Deal Making in 2012- What Next? Part 3- Financing

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Video title: Deal Making in 2012- What Next? Part 3- Financing
Released on: April 02, 2012. © PharmaTelevision Ltd
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Part 3:In this episode Helen Wright talks to Fintan Walton,CEO PharmaVentures, Shaun Grady, VP Strategic Partnering Business Development, AstraZeneca and Andy Richards, BioTech Entrepreneur about the financing situation for the industry in 2012
Andy Richards's views: Role of corporate venture funds in biotech financing environment
Helen Wright :
Welcome to this PharmaTelevision special program where will be assessing current trends and gazing into our crystal ball to analyze the future shape of deal making in the pharmaceutical and biotech industries, with me Fintan Walton who is CEO of PharmaVentures who are experts in deals and alliances, Shaun Grady who is AstraZeneca's Vice President of strategic partnering and business development and on Skype Andy Richards, a biotech entrepreneur and business angel. So moving onto financing the financial situation isn't hugely conducive to normal equity financing so what's happening to biotech, Andy Richards is this another area where those corporate venture funds really come into play?
Andy Richards :
I mean at the moment the corporate venture arms are dominating the investment continuum almost every major venture deal that goes on has one of the corporate venture houses in and very often there are two or three or even four acting as part of the syndicate now I think that the pharma has allocated more money towards this and almost every company has done so both the large and some of the medium sized companies and it will be very interesting to hear again from Shaun whether that"s going to be a sustained activity of course if it is (indiscernable) it's just the fashion then when end up again with discontinuities in the continuum but they certainly are pumping money and they are pumping less money in this limited partners into a major venture funds so there has been a (indiscernable) allocation.
AstraZeneca's venture arm Medimmune ventures
Helen Wright:
Shaun grady let me come to you on that point AstraZeneca does of course have a venture fund how important do you think that is?
Shaun Grady:
So our corporate venture arm is Medimmune ventures which was established by Medimmune a number of years before AstraZeneca acquired Medimmune [PharmaDeals ID = 27024]. We have actually just increased the fund we have added a further 100 million to it so the fund size is now 400 million the fund operated on an evergreen basis so proceeds are then re-invested back into the fund, as you would expect Medimmune ventures historically would have invented a large molecule opportunities particularly in North America but overtime then are looking more and more small molecule opportunities in Europe and elsewhere and in fact recently closed on an investment in a company a cardiovascular related company in Australia, so we see this very much now part of our ongoing ways of working and also is right that we get approached regularly and routinely by large VC funds looking for sort of co-investment as a limited partner and approached by very high caliber highly capable people with strong track record but it is really quite difficult for me to differentiate between those funds and way you invest, so rather we have invested time on improving and changing the caliber and quality of the management running the Medi ventures fund which is now headed up by a guy called Ron Laufer a very capable guy who has put a high caliber high quality team together so we think that"s a better route to go.
How does Medimmune ventures fit into AstraZeneca's strategic focus and future licensing deals?
Helen Wright:
And how does the fund fit in to AstraZeneca's sort of strategic focus and perhaps play in to future licensing deals and things like that that you might look at?
Shaun Grady:
So as a BD guy you will expect me to say the deal flow emanating from those investments is critically important and it is. You do have to careful though given the sort of fiduciary relationships of people our people who go on the boards and have few this sort of fine balance to walk but it"s not unusual for us to be engaged in partnering discussions where may be the opportunity is little bit early for an AstraZeneca partnering arrangement that we introduce to the perspective partner to the Medi guys to see if there is a investment opportunity there and vice versa. So if there is something that doesn't quite fit into the Medi investment policy at a particular point in time but could be interesting on the licensing side both larger and smaller molecular then we will pick that up so absolutely the deal flow emanating from the investment is key but the guys are pretty careful in terms of the areas where they invest and they don't restrict themselves to our sort of traditional therapy areas which I think is quite important.
PharmaVentures 's views on developments in financing, significance of emerging markets and role of not-for-profit organisations
Helen Wright:
Fintan what's your experience at PharmaVentures how do you see things developing in this area?
Fintan Walton :
Basically there is common theme here when we talk about licensing, M&A and financing, in the end we have to look at the landscape the landscape is a requirement by companies to have drugs in their pipeline and have drugs obviously out in the market so there is remand issue which the pharma companies create that demand there is supply issue which is where the origination of drugs would come from which is largely biotech companies and there is another third element which interlaces those two and is called risk and what we found over the last few years is that venture capital has basically run away the risks are too high, corporate ventures come in because the pharma companies require these products, they are stepping into play that role in providing venture capital, corporate venture arms then provide confidence to the few remaining venture capitalists around because now a large pharma company has basically endorsed the company that they are financing and VC's are now prepared to come in, so it"s part of this continuum this change that's happening within the industry and so we were left now with an issue which is how is how a biotech company is going to funded in the future. I think there are gonna be two ways that's gonna happen, on one hand I think that countries like India and China become very very important, basically you know biotech is the game for very wealthy individuals and as the emerging countries become more wealthy they also need to have access to high innovation and of course that still resides largely in the west so I think that what we our find is that there would be movement of intellectual property more towards China and India where that funding will take place. I also think that we are also seeing changes in the way in which early stage companies again Andy might be able to give us a better insight on this where early stage companies need to work closer with the research institutes and the universities and that funding will not only just come from traditional forms like venture capital from corporate funds but also increasingly seeing money coming from charitable organizations the cancer research organizations, taking for an example taking products further into proof of concept.
Shaun Grady:
If I could just add we have actually got a fostering arrangement with CR UK [PharmaDeals ID = 37425] / [PharmaDeals ID = 33005] where they have actually taken a program and they will actually conduct the phase 1 and phase 2 trials and then subject to a attractive data at the end of the end phase then we would then taken back it. So the relationship between academia "charitable institutions is much more of a commercial the sort of arrangement you would have had typically with biotech so that whole area is developing and transforming.
Andy Richards's perspective: Importance of charitable/not-for-profit organisations in biotech sector financing
Helen Wright:
Andy is that a view that you would share?
Andy Richards :
I think that Fintan is absolutely right that the importance of charitable sector the not for profit sector Welcome Trust, vehicles like the new government catalysts biomedical fund are increasingly important sort of bridging that gap in the early stage and I know a number of charities and charitable and not for profit institutions are currently trying to work out the structure funds such that they can fit into this new financing continuum. I think the importance of the not for profits should not be under estimated and everything we can do to encourage them we should do in fact I have been invited to speak at a debate in London in a couple of weeks time on this house believes the UK biotech sector is dead I am opposing that motion but I can understand why those looking from the outside in might think that's case.
Helen Wright:
Briefly Shaun and Fintan is the biotech sector dead?
Shaun Grady:
No absolutely not and let me just d"cor what Fintan said earlier about its about quality and so people with good science and good quality innovation will attract the attention of multiple pharma's and there will be competitive attention in the process and you will attract value and value will be attributed.
Fintan Walton :
Biotech is not dead it"s changed, the business model for doing biotech has changed, we will see a different type of biotech industry to the one we have seen traditionally.
Helen Wright:
Fintan Walton, Andy Richards, Shaun Grady thanks very much for joining us.
Helen Wright
Helen Wright has worked as a broadcast television journalist for several years, covering general news, business and politics and currently involved with PTVnews of Helen Wright has also worked as ITV News education correspondent and covered disability affairs. She has reported from Europe and the US. She also researched, directed and presented films for a Yorkshire TV regional documentary programme. Helen Wright began her journalistic career in local radio in Bradford. She has a BA Honours Degree in English.
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).
Shaun Grady
Vice President
At the time of recording this PTV interview Shaun Grady serves as VP Strategic Partnering and Business Development at AstraZeneca. Shaun Grady has global responsibility for the Strategic Partnering and Business Development (SPBD) function, dedicated to broadening AstraZeneca's access to scientific innovation outside our own laboratories - a key strategic priority for AstraZeneca. The scope of his team includes in-licensing, acquisition and partnering activities from early stage Discovery through to on-market commercial opportunities. Shaun originally joined ICI as an attorney and held positions in the Pharmaceuticals, Petrochemicals, and Head Office Legal Departments. Upon the demerger of Zeneca from ICI he was appointed Assistant General Counsel, Corporate. He worked on the merger of Astra and Zeneca, the merger of Zeneca Agrochemicals with Novartis Agribusiness to form Syngenta, and the creation of Avecia.
Andy Richards
At the time of recording this PTV interview Andy Richards serves as Andy Richards is a serial Biotechnology entrepreneur and business angel. He is currently Chairman of Altacor , Novacta, Abcodia and Ixico and is a director of Arecor, Summit Corp plc, PsychologyOn-line, Cancer Research Technology (commercial arm of CR-UK) and Babraham Bioscience Technology. Andy is a Cambridge graduate with a PhD in Chemistry who spent his early career with ICI (now AstraZeneca) and with PA Technology. He was a founder of Chiroscience and an executive director through to the sale to Celltech in 1999. Since that time he has been founding and investing in new Cambridge based biotechnology companies including several of those listed above as well as Arakis, Geneservice, Cambridge Biotechnology Ltd, Amedis Pharmaceuticals, Sirus Pharmaceuticals, Daniolabs and Pharmakodex, all of which were recently sold. He is a council member of the Biotechnology and Biological Sciences Research Council (BBSRC), a founder member of the Cambridge Angels, the founding Chairman of BIA Bioangels and an advisor to Vectura plc, CUTEC, 4D-biomedical and Toscana Life Sciences.
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.
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.
AstraZeneca is a global, innovation-driven biopharmaceutical business with a primary focus on the discovery, development and commercialization of prescription medicines for gastrointestinal, cardiovascular, neuroscience, respiratory and inflammation, oncology and infectious disease. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide.
Altacor is an ophthalmic specialty pharmaceutical company with marketed products and a diverse development pipeline. The products are focused in the following sub therapeutic areas: ocular surface disease, ocular anti-infection and glaucoma. The company differentiates products through, for example, formulation or reprofiling. ALT 005 (surgical) and ALT 020(ocular anti-infection), ALT 022glaucoma and ALT 401 for prevention of scarring in glaucoma surgery are examples. Altacor has five products marketed in the UK and Ireland (Clinitas and Clinitas range) which are commercialised through its own sales and marketing organisation and network. Clinitas and Clinitas GEL are prescription products; the former is for moderate dry eye conditions and has a uniquely high concentration of hyaluronic acid (0.4%) in the UK. It is gaining acceptance by clinicians nationwide. The OTC Clinitas range comprises Clinitas Hydrate, Clinitas Soothe and Clinitas Ultra 3which together address the major causes of dry eye.