Transcript TechAMP I Portfolio

Business Models That Biotech
Companies Employ
A. M. Pappas & Associates
Francis J. Meyer, PhD
Vice President, Enterprise Development
KFBS Biotech Speakers Series
November 25, 2002
Francis J. Meyer, PhD
Vice President, Enterprise Development
• PhD, Pharmacology, University of Maryland Medical
School
• Senior Management of 2 medical product companies
• Associate Dean for Technology Licensing, Johns
Hopkins University School of Medicine, 10 years
• Associate Vice Provost for Technology Development,
University of North Carolina-Chapel Hill, 5½ years
• A. M. Pappas & Associates, 2 years
– Life Science Venture Capital Fund Management & Advisory
Services
Presentation Outline
• Mission of biotechnology companies
• Biotech business models with examples
• Linking financial models with business
models
• Regulatory or ethical concerns that
could alter the business model
• How does a technology itself influence
the business model
Mission of Biotechnology
Companies
• Varies
• Focus on Human Health
Companies
• Using a platform to develop drugs
Designing Drugs
Leads to Drugs
Drug Development - A High
Risk Undertaking
Time
10-15 years from discovery to
market; patent life 20 years
Cost
$700 million + (includes costs of
failures)
Success
1 approval/ 5000 cmpds screened;
1 approval /5 cmpds entering
clinical trials
Return
3 in 10 approved drugs recover
development costs
Clinical Trials
Years
Discovery/
Preclinical
Testing
Phase I
Phase II
Phase III
FDA
6.5
1.5
2
3.5
1.5
Purpose
Assess
safety,
biological
activity and
formulations
Success
Rate
5,000
compounds
screened;
250 enter
preclinical
20 to 100
healthy
volunteers
Determine
safety and
dosage
100 to 500
patient
volunteers
1,000 to 5,000
patient
volunteers
Evaluate
effectiveness,
look for side
effects
Confirm
effectiveness,
monitor
adverse
reactions from
long-term use
5 enter clinical testing
Review
process/
approval
File NDA at FDA
Laboratory
and animal
studies
File IND at FDA
Test
Population
1
approved
Phase IV
Additional
postmarketing
testing
required
by FDA
Life Science Development Cycle
PATIENT
MANAGEMENT
Genomics
System Pathways
Proteomics
Cell Biology
THERAPEUTICS
DIAGNOSTICS
BIOLOGY
COMMERCIALIZATION
Screening
Sequencing
Expression
Target ID
FDA
Target
Validation
Assay
Development
Human
Trials
Natural
Extracts
Synthesis
Compounds
HTS
Lead
ID
Lead
Optimization
Preclinical
Development
FDA
CHEMISTRY
Discovery
Development
Business Models for Human
Health Biotech Companies
• Product Companies
• Subscription Companies
• Service Companies
Product Companies
• Product Company
– Develop products through clinical trial
stage
• initial products partner with pharma
• later products sell and market
directly
– Examples: Inspire, Panacos, Signase
Subscription Companies
• Subscription company
– Develop genomics databases
– Pharma subscribes to databases
– Subscription fees
– No downstream royalties
– Examples: Millennium
Pharmaceuticals, Inc., Incyte
Genomics, Inc., Celera Genomics
Corp., GeneLogic
Changed Model
• Most subscription companies have
become fully integrated pharma or
research companies
• Wall Street less value for subscriptiononly companies
• Examples: Human Genome Sciences,
Inc., Millennium Pharmaceuticals, Inc.,
Incyte Genomics, Inc., Celera
Genomics Corp.
Service Model
• Product is service
• Full range of services to support
pharmaceutical companies ideal
• Technology know-how strong
• IP less important
Service Model
• Contract Research Organization (CRO)
• Full range of services to support pharma
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Preclinical
Clinical
Regulatory
Post marketing
Production/Manufacturing
Specialty Testing
• Staff, know how, databases are the assets
• Examples: Quintiles, Piedmont Research
Service Model
• Chemistry Service Companies
– Chemical Libraries, Scaffolds,Synthesis
– Staff, Know How, Databases, Libraries, IP, Robotics are the
Assets
– Examples: Albany Molecular Research, Aurora Biosciences,
Tripos, Synexis Chemistry & Automation
• Smart Screening Companies
– Development and Use of Proprietary Models ( animals &
others)
– Staff, Know How, Databases, Models, IP, Robotics are the
Assets
– Example, EnVivo
Tool Companies
• Product companies that sell tools,
not as a service, but as a product
• Example: Chip companies such as
Affymetrix, Aclara, Caliper
Development Companies
• Development companies (Devco model)
– In-license compound, take it through
Phase II or III clinical trial
– Out-license to big pharma
• Downstream royalties
• Example: Pozen Pharmaceutical, Inc.,
DevCo Pharmaceuticals, Inc.,
Bioinformatics Companies
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Service & software company
Variation under subscription
Many to categorize
Examples: Bioinformatics Group,
Incellico, Divisions of IBM, SAS
Linking Financial Models with
Business Models
• Business model independent of source of
capital funding
• Example: AlphaVax, Inc.
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NCBC
SBIR
Foundation
Venture Capital
• There is a point when co.may not want
venture capital money
• Very early stage
Regulatory or Ethical Concerns
That Could Alter Business Model
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Drugs
Diagnostics
Medical Devices
Research Reagents/Tools
Stem Cell Research
– Geron & Univ. of Wisconsin
How Does the Technology Itself
Influence the Business Model?
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Platform technology
Products
Services
Databases / Tools
Critical Factors in Start-Up
• Management Team
• Business Model
• Technology
A Company for Today
• Profile:
– Post Genomic
– Rapidly Identify & Validate DiseaseCausing Cancer Genes
– High-Throughput Functional Cloning
– Developing Data, Tools and Therapeutics
– Treat Based on Individual Disease Profiles
A Business Model for Today
• Profile:
– Combination of Subscription, Tools &
Products
– Logical Evolution of Income Producers
Over Time
– Strategic Partners from Day One
– Several Sources of Cash & Conserve
Today’s Fund Raising Climate
• Cash is Very Hard to Get
• Only the BEST are Obtaining Funding
– BEST Management
– BEST Business Model
– BEST Technology
– BEST Products
– BEST Markets
Conclusions
• Constant change will continue
– Biz models change to adapt to science
change
– Genomics, functional genomics,
bioinformatics, proteomics, etc.
• Which model is best?????
– “ Morphing”
• Management team
• First 8 years of genomics will pale
compared to next 25
A. M. Pappas & Associates
If interested in additional
information contact:
Fran Meyer at 919-998-3314 or
[email protected]
Pappas Ventures I Portfolio
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Aclara BioSciences (Nasdaq: ACLA) (Mountain View, CA)
Arena Pharmaceuticals (Nasdaq: ARNA) (San Diego, CA)
ArgoMed (Cary, NC)
Bio-Informatics Group (Cary, NC)
EBM Solutions (Nashville, TN)
Elitra Pharmaceuticals (San Diego, CA)
Nereus Pharmaceuticals (San Diego, CA)
Panacos Pharmaceuticals (Gaithersburg, MD)
Reprogenesis (acquired by Curis) (Nasdaq: CRIS) (Cambridge, MA)
Signase (Houston, TX)
Variagenics (Nasdaq: VGNX) (Cambridge, MA)
X-Ceptor Therapeutics (San Diego, CA)
Pappas Ventures I Portfolio
Aclara Biosciences
biochip company developing microfluidic lab-on-a-chip
technology with applications for genetic analysis, high
throughput drug screening and clinical diagnostics
Arena Pharmaceuticals
biopharmaceutical company that has developed a
technology to accelerate the development of lead
compounds targeting G-protein coupled receptors
ArgoMed
company developing a proprietary, water-induced
thermotherapy device and technique to address the
non-surgical treatment of benign prostatic hyperplasia
(BPH)
Pappas Ventures I Portfolio
Bio-Informatics Group
company developing an innovative, proprietary 3-D
biochip to enhance the capacity, efficiency, accuracy and
automation of gene screening; NC State University
EBM Solutions
healthcare information company that provides evidencebased disease treatment protocols via the Web to
physicians and patients; Duke, Emory, Mt. Sinai NYU,
OHSU, Vanderbilt and Washington University
Elitra Pharmaceuticals
antimicrobial functional genomics company focused on
the identification, development and commercialization of
novel antimicrobial compounds that target essential gene
products of pathogenic organisms
Pappas Ventures I Portfolio
Nereus Pharmaceuticals
drug discovery and development company focusing
on marine environments as a source of smallmolecule compounds for the treatment of
inflammation, cancer, and infectious diseases;
Scripps Institution of Oceanography
Panacos Pharmaceuticals
drug discovery and development company focusing
on novel antiviral compounds targeting the treatment
of HIV, RSV and hepatitis; University of North
Carolina at Chapel Hill
Reprogenesis (now Curis)
company developing in vivo tissue augmentation/
repair products; MIT and Harvard
Pappas Ventures I Portfolio
Signase
cancer therapeutics company developing novel,
small molecule inhibitors of a critical cell replication
pathway to inhibit tumor growth; M. D. Anderson
Cancer Center
Variagenics
pharmacogenomics company with proprietary gene
variance detection technology anticipated to
streamline drug development
X-Ceptor Therapeutics
biopharmaceutical company focused on research in
the field of orphan nuclear receptors; Salk Institute,
Baylor College of Medicine, UT Southwestern and
Ligand Pharmaceuticals
Pappas Ventures II Portfolio
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Calyx Therapeutics Inc. (Hayward, CA)
Cognetix, Inc. (Salt Lake City, UT)
Dynogen Pharmaceuticals, Inc. (Boston, MA / RTP, NC)
Incellico, Inc. (Durham, NC)
NuVasive, Inc. (San Diego, CA)
Peninsula Pharmaceuticals Inc. (Fremont, CA)
Plexxikon, Inc. (Berkeley, CA)
Sensys Medical, Inc. (Chandler, AZ)
Syntonix Pharmaceuticals, Inc. (Waltham, MA)
Pappas Ventures II Portfolio
Calyx Therapeutics
pharmaceutical company focusing on oral
therapies for diabetes and inflammatory diseases
utilizing natural plan extracts with demonstrated
clinical activity in humans
Cognetix
biopharmaceutical company developing peptide
therapeutics for the treatment of epilepsy, pain and
anesthesia; University of Utah
Dynogen Pharmaceuticals
neuroscience-based drug discovery and
development company targeting novel therapies
for genitourinary and gastrointestinal disorders
Pappas Ventures II Portfolio
Incellico
bioinformatics company developing proprietary
solutions that will significantly streamline biological
and genomic data mining and processing
NuVasive
medical device company that has developed a
minimally invasive system for spine surgery
Peninsula Pharmaceuticals
pharmaceutical development company focused on
in-licensing and developing clinical stage
pharmaceutical products.
Pappas Ventures II Portfolio
Plexxikon
drug discovery company that utilizes a structural
proteomics approach to discover novel
pharmaceuticals
Sensys Medical
developer of non-invasive technology for blood
glucose monitoring
Syntonix
biopharmaceutical company focused on the
discovery and development of innovative drug
delivery technologies for improved administration
of protein drugs and vaccines; Harvard Medical
School