The IPO window for biotech companies remains mostly shut. VC firms are so busy propping up — or weeding out — existing portfolio companies during the recession that they have little energy and cash to fund new start-ups. And the so-called “patent cliff” facing big pharma is approaching fast: One third of approved drugs will go off patent by 2012. All of this adds up to an environment in which academia is positioned to play a key role in refilling pharmaceutical companies’ pipelines. “We are incubating a deal with pharma now,” says Dale Larson, director of biomedical systems at the Cambridge-based nonprofit research institute Charles Stark Draper Laboratory Inc. “In the past, they wouldn’t have looked at this technology until three years later.”
Both the technology that is the subject of the impending deal, and a second collaboration with Pfizer, Inc., are based on life sciences tools that can help pharma companies find flaws in their drug targets earlier so they can minimize the number of dollars spent on a candidate that will ultimately fail. Partnering with a pharmaceutical company is attractive for academic and nonprofit researchers, Larson and others say, because those drug makers have deep enough pockets and a mature enough infrastructure to keep promising technologies from being left on the research shelf. “If this drug gets approved, we will get a percentage of sales in the low-single digits. If it’s a billion-dollar drug, that gets very interesting,” says Todd Keiller, director of technology commercialization at the University of Vermont. Keller is referring to the school’s licensing deal with Seattle-based Cell Therapeutics for a drug target that has completed clinical trials and is awaiting approval from the U.S. Food and Drug Administration.
Jon Soderstrom, the head of the TTO at Yale University, says a big uptick in pharma collaborations is just around the corner. “We actually had a surge of interest two years ago, because a lot of the later-stage drug targets out there in industry had just gotten so expensive for pharma and they were looking for cheaper alternatives.” When the market crashed and biotech companies’ valuations took a nosedive, pharma went hunting for bargains in the marketplace instead. Soderstrom thinks the big drugmakers have picked through the available later-stage assets and will seek more partnerships with academia. One phenomenon that has made academic labs increasingly attractive is that universities are reclaiming “distressed assets” — drug targets formerly licensed to small biotechs that were dropped to conserve cash. “These drug candidates often have large investments already from venture capital firms, so they are somewhat de-risked,” Soderstrom says. Yale has received calls from big drugmakers inquiring about those valuable returned products, he adds.
Source: Mass High Tech Business News