Commercialization Or Bust?

By Ben Comer, Chief Editor, Life Science Leader

If you’re a biotech in the earlier stages of clinical development, is it now incumbent upon leadership to build the capabilities necessary for regulatory submission and commercialization, in case the right deal doesn’t materialize? Or is the strategy of creating an exit based on positive clinical data, without the need for an expensive regulatory and commercial function, still viable?

To hear Vlad Coric, CEO and board chair at Biohaven (and the subject of this month’s cover story) tell it, leaders should always plan to commercialize their products — with partners in global markets, if necessary — as a way to maximize a company’s and (potential) deal’s value. It certainly worked for Biohaven, which rebuffed Big Pharma’s advances when its lead candidate, the migraine treatment Nurtec ODT, was still in the pipeline. Without Nurtec ODT’s U.S. revenue stream as leverage, Coric almost certainly wouldn’t have been able to reach the $11.6 billion sale price from Pfizer that he and the company agreed to last May.

For a while, it almost seemed like product revenue streams were a liability, considering the multibillion-dollar valuations many early-stage companies, even preclinical in some cases, were able to achieve. “Right now, newly launched tech companies that haven’t treated any patients and don’t have a drop of revenue, are still often valued in the multibillion-dollar range, exceeding companies that have real products and real revenue,” observed Emil Kakkis, CEO and president of Ultragenyx, in a Life Science Leader article published just one year ago.

Those days may be over for now, and potentially over for good. At the J.P. Morgan (JPM) Healthcare Conference in January, it seemed as though the Big Pharma presentations were better attended than many of the small biotech presentations, a reversal, from my perspective, from years past. The conference kicked off with a flurry of activity, but M&A took a backseat to research collaborations and licensing agreements.

In an interview at the JPM conference, David Lee, CEO of Servier Pharmaceuticals U.S., told me that COVID-19 taught company leaders that it’s OK not to rush into a deal, and that it’s good to do additional analysis before moving forward. On the biotech side, meanwhile, a bigger realization was crystallizing: Those nosebleed valuations, now down in the gutter, may not be coming back up anytime soon. Leaders at publicly traded companies are trying to decide whether it makes sense to embark on new fundraising rounds, given current share prices, and suffer the resulting dilution that goes with it. Either way, the situation is leading to difficult conversations with investors and board members.

In that context, partnerships begin to look appealing, particularly if there isn’t enough cash on hand to file and launch a drug alone. At the very least, leaders will need to be more transparent and realistic about a company’s options, says Lee.