PharmaTelevision - 1. Out-licensing by big pharma: Pfizer, Roche and CoNCERT Pharmaceuticals discuss this hot topic (Part 1)

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Video title: 1. Out-licensing by big pharma: Pfizer, Roche and CoNCERT Pharmaceuticals discuss this hot topic (Part 1)

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What are the new out-licensing practices of large pharma? How can biotechs capitalise on these? Having the right business models and practices that match the new opportunities is key to success. The leading companies of our industry are acutely aware of this need and have implemented new ways of finding partners, doing deals and accelerate strategies. Dr Tibor Papp, Head of Advisory & Transactions of PharmaVentures asked a panel of leading executives what business development strategies and models they use to position themselves for competitive success. David Rosen from Pfizer, Robert Silverman from Roche and Jonathan Montagu from CoNCERT Pharmaceuticals offer their detailed company and personal insight into their business development models.

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Pfizer Inc's approach towards risk sharing deals.

Tibor Papp:

Welcome to our second panel discussion today. My name is Tibor Papp, I am the Head of Advisory and Transactions Team in PharmaVentures. On the second panel I have with me David Rosen, Head of Out Licensing in Pfizer. Robert Silverman, Director of Licensing, Global Director of Licensing in Roche. And Jonathan Montagu, Director of Business Development from the biotech company Concert Pharmaceuticals. In this panel we would like to focus on business models but in particular because this is a deal making conference we would like to address new ways of doing deals, new models of innovative deal making. We know from the first presentation that the number of deals have actually dropped in the past few years, but the values have risen, we know that pharmaceutical companies commercializing entities have become a lot more critical about where you hardly assess that what sort of terms they agree to and what sort of products they want to bring in or keep outside of their machines. We also know that deals have become a lot more complex, deal making groups have become a lot more sophisticated about deal making they have separate transactions teams. The biotech companies themselves have become a lot of more stout about how they do deals. Now with all of these they are trying to assess of course risks and the new opportunities. Those who are more flexible with more open minded would have access to new opportunities, now what it has been touched upon in the previous panels but I would like to go more deeply in that how to share risk and what sort of opportunities there are for risk sharing deals and not just between large pharma and biotech but how to involve third parties? How to create those deals that at the outside they look complex, but if it's done well it can become a process, it can become a key opportunity for companies that are willing to take this to generate a lot more deals, become a lot more productive in deal making and in fact achieve new opportunities even in this depressed market. So the first question I would have to my panel members is about risk sharing deals and I would like to ask this question in your organizations first of all what is your approach for risk sharing especially new ways to share risks? Do you have different approaches depending on the opportunity whether it's in licensing or out licensing, divestments or acquisitions? And I'd like to also ask for your personal opinion which relate to a kind of risk I think in deals that you haven't done yet in your organization, but do you think that is possible in risk sharing, so first I'd like to ask David, please and let's speak up so that everyone can hear?

David Rosen:

Tibor thanks, can you hear me in the back or do I need the microphone? Okay so for you that's a little bit better for you. So as Tibor said we are considering a lot of different options for how we develop the portfolio that we have inside of our business. I think you know as the previous panels discussed we have this challenge of, we have a top-line, we have a bottom-line and that bottom-line that we owe to the street limits the amount of money that we can spend on our R&D at least if we're going to try and maintain the EPS that we've promised to the street. So for us we've taken several approaches with respect to how we move those programs forward. Last year Pfizer created an out licensing group first time in Pfizer's history that we are making a dedicated effort to take molecules and try and move them forward and turn them into medicine if we believe that they have legs. And we actually have well over a 100 molecules right now that we are looking for homes for, but what is that home look like? And the answer is it can look like a lot of different things again depending on what it is we want to do with those molecules in the future or what we would hope to do with those molecules in the future, so for some of those programs we are very interested in having a look back at those molecules and in fact we probably wouldn't have put them on a quote on quote out-licensing list if we couldn't spend any amount on R&D but the reality is that we can't. And so you know what does that deal look like? Well as I said it can look like a bunch of different things. It can look like a pure you know risk sharing finance deal where an outside party puts cash in, we continue to do that development and then on the backend they get some share of the backend some combination of milestones and royalties or commit or just royalties you know I think the challenge there and a lot of the challenges that we face internally in terms of trying to get these deals done are related to the right amount of share if you will and the cost to capital. And you know if you have all of the money that you need to do all of the development I think it makes a lot of sense to use your own capital obviously to do that work, your capital is gonna generally be the � it's generally gonna be the cheapest. But I think if you look at the portfolio differently, if you look at it from the standpoint of what is the probability of technical and regulatory success with those molecules you'll find that there are some that you've got a huge amount of upside on but the likelihood that you are gonna get there is very small. And so if you can align your portfolio � this portfolio with an investor interest and need in a high risk portfolio then at least in my opinion it makes a lot of sense to figure out how to take that money for those high risk ventures put that into a portfolio that you share with investors and then for the molecules for the programs that you believe have a higher likelihood of technical and regulatory success put your capital towards those programs and then that is indeed a model that we're actively exploring. In addition we are looking to putting these molecules into new companies that we start along with venture capital or investment banks again with the same idea that in some instances at least if we put a portfolio into these new companies there is a right to take some of those molecules back, one of those molecules back again depending on the situation. We are very interested in taking equity in these companies we see that as a hedge if you will against deciding not to buy back that molecule but having that molecule turn into something successful in the future. And I think 0.07.06 you have the previous conversation around FIN 46 and equity accounting in the like, in some cases although it is going to impact the P&L we are not gonna have to absorb a 100% of the cost of doing that work and if we have an absolutely buy back right it may make sense in those instances to deal with the equity accounting right you know have to write off a part of that investment but not have to write off the entire investment. And again in areas where the you know where the programs are very risky neuroscience programs, like Alzheimer's disease, like schizophrenia where it's not about doing a proof of concept study it's about doing three or five proof of concept studies and hoping that two of the three or three of the five are gonna demonstrate some value. And then in addition to that you know other types of risk sharing types of models that the joint venture that we just recently announced with GSK around HIV molecules and the like where there is an absolute need for the � for the medicines and we're putting together two companies that both have expertise in a particular area can likely do better than, than one alone, so why don't I stop there.

Tibor Papp:

Thanks David, there can be a lot of questions about your statements, but I would like to give a chance to Rob and Jonathan as well.

David Rosen:

Okay.

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Jonathan Montagu

Director of Business Development Concert Pharmaceuticals

Dr. David Rosen is currently the head of out licensing at Pfizer Inc. In his role, Dr. Rosen is responsible for the externalization and partnering of non-progressing research and development programs that are no longer strategic to Pfizer. He joined Pfizer in 2003 as the head of Strategic Alliances in St. Louis, Missouri and during his 15 year career in business development has had increasing levels of responsibility in both large pharma and the biotechnology industry. He recently completed the divestiture of Pfizer's research assets in Nagoya, Japan resulting in the creation of a new life sciences company. Prior to joining the pharmaceutical industry, Dr. Rosen was a practicing veterinarian and practice owner. He received a Bachelors degree in Bacteriology from the University of Wisconsin in Madison and a Doctor of Veterinary Medicine Degree from Iowa State University. He received a specialty Board Certification in feline medicine in 1998. Robert Silverman is currently the Global licensing Director at Pharma Partnering RocheJonathan Montagu is presently Director of Business Development at Concert Pharmaceuticals. His previous roles include New Product Development Manager at Ortho-McNeil Pharmaceuticals and Business Development Intern at Biogen Idec.

Pfizer

Good health is vital to all of us, and finding sustainable solutions to the most pressing health care challenges of our world cannot wait. That's why we at Pfizer are committed to applying science and our global resources to improve health and well-being at every stage of life. We strive to provide access to safe, effective and affordable medicines and related health care services to the people who need them. We have a leading portfolio of products and medicines that support wellness and prevention, as well as treatment and cures for diseases across a broad range of therapeutic areas; and we have an industry-leading pipeline of promising new products that have the potential to challenge some of the most feared diseases of our time, like Alzheimer's disease and cancer. To ensure we can continue to deliver on our commitments to the patients, customers and shareholders who rely on us, we are focused on improving the way we do business; on operating with transparency in everything we do; and on listening to the views of all of the people involved in health care decisions. Through working in partnership with everyone from patients to health care providers and managed care organizations to world governments and non-governmental organizations, our goal is to ensure that people everywhere have access to innovative treatments and quality health care. RocheRoche plays a pioneering role in healthcare. As an innovator of products and services for the early detection, prevention, diagnosis and treatment of diseases, we contribute on a broad range of fronts to improving people's health and quality of life. Roche is providing the first products that are tailored to the needs of specific patient groups. Our mission today and tomorrow is to create added value in healthcare by focusing on our expertise in diagnostics and pharmaceuticals. Responsibility at Roche we are committed to meeting high ethical standards and complying with all applicable local, national and international laws wherever we do business. Our ethical standards are embodied in our Corporate Principles. For more than 110 years Roche has played a pioneering role in healthcare. Concert Pharmaceuticals Founded in April 2006, Concert Pharmaceuticals is a clinical stage biotechnology company dedicated to creating new medicines through a novel scientific approach utilizing the naturally-occurring element deuterium. Concert applies its innovative precision deuterium chemistry platform to modify specific properties of validated drug molecules, yielding a rich pipeline of new chemical entities (NCEs). Concert leverages decades of pharmaceutical experience to create novel drug candidates with potential for best-in-class efficacy and safety, while greatly reducing R&D risk, time and expense. The Company has over 100 patent applications for new drug candidates addressing a broad range of therapeutic areas, including HIV/AIDS and renal disease, among others. In 2009, Concert's first patents were granted by the USPTO. In June 2009, Concert announced a strategic partnership with GlaxoSmithKline to develop and commercialize deuterium-containing drugs, including CTP-518, a protease inhibitor for the treatment of HIV. CTP-518 is currently in Phase 1 testing. Concert is a rapidly growing company based in Lexington, Massachusetts. The Company is led by an experienced management team and Board of Directors, and is supported by top-tier venture capitalists and leading institutional investors. Concert has raised $110 million since its inception. Concert was co-founded by Richard Aldrich, Roger Tung and Christoph Westphal