I had the chance to moderate a panel at the BIO-Europe Spring meeting yesterday on new business models in biotech, with Torbjorn Bjerke, the CEO of Karolinska Development, David Collier, the managing director of CMEA's life sciences group, Kevin Johnson, a CAT veteran now a partner at Index Ventures, and Genentech business development director Thomas Zioncheck joining the conversation.
If there was one underlying piece of advice they extended to the biotech audience, I'd summarize it as "get real." In a time when successful IPOs are rare as unicorns, new companies today have to have a very realistic attitude towards drug development. And, not too surprisingly, there was a very strong bias on the panel in favor of the virtual approach to drug development.
I was particularly intrigued by a new venture dubbed Velocity Pharmaceutical Development, formed by Collier and Karl Handelsman at CMEA, which is really pushing the envelope on the virtual model. They've teamed up with Ed Schnipper and a couple of other top developers to put together a portfolio of late-stage preclinical drug programs. In a nutshell, they're using financing from CMEA--they're not saying how much--to in-licensed programs from restructured pharma pipelines, with a plan to outsource the development work as they advance the candidates through to Phase IIa proof-of-concept data, when the pharmas can buy back the successful candidates. Velocity is shooting for a one-in-three success ratio, which Collier notes is right in line with the industry standard for that particular R&D niche.
Collier says he was inspired to set up Velocity after watching the new generation of single-product biotech companies come along, building teams of 20 or more that often have to sit and wait as their program winds its way through various stages of the development process. By creating a virtual team with a portfolio of experimental meds, each of the three CMOs in the venture can shepherd multiple projects in development. And the team stays small, with Collier looking to sign deals on four programs a year.
Johnson and Bjerke are also both fans of the virtual model. Interestingly, Bjerke discussed a virtual portfolio approach Karolinska Development--which has more than 30 innovative programs it's working on with an eye to eventually selling or out-licensing--has taken with its oncology assets. And just to make sure that there's not too great of an attachment to the product, the scientific founders are staying on the board.
This new approach they're taking is strictly about building products which can be passed on to Big Pharma. The R&D process is finite, and the goal is to reward investors after a relatively brief stint managing the asset. They're not at all much interested in building independent biotechs that plan to operate for the long-term. And that has some significant implications for the industry. -- John Carroll, Editor (Twitter | LinkedIn)