US goverment helps fund small biotechnology companies

On May 21 2010 the US government announced a new programme to provide $1 billion in tax credits and grants to small life-sciences companies to aid the development of new therapies. The programme is part of the healthcare reform legislation, and provides incentives equal to 50 percent of the firms’ investments in 2009 and 2010 for “qualified therapeutic discovery projects” developed by biotechnology, medical device and diagnostic companies with less than 250 employees.

The funds are aimed at projects seeking FDA approval, and range from those developing molecular diagnostics to those advancing the delivery or administration of drugs. Crucially the funds are to be targeted to companies who have the potential to develop cost-saving therapies, generate or sustain high-paying jobs, and increase US competitiveness.

Alliances with Chinese biopharma companies few and far between

Despite the noise surrounding the prospects for Chinese biotechnology, research alliances between large life science companies outside China/Taiwan and research driven companies inside China seem to be virtually non-existent. A search for disclosed external collaborations involving the hundreds of Chinese companies involved in life science-related research and development uncovers just a handful of collaborations over the last decade including:

• A collaboration and licensing agreement between Changchun Huapu Biotechnology Co Ltd and SBI Biotech Co Ltd (Japan).
• China Biopharmaceuticals Holdings Inc which was acquired by Neostem Inc.
• Shanghai Genomics a subsidiary of Japanese bio-pharmaceutical company GNI Ltd, has a collaboration with Centocor.
• Shenzhen Neptunus has an external collaboration with GSK.
• Sinopharm has a joint venture with Fresenius Kabi, Germany, Sino-Swed Pharmaceutical Corp. Ltd and a collaboration with Otsuka Pharmaceutical (Japan).

It seems that a combination of weak intellectual property control and the lack, so far, of compelling new development candidates coming out of Chinese laboratories has persuaded major pharmaceutical companies, for the time being, to play a waiting and watching game.

China invests in biotechnology and technology

Reuters is reporting that China will spend $9.2 billion this year and the next on new technology as part of its efforts to stimulate economic growth. Among the sectors to be given support will be biotechnology and broadband wireless technology. The Chinese cabinet also approved a number of policies aimed at boosting China’s biotechnology sector, with the government intent on creating big firms that could compete internationally, as well as encourage the development of small firms in the sector.

Takeda and Eli Lilly led biotechnology acquisitions in 2008

According to a recent report by Ernst and Young Takeda topped the 2008 for the largest sums paid for biotechnology acquisitions, having paid $8.8 billion for Millennium Pharmaceuticals of Cambridge, Massachusetts. Through the deal Takeda gained access to the blood-cancer medicine Velcade. The second largest deal of 2008 was made by Life Technologies Corporation (formerly Invitrogen Corporation), having paid $6.7 billion to acquire Applied Biosystems Group. The third largest deal was made by Eli Lilly which paid $6.5 billion to acquire ImClone Systems Inc. This gave Lilly the rights to Imclone’s cancer drug Erbitux and several experimental tumor treatments. Overall the biotechnology acquisitions in 2008 totaled $28.5 billion in the US and $5 billion in Europe in 2008.

Ernst and Young reported a 46% decline from 2007 in the amount of capital raised by U.S. and European biotechnology companies, which totaled $16 billion. Money from initial public offerings also plunged 95% from$2.3 billion in 2007 to $116 million in 2008. After a record high in 2007 the decline in Biotech venture financing dropped only 19% to $6 billion in 2008.

Bristol-Myers Squibb looking to acquire small biotechnology companies

Possessing $9 billion in cash and marketable securities, Bristol-Myers Squibb, in a bid to remain independent, is looking to acquire small private biotechnology companies or those worth $1 billion following initial public stock offerings. In addition to acquisitions Bristol-Myers Squibb is hoping to form drug-development partnerships with its rivals. This year the company had already entered into a number of collaborations: one with ZymoGenetics to develop a novel type 3 interferon for the treatment of Hepatitis C and another with Nissan Chemical Industries and Teijin Pharma to commercialize atrial fibrillation treatment NTC-80 Last month it also extended an agreement with Otsuka Pharmaceutical to develop Abilify, a drug for the treatment of depression.

Sanofi sets up biotechnology incubator

Reuters is reporting that Sanofi-Aventis has announced a 200 million euro plan to convert a French factory to biotechnology and partnerships. The group’s Vitry-sur-Seine factory near Paris will be dedicated to researching, developing and producing biotechnology products and its facilities will be available to be used in partnerships with smaller biotechnology companies.

Pressure to speed up approval of generic biologic drugs

On April 1st 2009 the Promoting Innovation and Access to Life-Saving Medicine Act (S. 726) was introduced to the US Senate and Congress. Aiming to save federal programs like Medicare and Medicaid at least $10 billion dollars, part of the bill is directed towards reducing the five-year window of exclusivity that brand name biologics currently have. If passed the bill would allow generic drug manufacturers faster approval for biosimilar drugs. This could significantly cut the high cost of biologic drugs and pave the way for greater access to patients.

While senators sponsoring the bill stress their desire to strike the right balance between competition and rewarding innovation, critics within the biotechnology industry fear the bill does not pay enough attention to patients safety and could undermine future innovation.

Partnering now accounts for 2/3 of biotechnology funding

Figures released by Burrill & Company highlight the growing importance of alliances to the fortunes of biotechnology companies and to survival of the sector in general. According to Burrill, financing and partnering deals collectively brought in $30 billion for small- to medium-sized US biotechnology companies in 2008, with $10 billion in financing and $20 billion in partnering.  Although funds raised through partnering only slightly declined from $22.4 billion in 2007 to $20 billion in 2008, private and public financing for US biotechnology companies declined by more than 50% from $22 billion in 2007 to $10 billion in 2008. To put it another way, partnering income has risen from 50% of external funding in 2007 to 66% in 2008. Full report in PharmTech.

Taiwanese set sights on biotechnology

The Taiwanese government has vowed to turn biotechnology into the country’s third “trillion-dollar industry” in 10 years, joining the semiconductor and flat-panel industries, which each generate more than NT$1 trillion (US$29.5 billion) a year in revenue according to a report in the Taipei Times. Under the plan, the government will initiate a fund-raising campaign to establish a NT$60 billion venture capital fund that would focus on biotechnology. The government’s National Development Fund will take a 40% stake and the remaining 60% will be controlled by the private sector.

WSJ finds out how to get money out of stone

The WSJ has rode to the rescue of the biotechnology industry with an article called How to Attract Money to Fund Biotech Projects. You can imagine our reaction when we heard that the WSJ has found the solution to the industry’s current funding problems. Unfortunately the article turned out to be a puff piece for biotechnology orientated masters degree courses and the like at the University of Pune in India and other regional and second tier universities around the world. And that helps biotechnology companies to fund their projects how?