From Assets to Zen: Building Successful Drug Hunting Relationships

4/22/13

[Editor's Note: This post was co-authored by Jessica Yingling, founder of Little Dog Communications.]

A wise person once said, “Select your partner wisely. Because that person will be either 90 percent of your happiness or 90 percent of your misery.” While she presumably was referring to partners in love, this could also easily apply to partners who have come together for drug discovery and development.

This adage inspired us to organize a breakout session, entitled, “Partnering for Effective Drug Development: 90% Joy, 100% Misery or 110% Synergy” at the BIO International Convention, taking place this week in Chicago. At this panel on Tuesday afternoon, we will delve into partnership approaches with two distinguished drug hunters and partners: Tom Daniel, the president of global research and early development at Celgene, and Tadataka (Tachi) Yamada, chief medical and scientific officer of Takeda Pharmaceuticals.

Daniel has a deep background in biotech drug discovery and development, formerly leading research programs at Ambrx, Amgen and Immunex. He and the team at Celgene have a very active partnering program to support a leading pipeline.

Yamada was formerly the president of global health at the Bill & Melinda Gates Foundation and chairman of R&D at GlaxoSmithKline. He has been instrumental in creating partnerships with unique terms and purposes.

In the one-on-one discussions with Daniel and Yamada to prepare for the panel, we have unearthed a few revealing insights that are not often mentioned when considering drug partnering.

Assets

Most people think about partnerships as a way for pharma companies to obtain assets like new drug candidates. But for these relationships to be successful they have to go beyond assets. Assets may seem like the bread and butter of partnering, but they do not represent the actual value in why we form partnerships. If the relationship does not go beyond assets, then it is not a true partnership.

Building Capabilities and Capacity

For the pharma company, partnerships with small biotech companies should support, complement and compete with their own internal capabilities and capacity. This can be done in different ways via acquisitions. Yamada points to the acquisition of LigoCyte Pharmaceuticals to expand Takeda’s vaccine business and of Millennium Pharmaceuticals to build an oncology franchise.

Staged acquisitions can also be a way to ensure the partnership can lead to the 90 percent level of happiness or even higher. Celgene’s staged acquisition of Bedford, MA-based Avila Therapeutics established a long-term relationship in which Avila employees and shareholders received an upfront payment, and stand to receive more rewards later for hitting certain development goals. The “earn-out” structure supported keeping Avila’s Boston-area site, and the expertise of its team, intact. Daniel finds it important that partners maintain the culture and energy, which made them successful in the first place.

Daniel adds a caveat to acquisitions. He says acquisitions should not be about the exit or cashing out. Acquisitions should be a reward, but not the end of productivity at the smaller company.

Competition

Another way to build internal capacity is through competition with internal programs. Another wise person once said, “Raising two pigs is better than raising one.” She so succinctly gets to the point that without competition, a sole pig can get fairly self-satisfied with no sense of urgency. Applying a sense of competition, under win-win terms, can drive productivity and innovation.

While it may seem counterintuitive to be betting on two horses in the same race, Yamada said the focus is on increasing the overall chance of success when setting up these competitive partnerships, and on selecting the best molecule.

Setting up a competitive partnership is not about creating a dynamic where there will be a winner and a loser. The relationship must be set up in a way that is a win-win for both partners, with a bonus for whoever developed the drug that was selected.

If such a competition runs the risk of a pharma company giving up some control, that can be OK. As Yamada points out, “it is much better to have 70 percent of something than 100 percent of nothing.”

Control and Strategy

Partnering takes forethought and strategy, which should provide not only coherence for the whole effort but also a way to balance strategy with opportunism. While it is important to have strategy and a framework, partners should not lose the opportunity to be opportunistic.

The upfront design of the relationship is always a major focus on how to get to success. Many delve into the specifics on decision-making and control.

However, we had agreement that control is a lot less important if the partners are aligned, and the people share common values. Daniel pointed out that if someone has to read the contract about how the relationship should work, then the relationship is not working.

Sometimes you need to give up control to ultimately get what you want: making important new medicines for patients. That’s how partnering gets to Zen.

John Mendlein, Ph.D. is the CEO and executive chairman of San Diego-based aTyr Pharma. Follow @

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