Home General Biotechnology

Mergers and acquisitions are regular events for biotechnology companies. I have often been asked if being acquired is a goal for biotechnology companies, and if it is seen as a ‘good’ or a ‘bad’ thing.

Value Creation in Biotechnology

Value Creation in Biotechnology

The outlook on merging with another company, or being acquired, is really just a matter of timing. As I describe in my textbook, Building Biotechnology, the goal of young biotechnology companies is to de-risk their technologies to the point that the value of the company exceeds the time and financial investments. For example, the value of most biotechnology companies will be lower than the inputs for the course of much of their early research. Ideally, there will be an inflection point(s) as R&D progresses where the potential of serving lucrative markets will yield a healthy valuation. At this point, a company may lean on its strong valuation to raise funds at attractive rates, or seek to sell/license technologies or seek to merge with or be acquired by a more mature firm.

This brisk illustration glosses over many of the nuances of biotechnology R&D and fund raising;  the greater point I want to make is how public companies can avoid being acquired.

When the perceived value of a company exceeds the cost to acquire that company, investors and acquirers may seek to purchase the company, to profit from the difference in the company’s value vs. its cost. While a private company (and its shareholders) may resist acquisition by simply not selling their shares, public companies do not have that luxury. Because shares in public companies can be purchased on open exchanges, it may not be possible for a public company to prevent acquisition by restricting the sale of stock.

So, what can a public company do to prevent acquisition?

On a recent visit to Carlsbad, California, I asked this very question of ISIS Pharmaceuticals CEO Stanley T. Crooke*. He had a relatively simple answer: Offer potential acquirers the technology and products they seek at a price that is lower than the cost to acquire the whole company.

Unfortunately time did not allow two important follow-up questions: Firstly, how can a CEO prevent being overruled by the board of directors (who are charged with representing the interests of shareholders) when intentionally sacrificing short-term returns for a potential long-term payout? And, secondly, what is to prevent an aggressive company from acquiring ISIS if only to prevent another licensee from doing the same and blocking the first licensee from its access to ISIS’ technologies?

*An interesting note about Stanley Crooke. He founded ISIS more than 20 years ago, and remains CEO to this day. This is in sharp contrast to most biotechnology company founders, who are replaced shortly following venture financing or IPO (When should you fire the founder)

Journal of Commercial Biotechnology This paper is part of the free Open Access archive of the Journal of Commercial Biotechnology

Patient access to innovation: Biopharmaceuticals, 4th hurdles and socioeconomic issues

Go to paper

ABSTRACT: Biopharmaceuticals and innovative therapeutic solutions offer treatments that are increasingly tailored to patient needs. Although biotechnology has produced health benefits, biopharmaceutical products require resources that governments had not planned or budgeted for in the appropriate time frame...

The Journal of Commercial Biotechnology is a unique forum for all those involved in biotechnology commercialization to present, share, and explore new ideas, latest thinking and best practices, making it an indispensable guide for those developing projects and careers within this fast moving field.

Each issue publishes peer-reviewed, authoritative, cutting-edge articles written by the leading practitioners and researchers in the field, addressing topics such as:

  • Management
  • Policy
  • Finance
  • Law
  • Regulation
  • Bioethics

For more information, see the Journal of Commercial Biotechnology website

I will be giving a talk on September 10th at George Washington University on two recent data analytics projects:

Firstly, I will present Scientific American Worldview, a global biotechnology ranking I developed six years ago and have managed since. The primary challenges in developing Worldview have been ensuring that the product is accessible to a general audience and ensuring that it delivers actionable guidance to countries at all levels of development.

The second project I will present is PatentStat.com, a website dedicated to increasing transparency in patent prosecution. PatentStat ranks patent attorneys and law firms in 33 technology areas, and profiles patent examiners. The primary challenges in developing PatentStat have been reducing the multi-terabyte United States patent database into a focused dataset amenable to manipulation on commodity hardware and, once again, ensuring the product is accessible to a general audience by actionable and relevant to an advanced audience.

Where:

GWU, Funger Hall, Room 103
2201 G St. NW, Washington, DC

When:

Wednesday, September 10, 2014
6:30 PM to 9:00 PM

Hope to see you there!

Drug Patent Expirations for September 2014

TradenameApplicantGeneric NamePatent NumberPatent Expiration
COMBIVENT RESPIMATBoehringer Ingelheimalbuterol sulfate; ipratropium bromide5,662,271Sep 2, 2014
BONIVARocheibandronate sodium5,662,918Sep 2, 2014
HEPSERAGileadadefovir dipivoxil5,663,159Sep 2, 2014
VIGAMOXAlcon Pharms Ltdmoxifloxacin hydrochloride5,607,942*PEDSep 4, 2014
MOXEZAAlcon Pharms Ltdmoxifloxacin hydrochloride5,607,942*PEDSep 4, 2014
ALINIARomarknitazoxanide6,020,353Sep 8, 2014
ALINIARomarknitazoxanide5,578,621Sep 8, 2014
PROTOPICAstellastacrolimus5,665,727Sep 9, 2014
RENVELAGenzymesevelamer carbonate5,667,775Sep 16, 2014
RENAGELGenzymesevelamer hydrochloride5,667,775Sep 16, 2014
ALINIARomarknitazoxanide6,020,353Sep 18, 2014
EXUBERAPfizerinsulin recombinant human6,543,448Sep 21, 2014
ATRALINDow Pharmtretinoin5,670,547Sep 23, 2014
NAROPINFresenius Kabi Usaropivacaine hydrochloride5,670,524Sep 23, 2014
NEORALNovartiscyclosporine5,985,321Sep 26, 2014
IONSYSIncline Therapfentanyl hydrochloride7,027,859Sep 26, 2014
*Drugs may be covered by multiple patents or regulatory protections. See the DrugPatentWatch database for complete details.

Subscribers have access to valuable datasets, including:

  • Clinical trial information
  • International patent families
  • International patent priority and PCT information
  • Patent maintenance
  • Full-text patent downloads
  • Sales data (top 200 drugs)
  • Paragraph IV challenges
  • Tentative approvals
  • Dynamic search capabilities with data export
  • More…
See the Database Preview and Plan Comparison.
Contact Us with any questions.

Journal of Commercial Biotechnology This paper is part of the free Open Access archive of the Journal of Commercial Biotechnology

Media coverage and biotechnology IPOs: Some Australian evidence

Go to paper

ABSTRACT: This paper analyses Australian biotechnology initial public offerings and the role of media coverage during the issue period in explaining capital raising, sentiment and underpricing. This paper finds empirical support for the hypothesis that an issuing company that receives more press coverage during the listing process leaves significantly more money on the table than those who receive less coverage, a finding consistent with the presence of sentiment effects and hot issue periods.

The Journal of Commercial Biotechnology is a unique forum for all those involved in biotechnology commercialization to present, share, and explore new ideas, latest thinking and best practices, making it an indispensable guide for those developing projects and careers within this fast moving field.

Each issue publishes peer-reviewed, authoritative, cutting-edge articles written by the leading practitioners and researchers in the field, addressing topics such as:

  • Management
  • Policy
  • Finance
  • Law
  • Regulation
  • Bioethics

For more information, see the Journal of Commercial Biotechnology website

Journal of Commercial Biotechnology This paper is part of the free Open Access archive of the Journal of Commercial Biotechnology

Transfer to Africa of the resources and rewards from biotechnology: The need for a participatory approach

Go to paper

ABSTRACT: The low adoption rate of new technologies by rural communities in developing countries in the 1970s and 1980s revealed a need for a different approach to the setting of research agendas and technology transfer. More recent programmes have shown a shift away from 'top-down' researcher-led projects, towards a 'bottom-up' participatory approach...

The Journal of Commercial Biotechnology is a unique forum for all those involved in biotechnology commercialization to present, share, and explore new ideas, latest thinking and best practices, making it an indispensable guide for those developing projects and careers within this fast moving field.

Each issue publishes peer-reviewed, authoritative, cutting-edge articles written by the leading practitioners and researchers in the field, addressing topics such as:

  • Management
  • Policy
  • Finance
  • Law
  • Regulation
  • Bioethics

For more information, see the Journal of Commercial Biotechnology website

Drug Patent Expirations for July 2014

TradenameApplicantGeneric NamePatent NumberPatent Expiration
EXALGOMallinckrodt Inchydromorphone hydrochloride5,702,725Jul 7, 2014
EXALGOMallinckrodt Inchydromorphone hydrochloride5,914,131Jul 7, 2014
AGENERASEGlaxosmithklineamprenavir5,646,180Jul 8, 2014
ACUTECTCis Bio Intl Satechnetium tc-99m apcitide5,645,815Jul 8, 2014
INCRELEXIpsen Incmecasermin recombinant5,824,642Jul 8, 2014
AMITIZASucampo Pharmslubiprostone5,284,858Jul 14, 2014
VANIQASkinmedicaeflornithine hydrochloride5,648,394Jul 15, 2014
PROPULSID QUICKSOLVJanssen Pharmacisapride monohydrate5,648,093Jul 15, 2014
RELENZAGlaxosmithklinezanamivir5,648,379Jul 15, 2014
ZELAPARValeant Pharm Intlselegiline hydrochloride5,648,093Jul 15, 2014
LOESTRIN 24 FEWarner Chilcottethinyl estradiol; norethindrone acetate5,552,394Jul 22, 2014
MINASTRIN 24 FEWarner Chilcott Llcethinyl estradiol; norethindrone acetate5,552,394Jul 22, 2014
LO LOESTRIN FEWarner Chilcott Llcethinyl estradiol; norethindrone acetate5,552,394Jul 22, 2014
NORETHINDRONE ACETATE AND ETHINYL ESTRADIOL AND FERROUS FUMARATEWarner Chilcottethinyl estradiol; norethindrone acetate5,552,394Jul 22, 2014
LO MINASTRIN FEWarner Chilcottethinyl estradiol; norethindrone acetate5,552,394Jul 22, 2014
NORETHINDRONE AND ETHINYL ESTRADIOL AND FERROUS FUMARATEWarner Chilcottethinyl estradiol; norethindrone5,552,394Jul 22, 2014
NUTROPIN DEPOTGenentechsomatropin recombinant5,656,297Jul 25, 2014
ASMANEX TWISTHALERMerck Sharp Dohmemometasone furoate6,365,581*PEDJul 27, 2014
ASMANEX HFAMerck Sharp Dohmemometasone furoate6,057,307*PEDJul 27, 2014
ASMANEX TWISTHALERMerck Sharp Dohmemometasone furoate6,949,532*PEDJul 27, 2014
DULERAMerck Sharp Dohmeformoterol fumarate; mometasone furoate5,889,015*PEDJul 27, 2014
SUMAVEL DOSEPROZogenix Incsumatriptan succinate5,891,086Jul 27, 2014
NASONEXMerck Sharp Dohmemometasone furoate monohydrate5,837,699*PEDJul 27, 2014
ASMANEX TWISTHALERMerck Sharp Dohmemometasone furoate6,057,307*PEDJul 27, 2014
ASMANEX HFAMerck Sharp Dohmemometasone furoate6,365,581*PEDJul 27, 2014
ASMANEX TWISTHALERMerck Sharp Dohmemometasone furoate6,677,322*PEDJul 27, 2014
ASMANEX HFAMerck Sharp Dohmemometasone furoate5,889,015*PEDJul 27, 2014
DULERAMerck Sharp Dohmeformoterol fumarate; mometasone furoate6,057,307*PEDJul 27, 2014
ASMANEX TWISTHALERMerck Sharp Dohmemometasone furoate5,889,015*PEDJul 27, 2014
NASONEXMerck Sharp Dohmemometasone furoate monohydrate6,723,713*PEDJul 27, 2014
KALETRAAbbvielopinavir; ritonavir5,484,801*PEDJul 28, 2014
NORVIRAbbvieritonavir5,484,801*PEDJul 28, 2014
*Drugs may be covered by multiple patents or regulatory protections. See the DrugPatentWatch database for complete details.

Subscribers have access to valuable datasets, including:

  • Clinical trial information
  • International patent families
  • International patent priority and PCT information
  • Patent maintenance
  • Full-text patent downloads
  • Sales data (top 200 drugs)
  • Paragraph IV challenges
  • Tentative approvals
  • Dynamic search capabilities with data export
  • More…
See the Database Preview and Plan Comparison.
Contact Us with any questions.

Journal of Commercial Biotechnology This paper is part of the free Open Access archive of the Journal of Commercial Biotechnology

The DNA/RNA market to 2010

Go to paper

ABSTRACT: The DNA/RNA market is currently at an early stage of development, with only two marketed products that together generated an estimated US$30m in 2004. The launch of Pfizer/Eyetech's ophthalmological aptamer Macugen (pegaptanib) is set to help power market growth to US$1.2bn by 2010. Of the 229 active DNA/RNA programmes identified by Datamonitor, oncology currently dominates the therapeutic focus, while antisense and gene therapies dominate the technological focus.

The Journal of Commercial Biotechnology is a unique forum for all those involved in biotechnology commercialization to present, share, and explore new ideas, latest thinking and best practices, making it an indispensable guide for those developing projects and careers within this fast moving field.

Each issue publishes peer-reviewed, authoritative, cutting-edge articles written by the leading practitioners and researchers in the field, addressing topics such as:

  • Management
  • Policy
  • Finance
  • Law
  • Regulation
  • Bioethics

For more information, see the Journal of Commercial Biotechnology website

This is a guest post from Susan K Finston, President of Finston Consulting. Do you have a response to Susan’s post? Respond in the comments section below.
Susan Kling Finston
Once again we have reached the dog-days of summer in Washington DC, when it is nice to day-dream about biotechnology in cooler climates. There may be no better destination for a biotech busman’s holiday than Iceland.  (For anyone keeping score, this series also has touched on biotech trends in India, Ireland, Israel (twice) and Italy.)

These days Iceland’s biotechnology sector is enjoying the limelight as one of the ‘Country Spotlights’ in the 2014 Scientific American Worldview on biotechnology released last month at the annual Biotechnology Industry Organization (BIO) Convention in San Diego.  The 2014 Worldview highlights the success of Icelandic biotechnology company Sif Cosmetics, which has developed a barley-based cosmetic with anti-aging skin cream, called BIOEFFECT.

Beyond cosmeceuticals, Iceland’s small and genetically homogenous population provides an unique laboratory for identification and isolation of genetic mutations associated with cancer, heart disease and other common diseases. DeCode Genetics has capitalized on Iceland’s genetic heritage dating back to the time of the Vikings 1,000 years ago and has assembled genotypic and related medical data from over 140,000 volunteer participants (a substantial share of the total population of Iceland now estimated at 320,000).

The company’s fortunes have waxed, waned, and waxed anew since its founding in 1996. Following initial high hopes for early commercialization of drugs benefitting from DeCode’s genetic research, the company fell on hard times in 2010 in the aftermath of the global financial crisis and Iceland’s own insolvency.  DeCode succeeded in reorganizing, emerging from a Chapter 11 bankruptcy process as a smaller, leaner company, under the same management.Then in late 2012, Amgen acquired DeCode for a reported $415 million in order to gain exclusive access to the company’s genetic risk factors for dozens of diseases.

Over the years, DeCode has been in the news as much for its efforts to gain access to private genetic data as for its R&D. Most recently the company failed again in June 2013 to convince Iceland’s Data Privacy Authority (DPA), to allow DeCode to “apply computational methods to the country’s genealogical records to estimate the genotypes of 280,000 Icelanders who have never agreed to take part in the company’s research.”

Given the vast database of genotypic and related medical information that Decode Genetics has already harnessed, the company may be better served in the long-run to take a step back, particularly now that DeCode is a wholly owned subsidiary of an American biotech. Instead Decode has followed up on its failure to gain government sanction with individual solicitations to Icelanders to donate their DNA.  This has not endeared to the company to at least some Icelanders: “Bam—you get the package, then the next day someone is there asking for the sample. No time for contemplation or making an informed decision. Maybe it’s being done with this urgency precisely because Decode doesn’t want people to have to think about it too much.”  To at least some extent, the underlying concerns may go to the issue of exclusivity, where the data itself is not patentable and Icelanders who have opted out to date may feel that the genotypic data should not be the exclusive property of any one company.

Undoubtedly, the collection of Iceland’s comprehensive genetic data would make a further contribution to understanding genetic mutations contributing to a range of public health threats. In the long run, DeCode may be more successful carrying out this important project as a true Public-Private Partnership, ensuring access to the data to Icelandic research institutes as well as private companies on a non-exclusive basis.

About the author:
President of Finston Consulting LLC since 2005, Susan works with innovative biotechnology and other clients ranging from start-up to Fortune-100, providing support for legal, transactional, policy and “doing business” issues. Susan has extensive background and special expertise relating to intellectual property and knowledge-economy issues in advanced developing countries including India and South Asia, Latin America and the Middle East North Africa (MENA) region. She also works with governments, and NGOs on capacity building and related educational programs through BayhDole25. Together with biotechnology pioneer Ananda Chakrabarty, she also is co-founder of Amrita Therapeutics Ltd., an emerging biopharmaceutical company based in India with cancer peptide drugs entering in vivo research. Previous experience includes 11 years in the U.S Foreign Service with overseas tours in London, Tel Aviv, and Manila and at the Department of State in Washington DC. For more information on latest presentations and publications please visit finstonconsulting.com.

This is a guest post from Isabela Oliva. Do you have a response to Isabela’s post? Respond in the comments section below.

How to survive the expected and unexpected challenges of the start-up lifecycle in the biotechnology business

IMG_2215 linkedin3A major difference between biotechnology and information technology ventures is the time it takes to bring a product to market. Unlike Facebook and Google, innovation in the medical sciences world generally starts from the results of a long, government-funded basic research investigation.

If a scientific discovery is deemed promising and potentially lucrative, a patent is filed to protect the idea until it matures to a final commercial product. Initially, a patent value is very low due to the high risks and uncertainties associated with the early stage discovery, and it can be hard to attract interest and money from big corporations that have their focus on late stage product development. That is why biotech start-ups emerge. They cover the ground of developing the proof of concept of a new technology.

The early stage of the biotech start-up lifecycle is often called “the translational gap” or “the valley of death”, because of the technical challenges and scarcity of funds available for this early stage of product development. When the proof of concept is successfully established and clinical trials begin, patent value starts to increase, attracting big players in the Biotech/Pharma industry. At this more mature stage of the company, new demands arise, and the start-up company structure and priorities will be required to change in order to survive.

Great technology alone is not sufficient to bring a product from research to market, and leaders should be aware, from the beginning, that a start-up structure and focus will most likely need to change to successfully adapt to the different stages of the product development lifecycle.

This article correlates the different phases of a biotech start-up with the leadership skills necessary to address the most relevant challenges of each stage in an attempt to improve the success rate in surviving “the valley of death”.

Early Stage: The visionary and how to move the idea forward

The spark that ignites the creation of a new biotech start-up is the identification of an opportunity or breakthrough solution for problem in a given market. A passion for the cause, a strong belief in the idea and a clear vision of its application are essential to leadership during the first step of the start-up development.

At this stage, most leaders are the inventors or licensees of an intellectual property. In the early stage the leader must have a strong scientific background and be credible when presenting their idea to the scientific community and the general public. A can-do mentality is crucial, since the number of employees is limited and the leader will need to wear many hats to achieve the company’s goals at this stage, such as defining the technical concepts of the business plan and choosing valuable teammates and partnerships. Understanding the market, protecting intellectual property and securing early funding require a business mind-set, and it can be a challenge for scientists without prior experience outside of the academic world. Nevertheless, being passionate about the technology can help the leader motivate people to believe in the idea, and could also provide the stamina required to overcome the obstacles of the early stage.

Commercialization Stage: The fundraiser and science-to-product

The main goal of this stage is the development of concrete routes for commercialization – assuring sufficient funding to bring a product to the market. The day-to-day operations become more complex, resulting in a need for structured management, and a possibility of changing roles and responsibilities for early stage employees, including co-founders.

Commercial interest will likely replace the early-stage scientific focus as requirements for funding increase. The leader becomes the person with the power to realize the commercial vision for the company. Convincing founders that the priority is commercialization might require canceling projects that seem unprofitable, even if it means shifting the priority to a secondary project that had just entered the pipeline.

It is crucial for the leader at this stage to be strong in their decisions, yet sensitive to the company environment, in order to implement necessary changes without affecting employee relations in a negative way.  Communicating and managing change effectively is a key challenge at this stage. A growing biotech start-up cannot afford losing talented employees, many of whom are subject matter experts of the technology being developed. The implementation of professional processes, operations and organizational structures that might make some senior employees uncomfortable will most likely be necessary.

 Operational Stage: The strategist and how to deliver

At this stage the company needs to demonstrate its marketability by strengthening alliances, deals, and strategic partnerships. A shift in focus from project to transaction might take place, and the management team might be under pressure from its responsibility to investors and an imminent IPO or M&A. The main company goals are to maximize investor return while maintaining workforce retention, morale and culture. In general, it is a stage when keeping promises to business partners, investors, and the general public is extremely demanding. The leader now needs to lead a result-oriented, precise, and efficient management team, task comparable to those of managers in the large industry. Investors such as Venture Capital might want to bring their own CEO as a leader and take part in the company board of directors.

The Board and Exit Strategy

The board of directors plays a key role in advising the leader at all biotech start-up stages. Although t the leader chooses the board members during the early and commercialization stages, they may lose this control at the operational stage when investors’ pressure on ROI is high. The board generally plays an important role in deciding the exit timing and strategies, and it is the leader’s responsibility to clearly articulate the company’s strategy internally and externally. The ability to successfully react to change and to deal well with pressure is equally important when planning for the exit.

Conclusion

The growth of a biotechnology start-up company presents unique challenges that should be properly addressed to achieve the business goals at each stage. Common leadership skills such as clear communication and the ability to implement change are necessary throughout the biotech start-up lifecycle; however, a transition from a science-oriented to a business-oriented culture seems to be essential to survive “the valley of death”, and must begin within the company’s leadership. The ability to accept change, to adapt and to build and maintain relationships are the key points in the progression from science to business and finally the success of a biotech start-up company.

References

Leadership management needs in evolving biotech companies. Andreas Foller. Nature Biotechnology  20,  BE64-BE66 (June 2002).

 Managing change in biotech: startup and growth. Mary Ann Rafferty. Nature Biotechnology 25, 479 – 480 (2007).

Early-Stage Biotech Companies: Strategies for Survival and Growth. Wendy Tsai and Stanford Erickson. Biotechnol Healthc. Jun 2006; 3(3): 49-50,52-53.

About the author

This article was written by Isabela Oliva is a biological scientist currently studying technology transfer.  She can be reached at oliva.isabela@gmail.com.