Partnering with Pfizer 6 th Annual Rice Alliance Life Science Technology Venture Forum Dr B J Bormann, Vice President Strategic Alliances June 6th, 2007 Partnering with Pfizer 6 th Annual Rice Alliance Life Science Technology Venture Forum Dr B J Bormann, Vice President Strategic Alliances June 6th, 2007
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Partnering with Pfizer
6th Annual Rice AllianceLife Science Technology Venture Forum
Dr B J Bormann, Vice PresidentStrategic Alliances
June 6th, 2007
Partnering with Pfizer
6th Annual Rice AllianceLife Science Technology Venture Forum
Dr B J Bormann, Vice PresidentStrategic Alliances
June 6th, 2007
� Jury Duty, last person in the pool of 200, interviewed at 5 pm� Selected as an alternate for jury, ‘medical condition’ civil trial� Closing arguments, juror was ill� Chosen as replacement� Deliberations
– I was alone in my opinion, needed to convince fellow jurors– Do you remember “Twelve Angry Men?”
� All took > 2 weeks
� Cancelled my presence but not my presentation last year� You saw my slides presented by Dr. Ajay Gautam, a Rice
alum.
� I have mostly new slides for you this year
� Jury Duty, last person in the pool of 200, interviewed at 5 pm� Selected as an alternate for jury, ‘medical condition’ civil trial� Closing arguments, juror was ill� Chosen as replacement� Deliberations
– I was alone in my opinion, needed to convince fellow jurors– Do you remember “Twelve Angry Men?”
� All took > 2 weeks
� Cancelled my presence but not my presentation last year� You saw my slides presented by Dr. Ajay Gautam, a Rice
alum.
� I have mostly new slides for you this year
Last YearLast Year
“Pfizer has had a long history of great innovations, but it recognizes that no single
company has a monopoly on good ideas. To build on and
complement its strengths, Pfizer actively seeks out alliances.”
William Steere, Former CEO of Pfizer1999
Agenda Today:�A wee bit of Pfizer Propaganda�A Flash review of challenges to the pharmaceutical business�The evolution of Pfizer by Alliances
�Biologics�Diagnostics
�New Paradigms�Scripps�The Pfizer Incubator
Agenda Today:�A wee bit of Pfizer Propaganda�A Flash review of challenges to the pharmaceutical business�The evolution of Pfizer by Alliances
�� Average 50% Continuous Average 50% Continuous Quit Rate After 12 Week Quit Rate After 12 Week Treatment Compared to Treatment Compared to 12% With Placebo12% With Placebo
UK-427,857 HIV Entry InhibitorUK-427,857 HIV Entry Inhibitor
HIV Cell Entry InhibitionHIV Cell Entry Inhibition
� First-in-Class
� Selective, Reversible Binding to the CCR-5 Receptor
� Excellent Pharmacokinetics and Selectivity
� Potent In Vitro Activity Against Resistant Strains
� No Drug-Drug Interactions
�� FirstFirst--inin--ClassClass
�� Selective, Reversible Binding to Selective, Reversible Binding to the CCRthe CCR--5 Receptor5 Receptor
�� Excellent Pharmacokinetics and Excellent Pharmacokinetics and SelectivitySelectivity
�� Potent In Vitro Activity Against Potent In Vitro Activity Against Resistant StrainsResistant Strains
�� No DrugNo Drug--Drug InteractionsDrug Interactions
SU-11,248Cancer
� Multi-Targeted VEGFR Kinase Inhibitor
� Remarkable Efficacy Seen in Gastrointestinal Stromal Tumor and Renal Cell Carcinoma Cancers
�� Remarkable Efficacy Remarkable Efficacy Seen in Gastrointestinal Seen in Gastrointestinal Stromal Tumor and Stromal Tumor and Renal Cell Carcinoma Renal Cell Carcinoma CancersCancers
� Cyctotoxic T Lymphocyte-associated Antigen-4 Antibody
� CTLA-4 Blockade with CP-675,206 May Break Peripheral Immunological Tolerance and Induce Anti-tumor Activity
� Currently Conducting Phase III Study Using Multiple Doses
�� Cyctotoxic T LymphocyteCyctotoxic T Lymphocyte--associated Antigenassociated Antigen--4 4 AntibodyAntibody
�� CTLACTLA--4 Blockade with CP4 Blockade with CP--675,206 May Break Peripheral 675,206 May Break Peripheral Immunological Tolerance and Immunological Tolerance and Induce AntiInduce Anti--tumor Activitytumor Activity
�� Currently Conducting Phase Currently Conducting Phase III Study Using Multiple DosesIII Study Using Multiple Doses
� The diagnostics market has total revenues of $70-75B(1) is growing at ~7% pa and has margins varying by technology segment from 5% to 30%
� Electronics companies are merging the traditional technology segments (in vivo and in vitro), pursuing higher margin services and IT revenues from clinical institutional customers
� Most large pharma companies (Merck, GSK, Bristol-Myers Squibb) have elected for selective diagnostics licensing deals focusing on support for specific portfolio assets
� Diagnostics will grow in importance in healthcare decision-making over the long term, driven by expansion in evidence-based treatment, shifts to early testing and screening and demand for personalized medicine
� The diagnostics market has total revenues of $70-75B(1) is growing at ~7% pa and has margins varying by technology segment from 5% to 30%
� Electronics companies are merging the traditional technology segments (in vivo and in vitro), pursuing higher margin services and IT revenues from clinical institutional customers
� Most large pharma companies (Merck, GSK, Bristol-Myers Squibb) have elected for selective diagnostics licensing deals focusing on support for specific portfolio assets
� Diagnostics will grow in importance in healthcare decision-making over the long term, driven by expansion in evidence-based treatment, shifts to early testing and screening and demand for personalized medicine
(1) Including in vitro, in vivo direct and in vivo IT and Services
Business Dynamics for DiagnosticsBusiness Dynamics for Diagnostics
• Revenues smaller (~$55B(1) relative to pharmaceutical ~$600B), margins lower (10-20%), and growth equivalent (~7%).
Short-term diagnostics business
Acquisitionchallenges in in vivo
Acquisition challenges in in vitro
Key short-termtrends
Landscape ofactivity
Long-term diagnostics business
Long-term Impact Of Dx On Rx
• Attractive segments fragmented; in select transactions studied, market paid $5-7B, for base revenues of ~$0.8B and revenue growth of ~$0.2B per annum
• Three key players; theoretically pay $15-25B (Philips Medical Systems) to $55-75B (GE Healthcare), for base revenues of $9B (PMS) to $15B (GEHC) and revenue growth of $0.4B (PMS) to $2.7B (GEHC) per annum
• No indication of a large improvement in diagnostics business
• Integrated Rx-Dx businesses have struggled to synergize• Companies entering or expanding are doing so for different reasons
• Critical longer-term enablers of pharmaceutical revenues
�����
����
• More attractive as diagnostics expected to grow considerably in importance as drivers of healthcare decisions
Key Trends: Limited Short-Term Change
Pricing under pressure
• Prices historically very low, continued downward pressure by payors• Reimbursement challenge: labs often have to absorb test costs• But, several trend-breakers may be emerging, such as in molecular diagnostics
(e.g., Genomic Health’s Oncotype Dx)
Increasing regulatory hurdles
Capabilities being commoditized
• Many segments already highly commoditized (e.g., clinical chemistry)• Higher margin segments seeing downward pressure with new entries
Long-term growing importance in healthcare
decision-making
• Human Genome Project, SNP Consortium and Hap Map are synergistic with diagnostic development
• Diagnostics likely to be much more important in driving healthcare decisions
• Variable regulatory path (PMA, 510(k), class I ASR, home-brew)( at FDA discretion• Recent examples indicate intent of FDA to increase hurdles
- Refusal to allow Roche AmpliChip as ASR in 2003- Draft proposal to regulate Multivariate Index Assays, February 2007
Limited IP protection• Few areas of real exclusivity• Many ways to resolve a particular Dx problem allows circumvention of IP
Expansion in Evidence-based treatment
• Market increasingly demands evidence-based treatment selection that can be provided by diagnostics
• Theranostics now standard for HIV, increasing for HBV and HCV
• Potential to grow Rx market for many indications• E.g., Biomarker and diagnostic development to identify pre-symptomatic Alzheimer’s Disease
Shift to early testing and screening
Demand for Personalized Medicine
• Diagnostics to identify molecular basis of disease important during both R&D and commercial
• Huge potential impact across many diseases currently defined by clusters of symptoms and tests
Longer-Term, Diagnostics Growing in ImportanceLonger-Term, Diagnostics Growing in Importance
� Aureon Labs
� Avid Radiopharmaceuticals
� Genizon
� Genomic Health
� ICardiac
� Monogram
� M2S
� Perlegen
� Virtual Scopics
� Aureon Labs
� Avid Radiopharmaceuticals
� Genizon
� Genomic Health
� ICardiac
� Monogram
� M2S
� Perlegen
� Virtual Scopics
� Cogstate
� Epidauros
� General Electric
� Oxford biosensors
� Source Mdx
Current and Past “Investments” in Diagnostics
Equity Non-Equity
New ParadigmsNew Paradigms
Recent DealsRecent Deals
� Scripps� An infusion of new ideas, fresh science
� The Pfizer Incubator� Nurturing ‘solutions’ to Pfizer ‘technology gaps or
problem statements
� Scripps� An infusion of new ideas, fresh science
� The Pfizer Incubator� Nurturing ‘solutions’ to Pfizer ‘technology gaps or
problem statements
The Collaborative Research Program Between The Scripps Research Institute and Pfizer
The Collaborative Research Program Between The Scripps Research Institute and Pfizer
General Provisions of CollaborationGeneral Provisions of Collaboration
� 5 year term
� Governed by Steering Committee (SC) with equal representation from Scripps and Pfizer
� Areas of Defined Collaboration� 2 Target Biology Projects/Year� 10 Screen Configurations/Year (Drug Pfinder)� Biological Libraries – creation/screening
� First option to license up to 47% of inventions
� First option to fund any corporate-sponsored research
� Collaboration in other fields as approved by SC
� Sabbatical Opportunities
� 5 year term
� Governed by Steering Committee (SC) with equal representation from Scripps and Pfizer
� Areas of Defined Collaboration� 2 Target Biology Projects/Year� 10 Screen Configurations/Year (Drug Pfinder)� Biological Libraries – creation/screening
� First option to license up to 47% of inventions
� First option to fund any corporate-sponsored research
� Collaboration in other fields as approved by SC
� Sabbatical Opportunities
The Pfizer Incubator Business ModelThe Pfizer Incubator Business Model
Value to Pfizer• Early access to enabling technologies• Flow of products at various stages at lower cost• Agility in exploring new technologies & processes
Value to Entrepreneurs• Easy hassle-free start-up, focus on science• Strategic advice from the ultimate customer• Opportunity for faster payoff
TPI Board needs• to ensure nimble
decision making
• to have flexibility to pursue different legal structures
• to reconcile compliance with certain Pfizer policies and procedures in the context of TPI and incubated entities
Founder(s)IP, know-how
NewCoExecutes Research
Plan
TPI$$*, facilities,
operational support
TPI acquires exclusive rights• Value negotiated or by third party• TPI cannot acquire only a portion
of company - cherry pick (in most situations)
• Milestones, royalties can provide long-term reward for founders
Spin out• TPI may acquire non-exclusive
license• NewCo can raise funding from
external investors or be acquired• NewCo moves out of incubator• TPI may remain a stakeholder
(no Board seat)
• Agreed upon objectives, research plan
• 2 year funding, 6 month milestones
• Plan and milestones can be changed if approved by TPI Board
• Equity share negotiated at start
• TPI has a Board seat • TPI reserves an option to
buy out founders based on negotiated or 3rd party valuation
Project initiation / Entity Creation
Incubation Exit Scenarios
TPI LLC
Entrepreneurs-In-Residence (EIRs)
Open innovation manager
TPI Head
TPI Organization, facilities and service modelTPI Organization, facilities and service model
TPI LLC is an umbrella organization under which multiple incubators at various locations can be run: scalable structure
TPI Board
Expert advisors
Investment budget for LJ incubator: $10M/y
Operating budget for 2007: $2.5M
LJ Incubator
Company 1
Company 2
Company 3
Incubator Head
Employees/contractors
Concierge
Service model
IncubatorEntity
ConciergeServices
IT
EHS
FacilitiesServices
Supplies/Logistics
Security
Pod
11st Floor
� 26,600 sq. ft.
� 5 dedicated labs (divisible into 8)
� Office space to support 70+ people
� Glass wash & central services
� Shipping / receiving location
� Least invasive renovation
� Shell space provides future flexibility
CB7
Thanks for Listening!!Thanks for Listening!!
� Pfizer is a superb partner� If an opportunity fits within our strategy, we are
nimble� We negotiate deals appropriate for the opportunity� We focus on the science� We manage the Alliances with purpose and for
success
� Any Questions?
� Pfizer is a superb partner� If an opportunity fits within our strategy, we are
nimble� We negotiate deals appropriate for the opportunity� We focus on the science� We manage the Alliances with purpose and for