The Sharing Economy: Pharma Version

The Twenty-First Century ‘Sharing Economy’ has achieved a high profile and been sometimes rewarded with massive valuations over the past few years, with AirBnB and Uber epitomizing the model of sharing the costs and benefits associated with an asset. The Pharma version involves two companies joining forces on a program, sharing the costs, risks, and potential rewards. The difference between the Pharma iteration of SE and the aforementioned AirBnB and Uber is that, in the Pharma world,  there is also a change in ownership of the asset, but the sharing concept still has some applicability. Now, we have a brand new example of this being applied in the neuropharm arena:

(BioCentury 9/1/15)
Amgen Inc. and Novartis AG will collaborate to co-develop and co-commercialize candidates in Alzheimer’s disease and migraine. The companies said they will combine beta-site APP-cleaving enzyme (BACE) inhibitor programs to treat AD. Novartis’ CNP520, which is in Phase I/IIa testing, will be the lead candidate. Amgen will make undisclosed upfront and milestone payments to Novartis, and pay “disproportional” R&D costs for an undisclosed time frame, after which the companies will share equally global profits and costs for all AD assets. Novartis will receive global co-development and full ex-U.S., Canada, and Japan commercialization rights to Amgen’s migraine candidates including mAbs AMG 334 and AMG 301 in return for paying “disproportional” R&D costs and double-digit royalties.”
Just one day earlier….
(from NeuroPerspective, Sept-October 2015, released 8/31/15)
“Given the enormous scale of late-stage clinical trials in AD, several companies have decided to collaborate on the therapeutic programs as well. While there are some companies (e.g. Roche/Genentech) who are willing to double-down and carry the costs of multiple disease-modification programs, for those who want to go for the gold ring of arresting Alzheimer’s at its biological source, there is value and safety in partnering around one or more mechanisms, to avoid risking too much credibility and capital. Biogen/Eisai, Lilly/AstraZeneca, and Lundbeck/Otsuka exemplify pairings that provide some insurance against excessive exposure in the event of failure. Collaboration means relinquishing hubris in the service of sharing both the risk and the reward, but one-third or one-half the revenue that will come from a successful Alzheimer’s drug will be–or should be–more than sufficient for any pharma company.”
We would like to take full credit for thereby inspiring the Novartis/Amgen deal, but unfortunately, we cannot. This is an excellent example of an illusory correlation that has nothing to do with causality. However, and more importantly, the agreement epitomizes pragmatic diversification and risk-reward sharing. Amgen will shoulder a major share of Novartis’ Alzheimer’s costs/risk in venturing into a BACEi field not lacking for competition (Merck, Biogen/Eisai, Lilly/AstraZeneca); while Novartis is taking on some of the challenge of bringing Amgen’s CGRP-antibody into a now crowded CGRP-migraine field (Teva/Labrys, Allergan/Merck, Lilly/Arteaus, and Alder Pharma).
There is a bonus here: Amgen, with all of its resources, had largely exited neuroscience several years ago. They are finally giving some indication that they see neuroscience as something more than just a headache. We hope that this presages greater investment in this area.

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