Pullan's Pieces #162
Pullan's Pieces #162
August 2020
BD News and Analysis for  Biotech and Pharma
Dear --FNAME--,
Summer of this strange year 2020 is racing by.  We hope you are healthy, employed and making progress in our wonderful world of biotech promise!  



1.  What does a breakthrough designation mean for deals?
2.  Infographic:  Infectious diseases        
​​​​​​​3. Jessica:  The promise of iPSCs
4.  Trevor:  Be Different - How
What does a Breakthrough Designation mean for Deals?
Breakthrough Therapy Designation

The US FDA may assign a breakthrough therapy designation to a drug if 
  • it is to treat a serious or life threatening disease or condition
  • if the preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints.  

Drugs that have been granted breakthrough status are given priority review. The FDA works with the sponsor of the drug application to expedite the approval process. This expedited process can include rolling reviews, smaller clinical trials, and alternative trial designs.  

To date, there have been 163 approvals for breakthrough designations but some of these are for multiple indications for the same drug, so there are 126 drugs with breakthrough designations.  
Big Deals? 

Since a breakthrough designation implies impressive early clinical efficacy, it is easy to speculate that many of these drugs will subsequently be part of big deals.  

BUT, roughly 80% of the 163 breakthrough designations are from global companies and some of others are now pretty big (such as Regeneron and Vertex).   Some are from generic companies including Horizon and Teva.  

Deals after BTD

Looking at Breakthrough Designations (BTD) by smaller companies thru 2017, here are some of the deals that occurred after the BTD for the drugs

  • 2013 BTD  for Ibrutinib, the covalent BTK inhibitor for cancer. 
  • 2015 Abbvie purchasd Pharmacyclics for almost $21B in cash and stock. 
  • Ibrutinib had $3.4B in sales in 2019 and is expected to reach over $6B in sales.  

  • February 2016 deal with Ipsen for rights outside the US and Japan for the HCC drug Cabometyx (a multi-targed tyrosine kinase inhibitor), 
  • April 2016 BTD 
  • 2017 Deal for Japanese rights for Takeda in January 2017 for $228M.   
  • Exelixis markets in the US and in 2019 the drug had $1B in sales, forecast to be $2.7B in 2026.  

  • 2015 first approval of its its multi-target tyrosine kinase inhibitor levantinib in RCC
  • 2016 BTD
  • 2017, Eisai signed a deal for Latin American rights with Grupo Biotoscana SL. 
  • 2018, Eisai signed a deal with Merck to co-develop and co-commercialize levantinib as monotherapy and in combination wtih Keytruda.  With $300M upfront,and near term payments of $650M, the total may reach $5.8B.  
  • Sales were $1B in 2019 and its forecast to get to $2.5B in 2026.  

  • 2012 Tesaro in-licensed niraparib, a PARP inhibitor for cancer from Merck.  
  • 2016  Tesaro licensed rights to J&J for prostate cancer for $450M total. 
  • 2016 Tesaro licensed China rights to Zai Labs for $45M
  • 2017 BTD for niraparib, a PARP inhibitor.   
  • July 2017, right after the March 2017 breakthrough designation, Millennium (Takeda) paid $241M for rights in Australia , Japan , Russia , South Korea , Taiwan. 
  • 2019, GSK acquired Tesaro (with several other drugs) for $5.27B.  

Already Partnered before the BTD

Regeneron received a 2015 breakthrough designation for Eylea but the drug was already partnered with Bayer.  

In 2017, Regeneron got a breakthrough designation for Dupixent for atopic dermatitis.  It was already part of the 2007 partnership deal with Sanofi.  It is expected to reach $9.5B in 2026.  

Ariad got a breakthrough designation in April 2017, just a few months after the Takeda acquisition of Ariad for $5.2B. The ALK inhibitor is expected to do $640M in 2026 sales.  

Celator got a breakthrough for the fixed dose combination of cytaarabine and daunorubicin for AML in 2017.  It is the only surviving drug from the earlier Jazz Pharmaceuticals acquisition of Celator in 2016 for $1.5B.  The drug is expected to do $303M in 2026 sales.    
Alexion received a 2015 breakthrough for its hypophosphatasia drug it previously licensed from Enobia.  Sales were $593M in 2019. 

Alexion also got a 2015 breakthrough designation for Kanuma for lysosomal acid lipase genetic disorder (2019 sales $112M) which it got in the earlier acquisition of Synageva Biopharma for $8.4B.  

Seattle Genetics got a breakthrough designation for Adcetris in 2017.  It was already subject to a $400M deal with Millennium (Takeda) where Seattle Genetics markets in the US and Canada and Takeda elsewhere.  Sales are expected to reach $2.3B in 2026.  
Not partnered, Marketed by the Originator

A historically important breakthrough designation was for the Cystic Fibrosis drug Kalydeco from Vertex, which the CF Foundation had helped fund.  

Neurocrine is marketing valbenazine for tardive dyskinesia and the drug is expected to reach almost $2B in 2026.  It received a 2017 breakthrough designation.  

Biomarin is marketing cerliponase for Batten disease after a 2017 breakthrough designation.  it is expected to reach $336M in 2026. 

Acadia's pimavanserin with $339M in sales in 2019 in schizophrenia etc has no visible partnerships.  It was first approved in 2016, the same year as its breakthrough designation and is forecast to get to $4.5B in sales in 2026.  

After a 2016 breakthrough designation, Clovis Oncology has the PARP inhibitor rubraca on the market wtih $143M in 2019 forecast to get to $788M in 2026.  


1.  Big Companies.   Most of the breakthrough designations have been received by the big global companies.  That may reflect a greater ability to invest early? 

2. Big Sales.   It is an impressive list of drugs, including Keytruda and many other big sellers.  

3.  Some big deals.  There were some big deals (licensing and acquisitions) after BTD.

4.  Partnering Early.   But many times these drugs were partnered before the clinical data that drove the BTD.  

5.  Own Marketing.  And the BTD often enables a company to hold on to and market its own drug, becoming a fully integrated pharmaceutical company.  

Infographic:  Infectious Diseases

Jessica:     The Promise of Induced Pluripotent Stem Cells:  iPSCs
Induced Pluripotent Stem Cells (iPSCs) were first described by a group led by Dr. Shinya Yamanaka at Kyoto University in 2007.  Prior to this innovation, President George Bush introduced a ban on the establishment of additional Embryonic Stem cell lines in August of 2001 while allowing for continued research on previously established lines.  In the intervening years, scientists were trying to work with the existing cell lines which were not optimal (see short reference about ban above for more information). 

Dr. Yamanka and colleagues, building on the work of Sir John Gurdon, took a different approach; they endeavored to convert adult cells back to “stem cells”.  The establishment of induced pluripotent stem cells, and the ability to start with mature/adult cells and genetically engineer them back to a pluripotent state was revolutionary.  So much so that Drs. Gurdon and Yamanaka were awarded the Nobel Prize in Physiology or Medicine in 2012, the fastest any scientific discovery has ever been awarded a Nobel Prize - in just 5 years!

What is an iPSC?

At the risk of wading too deep into the technical weeds here; these are adult cells that are engineered back to an undifferentiated pluripotent state, capable of becoming multiple types of specialized or differentiated cells (such as cells that make up the lung, muscle or nerves).  The engineering of the cells is achieved via the ectopic (introduced) expression of, so called, “Yamanaka factors”  or genes also known as OSKM:  Oct4, Sox2, KLF4, and c-Myc.  Once a bank of pluripotent cells is established the cells can then be differentiated/matured into (theoretically) any somatic cell that is desired.  In practice, it has been noted that cells from a similar lineage tend to work best.  For example, if looking to establish a bank of T-cells it is probably best to start with cells of hematopoietic lineage such as peripheral blood cells.

A 2-Part Process to iPSC-derived mature cells

Step one involves the establishment of the iPSCs.  The process described above, by which adult cells are engineered back to pluripotency.  It is then possible to establish a bank of iPSCs which can be used for various applications (more on that later).  Banked iPSCs can be maintained as patient-specific which can be used as either an autologous therapy or an HLA-matched recipient.  Alternatively, banks of iPSCs can be derived from healthy donors and used as a universal donor/off-the-shelf approach.  The off-the-shelf approach not only enables the development of allogeneic iPSC-based therapeutic products but also enables other applications (the suspense is mounting I know, keep reading). 
Step two involves the differentiation of (banked) iPSCs into mature cells.  For autologous therapeutics this can include the administration of edited/repaired cells back to a patient with a genetic disease for example.  This step is where the magic happens, from a biotech perspective, because this is where the potential for discerning intellectual property is greatest – the differentiation protocols.  With these protocols there is the potential to distinguish one iPSC-derived T-cell (for instance) from another.  Some examples of unique IP for differentiation protocols include: the use of fewer factors (cost savings), or a faster protocol (also cost savings), or conferring unique attributes (competitive advantage) such as knock in or knock out of additional capabilities. 
What can an iPSC become when it grows up?

Cell therapy - the go-to application most people think of is typically iPSC-derived cell-based medicines.  Great strides are being made for many diseases for which developers were previously struggling to address.  For example, Type 1 Diabetes. 
  •   Semma Therapeutics, which was recently acquired by Vertex, is developing an iPSC-derived human islet cells combined with an encapsulation device to avoid the immune response.  
  • Bluerock Therapeutics, recently acquired by Bayer, is developing iPSC-derived neurons to address various neurological diseases with their lead candidate addressing Parkinson’s Disease.  They are also developing iPSC-derived cardiomyocytes and immune cells. 

There are numerous other companies in the space including: Fate Therapeutics (immuno-oncology and autoimmune diseases), Vita Therapeutics (muscular dystrophies), Century Therapeutics (immuno-oncology), and Notch Therapeutics (T-cells; exclusive license to Allogene) to name a few.
Substitute for primary cells in drug discovery:   For cell-based drug discovery, developers seed iPSC-derived cells into high throughput screening arrays in order to screen libraries of small molecule drug candidates.  With this approach, developers can look for promising “hits” against a target or phenotype, using iPSC-derived cells that more closely resemble hard to isolate primary cells such as neurons than do conventionally established cell lines. 

Serve as model organs:  In the case of disease modeling, cells can be coaxed to form 3-dimensional structures organically, or they can be “printed” using the iPSCs as the “ink”.  With these organoids, developers can test efficacy and/or toxicity in simulated tissues, which can be more meaningful than cell culture.  In some instances, there exists the potential to supplant animal studies with human iPSC-based organoid studies.  This could allow for the use of fewer animals in therapeutic development which is terrific, but more importantly could enable “in situ” evaluation of new medicines for diseases for which there are no animal models.  Furthermore, liver organoids have been an intensive area of focus for modeling drug toxicity, as well as diseases of the liver.

So, you want to use iPSCs…

As one would expect, any company wishing to use iPSCs for any of the above applications will need to take a license.  Luckily, unlike with the CRISPR/Cas technology, there is a clear license owner with a predetermined license scheme - iPS Academia Japan.  This technology licensing organization was founded in 2008 and has the mission: “To facilitate the application of iPS cell technology for the benefit of human health and welfare”.  There are predetermined terms for research use, manufacture/service, and therapeutic applications.   At least one aspect of iPSC therapy development is easy to understand.

Hype or Reality?

According to clinicaltrials.gov (20Aug2020) there are a total of 104 iPSC-derived products.  The majority of these trials involve academic projects.  Of these 104 products, 78 are active or completed with the remainder being either not-yet enrolling, suspended, or terminated.  Of these 78 trials the following companies are listed as sponsors:  Centogene (4), Help Therapeutics, GSK, Fate (2), Cynata, and Biogen.  Surely, we will see more company sponsored trials as more clinical validation of these cells as therapeutic modalities emerges.  

It is worth noting that neither Semma nor Bluerock (mentioned above as iPSC companies that have been acquired in the last year) are in the clinic with their trials yet.  This is not terribly surprising for such a young technology, though what is surprising is the value of the deals:
Note that very few company-sponsored iPSC-based products have been tested in clinical trials, yet the value placed on these cell therapies far exceeds that which is typical of cell therapy deals (for more on the value of cell therapy deals see the July issue).  In fact, the Fate-Janssen deal is the “outlier” in the cell therapy deals summarized last month.  This may suggest that iPSC-derived cell therapies are perceived as “other” with respect to value when compared to unmodified cell therapies such as MSC-based products.  With the promise of this exciting technology, perhaps they will be in a class all their own someday
Trevor:  Be Different - How?

You’re different?  How, exactly?

That question – which sometimes feels more like a statement – usually leads to either an enthusiastic telling of why your program offers superior efficacy, significantly enhanced safety profile, favorable route of administration (etc) or a strained message of a largely similar offering to others in development (and there can be loads of others). 

For every hot-shot startup that announces a Brinks truck has backed up to their front door and unloaded a $25M Series A, there are many more that continue to grind out rounds of financing through Convertible Note Purgatory hoping they can raise enough to do something, go somewhere.  The good news: the Angel investment cogs in the early stage funding apparatus are still very much in gear.  We see this all the time through our experience at Pullan Consulting working with preclinical to Phase II companies, and it is a wonderful thing for both entrepreneurs and investors.  The world has not yet been totally overrun by professional investors, who make no bones about their desire to capture ever more of the potential for capital appreciation, and a Founder-slash-Investigator-slash-Entrepreneur can still strike out on his/her own to realize the full potential of their ambition.

But drugs don’t come to market on the backs of Angels.  At some point you’re going to need to translate to efficacy in humans and that, by and large, is the domain of big moneyAnd they will want to understand exactly how are you different?  

Yes it’s true… investors, and pharma, do miss things: if every major Pharma hadn’t passed on EPO (so the legend goes), the Biotech/Pharma/Beast that Amgen is today might not exist.  But let’s not forget those legendary relationships that gave Amgen it’s chance – Amgen was a well-capitalized VC-backed scrappy biotech startup with a dynamic leader in George Rathmann and investors willing to take risk at the dawn of an emerging science.  Indeed, the appreciation for venture capital is perhaps nowhere better reflected than Amgen’s campus at the Thousand Oaks headquarters where a statue of initial investor Bill Bowes greets all comers.

At some point your story is going to have to translate into the deep pools of capital and resources.  The sooner you can ask yourself the tough questions (and get to answering them) the closer you’ll be to making the transition, or to abandoning the current pursuit in favor of another more promising thesis.

If you wonder what the tough questions are or if you struggle with holding yourself accountable to them (perhaps more personal existential motives have crept into the Use of Funds ask in the latest fund raise), it’s imperative to seek out and use an impartial, qualified advisory board to ask the questions of you.  After all, if these programs – as we are prone to say – are our babies, do we not want the absolute best education possible to be afforded them?

Let’s take an obvious example, an area that is horribly crowded and tough to find meaningful differentiation.  The figure below shows the saturation in the market for PD-1 and PD-L1 inhibitors and combinations.  The authors note that “the number of clinical trials for the therapy types and targets with 7 or more trials is indicated in the labelled circles.”
Any PD-1/PD-L1 inhibitor combination will have trouble getting attention when the leading players have such huge explorations of the space.  Even if you have a new mechanism, if you are looking to combine with a PD-1 or PD-L1 inhibitor, you will have to have an argument as to why you are different from all the things they are already exploring in combinations.  Moreover, single agent activity is typically desired since there are already so many combinations to choose from.  Beyond that, is there an indication where your combination works when no other combination does?   Why?  What’s the evidence? Meaning, where’s the evidence?  Is there evidence to suggest you’re wrong?  Anything lurking in your files which is disclosed in your data room?  Professional investors and pharma partners will find it – ultimately, if you get there, you’ll guarantee your disclosure of all data as they contemplate dedicating significant resources to advance your baby through later stages of development. 

Which brings us back to those professional investors looking to wring out every last drop of value from your startup… it’s not the case.  Investors want to make money sure; the costly failures require that significant returns be provided through the winners.  It’s good that it is so, lest the market for risk capital dry up altogether. 

Drugs don’t come to market on the backs of Angels but Founders can stand on the shoulders of Angels to lift the program into the necessary realm of professional capital and industry through the application of precious resources to the most pressing of questions.  In a massively innovative industry, how are you going to stand out?  What’s the problem you solve not achievable by any other approach or that has not yet been demonstrated by anybody else?  You don’t have to be at the fringe of the NEW but your thinking/strategy must reveal a capability that is new.  

If we adopt the rigorous and critical ethos which an intense focus on differentiation can impart, examining our own stories for that critical WHY (“why is this one is special?”, “why is this needed?”), then the pitch for capital and partnerships becomes a rewarding experience. Instead of a next desperate raise, you’ll be about the business of answering challenging questions and solving important puzzles for the betterment of humanity.  You’ll be empowered to look for “fit” between you and investors/collaborators given the clarity of the meaningful value of your solution (and the questions you to propose to solve next) for unmet needs.  Incredible opportunities await.


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