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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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« Steve Nissen's Meeting with GSK | Main | Cranking Away »

February 24, 2010

Knocking on Doors

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Posted by Derek

A correspondent writes in with an interesting and useful question: he's with a small company that believes that it's discovered a useful lead compound in an area where they're hard to find. But no one there has any experience with knocking on the doors of Big Pharma to talk about a deal, and they're wondering about the best way to go about it.

I (and people like me) can provide some general advice. But I know that there are consultants out there who've brokered things like this before and have both contacts and expertise that can help out. But that just kicks the problem along: how does a fledgling company find one of those? Some startups naturally begin with connections of this sort, but others don't. Anyone have some leads for them?

Comments (38) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. JGMZ on February 24, 2010 2:36 PM writes...

If you are in a town like San Diego, there are organizations that can help you with exactly this type of questions (notably, CONNECT, an organization associated with UC San Diego that supports this type of activity). I'm sure that in other 'biotech hubs'

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2. milkshake on February 24, 2010 2:38 PM writes...

It would be rather naive to hope that one can get a qualified answer here. You need to find a professional who has the connections and the experience - and much like with a commercial lawyer he is unlikely to post a free advice online.

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3. darwin on February 24, 2010 3:06 PM writes...

make sure you have airtight patent locks in place before you let the big bad wolves in.

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4. Katherine on February 24, 2010 3:15 PM writes...

milkshake, I think the question here is how one goes about finding such a professional. A commercial lawyer won't post free legal advice, but will happily tell you how to find a good lawyer.

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5. bbooooooya on February 24, 2010 3:16 PM writes...

There are many early stage VC firms that do this type of stuff.

Look up firms like Alta Partners, Sandhill, New Leaf, Forward Ventures, maybe New Enterprise Associates, Arch Venture Partners, Domain Associates. This firms typically have contact info for inventors on their websites.

Be warned, after the debacle of stupid biotechs in the late 90s, these firms will be skeptical, and you may be surprised how little they value a lead molecule without Phase 1 data (even P1 data won't get you much).

The days of a labcoat, a powerpoint presentation, and "genomics" in your name being enough to raise $100 mil are over, but there is still $ out there.

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6. HelicalZz on February 24, 2010 3:25 PM writes...

My first concern is that if you don't have the experience to talk with pharma about a deal, how confident are you that you have enough information to approach them with?

Pharma isn't where you are headed anyway if you only have a useful 'lead'. [leads are discovered, drugs are generally made from leads]. Pharma would often want clinical data, and that doesn't sound like the situation here. Getting venture feedback, if not actual funding, should be considered.

But do get the experience. A good place to put it is on the board of directors or scientific advisory board. Too many companies have boards comprised only of founders (capital contributers), rather than needed experience for 'directing' the company.

If you haven't noticed the series that Nature Biotechnology has been running for better than a year on 'Building a Business', this is a great time to pull all these articles and go through them strategically (it will make you look very informed as well).

Zz

P.S. - Don't stop with partnering / dealmaking experience. Get legal experience (IP) on the board as well.

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7. Derek Lowe on February 24, 2010 3:37 PM writes...

Milkshake, Katherine's right - what my correspondents are looking for is just a friend-of-a-friend type contact to get them going.

I've already advised them to look to their IP, and to take things as far along as possible on their own, in order to have a package that has a better chance of attracting interest. The deal-making environment seems rather unsettled these days, though - but hey, the whole industry is unsettled, so why not?

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8. Ed on February 24, 2010 3:51 PM writes...

I'll second what HelicalZzz had to say about venture feedback - if nothing else, it will give you an outsiders eye on where you are doing the right things, where you are coming up short, and help you emphasize and polish up areas where you may have an advantage.

The feedback that I have had from VCs has been very useful in refining my ideas and giving me an inside peek into how the "business" end thinks differently from the "science" end.

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9. David K on February 24, 2010 4:08 PM writes...

This is one of the services we provide at Raphael Capital depending on the stage, indication, biological target and technology. Visit www.raphaelcapital.com to learn more.

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10. Ben A on February 24, 2010 4:18 PM writes...

Take this for what it's worth (namely advice from a life sciences VC)

1. Are they sure they want a deal vs. VC funding? If the latter, there are plenty of contacts. Me, for instance.

2. Does this company have any university connections? Often tech transfer offices have direct pharma connections.

3. Among the larger brokers/consultants, JSB partners has a good reputation. Many of the I-banks will do this work as well: ranging from Lazard, Cowen & co., Leerink Swann, all the way up to Goldman and JP Morgan.

4. As noted above, make quadruply sure the IP is covered. Do not show structures to pharma (or a VC, or anybody for that matter) without a CDA. And maybe even with one.

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11. Pharma Conduct Guy on February 24, 2010 5:03 PM writes...

If you're working in a highly specialized area, then you likely should know who the movers and shakers are in that space.  If none of them happen to be in big pharma or at least have ties with big pharma, then you have a really up-hill battle.  This is where having a really well-connected board of directors makes a difference.

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12. Jumbo on February 24, 2010 6:00 PM writes...

I admit to being confused by the entire line of inquiry. "(H)e's with a small company..." How small must be the company, and staffed with what sorts of people, that this is even a question? If the staff are all ex-academics, then they were spun out of an academic institution and likely have a tech transfer office with a vested interest that they find partners/financers. If they are ex-'other' company, they must know an erstwhile colleague or board member that could help. Of course, that begs the question of what sort of board of advisors could this company have that they have no one to offer advice?

I am afraid that with this little info, good advice is hard to give.

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13. CMCguy on February 24, 2010 6:18 PM writes...

If chose that route the Friend of Friend Networks (and here academics who consult for Pharma can be of value) don't provide a solid contact the best option is to move forward and generate data then make a presentation at a meeting and if compelling enough Big Pharma will contact you. Biggest problem in all stages is incompatible time frames, not only in doing study and presentation at appropriate conference, but once anything gets into most Big Pharmas Due Diligence it can take forever to cycle through committee after committee till it reaches actual decision makers. Dinosaurs (the fossilized ones) probably move faster.

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14. Skeptic on February 24, 2010 6:32 PM writes...

"...believes that it's discovered a useful lead compound in an area where they're hard to find"

They should head straight to the Vancouver Stock Exchange where they belong.

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15. Skeptic on February 24, 2010 6:36 PM writes...

"...believes that it's discovered a useful lead compound in an area where they're hard to find"

They should head straight to the Vancouver Stock Exchange where they belong.

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16. Scott on February 24, 2010 8:52 PM writes...

I do some of this sort of work, and I'm always happy to talk to entrepreneurs.

It can be a long and tricky road to either licensing or VC funding. I'd second the opinions of other posters who have said that it's important to get as far down the approval process as possible before trying to hand it off to Big Pharma or Big VC, and to choose your advisors carefully.

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17. researchfella on February 24, 2010 9:55 PM writes...

@ Darwin:
"make sure you have airtight patent locks in place before you let the big bad wolves in."

Unless this "lead" compound/compound series is getting close to being a clinical candidate, 'patent locks' could be a bad move. You can do confidential disclosures of the critical data without disclosing the chemical structure(s). I've seen companies peddling their leads and proudly reporting their patent applications on the series, including some published non-provisional applications. If you can't identify the clinical candidate before it's time to file the non-provisional application, you're not in a good spot. You've created prior art against your own specific candidate compound. Subsequent selection invention applications are not the answer, because they're tougher than they used to be.

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18. Cellbio on February 24, 2010 10:15 PM writes...

I know several of these folks. One with a Rolodex of more than 3000 business development folks at small, midsized and large companies...one of my favorite people to work with too. These folks are very skilled, and very valuable for start ups. They essentially do a good job of pre-selling assets, even without disclosing much. This concept can really help a small company understand their path to realizing a good return. Often, the story needs more meat on the bone than first realized, so good early work by a person with business development and corporate strategy is essential to make sure the work, and money, is directed down paths potential buyers care about.

I'd be happy to suggest some names or make introductions off-line.

Agree with researchfella. Have seen several occasions of promising hit rushed off to be patented, and patent publishes before significant funding and advancement, gutting any deal value for the early molecules.

My favorite was hearing a pitch for in-licensing, with presenter of great goods showing data in a graph with compound ID obscured, while I was holding the patent in my hands that revealed the structure. Priceless stunned response when I pointed out the info was in the public domain.

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19. Cellbio on February 24, 2010 10:32 PM writes...

oh, forgot to add, there are meetings set up for this as well, with elaborate scheduling systems for companies to set up 1:1 meetings based on company description. Bigcos will have large hospitality suites manned by there licensing and BD staff. it is kind of like speed dating for bio deals.

The biggest of these is BIO, which is in Chicago this year, early may, and Bio Europe is coming up soon, second week of March in Barcelona. Not the stuff for most scientists, but I recommend seeing it once. This year Bio has a keynote session featuring Bill Clinton and GW Bush on one day, followed by Al Gore the next. Go figure. Check out the BIO website for an idea of the sessions, fairly interesting to many here, I suspect, given the frequent discussion of the business side of our business.

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20. Losing My Edge on February 25, 2010 12:14 AM writes...

It sounds like these guys are set on doing a preclinical licensing deal. Not a bad strategy. Promising assets can fetch a tidy sum these days. Here's what they need:

i) IP counsel with experience in small molecules, who can advise on strategy to avoid the pitfalls mentioned above (mainly, creating scorched-earth prior art) while locking down what they currently have. At the end of the day pharma buys patents, not vapourware.

ii) Experienced licensing counsel who can advise on deal-making & negotiation tactics/strategy. There are probably only a dozen or so of these guys around and they aren't cheap. But they are essential; spend the money.

iii) Data package & presentation - confidential & non-confidential versions. And an iron-clad CDA before anything sensitive is disclosed.

iv) A plan. Not all pharma is created equal - who is active in your therapeutic area? Who do you want to work with? Who do you think can advance your lead/compound most effectively? I'd make up a top-five list then go out & find the partnering contacts. Most of them are online.

v) Advisors with pharma experience who can tell you what pharma is looking for and how to structure the data package. Consultants are preferred here. I'm inclined to stay away from VCs & investment bankers; their priority is to make money for themselves, not you.

I'd be happy to provide some names & contacts off-line.

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21. HTS Guy on February 25, 2010 1:29 AM writes...

I work in large Pharma. We typically don't want to see a "for sale" potential lead structure until: 1. you've shown data to convince us that you have something which really interacts with the target and 2. a consultant chosen by us has had a confidential look at the structure and can assure us that it's not a medchem deadend. Of course the interest (and value) are much higher with greater characterization, like initial SAR, PK and toxicology.

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22. chris on February 25, 2010 2:39 AM writes...

I've acted has independent consultant in a number of licensing negotiations and offer a few comments.
Get an experienced chemist to look at the structure and say whether it looks like a tractable lead. I've seen a "small molecule" leads that turn out to be complex glycoproteins. From then on as others have said data adds value, whether it be calculated and measured physicochemical properties, ADME, SAR, counter-screening. You don't have to disclose the structure, but having the compound profile is essential.
A lead suggests there may still be the need for lead optimisation to identify the clinical candidate, do they want to do that if funding was available? There a many options, collaborations with academics or small companies and a number of funding bodies now support drug discovery. Selling a "lead" to a large pharma company might be more difficult.

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23. greg on February 25, 2010 8:09 AM writes...

Being in somewhat the same position as the fellow “knocking on doors” all I can say is that I feel your pain. After reading the posts all I can add is re-read them. There’s a lot of sound advice offered – strong IP, CDA’s, etc. In other words protect and lookout for yourself/compound first and foremost.
I will add this to the mix however. This is the toughest environment I’ve seen in more than 20 years. Gone are the days when pharma/biotech would be willing to jump into bed on preclinical compounds. Does it still happen, yes but I’d rather take my chances on a winning lottery ticket. Risk aversion is what it is all about these days. In other words you take all the risk.
I would strongly suggest based on what I have read about your small company is that you look at SBIR grants and attempt to develop a package/good proof of concept. Even when that is complete you will still have your work cut out for you. As I said the environment has changed (and in my opinion not for the better either from a research standpoint or clinical trial support like the old days).
Secondly, seek out great consultants if possible. With the downsizing of the industry over the last decade there are a lot of very good skilled folks out there that have set up shop as consultants - seek out and use their expertise and contacts in the industry.
Finally check out the state where you live to see if they have any grants or matching funds. Many states in an attempt to foster pharma/biotech growth have established such capital funds just for the status you seem to be in.
I wish you the best of luck – you’ll need it. If you really believe in what you got is viable, stick to your guns.

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24. Anon on February 25, 2010 8:47 AM writes...

For GSK send a non-confidential summary to:

ww.bd@gsk.com

The opportunity will then be forwarded to the appropriate people (typically by therapeutic area) for further (primary) evaluation.

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25. Johnny D. on February 25, 2010 9:40 AM writes...

Does the pill make fat people thin or prevent some other ailment that is otherwise completely preventable? You might have a winner.

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26. Johnny D. on February 25, 2010 9:42 AM writes...

Does the pill make fat people thin or prevent some other ailment that is otherwise completely preventable? You might have a winner.

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27. Vader on February 25, 2010 10:54 AM writes...

"... a useful lead compound ..."

It's still possible to market useful compounds of lead? In today's chemophobic climate?

;)

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28. Vader on February 25, 2010 10:54 AM writes...

"... a useful lead compound ..."

It's still possible to market useful compounds of lead? In today's chemophobic climate?

;)

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29. Vader on February 25, 2010 10:54 AM writes...

"... a useful lead compound ..."

It's still possible to market useful compounds of lead? In today's chemophobic climate?

;)

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30. Vader on February 25, 2010 11:08 AM writes...

Apologize for multiple posts. Browser acting up.

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31. okemist on February 25, 2010 11:13 AM writes...

The advise I haven't seen is to get associated with a Research Hospital. All the post's thus far are very solid, but from the chemistry point of view of this blog. The biggest payoff would be the patient approach, garnering as much pre-clinical information as possible while setting up potential clinical pathways working with MD's in that theapeutic area. We still see one drug wonders coming to CRO's, but they are much leaner(5-20 person) than the Amgen-wanna-be's of 10-15 years ago. The further along the development the more likely GSK will give you $720 million.

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32. okemist on February 25, 2010 11:18 AM writes...

The advice I haven't seen is to get associated with a Research Hospital. All the post's thus far are very solid, but from the chemistry point of view of this blog. The biggest payoff would be the patient approach, garnering as much pre-clinical information as possible while setting up potential clinical pathways working with MD's in that therapeutic area. We still see one drug wonders coming to CRO's, but they are much leaner (5-20 person) than the Amgen-wanna-be's of 10-15 years ago. The further along the development the more likely GSK will give you $720 million.

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33. tyrosine on February 25, 2010 11:34 AM writes...

This is not a unique problem and there is a straightforward answer. Go to your advisory board and investors (VCs or angel). If you've chosen them properly, then they are suppose to be the ones with the connections, experience, and know-how for how to do things like this.

Yet another reason why you don't just let anyone invest in your company. Make sure you always have qualified investors before taking the leap.

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34. Cellbio on February 25, 2010 11:44 AM writes...

Vader, I'll offer my opinion, yes it is still possible, but takes a special case. One such case may fit the high level description Derek laid out, namely, a hit for a target that has proven tough to crack. If you add to the assumptions a few more details, like pharma knows and cares about the target, and sees the clinical path and market potential, then these can find a partner.

Related to the above scenario, I see too many people investing heavily in animal pharmacology. While some data may help, it better be associated with exposure data, an appreciation for ADME characteristics, and tied to concentration effect measurements in cell biology and biochemistry. If you were on the buy side, imagine these things missing, or not telling a logical story. How much of your money would you spend.

Here are not uncommon occurrence to make the point. Compound X is selective, with a 10 fold (groan) selectivity over the kinome. Look how great it works in our model at 60 mgs/kg BID! or Compound Y is 1-5 uM on the target, but nM on cells, and works in animals, so our potency is fine, and since the biological outcome is the desired outcome, the biological impact must be through our proposed mechanism (though the only outcome measured is the desired outcome, except for the feet on the ground safety endpoint). Ready to write a check?

My advice, stitch together a solid story on mechanism, concentration effect relationships, and then add the pieces that show the unique or competitive advantage of the compound, and be sure these matter to your future buyers.

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35. lily on February 25, 2010 4:16 PM writes...

Try Eli Lilly phenotypic drug discovery initiative out reach program : https://pd2.lilly.com/pd2Web/

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36. ex-bd on February 28, 2010 12:10 PM writes...

There is a lot of good advice here. But I would particularly highlight Cellbio's advice to try partnering meetings. I did bd/licensing at a small (7 people) biotech with an early clinical compound. We tried the website approach and had very little luck. Later we did the partnering track at bio-windover, bio, and bio-eurpoe. We called it speed dating since you had a 10 - 30 minute face-to-face meeting then moved to the next room and had another-- all day long. The meetings were generally with business development people who gave good feedback on what the company was looking for in partners. This feedback helped improve our program and marketing. These meetings resulted in several companies in diligence and 2 term sheets for the program, so I would consider these meetings worthwhile.

If you are taking the VC route, I would also recommend Bio-VC. This is speed dating with VCs. The year we went we had 30 minute meetings with 12 VCs over 2 days. It was exhausting, but greatly expanded our network. These meetings resulted in some real duds, but also got us into diligence and partner meetings at several firms we would not have been able to get in front of otherwise.

Finally, before attending any of these meetings-- be prepared and do your homework. You won't close a deal at these meetings, but you can damage your chances of moving forward with a poor pitch or poor understanding of a companies needs/areas of interest. This is hard work to get but is really important if you want to get to a deal.

Best of luck.

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37. Pali on March 4, 2010 7:07 PM writes...

The post may relate to my company.
I would be interested to identify a consultant with early stage project licensing experience. I would be also interested in contacts with VCs.
The leads are in Alzheimer's Disease/beta-amyloid area.

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38. Pali on March 4, 2010 7:16 PM writes...

My e-mail is imike1169(at) walla(dot)com

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