Late stage partnerships not always the way to go: Edwards

By Renate Krelle
Wednesday, 29 September, 2004

Recombinant Capital's Mark Edwards has some unfashionable advice for Australian life science companies: don't hold out for a late-stage partnership with a pharmaceutical company at the expense of shoring up the company's future with early stage deals.

Edwards -- managing director of San Francisco biotech consultancy Recombinant Capital -- was in Sydney for this week's JB Were Global Life Sciences conference.

"I think those early stage programs have got to be available to Australian biotechs," he said. "The question is, are they snubbing them? Are they turning them down wanting to do Phase II deals?

"In the US [the fashion is] to withhold from partnering until you have the blend of results to get top dollar.

"My experience of biotech is you do the deal when you can do the deal. This helps you retain and hire quality people and that's your strength."

Learn from the example of genomics company Millenium Pharmaceuticals, urged Edwards, which -- after an initial $12 million injection of venture financing -- hammered out a series of smaller deals with Hoffmann-La Roche, Lilly, Astra AB, Ortho biotech to keep cash flowing freely. Millenium's market capitalisation has now ballooned to $4.2 billion.

"The Hoffmann-La Roche deal allowed Millenium to keep the wolf from the door," he said.

"The deal with Lilly for atherosclerosis - under which Lilly paid $4 million upfront for access to Millennium's core technology and which reserved the right for Lilly to expand the field to include oncology for $3.5 million and to include CNS for $11m -- also allowed Millenium to go out and talk to other people.

"They key deals for Millenium weren't hundred million plus deals. The key deals were to pay the bills and move fast in a very competitive area, but convince the partner that you were someone you truly wanted to collaborate with because of your grip of the science."

Edwards also tipped biotechs to grab bargains whilst platform technologies or basic drug-discovery targets are out of fashion.

"There are great bargains available," he said. " Probably pharma is unlikely to snatch up non-exclusive licenses from universities [at the moment]."

"Who is likely to get real bargains are opportunistic biotechs or VC backers or investment bankers."

But leading the way in finding the utility of a new target is not enough, said Edwards. "Look at who competitors are in other areas of the world and close out their patent positions," he advised.

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