As Bristows partner Claire Smith wrote in her recent look back at 2021, while deal making activity in the pharma and biotech sector remained largely flat last year, many people are predicting that 2022 will see an increase in strategic partnerships. Although three weeks into the New Year is perhaps a little soon to tell, early signs suggest that this prediction may be holding true. Last week saw a flurry of deal activity as JP Morgan's annual Healthcare Conference took place and this year there seems to have been a focus on licensing and research collaborations.
Claire outlined a number of reasons underpinning this trend in her article. The increased availability of capital from VC funders to biotech companies is one of the key drivers of the trend towards collaborations. Greater access to funds means biotech companies can take products further through development and are becoming less reliant on pharma companies for taking products to market.
Looking at the deals announced at the JP Morgan conference, it's also notable that there is a lot of partnering activity with biotech companies who are developing platform technologies. By their nature, platform technologies have broad applicability and therefore lend themselves to licensing and collaborations. This broad applicability can mean that companies can run multiple collaborations in parallel, each focussed on a different application or disease indication. Examples of platform technology deals announced so far this year include:
- gene editing technologies such as Mammoth Biosciences' CRISPR gene editing technology (which is the subject of a new collaboration with Bayer focussing on monogenic liver diseases) and Beam Therapeutics' base editing gene editing platform (which is the subject of a new collaboration with Pfizer focussing on rare genetic diseases of the liver, muscle and central nervous system);
- new delivery systems for genetic material, such as Acuitas Therapeutics' lipid nanoparticle (LNP) delivery system which is the subject of a new non-exclusive development and option agreement with Pfizer focussing on mRNA vaccines and therapeutics (the Acuitas LNP system is already used in the Pfizer BioNTech COVID vaccine);
- cell therapy platforms, such as Century Therapeutics induced pluripotent stem cell (iPSC) based engineered natural killer cell and T-cell platforms which are the subject of a collaboration with Bristol Myers Squibb to treat blood and bone marrow cancers and solid tumours; and
- antibody domain platforms such as Crescendo Biologic's "Humabody" platform which is the subject of a new multi-target discovery collaboration with BioNTech for the development of novel immunotherapies.
Collaborations and licences involving platform technology can by their nature be more complex and require more creativity than deals focussed on a single asset. In particular, careful thought (and a degree of creativity) may be needed in areas such as:
- valuation and structuring of financial terms, particularly where the platform is untested in the field of the collaboration (meaning large upfront payments may not be preferred); and
- IP ownership and management: which model of IP ownership is appropriate will depend in part on the degree of development collaboration involved. The IP ownership model selected may also impact other terms of the agreement such as royalties, sublicensing and consequences of termination, particularly where the platform licensor may not own IP covering the ultimate end products (as may be the case where the licensor's technology is an antibody screening platform but parties have agreed that the licensee will own IP covering any antibodies taken into development).
Deal creativity was also a key theme of a virtual panel event I attended this week focussed on collaborations. The event run by Fierce Biotech had a panel including participants from Bayer, Roche, Sanofi and Beigene and included a discussion on collaboration trends for 2022 and beyond. There seemed to be a consensus among the panel that the terms of biotech partnering deals are getting more creative and a view that gone are the days of pharma companies taking rights to an asset in return for a simple upfront and royalty. There was a view that different deal types are becoming more prevalent (such as pharma backed venture financing, regional licensing deals, co-development and co-commercialisation deals). In some fields pharma companies are looking to collaborate at an earlier stage and with more targets than may previously have been the case. This can have the advantage of giving more "shots on goal" but also comes with the added complication of a greater degree of uncertainty (which can play though into deal structure and licensing terms). The event also included an interesting discussion focussed on the potential of data to transform everything from drug discovery and R&D to diagnostics and healthcare systems. Collaborations in this field may require a more open minded approach as the worlds of tech and biotech converge and traditional valuation models are challenged.
Overall, if the first three weeks of the year are anything to go by, the outlook for pharma and biotech collaborations looks positive. It's going to be interesting to see how creative the industry gets in 2022.