Big Deals - Pharmaceutical Executive


Big Deals
Many say licensing is the new R&D. The third quarter of 2007 featured some pricey cherry-picking. Will the unions bear fruit? We've rounded up the interesting ones to watch.

Pharmaceutical Executive

GSK's signature "cherry-picking" strategy toward licensing, and its use of milestone payments, expose the firm to as little risk as possible while incentivizing OncoMed to move fast. The biotech plans to file an investigational new drug application for its lead product, OMP-21M18, and start Phase I trials this year. Even in a best-case scenario, the cancer therapy isn't likely to make it to market for another eight to 10 years, according to Suvannavejh.

At A Glance
The impressive milestone money reflects the promise of OncoMed's platform. The biotech is developing humanized monoclonal antibodies targeted to kill cancer stem cells in solid tumors. Many researchers believe that these are not only the most malignant cells—and most resistant to treatment—but the ones that actually drive tumor growth. A drug able to take out cancer stem cells could prevent the return of the tumor following first-line therapy. Odds are good that it would also work against a host of different cancers, including breast, colon, prostate, and lung. And since most solid tumors do recur, it's no exaggeration to say that such a drug would revolutionize cancer treatment.

"There's no question that stem cells are very sexy right now," Suvannavejh says. "They're kind of a futuristic concept, but we still haven't seen much success in clinical development." On the other hand, he adds, "humanized monoclonal antibodies are a good class of compounds, especially for oncology."

If OncoMed achieves proof of concept (Phase IIa), clinical development and commercialization will pass to GSK. The biotech has the option of upping its royalties on sales by helping to bankroll Phase III.

"It's a shot on goal by GSK," Suvannavejh says. "Every drug giant needs to make many, many shots on goal every year to keep coming up with winners tomorrow—and in 10 years." –WALTER ARMSTRONG

The mother of all partnering discovery deals." That's the way Simon Moroney, cofounder and CEO of MorphoSys, characterizes the deal recently struck between his company and Novartis.

The Swiss pharma giant has agreed to pay the German biotech $600 million of committed cash to flow over the next 10 years (with 50 percent in research support and 50 percent in the form of technology access fees).

MorphoSys will receive another $400 million in milestone payments—an estimate based on what the company realistically thinks is the likely flow of products through development.

The deal, Moroney says, leaves MorphoSys with enough independence, security, and financial strength to expand its own drug-development activities. "And, of course, we have the freedom to take those programs that we have originated to other partners," Moroney said in an interview with

And there's plenty for Novartis in the deal too, according to Marcel Wijma, senior equity analyst at SNS Securities, a Dutch investment bank.

"Under the agreement, Novartis makes a long-term commitment to MorphoSys' HuCAL technology, which consists of a database of more than 12 billion fully human antibodies," says Wijma. "With this technology, MorphoSys is able to design fully human antibodies against several types of diseases via phage display."

Yaghi Maher, Desjardins Securities.
Novartis and MorphoSys began their collaboration in May 2004. To date, according to the companies, it has yielded multiple active therapeutic antibody programs across various diseases, and the first IND-filings came three years after initiation.

Biologics make up 25 percent of the preclinical pipeline at Novartis and are increasingly a priority in its R&D activities.


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