By Denise Roland
Pfizer Inc. executives hope the late-stage clinical trials on
its new sickle-cell-anemia treatment will show strong benefits for
sufferers of the blood disease. But if they don't, there will be a
small silver lining: Pfizer didn't pay for the trials.
Last year, NovaQuest Capital Management LLC, a private-equity
firm focused on life sciences, agreed to pay for Pfizer's Phase 3
trial program for the drug, called Rivipansel. Phase 3 is typically
the final and costliest trial period.
NovaQuest is one of a bevy of investors dedicated to funding
late-stage clinical trials. Such deals are becoming increasingly
common as the pharmaceutical industry seeks to limit risk.
The strategy takes a page from Hollywood, where big production
companies have long sought to attract upfront investment -- in
exchange for a cut of box-office sales or royalties -- as they
gamble on the next blockbuster film.
Large pharmaceutical companies, like big movie production
houses, must contend with "most innovation occurring outside your
walls, and your cost structure varying over time and project type,"
said Richard Evans, an analyst at SSR LLC.
NovaQuest is one of the more active trial backers, and over the
years has counted Sanofi SA, Takeda Pharmaceuticals Co., Allergan
PLC and Eli Lilly & Co. as its partners in cost-sharing
ventures that have spanned drug launches as well as research.
Rivipansel is an experimental drug Pfizer acquired from
GlycoMimetics Inc. in 2011, while it was undergoing midstage
trials, in a deal worth $340 million. For the final push, NovaQuest
has agreed to pay up to $200 million, a sum Pfizer figures will
cover the trial and all other development costs. If the drug is
successful, NovaQuest could receive a series of payments totaling
as much as $267 million, plus royalties on sales, for the next
eight years.
"People look at us as an alternative," said NovaQuest founding
partner William Robb. One of the main attractions of the strategy,
he said, was that returns rely on the success of the drug program
rather than market or deal-making sentiment. "Our investment
structure and thesis provides something uncorrelated to the public
markets," he said.
The structures of its deals vary, he said, and in most cases,
NovaQuest pays for a proportion of a given clinical trial rather
than shouldering the entire cost.
A Pfizer spokeswoman said that while the company still
self-funded most of its clinical trials, it was increasingly
seeking to collaborate with external partners to "increase the
potential of our innovation activities."
Drug makers, facing declining returns on their research dollars,
are using various strategies to supplement their fixed annual
research-and-development budgets. These include striking up
collaborations with one another to pool the costs and rewards of
drug programs they consider especially risky or expensive. They
also trim their own research investment by selling the rights to
promising pipeline drugs that fall outside of their own areas of
interest.
The drawback: sharing risk also involves sharing the rewards.
Such collaborations involve the company in question agreeing to
relinquish some of the drug's profit to its partners.
"We said, 'Gosh, we can be an alternative to this, a capital
provider for some of these drugs,'" said NovaQuest founding partner
John Bradley, who as an employee at drug-industry outsourcer
Quintiles came up with the idea with several co-workers in 2000.
The group that became NovaQuest was housed under the umbrella of
Quintiles, now Quintiles IMS Holdings Inc., until it was spun out
in 2010.
"R&D has periods of feast and famine," said Luciano
Rossetti, head of global research and development at Merck KGgA.
The German company recently reached a deal with Avillion LLP, a
London-based group set up in 2013 that finances and executes
clinical trials for drugmakers. Under that deal, Avillion will
bankroll and execute the Phase 2 and 3 development of an
experimental psoriasis drug.
Dr. Rossetti said the deal meant Merck wouldn't have to abandon
or delay the program at a time when other, late-stage research is
"absorbing all internal [financial] resources and talent." Merck
and Avillion didn't disclose the terms of the deal, but Dr.
Rossetti said it involved Avillion taking on the development risk,
mainly in return for royalties down the line.
For now, just a handful of clinical trials are bankrolled by
outside investors. But Mr. Evans believes drugmakers should open
the majority of their trials up to external bidders. Such a move,
he says, would mean that only the highest-quality projects received
funding and that the level of research investment could vary
substantially from year to year.
Opening their entire pipelines to external scrutiny would mark a
sharp departure from the industry's usual secrecy, especially in
the most competitive areas. But as companies accept the benefits of
collaboration in areas where they may lack funding or research
expertise, those attitudes are changing, Dr. Rossetti said.
"Many companies are willing to take a little risk of sharing
information in order to get the right approach to fully leveraging
their pipelines," he said.
Write to Denise Roland at Denise.Roland@wsj.com
(END) Dow Jones Newswires
April 30, 2017 09:14 ET (13:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Pfizer (NYSE:PFE)
Historical Stock Chart
Von Mär 2024 bis Apr 2024
Pfizer (NYSE:PFE)
Historical Stock Chart
Von Apr 2023 bis Apr 2024