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The 1%

May 2, 2012

Inversely #Occupy and be in the 1%.  Read on…

From Merck’s Shearman on BD: in 2011, Merck received 8,672 BD opp’s, reviewed 1,290, took 697 to CDAs, ultimately did deals w/ 52 co’s

26 Apr Bruce Booth Bruce Booth@LifeSciVC

in line w/ Merck data MT @liftstream: Biogen VP says 90% license opportunities get canned before confidentiality agreement #biotrinity

@LifeSciVC @liftstream historically we see a yearly flow ~7000 oppys -> 500 CDAs -> 50 deals.

I asked Bruce and Reid, of total potential deals, what percentage get consummated?

@steen1969 @lifescivc I’d have agree w Bruce. Very unusual for an unsolicited technology pitch to land on an existing strategic need.

Looking at these numbers, approximately 0.6% – 1% of total potential deal opportunities actually become “deals.”  Approximately 8% of total potential deals get to CDA.  If you get to CDA, you’ve got about a 7.5% – 10% chance of getting to a deal.

So that’s a fairly significant downselect.

My hypothesis has long been that it is difficult and rare to license a life science technology straight from the University tech transfer office directly to biopharma industry.  Those numbers pretty well support that.

My assumption is that license deals are impacted by stage of development.  Meaning, generally speaking, it’s probably less than “less than 1%” for stuff that’s just had a provisional filed by a tech transfer office.  Reid indicated that it’s “partly stage of asset and largely fit with strategy/predefined needs.”  And then, of that, I’d bet that 90% that goes from a university directly to a license deal with pharma comes from a “name” institution.

It’s just that—my opinionmore, not all, of the leading edge stuff is developed by bigger name, more well-funded PIs at bigger, more well-funded schools.  We can all name examples.  Hot academic labs with hot papers.  That’s not hard and fast, just my perspective.

I’m interested in datapoints to either support or disprove these assumptions if anyone has them.  Feedback from Reid, “I suspect…high impact institutions attract the attention.”

Related, we’ve seen in the media stories about pharma/academia tie-ups.  This article talks about that as a trend, drug companies turning to universities. How, if at all, does that impact the 1% licensing deal number?  Do those institutions with the funding ties end up with the license deals in the 1%?  I suspect it can’t hurt.  There again, though, you see those relationships happening more commonly with big name schools in hotbed areas.  There’s a paper referenced in the aforementioned article which could support that theory. It says; “Our data suggest patterns of constancy as well. In 2007, as in previous surveys, we found that life science faculty with industry research support, compared to those without it, were more productive on virtually every measure of commercial and academic activities we used.”

Which leads me to, OK, to try and move stuff out of the University of Louisville and be in the 1%, we probably have to try and push it along a little further ourselves.  And that may be in the form of a startup.  At least as a vehicle for additional funding.  Just to get up to at least a 1% downselect as a licensing deal.  So, that to me entails making sure we do seed/Series A rounds that get us to data someone wants to see.  How do we figure that out?  We’ve got to have early, iterative contact with VCs, corporate VCs and other pharma industry folks.  [Good related post;  Time Will Kill Your Deal…but in Deal-Making, Timing is Everything]

More feedback from Reid, used with his permission; “I think you are correct—easier to attract funding and exit the noise if the technology moves into a biotech, because it is being actively managed and (ideally) there is value add.  But alternatives exist to the venture funded model; academic incubators, 3rd party accelerators (see recent news on Peter Schultz and new Merck-funded institute, Calibr), angel funding and disease foundations.  But, the common theme is applying project management and external resources beyond the capabilities—and in some cases—the direct control of the academic PI.”

Good post today by Karen Jones related to this topic; What Makes a Life Science Discovery “Investable”?  Well, you have to have good stuff, for one thing.

How do we up our odds?  Bucks for Brains.  Started in 1998 and needs to continue in some way, shape or form.  You’ve got to have the scientific horsepower that industry wants to work with.  Great post by Carl Weissman from 2009 that reads right on this; Recruit Rock Star Scientists To Make Seattle Thrive as an Innovation Hub.  Spot on.

And I realize more goes into it (i.e. management) if you’re trying to build out companies, but this is focused on license deals.

On top of good science we need to be proactive*.  Mine existing relationships.  Build new ones.  Many pharma companies publish areas of interest.  Merck does, for example.  Be up to speed on those, know what to shop to whom.  And, related, be aware of PIs here who are doing work in those areas.

Get the word out!

Get in the 1%.  Inversely #Occupy!

As always, greatly appreciate discussion and feedback.  (And thanks, Bruce, for the encouragement!)

* Not saying we aren’t now, just thinking maybe we could be even better.


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