Biotech boards bur­dened: Bridg­ing the suc­cess gap

Based on our nu­mer­ous con­ver­sa­tions with board mem­bers and CEOs, we sur­mise that biotech boards are fac­ing busy meet­ing agen­das with a mul­ti­tude of top­ics rang­ing from gov­er­nance, fi­nan­cial au­dits, and bud­get re­views to com­pen­sa­tion and board nom­i­na­tion work. While it is the job of the CEO to out­line strat­e­gy and plans for the busi­ness, the board is tasked with pres­sure test­ing those pro­pos­als to en­sure that they are sound. Of­ten boards do not have am­ple time to re­view ma­te­ri­als in ad­vance, there is in­ad­e­quate time for dis­cus­sion or prop­er de­bate dur­ing the meet­ing, and mem­bers lend their sup­port with­out hav­ing all the in­for­ma­tion in re­al time to as­sess un­der­ly­ing as­sump­tions.

Fill­ing The Suc­cess Gap

As biotech boards are faced with chal­lenges giv­en tech­ni­cal com­plex­i­ties and bi­na­ry out­comes, over­com­ing the Suc­cess Gap re­quires ex­per­tise, trans­paren­cy and de­bate, which are not eas­i­ly ac­com­plished.

The Suc­cess Gap is the chasm be­tween the lev­el of in­for­ma­tion, da­ta, an­a­lyt­ics and as­sess­ment that is pre­sent­ed to the board rel­a­tive to the kind of analy­sis and depth of un­der­stand­ing that must be pro­vid­ed to the board when it is mak­ing de­ci­sions. This is the gap be­tween well thought-out de­ci­sions and those that are made un­der time pres­sures or with im­per­fect in­for­ma­tion. In our con­ver­sa­tions and based on our re­search on the top­ic, it is ev­i­dent that many board mem­bers feel that they are not suf­fi­cient­ly knowl­edge­able about key dri­vers and are not able to get in­de­pen­dent in­for­ma­tion about the com­pa­ny. In many ways, the board is large­ly ed­u­cat­ed on the busi­ness by the CEO and is re­liant on the ac­cu­ra­cy, in­sights and ob­jec­tiv­i­ty of the pro­pos­als that are pre­sent­ed.

Time To Take “SOCK” Se­ri­ous­ly? Be­cause Strate­gic Op­er­a­tional Items Can Be The Dif­fer­ence Be­tween Suc­cess And Fail­ure

We ar­gue that hav­ing am­ple over­sight on strat­e­gy may be the most like­ly de­ter­mi­nant of fu­ture suc­cess or lack there­of. We ad­vo­cate that a new Strate­gic Oper­a­tions Coor­di­na­tion TasKforce (fond­ly named “SOCK” as a friend­ly form of SOX) should be re­quired for each board. This will be a sub­set of the board that will ex­am­ine in de­tail the mer­its of cer­tain projects, strate­gic ini­tia­tives, po­ten­tial deals or crit­i­cal op­er­a­tional con­sid­er­a­tions such as ma­jor clin­i­cal/sci­en­tif­ic de­ci­sions. This group will not han­dle these items in lieu of the board but would rather en­sure that the board is well pre­pared to dis­cuss these is­sues when they come up for a broad­er dis­cus­sion. In essence, the role of SOCK is to vet these in­puts ahead of time to bridge the Suc­cess Gap.

Un­ques­tion­ably this idea will be con­tro­ver­sial. But boards are al­ready hir­ing ex­ter­nal ex­perts to help with au­dit and com­pen­sa­tion among oth­er items, and we ad­vo­cate that the SOCK task­force should al­so be able to hire ex­ter­nal ex­perts to help en­sure that there is care­ful over­sight of de­ci­sions that can trans­late in­to suc­cess or fail­ure of the com­pa­ny.

Ques­tions For In­vestors And Boards To Keep In Mind To Over­come Mis­con­cep­tions

In­vestors in the biotech sec­tor do not al­ways have ac­cess to boards and many board mem­bers are not nec­es­sar­i­ly ex­pe­ri­enced with how in­vestors at­tribute val­ue to com­pa­nies in the pub­lic mar­ket. Not sur­pris­ing­ly, this can lead to some mis­con­cep­tions and con­fu­sion. There are sev­er­al ques­tions that may jump-start a con­ver­sa­tion to build un­der­stand­ing be­tween the two sides. In­vestors should con­sid­er how the board is struc­tured, its lev­el of in­de­pen­dence, and its lev­el of op­er­a­tional biotech ex­per­tise.

We pro­pose that board mem­bers keep a keen eye on how in­vestors eval­u­ate their com­pa­nies, what the val­ue propo­si­tion is rel­a­tive to com­pet­i­tive tech­nolo­gies or drugs and get a clear sense of the dri­vers of the val­ue cre­ation rel­a­tive to what in­vestors are look­ing for. In cas­es where there is a wide gap be­tween the in­ter­nal and ex­ter­nal view, get­ting a deep un­der­stand­ing of why there is ex­ter­nal skep­ti­cism may help the board and man­age­ment fill in those gaps. In cas­es where it is not pos­si­ble to fill the gaps, the board may want to con­sid­er what is miss­ing from the in­ter­nal view and whether key in­ter­nal as­sump­tions have been vet­ted ad­e­quate­ly.

BiTE® Plat­form and the Evo­lu­tion To­ward Off-The-Shelf Im­muno-On­col­o­gy Ap­proach­es

Despite rapid advances in the field of immuno-oncology that have transformed the cancer treatment landscape, many cancer patients are still left behind.1,2 Not every person has access to innovative therapies designed specifically to treat his or her disease. Many currently available immuno-oncology-based approaches and chemotherapies have brought long-term benefits to some patients — but many patients still need other therapeutic options.3

Pfiz­er’s Doug Gior­dano has $500M — and some ad­vice — to of­fer a cer­tain breed of 'break­through' biotech

So let’s say you’re running a cutting-edge, clinical-stage biotech, probably public, but not necessarily so, which could see some big advantages teaming up with some marquee researchers, picking up say $50 million to $75 million dollars in a non-threatening minority equity investment that could take you to the next level.

Doug Giordano might have some thoughts on how that could work out.

The SVP of business development at the pharma giant has helped forge a new fund called the Pfizer Breakthrough Growth Initiative. And he has $500 million of Pfizer’s money to put behind 7 to 10 — or so — biotech stocks that fit that general description.

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Gilead re­leas­es an­oth­er round of murky remde­sivir re­sults

A month after the NIH declared the first trial on remdesivir in Covid-19 a success, Gilead is out with new results on their antiviral. But although the study met one of its primary endpoints, the data are likely to only add to a growing debate over how effective the drug actually is.

In a Phase III trial, patients given a 5-day dose of remdesivir were 65% more likely to show “clinical improvement” compared to an arm given standard-of-care. The trial, though, gave little indication for whether the drug had an impact on key endpoints such as survival or time-to-recovery. And in a surprising twist, a 10-day dosing arm of remdesivir didn’t lead to a statistically significant improvement over standard of care.

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Fangliang Zhang (Imaginechina via AP Images)

The big mon­ey: Poised to make drug R&D his­to­ry, a Chi­na biotech un­veils uni­corn rac­ing am­bi­tions in a bid to raise $350M-plus on Nas­daq

Almost exactly three years after Shanghai-based Legend came out of nowhere to steal the show at ASCO with jaw-dropping data on their BCMA-targeted CAR-T for multiple myeloma, the little player with Big Pharma connections is taking a giant step toward making it big on Wall Street. And this time they want to seal the deal on a global rep after staking out a unicorn valuation in what’s turned out to be a bull market for biotech IPOs — in the middle of a pandemic.

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Why Mer­ck wait­ed, and what they now bring to the Covid-19 fight

Nicholas Kartsonis had been running clinical infectious disease research at Merck for almost 2 years when, in mid-January, he got a new assignment: searching the pharma giant’s vast libraries for something that could treat the novel coronavirus.

The outbreak was barely two weeks old when Kartsonis and a few dozen others got to work, first in small teams and then in a larger task force that sucked in more and more parts of the sprawling company as Covid-19 infected more and more of the globe. By late February, the group began formally searching for vaccine and antiviral candidates to license. Still, while other companies jumped out to announce their programs and, eventually and sometimes controversially, early glimpses at human data, Merck remained silent. They made only a brief announcement about a data collection partnership in April and mentioned vaguely a vaccine and antiviral search in their April 28 earnings call.

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Mark Genovese (Stanford via Twitter)

Gilead woos fil­go­tinib clin­i­cal in­ves­ti­ga­tor from Stan­ford to lead the charge on NASH, in­flam­ma­to­ry dis­eases

With an FDA OK for the use of filgotinib in rheumatoid arthritis expected to drop any day now, Gilead has recruited a new leader from academia to lead its foray into inflammatory diseases.

Mark Genovese — a longtime Stanford professor and most recently the clinical chief in the division of immunology and rheumatology — was the principal investigator in FINCH 2, one of three studies that supported Gilead’s NDA filing. In his new role as SVP, inflammation, he will oversee the clinical development of the entire portfolio.

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Stephen Isaacs, Aduro president and CEO (Aduro)

Once a high fly­er, a stag­ger­ing Aduro is auc­tion­ing off most of the pipeline as CEO Stephen Isaacs hands off the shell to new own­ers

After a drumbeat of failure, setbacks and reorganizations over the last few years, Aduro CEO Stephen Isaacs is handing over his largely gutted-out shell of a public company to another biotech company and putting up some questionable assets in a going-out-of-business sale.

Isaacs —who forged a string of high-profile Big Pharma deals along the way — has wrapped a 13-year run at the biotech with one program for kidney disease going to the new owners at Chinook Therapeutics. A host of once-heralded assets like their STING agonist program partnered with Novartis (which dumped their work on ADU-S100 after looking over weak clinical results), the Lilly-allied cGAS-STING inhibitor program and the anti-CD27 program out-licensed to Merck will all be posted for auction under a strategic review process.

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Hill­house re­casts spot­light on Chi­na's biotech scene with $160M round for Shang­hai-based an­ti­body mak­er

Almost two years after first buying into Genor Biopharma’s pipeline of cancer and autoimmune therapies, Hillhouse Capital has led a $160 million cash injection to push the late-stage assets over the finish line while continuing to fund both internal R&D and dealmaking.

The Series B has landed right around the time Genor would have listed on the Hong Kong stock exchange, according to plans reported by Bloomberg late last year. Insiders had said that the company was looking to raise about $200 million.

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No­var­tis chips in $10M for IPO-bound part­ner Pli­ant; Tenax shares soar on heart drug da­ta

Novartis is coming in with $10 million to help support the looming IPO of a partner. Pliant Therapeutics posted a new filing with the SEC showing that Novartis is buying the shares at $15, the mid-point of the range. It’s adding several million shares to the offering, bringing the total to around $135 million. Biotech companies have been enjoying quite a run on virtual Wall Street, with investors boosting new offerings to some big hauls.