Monday, July 18, 2011

BIO Convention Part 2

OK it’s time for part 2 of the BIO convention blog.  In this next section, I’ll give you some specifics in business development trends. Hope you enjoy the read.

Part 2: Business development specifics

Unfortunately, the news is not all that rosy right now for small biotech firms looking to sell to larger companies. The IPO option is still closed for the vast majority of firms and M&A exits have more strings attached than ever before. Many pharma companies are delaying cash payment to smaller biotechs, and full exit value is contingent upon achieving future milestones.  This contingency is the dreaded earn-out clause that VC’s hate as it delays repayment of their investment and lowers the IRR’s for their investors.  And if the drug performs less than expected, the sale value will likely be renegotiated downward.

The new financing environment for biotechs is even less pretty, with early stage VC’s going out of business left and right and no one really there to pick up the torch.  While big pharma is stepping in more and more with strategic alliance financing, they are using options to limit the exit value of the firm/program and staging their investment more like a VC would. With all this pressure on developmental biotech firms, it’s hard to tell whether innovation will suffer or whether it might be more efficient. Time will tell.

With all the emphasis on partnering now, alliance management has taken a main stage in business development.  There seems to be much more of a collaborative spirit than ever before, especially when the technology is still very early in development, but really in all stages.  And, of course both companies have to be very understanding of the goals and incentives of the other and bring a high level of emotional intelligence to the table.  Only then do these partnerships become a win-win for everyone involved.

It is clear that alliances are definitely the way of the future, both for the financing and development of the drug.  Yet, the path to an alliance is not at all clear since big pharma is still very bureaucratic.  As always, you have to be creative to get traction. Shawn Grady, VP of BD from Astrazeneca, had these words of advice. “You have to be tentacular in your approach,” meaning that you have to have multiple touch points in the large pharma organization. You never know who your internal champion will be, so the more connections you have, the better your chances are as well. I think this holds true when dealing with any large organization, but is even more important when there are many stakeholders involved.

I know that all this seems a bit daunting for the small biotech firm who just wants to get their baby to market. While it’s a bit rough right now, there are still lots of opportunities for a disruptive product or technology.  In fact, big pharma is doing many preclinical deals with clinical stage valuations with companies who are using novel chemistry or have a diversified, risk-reducing system for drug development (notice I didn’t say platform technology – you shouldn’t either if you want funding right now).  And, any large company will take a serious look at a product company if it has passed the “new” proof of concept benchmark which is a phase IIB clinical trial.

In summary, drug development has always been risky.  And in the current environment, everyone is doing what they can to make the process less risky, take less money, and be more efficient in general. The challenge now is innovation – not only in product development, but with business models, supply chain management, and finance. The development of a differentiated product with a high customer value has been the central dogma in business for years.  It’s just taken pharma this long to catch up to the rest of the business world.  So, the future looks bright.  We’re going to have better medications that have a much higher probability of success than ever before. Lets just hope that we can solve the current financing crunch before all the innovation goes out the window.

Author: Josh Bueller

Monday, July 11, 2011

Let the blog posts roll

Hello All,
I want to officially re-launch our blog here at the CU Biotech Club. I think that this blog can be a great outlet for our members to reach a broader audience and share their thoughts on Biotech, Healthcare, and anything else on their minds. I hope that it can serve as a great representation of the members we have here in the club and their depth and breadth of understanding of Biotech. I'm currently looking for any and all members who would like to contribute content. Please reach out to me Jeff.Schreier@colorado.edu if your interested.

For our first post we've got some insight into the themes and topics that were prevalent at the recent BIO convention which our former president Josh Bueller was fortunate enough to attend. Check back weekly for more posts.

Enjoy!
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BIO Conference
June 27-30 

Hi my fellow Bio business enthusiasts! 

It’s been a while since I’ve written a blog post so I thought I might get things rolling again.  Jeff Schreier assures me that he will continue the blogging as well so keep checking in. 

What a week it’s been here in Washington D.C at the 2011 Bio International Convention.  For those of you that are not familiar with this convention, it’s the foremost international conference for biotechnology and pharmaceuticals. There were even biofuel companies exhibiting this year. No devices though. 

I’m going to try to give you a recap of what I saw.  I followed mainly the business development track of sessions which provided an overview of M&A activity, strategic alliance tips, current valuations, and general trends in the market. There were also a host of other session tracks including personalized medicine, diagnostics, regulatory, finance, health care reform, etc… but I didn’t attend many of those. I’m going to do this blog in 2 parts, so stay tuned for the rest. 

Part 1: General themes 
It was pretty much agreed by all the experts that we are in the midst of a fundamental shift in drug development.  For years, the lowest-hanging fruit for drug makers has been to develop therapeutics to combat the most prevalent diseases and basically treat everyone the same – the same drug for everyone.  Now, we are definitely getting more personal. As captured in the 2011 Ernst & Young Beyond borders: global biotechnology report, the FDA is subscribing to a “Prove-it or lose-it” philosophy, stating that a new drug will need to be much more effective with fewer side-effects or the FDA will not approve it.  Me-too drugs are simply gone and it’s all about proving a comparative advantage over standard of care medicine.  

This policy means that pharma companies will be looking to develop drugs for niche diseases now so that there will be less chance for competition in the specific indication market in the future.  In addition, companion diagnostics are becoming more and more important in the quest to reduce side effects and boost efficacy for select groups of patients belonging to any specific disease group.  Now, we’re still a long way off from individual drugs being made for a specific person, but this is a huge step in the right direction. 

Secondly, biotechnology companies have to be accustomed to doing more with less.  If you’ve read the Wall-Street Journal recently, you’ve noticed that we’ve regained our pre-2008 crash GDP, but we’re doing it with 7,000,000 fewer jobs.  The biotech industry is no different.  Interestingly, big pharma has not only been laying-off sales and marketing people, but have reduced R&D jobs as well.  They are really starting to embrace the open-innovation philosophy to fill their late-stage pipeline.  This results in two major shifts in work force: 1) They rely on outside firms to fill their late stage pipelines (less internal R&D folks) and 2) some companies will kill internal mid-stage programs if they feel that an outside firm has a better drug than they do.  So, for all you scientists out there, small biotech firms may be a much better place to work than large firms – at least right now. 

Much of the development work that was previously done within the walls of pharma companies in the US and Europe is now being outsourced to China, India, and Brazil.  Companies in these regions have the capacity and know-how to be a major participant in the development and manufacturing of any drug. And, while they are still a ways from being good at the discovery phase, it will not be long until they can discover, produce, and sell new pharmaceuticals on the same level as Europe and the US. In addition, these emerging markets represent an enormous revenue potential for drug makers as more people in these countries become able to pay for western medications.

Monday, August 16, 2010

Stay up to date with journal rss feeds and emails

by Josh Bueller

Why does it seem like I'm always failing to keep up to date on trends in biotechnology?  Does it seem that way to you too?  There's just too much information out there to stay on top of everything and still have a life.  So, I've decided to let the information come to me.

If you didn't realize it already, the old Science Citation Index is now part of the Journal Citation Report (JCR) and this database is provided through the Thompson-Reuters Web of Knowledge.  Through the JCR, you can determine a specific journal's influence in the marketplace as compared to others.  You can get information from the most relevant journals in your field to do all sorts of things like review trends and strategic directions, monitor competitors, and identify new opportunities in biotechnology.

To speed up my information gathering, Ive decided to subscribe to the journals that have the most Impact.  The journals listed below carry the highest impact factors in biotechnology (source: JCR 2009 report):


1) Nature Biotechnology
2) Nature Reviews Drug Discovery
3) Genome Research
4) Biotechnology Advances
5) Current Opinion in Biotechnology
6) Stem Cells
7) Briefings in Bioinformatics
8) Mutation Research - Reviews
9) Trends in Biotechnology
10) Genome Biology
11) Molecular Therapy
12) Nanomedicine
13) Biosensors & Bioelectronics
14) Bioinformatics
15) Biofuels Bioproducts & Biorefining

Hope this helps with your searching as well!

Wednesday, August 4, 2010

Market Research Blog Series --> Getting Organized

By Greg Kuehn

Ok Josh Bueller has been bugging me all summer about getting a blog started so here it goes.  First things first... Let me introduce myself.. my name is Greg Kuehn.. I'm just about to start the second year of the MBA program at the CU Leeds School of Business and I'm interested in pursuing a career in Biotech... Why? You ask... Well, My undergraduate degree is in Biology and Computer Science from William and Mary and after a brief professional football career I found myself marketing real estate in Vail, Colorado. Needless to say, the luxury real estate market has tough for the last few years and the real estate industry was never really part of my "master plan."  I put "master plan" in quotes because I absolutely do not have a "master plan."  To reference Pirates of the Caribbean... "It's more a set of guidelines than rules." 

One thing I do know is that I will always be fascinated by science.  A second thing I know is that you should try as hard as you can to work on something you're fascinated by.  Thus, Biotechnology entrepreneurship has long been the general direction I've allowed myself to drift.  I'll elaborate more in future blogs but I've been procrastinating too long and Josh is going to kick my butt if I don't write anything of value in this post so I'll have to allocate the blathering across several posts. 

I've been working for two Biotech*** related startups this summer, one is a greater Denver area medical devices company that is developing machine learning techniques for analyzing physiological data and the second is a Washington DC area based molecular diagnostics company that is studying the human microbiome and developing diagnostics for gastrointestinal and autoimmune diseases.  For both projects I have been working on doing market research and developing business and marketing plans.  The market research experience is something that I think has been very valuable and worth sharing with all of you.  

Here's the "master plan" for my first couple posts.
Subject: Market Research

Description:
If you're going to pursue a career in biotechnology at some point you're going to be doing market research.  Somehow you've gotta figure out how much your technology is worth and how you're going to demonstrate that value. 

Blogs: 
- 1 Getting Organized - using the free evernote tool to organize your research
- 2 Following Market Trends - using rss feeds and key industry news sites to stay up to date on the bioscience industry  
- 3 Using Colorado library resources
- 4 Digging for the numbers - advanced research databases
- 5 Presenting the Report - What do investors expect to see?

1. Getting Organized

I use 3 main tools for organizing my research and following industry trends
3. RSS Feeds

Evernote has become an absolutely indispensable research organization tool for.  It works both of my computers and my iphone and syncs my research notes across all three.  Evernote is seamlessly integrated with your web browser and allows you to clip whole webpages.  You can also grab screenshots and take your own notes.  Everything that you capture is automatically indexed and made searchable.  Also, you can add tags to notes and organize notes into different notebooks.  Perhaps most importantly, Evernote notebooks can be shared online with your collaborators so they can follow your progress and read the stuff that you find. 

Evernote Tips: 

Clipping
You can clip whole web pages by clicking on the evernote button in the top of your browser.  Make sure you've installed the appropriate plugin for Safari, Firefox or IE.  You can also highlight small sections of text and clip only that section.  You can also drag .pdf's and a few other filetypes into a new note and save those.  I've used evernote to clip market research reports, competitors websites, news articles and more.  


Tags
Always tag your notes as you create them to keep your notebook organized.  One great thing about tags is that you can add multiple tags to each note so that a note can be found in several different tag groups. For example, you might find an article that contains information about multiple subjects that you're researching or has several different characteristics that you want to keep track of. 

I've taken tags to the extreme by creating a pseudo hierarchy.  The tags are automatically ordered alphabetically so I put numbers before some of my tags to force some key tags to appear at the top.  I put a 0 in front of tag groups that I want to highlight for my collaborators or groups that I use very often.  I put a 1 in front of tags that indicate what type of note it is. (article, market report, company, competitor... for note SUBJECT I don't add a number so that they'll be sorted alphabetically.  You'll have to play with it to figure it out.... 

Here's what my tag list ends up looking like:
0 ---> ORGANIZATION LISTS <----
0 Greg's Pics
0 Imported
0 For Review
0 To DO
0 Meetings
1 ---> BY TYPE - ATTRIBUTES <---
1 articles
1 Market Reports - Full
1 Market Reports - Outline
1 Patent Info
1 Links
1 Competitors
1 Market Data
2 ---> BY TOPIC <---
Autoimmune Disorders
Bioinformatics
Biomarker
DNA Sequencing
Colorectal Cancer
Crohn's Disease
Therapeutics

This means that if I find a market report about the Colorectal Cancer Market that contains market data I'd tag it like this:  (1 Market Reports - Full) (1 Market Data) (Colorectal Cancer).  This means that when I go back and have to write something that needs market data or information about Colorectal Cancer I can find the report in both groups. 

xMarks
xMarks is a cool tool that syncs all your passwords across all your computers and browsers.  This has saved me a lot of time over the past few years. 

RSS Feeds 
I'm burned out so I'm not going to write as much as I should about RSS feeds.  Basically RSS feeds allow you to subscribe to various industry news sources and have all the news updates compiled automatically in an RSS reader.  You can use Outlook, Mail or google reader to read RSS Feeds.

 ok that's it for now. 

Monday, July 19, 2010

Failure in Biotech - Should the Founders be Fired?

by Josh Bueller

The Biotech industry is truly the hardest business to be in.  The enormous capital requirements, the scientific expertise needed, the regulatory red-tape, and the challenge of adoption by multiple people (payers, prescribers, and patients in the case of therapeutics) make successes in biotech few and far between.  In fact, the current stats are that 9 in every 10 business will fail.  This is a staggering statistic and caution is warranted for any new entrant to this field.

There are many reasons for these failures.  In pharma, the success of a new compound will largely be based on the science.  In diagnostics, the success might be based on execution of the product.  No matter your specific segment of the industry, however, there is one unifying factor that ultimately will determine the company's success - The management team.

At the beginning of a biotech start-up, the company is typically formed by a scientist (CSO) and a business driver (CEO). These two people, along with some other potential VPs make up the New Venture Management Team (NVMT) and will usually take the company through early seed financing and carry out some early R&D until Venture Capital (VC) investment can be attracted for further development.  However, at the time of the first VC round, these executives are typically replaced with "more experienced" people.  For example, in the time from company inception through a liquidity event (IPO or acquisition), the average biotech company gets through 3.5 CEOs (Walton, A. 1999). Other members of the NVMT are fired as well soon after the first VC investment in favor of more professional management.  Clearly, VC's have commonly fired the founders as they believe that a more experienced team has a greater likelihood of success than does the original team - but are they right?

William Bains, Ph.D. biochemist, serial entrepreneur, and previous member of Merlin Ventures (London), recently explored this issue (Bains, W. 2007).  He examined the effect of NVMT removal in a set of 77 UK venture-backed biotech companies to see if the investors in the company fared better than if the NVMT hadn't been removed.  By analyzing the relationship between company performance (achieving liquidity, attracting further investment, company size) with length of NVMT retention as a primary metric, he determined that removal of the founding team is correlated with poorer  performance of the company for all of his performance measures.  He concluded that VC investors' tendency to routinely remove founders and change CEO's is damaging to their own interests and suggested that ways in which the founding members can continue to contribute to the company should be explored.

Commercial experience is an essential component of any executive's skill set and I would still caution any newly minted MBA's, Ph.D.'s, or M.D.'s from starting their own companies without working in industry for some period of time. That being said, this is good news to all you future entrepreneurs out there!  While serial entrepreneurs are still the most valued executive, there is hope for all of us novices that we'll be able to survive after the initial VC rounds, gain our well deserved stock options, and see our products come to life.

refs:
Walton, A (1999) Some thoughts on bioentrepreneurship. Nat. Biotechnol. 16(Supplement), 7-8
Bains, W. (2007) When should you fire the founder?  J Com Biotechnol. 13, 139-149

Friday, June 11, 2010

Opportunity for Intellectual Property Assessment

by Josh Bueller

It's great to see so many people getting interested in the club and the various initiatives that we're pursuing with the Colorado Initiative for Molecular Biotechnology (CIMB), Leeds Business School & Deming Center for Entrepreneurship, and Industry. It's safe to say that our future looks pretty bright.

Besides the seminar series, I'd like to bring up another opportunity for our members.  One of the reasons that this club was formed was to assess the technical and market feasibility of the exciting ideas and technologies that we think up ourselves or hear about in our everyday work and research.  Along these lines, there are some interesting ideas that other universities have developed to provide access to faculty innovations through the unlicensed intellectual property of their universities.  See this relevant article from the University of Rochester for instance:

http://www.technologytransfertactics.com/content/2010/06/09/entrepreneur-focused-master%E2%80%99s-program-to-target-university%E2%80%99s-unlicensed-ip/

While I think that a Master's / certificate program is an interesting idea for the future (see article), it would be pretty darn exciting if interested members of this club would team up and develop some of their own ideas or look at some of the unlicensed technology that CU has in the Technology Transfer Office. Formed teams could present their analysis and subsequent business plan at national Biotech business plan competitions or right here at the CU New Venture Challenge (CUNVC) Business plan competition. You can get access to the portfolio of CU inventions here:

http://techexplorer.cusys.edu/

I happen to work here at the CU TTO and I can tell you there is a wealth of  technology, some of which has a lot of potential. Currently, you can only get access to non-confidential information on the website.  If a provisional patent has been filed, you can usually find an associated academic publication on pubmed by searching by inventor's name.  Hopefully, there will be more formal mechanism for our members to analyze CU technology in the future though a Market Assessment Program (MAP).

Friday, May 21, 2010

Personalized medicine – Can we all have our piece?

A Reflection from the GoldLab Symposium
by Phil Calabrese

Human societies are pressed to find medicines and drugs to alleviate the prevalent ailments and diseases within their culture for the sake of longevity and health.  As far in the past as two thousand years ago, Chinese herbologists used compounds found in nature to develop a successful system for diagnosing and practicing medicine.  They were able to do so using a system based heavily on trial and error while doing the testing on themselves and keeping meticulous records.  In contrast, modern day science’s technology driven approaches have led to a deep understanding of the molecular interchange between genes and proteins.  In today’s world, there is a huge effort to be rational when it comes to finding novel, useful therapeutic targets and compounds.  In the US, small sets of human subjects are tested and evaluated in clinical trials before a drug is deemed appropriate.  But strangely enough, even if a drug makes it to market for a certain type of cancer, it doesn’t mean that everyone who has that type of cancer will respond to the drug. 

One great promise of biotechnology is that medicine will one day be administered to an individual and tailored towards them based on their unique genomic or proteomic signature. However, many people wonder how reasonable this goal really is and some therapies are already expensive beyond reason itself.  Take Erbitux, the genetically engineered monoclonal antibody for example.  It is a colorectal cancer therapy that has been shown to exhibit some mechanism of action against the disease but costs $17,000 per month and it is only effective in roughly 20% of the population.  This type of situation places a huge burden of cost on a collective pool of individuals - each contributing to what they may be disproportionately getting back from the healthcare system.  Effective pre-screenings that are a few hundred dollars and evaluate if the therapy will be beneficial can provide cost effective way to alleviate this financial burden.

But getting a diagnostic to be used in the clinic takes a lot of research, product development and dollars.  And even if the test results are backed by solid evidence, if they don’t fit into the timeframe and practical limitations built into a hospital’s workflow, they aren’t used.  For example, if someone is diagnosed with a disease, a decision about surgery needs to be made within a window of time.  If the patient’s sample can’t be taken, analyzed and given back to the clinic within that window, the hospital won’t use the test because of their established protocol in how they treat patients.  Even if it saves the patient and the system from wasting $17,000 eighty percent of the time by taking a blood test that costs $300.  

There are surely many challenges and obstacles to achieving the goals of personalized medicine.  However, the vision of many pharmaceutical and biotechnology industry leaders is focused squarely in this realm.  Although many times these types of ventures do not succeed, they will continue and when breakthroughs are made, people benefit.  I hope we can use what we heard at the GoldLab Symposium to be more aware of the bigger picture at hand and become better as individuals at what we do to impact health and disease.