This past year has resulted in numerous publicly announced collaborations and deals in precision medicine. Many times, however, these deals have been forged late — when the diagnostic is already developed or the drug is already without a biomarker, or the clinical paradigm is already too complex or the technology is not accessible in many of the countries in need — and management teams miss opportunities and synergies that a collaborative effort would have yielded if the deal had been pursued earlier. In other scenarios, lack of planning has resulted in deals negotiated in haste which, in turn, has jeopardized the due diligence necessary to protect the investment.
At the 2014 BIO International Convention in San Diego last week, I organized a panel of noteworthy leaders in precision medicine to discuss transaction planning and identify best practices. The panel included John Boyce, President, CEO and Co-Founder of GnuBio/BioRAD; James McCullough, CEO of Exosome Diagnostics; Khosrow Shotorbani, President and CEO of TricCore Reference Laboratories; and Jami Taylor, Senior Director, Global Access Policy, Global Market Access, & Commercial Strategy at Janssen Global Services, Johnson & Johnson.
Each panelist represented a company with very recent inorganic and organic growth in precision medicine, and had tips for the audience:
- Plan well. John Boyce, whose company, GnuBio was just acquired by BioRad, emphasized the importance of building a strong data room with solid commercial and scientific research to support the product and its future potential. For his company, this approach allowed multiple parties to come to the table and understand the value of their DNA sequencing platform so they could then get to the important issues of integration and fit with the potential acquirer. While having a strong dataroom is essential to any deal, in innovative diagnostics and precision medicine this need is heightened by the added complexity of new technology and still burgeoning market access.
- Get creative. James McCullough, whose company Exosome Diagnostics has been involved in multiple deals with biopharma and diagnostics companies over the past two years, stressed that each party must be clear upfront with their expectations for the goals of the transaction and craft a partnership that is agreeable to both parties. Their deal with a specific life science tools company provides the tools company access to Exosome’s novel liquid biopsy technology and in return, Exosome was able to leverage the global reach of the tools company to market their product. In other deals, the question of how to structure to benefit both the pharma and the diagnostics company is of concern. “This is a huge challenge in precision medicine, but some pharma companies are structuring deals to provide more equality to the diagnostic as they recognize the value it brings to drug sales.”
- Be realistic. TriCore Reference Laboratories is a not-for-profit that offers a full spectrum of laboratory services so the medical community has a single provider for diagnostic testing and the supporting records. TriCore’s CEO, Khosrow Shotorbani explained that by giving patients a single provider that meets all their testing needs, TriCore can help identify unnecessary testing, give HCPs the comprehensive patient information needed to make more accurate diagnoses and, ultimately, provide better care. Shotorbani noted that despite all the talk about innovative technology and the importance of longitudinal tracking, basic fundamentals are still missing — there still isn’t a way to bring a complete patient record of testing and health information into one database so that a physician can make the right medical decisions. He added that physicians are facing this complexity, and they are overwhelmed by it. Khosrow also emphasized the financial realities associated with adopting new technology. TriCore has recognized these issues and is investing in a new business model to overcome the reimbursement complexities associated with the US’ bundled payment system.
- Go truly global. Jami Taylor from Janssen Pharmaceuticals shared his insights from Janssen’s global approach to precision medicine. When they were building their business, they realized that they couldn’t just focus on one type of technology, one type of geography, or one aspect of precision medicine. They also were aware that they needed to be open to partnerships and deals that gave them the flexibility needed to broaden their focus and become truly global — moving beyond established markets like the US, EU5 and Japan to the frontier markets. In Rwanda, for example, better diagnostics capabilities are a high priority, but there have been limitations to what the government could afford. It was clear to Janssen that they needed to reengineer their diagnostics and precision medicine to be more affordable and accessible to developing countries without compromising testing capabilities and sophistication.
The panel closed with each panelist discussing strategy and implementation plans over the next six months for their specific deals and partnerships. The consensus of the group was that this was a fantastic time for precision medicine with the road ahead made brighter through pragmatic and well-backed partnerships that can help more and more patients worldwide.
Jeff Stoll and Scott Palmer, who work closely with me on precision medicine transactions and commercial development and lead our key Commercial Advisory project teams, attended this session with me and helped in the development of this blog
For more on precision medicine, see EY’s Biotechnology Report 2014: Beyond Borders – unlocking value.