Roche: What they look for in a partner




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Video title: Roche: What they look for in a partner
Released on: November 23, 2009. © PharmaVentures Ltd
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In this episode of PharmaTelevision News Review, Paul Larsmon talks with Dan Zabrowski, Global Head of Pharma Partnering at Roche.

Filmed at BIO-Europe 2009, they discuss:

• what Roche is currently looking for in a potential partner
• business development at Roche and how it operates using the mantra “want, find, get, manage”
• new ways of working with Biotech
• at what stage Roche invests in opportunities
• Roche’s areas of interest, including stems cells, oncology, CNS and arthritis
• defining innovation
• the future of the pharmaceutical industry in the next year
Business development at Roche and how it operates using the mantra want, find, get, manage.
Paul Larsmon:
Hello and welcome to BIO-Europe 2009 here in the Austrian capital of Vienna. With me is Dr. Dan Zabrowski, Global Head of Pharma Partnering at Roche. Dan Zabrowski, the business development Manager at Roche is famously want, find, get, manage. Now how does that, how does that work in this new world of having to operate in post global financial crisis?
Dan Zabrowski:
Well actually the, the crisis has had an impact across all elements of our business development process in terms of the want and find we've been besieged with opportunities from biotech's and venture capitalist particularly biotech's that have a relatively short amount of cash left to complete their project, on the get we continue to think about creative deals because we see that there is an opportunity for us to work win, win, win with biotech's and venture capitalist by may be working earlier with them and giving them an opportunity for an earn out earn out later on in a success scenario and on the manage front we also are very active with our current partners because in some cases they have cash issues and are looking to potentially change our agreement or modify our agreement to be able to allow them a little bit more cash flow in the short-term.
New ways of working with Biotech
Paul Larsmon:
Here at BIO-Europe 2009 we have heard a new of lot of about new ways of working with biotech, pharma doing different types of deals, can you give me some examples of what that means?
Dan Zabrowski:
Well I think good example is, is the work that we've done with Pontifax a venture capitalist in Israel, in that particular situation we've partnered closely with, with the company as well as the Israeli Government to help bring technology out of the Israeli universities and allow their technology to incubate in the incubator that is run by Pontifax.
Paul Larsmon:
And as far as deals with, with smaller biotech companies I mean creative deal making is another phrase we hear a lot about, what does that mean?
Dan Zabrowski:
Well in traditional deal making with biotech a large pharma would typically do some type of licensing deal with the biotech company at the time of end of Phase II, you know allow our large global development and commercial capabilities to come into play and to take that asset to the market place. I think in light of the higher risk now post phase II of bringing compounds to the market and the cost of doing that, we are starting to looking at more risk sharing deals, whether that be an asset acquisition or an M&A within earn out where we would start working much closer with biotech joining forces at a time where traditionally biotech would want to take it by themselves and you know share in moving that compound forward with high earn out based on success of that compound as a medicine.
Paul Larsmon:
How does that reduce the risk for you there, because it's still the same compound?
Dan Zabrowski:
Well, what we have to do is we still are investing going forward with the in the development program and the commercialization of that asset, but we, we're typically not paying as high of a multiple initially giving of what we would consider to be fair market value at the time that we would do the deal, but then the biotech company and their investors would then get a much higher multiple based on the success of that medicine.
At what stage Roche invests in opportunities
Paul Larsmon:
Does it also mean that Roche would expect to be more hands on with these projects in the early stages?
Dan Zabrowski:
I think so, and I actually, I thinks it's really to every ones best interest and when we talk about an opportunity that's first in class it is a race and any, anything that would slow the pace down of the development of that asset because of prioritization, due to lack of financial capital is really unfortunate and it's actually value destroying. In addition to that we think we can bring capabilities to biotech that may be they don't have in-house, for example technical development of the product itself. I mean also may be to try to find the right patient population that would actually benefit mostly from that product and that then really does bring true differentiated medicines to patients who need them.
Paul Larsmon:
We've heard venture capitalists here saying you know they are not prepared to invest in something, it's almost got approval it's seems, it's certainly in Phase III, where would you see yourselves getting involved with the biotech?
Dan Zabrowski:
Actually much earlier than that, we think that there is two areas for large pharma to play particularly Roche, number one is opportunities that really can move the needle in the next three to five-years, so something that would be considered relatively late stage in the clinic. And then the other areas is in early stage research programs where you may not see the needle move until 15 to 20-years, but frankly if we're in the business of creating medicines for patients who need them then we need to keep focusing on that 15 to 20-year horizon. I do think that the venture capitalist will also invest there if we're able to find a reasonable exit strategy for them and a successful exit strategy within a few years with a relatively small investment that they would need to make to be able to realize that, that exit.
Roche's areas of interest, including stems cells, oncology, CNS and arthritis
Paul Larsmon:
There are gone be some biotech's out there watching this interview who got something they are really excited about, how do they excite Roche about it?
Dan Zabrowski:
Well first of all we, we are very open and agnostic to innovation sources. And one of the things I've learned in the short-term, I've been in this business is that you don't want to say no too fast, because if it's really innovative then people will probably have said no it won't work et cetera, so we really try to encourage anyone who wants to talk to us about their innovation to do so, and we have contacts on our website. We are present in basically all of the big meetings and so that opportunity exist, specifically clearly we are number one in, in oncology, we are number one in virology so we, we have high interest there. We are making strong in roads into the autoimmune disease particularly Rheumatoid Arthritis, metabolic diseases and CNS diseases. So in general the disease areas that we are interested in are very broad. I mean addition to that we are also very interested in disruptive technology, technology platforms that have shown some evidence of hope through compounded to that's, that's come from that technology platform. And frankly even early stage platforms where there had there hasn't been that success yet. So I guess to say really we're open to listen to everything.
Paul Larsmon:
Stem cells?
Dan Zabrowski:
Yes.
Paul Larsmon:
Even stem cells?
Dan Zabrowski:
Therapeutic stem cells absolutely, it's a " it's a matter of fact I would say it's an area right now that's of high interest to Roche. I would say we've talked to probably every single "I won't say every single, but we've talked to a large number of companies in this area, and we feel that this might be the right time to enter into a collaboration with a strong partner.
Paul Larsmon:
Because they have traditionally been seen as pretty risky?
Dan Zabrowski:
Yes. But in fairness if we are going to try to find the next step change in medicine we have to take risks.
Defining innovation
Paul Larsmon:
Earlier on you mentioned importance of true innovation when it comes to a new drug, how do you define innovation?
Dan Zabrowski:
It's a difficult topic because typically when we talk to potentially partners, they have a more favorable view of that " of innovation than potentially a company like Roche. For us it's around clinical differentiated medicines, you know we would consider true innovation to be something in the order of increasing benefit by two fold, three fold in a patient population versus may be a small incremental benefit for those patients, good example would be in the Rheumatoid Arthritis patients typically now the biologics will demonstrate an ACR70 and somewhere between 20, 30, 40% and we would think a real true step change would be to identify a patient population that would, that would respond to a medicine in the order of 80%.
Paul Larsmon:
There are lot of small, medium size biotech's out there who are struggling at the moment and I heard people on the conference floor saying you know we delivered for big pharma when times were good, but they are not backing ourselves now the times aren't so good, how do you react to that sort of criticisms?
Dan Zabrowski:
Well guilty is charged, you know in fairness I believe the financial market collapse has really created an acute situation where it's time for everyone to focus not only biotech and their investors but also large pharma, because we are going into a very different time, not only are, not only are the capital markets riskier but if you look at the regulatory environment, the pair environment this is also riskier. And so in the days, in the old days where you would had take a compound say post Phase II with a high success probability, that's come down some in the cost associated with bringing those compounds to the marketplace and supporting them on the market place have gone up dramatically. You know one of the stories that we like to tell has to do with an analysis that we did right after the financial market collapse and I asked our finders to give me their Christmas list, of their assets that they've really covered it and we ended up identifying a list of 80 assets, we did a financial check on those " on those companies that had those assets and not surprisingly there was only about five or six companies that were really defined as financially distressed. And so I do think that the companies that have quote on quote(indiscernable) winners from an innovative stand point are well funded, not in a hurry to partner with large pharma like Roche. And so we continue to monitor those assets and we will continue to stay focused on the one thing that's most important regardless of the financial environment and that is high quality assets.
The future of the pharmaceutical industry in the next year
Paul Larsmon:
Talking about the future, what sort of things is Roche gonna be looking for going forward in terms of the sort of deals that they might be able to make and the sort of innovative drugs that they might be interested in?
Dan Zabrowski:
Well from a deal stand point we've typically been agnostic to the structure itself, for us we look at partnering as a long-term relationship and we want to start it off as a win- win. So if a potential partner and the investors comes to us and they ask for particularly the deal structure we'll try to accommodate, so from that aspect we will continue, continue that process. I think in terms of the types of opportunities we are looking for I really think it's in three categories. Number one is we will look for late stage opportunities that will move that needle that we've talked about earlier in three to five-years. And we will not only look in the biotech community but also in the large pharma community, I think you are going to see more and more large pharma collaborations going forward. And I think also that will put a little bit of a pressure on the, on the biotech pharma relationship because resources will be taken by those large pharma collaborations. We also will continue to look at " what I would call late preclinical stage or early clinical stage opportunities particularly for a project where we've seen a clinical signal or a strong validated preclinical signal and really try to partner very quickly with that companies so that we can really take the best of both companies and move that medicine forward. And then the third area is in a early stage research opportunities platform companies etc because you know we do have an obligation to you know try to find that next step change in medicine in 15 to 20-years and you know we can't just stop doing that because of the financial market collapse.
Paul Larsmon:
And in one-year in BIO Europe 2010, I mean what's the pharmaceutical world going to look like? Better?
Dan Zabrowski:
I believe so. I believe so, I think you will still see the number of biotech companies reduced. I do think you will see more large pharma collaborations. I do think you are going to see more pharma, large pharma get involved in early stage research programs and try to form partnerships with biotech's and the venture capital investors sooner than later.
Paul Larsmon:
Dr Dan Zabrowski, thank you very much for joining us.
Dan Zabrowski:
Thank you very much.
Dan Zabrowski
Global Head of Pharma Partnering
Dan Zabrowski has been the Head of Pharma Partnering since July 2007. His team is dedicated to finding the best external innovation to strengthen the Roche R&D portfolio. He has previously worked at Roche Pharma HQ, Switzerland as Global Head, Drug Regulatory Affairs and Vice President, Pharma Development, Nutley, Vice President, Drug Regulatory Affairs at Roche Pharma USA in 1995 Executive Director, Drug Regulatory Affairs and Regulatory Program Director at Syntex, USA. Associate Director, North American Regulatory Affairs Fujisawa Pharmaceuticals Company, USA and School of Pharmacy, University of Illinois " Chicago Adjunct Assistant Professor, Medicinal Chemistry and Pharmacognosy
Roche
Roche plays a pioneering role in healthcare. As an innovator of products and services for the early detection, prevention, diagnosis and treatment of diseases, Roche contributes 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. Their mission today and tomorrow is to create added value in healthcare by focusing on our expertise in diagnostics and pharmaceuticals. Roche is the world leader in in-vitro diagnostics and drugs for cancer, transplantation, and active in other major therapeutic areas with a high medical need such as autoimmune diseases, inflammatory diseases, virology, metabolic disorders and diseases of the central nervous system.