Pullan's Pieces #155
 
 
 
 
 
 
linda@pullanconsulting.com
1(805)-558-0361
 
 
 
 
Pullan's Pieces #155
January 2020
BD News and Analysis for  Biotech and Pharma
 
 
 
 
 
Dear --FNAME--,
 
 
 
 

Happy New Year!   We are all heading to the biotech gatherings during JPM in San Francisco soon!  Hope to see you there. 


Cheers,


Linda
 
 
 
 



1.  Why are you not finding partners?

2.  2019 Licensing Deals Infographic

3. Jessica:  Taking a BiTE out of CAR-T  

                                              4.  Trevor:  C and D Venture Rounds

 
 
        
 
 
 
Why are you not finding partners?
 
 
 
 
​​​​​​​
What makes it so hard to find a partner?

Getting a deal done is a challenge.  There are far more opportunities seeking a deal than the number of deals done each year. There are 27,972 drugs in discovery thru preregistration and only 1283 licensing deals done in 2019.  So hearing "no deal" is common.  
 
 
 
 
Syneos Deal Maker Survey
 
 
 
 
What are the major reasons for "No Deal"?


1.  "Not a strategic fit"  
May really mean:
  • We are focused on our shopping list
  • We don't have the expertise - e.g., in cell therapy
  • Does not fit our image - not sexy science or too risky
  • Wrong message, contrary to what  we are saying about our assets
  • Wrong stage for our pipeline gaps
  • We don't believe in that science

What you can do?
1.  Figure out what is on the shopping list (we try to collect that feedback in our database).  
2.  Find a partner whose pipeline and deal history suggests a fit with risk, therapeutic area, stage, molecule type, etc. 
3.  Try again later - strategies change. 
4.  Bring more data (literature and yours) to change the thinking.  
 
 
 
 
2.  "Too early"
Could mean:
  • Not fit our pipeline gaps
  • Too risky
  • The mechanism is not clear enough
  • We don't believe in that science

What can you do?
1.  Ask what would data they would like to see
2.  Come back with more data (yours or literature)
 
 
 
 
3.  Too risky. 
Might mean
  • Insufficient target validation
  • Mechanism not clear 
  • Practical weaknesses:  PK, Solubility, manufacturability uncertain
  • Concern on toxicity

​​​​​​​What can you?
1.  Establish a clear link of every step from target to disease benefit
2.  Work with advisers on formulation, PK, tox, etc
 
 
 
 
4.  We do not see the value

Could mean:
  • Unconvincing differentiation from competition 
  • The pathway to approval or reimbursement is unclear
  • We don't believe in that science

What can you do?
1.  Really work on clarity of your deck.
2.  Study the competition
3.  Think about biomarkers for patient and dose selection
4.  Get an outside opinion of the regulatory path, or the market potential
 
 
 
 
MORE, MORE, MORE!  
Getting to a deal may take
  • more clarity
  • more outreach
  • more listening to the feedback of potential partners and to other advisers
  • more data to address the uncertainties.   
 
 
 
 
 
 
 
2019 Licensing deals Infographic
 
 
 
 
 
Jessica:     Taking a BiTE out of CAR-T
 
 
 
 
As we usher in a new year, and a new decade, let’s take a look at two of the hottest new Immuno-oncology treatment modalities, bi-specific T-cell engager (BiTE) and chimeric antigen T-cell receptors (CAR-T), and how they stack up against each other.  The buzz out of the annual meeting of the American Society of Hematology (ASH) last month (disclaimer, I wasn’t there) was that BiTEs are poised to upstage CAR-Ts as treatment of choice for hematological malignancies:  ASH 2019 – for CAR-T the bispecific antibody threat is real. 

BiTEs


The BiTEs, also known as T-BsAbs, are designed to bind both a tumor antigen as well as CD3 (typically) on T-cells.  Unlike monoclonal antibodies (mAbs) which engage immune mediators via the Fc portion of the molecule, the BiTE binds the tumor AND grabs T-cells by the TCR, bypassing MHC restriction.  Engagement of the Fc region of mAbs often leads to recruitment of “accessory cells” such as NK and DC cells and/or initiation of the complement cascade, while the direct recruitment of CD8+ T-cells by BiTEs is thought to promote more powerful and direct tumor killing via the forced formation of an immunologic synapse.  In this way, this BiTE modality may be ideally suited for solid tumors as the BiTE molecule can penetrate tumors and engage the tumor infiltrating lymphocytes and activate them in situ via the CD3 binding.  The most common format for BiTEs is the tandem single chain variable fragments (ScFv) though many other “flavors” are being developed:
 
 
 
 

T cell engaging bispecific antibody (T-BsAB):  from Technology to Therapeutics (2018)



CAR-T


These products are developed, typically, using a patient’s PBMCs to specifically target the T-cells against a particular tumor antigen via delivery (typically via lentiviral vector) of the antigen-specific scFv bound to an intracellular signaling domain; the CAR.  The clinical data has been compelling, and the use of autologous (patient) cells makes these products have a very low risk of immune rejection.  This modality may be uniquely suited to address hematological cancers as the tumor recognition and the T-cell engagement are coupled completely.  Unfortunately, commercial success of CAR-T has been fraught with manufacturing challenges associated (primarily) with logistics and product specification setting.  Furthermore, the strong cytokine release syndrome (CRS) and increasing rate of relapse in CAR-T-treated patients have left developers searching for innovations to drive down some (or all) of these “cons” associated with these therapies.  A recent depiction of the evolution of the CAR constructs:

 
 
 
 


Both types of therapy are clinically promising and are being heavily pursued in the clinic.  Is one technology more abundant, or more attractive to partners?


Partnering for BiTEs and CAR-Ts




BiTE



CAR-T


Products (incl. PreClinical)

587^

938

Deals

76^

71

Deal Value

Average:  $658M

Median:  $220M

Average: $220M

Median:  $22M

Drug and Deal data pulled from GlobalData December 2019

^Products and deals were queried as bispecific monoclonal antibody; results may capture more than true “BiTEs”



Interestingly, there are seemingly fewer BiTE assets in development than CAR-T, though there are a similar number of deals.  The data are not restricted to industrial assets and, therefore, products being developed as investigator-led INDs are also counted.  This has resulted in the inclusion of a significant number of academic CAR-T products, the majority of which are in China.  It is also worth noting that the median deal value for BiTEs is seemingly an order of magnitude higher than that of CAR-T.  One reason for this may be that several of the CAR-T deals involve the in-license of technologies, by CAR-T developers, which enable product development such as gene editing tools, viral vectors, antibody and/or CAR constructs etc. 

Both classes of therapies involve a collection of technologies which will need to be combined in the final product.  Therefore, an important factor in the commercial success of these newer technologies can be the manufacturing process:

  • BiTE manufacturing (tandem ScFv format) involves the transfection of producer cells with a single construct; typical mAb manufacturing

For other formats the manufacturing could be akin to that of antibody drug conjugates (ADCs) in which the antibody and linker must be manufactured separated and conjugated (to a toxin in the case of ADCs)


  • Autologous CAR-T manufacturing involves patient blood collection, cell isolation and engineering with viral vector, and infusion of engineered cells back to the patient

Construct development is required, as well as viral vector development, manufacturing, and testing before patient cells can be processed


Despite manufacturing complications, there are a handful of each type of therapy that have marketing authorization by regulatory agencies in major markets:  

Approved BiTEs and CAR-Ts




BiTE


CAR-T

Product

(Sponsor)


Blincyto®

(Amgen)

Removab®

(Neovii)

Kymriah® (Novartis)

Yescarta® (Gilead)

First Approval

2014 (FDA)

2009 (EMA)*

2017 (FDA)

2017 (FDA)

Target(s)

CD19, CD3


EpCAM, CD3

(FcR2a)**


CD19

CD19

Primary Indication(s)

ALL, DLBCL


Metastatic ascites


ALL, DLBCL

DLBCL

Price


$178,000


-

$475,000

$373,000

*Voluntarily withdrawn from US market in 2013, EU in 2017.  Approved in Canada in 2012; may be available there

**FcR2a fragment enables engagement of accessory cells (eg NK, DC) rendering the molecule trifunctional


Allogeneics


One potential game-changer for the commercial success of CAR-T would be allogeneic products in which the product is derived from healthy donor cells, banked, and used “off-the-shelf”.  Allogeneic CAR-T product could simultaneously reign-in the logistical challenges of patient-specific products and the batch-to-batch consistency (product specification setting) concerns; all while driving down costs.  The main approaches to allogeneic CAR-T are:

  • Building banks cells from the most common haplotypes and matching patients to the banked cells
  • Editing the donor cells to remove the endogenous TCR thus evading immune rejection
  • Starting with stem cells such as umbilical cord stem cells or iPSCs

Clinicians are still at odds regarding the potential clinical success of allogeneic versus autologous CAR-T due to the residual potential for rejection (risk is reduced but not eliminated) as well as the necessity for cryopreservation of the allogeneic products versus the “fresh” format of autologous cells.  One notable benefit, however, of starting with healthy donor cells is the fact that the cellular health and yields from the donor will be more robust and will likely not have been exposed to chemotherapy or radiation which is most likely going to be the case when starting with patient cells.  Nonetheless, if the clinical outcomes are good and manufacturing challenges and costs could be addressed - the commercial picture of (allogeneic) CAR-T products could rival that of BiTEs.   Would this change the expectation for commercial success of CAR-T compared to BiTE?

BiTE or CAR-T…BiTE and CAR-T?


There was a study published this past July, in which CART.BiTE cells were developed to express both a CAR specific for EGFRvIII as well as to a secrete an EGFR-specific BiTE in an attempt to recruit endogenous, un-modified T-cells to address glioblastoma.  Here we have a product employing the “best of both worlds” to address a solid tumor.  Is this the magic bullet for addressing solid tumors with CAR-T?  It is interesting to note that many companies are developing both BiTEs and CAR-Ts in an effort to spread the field on immuno-oncology technologies.  How many will attempt to combine the two?  Which is the superior therapeutic modality, BiTE or CAR-T?   

Both will surely play an important role in the treatment of hematological oncology, solid tumor, and ideally non-oncology indications, in this new decade that we’ve just begun. 
 
 
 
 
 
Trevor:  C and D Rounds of Venture Capital
 
 
 
 

In June of 2018, we looked at the changing contours of early stage venture financing and the data confirmed a notable shift towards bigger deployments of capital in earlier rounds.  We wrote:

In the chart below, we can see a clear trend in bigger Series A investments as a percentage of overall deals.  Sourcing data from Pitchbook presents a clear picture that the traditional venture capital funding path of a small Series A followed by successive rounds of bigger rounds has been supplanted by massive initial financings.  In 2013 just over 10% of Series A deals were sized over $25M.  In the first half of 2018, the number is almost half!





In conversations with investors, the (anecdotal) reasons for this are two-fold: (1) investors feel that they have better control of the start-up company’s trajectory, and (2) put simply, they capture more of the capital appreciation on successful exits.


With more companies “staying private for longer” we should expect to see growth in the later stage venture rounds, such as the Series C & D rounds.  And that’s what the data appears to show but not in the way you might first expect.  I’ll explain…



 
 
 
 


 
 
 
 

While 2016 was a down year for later stage financings, the total raises in the 5-year period from 2015-2019 generally fluctuate in a range, both in total financings and the percentage of either Series C or D to the overall totals.  While this chart doesn’t account for companies that have been acquired, gone public or otherwise liquidated, it does suggest a somewhat steady state supply of later stage fund raises.


A review of the deal briefs associated with each completed financing provides a little bit of color as to what companies “should” be doing at Series C & D financing events.  A couple takeaways:

  1.   Advancing the lead program was of paramount importance to Series C investors ,whereas obtaining regulatory approval and building the company for commercial operations mattered most to Series D investors. 

2.   Pipeline development and platform investment mattered little to Series D investors, but it was a significant use of funds for Series C investors.


 
 
 
 
But confirming that more companies are staying private for longer is the chart below, which shows a trend in larger Series C investments.  Series C rounds in 2018-2019 more than doubled the average from the previous three years.  And, based on the Use of Proceeds chart shown above we can assume that investors are backfilling the company’s pipeline with assets to diversify the company in advance of the binary risk of the lead program.
  
 
 
 
 
In summary, A rounds have grown as investors want more control.  C rounds are larger and used to build the pipeline.  D rounds are focused on approvals and getting ready for commercialization.  
 
 
 
 
 
 
 
www.Pullan Consulting.com

Pullan Consulting (www.PullanConsulting) provides advice and execution for biotech partnering and fund raising, with outreach to partners and investors, help with shaping of presentations, evaluations and market analysis, preliminary valuations and deal models, and negotiations from deal prep to term sheets to final agreements. 
 
 
 
 
We have extensive scientific and financial experience, with many deals signed. 

Send us an email or set up a call if you want to explore how Pullan Consulting might be of help!
 
 
 
 

Linda Pullan                     Linda@pullanconsulting.com 
Trevor Thompson             Trevor @pullanconsulting.com 
Jessica Carmen               Jessica@pullanconsulting.com 
 
 
 
 
 
 
9360 W. Flamingo Road, Suite 110-554 Las Vegas, NV 89147
 
 
Footer-logo