BOSTON – Since the BIO International Convention was last held in Boston in 2007, the number of publicly traded biotech companies has declined by 35 percent, from 394 to 255, David Thomas, BIO's director of industry research and analysis, told conference attendees Wednesday morning.

Although some of those companies failed to survive the Great Recession, many were acquired over the past five years. The lingering question is: What happened to those assets after the deals were done?

Can big pharmas and smaller biotechs successfully maintain their innovation engines once they're sharing the sandbox?

In short, that depends, according to four biotech execs who reflected on their experiences following an acquisition. Although small, nimble biotechs may chafe under the structure of a large, multinational pharma, access to capital can accelerate development for organizations accustomed to operating in survival mode.

Peter Greenleaf, president of MedImmune Inc., of Gaithersburg, Md., said that biotech was facing operational constraints when AstraZeneca plc, of London, acquired the company in 2007 for $15.6 billion. (See BioWorld Today, April 24, 2007.)

"We were lucky to maximize shareholder value, and also to find a partner who needed the capability we had," Greenleaf said, noting that AstraZeneca had been focused almost entirely on small molecules.

"We're living our business plan at a much larger level," he added, noting Astra Zeneca is hands-off on to day-to-day operations. In fact, MedImmune's assets represent nearly half of the parent company's R&D budget, according to Greenleaf, who said MedImmune has become "the future for the company."

Although Greenleaf didn't comment on turmoil within AstraZeneca, former CEO David Brennan resigned under fire earlier this spring after shareholders grew restless with the plodding pace of new product development, including failure to capitalize fully on the MedImmune purchase and to build value through additional acquisitions. (See BioWorld Today, April 27, 2012.)

Paul Stoffels, worldwide chairman of the Janssen Pharmaceuticals unit of Johnson & Johnson, of New Brunswick, N.J., has witnessed several iterations of biotech mergers and acquisitions. Stoffels was managing director of Virco Group NV, based in Mechelen, Belgium, when the company merged in 2001 with Tibotec Group NV, also of Mechelen. The following year, J&J scooped up the surviving organization, Tibotec-Virco NV, which specialized in therapies for HIV/AIDS, infectious diseases and oncology. (See BioWorld International, Jan. 24, 2001.)

Virco was a small biotech built from the ground up, with two Phase II HIV assets "that needed significant investment to go forward," Stoffels recalled. Partnering options were poor at the time, so the merger with Tibotec offered a potential route forward for its HIV compounds.

But it was the J&J acquisition that put the drug development engine into high gear, Stoffels added. For example, Virco had struggled with the technology to reduce the dosing formula for its HIV protease inhibitor, then in Phase II. Within three years, the formulation was reduced from 18 pills a day to three.

"We never could have solved that problem on our own," Stoffels admitted, noting that J&J's deep pockets and global infrastructure also facilitated worldwide regulatory filings and enhanced patient access to clinical trials.

Integration was so seamless, in fact, that four compounds from the original deal have moved to market, with a fifth in registration.

"We have the potential to commercialize six of the seven drugs we brought to the organization," Stoffels said.

Those assets include rilpivirine (Edurant), licensed to Gilead Sciences Inc. and a component of the HIV drug Complera. (See BioWorld Today, Aug. 12, 2011.)

David Meeker, president and CEO of Genzyme Corp., of Cambridge, Mass., said last year's acquisition by Sanofi SA, of Paris, added capital but shelved some R&D efforts to focus on moving late-stage products to commercialization. He acknowledged the move was warranted, however, after Genzyme struggled to find direction for several years prior to the $20. 1 billion Sanofi deal. (See BioWorld Today, Feb. 17, 2011.)

Some of those assets are coming "off the shelf" now, and the companies are integrating their cultures, but it's not a process that occurs overnight, Meeker said.

Deborah Dunsire, president and CEO of Cambridge, Mass.-based Millennium Pharmaceuticals Inc., a unit of Takeda Pharmaceutical Co. Ltd., of Osaka, Japan, said a go-slow approach to integration isn't necessarily a downside. Japanese culture places tremendous emphasis on listening and respect, she observed, while Millennium's culture embraced innovation. Combining those traditions means "we don't agree on everything, but there's always an opportunity to have a discussion," she said, adding that biotech/pharma mergers require "patience, dialogue and investigation."

The culture of each company prior to a merger has a huge impact on a biotech's assimilation into the combined entity, panelists agreed.

Greenleaf said the MedImmune and AstraZeneca cultures were "aligned pretty well," with similar governing styles. Too, MedImmune's scientists and development capabilities were as highly valued as the compounds in its pipeline.

Pharmas are improving their integration of biotechs into their corporate cultures, Stoffels maintained. Overall, J&J's acquisitions have improved the big pharma's scientific capabilities and reach, he said.

"There are enormous opportunities for people to move fluidly across J&J," he said. "That's important for a big organization because that's your lifeblood for the future. If you remain static, you'll fail. A culture of constant change, renewal and adaptation is what makes companies successful."

This year's BIO participants may need to take the advice to heart. Partnering discussions at BIO 2012 increased by 100 percent over 2007 levels, with more than 25,000 meetings over four days, according to BIO's Thomas. Of the 2,900 companies participating in those meetings, 973 were pharmas or biotechs with active drug R&D programs, Thomas said, including 196 seeking to in-license compounds and 776 seeking to out-license candidates.