Life Sciences Innovation Hotspot

LSIHS_April2016

An event has been organized in Geneva (Campus Biotech) in order to give an overview of funding opportunities in R&D in Switzerland. European as well as Swiss opportunities were explained, each time with insightful success stories and business cases.

That event combined both useful information together with relevant stories of companies having experienced the process, sometimes time-consuming but clearly worth the efforts.

Horizon 2020 was an extremely important topic during the event as Switzerland is now in a partial association framework with EC (Fact Sheet on the Status of Switzerland in Horizon 2020).

Below I summarized the key points and “take home messages” from the event in a MindMap format (much better than taking notes and reading them afterwards).

The event was organized by Inartis and BioAlps.

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A Better Understanding of the US Drug Pricing Landscape and Financial Risks Associated – Health Affairs Blog

An excellent article posted on the Health Affairs blog takes a step back regarding US drug pricing and the financial risks associated with drug development well beyond the clinical trials stage.

Key quotes from the article:

  • It may be helpful for the policy discussion to think of a drug’s value as the clinical performance and patient outcomes, while the price reflects both the value and the growing uncertainty around in-market risks of market consolidation and restricted access, branded therapeutic competition, mandatory discounts, and restrictive coverage policy.
  • As competition heats up, each sector and each entity strives to reduce input costs and maintain or improve prices — and consolidation can be an important tool to accomplish these goals. Specific to biopharma, consolidation strengthens payers’ and providers’ ability to press for drug discounts that are contractual, proprietary, and confidential.
  • Net lifetime revenues of new biopharma therapies declined from profitability in the late 1990s to slightly negative profitability by the end of the first decade of 21st century.
  • In addition to cross-sector market competition through payer and provider consolidation, there is growing intra-sectorial competition among generics, biosimilars, and branded therapeutic alternatives.
  • We should not underestimate the potential effect of mandatory price discounts on drug launch prices.
  • In-market risks for biopharma are very significant today. Because of rapid changes in the market environment, revenue expectations established when the decision is made to proceed with product development can be very different than actual revenue several years later when a product is launched.

 

Additional Resources

When Is a Virtual Business Model Suitable for Biopharmaceutical Companies? – BioProcess International – 2015

Understanding the pharmaceutical value chain – IMS Institute for Healthcare Informatics – 2014

Innovative Business Models in the Pharmaceutical Industry: A Case on Exploiting Value Networks to Stay Competitive – International Journal of Engineering Business Management – 2014

The Real Cost of “High-Priced” Drugs – Harvard Business Review – 2014

Rapid growth in biopharma: Challenges and opportunities – McKinsey – 2014

 

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Therapeutic Financing Rounds in 2015: Gene Therapy Outpaces Antibodies in Early Stage Investment

Great stats and insights on financing rounds up to now

Next Phase Newsletter

By Michael Quigley, Director of Research, LSN

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It is no secret that 2015 has been a highly active year for deal-making in the life science space.  However, what is often overlooked is exactly where in the space those deals are taking place. Life Science Nation’s financing rounds database contains detailed information on over 250 of these rounds that have taken place since January 1 of 2015. We track this data from a variety of sources however as many companies and investors chose not to disclose this information this should be viewed as a sample of the entire data set of financings. With this article will highlight what our data tells us about the rounds that have taken place thus far in 2015 for therapeutics companies around the globe.

The first cut worth examining is the types of technologies that received funding.

f1 Figure 1 | Source: LSN Financing Rounds Dataset |…

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The Venture Funding Boom In Biotech – Life Sci VC

One of my favorite blogs recently posted an excellent article on the funding boom currently taking place in the biotech sector.

I think that this article really deserves a read. Why? Because it goes deeper into the fundamentals of the industry destroying some myths about the figures, very often misunderstood by the crowd.

According to Bruce Booth, despite the gigantic amounts invested in the sector:

– it is not always VC funding;

– it is not equally distributed;

– it is not linked to an increasing number of biotech companies getting financed;

– it is not leading to an increase in the the number of new companies created.

Moreover, after this analysis, the author wonders about the current situation (overfunding?) and what would happen in the next few months when investors would switch to other sectors… Another crucial question also emerges: will the number and quality of new ventures be sufficient to refresh the current ecosystem?

 

Additional material:

Venture Capital Investing Exceeds $17 Billion For The First Time Since Q4 2000 – PWC – July 2015

Torrid pace of VC investing in H1 sets a new biotech record – FierceBiotech – July 2015

Biotech Investing Hits An All-Time High–But Is It A Bubble? – Forbes – July 2015

Biotech: The Forgotten Bubble – Barrons – July 2015

Should The Biotech Bubble Be Feared? – Bloomberg – June 2015

 

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Can Finance Cure Cancer? Andrew W. Lo Talk at the University of Geneva – June 29th 2015

I had the chance to attend this refreshing talk about what finance could do to help drug development. My summary of the talk is shown below.

CanFinanceCureCancerAWLGenevaJune2015

 

None Better than One? (A Brief Note on VC in Smaller Hubs)

The Next Element

Biotech venture funding metrics continue at historic highs, highlighting that the robust financing environment in the public markets continues to fuel the private markets as well.

 – Bruce Booth, partner Atlas Venture in Data Snapshot: Venture-Backed Biotech Financing Riding High, April 2015

Here in Madison, Wisconsin, you might not know that was true if you didn’t read the news. The equity funding environment in smaller hubs (e.g. Madison) is different that in major centers of biotech (e.g. Boston, San Francisco). There are both old and new dynamics that make building the next big thing (quickly) a significant challenge outside the coasts. Today I wanted to look at one of the old dynamics that remains true today.

When out looking for venture funding, one of the early questions a biotech company located in a smaller hub will get is about their local VC – are they in on the deal?…

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Pop That Bubble: 5 Reasons Biotech Needs A Different Metaphor – Xconomy

SoapBubbleAlex Lash said that, this time, there will be a “soft landing” in biotech instead of a bubble burst… We’ll see…

“There are signs the sector is strong enough to make it a gentle correction”.

Let’s discuss his arguments.

Resilience

External pressures that would trigger a trend reversal is not present and, despite some adverse events (Sovaldi price questioning, overvaluation statement by the Federal Reserve, ExpressScript exclusive move with AbbVie in HCV), in 2014, the sector is stronger than ever.

My comment: that’s right. The biotech sector supported a lot of strain but it is maybe not over and there will still be investigations about drug pricing rationale (especially those molecules not bringing enough value for the patient and the society). Why paying for drugs that will only extend your life and not saving it?

Cancer Immunotherapy

Several immuno-oncology projects have already passed several important tests. Big drug makers are firing all cylinders by putting together big internal teams. Three products have been approved since 2011. Among them Yervoy (ipilimumab) and Keytruda (pembrolizumab).

My comment: competition is tough and the field is crowded. Some experts are doubtful about the commercial potential of this class of drugs despite very high prices. Let’s take the example of Yervoy. Yervoy dosing is 3mg/kg every 3 weeks. The average body weight for a patient in US is 80.7kg and 70.8kg in Europe leading to respective dosages of 242mg and 212mg. After a little calculation we reach prices per cycle of 21 days of USD 31’370 for the US patient and EUR 19’850 on average for a EU5 patient… with a median overall survival of 10 months. So for the whole treatment (for a patient treated during 10 months): USD 313’700 in USA and EUR 198’500 in 5EU. Is it reasonable?

Even oncologists are complaining about cancer drug prices. A growing number of patients have difficulty affording treatment and, if nothing is done, people will not be cured with the latest technology and commercial revenues as well as profitability for drug companies will not meet expectations, not covering all the R&D expenses incurred during the previous years.

More about cancer immunotherapy

The Crossovers

A different type of investor according to Alex Lash: “crossover investors—hedge funds and other public funds looking for an ownership foothold and a pole position for the IPO”. They tend to be specialists, not generalists.

My comment: according to Alex Lash, bubble fears come essentially from generalists, biotech investors that do not understand fully the technology and its potential applications. It may be the case, we will see in the future how these small companies develop their business models.

More about crossover investors

Venture is now different

The landscape is different with more selection made by investors and more maturity shown by companies. All this contributed to a healthier investment environment.

My comment: I totally agree with him, especially because as of today even big pharma have a dedicated VC arm to finance promising small companies.

Less regulatory risk

Today approval is not as difficult to obtain as before. Drugs are coming to market faster with Fast Track and Breakthrough Therapy Status. Incentives to drive development for unmet needs have been implemented such as the GAIN Act. The regulatory sky is much less cloudy…

My comment: that’s true but the challenge is next door as approval is just an official green light and it doesn’t mean that you will get reimbursed and adopted on the market. All the work has still to be done after approval (or even before as market access is prepared earlier now). 

Xconomy Article

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