Following on from the recent rise in Xoma shares, that I discussed in yesterday’s blog post, the company announced this morning that they have signed a commercialization deal with Les Laboratoires Servier, France’s largest privately held pharmaceutical company (2010 revenue 3.7 billion euros).
According to the press release, the key elements of the deal are as follows:
XOMA will receive approximately $35 million upfront, up to approximately $470 million in milestone payments and tiered royalties up to a mid-teens percentage rate.
XOMA retains development and commercialization rights for Behcet’s uveitis and other inflammatory and oncology indications in U.S. and Japan. Servier receives similar rights in the rest of the world.
Servier will fund the first $50 million of XOMA 052 development expenses and 50% of further expenses for the Behcet’s uveitis indication. XOMA 052 is expected to advance into Phase 3 development in Behcet’s uveitis in 2011.
Servier will fund development for diabetes and cardiovascular disease indications in exchange for worldwide rights.
XOMA retains an option to reacquire the development and commercialization rights to the diabetes and cardiovascular indications in the U.S. and Japan by paying an option fee and partial reimbursement of incurred development expenses. If XOMA reacquires these rights, it has the ability to license them to one or more third parties.
This is a large injection of cash into Xoma that will help fund phase 3 clinical trials. The regional deal also keeps open the possibility of licensing U.S. marketing rights to another partner in the future.
The only surprise perhaps is the timing of the announcement, which is in advance of the phase 2 clinical trial results for XOMA 052 in diabetes. The expectation from all the signals is that this data could be positive, although there are no guarantees in clinical research and I’d give this a 50:50 shot at success. It will be interesting to see what happens to XOMA 052 as it moves forward in development.
Intellectual property (IP) rights are important in the biotechnology industry; one only has to look at a licensing, consulting or service agreement to appreciate this.
If you are a non-lawyer new to the area, and wish to gain a basic understanding of the different types of intellectual property protection such as copyright, trademarks, industrial design, patents and unfair competition, then the World Intellectual Property Organization (WIPO) Academy offers a free general course (DL-101).
The course is delivered online, twice a year, over 6 weeks. If you are a native English speaker, it takes far less time to complete than the 50 hours suggested. What makes the course work well is you can download the study material as PDF files. These can then be read anywhere – I used my kindle.
An additional benefit, if you have an ego wall in your den or office, is that WIPO send you a certificate after you pass a final exam. When I lived in the UK, I put all my certificates on the wall in the downstairs toilet, an idea I “borrowed” from Mrs Thatcher’s eye surgeon when I had dinner at his home. British understatement at its best.
Although the WIPO general course is not focused on biotechnology or the life sciences industry, it does provide a useful overview of international treaties and IP regulation to build upon. It is worth considering if you are new to the area.
With best wishes for the New Year, may it bring you good health, happiness and prosperity.
Although the market for biotech IPOs is opening, capital constraints remain a key issue for biotech companies. Recent years have proven difficult with limited access to financing, and venture capital in particular has been virtually non-existent. Biotech companies with limited resources have focused on core development activities.
This has resulted in delayed development of pipeline products and is likely to have a future impact on the availability of new drugs for licensing and acquisition by big pharma. One of the consequences is that big pharma cannot rely on biotechnology companies to be the sole source of new products to keep their portfolio's stocked. They will have to continue to invest in their own R&D, however inefficient this may be. However, the trend of big pharma is to outsource and divest R&D as evidenced by the recent layoffs at AstraZeneca and GSK, and the loss of R&D facilities post-merger at Wyeth/Pfizer. The current strategy of big pharma is only likely to exacerbate their pipeline shortages in the face of the generic cliff many companies are facing.
Additionally, as reported earlier this week in the FT, the benefit to pharmaceutical companies of investing in their own R&D is that early stage development is cheap compared to the high cost of buying developed research. Late stage products come at a price premium reflecting their lower risk.
An example of this is the $1.2B licensing and development deal that AstraZeneca did last week with Rigel Pharmaceuticals (Nasdaq: RIGL) for their rheumatoid arthritis drug, fostamatinib disodium (R788). The Pharma Strategy Blog has further insight on this.
Big pharma cannot rely on outsourcing and biotech for all their new drug development and need to invest in their own R&D.
Welcome to the biotech strategy blog which provides commentary and insight on current news and emerging trends in biotechnology.
As a strategy and marketing consultant with a background in clinical development I am interested in how biotechnology companies grow, manage alliances, partner with CROs and bring new products to market. I hope that you will find posts on this blog to be informative and interesting.