Rachael Craig, MotionHall: Glad to be hosting us today! My name is Rachael Craig, and I’m MotionHall’s Co-Founder and CEO. MotionHall exists for one reason, and that’s to help you ensure your company closes the most valuable licensing or M&A deal possible. We're very pleased today to be joined by special guest and MotionHall member, Anu Balendran who is also VP Business Development at Alligator Biosciences.
Anu joined Alligator in 2018, after spending 17 years at AstraZeneca, first as a scientist in the diabetes and obesity area, then in business development. At AstraZeneca, Anu was involved in several major in-licensing transactions and now works with out-licensing Alligator’s portfolio of projects. He holds a PhD in Biochemistry from the University of Dundee, Scotland.
What got me excited about hosting Anu today is his dealmaking experience from both sides of the table, and the learning journey that comes with the transition from top pharma in-licensing to out-licensing at a smaller biotech. Many of our members here at MotionHall made this transition at one point in their career, and there are surprises along the way.
Anu Balendran, Alligator Biosciences: Thank you, Rachael. Glad to be here.
Rachael: Anu, tell us a bit about your history and then about your role, leading Search and Evaluation at AstraZeneca. As a buyer, what did you find most challenging, and what did you find rewarding?
Anu: I'm Sri Lankan by birth. From there, I moved north. I had my university education in the UK, then joined AstraZeneca in Sweden. I worked at AstraZeneca for quite a long time - almost 18 years. In research, starting at the bench, screening and finding new drugs, then leading teams discovering candidate drugs that we took to the clinic. Then I moved into business development, which was the majority of my time at AstraZeneca. In Business Development (BD), it was search and evaluation and in-licensing transactions. If I look back at my time in AstraZeneca, it's a fantastic organization. It’s very innovative and looking for the next cutting edge scientific discovery that AstraZeneca could move through into the clinic and to the patient. The excitement in business development at AstraZeneca was bringing in new technology, new ideas and innovation into an organization where there's a lot of established ways of working, but you're trying to change that. My main focus was bringing in new technology, getting buy-in from the organization and then allowing that innovation to be implemented. In a large organization, you have the opportunity for a lot of learning and also growing wider competence and expertise in every type of subject at the highest level you could ever expect. That allows you to do quite a deep dive into different areas when it comes to evaluating projects.
Rachael: Can I ask a couple of questions about that? For our listeners who don't have that background, working in large companies like AstraZeneca, can you give us a sense of how many people you're working with on the BD team, between committees and the scientific team on a regular basis?
Anu: I worked in the Cardiovascular and Metabolism IMED (Innovative Medicines & Early Development). That unit was about 330 people. We focused on the metabolic diseases: diabetes, obesity, cardiovascular diseases, and renal. That was just the scientific part and there was a lot of competence in biology, chemistry, pharmacokinetics, toxicology, and then there were other departments in the larger AstraZeneca organization. So, an evaluation project team that I might pull together for a new idea coming in, that core team could be about ten people, with expertise from different parts of the company. The core evaluation team, in turn, would reach out to their own departments for expertise that could lead to a further two to five other people who they could get input from. So, the team becomes quite expansive. If you suddenly have a question such as, “Hey, I have a product with a novel formulation.” then you could speak to somebody who actually sells this drug to physicians, who is involved in the commercial formulation. You could reach through within AstraZeneca, for example, to people in the production plants in Sweden or elsewhere, or directly to an expert who's actually involved in formulation for a commercial drug. The expansive knowledge base that exists in a big pharma company has been built up over the years. That's evaluation from the buy-side. When I was doing the due diligence from the buy-side, I reached out to all of these teams regularly.
From the sell-side, when you go into an evaluation or Due Diligence (DD), you need to keep in mind that when you put your project in the expert hands within a pharmaceutical company and they start looking into it in-depth, they've got massive amounts of expertise that they can reach through to set up their questions. It's not just the people you're facing in the due diligence interactions but also the expansive expertise beyond. They likely have much more help than what you can see from the outside.
"It's not just the people you're facing in the due diligence interactions, it’s the expansive expertise beyond. They likely have much more help than what you can see from the outside." - Anu Belandran
Rachael: One or two more questions about your time at AstraZeneca. What was the most challenging part of being on Search and Evaluation as a leader?
Anu: I would probably say that the decision to make a deal within a pharma company is quite a big decision and a long-term commitment. So, you need to go to multiple committees for approval. The first level of approval would be a triage team, which could be your peers, a search and evaluation director and scientific peers with whom you could say, “Okay, that's in or out.” Then you would go to the research area management as the next level of seniority. Then if they are happy, you have to find a champion within that group who would then be your sponsor on taking it through to the next level of management. Then you probably go through another two levels of management before it hits the level of the CEO. Many of these deals have long term financials, which would mean that the Net Present Value (NPV) would work out to a large amount and it has to go to a high level of approval. So, the challenge is really maneuvering through these different committees and knowing how to stakeholder manage through that process so that you end up getting the right buy-ins throughout the process. Then you have nay-sayers and it’s frustrating sometimes when you hit a brick wall with some of these people who could be quite powerful, quite influential and you have to struggle to get them to come onto your side in order to keep the deal moving forward.
Rachael: Thank you, Anu. That's a great answer.
Rachael: Anu, you made the switch into biotech that a lot of people make after building up some seniority in the larger companies. You move from leading in a buying position in a large organization to selling position at a small one. Most people I’ve spoken to describe the transition as exciting and worthwhile but challenging, too. What surprised you the most in becoming a sell-side leader at a biotech?
Anu: I think that the biggest surprise has been the amount of time you spend in sales and marketing, reaching out, trying to pitch and working to get the attention of the right people on the pharma side. For me, that was like, “Wow! This is a big effort before you get to the point at which you can actually get movement in your deal-making.”
"I think that the biggest surprise has been the amount of time you spend in sales and marketing … You’ve got to like to sell. You've got to become a salesperson on the sell-side." - Anu Belandran
I think it's good for people who are thinking of the shift to know that you've really got to like to sell. You've got to be a salesperson to be on the sell-side. It's an important characteristic you have to have, and something you should like doing.
Then the second surprise is when you're on the outside, it is extremely difficult to maneuver through the complexity of the large pharmas. People outside have to understand the different organizations in the different pharma companies, and to get yourself to the right person and pitch in the right way.
I would say those were big surprises to me when I moved out, but they are the key things that you need to build your competence around. For the sell side, a large majority of time is spent finding the right companies and the right contacts. That's where MotionHall comes in, and where you can do that in a much more time-efficient manner, you have a lot more data there, and you can pull those lists of potential partners out. There's a lot of potential partners that are obvious, but in the list that I've received from you, you find companies that you wouldn't have picked yourself. Those are pretty important things to keep in mind to reach out to different companies that don't surface from the scope of your knowledge.
Then building on that, is how you reach through further into the pharma companies, by using something like MotionHall’s Scientific Synergies, where you could get the scientists within your biotech organizations to reach out to the correct people in the pharma, and start a conversation in a scientific area of common interest. You may find that the scientists within the pharma company are really interested in your area, but because sometimes when a project goes to the BD team, it gets lost in the process. So I think there's real value in reaching out to a scientist at a prospective partner company who can champion your project within the organization.
“There's real value in reaching out to a scientist at a prospective partner company who can champion your project within the organization.” - Anu Belandran
Rachael: We're big advocates of that here at MotionHall, as you know, and thank you for that, Anu.
A question following on from those threads: What’s the biggest piece of advice for executives who are about to make, or have just made the same career transition going from a top pharma to leading business in biotech, as you have? Are there one or two takeaways that you would say, “Look, this is what you need to know to be the most successful in your new job.”
Anu: As I mentioned, the most important thing you need to consider, if you are going to be taking a position in BD in biotech, you have to like to sell. You really need to be somebody who really enjoys that selling process. So that's an important thing for you to keep in mind when you come into a biotech. You've got to be very optimistic, very positive about the project you're going to pitch to the big pharma company.
Then from that positive, optimistic aspect, do your diligence before joining. Make sure that you're signing up with a company that has a product that really can be of interest to others. Like you'd have done the due diligence when you were in BD in pharma, you need to look into the depth of the project and company.
I think also coming into biotech, sometimes there's no long-term experience there on how to build a project to be pharma in-licensing worthy. You will need to keep in mind a timeline. It's not easy to convert quickly. I think you need to bring your experience in and use it to build the pipeline or the project into something that will have that characteristic that makes it appealing to a pharma company. Those would be three pieces of advice I would say to somebody moving in.
Rachael: Great pieces of advice, Anu. The emphasis on the biotech job being a complex sales position, in a lot of ways, is something sometimes people miss. The diligence points are also fantastic. You really want to understand the company that you're getting into. These are great, great pieces of advice for others making this career transition.
Rachael: Thank you for the comments on MotionHall. To pull it back there for a moment, I know that other people who are listening to this call or reading the transcript are going to be interested in either using MotionHall, or potentially already are. Do you have advice for new members getting started with the MotionHall platform, maybe one or two key points in terms of how they can make the most out of this to be successful in their sell-side journey?
Anu: I worked with MotionHall from the very beginning, and I've seen the tools develop over time. I'm really happy where you're going and building towards. One, as you have really positioned it, it's about saving the time to make that list of partners you're going to approach. So you're going to get that quickly with MotionHall. When you've got the list, before a quick partnering meeting, you could just look through who's going to be participating in the partner meeting from your list and then target them.
As you have said, in webinars, you should initially pick the low priority companies as a practice run and then focus on the ones you really want. That is helpful because you should have some practice runs to improve your messaging for the key people you get to meet at partnering meetings.
It could be the start for an email campaign where you then look at each of those potential partners and then write to each of the companies. When you go into MotionHall’s Company Cards you have an idea of the cash position, which is very important to think about, and then the scoring and the prioritization.
My advice is to use this information to think about what type of a deal you want, what type of a partner you want. In the list, the obvious pharmas, which usually come up at the top, they are of course, looking for licensing deals and they will want to be in full control. But then look at the middle of the recommendations list and you will see the companies which might be a surprise to you. Go and research them a bit more because maybe those companies will be the ones who are looking into different types of partnerships. If you're open to a different type of partnership, those might be the ones that you want to really focus on. So go through the list of potential partners in multiple ways. You've got to set up your strategy, how you are going to approach it. Is it an email campaign, are you meeting at BIO and slowly approaching the different parties? And so on.
Rachael: That’s great, Anu. To your point, we do like to recommend that companies try to work from the least preferred partners towards most preferred so they can iterate on the pitch. I think that that's often undervalued as a part of the process. People often want to get to the company that they think is the best fit for them right away. Would you be up for speaking just a little bit more, Anu, that value of iterating on the pitch and what happens as you have a chance to interact with the market? You've done several of these meetings: how things change, how your perspective on the pitch changes, and where the value is for new projects?
Anu: I think you're very right, Rachael, about starting from the least favorite and build up and learn from the early pitches. The things you need to take into account when you're going into these meetings is how prepared are you for the Questions and Answers (Q&A) behind the pitch? Spend time putting the slides together, trying to get the message crisp. Hire somebody externally to help with the media part, to help with how to structure it. It's all worth it. Spend time to make a good crisp presentation, which gets the message across clearly, then be ready for the Q&A.
Ideally, you've asked a lot of questions yourself to get the Q&A ready. But then you discover surprising questions in the early pitches. As you go through several of these pitches, you’ll begin to understand which are the key questions that people are focusing on, and then you can change your pitch deck to make sure that you address these questions quickly. If you deal with the core question first, so that they can focus into the more critical message about your program. The iterative process is very helpful.
"[In outreach.] The iterative process is very helpful." - Anu Belandran
But before you start pitching, I think that you should start with critical feedback, when putting together your presentation with your scientists. As a BD person, put yourself in the shoes of the buyer and ask the tough questions. I think sometimes it is tough on organizations because you start sounding negative, but that's important for you to play the devil's advocate. Get your scientists to think through some good answers for those hard questions, improving your Q&A. Do that prior to the presentations and that will help you with dealing with these buy side interactions.
Rachael: I think that's great advice and much needed
“Put yourself in the shoes of the buyer and ask tough questions . . . Play the devil’s advocate.” - Anu Belandran
Rachael: Let’s pull the topic into a different place for a little bit. I know last time you and I chatted, we wondered how the switch to video would pan out for the industry? Could there be some silver linings here? What are your thoughts on video based partnering meetings? How's that been going in your opinion and do you have advice there for others?
Anu: We've done one partnering meeting by video, and it was surprisingly better than what we anticipated. I think people had quite a negative opinion of video partnering, but when we went through with it, we were quite surprised that it could work quite well. I’d say that they were quite engaging meetings. The follow up has been similar to what you would have had in a face-to-face partnering meeting, so not a huge difference. Some of the things that you need to keep in mind with video meetings is you miss some of the physical cues that are harder to read in a video meeting. So it requires you to be a bit more patient, allow a bit more time for the other person to speak, and to get their doubts clarified. Also, be careful that in a video meeting, if your presentation is too long, it could become a monologue.
Rachael: Which is always a risk when you’re selling, right?
Anu: Yes. So be careful because it's even more important to avoid it being a monologue in a video meeting as you don't have the in-person physical reactions. You need to ask some leading questions to the other side, interrupt yourself and ask them if they have any doubts, allow them to come into the conversation and focus on creating the conversation. In physical meetings you had that little walk together afterwards, to the next partnering booth to discuss a few more things, and that's not there in this virtual format. So make sure that you fit that casual part of the meeting in, that little chit chat, within the 30 minutes.
Rachael: That's great advice
Rachael: I've got maybe one more big question for us today, moving out of video, but related to the Coronavirus pandemic. How do you think the pandemic will impact activity at large buyers such as AstraZeneca? What do you think dealmakers and smaller biotechs should be alert to as the next few quarters move forward?
Anu: The pandemic is moving so fast in many ways, and the landscape is changing quickly. So, I think predicting is hard, to be honest. But you've already seen so much movement and news about all the pharma companies searching for treatments against COVID-19 vaccines. Even companies you didn't expect to be going into it, are going into it. The pandemic is of course creating opportunities for treatments against COVID-19. If biotechs move quickly, they might have room to be setting themselves up for some deals going forward.
Rachael: Of course, no one can predict the future - there's so much uncertainty right now. But we all have sort of our speculations and bets, and at MotionHall, we tend to think that a lot of the financing out in the market is going to retract, or has already retracted and will continue to do so over the next few quarters. That should create extra pressure on biotechs to license as a way to continue to fuel development and fuel the company. We tend to think Q4 might be particularly busy for dealmakers on the buy-side. Of course, they're going to be thinking about COVID and implications there. So assuming that's how things play out: VC is depressed, and more companies are looking at licensing; how do you think that might be received by buyers in terms of volume of activity and how the decision is made about partnering?
Anu: It might be towards the end of the year that the pharmas come back into buying mode. But I think from the sell-side, you've got to keep in contact and keep your process working now because most deals take time to build up traction within the buying company even if you get them to be interested in moving, due to diligence and so forth. It takes time, so you have to keep building up the contact network and the traction for your programs with potential buyers all the time.
The financing windows are going to be very difficult. However, the pharma industry was quite resilient in the last crisis. They go on a different cycle and their situation is driven by their patent cliff and product portfolio. So, you might still see that there would be continued interest to keep building their future portfolio. The healthcare industry has done better than most other sectors in the share market during this crisis. So we might see pharma wanting to build out their position and show innovation.
Rachael: I think that's a great point and it is really unprecedented, the level of focus on healthcare right now as an industry, and level of focus on solutions. There is new, non-traditional biotech money coming in from a lot of places as well. Maybe we won't see that retraction, just something that looks a little bit different than what we had before the pandemic. At MotionHall, we’ve spent a little bit of time looking at the 2008 crisis. We found that some large pharmas retracted and didn't buy as much during those times while others really leaned into the buying opportunity assuming there was pressure on biotechs to license. We expect the same this time around; some companies really lean in and others might be slower to license, depending on their financial situation and who's on their management team. Would you agree with that, Anu?
Anu: Absolutely. Each pharma behaves quite differently when it comes to their deal cycle and level of risk that they’re willing to take. You might see the behavior could be different from the different partners. So it's important for you to find out when you're talking to your potential partners to get an idea on where their strategy is going forward. A lot of BD people from the bigger companies have a certain script to share on what their current strategy is. So you could get an idea whether this partnership is going to be a reality this year. Or is this a company that I have warm until next year? It's worth digging into the timeline when you speak to people on the buy side.
Rachael: So we're just at time, any closing thoughts on this conversation that you'd like to share to others?
Anu: I think the biggest learning for me coming from the buy-side to the sell-side is to build your project to be differentiated. If you come from the buy-side, use that deep diligence that you used in the big company within the smaller biotech to make sure you're asking all those questions, helping the team steer the project to that innovation level that is expected by the pharma companies. Guide the biotechs in terms of which projects will make that cut. Be brutal. You should not put too much effort into programs that are not differentiated enough. Bringing in the learnings from large pharma is important and that's why there's a lot of biotechs trying to get people from the bigger companies to move in and take up key positions.
"If you come from the buy side, use that deep diligence that you used in the big company within the smaller biotech to make sure you're asking all those questions, helping the team steer the project to that innovation level that is expected by the pharma companies. - Anu Belandran
Rachael: Closing out with a focus on empathy! We talked just a little bit earlier in this conversation about the importance of empathy. Considering what it's like on the other side of the table when you're selling, and appreciating just how much diligence, how many stakeholders, how many committees, and how many pieces have to come together to advance the deal.
Great. Well, so there we go. We've got Anu Balendran on dealmaking from both sides of the table! Thank you so much Anu for your time and answers today. I really enjoyed this discussion, and appreciate your leadership today.
Anu: Thank you, Rachael. Wishing you continued luck with MotionHall. I think you have great tools that you’re building there.
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