46
2nd QUARTER 2014
By Brian Zietsman
President and CFO of Enteris BioPharma, Inc.
2 CFO CFO
I
n an airport snafu, an executive at a
midsized biotech company told airport
security, “We deliver drugs.” Not the
appropriate response, given the audience,
and not surprisingly, it resulted in a missed
flight.
Delivery of drugs to solve unmet medical
needs or to improve the delivery mechanism
for patient compliance is
the
goal of both big
pharma and biotech companies. The way
they got there has been different. That
independent approach, though, is changing.
Big pharma has traditionally spent
significant R&D dollars to discover novel
molecules. Once the product obtained FDA
approval, through focused sales and
marketing efforts, it would be launched amid
much fanfare (and expense). The outcome
is, however, binary — the drug works and
gets approved, or fails. Despite the risk, this
model served big pharma well for decades,
but was not sustainable. Through a number
of factors, including increased competition,
desire to contain health care spending,
stringent regulatory requirements, and
looming patent cliffs, revenue growth has
stagnated, and in some cases, declined.
Biotech delivery companies, on the other
hand, through novel patented technologies,
have developed alternate routes of delivery,
and when compared to the injection, modes
that are more patient friendly. These include:
oral, topical (skin), nasal, and inhalation.
Imagine that you or a loved one is faced
with a daily injection regimen in order to
take prescribed medication. If an alternative
were to swallow a tablet or apply a patch,
the result would be, we can safely say, better
patient compliance.
Biotech to the Rescue?
Does big pharma continue to develop novel
products? By collaborating, could biotech
help with big pharma’s languishing pipeline?
Changing the way an existing marketed
product is administered to the patient should
allow a 505(b)2 approval pathway, thereby
giving the pharma company a “new” product
at reduced time and cost to approval, when
compared to a new chemical entity. By
working with a molecule that is already
approved, the hurdle that needs to be
overcome is whether the alternative mode
of transport can deliver the drug where it is
needed, within an acceptable variability range.
If this can be achieved, the approved drug
should result in improved patient compliance.
The CFO’s Concerns
What are the financial implications for the
CFO, when considering changing the route of
administration of an already approved drug?
The cost to acquire the technology
– To
reduce the cost, negotiate licensing terms early
on in the collaboration. If the drug using the
biotech’s technology gets approved, your costs
to license the technology are already known.
The risk
– You already know that the
molecule works. The risk now is whether the
patented technology delivers the drug in
sufficient quantity, within variability
constraints.
The time and cost to develop
– A 505(b)2
approach significantly reduces the regulatory
pathway, thereby saving both time and cost.
Patent protection
– Does the technology
used by the biotech provide you adequate
protection from potential competitors?
Maybe big pharma’s woes are all in
the delivery and biotech can help. You be
the judge.
C
Can Biotech Help
Big Pharma?
THE CASE FOR BIG PHARMA TO SHIFTDOLLARS
FROMR&DTO LICENSING
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