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What’s attracting big pharma to pre-clinical deals?

9:18 am by | 1 Comments

business shaking handsRoche’s move to skip over Inovio’s (NYSE: INO) late stage drugs for cervical cancer and Hepatitis C and make a beeline for its preclinical DNA vaccines for prostate cancer and Hep B was initially a little puzzling. Investors have preferred to park their money further upstream when products are in the clinic and they’ve been derisked. Big pharma is always looking for ways to take costs out of research and development. But the prospect of utilizing new technology with the potential to improve treatment is appealing for drug developers that want to build up and strengthen their drug pipeline.

The cost of absorbing the risk of taking therapeutics, or in this case immunotherapies, to the clinic results in a potentially much lower price than they might otherwise command.

Karen Andersen, a senior biotechnology analyst with Morningstar,  pointed out in response to emailed questions that Roche has trailed in the immunotherapy space.

Gaining rights to Inovio’s novel vaccines early in development gives Roche more flexibility to shape their development pathways, perform combination trials with its own pipeline, and also puts less upfront cash at risk, Andersen pointed out. She added: “I think in this case the therapeutic areas are particularly good fits for Roche, given its significant experience in treating cancer and hepatitis.”

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The downside of  doing a deal at a later stage is that the drug developer has shaped the initial path to market, and the firm interested in licensing the program may have a different path–in different indications, or as part of a combination regimen–in mind, Andersen added

It’s a trend born out by other big drug developers “dipping their toes into newer technologies” of late recently. Celgene made a $100 million deal with Acetylon Pharmaceuticals for its early-stage multiple myeloma drug based on epigenetics, with an option to acquire the business. It also made a smaller deal with Array Biopharma (Nasdaq: ARRY) for its anti-inflammation drugs. This week Biogen Idec (Nasdaq: BIIB) made its fourth deal with Isis Pharmaceuticals (Nasdaq: ISIS) to license its antisense technology to speed up the discovery of drug targets for neurdegenerative diseases. over the past year and a half on its antisense technology applied specifically to neurology.

It’s a risk that worked well for Bristol-Meyers Squibb (NYSE: BMY), which brought Yervoy to the market following its approval by the U.S. Food and Drug Administration in 2011. It’s the first anti-cancer drug known to prolong the life of people with skin cancer melanoma.

Pharmaceutical companies like J&J and Bayer Healthcare, Merck and GlaxoSmithKline have sett up innovation centers and other programs to help them do a better job of spotting innovative technology opportunities in the early stages.

[Photo credit: Male and female hands shaking from Bigstock Photos]

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Stephanie Baum

By Stephanie Baum

Stephanie Baum is the East Coast Innovation Reporter for MedCityNews.com. She enjoys covering healthcare startups across health IT, drug development and medical devices and innovations deployed to improve medical care. She graduated from Franklin & Marshall College in Pennsylvania and has worked across radio, print and video. She's written for The Christian Science Monitor, Dow Jones & Co. and United Business Media.
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1 comments
jlrdb
jlrdb

Hello Stephanie, the lessons to be gained by more than 30 years of watching innovative moves by large and small companies is that the organizational and decision making pendulum keeps swinging, and the outcomes roulette keeps turning.

what are your own conclusions?

best