Partnering With A Big Pharma

By Wayne Koberstein, Executive Editor, Life Science Leader
Follow Me On Twitter @WayneKoberstein

At a recent industry conference I met with Shaun Grady, AstraZeneca’s head of strategic partnering and business development, who gave me his advice for small life sciences entities looking to partner with his company. Grady was eager to extend an olive branch from AstraZeneca to companies and academic centers on the other side of deal making, playing against the arrogant and aloof stereotype of Big Pharma business development. Grady heads the gatekeeper group for most of AZ’s partnering, licensing, and mergers and acquisitions. But, he says, his company is now pursuing a much more interactive policy toward the community of smaller players that create most of the innovation AZ and other large companies need so urgently.

HOW CAN AZ IMPROVE THE PARTNERING EXPERIENCE FOR SMALL COMPANIES?
GRADY: That is actually where we’re focusing our time and effort, because it shouldn’t be daunting. For companies with good science, good technology, and good people, it should just be a lot easier to interact. My group includes about 150 people around the world, and we are focused this year on getting our people to speak with the right scientific experts and the right geographical experts, expeditiously. We are having more peer-to-peer engagement and getting good feedback. In the industry, there can still be a sense of arrogance about deigning to be with the smaller companies. So, we’re trying to recalibrate that whole relationship. In November 2011, we set up a meeting between our R&D and business development leadership with all the key academic and biotech leaders in the greater Boston area. At our annual CEO Conference, we invited executives from current and prospective partners to give us candid feedback on what it felt like to interact with Big Pharma generally and AZ in particular. As a result, amongst other things, we have set specific targets for turnaround times and responsiveness to external opportunities. These will be included in everyone’s individual performance targets in the business development function.

HOW EARLY IN RESEARCH CAN SUCH A RELATIONSHIP BEGIN?
GRADY: We all recognize that we need to talk to each other much earlier, even if there isn’t a deal in sight, just to get a better sense of what we need, what we think, what’s impacting and influencing the science, and what the university researchers and start-ups are doing at the early stage. In our areas of high interest we are prepared to offer our feedback and advice — and in theory —  even services to companies on a no-commitment  basis just to get to know them and their management and to put AstraZeneca in a good place when the time does come for partnering discussions. 

DURING DUE DILIGENCE, ARE THE SCIENTIFIC PEOPLE MORE CONSERVATIVE THAN THE BUSINESS STAFF?
GRADY: Well, when you say conservative, you might just say, realistic. Listen, it’s true we’ve had some cases where a supposedly advanced project was not quite so advanced after we got a closer look at it, and the company needed to do a lot more work on it. But it’s not just about the due diligence; it’s more about the feedback we give and get. If we like things, we’ll tell people why, but if we don’t like things, we try to give full and proper accounts of how we see the opportunity as well as any obstacles. We gave some very specific post due diligence to a prospective partner in China about a year ago around the regulatory pathway, dosing, and formulation. The company recently approached us again to say it had taken our advice, and we are now engaged with them to review the opportunity again.

WHY DO YOU PREFER TO PARTNER WITH COMPANIES THAT HAVE PRODUCTS READY FOR LATE-STAGE TRIALS?
GRADY: We are looking to partner and collaborate all along the value chain. Sure, our priority right now is later stage assets, but if you don’t attend to the earlier opportunities you will always find yourself prioritizing later stage. Big Pharma has the experience to run the global Phase 3 trials and has the ability to fund them. So actually my job — our job — is to find those programs at the point where we can apply our specific skill set, or as we refer to it, our “edge.” We want to get into a discussion, help design those trials, and execute them in Phase 3 because that’s an area we are comfortable operating in.

HOW DO YOU DIVIDE YOUR INVESTMENT BETWEEN EXTERNAL AND INTERNAL RESEARCH — AND BETWEEN EARLY VERSUS LATE-STAGE PROJECTS?
GRADY: We set ourselves a target of having 40% of our pipeline and portfolio coming from programs that began life outside AstraZeneca — and we are broadly at that level today. It varies a bit across the different discovery and development phases and is currently higher at the later phases. What’s important is that it isn’t about doing deals to meet a particular percentage target if the quality isn’t there. Equally, we won’t stop if we reach that target and still see attractive opportunities. It is all about quality.

WHAT CAN COMPANIES DO TO AVOID THE COMMON PITFALLS OF SEEKING AND SECURING PARTNERS?
GRADY: As a small company, my advice is that you should talk to pharma companies early and be open, honest, and willing to listen. I’d talk to multiple pharma companies and hear what they’ve got to say — hear their feedback. And then on the pharma side, we need to be more open to giving and hearing feedback from the small companies, recognizing that we need to accommodate what is important to them and that, if we steer them in the right direction, they could come back to us at a later stage with a more attractive opportunity. There is still some residual “them-and-us” mentality in the industry — an old pattern we just have to forget and break out of. Everybody needs to be a bit more open with each other.  The Pharmas who break out of that the quickest have a real opportunity to differentiate themselves from their peers.

WHEN DO YOU START THINKING ABOUT AN ACQUISITION RATHER THAN PARTNERING OR LICENSING?
GRADY: We pretty much look at any project potentially from an M&A perspective as well as a licensing perspective. All things being equal, you do a licensing deal because you get the risk profile aligned properly with your financial investments and risk is shared. We are open to considering acquisitions if the asset is strategically important to us or there is a bigger portofolio that fits well with our strategy. More often you’re seeing acquisitions with deferred considerations or other contingencies — a kind of licensing deal by another name.