Pfizer’s Out-licensing Opportunities




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Video title: Pfizer’s Out-licensing Opportunities
Released on: July 15, 2009. © PharmaVentures Ltd
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In 2008 Pfizer refined their R&D strategy and decided to decrease the number of therapeutic areas that their teams were focusing on. The result of this decision is that the company now has approximately 100 molecules that they are looking to out-license. David Rosen, Head of Out-licensing, joined Fintan Walton at BIO 2009 to talk about his team’s activities. He explains that this is the first time that Pfizer has actively looked to out-license and how they are looking to maximise value for Pfizer now and in the future.
Outlicensing of Pfizer
Fintan Walton:
Hello and welcome, we are here at Bio 2009 at the Annual Convention here in Atlanta. We are here to record a series of programs with leading pharmaceutical and biotechnology companies to talk about the both their vision and what they are doing to build their organizations in tough economic times. Hello and welcome to PharmaVentures business review here at Bio in Atlanta. On this show I have David Rosen who is Head of Out-Licensing at Pfizer. Welcome to the show.
David Rosen:
Thank you.
Fintan Walton:
David, you are based in Pfizer in New York and you are responsible for Out Licensing at Pfizer. Why is Pfizer out Licensing?
David Rosen:
Well, I think you know that last year we've made announcement that we were going to refine our R&D strategy and we were going to reduce the number of therapeutic areas that we were doing research and development in. you know we believe that in these areas where we've decided to exit that there are still some great molecules and probably some great drugs and we'd like to get those drugs to market if indeed they are capable of getting there. We'd also like to recover some of the value in those molecules at the same time if we can.
Fintan Walton:
Okay, so the, when we talk about these candidates, these molecules we are now outside your core strategy, are we talking about early stage or mid stage, late stage, what type of products we're talking about?
David Rosen:
So we are really talking about all of those stages of assets in the portfolio we have you know somewhere around the 100 molecules that we are looking to out license across about 50 programs they've range in the maturity from some programs that are in the late preclinical stage all the way through to in a couple of cases molecules are either, at the agency for approval or have recently been approved by one or more agencies.
Value based deals for Pfizer in the future
Fintan Walton:
So when you look at potential in licensing companies, companies that are likely to take these products do you see those smaller biotech companies or you're expecting to do deals with larger pharmaceutical companies?
David Rosen:
Well as you can imagine we've had interest from a varied group of strategic and financial investors everything from the very large pharma and we all know who those are down to very small venture backed types of companies that are still strategic players as well as VC's and other private equity investors who are interested in starting new companies around these assets. And quite honestly we will look at all of those options and come up with whatever we think offers the greatest value for Pfizer and whomever has the -- the greatest capabilities if you will to develop those assets given the best chance to get to market.
Fintan Walton:
So value back to Pfizer's important value today plus value tomorrow?
David Rosen:
Value today plus value tomorrow and the amount of value today is really driven by how late the stage the asset is. If it's a program that's already approved our expectation is that yeah that's probably a pretty valuable asset there aren't a lot of those and that the value should be pushed too earlier for molecules that are at an earlier stage our expectation is there is gonna be less upfront and that most of the value is gonna be tied to the asset as it progresses and matures.
Out-licensing strategy of molecules.
Fintan Walton:
And the molecules or these 100 molecules belong to different obviously different therapeutic areas, are you in the process of out licensing whole trenches of molecules to one particular, an organization or entity?
David Rosen:
Well from a from an ease of transaction standpoint it's more desirable for us if we could move these assets in bundles. The best deal for me would be the one where somebody came in and said well I will buy them all, you know give you some money upfront and then we will work out some type of other deal for the backend. In reality the molecules do run across you know virtually every therapeutic area, so we've got cardiovascular assets and arthro, metabolic disease assets and obesity, and women's health like bone -- osteoporosis, bone healing. We've got assets in GI and genetic urinary disease, allergy and respiratory disease kind of on-and-on. In a lot of cases they don't complement each other very well. So we make sense to try and put those assets together, we try and do that because I think the bigger deals probably have more value overall to the company, meaning my company. But obviously the buyer has a role in deciding what assets go together and what the value of those assets are and you know we'll work with a number of them, we' probably negotiate with a number of them in parallel in order to get to what we think is the right value.
Fintan Walton:
And would Pfizer itself put money behind in some of these products in order to make sure that they are probably partners, so for an example if a smaller company may not have the resources to take something forward would Pfizer consider putting an investment into that company?
David Rosen:
So I would say by and large the molecules that I'm looking to divest over out license, we are looking to exit and in those instances we're really looking to get the value out of these assets and then move on and we would expect the capital, the operating capital to come from someplace else. But there are handful may be a couple of hands full of molecules where we would be interested in having a look back at those molecules at some point and so some type of other deal structure that perhaps involved our internal- internal venture capital group where we put the assets in, some cash, somebody else puts some cash in as well as the FTE's to run the programs is something we've considered to depending on the asset.
Fintan Walton:
So your options are open there?
David Rosen:
Yeah options are open there.
Outlicensing and merger with Wyeth
Fintan Walton:
So clearly these 100 molecules come from Pfizer itself, you are not talking about molecules that fall out of potentially the merger between Pfizer and Wyeth [PharmaDeals ID = 32282]?
David Rosen:
Yeah that's absolutely right. So today of course Pfizer and Wyeth are two separate companies and we continue to operate as two separate companies until or I should say if and until the merger of the two companies occur. So these are the Pfizer assets that we are looking to divest of today. If there is a merger at some point in the future I would expect that there will be more assets available but you know we deal with that in time.
Fintan Walton:
So is that deal obviously the merger with Pfizer and Wyeth doesn't happen till towards the end of 2009?
David Rosen:
That's right.
Fintan Walton:
And of course the whole process of decisions around what is going to be divested and what's going to be out licensed is not yet happened in the deal?
David Rosen:
It's not happened,it's something that won't happen until the two companies are merged.
Fintan Walton:
Okay, so that's something for the future?
David Rosen:
Something for well in the future and my hope would be that the, with the deals that we have pending right now I think we have including some, some of the commercial assets I think right now I have got somewhere in the neighborhood of 40 to 45 offers for various assets that we'll transact these deals, get the stuff out of the way and then we'll worry about the future when the future comes.
Fintan Walton:
This is really the first time that Pfizer's ever really actively considered Out Licensing get the best in the molecules?
David Rosen:
We've never been serious about this before in fact, you know I would say was really the other way there was just never any discussion about a willingness to out license. I think it's really become an interesting opportunity for Pfizer for you know for a few reasons. One we never really done a rationalization of a portfolio change the strategy to really focus on a few therapeutic areas like we did last October which really creates a lot of substrate that you know that we can use to out license but I think you know above and beyond that I think we've recognized that when you've got you know may be 50 programs, a 100 molecules that are in clinical development that 10% of those are medicine and yeah we've got to do something about keeping those molecules moving forward and finding out which -- which 5 to 10 of those are the medicines because you know there is benefit to us but there is also benefit to physicians and patients in figuring out how to get those things developed.
Big investments and focussed efforts.
Fintan Walton:
Right. Now clearly as we said it's this is relatively new for Pfizer, does that require a change of culture within your organization? did there have to be people who are now empowered to do something which they were'nt empowered before and it also required a cooperation within the organization that facilitated the means by which these could be successfully divested because divested to out license because it's not just simply putting something in the shop window you've got to be able to the package that you got to put it into a bundle that even a single molecule have to be put into a it's quite a lot of effort a lot big investment for a company like Pfizer?
David Rosen:
Yeah really is, it's a big investment for any company but to do it on the scale of this many molecules really requires some not just a focused effort but a big and focused effort. One of the things that's really been a surprise to me is how much the cooperation in the leadership and the cooperation is behind this kind of effort. The thing that surprises me more though is the amount of effort and the amount of energy that comes from the commercial organization and the scientific organization around you know as you've described packaging these assets and getting them ready to, to divest. And what really wasn't apparent to me initially but you know as become very, very clear as of late is that people could develop these molecules, you know these are like the babies.
Fintan Walton:
Passioned?
David Rosen:
And they are very passionate about them and even though you know we've said as a corporation that these are no longer gonna be the focus for these people who develop these molecules to whatever stage they are at, you know they really like to find out whether these things could be medicines and so they've been -- yeah just tremendous champions for the divesture of these molecules.
Fintan Walton:
Is it likely that some of those scientists and backers will move out of Pfizer into other organizations as a result of this?
David Rosen:
Well it's certainly possible. Our approach with these molecules is really to do the right thing for the molecules as well as doing the right thing for Pfizer. And so what that means is that there are lot of deal structures and options that are opened to us, so those molecules could go into an already existing company, they could go into a joint venture that we create, they could go into a new co that is created by a syndicate of venture capitalist and so in many of those cases the investors or the buyers want the expertise that goes along with the molecules, not necessarily the way that Pfizer has tapped them previously, but yeah may be 3 to 5 to 8 of the key people who've shepherded that molecule and where possible you know we'd like to we'd like to you know allow those people to move with the molecules with something they want to do.
Capital market and deals to outlicense molecules.
Fintan Walton:
Right, and clearly we are in 2009 and there is a global financial crisis going on out there which has greatly affected biotech companies and obviously the VC's who are trying to back these companies, have you seen a difference out there in relation to the interest that you could have potentially got for these particular molecules in other words they may not be in the best time to go out and trying out license on these molecules?
David Rosen:
Yeah, so certainly the capital markets have changed substantially since we've really got focused on this effort. We made the announcement that we were going to rationalize the portfolio and refocus in October of last year and of course the markets got progressively worse through the fall and into the winter, you know in terms of how that's affected interest it's a little hard to say because I think over the last five months or so I've talked over 300 companies about their interest in buying one or more of these assets. So I don't know what it would have been like if the if the capital markets would have been better but I can tell you there is a huge interest right now and one of the biggest challenges I face right now is trying to figure out what's the right deal or which are the right cup of the deals to go and negotiate in order to get those deals across the line.
Fintan Walton:
Right, I would say trying to do 300 deals this year would be pretty difficult?
I don't think we will do 300 but I am hopeful before the end of the year we will may be have 10 to 15.
Fintan Walton:
Right. well we wish you all the best David Rosen in this Out Licensing activity by Pfizer and thank you very much indeed for coming on this show.
David Rosen:
Thank you.
David Rosen
Head of Out Licensing Pfizer
Dr. David Rosen is currently the head of out licensing at Pfizer Inc. In his role, Dr. David 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. David Rosen was a practicing veterinarian and practice owner. Dr. David Rosen received a Bachelor's 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.
Pfizer
Pfizer is the world's largest research based biomedical and pharmaceutical company, in 2007 the company earned $448.4 billion in revenues and invested $8.1 billion in research and development. It's headquarters are located in New York with research and development faculties based in the US and in the UK. Pfizer produces the number-one selling drug Lipitor; the neuropathic pain/fibromyalgia drug Lyrica; the oral antifungal medication Diflucan, the long-acting antibiotic Zithromax, the well-known erectile dysfunction drug Viagra, and the anti-inflammatoryCelebrex. Recent innovations include Sutent a novel cancer medicine that both cuts off the blood supply that feeds tumors and destroys cellular reproduction, and Chantix a new prescription medicine and accompanying support plan designed specifically to help smokers quit.