The Role of Licensing Business Development in the Pharma Industry

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The Role of Licensing / Business Development in
the Pharma Industry

• Jack Geltosky
• Vice President
• External Science, Technology Licensing
• Bristol-Myers Squibb Co.

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Agenda

• Macro view of the Pharma Industry
• Impact of Licensing / BD
• How its Done
• Role of Alliance Management

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Unprecedented Pressures on the Industry

• First Foremost some kind of price controls in
  the US
• - 15 sales gt RD
• - 28 of population think drugs come from the
  pharma industry
• - Numerous studies show use of drugs have huge
  positive impact on the economy
• - Compliance runs 33

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Unprecedented Pressures on the Industry (Contd)

• Dry Pipelines
• - 60B/yr. spent on RD!
• - But, productivity is inversely proportional to
  investment!!
• - Whats up with the new technologies??
• Regulatory Pressures
• - FDA EMEA ever demanding, esp. about
  safety
• - New anti-coagulant from AZ 30,000
  patients in phase 3!

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The Cost to Develop a Drug

• Estimated to be gt 1B from Discovery to Approval
• 15 years from Discovery to Approval
• lt10 probability of success going from phase 1 ?
  Approval
• Then another couple of hundred million to launch
• And no guarantee of commercial success

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In-Licensing Supplements Internal Pipelines

• 1/3 of all drugs in the market originated
  elsewhere
• BMS 2/3!
• Who are the licensors?
• Universities
• US Biotechs
• Mid-sized European pharmas
• Japan
• Peer pharmas

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In-Licensing Supplements Internal Pipelines
(contd)

• Deals come in multiple flavors
• - Straight (upfronts, milestones, royalties)
• - Co-development
• - JV/profit sharing
• - Based on territories
• - Getting increasingly complex
• - Hugely competitive ? ? cost

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How We Do Licensing Deals
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5 Basic Steps

• Search Identify
• Evaluate
• Value
• Negotiate
• Sign

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Criteria for Candidate In-Licensing

• Strategic Fit / Disease Area
• Unmet Medical / Scientific / Technical Need
• Scientifically Sound
• Feasibility of Development / Utilization
• Commercial / Business Value

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In-Licensing Process
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What We Look for in Compounds

• All stages of development
• Biologicals are ok
• For pre-clinical compounds
• Within 12 months of First in Man
• Proof of concept in validated animal models
• Evidence of potential wide therapeutic window
• ADME work-up
• Drugable pharmaceutical properties

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What We look for in Compounds (Contd)

• For Clinical Stage Compounds
• - Good safety tolerability
• - PK/PD supporting 1x/day dosing
• - Efficacy

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Valuation Approach
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Where is the licensing Sweet Spot?

• For Biotechs, it is mid to late development
• Bigger terms
• Co-promotion quids
• Greater control
• For pharma, it is early to mid development
• Lower terms
• Less need to concede co-promotion / quids
• More opportunity to shape development
• Greater control

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Key Deal Components

• Development cost sharing
• Profit sharing
• Co-promotion rights
• Quid from BMS
• Lead Party
• Governance (voting rights)
• Termination rights

• Territory
• Field of Use
• Upfront/milestonepayments
• Equity investments(premium)
• Loans
• Royalty rates
• Sales based milestones

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Keys to Signing Successful Deals

• Commitment of both partners from beginning to end
• Trust and respect
• Communicate frequently consistently
• Senior management support
• Speed
• Flexibility
• Seasoned Alliance Management team

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Deal Values 2000- ytd 2004 Phase II/III
(Published) Deals
Main
Therapeutic
Upfront
Total
Licensor
Licensee
Compound
Phase
Area
(M)
(M)
Imclone
BMS
IMC-C225
Phase III
Oncology
1,200


2,000


Genta
Aventis
Genasense
Phase III
Oncology
135


480


Amylin
Lilly
AC2993
Phase III
Diabetes
110


435


Eyetech
Pfizer
Macugen, EYE001
Phase III
Macular Degeneration
100


645


Neurocrine
Pfizer
Indiplon
Phase III
Insomnia
100


575


Organon
Pfizer
asenapine
Phase III
Schizophrenia
100
370




Isis
Lilly
ISIS 3521
Phase III
Oncology
100
259




OSI
Genentech/Roche
OSI-774
Phase II
Oncology
95
187




Biovitrum
Amgen
11b-HSD1
Phase IIa
Type II Diabetes
87
512




Regeneron
Aventis
VEGF Trap
Phase I
Oncology/ Opthal.
80
430




Idenix
Novartis
Valtorcitabine
Phase II
Hepatitis B/ Antiviral
75
437




Regeneron
Novartis
IL-Trap
Phase II
Rheumatoid Arthritis
75
350




Lundbeck
Merck
gaboxadol
Phase III
CNS / Sleep Disorder
70
270




Celltech
Pharmacia
CDP-870
Phase II
Rheumatoid Arthritis
50
280




Adolor
GSK
alvimopan
Phase III
Post-op Ileus
50
270




Corgentech
BMS
E2F Decoy
Phase III
Cardiovascular
45
250
Kosan
Roche
Kos-862
Phase I
Oncology
30
190




Pozen
GSK
5-HTIB.ID agonists/MT 400
Phase II
Anti-Inflamm. / Migraine
25
160




Flamel
BMS
Basulin
Phase II
Diabetes
20
165




Millenium
JNJ/Ortho Biotech
Bortezomib
Phase III
Oncology
15
520
Ipsen
Roche
BIM 51077
Phase I
Diabetes
12
128
Phase I
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Alliance Management

• Ensures the deal succeeds after the ink is dry
• Manages conflict resolution
• Builds and maintains alignment shadows the
  commercial relationship
• Manages all governance aspects of relationship

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• Role of the Alliance Manager
• Takes the asset (joint enterprise) view.
• Manages long term relationships between BMS and
  partner.
• Ensures implementation of alliance decisions in
  letter and spirit.
• Takes BMS lead on issues requiring Alliance
  consensus or decision.
• Single point of communication.
• Manages and directs the Alliance governance.

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Project Management vs Alliance Management
Alliance Management Accountable for conflict
resolution Responsible for S. Mgmt
alignment Manages governance committees and
action items Greater financial/negotiating
skill base (PLs, strat plans, budget,
contracts, business development) Operational and
strategic Contractual role -high influence factor
Falls within Corporate and Business and
Development
Project Management More internal vs partner
focus Accountable for timelines and
budgets Primarily clinical focus Operational Falls
within RD structure
Team Building Cultural sensitivity Able to
manage multiple priorities Takes accountability
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• Specific Approaches
• Senior management engagement and involvement
• engaged continuously, used sparingly
• Actively build the relationships
• Ensure transparency on both sides
• Decision making by consensus

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Specific Approaches (contd)

• Joint working teams
• Strategy/decisions are separate from
  implementation
• Go beyond the contract to whomever has the
  strengths