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Would Pfizer-AstraZeneca mean more ‘Parked-AssetZ’?

As the two Goliaths lick their wounds over the failed takeover, it’s perhaps time to ask how the Davids of drugs innovation see the future

Little and largeAs the two Goliaths lick their wounds over the failed takeover, it’s perhaps time to ask how the Davids of drugs innovation see the future. Tim Guilliams, founder and CEO of Accelerate Cambridge startup Healx3, explores the potential of ‘small pharma’.

Pfizer has pulled out of its fight to take over AstraZeneca, after receiving a rejection of its ‘final’ £69bn bid. But the fight may not be over, as BlackRock, the world’s largest asset management group, whilst backing AstraZeneca’s decision, urged the board to reopen negotiations to create the world’s largest pharmaceutical company, potentially in as soon as three months.

Had the takeover been successful, what might it mean locally? Back in 2000, Pfizer merged with Warner-Lambert Pharmaceuticals, the largest merger in the sector to date. This merger notoriously resulted in a number of divisions and drug development programmes being closed down. In some cases this led to new spinout companies (a local example being Cambridge Biotechnology Limited), but there was a waste of many assets with therapeutic value.

For the Cambridge Biomedical Cluster, the Pfizer takeover of AstraZeneca would likely have a serious impact, probably slowing AstraZeneca’s grand strategic plan to move its headquarters and around 2000 employees to Cambridge by 2016. With the Pfizer take-over seemingly off the cards for now, there is a good chance that the Cambridge relocation can now go full steam ahead. Having AstraZeneca’s HQ and scientific research powerhouse in Cambridge would foster collaboration between local biotech companies, research institutes and academic groups and contribute to Cambridge’s innovation ecosystem, both improving health and increasing wealth.

But what typically happens after a mega-merger? Given both companies would have competing assets in development, some would have to be dropped on the grounds of ‘efficiency savings’ after a review of both R&D portfolios. The greater the overlap of portfolios, the more R&D teams would need to be dismantled and their work parked, possibly permanently. Generally, post merger, companies don’t devote enough effort to either out-licensing these assets, or repositioning them for new purposes (as Pfizer famously did during the development of Viagra). Generally the focus is on the internal projects with higher strategic priority, and not what could be done through greater engagement with the wider community. Whilst this makes sense from a company perspective, the wider life sciences community, and patients, are not necessarily best served by this approach. Just because an asset doesn’t have blockbuster potential, that doesn’t mean, in the right hands, it couldn’t have niche-buster potential, which is especially relevant for rare diseases.

The lack of transparency during and following an M&A and the lack of focus and priority regarding parked assets inhibits the creation of novel drug development opportunities, slowing down therapeutic breakthrough and innovation.

As big pharma falters, what can small pharma bring to the table? Two-thirds of known diseases are still uncured and affect around 45 per cent of the UK population. This enormous therapeutic unmet need is partially due to the high failure rate of therapies in development. Moreover, the lack of transparency around shelved biopharmaceutical assets and the lack of resources allocated to subsequently maximise their therapeutic value strongly hinders innovation in this sector. This results in the accumulation of assets with therapeutic potential on company benches, which don’t cure patients or generate revenue

Healx3 aims to provide support to companies seeking to maximize the value of their therapeutic assets, with a focus on finding new life for parked assets. By doing so, Healx3 addresses a significant market inefficiency and therapeutic unmet need, providing an integrated, systematic approach to the management, evaluation and transfer of parked assets, enabling companies to generate new revenue streams. Healx3 can act as a broker between multiple stakeholders involved in the drug development process. The company is also developing a software-based technology platform coupled with an online marketplace to facilitate the exchange, promotion and evaluation of parked assets.

So, big takeovers are not the only show in town. There is frequent smaller scale M&A, for example with GSK and Novartis announcing the swapping of vaccine and oncology assets just before the Pfizer-AstraZeneca story broke. And there is the huge potential to make more out of parked assets, a potential that Healx3 is addressing.

About Tim Guilliams

Tim Guilliams is interested in startups, technology transfer and knowledge exchange. As Founder and CEO of Healx3, he is excited about the challenge of helping deliver the next generation of therapeutics to patients in need. He obtained his PhD in the field of Biophysical Neuroscience at the University of Cambridge in 2013, where his research related to the development of camelid antibody fragments (Nanobodies) as potential therapeutic and biophysical tool for Parkinson’s disease.