Diametrical

I have John Carroll, editor of the newsletter FierceBiotech, to thank for setting up this posting.  Last week, he ran an article on the announcement by Johnson & Johnson (JnJ) of the formation of a dedicated global health business group (FierceBiotech article).  But he also included in the story a quote that nicely illustrated the diametrical (and wrong, in my opinion) direction some big pharma companies are taking in global health.  The quote is from a Business Week article on the on-going duel between some big pharma companies and the Indian government on access to their patented drugs (for more, see my post, “Dueling Sitars”).  The CEO of Bayer AG commented on the compulsory license the government issued last year to a generic maker of a copy of Bayer’s patented drug, Nexavar:  “Is this [license] going to have a big effect on our business model?  No, because we did not develop this product for the Indian market, let’s be honest.  We developed this product for Western patients who can afford this product, quite honestly.  It is an expensive product, being an oncology product.”  If he was being honest, he should have explained why Bayer bothered to patent it in India if it had no plans to sell the drug there or in the markets where a generic copy may be sold.  Why not plan to sell a new, needed (presumably) drug globally rather than using patents solely to minimize competition?  Competition is part of business (increasingly so for big pharma companies in the “Western” markets) and to be successful Bayer should figure out how to compete globally.  Roche, one of Bayer’s competitors, apparently decided it was profitable to sell a low-cost version of its oncology drug, Herceptin, in India and licensed an Indian company to do so in 2012.  And soon that company will be competing with the Indian biotech, Biocon, and its bio-similar Herceptin, CANMab (Biocon press release).  Time for a new business model, Bayer?

At the other end of the diameter, last week JnJ publicized its Janssen Global Public Health group (JGPH) (Janssen is the pharmaceutical division of JnJ), “an important new group unifying Janssen’s commitment to research, develop, and deliver transformational medicines to address the world’s greatest unmet public health needs” (Janssen press release in FierceBiotech).  To me, JGPH is pioneering a superior business model with several laudable features.  The group will conduct research and development for new drugs for these unmet needs, not just repackaging or repurposing existing products.  It will also develop and launch both products (diagnostic and therapeutic) and services that cover a wide range of healthcare, and these will be  “… designed specifically to address the real world needs of people living with disease in underserved regions of the world,” according to Wim Parys, JGHP co-leader.  JGPH will not be a stand-alone, on-its-own division.  Since JnJ has existing global health products and efforts (e.g., in 2011 it acquired Crucell, one of the largest suppliers of childhood vaccines to UNICEF, see JnJ Caring), it will work with other divisions within JnJ as appropriate.  More important, JGPH will co-develop products with outside organizations, including the global health product development programs (PDPs) like PATH and the Drugs for Neglected Diseases initiative (DNDi) that have product pipelines but lack commercialization expertise.

JGPH is also starting with a nice portfolio of ongoing products and projects in various stages of development.  From early to late, the portfolio includes:

– a chewable form of mebendazole (Vermox®), a Janssen-developed drug for treating intestinal worms now distributed in public health programs in many countries, for younger children (in preclinical development);

– a reformulated flubendazole, a potential new treatment against parasites that cause lymphatic filariasis (elephantiasis) and onchocerciasis (river blindness), under a preclinical data sharing agreement with DNDi;

– a long-acting, injectable version of the JnJ HIV medicine, rilpivirine, to enable less frequent dosing and prophylactic treatment, under a licensing agreement with PATH to conduct planned late-stage trials;

– an anti-microbicidal vaginal ring using the investigational HIV medicine, dapivirine, for preventing sexual transmission of HIV with the International Partnership for Microbicides (in trials); and

– a global access program for Sirturo®, a newly approved drug in the US and Russia to be used in combination therapy in adults with pulmonary multi-drug resistant tuberculosis.

JGPH is also tackling the (really big) challenge of access and affordability.  It “will cultivate and help implement innovative pricing and results-based financing models that improve access to these medicines for patients in resource-limited and emerging markets, while also creating sustainable, long-term solutions based on country ownership and accountability for health services and outcomes.”  This will not be a de novo effort but will build on the experience of the company’s existing Global Access and Partnership Program (GAPP).  The GAPP was started in 2006 to provide access to its HIV drugs to people living with AIDS in low-resource countries (GAPP report).  GAPP’s works primarily through licensing of manufacturers in regions of need.  To date, Janssen has licensed several South African pharma companies, non-exclusively and without royalty, to make three of its branded anti-retrovirals for sale in low- and middle-income countries, and it has licensed these companies plus an additional three (one in the US and two in India), non-exclusively and with royalty, to make and sell generic versions of two of the anti-virals.  The latter agreements also include the right to make combination drugs, transfer technology from Janssen to the licensees, and the right to sell the active ingredient to others.  Janssen also is not enforcing its patents on unlicensed companies for one of the drugs if the drug is approved and will be used in low-income countries.  For the branded drugs it sells, Janssen has prioritized seeking registration in countries of most need and is selling these products at reduced prices that will be reduced as cost-savings from production volume or manufacturing efficiency allow.  In addition to increasing access, this approach helps build the distribution and regulatory infrastructure needed for a functioning pharmaceutical market in the regions of need.  GAPP also has medical education program to improve drug use and a sequence database for diagnostic development accessible to academic collaborators.

JGPH is a large and ambitious effort, many years in the making, and, my hope, will be a model for other companies that are building global health businesses.  My advice (which I always have) is that JGPH needs a website to advertise its approach and progress (I couldn’t find one) and a dedicated business development group to find opportunities and cut deals.  The management should also encourage JnJ’s corporate venture group (JnJ Development Corp.) and the new chain of innovation centers (e.g., the Boston Innovation Center) to find and incubate ventures that are applying new technologies to global health problems.

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WIPO Wipeout?

Recently, I reconnected with a colleague about his project to employ an open innovation model to find candidate compounds for treating neglected diseases (to be the topic of another post) and was reminded of a post I wrote a couple years ago on open innovation.  In “Window Dressing” (November 2011), I wrote somewhat dismissively about WIPO Re:Search, a program initiated by the World Intellectual Property Organization (a division of the United Nations) and several major pharma companies to “share valuable intellectual property (IP) and expertise with the global health research community to promote development of new drugs, vaccines, and diagnostics to treat neglected tropical diseases, malaria, and tuberculosis.”  There has been a fair amount of interest among the not-for-profit side of the global health community in the open innovation drug development model since it allows these groups (e.g., academics and the product development programs or PDPs) to access resources of pharma/biotech companies and possibly leverage them into products for the diseases of the impoverished (for a good summary of open innovation for global health, see the 2011 Results for Development Institute report, “Open Source for Neglected Disease:  Magic Bullet or Mirage?”).  I had several reasons for my lack of enthusiasm for Re:Search:

  • Access to IP is insufficient (and in many cases not needed) for the kind of early-stage product development supported by Re:Search; more important is access to the data and materials underlying the IP;
  • The rights to use the IP without further licensing and possible payment (royalties) are limited to the WHO list of neglected diseases and to the least developed countries as defined by the World Bank, meaning that any resulting products are financially unattractive to subsequent licensees (e.g., Chagas disease is a neglected disease that afflicts millions in Central and South America but commercialization of a new drug will require an additional license) (for details, see Re:Search Guiding Principles);
  • Programs of this type have bureaucracies that stifle rather than encourage collaboration and innovation; and
  • Databases are only useful if they are extensively populated, and companies need to put effort into contributing to the Re:Search database and responding to requests.

My take was that Re:Search may be a good first step in encouraging early stage product development for neglected diseases but it does not address the major needs:  positive feedback or incentives to coordinate efforts to generate product prototypes that are likely to be successful (or even advance to the next step) and attracting investors with risk capital and companies with the expertise and interest in bringing those prototypic products into commerce.

Since my colleague spoke highly of his experience in finding collaborators through Re:Search, I thought a revisit was in order and evaluated the program’s performance on four factors over the past two years.

Number and quality of items in the database:  the database (at Database Search) has 247 items in it, up from 140 when it was initiated, so not quite doubled.  Of these, 92 are listed as being IP, and therefore not so useful in my mind, and 56 are listed as Preclinical Candidates.  Most of the items in the latter category are drug or vaccine candidates that emerged from one or two disease-relevant in vitro screens and therefore are likely to have no in vivo data, e.g., on toxicity or metabolism.  A few items seem to be mis-categorized methods.  I also looked at the Marketed Products and Other Type of Data or Services categories.  The first was not interesting, comprising six Sanofi drugs for which one could obtain samples.  The second was much more interesting, a list of 49 institutions and companies offering their drug discovery services, like screening, pharmacokinetics, medicinal chemistry, and biomarkers.  There were also plugs for NIH’s Clinical Testing Center and a Department of Defense biomanufacturing RFP.  The descriptions of the services did not include key details, like cost (I am assuming the cost will be less than that charged by a commercial service), and to get more information, one needs to contact the Partnership Hub run by BIO Ventures for Global Health (BVGH), which may be OK, if BVGH is responsive and helpful.

Number of collaborations with materials and/or data transfer and/or funding:  the Re:Search site has a list of completed agreements (at Agreement List), 37 of which are for collaborations.  I think the most important are those transferring compounds with data, since they are most likely to facilitate drug discovery, and found nine from company to academic institution, two company to company, and one academic to company.  The number of transfers without data from company to academic were nine, and there were five company to academic transfers of know-how.  This is substantial progress, although, of the total, most were made between about one-quarter of the more than 45 participating organizations.  It would be interesting to know if the number of collaborations was increasing, if the parties obtained what they asked for, and what the time from agreement initiation to completion was.

Number of licenses:  as far as I can tell, there have been no licenses completed for the development of products, one of the important goals of the program.  Of course, product development is a multi-year process and my guess is that institutions receiving materials and/or data are not thinking about getting to a candidate product.  The base licensing terms are already set and the licensors supposedly willing, so I see no reason (except effort) not to execute a license; better to do so before generating data that may show value.  Bottom line is that this part of the program is untested.

Buzz generation:  my quick web search found very little news about Re:Search and almost no comments from the professional non-profit global health community.  I did find two articles on the program: a 2012 article in Nature Reviews Drug Discovery (Frantz 2012) and a 2013 article in Pharmaceutical Patent Analyst (Dent et al. 2013).   The latter was written by the BVGH Partnership Hub managers, and they wrote that their role is to “proactively facilitate” collaborations; however, it seems to me they are responding to requests.  If the service is proactive, a more concerted advertising effort among drug discovery researchers, academic and corporate, is needed to attract users.

Overall, I have upped my grade of Re:Search from a C- to a B and am hoping for significant growth in the next year and not expecting a wipe out (or a slow motion crash).

Building with BRICS

One of my topics of interest is the role that companies in the low- and middle-income countries (rest-of-world or ROW countries) may have in developing new technology and products to address global health problems (e.g., my posts, “Healthy, Wealthy, and Wise Reprise” and “Missing the Boat from the Other Direction”).  I think these ROW companies, in addition to being more effective and efficient in the long run than the traditional aid programs in bringing widespread improvements in health, may also present partnering opportunities for the many biotech and medtech companies that have powerful technologies but will not be among the lucky few to attract multiple rounds of VC funding or lucrative corporate buy-outs.  They may also be potential licensees of the many global-health-oriented proto-products being cooked up by the many proto-ventures started up by recently-graduated, socially-minded entrepreneurs.  Finally, I also think that, given the pressing need to control health care costs in the US and Europe, these ROW companies have a good shot at exporting their affordable products to the “first” world markets and thus helping me in my dotage.

While trolling the web for recent information on the topic, I found a relevant report, “Shifting Paradigm:  How the BRICS Are Reshaping Global Health and Development” (GSHi report), that was published in April 2012 by  a new-to-me group, Global Health Strategies initiatives (sic).  This organization is described as an affiliate of Global Health Strategies, an international communications and advocacy consultancy based in New York with offices in India, Brazil, and China (GHS).  The report was sponsored by the Bill & Melinda Gates Foundation, but seems to be a one-off, since I found no news about GHS initiatives or its work since the report’s publication.  Here are some of the major points made in the BRICS (Brazil, Russia, India, China, South Africa) report.

  • While the dollar amount of foreign development assistance given by the BRICS is less than 10% of the seven top donor countries’ assistance ($6 billion vs. $100 billion in 2010), the growth rate in the assistance over the past five years has been about five times greater (10 to 30% vs. 4%).
  • The BRICS prefer bilateral health aid programs as opposed to multilateral such as the Global Fund, mostly likely because the former is more cost-efficient in building international prestige and trade relationships.
  • Support of health R and D and innovation by the BRICS governments is small relative to that of wealthier countries, but is growing and exceeds that of the private sector.
  • In the BRICS, a few companies have created some new technology and products while the governments are trying a range of innovative health care delivery programs.
  • Not surprising, the BRICS have huge domestic health care challenges; for example, in South Africa, 42% of the annual mortality is caused by HIV/TB with one-fifth of the population being infected by HIV and China has one-third of the world’s hepatitis B carriers.
  • Also noted in the report are the “beyond BRICS” countries of Indonesia, the Gulf States, Turkey, Mexico, and South Korea that have growing economies, a more active foreign assistance programs, and a growing health care export aims.

The GSHi report is also a good source for the various BRICS government programs that encourage health care technology development by companies and may be a source of funding for north-south (developed-developing world) company collaborations.  With few details, they are:

  • The Brazilian Development Bank’s (BNDES) Profarma program provides favorable financing to public and private companies that invest in health R&D.  Also the Brazilian government’s Fiocruz, primarily a vaccine R and D institute, has a nascent Center for Technological Development in Health which aims to mix public sector research and the private sector’s product development expertise.
  • In 2009, the Russian government committed $4.4 billion to Pharma 2020, a plan to significantly increase domestic capacity for health care technology production and innovation in partnership (and, unfortunately, with co-funding) with non-Russian companies.  Not mentioned in the report, but of interest to US nano/healthcare technology startups, is Rusnano, a government venture capital fund that has been active in the US (Rusnano USA).
  • The government of India’s Department of Biotechnology has a Small Business Innovation Research Initiative to fund proof-of-concept research and late-stage product development in small and medium biotechnology companies and a Biotechnology Industry Partnership Programme to fund companies on a cost-sharing basis in developing technologies to address the country’s health care problems.
  • While China’s Ministry of Science and Technology (MOST) is spending about $150 billion on domestic R and D across sectors, including about $1.3 billion on health R and D, the report identified only one unnamed program aimed a public-private partnerships in global health.  In September 2011, the Gates Foundation and MOST signed a memorandum of understanding that committed a total of $400 million to four areas, one of which was the development of new products for global health (Gates press release, Gates press release).  As far as I can tell, this program is still in the rollout phase with two efforts funded.  One was a conference in September 2011 to encourage Chinese companies to invent new diagnostics for global health (Gates blog) and the other was research grant program at Tsinghua University (TU grant program).  Achieving success in the former will be difficult in my opinion since the Chinese diagnostics industry is under-resourced for R and D since it is composed of 300-400 companies with the largest having only a 4% market share (Market Publishers report).

The model industry for successful public-private cooperation in global health product development is the vaccine industry of India.  Recently FierceVaccine reported there are a dozen major vaccine manufacturers in India, exporting to 150 countries, and their domestic and export revenues are forecast to increase by 150% by 2016, reaching $870 million from about $350 million today (FV article).  And China is emerging as competitor for public health vaccines, recently gaining WHO approval for its companies to apply for prequalification to supply UN agencies.  The first vaccine to be approved is likely to be a Japanese encephalitis vaccine invented and developed by the Chengdu Institute, part of the China National Biotec Group, the largest (state-owned) biotech company in China (Reuters article).  It remains to be seen how many of the other 36 vaccine companies will be able to meet international standards but high interest exists (Interview with PATH’s Zhang and partial company list at List of manufacturers).

Not exactly Lego-scale variety, but for companies with the global health ambitions, there are pieces to play with.

Downsize or Downhill?

Last week, I noted with some dismay a press release by BIO Ventures for Global Health (BVGH), one of the few organizations advocating for greater participation by the biotech/pharma industry in developing new products for global health.  The release (BVGH PR) announced the transfer of the management of BVGH’s Global Health Primer, an on-line catalog of products and companies engaged in global health (Primer), to the Emory University Institute for Drug Development.  While the transfer is not particularly disconcerting, the reasons given in the release for it are.  Don Joseph, whom I have met in his capacity of BVGH CEO, said the transfer was “[d]ue to funding cuts which affected our ability to update and expand the Primer,” apparently the cuts being a loss of Gates Foundation funding (i.e., “Finally, I want to thank the Gates Foundation for their support over the past several years, …”).  The next paragraphs imply that BVGH is downsizing, reorging, and re-focusing in response to the diminished funding.  Don will “transition out” of his CEO spot and into the chair of the BVGH board, the CEO position will be eliminated, and Jennifer Dent, Vice President, Commercialization and Alliance Management, will become president.  Finally, “Going forward, BVGH will focus its efforts on WIPO Re:Search….”  Big sigh.  As some may remember, I wrote about WIPO (World Intellectual Property Office) Re:Search when it was launched in November 2011 and thought it not particularly useful in advancing global health product innovation and not a good fit with BVGH’s mission (“Window Dressing”).  Re:Search allows “qualified” researchers to view and use data and patents donated by the inventor companies for neglected disease product development (Re:Search), a good idea as far as it goes.  But all product development requires funding, and recently, I found very modest progress reported at the Re:Search website and no report of new money committed to product development projects by the participants (November 2012 Snapshot).

This more passive, less proactive tack by BVGH was also reflected in a recent report the organization wrote with one of its sponsors, the Bioindustry Organization (BIO):  “Biotechnology:  Bringing Innovation to Neglected Disease Research and Development” (BVGH/BIO report).  Although in the preface the authors stated the report offers “actionable information for product developers from academia, government agencies, biotechnology companies, and non-profit product development partnership (PDPs) to help spark new partnerships and collaborations with bio-technology innovators to drive new drugs, vaccines, and diagnostics” and “concrete recommendations to help biotechnology companies increase their commitment and investment in neglected disease R&D through partnering,”  I found it to be a restatement of existing ideas and, worse, provided no specific actions BVGH can or will take to “spark new partnerships and collaborations.”  My read is that BVGH’s actionable information and concrete recommendations were basically that interested parties should talk and collaborate more.

Earlier this year I wrote a post on why BVGH needed to undertake a serious business development effort with its potential customers, the estimated 97% of biotech companies that BVGH has reported are not engaged in global health product development, to sell them on the idea of entering the global health business.  Rather than building a database like the Primer to “track” product development and writing reports on summarizing the work of others, BVGH should generate information and tools to enable companies to find the funding and partners needed to build their global health businesses (“BD Needy”).  Specifically, I thought BVGH could:

  • find relevant technologies for companies to license from academic and research institutions;
  • point out opportunities for PDPs (the non-profit product development programs) to bring in biotech companies as partners rather than contractors;
  • for each project in the Primer, report the quality of participation (e.g., funds, personnel) of each partner and which party was the originator so one can follow the money and figure out who is funding what (a challenge); and
  • report on which major pharma companies have experience in developing and commercializing which products and which developing world/emerging market companies are seeking biotech partners and, most importantly, identify whom to contact.

While I am at it, here are a few more ideas for BVGH:

  • build a pitch deck and use it at any and all venues including going on the road to the mid-sized biotechs and pharmas who may find a small market products (under $100 million) attractive;
  • create a newsletter specifically aimed at companies with interest in markets in ROW and ROW companies interested in new product opportunities;
  • represent the interests of US-based biotech companies at international business meetings that may be unaffordable, e.g., the World Vaccine Congress Asia (WVCA 2013), Medifest (Medifest), and MedExpo (MedExpo);
  • assemble a database of low-cost resources to help biotechs with their preclinical work, e.g., the PATH Point-of-Care Diagnostics Center, (PATH POC) and the NIAID Translational Research Resources (NIAID  resources);
  • run a “business development plan competition” for companies with products in development needing partners to gain visibility and engage potential partners; and
  • run more interactive and practical Partnering for Global Health Forums with more company people (see my post, “Nuts and Bolts”).

If funding is the problems, in addition to passing the hat among the usual donors (Gates, Rockefeller, BIO), BVGH could get a revenue stream by:

  • starting a low-cost consortium with fees based on company size with the product being networking opportunities; and
  • offering custom consulting and report writing but keep operational costs low by using volunteer consultants (I remember BVGH did this when it first started since I was on an ad hoc committee on business models).

BVGH could also reduce its operating expenses, for example, by finding a less expensive office location than San Francisco or paying its executives more modestly (the BVGH Form 990 for 2010 has the top four managers’ compensation plus outside consultants expenses at $1.4 million or about 50% of all expenses [BVGH 2010 Form 990]).

But then I may be too late.  Have a Happy Thanksgiving.

BD Needy

BIO Ventures for Global Health (BVGH), an advocacy group now based in San Francisco, issued a report last week, “Developing New Drugs and Vaccine for Neglected Diseases of the Poor:  The Product Developer Landscape” (BVGH report).  As I have noted in previous posts on BVGH, I’m enthusiastic about the organization’s mission- to encourage the biotech industry to address the unmet medical needs of the developing world- but have been disappointed in its execution.  In one of my early posts, I praised a BVGH case studies report as a good start in highlighting partnering opportunities in global health (“Converting Inspiration to Investment” 9/27/09) and have appreciated its sponsorship of past Partnering for Global Health meetings, but more recently posited that the group’s involvement in the World Intellectual Property Organization’s Re:Search database was not a productive use of its resources (“Window Dressing” 11/3/11).  The aim of this recent report is to provide an overview of products being developed and is based on information in BVGH’s searchable database, the Global Health Primer (Primer), specifically, the Primer’s disease-specific Pipeline listings which identify products and developers (but, I note, is not business development-friendly because it lacks links to the listings’ sources and company contacts).  My major beef with the report though, is that, while it provides several novel insights into the complicated world of biotech/pharma product development, it seems aimed at providing advice to government and foundation policy-makers, not to company executives or investors, and therefore is not helpful in building global health business.

To their credit, the report authors are thorough in covering many aspects of the topic.  The report parameters include the full range of global health diseases (the “big three” of HIV, tuberculosis, and malaria; the neglected diseases; and “other” diseases of poverty), drugs and vaccines in development (except for drugs to treat HIV), developers by country and type (academia, product development programs [PDPs], biotech and big pharma companies), and degree of collaboration as measured by number of partners in each project.   This last parameter is an important one but hard to pin down, as the authors note, since they could not determine the quality of participation (e.g., funds, personnel) of each partner in a given project and which party was the originator so one cannot follow the money and figure out who is funding what and why.  The report’s findings I thought notable are:

-Academic/research institutions are have some role (as originators, co-equal partners, contractors?) in almost half of the products under development;

-An institution’s primary partners is a PDP and secondarily is either a biotech company or “other” institution (not sure what the latter is);

-PDPs partner extensively, but mostly with academic institution (>50% of their partners) and less so with biotech (34%) and big pharma (20%) companies;

-Only a small percent of all biotech companies are involved in global health product development (3% or 104 out of 3853) (looks to me as if BVGH needs to do more business development);

-Biotech companies often go without partnering (about 40% of their projects) and don’t spend much, only about $600K each (the authors used data from the G Finder report [G Finder 2010]), but importantly focus their efforts on the preclinical stage, an important link between inventors and clinical testing; and

-For the big pharmaceutical companies, the most involved were GlaxoSmithKline, Novartis, and Sanofi, accounting for 66% of the 64 products in development and, not surprisingly, they participated as partners primarily in the clinical testing stages.

While the report’s authors acknowledged that their analysis of the financial and quality character of the partnerships (pages 38 and 40), they seem to miss the primary potential utility of a report of this type and the Global Health Primer.  Rather than using these tools to “track” and report, BVGH should be generating information and tools to enable companies to build their global health business.  It could point out what are the opportunities for companies to license from academic and research institutions and for PDPs to bring in biotech companies as partners rather than contractors.  BVGH could report on which major pharma companies have experience in developing and commercializing which products, which developing world companies are seeking biotech partners, and most importantly, identifying whom to contact.  Building relationships and developing business takes time, planning, research, analysis, and dedicated people, and, in the case of the global health business, lots of pushing.  Now in its eighth year, it is time for BVGH to do less pontificating and more pushing.

Nuts and Bolts

As many of you may know, one of the few conferences aimed at the business of global health is coming up on June 27.  BIO Ventures for Global Health (BVGH), the Biotechnology-Industry-Organization (BIO)-backed and now San Francisco-based group that advocates for the participation of the biotech/pharma industry in developing products for global health needs, is sponsoring its third annual Partnering for Global Health forum (PGH) in conjunction with the big annual biotech/pharma industry confab, BIO 2011, in Washington, DC, June 27-30.  I attended the first two meetings but will not be there this year (June is a nice month to be outside), but I wish them success in their goal “to discover innovative ways to drive new product development for neglected diseases.”  Based on my personal experience and observation though, we, that is, anyone who is concerned about convincing, cajoling, and otherwise corralling the for-profit world into applying their considerable product-development and money-making skills to making useful and affordable stuff for the rest of the world, should be past the point of “discovering” and should instead be focused on nuts and bolts such as products that are under development, opportunities for new products, buyers for those products and the prices they’ll pay, and deal structures.

Here’s a quick summary of what this year’s PGH offers:

-Speakers (Program):  Fran Collins, NIH director, is the keynote speaker and Rajiv Shah, Administrator, USAID, is on a panel; both are headliners in their fields but I don’t think they have practical experience in getting products on the market.  More promising are some of the panelists.  Inder Singh has real market-building experience at the Drug Access Program of the Clinton Foundation and there are three speakers from big pharma/diagnostics companies, but where are the smaller companies that need to be innovative to survive and are creating products for world markets?  I can think of a handful that could present their product development efforts (see my posts of 6/24/10, 7/15/10, 9/25/10, 11/28/10, 12/10/10, and 4/7/11).

-Breakout Sessions (Program):  two breakout sessions are offered (How to Access Non-Traditional Financing and Strategies for Engaging in Emerging Markets) which sound interesting and practical, but also similar to sessions at the previous PGHs which I found lacking in specifics.  If these are to be interactive sessions, I suggest providing the panelists’ presentations in advance to give attendees the chance to prepare questions and generate a discussion and perhaps action items.

-Partnering Forum (Partnering):  the PGH gives attendees the chance to register and participate in the BIO 2011 Business Forum in which participants identify and request one-on-one meetings with other attendees to whom they pitch their products and opportunities.  This sounds great, and I participated in he Forum several times during my business development career and found it a good way to generate leads, but question what the PGH attendees get from it.   I wonder if the PGH organizers have tracked participants and outcomes to demonstrate the value of participating. One idea for improving the value would be to invite specific participants who may have deals to pitch or those needing deals.

-Networking (aka smoozing):  although it is great to connect/reconnect with others with similar interests in global health, I found that I was speaking with the converted rather than possible recruits which the global health field desperately needs.  How about the PGH include special session titled “how to sell your idea for a global health product,” send everyone into the exhibit hall to pitch their ideas, and then ask them to share what they learned from the many attendees who are there to find money and deals to make or keep their companies profitable?

Overall, I’d love to see more nuts and bolts and fewer references to non-specific “partnering,” but then there is always next year.

Starting Uphill

Start up companies face a tough go- converting a new technology into saleable products on minimal funding- and those aiming at products for global health have even a harder challenge by swimming against the conventional wisdom that a highly-priced, reimbursable product is the only way to profitability.  But one piece to solving the currently intractable problems in global health is the lever of technology underlying innovative, affordable products.  For all start-ups, time is money and the shorter time to a product prototype the more likely is revenue and survival, and to fund that prototype development stage most start-ups patch together funding from government (or very rarely, foundation) grants and private sources while trying to convince a major, established company that that wants access to the technology and/or the resulting products to foot the product development bill.  For the few early-stage companies in global health, the basic deal is to either convince the major company partner to sell the licensed products at discounted prices in pre-defined low income countries or, when the start-up has a technology platform for creating multiple products, grant the partner rights to only to high income countries.  In these deals, exclusive rights are “demanded’ by the partner so that it can control product development, exploit the most profitable markets, and maximize profits, all very reasonable.  However, I think that the exclusive licensing route has enough problems for global health product companies to warrant use of a nonexclusive licensing approach.  (If anyone has an example of the exclusive licensing strategy working for a global health company, please comment below).

I should first note that a nonexclusive licensing to multiple companies is probably not workable when the prototype is for a drug, given the large investment needed for product approval and the need for the licensee to control all aspects of the product development, approval, and sale to have a hope of a return on its sizeable investment in product testing and approval.  That being said, companies with platforms for discovering/creating drugs or vaccines or for delivering them or for diagnostics or for medical devices could license nonexclusively to multiple companies.  For global health companies, by  lowering the barrier to product development and creating competition among multiple licensees, they advance their goal of getting low cost products in use fast.

So in broad strokes, the advantages to pursuing a nonexclusive licensing strategy are:

  • products using or discovered using the licensed technology get to market faster than a single product developed under and exclusive arrangement;
  • multiple similar products generates competition and therefore leads to lowest costs and prices;
  • the licensor may pursue development of products that are specific to its interests (e.g., low-cost diagnostics for treatments for neglected diseases sold to public sector customers);
  • lower transaction costs (less complicated negotiations and licenses);
  • licensing to less wealthy, non multinational, companies; and
  • licenses may be modified to be IP only or include technology transfer or co-development depending on abilities and interests of the licensee.

Of course, there are disadvantages:

  • the revenue from the multiple licenses needs to come quickly (e.g., as up-fonts) and must be significant;
  • pricing needs to be well-thought out to be both attractive and non-negotiable (first-in should have the best pricing); and
  • transaction costs could be excessive.

Looking at the real world, while the large majority of licenses are exclusive, there are examples of successful nonexclusive licensing programs and nonexclusive licenses.  Two of the best known programs are for two core biotechnologies (and therefore may not be good examples):  the Cohen-Boyer gene engineering platform which was license broadly by Stanford University to start the biotech industry and the polymerase chain reaction (PCR) technology licensed to many companies by Roche, mostly for molecular diagnostics, starting in the 1990s.   And, of course, in the global health field, and also may be not a good example since the licensor is an established company, there is the nonexclusive licensing by Gilead Sciences of its antiviral, tenofovir, to several generics manufacturers (American article).

In the category of a smaller company licensing to a large company nonexclusively, I noted the German biotech MorphoSys recently closed a nonexclusive license and technology transfer agreement with Pfizer for a platform for gene and protein libraries (FierceBiotech article).  In the diagnostics industry, I found multiple examples:

  • Epigenomics to multiple companies for a cancer biomarker (Epigenomics);
  • Epoch (Nanogen) to Celera for its platform (Epoch);
  • Xceed Molecular to Gen-Probe for a microfluidics platform (Xceed);
  • Roche to Aligent for its “melting curve analysis” technology (Agilent);
  • Orion Genomics to Novartis Diagnostics for its MethylScreen platform (Orion); and
  • Pathways Diagnostics to Quest Diagnostics for “hetereoduplex tracking” technology (Pathways).

As I have noted in previous postings, there are relatively few early-stage companies that have products in development to address global health/neglected diseases.  But several of these are built on platforms that could be licensed nonexclusively to generate revenue for product development, e.g.,:

  • Aktiv-Dry LLC, nano-particle drug delivery (Aktiv-Dry);
  • Archivel farma SL, vaccine technology (Archivel);
  • Claros Diagnostics, microfluidics platform (Claros, Claros);
  • Diagnostics for All, diagnostics platform, (DFA);
  • Genocea Biociences, vaccine technology (Genocea and Pipeline);
  • GenPhar, vaccine technology (GenPhar);
  • Ionian Technologies, diagnostics platform (Ionian);
  • Rapid Biosensor Systems, diagnostics platform (RBS);
  • Xcellerex, biomanufacturing platform (Xcellerex).

The nonexclusive route is not conventional wisdom, but I think it is worth a try.