PharmaTelevision - New Ways

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Video title: New Ways

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New Ways

Paul Larsmon presents a series of interviews with some of Pharma and Biotech’s biggest hitters, including Mervyn Turner from Merck & Co, Clive Dix of BIA and Vaughn Kalian from MPM Capital. In this programme we reflect on the industry and see how the sector is reacting to the current climate with new ways of conducting business.

2009: Year of changes

Paul Larsmon:

Hello I am Paul Larsmon, it's Monday December the 28th. Welcome to PharmaTelevision news reporting worldwide on the business of healthcare. We are taking advantage of the holiday period to run a series of special programs in which leading industry figures reflect on the year that's past and look forward to the one that's to come. First up some thoughts about just how bad things have been?

Jim Greenwood:

It's been a year of profound changes. The stock market if you look a year ago when we where, had this meeting in San Diego stock market was well above 12000, it dropped by half, of course in the, it really accelerated the difference between the haves and have not's of biologics, biotechnologies. So if you are a large company with product if you are Genentech, Amgen extra you did pretty well far better than the, than the dubbed average as a whole and that's largely because this spending on healthcare is not that discussionary you know people are still going to get sick, they are still going to need products for diabetes and for Multiple sclerosis for cancer, but if you are the small companies and you don't have if you are one of the small companies and you don't have a product for sale yet on the market and you are you know this unique thing about, about drug discovery which is you know you invent a mouse trap and you patent the mouse trap you can begin to sell the mouse trap the next day and start to generate revenues. You patented a molecule now you are off on the twelve year venture. And through research and development the clinical trials and FDA approval and for all of that time you are entirely reliant on investor capital and then, because of this worldwide economic recession there is not a lot of investment going on, so it's a very tougher time.

Dennis Purcell:

Generally what we've seen in the past is a year or two of boom times and then three or four-years " two or three-years of down times and right now we are in a protracted slump and with many, many companies with less than a year of cash and many of them less than six-months of cash, so there is a lot of scrambling right now to try to kind of keep the industry going.

Vaughn Kailian:

The obvious financial crisis which soft [ph] up liquidity very quickly in the life blood of our business is having access to capital that was number one. That was then exacerbated by the, the nervousness around healthcare reform in the United States, which increased the perceived risk in our business, which then has an effect on the returns that our investors for instance in venture capital market, the financial crisis then will back on the pharmaceutical companies and the pharmaceutical companies found themselves in a more constrained environment. So it was almost a perfect storm in healthcare that occurred in 2009. The difference between this perfect storm and the one on the movie that you are familiar with is, I think people are gonna survive this one, the boats won't be lost at sea.

Financial issues and concerns

Paul Larsmon:

No argument then that huge change has affected our sector some linked to the global financial crisis, but some independent of it. Among the many issues entering pipelines, patent cliffs, US healthcare reform and the shared difficulty of getting enough working capital. PharmaVenturesFintan Walton spoke to Merck & Co's, Mervyn Turner.

Fintan Walton:

Does the current climate and the condition of some of the biotech companies does that concern you, does that mean that you'll say well may be in the future we will not get access to some great technologies because these companies are now struggling, they are making probably the wrong decisions in terms of backing certain products when they should have you know continued to backing because they still have the money?

Mervyn Turner:

Yes.

Fintan Walton:

So are you planning for that and do you see a concern for that?

Mervyn Turner:

I'm concerned about that. I think it is a worry. I always refer to our business as an Ecosystem and we depend on the thriving biotech sectors very, very important for us. That was some of the thinking behind the consortium approach we started with PureTech and the Enlight [PharmaDeals ID = 30768] fund where we now have a number of big pharma partners in venture fund looking for our technology platforms precompetitive is the way we see it. And it's also some of thinking behind the creation of what we call external basic research at Merck & Co which is all about making partnerships earlier and trying to find the biotech companies with whom we can construct non-dilutive financing deals for them which give us access to technology earlier in a difficult financial environment.

The need for a new biotech business model

Paul Larsmon:

Well the crisis has made people look for different ways of doing things strapped for cash biotech's need new models?

Steve Parkinson:

I think we are learning better ways to develop drugs. I mean normal the classic text book stories of, I forgot what they call the company in Boulder, Colorado who had their product go into Phase III and built the manufacturing plant while was the product still in Phase III and they left the manufacturing plant, you know so I don't think that.

Paul J. Hastings:

That was Synergen by the way "

Steve Parkinson:

Synergen that's the company.

Paul J. Hastings:

My company.

Steve Parkinson:

Sorry about that one.

Paul J. Hastings:

No problem.

Steve Parkinson:

So you know that, I don't think we see that kind of thing anymore.

Should the UK government bailout biotech in the UK?

Clive Dix:

But what investors have done is they've turned to companies at a later stage. And it's because of that we've been talking to the government very seriously about something about fund that bridges that gap between the inventor and where the VC, the Venture Capital companies pick-up which is normally late stage preclinical up to early stage, early clinical.

Fintan Walton:

Why should the UK government bailout biotech in theUK?

Clive Dix:

It shouldn't, absolutely should not bailout biotech in the UK. Companies are already there that are being funded or already floated and are not going to make it they shouldn't make it. If they can't be funded then that shouldn't happen. What the government should do is ensure that the funding environment is right, that the incentives to funds things in the UK are right and the general business environment for biotech companies is right, because the whole biotech healthcare sector is now the number one sector in the UK for the economy.

Role of organisations

Paul J. Hastings:

There are organizations now, there are patient organizations now. It was basically led by the Cystic Fibrosis Foundation, but now you are seeing it with The Leukemia & Lymphoma Foundation, The Multiple Myeloma Foundation.

Fintan Walton:

The Michael J. Fox Parkinson's?

Paul J. Hastings:

Yeah, all those foundations I was actually presenting at an investor conference and our company focuses on solid tumors treating cancers like colon cancer, breast cancer. But our products may have applicability in Hematological malignancies, liquid tumors, lymphoma's, leukemia's and I was approached by patient organizations who's representatives were sitting in the office, who came and suggested that they could consider granting moneys so that we would develop our product in that area and at the end of the Phase II trials or the end of the clinical trials get a modest return in their investment.

Do venture capitalists have to think outside of the box?

Paul Larsmon:

And it's not just biotech's which have embraced change venture capital has also had to think outside the box?

Dennis Purcell:

I think that in the past what happened was we tried to build companies and then take them public, and that's how we would get our capital back. And then recently what we tried to do is build companies and try to sell them to big pharma or other big biotech companies. And I think in the future what we have to do is we have to finance these companies to sustainability, so we would have, it has to happen now as when you fund biotech companies you have to be able to fund them all the way through approval and watching the product unlike in the past you didn't have to do that there where always different people in the chain to finance.

Adrian Rawcliffe Senior Vice President, Worldwide Business Development GlaxoSmithKline predicts the future of biotech

Paul Larsmon:

Well on New Year's eve we will be hearing some predications for the future of biotech and pharma as we enter a new decade before that some calming words from GlaxoSmithKline's Adrian Rawcliffe?

Adrian Rawcliffe:

Yeah people talked about how the IPO market has disappeared, the IPO market will come back, people talk about how acquisitions have fallen off, acquisition activity will, will return. And I think they've driven of the fundamental principles which is for so long as there are transformative medicines that really change patient experience of disease society will be prepared to pay for those, a reasonable price for those and that creates the incentive for innovation. So in very long-term whatever short-term problems we are having and I'm not minimizing those because they are profound for individual companies, but long term I believe that the economics still hold true.

Paul Larsmon:

Tomorrow we will look at how the markets treated our sector in 2009. PharmaTelevision news, your news, your views, your channel. Goodbye.

Fintan Walton

CEO

Dr. Mervyn Turner is chief strategy officer for Merck & Co and senior vice president, Worldwide Licensing and External Research, for Merck & Co Research Laboratories. Since joining Merck & Co in 1985, Dr. Mervyn Turner has held many positions of increasing responsibility. Through his multiple an diverse experiences in the Merck & Co Research Laboratories he has acquired a broad perspective on the issues surrounding drug discovery and development. Most recently (November 2008), Dr. Mervyn Turner was appointed chief strategy officer for the Company. In this role, he reports to Richard T. Clark, chief executive officer, and has primary responsibility for partnering with Merck & Co's Executive Committee and leading the formulation and execution of Merck & Co's long term strategic plan. His role focuses on ensuring alignment of enterprise strategy with the business plans of Franchises, Divisions, and Functions Dr Clive Dixis the current Chairman of the BIA (BIA) and Non-Executive Chairman of Modern Biosciences plc. Dr Clive Dix has more than 20 years' experience in Lifescience research, with over 15 years in senior pharmaceutical industry positions, and a degree and PhD in Pharmacology. Dr Clive Dix's expertise includes an in depth understanding of all facets of drug discovery and development, a broad knowledge of the science and commercial landscape of a variety of therapeutic areas, and solid experience of the pharmaceutical business and finance community supporting the sector. Dr Clive Dix was previously co-founder and Chief Executive of PowderMed Ltd, a vaccines development company acquired by Pfizer in November 2006. Vaughn Kailianjoined MPM Capital Boston office in 2005 and brought to MPM Capital unparalleled success in the stewardship of commercial biotech and pharmaceutical companies. From 2002 - 2004, he served as vice chair of the Board of Directors of Millennium Pharmaceuticals, Inc and was head of the Millennium commercial organization Jim Greenwoodis President and CEO of the BIO (BIO) in Washington, D.C., which represents more than 1,200 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations. BIO members are involved in the research and development of innovative healthcare, agricultural, industrial and environmental biotechnology products. BIO also produces the annual BIO International Convention, the world's largest gathering of the biotechnology industry, along with industry-leading investor and partnering meetings held around the world. Dennis Purcellhas served as the Senior Managing Partner of Fund I and Fund II since February 2000 and is responsible for the management of the Partnership. Prior to joining Fund I, Mr. Dennis Purcell served as Managing Director of the Life Sciences Investment Banking Group at Chase H&Q (formerly Hambrecht & Quist, "H&Q") for over five years, and served on the Executive Committee of Hambrecht & Quist. While at Hambrecht & Quist, he was directly involved with over two hundred completed transactions and supervised over $10 billion of financing and advisory assignments in the pharmaceutical, biotechnology, and medical products industries. Steve Parkinson, President and CEO at Lakewood-Amedex, has over 25 years experience in the biopharmaceutical industry, including four CEO roles over the last eleven years, one of them as founder and CEO of TranXenoGen, a company he took public on London AIM. As President and CEO of CereMedix, a drug discovery and development company, he advanced their first product to clinical trials. Mr. Paul J. Hastings brings more than 20 years of experience as a biotechnology and pharmaceutical industry executive. He has served as President and CEO of OncoMed Pharmaceuticals since January 2006. Prior to joining OncoMed Pharmaceuticals >, Mr Paul J. Hastingswas President and Chief Executive Officer of QLT Inc. Previous to that, Mr. Paul J. Hastings served as President and Chief Executive Officer of Axys Pharmaceuticals, which was acquired by Celera Corporation in 2001. Adrian Rawcliffe is Senior Vice President, Worldwide Business Development for GlaxoSmithKline. In this role he has global responsibility for all business-development activities. Within Worldwide Business Development, he leads a global team of scientific and transaction experts building diverse collaborations relating to compounds (early stage discovery programs through to marketed products) and technologies including co-development, in-licensing, product acquisition, and / or co-promotion / co-marketing arrangements, R&D based mergers & acquisitions, technology licensing, research collaborations, academic relationships, post-agreement alliance management. Adrian Rawcliffe had most recently served as Managing Partner and President, SR One Ltd, GlaxoSmithKline's venture-capital business.

Merck & Co

Merck & Co is a global research-driven pharmaceutical company that discovers, develops, manufactures and markets a range of products to improve human and animal health. Established in 1891, the Company's operations are principally managed on a products basis and comprises of two business segments: the Pharmaceutical segment and the Vaccines segment. The Pharmaceutical segment includes human health pharmaceutical products marketed either directly or through joint ventures. Merck & Co sells these human health pharmaceutical products primarily to drug wholesalers and retailers, hospitals, government agencies and managed health care providers, such as health maintenance organizations, pharmacy benefit managers and other institutions. BIA (BIA) is the trade association for innovative enterprises in the UK's bioscience sector. Established in 1989, its mission is to "encourage and promote a thriving, financially sound sector of the UK economy, built upon developments across the biosciences. The BIA seeks to create economic growth, increase employment opportunities, and expand the skills base. MPM CapitalMPM Capital is a private equity firm focused on venture capital investments in early stage companies across a range of sectors in the healthcare industry including biotechnology, specialty pharma and medical technology. The firm, which is based in Boston, Massachusetts, was founded in 1996. The company has raised approximately $2.8 billion since inception across four private equity funds and a public equities fund. BIOBIOis the world's largest biotechnology organization, providing advocacy, business development and communications services for more than 1,200 members worldwide. Our mission is to be the champion of biotechnology and the advocate for our member organizations"both large and small. BIOmembers are involved in the research and development of innovative healthcare, agricultural, industrial and environmental biotechnology technologies. Corporate members range from entrepreneurial companies developing a first product to Fortune 100 multinationals. They also represent state and regional biotech associations, service providers to the industry and academic centers. Aisling CapitalAisling Capital believes the next decade will be marked by a revolution in healthcare driven by new therapeutics generated by biotechnology. The completion of the human genome has given scientists new insights into the causes of human disease. These insights, combined with the past 20 years of developments in the biotechnology industry, are leading to rapid expansion of novel approaches toward the diagnosis, prevention, and treatment of life-threatening illnesses. These advances have led to an ever-increasing demand for capital to complete the development and commercialization of new therapeutics. Aisling Capital 's goal is to support the leading global healthcare companies that are building on these technical and medical breakthroughs to commercialize new healthcare products. Lakewood-AmedexLakewood-Amedex, a private development stage biopharmaceutical company, headquartered in Sarasota, Florida, has a diverse portfolio of targeted therapeutics>, broad spectrum anti-bacterials, and anti-viral technologies. The lead product,LPI007, is a fully human toxin-neutralizing monoclonal antibody shown to be effective in the treatment of hemolytic uremic syndrome (HUS) caused by pathogenic Ecoli O157:H7 and will be entering Phase I clinical trials in late 2008. Nubiotics are a broad spectrum first in class group of anti-bacterial compounds that represent a first line defense against the increasing number of antibiotic resistant bacteria. OncoMed PharmaceuticalsOncoMed Pharmaceuticals was founded in August 2004, by Drs. Michael F. Clarke and Max Wicha who led the discovery of cancer stem cells, in solid tumors. GlaxoSmithKlineGlaxoSmithKline is a United Kingdom-based pharmaceutical, biological, and healthcare company. It is the world's second largest pharmaceutical company and a research-based company with a wide portfolio of pharmaceutical products covering anti-infectives, central nervous system, respiratory, gastro-intestinal/metabolic , oncology , and vaccines products. It also has a Consumer Healthcare operation comprising leading oral healthcare products, nutritional drinks, and over-the-counter medicines.