For startup biotech companies, there are many benefits to licensing drug candidates to major drug developers. Partners can be an excellent source of non-dilutive financing, provide the company with validation, and ensure that the drug candidate will have the support it needs to reach the marketplace. However, it is important for biotech entrepreneurs to avoid getting so focused on partnerships that they fail to fully develop a drug that’s wholly-owned.
Importance of Wholly-Owned Programs
If a management team is truly interested in building a company for the long term, then at the end of the day it needs to sell a product, generate revenue and turn a profit. Companies that sell most of the rights to their assets to partners in return for milestones and royalties have a very tough time getting interest from public market investor. Public investors are looking for companies that not only generate their own revenue stream, but have the ability to effectively invest profits into the innovation process.
Market performance over the past 20 years in this industry demonstrates that the most successful companies are those that took drug candidates into the market themselves. Companies that out licensed everything, on the other hand, have not been nearly as successful. In biotech it can be challenging to know when to keep a program versus finding a partner. It is important to understand some of the drivers in this decision.
Primary Care vs. Specialty Care
A generally useful delineation in choosing a program to partner and one that would remain fully owned is whether or not the eventual drug would be prescribed by a primary care physician or a specialist. If the drug in question is of the class that would be prescribed by a primary care physician, it is rather simple math to see why a startup would not pursue bringing that drug to market without the support of a partner. For example, in the U.S. alone, it likely would require thousands of sales reps to fully commercialize a drug with primary care physicians. It is virtually impossible for a startup company to garner the resources to make that investment. Major drug developers, though, have these sales forces in place and the capital needed to expand as required. It is also important to consider the size and cost of the clinical studies involved in the development of a primary care drug. It is almost guaranteed that the amount of investment required moving a primary care drug forward in the clinic would be more than a small company could afford. For these reasons, it is best to consider partnering the program to a company with the financial and infrastructure resources needed to move the product forward.
Amira’s first program, which inhibits a molecular target called FLAP, was clearly in the primary care space for potential treatment of asthma and chronic obstructive pulmonary disease. For this reason, we quickly achieved proof-of-concept in clinical studies which enabled us to secure a lucrative partnership that continues to finance our operations in a non-dilutive manner. We are also in the process of pursuing a similar arrangement with our second program, a DP2 antagonist. We expect the combined financial impact of these partnerships to finance the development and commercialization of our third program, which is a specialty care opportunity.
All of the business decisions about partnering should still allow … Next Page »