Issue Date: January 16, 2012
Deals Energize Drug Conference
The atmosphere at the 30th annual J. P. Morgan Healthcare Conference in San Francisco last week was charged with enthusiasm in the wake of deals indicating that drug companies are prepared to invest in innovative science. Biotech and emerging drug companies, armed with clinical data on lead compounds, came to court big pharma partners. Even the venture capital firms on hand seemed ready to get back in the game.
Attendees pointed to Gilead Sciences’ $11 billion acquisition of Pharmasset, announced in late 2011, as an indication that drug companies are willing to place big bets on promising compounds in competitive therapeutic areas. Pharmasset has a potential blockbuster treatment for hepatitis C virus in late-stage development.
This view was supported by Bristol-Myers Squibb’s $2.5 billion deal to buy hepatitis C specialist Inhibitex, which was announced on the day before the conference (see page 18). And Abbott Laboratories’ recent partnership with Reata Pharmaceuticals, in which the drug company paid $400 million for the rights to a group of preclinical inflammation inhibitors, signaled that drug companies may be willing to pay big for early-stage assets.
“The tenor is definitely better this year,” said Craig A. Wheeler, CEO of Momenta Pharmaceuticals. “We have come through some dark times in biotech, but people are starting to find that all the value is not gone, and opportunities are there.” Recently announced partnerships and acquisitions “have certainly put a little bit of energy back in the game,” Wheeler said.
Alnylam Pharmaceuticals CEO Barry Greene characterized the mood in San Francisco as one of “rational optimism.” Large drug companies have completed restructuring programs, he said, and are concentrating on building up their pipelines through acquisitions and partnerships. “Good money is available for good projects,” said Yves J. Ribeill, CEO of Scynexis. “That is a big change from last year.”
Although some attendees said reticence on the part of venture capitalists continues to hold back the biotech field, others expressed enthusiasm for a deal announced at the conference between Third Rock Ventures, Greylock Partners, and the French drugmaker Sanofi.
The partners have formed a new company, Warp Drive Bio, that will use genomics for natural product drug discovery. The technology comes from Harvard University scientist Gregory L. Verdine, who is also a partner at Third Rock. With $125 million in initial funding, Warp Drive is an independent company with full rights to develop and commercialize assets or form partnerships with other drug firms.
“We are very bullish right now on the environment for early-stage life sciences,” Kevin Starr, a partner with Third Rock, told C&EN. Starr said the retreat from early-stage investments by venture capital firms, the increased outsourcing of research by major pharma companies, and the flourish of new science coming from academic labs in recent years has created “an almost perfect storm” of opportunity for firms like his.
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