Artificial Intelligence And the Future of BioPharma Dealmaking

Artificial Intelligence And the Future of BioPharma Dealmaking

Artificial Intelligence provides opportunities to better understand and engage in a world saturated with data; empowering dealmakers to more deeply leverage their relationship expertise.

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GILEAD SCIENCES BUSINESS DEVELOPMENT AT A GLANCE

Gilead Sciences, Inc.
Company Type: Large Pharma
Region: United States, Worldwide
Cash Position: $9809M USD
Therapeutic Focus: HIV/AIDS, Liver Diseases, Hematology/Oncology, Inflammation/Respiratory, Infectious Diseases

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IMMUNO-ONCOLOGY DEALMAKING 2.0: AMBITION AND DRIVE

BD&L Highlights from BIO Day Two - Immuno-Oncology Dealmaking 2.0

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Perhaps the best way to describe yesterday’s session on immuno-oncology, is to start at the end. Just as the applause faded, the audience en masse rushed to the panelists, business cards in hand, hoping the brief exchange might lead to a transaction in the hottest area of biotech these days. And it could.

Panelists representing some of the largest pharmaceutical companies were remarkably motivated to partner in this potentially transformative space.

“This panel is really about ambition,” Dr. Bassil Dahiyat, President and CEO of Xencor and moderator, said.  

“The central reality is about 15 to 20 percent (of patients) have a profoundly improved outcome,” Dr. Dahiyat said. But 80 percent are left behind from this amazing advance in medicine. And that void is especially interesting to Johnson and Johnson, Pfizer, Bristol-Myers Squibb, and Amgen Inc, all represented on the panel.

“Only a relatively small percentage are getting this benefit. And that’s what’s driving our strategy, is working with partners to find other agents,” said Dr. Tim Fisher, Global Lead Immuno-Oncology, Bristol-Myers Squibb.

Fisher would like to see BMS break into areas where immuno-oncology hasn’t been active, such as pancreatic and prostate cancers.

“We see ourselves as a friend to all PD-1, PD-L1 players. We’ve got announced partnerships with Merck and Roche,” said Bethany Mancilla, Vice President, Business Development, Amgen.

It’s not unlike an arms race - with biotech, big and small, all moving toward trying to discover the next big thing. Clinical collaborations may be the engine that moves the effort forward most efficiently.

“We’re trying to speed the therapy to patients and we’re doing an amazing job of breaking down barriers,” Dr. Fisher said.

“Frankly, no one really knows what the magic combination is going to be with a PD-1.”

Big pharma is also willing to consider assets in the preclinical phase, according to panelists.

“There have been some remarkable deal values for preclinical assets, some sizeable money for stuff that’s never been in a human before,” Dr. Dahiyat said.

He asked the panel, how much data is enough?

Dr. Fisher said BMS has executed some deals with only preclinical data but only when there has already been clinical evidence established.

Sylvaine Cases, Vice President, Oncology Scientific Innovation at Johnson and Johnson, said there are two types of assets. One in which there is already something out there and JNJ wants to be a part of it, and in that case, they want to see a “good amount of data.” Enough to differentiate from what is already available. But, Dr. Cases went onto say, that in other spaces, such as vaccines where there are only two approved, “we’re going to have to take more risk.”

“There is is room to make an investment with less data.”

Dr. Cases said they can also help guide a smaller company with fewer resources in “those early experiments.”

Dr. Dahiyat noted there have not been a lot of mergers and acquisitions in immuno-oncology. Panelists said the area is so new they prefer to develop a relationship with smaller biotechs, akin to a long courtship.

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DEALMAKER'S INTENTIONS: SURPRISE, ONCOLOGY IS THE FOCUS

BD&L Highlights from BIO Day Two - Dealmakers' Intentions: 2017 Market Outlook

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Oncology is dominating both interest from buyers and sellers in the marketplace, according to Neel Patel, Managing Director at Campbell Alliance, an inVenitv Health Company. That was one of the big takeaways from BIO's Tuesday Dealmakers’ Intentions: 2017 Market Outlook session.

“It’s not surprising to see the focus on oncology,” Dr. Paul Biondi, head of Business Development, Bristol-Myers Squibb, said.

“It’s an incredibly exciting time. We see the possibilities of doing multiple transactions to continue to bolster opportunities,” Dr. Biondi said.

Daniel Karp, Vice President, World Business Development at Pfizer, said the areas his group is focusing on, are vaccines, oncology, rare diseases, inflammation, immunology and neurodegenerative disease and metabolic disease.

Pfizer also looks for investments that intersect and build on its current brands or anchor programs, Mr. Karp added.

Patrick Verheyen, Global Head of Janssen Business Development, of Johnson and Johnson, said he gravitate towards areas in which J&J has a deep scientific knowledge.

“We tend to make investments where we have a lot of expertise. It would be dangerous to get too excited about opportunities outside your expertise too quickly,” he said.

Bob Carey, Executive Vice-President, Horizon Pharma PLC, said his company wants to build up the orphan business.

“We see a lot of increasing competition. We’re were relatively agnostic within the areas of orphan, with the exception of oncology,” Mr. Carey said.

Expect to also see an increase in small and mid-size deals as opposed to the mega deals, according to all of the panelists.

The political climate - uncertainty surrounding the Affordable Care Act, interest rates, and potential changes to the tax code - is contributing to the reluctance to enter into the larger deals.

“Stability is important for mega deals,” Mr. Karp said.

Often, decisions are made in the margins, Mr. Carey added.

“We’ve looked at different impacts of tax policy and it throws a lot of transactions into doable and not doable,” he said.

That’s not to say the big deals won’t happen. Mr. Verheyen talked about some of the details of Johnson and Johnson’s acquisition of Actelion in a $30 billion deal that was completed last week.

According to Mr. Patel’s analysis, it is still a seller’s market.

“It may not feel like it if you’re the one looking to license your technology,” he said. But the outlook is good, especially for companies in the right phase and the right therapeutic area.

For example, there are more buyers than sellers in Phase II, Phase III and of course, in an already marketed asset.

The panelists closed the session with their assessment of risk  - were they willing to take more or less these days in the deals they made?

“We’re all in the business of risk,” Dr. Biondi said.

“Without risk, you get no innovation. I don’t see anything fundamentally shifting.”

Mr. Karp said it is integral to build a deal structure that mitigates the risks.

“Sometimes, it’s just too early and we need to see the data.”

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IT'S ALL ABOUT RELATIONSHIPS

“The company was a black box to me because I allowed my banker to actually deal with the company,” he said. And he hadn’t formed relationships with the senior officials of the company - people he could have called upon to try and salvage the deal.

Hasnain never made the same mistake again.

“It’s all about the relationships.”

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