Weingart
The Pitch to Investors and Partners
Arthur Boni
Strategic Engagement of the Science-Business Media
Moira A. Gunn
Achieving optimal financial and strategic transaction outcomes for small to mid-sized privately funded start-ups
Benjamin P Chen, Christa Nicholas
Partnering With the NIH: Now Part of the “Value Proposition” for Start-ups
Steve Ferguson
Licensing, Partnering, Strategic Alliances and University Relationships
Wesley Daniel Blakeslee
What Every Biotech Entrepreneur Needs to Know about VC Due Diligence
Stephen M Sammut
Valuation Methods in Early-Stage Biotechnology Enterprises: The “Venture Capital Method” at Work
Stephen M. Sammut
The Art of the Cap Table
Ashley John Stevens

 

 

This is a guest post by Ian Scoones, STEPS Centre, University of Sussex, UK

A decade ago, biotechnology was being hyped as the next big thing. Building on the successes of the IT sector, BT (biotech) was, it was argued, going to provide a platform for growth, innovation, job creation and more. So what happened next? A recent seminar jointly convened by the Centre for Public Policy at the Indian Institute of Management in Bangalore, the Association for Biotechnology Led Enterprises and the STEPS Centre, and supported by UKIERI, explored this question.

Certainly the hype around biotechnology has not gone away. The Karnataka State Government’s website proclaims:

“Karnataka has emerged as an undisputed investment destination for investors worldwide, offering vast business opportunities across sectors … Its capital, Bangalore, now a global brand has the largest biotechnology cluster in India, aptly named as Biotech Capital of India. Bangalore has sky-rocketed into the new millennium. A pulsating megapolis, a haven to IT-BT and Fortune -500 companies and today the world’s most preferred investment destination”.

But what are the realities behind the spin? Ian Scoones (STEPS Centre) reflected on some of the changes over the past decade since he carried out research on the emerging biotech sector. Across India the sector has certainly grown. According to the Biospectrum-ABLE survey of 2011, it crossed the $4bn revenue mark. But it did not grow as fast as expected, nor create as many jobs. The ‘big hit’ patents promised a decade ago as part of the pipelines of the start-ups did not materialise, and regulatory challenges have continued to plague the industry.

That said, some important successes have been recorded. Biocon, the flagship biotech company in Bangalore led by Kiran Muzumdar Shaw, has gone from strength to strength. A massively oversubscribed flotation in 2004, has led to year on year growth since. Overall, the biotech sector has grown around 20% each year; an impressive achievement, even through the global downturn of the late 2000s. A comparison of the ‘top 15’ companies (slide 11) by total revenue in the sector in 2003-04 and 2010-11 shows a new dominance of home-grown companies. A noticeable trend has been the growth of the agri-biotech sector. A decade ago, Bt cotton was formally released by Monsanto-Mayhco, and has since expanded on a massive scale, with a whole array of companies taking on the proprietary genetics and incorporating it into their germplasm. The result is that in 2010-11, a third of the ‘top 15’ biotech companies in India are trading Bt cotton.

However, with a few exceptions (perhaps only Biocon, Serum Institute and Panacea Biotec), most biotech companies remain small, dependent on external alliances, and in the case of agri-biotech almost completely reliant on Monsanto’s Bt technology. So what happened to the discovery and innovation model that was touted in 2002, whereby local companies would grow on the basis of new technologies, fostered through R and D investment? This has happened in important areas, including a range of vaccines, some important pipeline drug molecules currently being tested and a locally developed Bt crop application. However, the really big breakthroughs have not emerged. As Vijay Chandru (Strand Life Sciences and ABLE) put it “There has been no second Biocon”.

Why is this? Is the Bangalore biotech innovation system somehow deficient, or is this a normal pattern, reflected elsewhere in the world? The seminar discussion reflected on this. Certainly in the US, the biotech sector is dominated by a few big companies, with many others supporting these in a highly dynamic, fast-turnover setting. Technology clusters are supposed to be the drivers of growth, drawing on geographical synergies, links to academic establishments and strategic state investments. Has this happened in India? In India, clusters have emerged – in Bangalore, Hyderabad, Mumbai, Pune and elsewhere – but how dynamic have they been? Participants at the seminar suggested that it is taking time for such clusters to mature, and that distinct comparative advantages are only now being found. There were mixed views on the benefits of competition between clusters – say between Bangalore and Hyderabad – and a sense that the full advantage of proximity to top-rank scientific institutions was not being realised.

Indeed, one of the big selling points of Bangalore as a biotech destination has always been the presence of the prestigious Indian Institute of Science and the National Centre for Biological Sciences, along with whole host of engineering and technology colleges. Top flight scientific expertise in the biological, information and engineering sciences should, so the theory goes, result in greater innovation capacity. While moves have been made at IISc, NCBS and elsewhere to link basic science with commercial applications, this has only influenced the culture and practice of science in such institutions at the margins over the past decade, and the links between science and business remain weak.

And what about the application of science for development? With the science-business model being influenced by funding flows, patent ownership and market control, the opportunity of biotech businesses to develop technologies responding to the massive local needs of poverty, ill-health, poor environmental conditions, agrarian distress and so on remain structurally limited. The Prime Minister, Manmohan Singh, argued at the Indian Science Congress in January 2012 needs to begin “grappling with the challenges of poverty and development”. He continued:”It is said that science is often preoccupied with problems of the rich, ignoring the enormous and in many ways more challenging problems of the poor and the underprivileged”. Innovation, he argued, should be for social benefit, not just for profit.

These are fine words. They are often repeated in the Indian context where poverty and inequality continue to grow, while the GDP shows 7% (or more) growth rates. In India, there is a vast demand for low-cost, appropriate biotechnologies in India, and many of those at the ‘bottom of the pyramid’ can increasingly afford them. A growing middle class also has new demands – there are, it was noted, 50m diabetics in India. However, the current structure of the biotech industry, with some notable exceptions, cannot respond to these demands. The patents are held by the big companies, the financing is geared to northern markets, and the technological and business capacities are influenced by a US/European model.

So what new ‘inclusive’ innovations exist? As Ravi Kumar (XCyton) explained, medical diagnostics is an important growth area, improving the effectiveness of public health responses, and reducing patient costs. The potentials of portable PCR kits for diagnostics in rural health care are significant, for example. Equally, as Vijay Chandru pointed out, there are growing potentials in the field of ‘biosimilars’ (off-patent generic biological compounds). Low cost production of important pharma products may well open up, Chirantan Chatterjee (IIM-B) explained, as hundreds of important products are released from patent restrictions in the next few years. The current innovator market in biologics is estimated to be around $270bn, with huge potentials for the development of low cost alternatives. According to the ABLE-PWC Vision 2020 Biopharma Strategy, following patent expiry, a potential global market of $40-50bn may emerge over the coming years, although numerous legal hurdles will be encountered. Maybe it is in this area where Indian biotech will really thrive. As Vijay Chandru observed, while ‘Brand India’ (and perhaps particularly Bangalore) is dominated by the IT sector, perhaps the greatest global contribution in the technology field over the past few decades has been the development and supply of low-cost generic drugs to the world.

What then are the challenges ahead for the Indian biotech sector? There has been much talk of state support and investment, the ‘midwifery’ that Peter Evans talks of. But has state support been well directed over the last decade? Most believe it hasn’t. The Bangalore Helix Biotech Park has been plagued by controversy, and has only just got off the ground. State support for early financing has improved, but what about the next-stage financing?, participants asked. In a complex industry like biotech, returns are often slow and uncertain, and the parallels with IT and the software development successes of Infosys, Wipro and the rest are inappropriate.

And then there are the controversial challenges around regulation. Vijay Chandru argued that the “genie is out of the bottle”. Biotechnology is massively powerful, but also potentially hugely dangerous, he said. “We really need to have a good regulatory process in place”, he noted. “And we need to do it soon, or there will be all kinds of chaos”. Everyone agrees that biotech regulation in India needs an overhaul. There are too many, overlapping responsibilities, unclear mandates and lots of red tape. Regulatory delays result in losses of revenues for businesses, and the lack of transparency and unclear procedures are frustrating for applicants and opponents alike. The debacle over Bt brinjal (aubergine/egg plant) that dominated the headlines in 2010, illustrated the limits of the current system. An independent authority with a clear mandate and streamlined procedures – the Biotechnology Regulatory Authority of India – has been proposed. But at the seminar, its design came under much critique. Leo Saldhana (Environment Support Group) presented the results of a comprehensive critique of the Bill. It is damning on a number of fronts. The proposed Authority is seen to centralise decision-making; mix sector promotion with regulation, creating a conflict of interest; be democratically unaccountable, failing to recognise the multiple tiers of government; be excessively reliant on narrow technocratic expertise; override other important legislation (including the Right to Information Act); and ignore public concerns, making objection and protest impossible. Participants at the seminar concurred that “a major rethink is required”.

Biotech in Bangalore retains the hype and much of the hope of a decade ago. Today, however, commentators are more sanguine about the potentials. The sector is clearly thriving, but in a different way to what was envisaged. As Chirantan Chatterjee explained, more hybrid science-business models are emerging which switch between innovation/discovery and generics imitation/contract research. This may be a more realistic expectation, and one that can capture the potentials of biosimilars production, genomics-based diagnostics and more. However, direction of innovation remains a concern, as well as the diversity of applications and the distribution of benefits. The seminar concluded that much more could be done by states and the union government to build the industry, incentivise entrepreneurs, foster links with the diaspora, forge links between science, engineering and management training, protect and support emerging companies, and direct innovation towards the principles of inclusivity, poverty reduction and sustainability that the Indian Prime Minister talks of.