Researchers at Johns Hopkins University now have a new way to take a promising therapy to the threshold of Phase I, burnishing the value of what they have for the spinouts and biopharma groups that will take a select few therapies to the clinic.
Deerfield Management is funding the program with $65 million to start. But that money, of course, comes with strings attached.
The new in-house incubator is called Bluefield Innovations, and its primary goal is to advance Johns Hopkins research that shows strong commercial promise. The program will take the university’s research through pre-clinical development all the way to IND.
Advancing therapeutic programs in-house is an increasingly popular path for universities, because advanced assets bring in more money on tech transfer deals. We saw this happen in 2016 when Merck paid Harvard $20 million for advanced assets developed at the university’s in-house accelerator. And again when advanced research from Irv Weissman’s lab at Stanford was spun out to Forty Seven with a $75 million vote of confidence from Google’s venture arm.
Dave Gibbons, who handles commercial licensing at the biotech-heavy campus at UC San Diego, tells me it’s unusual for universities to get such big checks on tech transfer deals. Universities practically give their tech away because the research is so immature.
“Our deal terms are about two orders of magnitude less than what companies do with each other,” Gibbons said. “But that reflects the very early stage of the work. There’s normally a lack of clinical data beyond very basic discovery.”
If, however, a university like Johns Hopkins can de-risk their programs and develop them up to IND, “you’d have a tremendously more valuable asset for licensing,” Gibbons said.
Deerfield’s Jim Flynn tells me the excess of discovery-stage research in academia makes universities like Johns Hopkins untapped gold mines.
“There’s an enormous amount of fertile discovery sitting there lying fallow at our most prominent institutions,” Flynn said.
That’s why Deerfield is chipping in the funds to back this new program at Johns Hopkins. Under a pretty broad umbrella agreement, Deerfield will have control of assets developed through the program.
“We’ll ultimately decide where it ends up,” Flynn said. “Whether that’s at the university, a spinout biotech, or perhaps in better hands with a pharmaceutical company.”
Flynn noted Johns Hopkins had set out some terms that ensure the university can “fully participate” in the transfers. When asked what exactly that means, Flynn said, “we make sure they profit adequately if a product is sold.”
In theory, the university could profit in a number of ways, from monetizing future royalties to snagging a share of a spinout’s equity.
Good or bad for biotech?
While it’s clear that more developed assets (and bigger tech transfer deals) could be good for universities like Johns Hopkins, some questions come to mind.
Gibbons and I are both based in San Diego, where small biotechs doing pre-clinical research make up the bulk of the life science economy. These smaller companies rely quite heavily on licensing tech from local academia. Gibbons tried to imagine UC San Diego partnering with an investment group to launch a program like this new one at Johns Hopkins.
“I can see a program like this diminishing the number of startups and small businesses that the university works with,” Gibbons said. “If we were to hang onto an asset, the likely buyer will be Big Pharma. Yes, you’ve got a more valuable asset, but that means you price out smaller players we traditionally work with. And what will that mean for the local economy?”
I asked Flynn what he thought of that notion.
“I hear what he’s saying, and we’re sensitive to local biotechs and the Baltimore economy,” Flynn said. “But the way I see it is that there’s too much fruit on the table. There’s more at Johns Hopkins than we can possibly handle ourselves.”
Flynn also noted it’s important to remember the patient, not just the industry.
“You want these programs to take their best course forward — the one most likely to get a drug in a patient’s hand,” Flynn said. “And sometimes that’s not small biotech.”
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