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Commercialisation strategies for biotechnology companiesIn brief: Lawyer Adrian Coras provides an overview of some of the commercialisation strategies available to biotechnology companies.
IntroductionThe production of biotech products in Australia is dependant and correlative upon the successful commercialisation of biotech technology. Given the high cost, and time, required to research, develop and manufacture a biotech product, it is often the case that to commercialise their technology successfully, companies will need to consider collaborating with a third party via a commercial agreement. Commercialisation of a biotechnology company's technology may involve the implementation of one or more of the following strategies:
Choosing a commercialisation strategy is one of the most vital decisions a biotechnology company makes in terms of its potential to profit from their developed technology. In choosing a strategy, it is imperative that analysis be given to the economic environment within which the biotechnology company intends to commercialise its technology. Factors which must be given analysis include, the market for the product, the companies in that market, the products currently sold in that market, the potential for alliances with current market players, and the costs and benefits of alternative strategies with regards to profits and a company's competitive advantage.
The licensing and sale of technologyLicensing of a company's technology involves the granting of rights to use the technology in order to obtain an income stream. This is generally reflected in royalties or other payment streams (perhaps with some up-front lump sum payments), or perhaps access to a third-party's resources. The sale of technology generally involves the purchaser paying a lump sum to acquire the technology outright. The licensing and sale of technology have been, and continue to be, appealing commercialisation strategies for companies that wish to profit from their technology, without having to invest in the expense, activities and time required to develop and commercialise a product. These strategies are advantageous for companies that lack the resources and skills to commercialise a technology effectively. Whether carrying out clinical trials or investing in commercialisation, manufacturing infrastructure may push the boundaries of the company's financial resources. Additionally, these strategies can unlock an income stream at the very early stages of commercialisation, something that otherwise may take years to achieve. The licensing and sale of technology strategies, however, may not be appropriate for companies that wish to maintain higher levels of control over their technology and the shape of its commercialisation.
The creation of a venture or partnership with a third partyA biotechnology company has the option of partnering with another company to take a particular piece of technology from concept to the market place. Often, to successfully commercialise its technology, the biotechnology company will have to acquire, or gain access to, the infrastructure necessary to convert the technology into a product, namely, gaining requisite regulatory approval, manufacturing, distributing and marketing, and sales capabilities. The cost of acquiring or gaining access to such infrastructure can be so high that it makes the commercialisation of a particular technology unprofitable in the hands of the developer alone. A commercial marriage may be possible that combines the two fundamental elements required for the profitable commercialisation of technology: the technology or intellectual property itself and an established organisation that possesses experience, infrastructure and other assets which compliment the technology. This could include manufacturing expertise, organised distribution channels or particular technical and scientific expertise. Often, the only method by which a biotechnology company will experience long-term financial success is if it develops its technology at an idea stage alongside strategic cooperation with well identified and appropriate commercialisation partners. The venture or partnership strategy suits a company that wants to participate in the development and commercialisation of the technology, but lacks the funding or expertise required to build the commercialisation infrastructure. These deals are generally structured where the partners share responsibility for the expenses and profits, the technology owner has an input into the commercialisation process, yet the direction of the process will be a collaborative effort between the two parties drawing on respective strengths. When dealing with partnerships and ventures, ownership and right of use of intellectual property rights are a key issue. These rights need to be clearly defined, particularly in the area of improvements.
Outsourcing production and distribution processesAnother option, if cash flow will permit, is to sub-contract out or outsource aspects of the commercialise process. Unlike with a venture or a partnership, the third party does not obtain any proprietary interest in the technology or product being commercialised. There are a multitude of functions that can be outsourced throughout the commercialisation process, such as manufacturing or marketing. Outsourcing involves the contracting out of major development functions to third parties and is complementary to the emerging biotechnology sector as it is well-suited to the high-risk, high-reward nature of the sector. Outsourcing enables biotechnology companies that are developing technology to quickly involve organisations that possess key, complementary commercialisation skill-sets, positioning the company more aptly and quickly to compete in the marketplace. Of course, outsourcing comes at an upfront cost. This needs to be factored into the cash-flow equation of the emerging company. Conversely, developing internally the requisite skill-set, expertise and the capacity required to commercialise technology can be costly, time-intensive and can risk the success of the technology's commercialisation altogether.
ConclusionAustralia's biotech product development is dependent upon biotechnology companies assessing and implementing the most suitable commercialisation strategy for them. Each company will have varying objectives regarding how their technology is commercialised. Of particular importance is whether the strategy will provide the required revenue stream within an acceptable timeframe. It will also involve the developer assessing the extent to which it will retain intellectual property ownership and licensing rights once a product has been taken from proof of concept to market. It is advisable that biotechnology companies seek advice to determine whether their organisation possesses the requisite expertise and resources necessary to viably implement a particular strategy. For more information contact Andrew Wiseman on the contact details below.
Company newsIn brief: Regular news from the biotech industry.
AstraZeneca's Prilosec Patents upheld in US District Court1 June – The US District Court for the Southern District of New York has found that two Prilosec (omeprazole) formulation patents of AstraZeneca were valid and infringed by Impax Laboratories and Apotex Corporation. Judge Barbara S Jones upheld both formulation patents in a ruling consistent with her decision in the first wave case in October 2002. The court found that Impax's and Apotex's generic omeprazole formulations infringed both patents in suit. The infringing Impax compound is marketed by Teva in the US. The court also found that the generic omeprazole products sold by Lek Pharmaceuticals and Mylan/Esteve did not infringe. [Source: Company announcement] Avexa wins AU$4.3 million Australian Government grant30 May - An Australian Government Commercial Ready Grant worth AU$4.3 million has been awarded to Avexa Ltd. The grant is to develop a new generation of HIV antiviral drugs using fragment -based drug design. Avexa will work with the CSIRO's Molecular and Health Technologies division to discover inhibitors of the HIV integrase enzyme, which conventional techniques are unable to identify. The Commercial Ready Program is a competitive merit-based grant that supports innovative research. The grants provide for up to 50 per cent of eligible project expenditures for early stage research and development activities. Australian Industry Minister Ian Macfarlane said the funding would support Avexa in its work on HIV-AIDS to 'bring us closer to finding a cure and saving millions of lives'. [Source: Company announcement] BioDiem announces new pandemic flu vaccine strategy24 May – Melbourne biotech BioDiem Ltd announced a new vaccine strategy for a potential influenza pandemic. The method uses a genetic reassortment between a high -production, live -attenuated H2N2 strain and non-pathogenic avian H5 viruses. As it is based on a non-pathogenic H5N2 virus, this vaccine could be produced outside of high-level security labs. This may allow more facilities to be involved in producing vaccines in greater quantities if a pandemic breaks out. Preclinical data in mice and monkeys showed that animals administered the vaccine were substantially protected from challenge with several different strains of bird flu, including highly pathogenic H5N1 strains. Furthermore, in a Phase I clinical trial undertaken in St Petersburg, the safety of the vaccine has been demonstrated in 20 volunteers. The World Health Organisation (WHO) has commented that the world is billions of doses short of the volume of influenza vaccine required to be prepared for a flu pandemic. The WHO Global Pandemic Action Plan states that live attenuated flu vaccines, such as BioDiem's, may have a production yield 10 times greater than inactive flu vaccines. BioDiem has licensed the majority of rights to the vaccine to Nobilon International, which forms part of Organon BioSciences. BioDiem retains the sales and marketing rights to North America at present and Japanese rights are to be shared between both BioDiem and Nobilon. [Source: Company announcement] Genzyme to acquire Bioenvision29 May - Genzyme Corporation and Bioenvision announced that they have reached an agreement, under which Genzyme will acquire Bioenvision in an all -cash transaction valued at approximately US$345 million. Through the transaction, which has unanimous Bioenvision board support, Genzyme will gain the exclusive worldwide rights to clofarabine. Bioenvision and Genzyme co-developed clofarabine in Europe where Bioenvision currently markets the product for the treatment of acute lymphoblastic leukemia in relapsed and refractory pediatric patients. Clofarabine has been granted orphan drug status in both the US and EU. Bioenvision chairman and CEO Christopher Wood, MD, said he believed the transaction brought significant value to Bioenvision shareholders. 'Genzyme has the global clinical, regulatory and commercial infrastructure to advance clofarabine, as well as very significant experience with the product from its U.S. approval, launch, and continued development and commercialisation,' he said. 'We are confident that they will build upon the solid foundation our organization has established in Europe to further expand access to clofarabine for patients with serious unmet medical need.' [Source: Company announcement] Peptech launches inflammatory disease drug trial22 May – Australian biotech Peptech Ltd announced the launch of a Phase I trial of its compound PN0621, a drug developed for the treatment of auto-immune diseases such as rheumatoid arthritis, psoriasis and Crohn's disease. This trial will mark the first administration to humans of a domain antibody derived product. Domain antibodies are smaller than conventional antibodies but retain the important property of participating in highly specific interactions. PN0621 is an anti-TNF class drug that has been tailored to reach parts of the body that current drugs are not able to reach. Patients can develop a resistance to one anti-TNF treatment (of which there are three currently on the market), indicating the need for new antibodies such as PN0621. The final results of the trial should be available in late 2007 after data analysis and review. [Source: Company announcement] Progenics and Wyeth announce FDA acceptance for new filing31 May – Progenics Pharmaceuticals and Wyeth Pharmaceuticals announced that the US Food and Drug Administration has accepted the file for review of Progenics' new drug application (NDA) for subcutaneous methylnaltrexone for the treatment of opioid-induced constipation (OIC) in patients receiving palliative care. The companies also announced that the European Medicines Agency has validated for review Wyeth's marketing authorization application for the same compound. Methylaltrexone is a peripherally acting opioid-receptor antagonist designed to treat OIC without interfering with pain relief. The acceptance of the NDA submission results in a US$5 million milestone payment to Progenics by Wyeth. In December of 2005, Wyeth and Progenics entered into an exclusive, worldwide agreement for the joint development and commercialisation of methylnaltrexone. Under the terms of the agreement, the companies are collaborating on worldwide development. Wyeth received worldwide rights to commercialise methylnaltrexone, and Progenics retained an option to co-promote the product in the United States. Wyeth will pay Progenics royalties on worldwide sales and co-promotion fees within the United States. [Source: Company announcement]
BioTip: Amending PCT applicationsAfter filing a Patent Cooperation Treaty (PCT) patent application, an International Search Report (ISR) and Written Opinion (WO) will issue providing copies of relevant prior art and an opinion as to whether the claimed invention is novel, involves an inventive step, and is industrially applicable. The ISR and WO provide the applicant with an indication as to the patentability of the invention well before the need to pursue patent protection in one or more PCT member countries by entering into the respective National/Regional Phases. Another of several advantages of filing a PCT application is the opportunity to amend the claims and/or file submissions in response to the WO by filing a Demand for International Preliminary Examination (Demand). Any such amendments will form part of the patent specification that will ultimately proceed in the National/Regional Phase applications. Filing claim amendments with the Demand can overcome prior art resulting in a clear International Preliminary Examination Report (IPER) indicating that the claimed invention is patentable. Although the IPER is not binding on PCT member states, it can be persuasive to National/Regional patent examiners. The approach of filing claim amendments with the Demand, therefore, has the potential to save significant costs in the patenting process, particularly duplication costs where those amendments are successful in persuading relevant National/Regional patent examiners from raising the same or similar patentability issues that were raised in the WO.
EventsInformation on the latest conferences See conferences in: June | November International Pharmaceutical Regulatory and Compliance Congress BioMelbourne Network
BioBreakfast Genomics in Business
2007 International Intellectual Property Law and Pharmaceuticals Pharma Partnering Event - One-To-One License Meetings Asian Patent Attorneys Association Annual Meeting As active members of APAA, we look forward to attending what promises to be a very enjoyable and rewarding conference and, of course, to meeting many of our clients and contacts there. If you are planning to attend this meeting, please do take the opportunity to come and visit us in our Sydney or Melbourne office while you are in Australia. Let us know by getting in touch with Dr Trevor Davies (contact details set out below).
For further information, please contact:
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