Forbion Capital Partners : Philip Astley-Sparke, Enabling the development of truly innovative medicines and devices




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Video title: Forbion Capital Partners : Philip Astley-Sparke, Enabling the development of truly innovative medicines and devices
Released on: November 25, 2012. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, filmed at BioPharm America in Boston, Fintan Walton talks to Philip Astley-Sparke, Venture Partner at Forbion Capital Partners
Philip Astley-Sparke's role and functions at Forbion Capital Partners
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at BioPharm America, in Boston in 2012. On this show I have Philip Astley-Sparke, who is the Venture Partner at Forbion Capital Partners , welcome.
Philip Astley-Sparke:
Thank you.
Fintan Walton:
Philip, you have history of working in the biotech industry as a CEO of a company called BioVex, you went through multiple rounds of raising finance for them, but now you've become a Venture Partner at Forbion, so you've got some little bit of history knowledge about funding biotech companies?
Philip Astley-Sparke:
Yes, I think actually both on the advisory side and on the principal side, so I was an investment banker in the healthcare sector before.
Fintan Walton:
Right, and do you think that actually helps the fact that you were an investment banker before you became a CEO?
Philip Astley-Sparke:
I think very much so and when lot of people expect may be sort of people with the medical background to be CEO's of biotech companies, and I think may be a finance background is a little bit strange, I mean I would beg to differ, I mean the main thing you do as a CEO is get out there with investors to raise the money and just keep the show on the road, if you have the money you have a biotech company, because you just burn cash and you don't create it.
Fintan Walton:
Right.
Philip Astley-Sparke:
So I think it's actually very, very natural way to actually come to be a CEO of a biotech company is through a finance route, you know preferably mixed with some kind of scientific background.
Fintan Walton:
And that's because, that's presumably because you can empathize with the guy on the other side of the table who is trying to fund your business?
Philip Astley-Sparke:
Well I think that's one reason, but the other reasons, if you say a medic then you've probably still got to do your medical job as well look over the sort of the clinical protocols and clinical trial design and the rest of it, and you also have the job of keeping the investors happy and managing the board and the rest of it, whereas you come through the finance route then what you actually end up doing day to day as the CEO of a biotech company is very similar to what you are doing before say as an investment banker, obviously you have to have some level of experience with the other functions, but at least you just concentrate on what your day job is.
Fintan Walton:
Right and you are not distracted by other things?
Philip Astley-Sparke:
Well not if you hire the right team is obviously the other key part of the equation.
BioVex : Origin, development and acquisition by Amgen
Fintan Walton:
Exactly, so just a little bit on BioVex, because BioVex was a company that was originally incorporated in the UK?
Philip Astley-Sparke:
Correct.
Fintan Walton:
And then moved over to the US, just a little bit on that, why did you do that, and you did it, you were involved in that process, correct?
Philip Astley-Sparke:
Correct, we were spun out of the University College London, but in 2005 you know for we should to go to the next step and move the business to the United States and I drove that process, was first person on the ground and grew it to 70% company on this side of the pond, 30 on the other, 100 in total. And the reasons were multifold, and first of all it's just deeper pockets there to raise money. In 2009 in order to conduct a pivotal study,we've raised $70 million, which is one of the largest VC rounds of that year, the second largest, so finance was one reason. The second reason if you wanted to bring manufacturing in-house, we were getting towards commercialization, you have to have a commercial scale process before you start a registration study, and just in terms of expertise in biologics manufacturing, we were a biologics company in the cancer space, the Boston that was a very good place to locate ourselves, and then just in terms of networking opportunities in the US and the rest of it. And obviously the final point is the US is the largest free healthcare market in the world and ultimately where we would look to launch the product, and in the final stages we did actually build, start to build a commercial team with a Chief Commercial Officer, and a VP of Commercial Operations and you know in hindsight it was the right move.
Fintan Walton:
And you had to have the right technology underlying inside the business?
Philip Astley-Sparke:
Well ultimately you always have to have the data, may be you know ten , fifteen years ago you can tell a story and you can go public and you can make the investors money, but more and more these days you have to create the data.
Fintan Walton:
Right, now one of the investors in BioVex was Forbion?
Philip Astley-Sparke:
Correct.
Fintan Walton:
Which you are in with now, how important was Forbion in the development of BioVex?
Philip Astley-Sparke:
Very important, they became our largest shareholder, they weren't to start with, they first invested quite early in 2003, things didn't go quite as well as they would have wished may be in the earlier years, but then when the Phase II data started to accumulate they found that this was an investment they should double down on, and when things got very difficult in the credit crunch they were the ones who made a lot of money available in order to really cornerstone that $70 million round which allowed us to move into a pivotal study, and once we moved into pivotal study then, yes obviously we were in a situation then where we can start to look to a exit.
Fintan Walton:
Right, and you did exit with an acquisition by Amgen?
Philip Astley-Sparke:
We did.
Fintan Walton:
And how important was that, and to do that type of deal did you run a competitive bidding operation or had you already had a good relationship with Amgen?
Philip Astley-Sparke:
We did have a relationship, I mean no way did we run a full auction, we were talking to a number of parties, but either we were going to move forward at that point trying to launch our product ourselves, it was getting quite late in the day, or and if an offer came in where by you know as felt with the investor is going to make the right returns then the board was going to have go that way and eventually Amgen did come in with an offer where the board's felt that you know it was more their duty to give those returns to the investors rather than to continue and take additional risk with the program.
Philip Astley-Sparke's advice for CEO's on looking at an exit route
Fintan Walton:
Right, as somebody who's done that and giving advice to another CEO who is contemplating looking for an exit by that route, what would you, what advice would you give?
Philip Astley-Sparke:
Well I think the thing that allowed us to actually have people interested in the program was the clinical trial design ultimately. We had a Phase II high complete response rate was around about 25, 20% whereby in metastatic melanoma all patients lesions were disappearing on a durable basis, but what we don't have in Phase II, if you have a single arm study, is you don't really get handle on survival, compared to a (indiscernable) controls whereas shown to be very weak way to do things. So the Phase III trial zone was also response rate based, and if we saw basically the way the statistics work, about a third of the durable response rate we saw on Phase II, then we knew we will be well set for an approval. So that gives comfort to an incoming partner that we are all likely, very likely to meet our primarily end point, where as if you had a primary end point of survival it will be a little bit more difficult to connect the dots.
Fintan Walton:
In terms of in preparing for that, getting appropriately funded, because one of the biggest difficulties that biotech companies have is that they don't get appropriately funded, they don't do the right clinical trials and nobody believes the data that they've got, so was the funding, how important was funding in relation to making sure you got there?
Philip Astley-Sparke:
Well that's a second piece, that's why the first piece is being able to look at the data you have got historically and dot the lines to success in a pivotal study. The second piece is obviously funding which basically shows the world that that we can get there on our own and therefore the default, our default pathways we are with confident with our own program, we will launch it ourselves and that is a much better and stronger position to be in to get a high value sale then people know that you haven't got the funds to get there yourself.
Fintan Walton:
Right, and what I do really mean by funding, I mean is this the scale of funding that you were able to get, which is important, because often companies are drip fed small amounts of money? You were given sufficient amount of funds to get to the next stage?
Philip Astley-Sparke:
The scale of funding was clear that we would have enough money to get the answer in a pivotal study and from there we could raise further funds and launch the product and that's a very powerful position to be in when you are trying to potentially force a sale and you basically you don't know the terms say well we are going to do ourselves, and we did realistically have that alternative.
Fintan Walton:
Right.
Philip Astley-Sparke:
That's a very, very strong position to be in terms of the negotiation when doing the exit, and obviously Forbion were part of making that happen.
What is distinct about Forbion compared to other VC's?
Fintan Walton:
Right, now obviously they helped you and now you are working for them as a Venture Partner, what is, what made you join Forbion , and what is distinct of about Forbion that makes it different from any other VC?
Philip Astley-Sparke:
Yes, I think in terms of financial performance they are top tier, the actual thing that stood out for me and why I wanted to join them is that they are not scared to go where others fear to tread in areas that have been historically considered unfashionable, that includes BioVex , anoncolytic vaccine, not many VC's wanted to know about that, but they saw the data and they prepared to back their scientific assessment rather than fashion, and another example is uniQure, used to be AMT, who've just got Glybera approved, the first gene therapy ever approved by a Western Regulatory Agency. So what Forbion is doing is that they are truly investing in very disruptive technologies that drive innovation and making money out of them. I think uniQure now has a bright future, and yes if joining another group whereby it's just about the financial returns with it and not really driving innovation is less exciting.
Philip's perspective: Challenges for VC's in the Pharma industry ecosystem
Fintan Walton:
And obviously you know in 2012 it's a tough environment out there, for both VC's trying to raise funds but also the pharmaceutical industry itself is going through tough times, so somebody now, inside Forbion, working as a Venture Partner, what do you see? What are the challenges and are there, are we as an industry capable of getting back in form in terms of being able to get suitable drugs to market?
Philip Astley-Sparke:
Yes, I mean I do have some worries about the ecosystem, I think VC's who the life blood of innovation for the pharmaceutical industry has really kind of moved away from taking earlier stage risk, are finding it more difficult to raise money, and that does threaten the whole ecosystem, nothing that pharmaceutical industry has realized that and therefore stepped in to actually become limited partners in VC firms, try and keep the ecosystem alive, I think that's one part of the solution.
Fintan Walton:
Okay, so I mean obviously you are talking about corporate, the corporate venture arms of pharmaceutical companies, but in the end they are still taking the risk in the end. The pharmaceutical companies used to, in the past, let VC's take the risk, now they are participating in the risk at an earlier stage, now what's the difference between them just investing in normal research rather than just going straight in through a VC?
Philip Astley-Sparke:
Well obviously it allows their tentacles to go out much wider than it would do otherwise, and obviously there are internal reasons that you know research and development does have certain inefficiencies within bureaucracies and may be early stage research and development may be better suited to smaller companies and academic institutions, and obviously the pharmaceutical industry wants to access that. So not only are they are investing directly, they are also investing in the VC funds themselves basically to get some visibility on early stage technology, but I think on the other side of the equation though is the pharmaceutical industry does have to step up to the plate when they do see success. They pay a good market price for a product or technology, so what they will tend to do is they would tend to also try and, which is fair enough, going to limit the risk and do option type transactions, won't just come like a no brainer and it's almost like baked in the numbers in terms of profit such as the VC's got his full return, that also threatens the ecosystem, and I think, so the pharmaceutical industry just seems to have taken on board that it needs to invest in VC's, to protect the ecosystem on the investing stage, but the second way they can protect the ecosystem is not to shy away anymore in terms of the risk when you are looking at the actual structures of transactions when companies are exiting, they have to protect that end as well or the ecosystem is still in danger of failing.
Forbion 's business strategy
Fintan Walton:
So what, as your role at Forbion Capital Partners, what are you going to do to you know in terms to make sure that Forbion continue to have success, and how do you exploit the current situation which is in a sense as we just described a pretty tough environment?
Philip Astley-Sparke:
Yes I am pretty optimistic about Forbion, in terms of the group of individuals and how they think they have all been together for a very long time, this is basically science driven, it's not getting carried away with focus groups or fashions, it's 'is there a market for this product' and 'is it going to work', which is really attitude question, so you really need to answer and if they have a strong hunch they can, the both of those are positive, then they will back a company through thick and thin and I think that's part of their success through thick and thin. They've backed BioVex through thick and thin, they backed uniQure through thick and thin and then they actually end up being rewarded in the end, because they are prepared to take the risk and the commensurate reward comes with it and I think that really marks them out from lot of other potential players in this business.
Fintan Walton:
But they also need to bring other investors along with them?
Philip Astley-Sparke:
They do.
Fintan Walton:
So are there sufficient numbers of investors out there that are prepared to take the same level of risk?
Philip Astley-Sparke:
I would like to say yes. I think in Europe it's probably a more selective group, but there are some people raising money who will say, we are all seeing the pharmaceutical industry helping out at that end of things, in terms of the investment and also helping to form syndicates through direct investments as well as investing in LPs, so I think you can see more and more pharmaceutical companies, there they are not interfering this is genuine investment taking investments and help build syndicates for the leaders in the VC community, which I believe Forbion will be one , and is already one in Europe and part of my appointment is to increase visibility in the US.
Future plans
Fintan Walton:
Right, just on that then you are obviously located here in Boston, so what's your diary looking like over the next year, what are you setting out to do?
Philip Astley-Sparke:
Yes, so well I think I really have two roles, one is to potentially source deals in the US of interest and bring them back to Europe, I think in potential the medical device space is an interesting one, because Europe has a much sort of, what I would say probably an easier regulatory pathway and all the American companies therefore go via Europe first, so types of sourcing transactions and bringing those opportunities to Forbion here some of our experts in medical device area, that would be one area. And the other is basically do what BioVex did, in going the other way particularly with therapeutic companies is to be successful, a lot of companies that may have had genesis in Europe really need to have a foothold hold in the United States and potentially even become US companies like we did, and so I did that with BioVex, that's something I am a bit of an expert on, I think they say that if you do something once you are an expert and do it twice you are an industry leader, it's my saying, so I am an expert on that. And there are other companies in that portfolio I think would benefit from that, there is a company I've just become Chairman of Oxyrane, that I am pretty enthusiastic about in the lysosomal storage disease space, very powerful bio- manufacturing technology, doing the most post, most complex post translational modifications, you would ever want to do with proteins with a simple yeast-based system, and I think it will be announced shortly that we are setting up presence in Boston and wouldn't be surprised if as uniQure develops and looks to get FDA approval to actually EMEA approval they will also start to set up presence in the United States which hopefully I can assist with.
Fintan Walton:
Okay, temptation to try and raise a specific fund for the US?
Philip Astley-Sparke:
No I don't think that's on the cards at the moment from Forbion.
Philip's views: Future of pharma industry over the next five years
Fintan Walton:
Right, so let's just go back finally to where you see the future for our industry, what do you see happening over the next five-years and what would you like to see happen over the next-five years?
Philip Astley-Sparke:
I would like to see both on the VC side and the pharmaceutical side people taking the appropriate level of risk. I mean it's no point in taking steady risk you don't get any reward, but at the moment I think people become so risk averse that actually increases the whole risk for everyone in terms of the ecosystem. So for the pharmaceutical industry as I said I would like to see them doing the right thing now and basically keeping the ecosystem alive through making capital available for early stage companies, but also needs to think very carefully about the way they structure deals on the back end so that everyone can, everyone, it's going to a win, win I think that's the balance, I think if they get that right then maybe we can turn a corner on in terms of drug production productivity and to start to get back in the right direction after 10-years of productivity declines.
Fintan Walton:
Philip, thank you very much indeed for coming on the show.
Philip Astley-Sparke:
Thank you Fintan.
Fintan Walton
Dr Fintan Walton is the Founder and CEO of PharmaVentures . After completing his doctoral research on the genetics of cell proliferation at the University of Michigan(US)and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).
Philip Astley Sparke
Venture Partner
At the time of recording this PTV interview Philip Astley-Sparke serves as Venture Partner at Forbion Capital Partners . Philip Astley-Sparke is the former President and CEO of BioVex Group Inc / BioVex Group Limited. He also acted as the company's Chairman from November 2009 until March 2011, when the company was acquired by Amgen for up to $1bn ($425m upfront). BioVex (now a subsidiary of Amgen) is based in Woburn, MA, USA and Abingdon, UK and develops biologics for solid tumours and prophylactic vaccines for infectious diseases. The Company's lead program is completing Phase III testing for metastatic melanoma (study fully enrolled). Philip's key responsibilities and achievements at BioVex include the successfully implemented exit strategy; the sale to Amgen represented one of the largest takeovers of a private VC backed biotech company in recent years. In 2005, Philip established BioVex' US operations from scratch; recruiting the entire US senior management team (outside the CTO) whilst setting up all key functions including commercial capabilities. Arriving as the first employee in the US he grew the Company to 70 employees in Woburn, MA while retaining 30 in Abingdon, UK. Over the years, Philip executed five major private equity financings involving blue chip international investor syndicates totaling more than $160m including the second largest biotech VC raise of 2009 at $70m. He also oversaw the building of a launch grade manufacturing facility to zero default timelines and led his team through the agreement of a SPA with the FDA on the design of a pivotal study which commenced and was recruited on projected timeframes. Philip recently joined the Board of Directors of Oxyrane as Chairman.
PharmaVentures
PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialisation.
Forbion Capital Partners
Forbion Capital Partners is a dedicated Life Sciences venture capital firm with offices in Naarden, The Netherlands, and Munich, Germany. Forbion invests in life sciences companies in drug discovery & development as well as medical device companies addressing substantial unmet medical needs. Forbion's investment team of nine investment professionals has built an impressive performance track record since the late nineties with successful investments in Rhein Biotech, Crucell, NeuTec, Glycart, Borean, Impella, Alantos, Acorda, Fovea, PanGenetics, Argenta Discovery and most recently BioVex and Pathway Medical. Current assets under management exceed $550M, split between four active funds and comprising some 29 promising portfolio companies. Forbion Capital Partners Fund II is supported by the European Investment Fund through its ERP and LfA facilities. Forbion co-manages Biogeneration Ventures, an early stage fund focused on (academic) spin-outs and seed investments in the Netherlands.