It's always interesting to me when the biotech companies think that if they keep their product until Phase III they'll get
more money so it's obviously the right thing to do. But if you think about that economically, maybe you're not going to get
to Phase III or maybe there'll be some other problem that will crop up that you might be able to solve if you had a partner.
If the pharma company is looking at it and saying that the upfront payments are going to be very large and so is the total
value of the deal, it is not taking into account that's because most of the risk has fallen out of the system by then, which
is why it is paying less. So on a risk-adjusted basis, those deals might actually be more expensive or about the same as the
earlier- stage deals.
Novartis’ Gary Cupit, PHarmD held positions in business development, sales, product management, and new product development
at a variety of pharma and biotech companies. Before pharma, he held academic faculty positions at major medical centers and
teaching hospitals around the country.
Cupit For a biotech company to get to Phase III, it is probably going to focus on a single indication whereas the partner will probably
take it to three or four, so that if the lead indication doesn't succeed, you have that hedge.
Ormsbee That gets back to the point of getting there as fast as you can.
Ko Pharma companies are very reluctant to go in on preclinical drugs. But I encourage them to look at Phase I—which is a fraction
of the cost. You put in your investment and then let them run the shop for you. Within two years, you'll have the Phase II
data, which is worth it.
Yanni That's absolutely right. Although there have been a bunch of Phase II deals that have gotten attention, there are also many
deals that are done at the Phase I level and at the preclinical level. Certainly if you look at Merck's partnering history—and
I'm sure this is true of everyone—we've done far more deals at the basic research level, at Phase I, than we've done at Phase
III. It's just that the ones you hear about, of course, are the big ones with the huge amount of money paid at Phase III.
But I would argue to the biotech companies that partnering earlier is an advantage for both companies.
Cupit If I could send one message to a biotech company that's going to partner with Big Pharma, I would say that if you're going
to be the first product on the market in a new therapeutic area, you've got to set a high hurdle to be as competitive as possible.
You want to have all the drug interaction studies and all the disease interactions. You want to do some kind of monitoring
that shows that safety is better than anything else that may come later.
Let's say you're second to market. Now you've got to work even harder to overcome the position the first-to-market product
has in the marketplace. You've got to do a more robust clinical development package. So either way you look at it, you've
either got to be the first, or the second with better. That all speaks to time, money, and opportunity.