biomarinOn November 24th rare disease drug maker BioMarin Pharmaceuticals announced it was buying Prosensa for $840MM plus approval milestones. Prosensa has no marketed products but is in the late stages of obtaining approval for its lead drug candidate, drisapersen, for a rare form of muscular dystrophy. BioMarin will pay Prosensa shareholders an additional $80MM if drisapersen receives U.S. regulatory approval before May 2016, and another $80MM if the drug is approved in Europe before February 2017.

Drisapersen failed a late stage trial in 2013 but FDA agreed to look at new analysis of the data. Some analysts are calling BioMarin’s move a “call option” but this would not be unusual given activity in the RNAi space. Prosensa’s previous partner for drisapersen, GlaxoSmithKline, ended the relationship when the clinical trial data was first revealed, but Glaxo also ended a relationship with another RNAi company – Amicus Therapeutics – which eventually succeeded.

BioMarin is now in a race with Sarepta Therapeutics, which has a competing muscular dystrophy drug that uses a similar mechanism of action. Given these challenges, spending potentially $840MM dollars seems like an expensive call option indeed. So what’s going on here?

Lets take a quick look in Collective IP and try to get a better understanding of what BioMarin may be thinking. Collective IP contextualizes patents with inventors, universities, public filings and clinical trials. For now we won’t dive into the inventors and universities but rather focus simply on patents and public filings.

We already know, from Prosensa’s profile that its muscular dystrophy technology is based on exon skipping. Here are all of Prosensa’s: Patents.

By comparing the profile and patents we learn that, specifically, skipping dystropin exons 46 and 51 is one of the keys to the patent estate. By searching Collective IP for exon skipping specifically we discover:

EP 1619249: Induction of exon skipping in eukaryotic cells

Mapping this patent against public filings we discover an important IP piece of the puzzle explaining why BioMarin bought Prosensa. This material event document, surfaced in Collective IP, shows that in 2011, Avi Biopharma (the previous name of Sarepta), challenged Prosensa’s European Patent #1619249 at the Opposition Division of the European Patent Office and lost. Accordingly, Sarepta’s muscular dystrophy drug could potentially be infringing on Prosensa’s drug. And regardless, Sarepta does not, at least based upon this patent, have a claim against Prosensa in this important jurisdiction.

This (and other patent conflicts both resolved and pending) shine a light on Biomarin’s “call option” on Prosensa, suggesting that it makes a lot more sense than might appear at first blush.

This is just one example of the patent office battles, in the US and Europe, happening between Prosensa and its competitors, in particular Sarepta, rushing to get a muscular dystrophy drug to market. Interference proceedings on other patents are occurring at the USPTO and appeals are pending before the EPO.

With Collective IP users can drill deep down into this information, but also contextualize this data via the ability to connect the dots across previously uncorrelated document cohorts.

 

There has been much discussion about inter partes review among patent professionals recently. The legal complexities can quickly multiply. The following are what we consider to be some of the very basic points that business development executives searching for patents to license need to understand about this process:

What is Inter Partes Review (IPR)?  Inter partes review is a patent challenge process that can take place soon after a patent is granted. It is an administrative process (as opposed to the judicial process of patent litigation). Enacted in the America Invents Act legislation, the proceeding has been available for two years but has become very popular in recent months.

How Does IPR Differ From Litigation in Federal Court? IPR proceedings occur before a panel of administrative law judges at the Patent Trial and Appeal Board. These judges have technical/scientific backgrounds and patent litigation or prior administrative challenge proceeding experience. IPR costs a fraction of patent litigation and likewise occurs in a fraction of the time.  The discovery process in IPR is limited, at least as compared to litigation, but depositions may still be taken of any witnesses submitting affidavits. Unlike in federal court litigation, patents are not presumed to be valid in IPR

What is the Basis for IPR Challenges? IPR is based on prior art  – the challenging party has found a publication or prior patent that was not revealed in the examination process – and on an allegation that the patent is obvious or not novel.

Can a Patent Owner Amend a Patent in the Face of an IPR Challenge? The short answer is ‘yes’ – a patent owner can supply additional information that was not present during the initial patent examination. She can also make an application to have the patent “re-issued” with new or additional claims.

A year ago former Federal Circuit Chief Judge Randall Rader asserted that IPR was a “death squad” for patents. Rhetoric aside, it is too early to know the full impact that IPR will have, but clearly the impact is already being felt. From the start of this new proceeding until September, 2014 (roughly 2 years) there have been nearly 2,000 IPR petitions. See here.

For a deep dive into inter partes review, explore Fish & Richardson’s comprehensive website on the subject. See here.

USPTO Inter Partes Review FAQs. See here.

UPDATE: An illuminating recent Robins Kaplan law firm blog post says that, for patentees, the key to surviving an IPR is having good experts. See here.

The CIP platform interlaces subject matter experts with their entire body of technology innovation.  Interested in finding an expert for your scientific advisory board?  Sign-up for free today and take a look!

The Levicept story is inspiring to us for many reasons. First, it shows that assets that had once been written off can, in the right hands and with the right approach, prove themselves. Second, it confirms the importance of successfully navigating the tremendous challenges of early stage validation, as we’ve written about before, and the non-traditional capital (or visionary founder) that is usually required to do that.

As FierceBiotech explains – http://www.fiercebiotech.com/story/levicept-emerges-pfizers-rd-ashes-157m-and-new-pain-drug/2014-10-08 – history has proven that investigator Simon Westbrook did indeed understand the protein he’d discovered better than anyone else, including the leadership at Pfizer.

Pfizer’s 2011 cost-cutting and door-closing was part of a wave in the biopharma business at that time. Westbrook’s discovery of a fusion protein (p75 neurotrophin receptor fusion protein) was, for whatever reason, cut in the overall wave of retreat. And but for Westbrook’s entrepreneurial actions it would have been lost. Now Levicept (the company he founded) is closing on $20million in venture and grant funding to show that the fusion protein could be applied to chronic pain indications in actual human proof-of-concept patients. Among the participants in the round is Index Ventures which had provided the original seed funding back in 2012.

Between the moment Westbrook realized he believed in the compound and was ready to give it a go and start a company, and the closing of that venture round, is where the magic happens in science translation and commercialization. The right asset (and all necessary IP of course), combined with the right researcher/team, plus participation from diverse capital sources, can yield important economic and scientific advances. We suspect there are great deal more undiscovered or forgotten assets.

Biotech venture capitalist Bruce Booth recently wrote about VC funding in tech versus biotech and his concept of “flux” in entrepreneurial ecosystems.

Read his post, but the basic takeaway is that biotech start-up supply is constrained and the sector is a good one in which to invest because it is currently in a better position to withstand a boom-bust cycle driven by exit pressure.

A follow-up post elaborates on the pretty stark differences between very early stage investment in tech versus biotech.

Screen Shot 2014-09-24 at 5.10.19 PMBottom line: there’s a lot more in tech, and if there was that much early-stage investment in biotech it would create a glut that would be difficult to digest at later stages.

We believe this insight dovetails with our observation that biotech often requires some very early and extremely high risk proof-of-concept and other validation work that tends to be funded (and increasingly so) by non-traditional capital such as grants, venture philanthropy and so forth. Tech does not have the same challenges, so ideas tend to get to the angel investing stage quickly.

In general we have been illuminating the differences between tech and life science, especially biotech, start-up ecosystems for awhile now (see: here and here), we do not cheerlead for either.

What we do strongly support is investment in hard science, and the licensing, translation and commercialization of research. This is in our view the type of start-up activity that stands the greatest chance of generating the broadest benefit to society in terms of life quality, jobs and economic diversity.

 

Two mega-trends are reshaping the global biomedical research landscape: (1) In the U.S. the largest benefactor of early-stage life science research dollars is the National Institutes of Health (NIH); NIH budgets began stagnating after 2003 and declining in 2010 (2) U.S. Big Pharma has been reducing their R&D budgets consistently over the past several years; this sluggishness is even more onerous when considering that U.S. Big Pharma R&D investment, at its peak, had accounted for an ~80% share of the global spend.

This new normal R&D climate is forcing all participants to become more entrepreneurial and has given rise to an acceleration of the Industry:Academic collaboration.

Perhaps one of the most interesting biomedical Industry:Academic collaborations under way is the circuitous and semi-stealth route being pursued by South San Francisco-based Calico Life Sciences. We previously spoke about the longevity newco here. Founded by former Genentech chief executive Arthur Levinson, Calico was initially infused with $500MM from Google and AbbVie, and has access to an additional $1 billion in dry powder that is readily available from the duo. While Google is simply being Google, pursuing “moonshots”, as co-founder Larry Page frames it, AbbVie’s role in the collaboration is to bring its horsepower to bear for clinical, manufacturing and commercialization efforts. But alas, just what is “it” that will be ushered from the development stage start-up and into the clinic and on to the market?

 

Calico

 

That part of the story takes us to Dallas, and requires a rewind back to 2010, when Clara Bioscience, an affiliate of 2M Companies, licensed the P7C3 program and other NAMPT modulators from the University of Texas Southwestern Medical Center. Fast-forward to today and we find that Clara/2M recently entered into an exclusive worldwide agreement with Calico, the now neurodegeneration company, in exchange for an unspecified up-front fee, milestones, and royalty payments.

University_of_Texas_Southwestern_Medical_School

 

It truly takes a village to catalyze the commercial translation of academic discovery. With traditional risk capital resources waning for both industry and university these cohorts have united to actuate a new rubric of entrepreneurship.

This new trend of collaboration is accelerating, as observed by these additional 1H14 alliance formations: Pfizer & GMEC (the Global Medical Excellence Cluster is composed of University of Cambridge, Imperial College London, Queen Mary University of London and Oxford University); Daiichi Sankyo & Sanford-Burnham Medical Research Institute; Genzyme & the Cleveland Clinic; Bayer Healthcare & Peking University; Boehringer Ingelheim & Duke University; MedImmune & the University of California, San Francisco; AstraZeneca & Shenzhen University; and Google & Johns Hopkins University, to name a few.

The Industry:Academic Collaboration is also a trend that we write and tweet about often. Collective IP lives and thrives at the intersection of the collaborative process: contextualizing the earliest stage research, patenting, and funding activity, in order to help facilitate the translation of those discoveries into the marketplace.

Johns Hopkins University and Google are partnering to bring ideas from the engineering school to market. While some observers may view this development as evidence that the traditional tech transfer system is failing, we view it as a positive development. We have long argued that universities are creating licensable ideas at an incredible pace, and the onus is on the business community — entrepreneurs, investors, corporations, and funds — to be diligent in watching the university ecosystems and seizing upon licensable ideas early.

Hopkins

 

MN

 

Google is actually following a well worn path adopted by many Boston and San Francisco life science venture capitalists — where in the life science world, keeping close tabs on key researchers and their lab output is standard operating procedure for successful VC investment opportunities. Dealmaking in this context is known to transpire early, at times before the broader investor community is even aware there is a licensable opportunity (more on this in another blog post). As we have pointed out in other posts, when it comes to hard science like engineering and biology, the riskiest but most critical injection of capital occurs at the earliest stage or validation work.

Google clearly understands that when it comes to important breakthroughs, the distance that needs to be travelled between a university lab discovery and a commercial product is vast, and the university system is at times not fully equipped — from either the ability to effectively market opportunities, to the availability of sufficient risk capital for validation, to surrounding the nascent technology with with relevant and experienced industry personnel, etc. — to travel this entire distance with every potential invention. One of the reasons for Collective IP is to surface, organize and effectively market the work of researchers in the hard sciences to all members of the investment and business development communities.

A university administrator reading this might reasonably ask: why can’t we be the venture capitalist? Why can’t we expend the resources to do the high risk early-stage validation work, create value, and then move an actual company along the process? Given that many venture capitalists are not particularly skilled at “picking winners” (note that Google itself was turned down by many venture capitalists when it was seeking investment) what is to suggest that universities can’t do better? The University of Minnesota appears to be pursuing precisely such a strategy. But at least one observer believes this is a bad idea.

Between universities who may benefit from close relationships with select venture capitalists, and, on the other hand, becoming VCs themselves, there is a third way to accelerate the commercialization of academic discovery. Universities can use new software and analysis tools to efficiently connect the broadest possible yet intelligently targeted swath of the entrepreneurial, industry and investment communities with academic discoveries. By pursuing their existing fiduciary duties with an available tool like Collective IP, university administrators and technology transfer officers can shift risk and maximize the potential value of licensable inventions.

Peter Thiel’s Breakout Labs Shows A New Way Forward

The traditional seed funding model rule-of-thumb, at least according to legendary tech investor Fred Wilson, is about discovering *product market fit*.

“The first step is building a product, getting it into the market, and finding product market fit. I think that’s what seed financing should be used for.”

This is one reason why existing seed funding models tend to be tech-centric. In the *fail-fast* world of software development, early-stage costs are low, iteration is rapid, and valuation multiples may explode as soon as a product (even a free product with no immediately obvious revenue model) finds a user base and shows rapid growth.

Tackling the most difficult and seemingly intractable human problems — for example treating or curing disease, scaling alternative energy solutions, environmental remediation and so forth — requires a different approach than that of software development. To build a viable business in these hard-science areas often requires a material degree of technology validation work. This is one reason why the first step in tackling the great challenges of our day often involves university research. Because the critical step between the university research lab and the “seed” round, where important experimental and validation work is accomplished, typically requires alternative capital resources, such as grants or venture philanthropy. This technology validation stage is perhaps the highest risk part of the discovery process and unfortunately where few seed or venture funds participate.

Tremendous opportunities often lay in blazing new trails. That is exactly what Peter Thiel, of Paypal and Facebook folklore, is doing by taking the path less traveled with his San Francisco-based Breakout Labs. Thiel has attracted philanthropic sources designed to support early-stage hard-science companies in areas ranging from food science and biomedicine to clean energy.

The incubation program offers its portfolio companies $350,000 in non-dilutive capital to advance their proprietary technologies along with access to strategic mentorship and networking opportunities. As a nonprofit, Breakout Labs leaves all intellectual property to its beneficiaries, taking instead what it calls “a capped royalty stream and a small percentage of equity” while introducing each company to a syndicate of potential follow-on investors. All of Breakout’s revenue funnels back into its general fund for future investments

Theil’s approach of a capped royalty, small equity percentage and evergreened revenue is a creative way to tackle problems that are often not amenable to traditional seed funding models. If the seed-stage model pioneered by Breakout Labs works, and spurs other novel approaches to seed funding and accelerating the incubation of hard-science, humanity will certainly be the long term beneficiary.

On Tuesday, September 9, 2014, our friends at Janssen Labs will be hosting a meetup with Peter Thiel’s Breakout Labs.  If you are an entrepreneur with scientific research or technology that improves human life, you should attend. Details and RSVP HERE.
BreakoutLabs

 

We are lucky to know Breakout Labs portfolio company, Siva Therapeutics, quite well, CEO Len Pagliaro shared his view with us,

“Breakout Labs, and the Thiel Foundation, have the foresight and risk tolerance to take bets on early stage, promising, but “out of the box” technologies that have great promise. They are providing leadership in early stage, hard science investments, and their vision has been critical in moving Siva and the other Breakout Labs companies to the next stage in development. What may be less visible is the strong network that Breakout Labs is creating among its awardees and more broadly. It is much needed and very productive in the current life science investment environment.”

At Collective IP we look at university and research institution innovations on a daily basis and recognize the inherent challenges and long-term promise of ushering innovations into the hands of driven entrepreneurs. Of critical importance is keeping those entrepreneurs housed and fed through the critical early-stage. We hope to see more labs following Thiel’s “breakout” model come into being. They are desperately needed if we are to grow startups that address serious human and planetary needs, and not just the latest mobile app or cloud software.

 

In previous posts we discussed the challenges facing startups seeking to commercialize science originating from universities and research institutes, and pointed to how local startup ecosystems can aid in this process. This recent Techcrunch article about startup activity in Seattle shows how the University of Washington and the City of Seattle are working together to make the city more attractive to those looking to launch their start-up. With the city’s Office of Economic Development (OED) taking the lead (and going so far as to purchase and run a startup hub website) the partnership is addressing several key issues: office space, zoning, and collaboration support.

Print

 

This is a great start. The companies that will come out of this effort will likely span the gamut from out-licensed university discoveries to various software focused projects, and for those software-based start-ups the OED’s efforts will be especially helpful.

seattleBut for startups built on licenses to important university discoveries, these improvements, while still helpful, are only a first step…

For the start-ups aiming to solve our most pressing and serious challenges – in healthcare, environment, agriculture, energy, materials, and so forth – assets like office space and collaboration infrastructure are important, but not as critically important as runway. Simply put: these companies require high-risk early stage capital.

We submit that a critical piece of the puzzle for places like Seattle and other aspiring entrepreneurial ecosystems will be their ability to attract and integrate non-traditional sources of capital. Our definition of non-traditional capital includes grants, venture philanthropy, sponsored research, crowdsourced and other forms perhaps not yet devised. This structurally less risk averse capital is critical to help important scientific discoveries get to “proof-of-concept” stage, and thus become more attractive to the slightly more risk averse traditional venture dollars.

We will discuss non-traditional capital and the various high-risk venture funding models for aspirational hard science start-ups in subsequent posts.

 

“I just won’t sleep,” I decided. There were so many other interesting things to do.”
— Jack Kerouac, On the Road

BIO logo

And so began an important pilgrimage for Collective IP, from a mile high in Denver, Colorado down to the tip of southern California where the locals flirt with the Mexican border. So important a journey that our entire team attended, from engineering and R&D, to sales and marketing and every member of management. We all converged upon balmy and breezy San Diego to attend the 2014 BIO International Conference, where the global biotech community meets, connecting the people, companies and innovations that help fulfill the promise of life science technology.

We postulated in advance of attending BIO that demonstrating our novel Innovation Intelligence platform at the worlds largest life science business development and partnering meeting would yield invaluable intel and validation of our product design, data input organization and mapping capabilities, search and diligence solutions, monitoring functionality, analysis features, as well as enable us to accumulate additional product requests and acquire product price sensitivity feedback.

Having some forty formal one-on-one meetings scheduled prior to our arrival, combined with countless potential new customer interactions at our exhibitor booth, robust attendance at our happy hour reception (given the slew of evening activity options available), and the daily informal networking activities such as the opening night fireworks filled reception aboard the USS Midway…

BIO Midway 3

…to the Gaslamp receptions and the numerous impromptu connections made while waiting in lines, across the expansive exhibitor floor and in the many seminar sessions all totaled ample opportunity to gather comments from the users who populate both sides of the global innovation marketplace.

Our core product, the CIP profile — a unique body-of-work organization of previously uncorrelated data sets — is delivered in three flavors: i. Research Institute profile, ii. Inventor profile, and iii. Company profile. Throughout the Conference we received on the spot requests to “claim” or obtain access to edit and enrich profiles from each representative owner concomitant with the “why” access is desired, and not surprisingly there was no shortage of the “what would also be great is the ability to do X, Y and Z” feedback. These consistent reactions derived from our addressable market confer that our technical achievements have led us to the first and only comprehensive organization of global innovation.

There were many big picture themes at this years BIO conference: from the convergence of life science and software, to the accelerating precision of personalized medicine, to the increasing role of nontraditional capital — such as venture philanthropy and public-private partnerships — for early-stage (spin-out) start-ups.

From our lens it is clear that solving intractable deadly diseases requires a coordinated cooperation between a diverse array of participatory groups, from faculty inventors, granting agencies, technology transfer offices, venture and other institutional investors, foundations and patient advocacy groups, and of course industry, which spans large and small bio and pharma.

If the week spent at BIO were to be crystallized down to a single thematic takeaway, it is that there exists considerable inefficiencies between the multifarious parties who are all uniquely involved in the derivation, identification and execution of partnering technologies, of any stage.

Compressing time, saving money, accelerating connectivity and creating order out of an unstructured ecosystem are all pain points that the Collective IP Innovation Intelligence platform solves, and our value proposition was illuminated for a large portion of the 15,000+ attendees at this years BIO Convention.

While sixteen hour days were the norm in San Diego there were just too many interesting product demos to provide and conversations to be had, and like Sal Paradise, sleep for us in California was not part of our calculus.

Each week Collective IP highlights a particular profile, either a company, an investigator or technology transfer office. Today we shine the light upon Columbia University:

Columbia

 

Profile: https://www.collectiveip.com/technology-transfer/columbia-university

About

A leading academic and research university, Columbia University continually seeks to advance the frontiers of knowledge and to foster a campus community deeply engaged in understanding and addressing the complex global issues of our time. Founded in 1754 as King’s College, Columbia University in the City of New York is the fifth oldest institution of higher learning in the United States.

Columbia Technology Ventures (CTV) is widely regarded as one of the most experienced and successful technology transfer offices in the world, with more than 350 invention disclosures from faculty and more than 70 license deals each year.  Since its founding in 1982, Columbia has managed over 5,700 inventions, over 3,000 worldwide patents, and has been among the top university generators of licensing revenue in the world. CTV currently has over 1,200 patent assets available for licensing, across research fields such as bio, IT, cleantech, devices, nanotechnology, and material science.

Success Stories

Over the years, CTV has launched over 150 companies based on Columbia’s technologies. Of these companies, over 40 have received VC funding, with 27 successful acquisitions or IPOs to date.

Columbia technologies are behind many successful therapeutic drugs, including Xolinza®, Remicade®, Xalatan®, and medical devices, such as the Arrow® catheter and the Bigliani- Flatow® Shoulder, to name a few.

CTV