Virtually Biotechs

Why early stage academic deals are heating up

By Selina Koch, Staff Writer, BioCentury Innovations

Harvard University's $20 million licensing deal with Merck & Co. Inc in March for a preclinical cancer therapy brought in more cash in one swoop than the university's tech transfer office saw in all of 2015. While the sum might remain atypical, the deal validated the virtual biotech model many institutions are adopting to advance their programs beyond the traditional limits of academic labs, and showed how willing pharmas are becoming to bid aggressively on the more mature academic assets.

The deal gives Merck an exclusive worldwide license to preclinical small molecule inhibitors of enzymes that regulate transcription to treat acute myelogenous leukemia (AML) and other cancers, and Merck will be responsible for development and commercialization. In addition to the $20 million upfront payment, Harvard is eligible for undisclosed development and commercialization milestones, plus tiered royalties.

A Matter of Priorities 

June Lee, director of early translational research at UCSF and head of the university’s Catalyst accelerator, told BioCentury that while her program also uses a variety of approaches, including the virtual biotech model, it’s particularly focused on getting pharma involved early to get the greatest number of projects into commercial development, rather than placing big bets on a few.

“If you’re working with limited resources, does it make sense to put $2 million into getting a single technology IND-ready, when you could support 20 different projects at $100,000 each, and find a natural outlet for many of them?” Lee said. “I’m not sure universities are supposed to be the ‘virtual biotech’ beyond a certain point if there are viable industry partners who are willing to pick it up earlier on.” 

She said industry partners support UCSF research in a variety of ways beyond mentoring, including sponsoring research and doing medicinal chemistry, with “obligations that range from minimal to substantial.”

The key to the strategy, she said, is finding the right industry partners for each project. “I think academic institutions that are less far along in thinking about how to do this tend to treat industry as a monolithic entity. For us it’s about being very precise about the types of interactions we create.”

Because Catalyst is pushing for earlier uptake by pharma, Lee doesn’t see an onslaught of deals with $20 million licensing fees in UCSF’s near future. “The technologies may be licensed at earlier stages, but then you build in deal terms that would allow downstream royalty revenues to be longer term,” she said.

In fact, the number of licenses issued are a better measure of success for the new model than licensing revenues, because they reflect recent rather than historical deals.  

Read the full story at BioCentury Innovations