Genentech Inc: Jennifer Cygan talks about the changes they are seeing in early stage deal structures.




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Video title: Genentech Inc: Jennifer Cygan talks about the changes they are seeing in early stage deal structures.
Released on: October 26, 2011. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, Fintan Walton talks to Jennifer Cygan, Associate Director, Head Technologies & Diagnostics Business Development of Genentech Inc.
Role of Genentech's Technology and Diagnostic Licensing group
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at BioPharm America in Boston. On this show I have Jennifer Cygan, who Heads up Technology and Diagnostic Licensing at Genentech , welcome.
Jennifer Cygan:
Thank you very much Fintan, it's great to be here with you today.
Fintan Walton:
Good, now Jennifer I said that you, you know you headed up Technology and diagnostic Licensing at Genentech now obviously what we want to first establish is where do you fit within that organization?
Jennifer Cygan:
Yes, so I am one of the members of the leadership team in the Genentech Partnering Group which has both alliance management and business development functions, we're reporting to James Sabry and our partnering group serves the Genentech research and early development organization. Roche Partnering also has an independent business development group and I regularly communicate with my Technology Group leader counterpart in the Roche Partnering Organization so that you know we can converse about different technologies opportunities that we're each reviewing because potentially they could have applicability to the research in either of the two organizations.
Jennifer Cygan's views: Changes in early stage deal structures
Fintan Walton:
Right, now obviously you know technology diagnostics what is the stuff that you are actually looking at, I shouldn't call it stuff should I call it technologies you are looking at and innovation that you are looking at is early stage and so we all know these days that trying to do early stage deals have become more difficult for whole range of different reasons, what changes have you seen in the way deals are structured?
Jennifer Cygan:
Particularly as they pertain to early stage technologies I mean I think what we are seeing is that companies are not having the opportunity to initiate a lot of their own efforts and really establish a lot of proof of concept on their platforms necessarily before they start seeking to partner, so instead they are really looking for opportunities to collaborate at with a company such as Genentech at an early stage where we might bring a target to a collaboration and you know apply their discovery platform which hopefully has some unique properties such as that you know come up with unique leads and you know they really looking for us to bring interesting biology to the collaborations and also to bring some funding that will help them in the kind of be able to use that as a vehicle for raising money as well in the early stages of the company.
Fintan Walton:
Okay, so in effect you are seeing a change in which deal structures have would you call those more creative any different to what happened in the past?
Jennifer Cygan:
Well overall I think there is you know a new type of deal structure general some new themes happening in deal structures and there has been a lot of M&A activity and that's you know companies of all different stages, but you know certain structures such as acquisitions with earn outs, structured acquisitions also option structures you know that really provide them the option to either acquire a company at a certain price or an option to acquire specific asset, these are very attractive I think to companies as a way to understand on a certain time frame and a certain return for their investors that there may be exit opportunities or opportunities for financial return. So that's something I don't think we saw as much when there wasn't as challenging of a fund raising environment as we are now and also I think in pharmaceutical companies large biotech's are also willing to take more risk and are interested in partnering earlier and are interested in being more flexible and Genentech certainly has been doing some of these creative deal structures and including some of that we've you know announced this year and our partners to really appreciate the flexibility and listening to their needs and the challenges that they are facing.
Deal with Array BioPharma
Fintan Walton:
Right, so an example I suppose is a deal that you've done recently with Array BioPharma [PharmaDeals ID = 42430], can you just tell us you know in that particular example where the creativity was?
Jennifer Cygan:
So in the case of Array we really are excited about that deal, it was one that was driven by biology first and first and foremost. We are both interested in the cancer target ChK-1, we both had programs that were getting ready to enter the clinic and we learned that Array was interested in licensing their program with that both of them had the potential to be you know best in class, first in class but molecules were quite different and we weren't really sure, they had different properties which one might be more attractive and so we said to Array well how about we pour together these two programs, Genentech will take them both forward in development and we will give you the same financial consideration in terms of milestones and royalties regardless of which of the two molecules who originated the molecule that ultimately is the one that progressed into late stage development, so it was really a chance for them.
Fintan Walton:
Very generous?
Jennifer Cygan:
To have two shots on goal you might say, because now they also had access to the Genentech molecule and they like that.
Fintan Walton:
And why you were so generous?
Jennifer Cygan:
I think was because at the end of the day we were excited about the biology, we were really committed to ChK-1 and we truly felt we wanted the science to answer the question of what are the right properties, what's the ideal molecule to ChK-1.
Fintan Walton:
So you like the company as well, it's the people that were important in that deal?
Jennifer Cygan:
We have had a long establish relationship with Array and certainly respect all their capabilities, we know they have just excellent chemistry capabilities, we were very confident with all the work they had done to establish the molecule that they intended to take into the clinical, so already had a long a strong relationship and said hey we would like together share with your risk and reward by pulling these programs and really trying to develop the best possible ChK inhibitor.
Partnership and colloboration strategy
Fintan Walton:
Yes so, so from what you are saying there and also earlier we talked about these creative deals and clearly what I hear from you and from others is that the number of ways in which you carve up a deal is there is a much broader spectrum which means that it extends not just only into you know a straight forward collaboration and license space but also there is an equity component to these deals, I mean and also a lot of as you mentioned also a lot of these companies at a very early stage increasingly becoming early, I suppose the question is can you get too creative and the second a bit is can these companies be just too early, so maybe I'll ask you the first part are these companies too early, some of the companies as you are looking at right now?
Jennifer Cygan:
I think from Genentech 's perspective we don't think the companies are too early. Because we prefer actually to partner early and that's because we are really driven by biology and if we hear that a company is working in an area of biology in a particular disease mechanism or particular target that's off interest to us we'd like to establish an early collaboration and typically that when involved really leveraging the partners expertise, close collaboration where we fund FTE's because we think that's gonna maximize the chance of success if that party has an expertise in that area, in the past couple of years we looked back in 90% of our licensing activity was done at the research stage for product opportunities so they are really driven by the biology, so for us we are very comfortable with focusing on biology even before necessarily having lead candidates and really partnering while there is still the opportunity to help guide the way that you were just discovering drugs as well as developing them just based on the understanding the biology. So we wouldn't say it's too early, I would say the one thing that we have not done is target discovery collaborations, we generally already have some excitement around a particular target or a mechanism and we'll start thinking about collaborating around the target or mechanism generally.
Fintan Walton:
Okay, so at that particular stage. Just going on to the creative a bit the reason why I said too creative is because often creativities are great idea, but you end up looking at so many multi facet components to the deal which may not just simply relate to the person who you are negotiating with or just a CEO, it could also involve shareholders making decisions about equity dilution and so forth, so how do you make sure that you get that balance right?
Jennifer Cygan:
Well when we think of creativity it's about being flexible and at the end of the day it's about taking into considerations both parties needs and agree those needs can come from a variety of factors for a company including needs of the shareholders, so as we approach things I think we generally have an idea of what's most important to Genentech and we seek to understand what's most important for the company and then the cases of where there is a strong participations by the board, we actively engage them in the process just to understand what their needs are and how to structure something and at the end of the day it has to work for both parties. So if we can within the frame work of what they tell us is most important for them and what we know is essential for it to be a really positive opportunity and a good collaboration for Genentech , if we can make it work we will so I am not saying every structure will necessarily work, but it's really about being flexible and just listening and trying to understand what's most important to the other side and see if we can make something work within that context.
Genentech's perspective on Innovations, Fundings and corporate venture funds in Biotech industry
Fintan Walton:
Right, now obviously these new innovations, these new technologies whether they apply to a therapeutic or to a diagnostic obviously you cover diagnostics as well, innovation right at the very beginning is really important it needs funding as well and from just from your perspective looking at the industry, looking in the universities, research institutions, not-for-profit organizations well out of this innovation can occur, are we in danger now in from an Genentech point of view are we in danger that we will just not find the same level of innovation as we did in the past?
Jennifer Cygan:
I think that you are saying that there is less funding available, and I would agree that I think and Genentech things that there is a potential problem with there being less money available just to fund early stage companies, help translate things from the university out of that environment and into.
Fintan Walton:
A commercial environment?
Jennifer Cygan:
More of a commercial setting or one where things can be developed more towards commercial applications, but it does still seem that there are mechanisms for funding vehicles and I think more than traditional VC's that the focus is now being turned on corporate investors, so there is much more activity I think about corporate investment, investment funds that are happening right now.
Fintan Walton:
Sure, corporate venture funds?
Jennifer Cygan:
Corporate venture funds exactly and so as I am head much in previously there is just much more emphasis now on the pharmaceutical companies and large biotech's helping to fund that research and helping to fund more translation bringing but whether it's on a very focus manner on a specific collaboration which is more what Genentech turns to do or some other companies are taking their approach of providing a very large amount of money to a given university that's focused on a specific area and more broadly, I think that in this way that companies in the pharma and biotech space are looking to kind of step up and help to fill some of that gap that's created by less NIH funding and less traditional venture funding.
Opportunities in Personalized Healthcare landscape
Fintan Walton:
Right, now I mentioned also again your one of your area is diagnostics and personalized health has become very, very important and obviously Genentech has just gone to FDA approval for Zelboraf I believe, which is also a combination and works with the therapeutic with the diagnostic so it's right down into the personal health area you as somebody who is out there sourcing and identifying those types of opportunities, what is the landscape like and what is the opportunity there from your perspective having been out there looking for these gems that were looking for?
Jennifer Cygan:
Well I think personalized healthcare first of all is just an extremely exciting area and I am glad to see that there are so many technologies and so many new companies with platforms for diagnostics, potential companion diagnostics that are being funded these days, I think that's an area where there is a lot more activity actually for investment, and so our recent product Zelboraf which is for metastatic breast cancer has a companion diagnostic that's a molecular test that looks at a particular DNA mutation and there are other types of companion diagnostic test such as the immunohistochemistry test looking at the expression in the tumor of HER2 from our product Herceptin, so there are these different types of biomarker test and we are finding that there is a lot of different ways that we might have different tools for assessing certain patients that are likely to respond to therapy besides the obvious looking for DNA mutations are looking for the presence or absence of this particular protein there are companies looking more into circulating tumor cells, methylation of DNA a lot of different ways that one might be able to detect the difference between a patient who might respond or may not respond to therapy, so it's a very exciting time and Genentech is doing a lot of exploratory work about different types of technologies and different types of biomarker platforms, because we have a huge commitment to personalized healthcare we think it's what's right for patients and with the success and rapid approval of products such as Zelboraf I mean it just restates that there is a high level of interest at the FDA and a commitment to moving forward those types of therapies for the benefit they can bring to patients.
Future growth potential of companion Diagnostics working with Therapeutics
Fintan Walton:
Right, so in the end then again looking at, because you are looking at these early stage activities, these early stage innovations are we likely to see a lot more of these companion diagnostics working with therapeutics, is that really a growth area?
Jennifer Cygan:
I think absolutely, it's something that is gaining more momentum, it takes time if you are going to develop a product in the context of companion diagnostics you have to start out with hypothesis in early stage development and explore them in your early stage clinical trials, and then actually have a test in your Phase III and then the whole process takes time because drug development takes time, and what I am thinking, what I am seeing certainly in the case of Genentech pretty much every single one of our products in our early stage pipeline has a companion diagnostic hypothesis that we're testing and I think other companies similarly are more and more looking for biomarkers to predict response and are developing companion diagnostics, so over the next several years I think there is just gonna be burgeoning of this as all these programs that are in early development now move through the pipeline, so it's just a feel that I anticipate is just going to grow extensively in the coming years.
Fintan Walton:
Yes and I am just wondering whether that introduces another constraint for the chances of success for a particular product, is it more likely to enhance the chances of a product getting approved or is it is because you've got that extra diagnostic component you may have a greater chance of failure?
Jennifer Cygan:
Well we think that overall it will increase the chance of success, I mean diagnostic hypothesis may not bear out to be correct in the clinic just as therapeutic hypothesis may end up not baring out to be correct, so I thinking taking a hypothesis forward and testing it into the clinic is a good idea, it can be this the matter of just the product can be successful without any patient subset selection, products can fail regardless to whether or not you attempt near to subset sub patients, so I think there is a risk in the companion diagnostic development, but in the case of one of our products that finished a Phase II trial last year our antibody to c-MET it clearly if we had not selected patients based on a companion diagnostic in that Phase II trial the trial would have been negative, but it was very, very positive in the subset of patients who, who have been selected.
Fintan Walton:
Because you've given the right drug for the right patient group in the end?
Jennifer Cygan:
Yes and so it just really spoke to the situation of the drug that absolutely would have failed had it not been for the companion diagnostic could have failed Phase II trial, but now we are very excited for taking that forward in that patient subset in Phase III. So yes we know the hypothesis may have been wrong in this case it's absolutely necessary, I think it'll have different cases of whether or not your hypothesis was correct, whether or not it's actually necessary to have a companion diagnostic at the end of day it's just to select the subset of patients so.
Fintan Walton:
Right, absolutely very interesting. Jennifer Cygan, thank you very much indeed for coming on the show.
Jennifer Cygan:
Thank you very much Fintan. I appreciated being here and a lot of excitement at the conference just wanna say thank you for having me and really there is a lot of going on in the deal making environment and Genentech is really excited about doing creative deal structures, that was pleasure to have the opportunity to talk with you about that.
Fintan Walton:
Thank you very much.
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).
Jennifer Cygan
Associate Director
Jennifer Cygan Ph.D. is Associate Director, Business Development at Genentech Inc, where she is responsible for the identification, assessment and negotiation of strategic technology licensing and collaboration opportunities. Prior to joining Genentech , Dr. Cygan was Director, Business Development in the Healthcare Division of Genencor International Inc where she executed strategic out-licensing of clinical stage therapeutic candidates in oncology and infectious disease. Previously she was a Senior Licensing Officer at the University of California, San Francisco Office of Technology Management and a Licensing Assistant at the Harvard Medical School Office of Technology Development; in these roles she identified corporate licensees for innovative university inventions and completed the resulting agreements. She was also a Medical Sales Representative for Procter & Gamble Pharmaceuticals. Dr. Cygan received her Ph.D. in Biology from Harvard University and a B.S. in Microbiology *summa cum laude* from the University of Illinois, Urbana-Champaign.
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.
Genentech Inc
Genentech Inc was founded more than 35 years ago, in 1976, by the late venture capitalist Robert A. Swanson and the biochemist Dr. Herbert W. Boyer. In the early 1970s, Boyer and geneticist Stanley Cohen pioneered a new scientific field called recombinant DNA technology. Upon learning about this development, Swanson placed a call to Boyer and requested a meeting. Boyer agreed to give the young entrepreneur 10 minutes of his time. Swanson's enthusiasm for the technology and his faith in its commercial potential were contagious, and the meeting extended from 10 minutes to three hours; by its conclusion, Genentech was born. Though Swanson and Boyer faced skepticism from both the academic and business communities, they forged ahead with their idea. The company's goal was to develop a new generation of therapeutics created from genetically engineered copies of naturally occurring molecules important in human health and disease. Within a few short years, Genentech scientists proved it was possible to make medicines by splicing genes into fast-growing bacteria that produced therapeuticproteins. Today Genentech continues to use genetic engineering techniques and advanced technologies to develop medicines that address significant unmet needs and provide clinical benefits to millions of patients worldwide. In March 2009, Genentech became a member of the Roche Group. As part of their merger agreement, Roche and Genentech combined their pharmaceutical operations in the United States. Genentech 's South San Francisco campus now serves as the headquarters for Roche pharmaceutical operations in the United States. Genentech Research and Early Development operates as an independent center within Roche.