Pullan's Pieces #161
 
 
 
 
 
 
linda@pullanconsulting.com
1(805)-558-0361
 
 
 
 
Pullan's Pieces #161
July 2020
BD News and Analysis for  Biotech and Pharma
 
 
 
 
 
Dear --FNAME--,
 
 
 
 
We hope the disruptions of Covid-19 are not too bad for you!  We missed the social connections of a real BIO, but partnering continues.  Be great to hear what you are thinking about, maybe with an idea for the next issue!   Maybe where we might be able to help.  Maybe just to say hello.  

Cheers,

Linda
 
 
 
 

1.  Does an IND increase the odds of a deal?
2.  The "Silver Bullet" question        
​​​​​​​3. Jessica:  Deal values for cell and gene therapies
4.  Trevor:  Financings by MOA
 
 
        
 
 
 
Does an IND increase the odds of a partnering deal?
 
 
 
 
What I believe

Below are a few points about the thought pattern I've developed through years of experience.   

1.  Efficacy drives deals.  Most deals at Preclinical and Phase 2.  
Efficacy in vivo and efficacy in humans cause deals to get done.    Many deals at IND are probably just slow preclinical deals, with the deal driven by the preclinical data.  

2.  An IND rarely adds value. 
Big pharma would prefer to file its own IND.  And for most preclinical programs, the preliminary non-GLP safety is enough.  There are exceptions where the ability to modify the target safely is the big uncertainty.  But most of the value is created with good evidence for mechanism and preclinical efficacy.    

3.  China may be a bit different. 
In China, there is extra value with China's regulatory authorities of the validation by the US IND.   
 
 
 
 
What the data shows

I looked for some data to see if my beliefs fit the reality of the data! Sometimes when we do these analyses, nothing actually fits.  

1.  More deals at Preclinical and Phase 2.  

 
 
 
 
2.  INDs do not generally add value to the deal total.   
 
 Note:  Most deals do not have disclosed deal terms, so this graph represents a small subset of all deals.  I excluded things that were not really licenses (CRADAs, JVs, etc).  And the variability in deal total value is huge.  

 
 
 
 
3.  China deals at IND stage are a bigger share of deals done. 
 
 
 
 
So generally, my preconceptions fit with the data. 
Always fun to do a bit of analysis! 
 
 
 
 
 
 
 
The "Silver bullet" - a question for partnering
 
 
 
 
The 4 questions Partners ask

I've long used some form of these 4 questions as a guide to thinking about how to analyze or how to pitch an opportunity.  
1.  Is this a strategic fit?  (Image, expertise, pipeline gap, sales force structure, etc)
2.  What is the potential?
3.  What is needed to be done and spent to deliver that potential value?
4.  What are the risks and when can they be addressed?
  








The 5th Question or is it the First Question. 

But I've come to appreciate the power of a simple statement of "what is special about this opportunity".   And I think that my 4 questions should be 5 questions.  

 
 
 
 
Ideally, the answer to "what is special about this opportunity?" should be a short, powerful statement, a SILVER BULLET. 

Neil Gordon in an article on elevator pitches, https://www.entrepreneur.com/article/352514, says

                    the silver bullet is a short phrase
            that encapsulates the pain problem to be solved
and the unique solution. 
The statement speaks of the werewolf and how it can be slain with this silver bullet.  

It is hard to make a short statement of the essence of complex opportunities.  But it can be powerful, providing a memorable framework for the complexity behind the opportunity. 

Here are a couple of examples, works in progress.    
 
 
 
 






 Activates and redirects pre-existing memory T cells
created during childhood vaccination
to target and eliminate cancer cells.    
 
 
 
 






Has created an ever expanding database
of drug-like covalent hits
at hard-to-drug targets.  
  
Uses its drug-like covalent library, chemoproteomics database and covalent chemistry expertise
to identify the targets of phenotypic screens
and to develop lead drug candidates. 
 
 
 
 
*******************
What is your silver bullet to tell the world? 
Love to hear from you!  
 
 
 
 
 
Jessica:     Deal Values for Cell and Gene Therapies
 
 
 
 

The observation last week that gene therapy deals are typically lower value than therapeutic nucleic acids (TNAs) had many of you (myself included) question why this is.  Similarly, in the past I have looked at deal values for cell therapy compared to other technologies, such as biologics, and found much smaller mean and median deal values for cell therapy compared to the others.  Cell and gene therapy are hot areas of intense investment and development so if this real, why are cell and gene therapy deals typically fetching less money than more mature technologies?  This month we’re going to interrogate these findings in order to see if we can confirm that this is real and try to understand why.


What’s the Deal?

Here we have conducted a study of deals for four classes of technology:  cell therapy, biologics/antibodies, gene therapy, and oligonucleotides/TNAs.  For each technology we included technologies with the “molecule type” described in the bullets below which are referred to as “simple” technology deals meaning that these deals contain just these modalities.  In other words, these are likely monotherapy deals.  For “complex” technology deals they contain a combination of these technologies (eg cell therapy & gene therapy or gene therapy & mAb, or mAb & oligo) which can mean that these deals are either complex therapeutic products (eg engineered cell therapies) or combination therapies.


  • Cell therapy:  cell therapy, cellular immunotherapy, stem cell therapy
  • Antibody:  antibody, antibody/mAb, biologic/mAb, bispecific mAb, bispecific mAb/fusion protein, mAb, mAb conjugated, recombinant protein
  • Gene therapy:  gene therapy
  • Oligo:  oligonucleotide, antisense oligo, antisense RNAi oligo, aptamer


Data analysis has its imperfections which is why we report as much information about our queries and analysis as we can so that the reader can see the method that leads to the analysis.  For this “study” we queried strategic alliance deals (partnerships and licenses) over the last two years (mid-July 2018 – mid July 2020).  For all technologies both the asset and the timing of the deal were at discovery or preclinical stage in order to take a snapshot of values for preclinical deals across all of the technologies evaluated.  As all of you may be accustomed to, we report mean and medians of deals because means can be skewed by outrageous outliers, which is why we often also report the maximum deal value because sometimes it is super interesting to see what the extreme deals are.  Also, of note, we only report here on deals for which financials are disclosed and therefore total numbers of deals are artificially low. 


Total deal, upfront, and milestone payments for simple technology deals at Preclinical Stage:

 
 
 
 


Technology

Deals

Highest ($M)

Headline

CT

7

990

Sanofi Enters into Licensing Agreement with Kiadis Pharma

Antibody

65

5,100

Affimed to Enter into Co-Development Agreement with Genentech

GT

23

3,100

BMS Enters into Licensing Agreement with Repare Therapeutics

Oligo

18

4,100

Silence Therapeutics Enters into Collaboration with Astrazeneca

Global Data Deals Database 20 July 2020






Total deal, upfront, and milestone payments for complex technology deals at Preclinical Stage: ​​​​​​​

 
 
 
 


Technology

Deals

Highest ($M)

Headline

CT

33

3,100

Fate Therapeutics Enters into Co-Development Agreement with Janssen

Antibody

75

5,100

Affimed to Enter into Co-Development Agreement with Genentech

GT

81

3,100

3,100*

Fate Therapeutics Enters into Co-Development Agreement with Janssen

BMS Enters into Licensing Agreement with Repare Therapeutics

Oligo

21

4,100

Silence Therapeutics Enters into Collaboration with Astrazeneca

Global Data Deals Database 20 July 2020

*Tied for highest deal value


Crunch Time

So much to unpack here!  First, the caveats.  It is nearly impossible to ensure we are comparing apples to apples; some exceptions may apply, and nothing is absolute here.  It is possible that we are looking at multi-product deals compared to single product and that the multi-product deals contain assets that are further than preclinical.  Efforts were made to avoid this, but there are no guarantees that a few deals didn’t slip through.  Furthermore, while the inclusion criteria ensured that all deals evaluated had financials disclosed, often only the total deal value was disclosed.  Deals for which the upfront and milestone payments were also disclosed tended to be on the higher end of the spectrum and this higher reporting bias is likely what is skewing the median milestone payment to appear higher than the total deal value for some of the technologies.  The fairest view might be to just look at the top deals for all technologies as that alone is pretty telling.


Let’s focus on the simple deals first.  Wow, no matter how you look, one can’t help but notice the lagging value attached to the “simple” cell therapy deals.  We’ll delve into that a bit more below.  Making comparisons of the other technologies is tricky and any trends could also be explained away with the caveats, though clearly oligo deals are highly valued.  Looking at the top deal values, however, antibodies are still king and command the highest payout of all of the technologies. 


Now, the complex deals, one would expect that all deal values would be pumped up when compared to the simple technology deals, but that does not appear to be the case.  The only technology for which there is an inflation associated with complexity is cell therapy.  Furthermore, for gene therapy, complexity appears to bring the mean and median deal values down.  Interesting, more on that below.  For antibody and oligo technologies, there was no change in the value of the deals associated with the added complexity of other technologies, and the top deal for both of those technologies are the same top deals. 


What is the therapeutic potential of Cell Therapy?

Simple cell therapy deals, presumably deals for products containing unmodified cell therapies, appear lower in value than deals containing engineered cell therapies, or therapies involving the combination of cells and other technologies such as small molecules or antibodies.  This, of course, makes sense and suggests that cell therapies could be viewed (and maybe already are) as an “enabling technology” for more complex therapeutic development.  In the last decade, the rise of ex vivo gene therapy (ushered in largely by CAR-T) coupled with the meteoric rise of CRISPR gene editing technology have together demonstrated the enhanced therapeutic potential of genetically engineered cells.  The ability to genetically manipulate the cells enables developers to fine tune the activities of the cells, giving them greater control over what the cells do (eg where they home to, what they secrete, what cells they kill etc), which can render them much more potent.  Simply, cell engineering allows for more powerful therapy development than the simple dogma of isolate (and/or select), expand, give back, even for allogeneic therapies derived from healthy donor cells. 


What is the therapeutic potential of Gene Therapy?

Gene therapies have the potential to be transformative, life-altering treatments, particularly for genetic diseases.  The drug manufacturing scheme for in vivo gene therapy (manufacture, formulate, cold storage etc) closely resembles that of monoclonal antibodies which may factor into partnering decisions – (pharma) partners may like technologies that feel familiar to them.  Gene therapies in cancer (primarily CAR-T) also have transformative potential – though there is more development needed to realize this full potential (eg reduce cytokine storm, minimize/eliminate relapse rate etc).  Why would ex vivo gene therapies (GT & cellular immunotherapy or stem cell therapy – subset of the complex GT deals with mean $463M, median $89M) fetch lower deal values than in vivo gene therapies?  Most ex vivo therapies currently are autologous, and the manufacture of individual patient batches is expensive, complex (manufacturing and logistics), and challenging to control (eg batch-to-batch variability due to unique starting material for each batch).  Allogeneic cell therapy has the potential to address and streamline all of these challenges.  As the development of autologous CAR-T with more durable clinical responses, or allogeneic (so called “off the shelf”) ex vivo gene therapies advances, perhaps then we will see an increase in value of ex vivo gene therapy deals. 


How cool are Oligos?

Last month the question was asked if Oligos, or TNAs, were re-branded as gene therapies,  would it up their coolness factor?  Through the analysis from that article, and further study here, it seems Oligos are pretty cool on their own.  They seem to be commanding higher average deal values than all of the other technologies when evaluated alone, or in combination with other technologies.  Due to the generally transient nature of the activity of these molecules (discussed last month), the value proposition was perceived to be lower in the early days of oligo development.  There has been a significant amount of innovation around these products in recent years, and a resurgence of interest in the space.


So which technology is the coolest?  Truth is, all of the technologies are cool because they are being developed to address unmet medical needs and that is the best thing of all, and (I presume) why most of us are in the industry in the first place.


 
 
 
 
 
Trevor:  Financings by MOA
 
 
 
 

Are certain types of mechanisms more attractive than others?  Big data sets are available for some mechanism classes such as enzymes and receptors.  Does it matter if we are targeting the primarily intracellular catalytic proteins versus targeting the transducer of an extracellular messenger’s signal?  There are more drugs (757) in the database at Phase 1 targeting receptors than targeting enzymes (524).  If it’s “preferable” to target a receptor than an enzyme, does it translate into more investment opportunity if you’re just starting up? 


Spoiler:   Not really. 


Here’s a chart (data from GlobalData) showing the number of Series A and B financings from 2017 onward for both MOAs.  First, we don’t see the 50% higher proportion of A and B rounds for receptors than for enzymes; the data does not reflect the proportions seen in Phase 1.  It appeared in 2017 that there might have been a difference, with receptors getting more series B while enzymes got more series A rounds.  But we see that the differences in 2017 do not trend in the following years.

 
 
 
 

Nor does the type of mechanism confer any more funding on the startup – drug development is drug development – with both Series A and B round sizes “within the error bars”.  

It is not surprising that the data says B rounds are generally for more dollars than A rounds. 


 
 
 
 

This dataset did not lend any insight into how an entrepreneur might orient his or her startup with respect to these two types of mechanisms. 


What’s interesting, however, is that 2020 seems to be chugging along just fine when it comes to early stage financing velocity.  Both numbers and volume are in line with past years and may just come out ahead of the preceding years.

 
 
 
 
 
 
 
www.PullanConsulting.com

Pullan Consulting (www.PullanConsulting) provides advice and execution for biotech partnering and fund raising, with outreach to partners and investors, help with shaping of presentations, evaluations and market analysis, preliminary valuations and deal models, and negotiations from deal prep to term sheets to final agreements. 
 
 
 
 
We have extensive scientific and financial experience, with many deals signed. 

Send us an email or set up a call if you want to explore how Pullan Consulting might be of help!
 
 
 
 

Linda Pullan                     Linda@pullanconsulting.com 
Trevor Thompson             Trevor @pullanconsulting.com 
Jessica Carmen               Jessica@pullanconsulting.com 
 
 
 
 
 
 
9360 W. Flamingo Road, Suite 110-554 Las Vegas, NV 89147
 
 
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