Successfully developing drugs is the ultimate goal of pharmaceutical companies, but the downside is that the pipeline requires constant replenishing. The early stage drought was made worse by the merger of large pharmaceutical companies; as the pipelines came together, the later-stage compound usually got priority when there was redundancy.

Rather than restock the pipeline with only late-stage compounds, which can get expensive, large pharmaceutical companies have adopted different strategies to restock their pipelines with early stage molecules.

In a session at the third annual Global Life Science Partnering Conference put on by Southern California life sciences industry organization BIOCOM, representatives from various pharmaceutical companies shared the variety of external programs that companies have enacted to identify innovative therapies.

Academic Partnership

Pfizer Inc established Centers for Therapeutic Innovation (CTI) in academic institutions, typically medical schools although Sanford-Burnham Medical Research Institute is one of the sites. The New York-based company has more than 20 programs across the network of labs that are located in San Diego, San Francisco, Boston and New York.

The institutions sign master umbrella agreements that lay out the terms for collaboration between Pfizer and principal investigators (PIs) at the institutions. "We can collaborate with anyone at that university or institution instantaneously without having to talk about things like IP, money and things like that," Rick Lindberg, executive director and site head for Pfizer's California-based CTI, told the audience.

While Pfizer scientists and academics have the same training, there's a big difference between drug development and doing experiments to get grant funding. "Because the cultural difference between the way academics think and the way big pharma thinks is so different, we sit down – before we agree to collaborate with them – and write a drug development plan," Lindberg said. "We teach them about things like 'critical path' as opposed to interesting experiments."

Lindberg explained there's a focus on doing "go, no go experiments" to kill projects that won't be successful. In academia, those experiments are often avoided because they can affect funding.

The PI doesn't receive a lot of money up front, just enough to fund a couple of post docs in the lab. "They can usually write grants to get more money than we give them," Lindberg said. "Not everybody is for CTI, but the people who have the incentive are the type of people who are interested in testing their favorite target or pathway in humans."

The academic PI provides basic knowledge of the pathway and target and in vivo pharmacology. CTI provides protein technology – antibodies, protein-protein fusion technology and the like – pharmacokineticist, toxicologist, and eventually a regulatory experts.

"The academic PI sits on the drug development team, so instead of hiring a key opinion leader to come in once a year and tell us whether we're doing a good job, we usually have the expert in that pathway, in that biology, in that target, someone who's worked on it for decades, actually sitting on our drug development team," Lindberg said. "We tried to set it up in a way that we do the best that we do and the academic contributes what they do best."

The goal of CTI is to get the compound through Phase I development at which time Pfizer has the right to opt in and take it away for conducting Phase II trials and beyond. In addition to obtaining pharmacokinetic and safety data, CTI tries to get readout of efficacy, often with biomarkers. "We try to start programs where we can get good information in Phase I so Pfizer can make a decision at that point," Lindberg said.

CTI is only a year and a half old, so it isn't clear yet how successful the partnerships with academia will be. "It's an experiment, and it's still in its early stages as to whether this is going to be productive and actually contribute products to Pfizer's pipeline," Lindberg added.

Build Your Own Institution

Merck & Co. Inc., of Whitehouse Station, N.J., is seeking to in-license innovative technology from the California Institute for Biomedical Research (Calibr), that it founded.

While technically an independent non-profit, Calibr was initially funded by Merck with $90 million invested over seven years. When PIs apply for funding from Calibr, they sign an agreement that will allow Merck to license compounds that emerge at a predefined range of prices. The money split is 50/50 with the entrepreneur and the institute.

"It's not a huge amount of money," Jim Schaeffer, executive director of licensing and external research at Merck, told the audience. But Calibr only takes the molecules through animal proof of concept, so the development costs are relatively inexpensive.

Merck and Calibr also have an agreement with the Howard Hughes Medical Institute in which the institute picks up the tab for developing drugs. Currently 25 percent of funding at Calibr is from outside of Merck, but that's expected to grow to more than half by 2015.

Incubating Innovation

Johnson & Johnson, of New Brunswick, N.J., has focused on bringing in innovation through funding, support, licensing and acquisitions of early stage companies. The health care giant has set up innovation centers in Menlo Park, Boston and London, with plans to open a center later this year in Shanghai.

The innovation center in Menlo Park has 20 to 25 people consisting of a mixture of business development professionals, experts in therapeutic areas, and core functions such as finance, legal and project management.

"The intention is to be a nimble organization that allows us to be able to think about and scout early stage opportunities – so anything that's before clinical proof of concept – but think about trying to do deals in different ways," said Adam Keeney, VP and head of transactions of Johnson & Johnson's west coast innovation centers.

The innovation center works with J&J's corporate venture group, allowing the center to set up partnerships with equity stakes. "The intention of these innovation centers is to become more imbedded in the ecosystems of where we see the most innovation occurring," Keeney said.

J&J also has a no-strings-attached incubator within its San Diego Janssen Labs facility to house biotech startups. (See BioWorld Today, October 18, 2011.)

"It's an experiment to begin with, but has really demonstrated the power of relationship building," Keeney said.

Last month, Janssen Biotech Inc. announced its first deal with an incubator company, Araxes Pharma LLC, to develop first-in-class cancer therapeutics. Arazes will advance its program through Phase I at which point Janssen will take over development.

Eli Lilly and Co., of Indianapolis, is similarly focused on building its pipeline from start-ups. The company funded three independent venture capital funds with cash and molecules with the agreement that Eli Lilly could reacquire the assets after they were developed further. The idea is to "de-risk projects early" according to Tom Bumol, site head at Lilly's Applied Molecular Evolution. (See BioWorld Insight, September 20, 2010.)

Too Early?

Innovation doesn't make business sense if the capital risked to develop the product exceeds the risk-adjusted reward.

For Pfizer's CTI "too early is if the target is not validated or if it asks for a technology that doesn't exist in our repertoire already," Lindberg said. "We try to stick with what we do best."

J&J has a history of doing deals that are platform based, but Keeney stressed that the "platform has to drive the therapeutic." J&J shies away from "double risk," testing pharmacology and a new approach at the same time. It's much safer with a new platform, RNAi or nanoparticles for instance, to go after well understood targets and let the platform deliver the differentiation.