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December 9, 2008
Goldman Sachs: A New Drug Research Model?
Posted by Derek
Now, here’s an odd item from the Financial Times (registration required):
Goldman Sachs is in talks to provide hundreds of millions of dollars of funding to a large pharmaceutical company, in the first evidence of a new business model for the sector that will see financing shifted away from funding companies and towards targeted co-development of specific medicines. . .
. . .(The model involves) a different approach, creating a "research pool" into which pharma companies would place a range of experimental drugs in a single therapeutic area in early-stage phase 1 and 2 trials, where their specialists would work alongside external experts including scientists, chemists and clinical research organizations.
This was announced at a conference run by the newspaper, so they’re really the only source for information on this. I haven’t been able to find anything from Goldman about it, for example, and the minimal press coverage so far has all pointed back to this article. (Ed Silverman picked it up at Pharmalot, for example).
So one wonders what’s up, because the information that’s given raises more questions than it answers. I presume that the assumption is that since only a few early-stage clinical compounds ever make it, that this gives everyone a chance to share the risk. But which therapeutic area are we talking about here? How are things apportioned when one compound makes it through? And what if more than one does? And where are these external experts coming from, and who pays them?
This could be very interesting, because I think that we need to be open to some new research models in the industry. The current one isn’t exactly spewing results these days. But I wish that I knew more about what this proposal involves – anyone out there have any more details that they can share?
Comments (9)
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1. Jose on December 9, 2008 2:26 PM writes...
Pharma Skunk Works? Pharma Peenemünde?
Permalink to Comment2. Satan on December 9, 2008 3:08 PM writes...
But why do we require Goldman Sachs when big pharma has already dug it's own grave? Should they not concentrate on their core mission- destroying our economy with bigger ponzi schemes?
Permalink to Comment3. David on December 9, 2008 4:23 PM writes...
I believe that Lilly did something similar with an alzheimer's drug in development.
Permalink to Comment4. Skeptic on December 10, 2008 12:39 AM writes...
Satan, Goldman Sachs will soon create an economic boom in wheelbarrows and stoves to burn all the worthless US fiat.
Good thing Derek focuses on the real criminals like Kevin Trudeau and Matthias Rath...WINK WINK.
Permalink to Comment5. Lewis Daivdon on December 10, 2008 1:51 AM writes...
Now it looks like GTHR GeneThera will be the one getting bought. From sources two companies OXB.L and SASY.PA are showing major intrest in GTHR. Now GTHR revised a proposal .With its stock price at a all time low. A buyout would soar the share price to over $19.00 a share in no time.What does GTHR hold that brings so much value to it from other companies.
Website:http://www.genethera.net/index.htm
Oxford BioMedica Leaps on Rejected Buyout Bid from (GTHR.PK)
http://www.reuters.com/article/marketsNews/idINLF72702420080815
›Fri Aug 15, 2008 7:55am EDT
By Ben Hirschler
LONDON, Aug 15 (Reuters) - Oxford BioMedica Plc (OXB.L) shares leapt more than 20 percent on Friday after it became the latest company to receive a takeover approach in the increasingly active biotech sector.
The gene therapy specialist, however, said it had rejected a bid approach from GeneThera Inc (GTHR.PK) as not credible.
GeneThera, a U.S. company whose shares are traded over the counter, has a market capitalisation of just $230,000, while Oxford BioMedica was worth 46.5 million pounds ($87 million) as of Thursday’s market close.
Oxford BioMedica said GeneThera had first indicated its interest in acquiring the company in July and had made a revised proposal on Aug. 14.
“The board of Oxford BioMedica, which has consulted with its advisors, JP Morgan Cazenove and Rothschild, remains of the view that this unsolicited approach is not credible and is not in the interests of its shareholders,” the British-based company said.
Still, news of the approach reignited speculation about the future of the group and the possibility of offers from other companies, in the light of the quickening pace of takeover activity in the biotechnology industry.
Shares in Oxford BioMedica — which suffered a major setback in July when its key experimental cancer vaccine TroVax failed a trial in kidney cancer — were 24 percent higher at 10.75 pence by 1140 GMT, though still well off their year high of 30.5p.
TroVax is partnered with France’s Sanofi-Aventis.
Oxford BioMedica is the second small British biotech in two days to announce bid interest. Shares in Protherics Plc (PRCS.L) surged more than 40 percent on Thursday after it said it had received several bid approaches.
Biotechnology is receiving increased attention from big pharma companies hunting for new products to refill their dwindling new-drug pipelines.
Last month, Sanofi agreed to buy British vaccine firm Acambis Plc (ACM.L) for around $550 million, or a 64 percent premium to the prevailing share price.
And in the United States two giant takeover battles are under way, with Roche bidding $43.7 billion for the rest of Genentech (DNA) it does not already own and Bristol-Myers Squibb’s (BMY) offering $5.2 billion for ImClone Systems (IMCL). Both offers have been rejected as inadequate.‹
Permalink to Comment6. RZ on December 10, 2008 2:46 PM writes...
This looks a lot like what Symphony Capital has been doing for quite some time (with Exelixis, Isis, Dynavax, etc).
http://www.symphonycapital.com
They spin off small buckets of development candidates into a new and separate corporate entity which they finance. The spinoff pays the salaries of the people in the parent company who are working on the portfolio, and all of the external R&D costs for the portfolio (e.g. CRO costs), but the work itself stays largely within the physical walls of the parent company.
The parent company has a right to buy the spinoff "company" (and its assets) back from Symphony at a significant markup after crtical value-add milestones are reached.
It's an interesting alternative way for mid-size companies who have more pipeline than they can manage to maximize the value of the pipeline rather than entering into early big-pharma partnerships which force the small partner to give away enormous fractions of the upside value.
Simultaneously, the parent company offloads a lot of the development risk, because if the portfolio fails, the parent company just walks away from those assets (i.e., chooses not to "buy back" the spinoff), and the lost R&D cost is eaten by the Symphony investors.
Permalink to Comment7. Cellbio on December 10, 2008 11:53 PM writes...
No details, but lots of interest in the concept. I am working with several others on trying to build this model for early assets, either coming from academic labs, and really needing help before a company is formed, or working with existing bug pharma/biotech assets that are stalled for any number of reasons, including lack of money, lack of conviction, poor strategic fit or the belief in the value of less bureaucratic shops to do the early work to prove some merit.
So far, everyone likes the concept, but no funding yet. The details of how one constructs ownership in the assets is murky. Thanks for the info re Symphony, it is a very relevant model.
Permalink to Comment8. steve smith on December 19, 2008 2:40 PM writes...
Many VCs are doing this. For exmaple, QuakerBio Ventures in Phila.
Permalink to Comment9. Anonymous on March 22, 2009 10:15 AM writes...
Stem Cell Innovations (scll) www.activtox.com
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