The Zer­houni rule: “Every com­pa­ny that ac­quires a plat­form com­pa­ny kills it.”

Why Medi­va­tion makes the per­fect biotech takeover tar­get for Sanofi


John Car­roll, Ed­i­tor

Last Jan­u­ary at the J.P. Mor­gan con­fab, I had a chance to sit down with Sanofi R&D chief Dr. Elias Zer­houni. He made it clear up front he’s been fol­low­ing my writ­ing for some years. He even seemed to have en­joyed some of it — ex­cept for the parts in which I rou­tine­ly point­ed to Sanofi’s lack of in­ter­nal in­no­va­tion and a heavy re­liance on its de­vel­op­ment part­ners (es­pe­cial­ly Re­gen­eron) to ad­vance ma­jor new drugs.

(Feb 7, 2007: Pres­i­dent George W. Bush and NIH Di­rec­tor Dr. Elias Zer­houni en­joy an ex­change. Cour­tesy NIH)

The for­mer head of the NIH took ex­cep­tion to what he sees as a reg­u­lar theme of mine: that Sanofi “just buys” in­no­va­tion at part­ner com­pa­nies. And that set the stage for a con­ver­sa­tion on his track record at the French phar­ma gi­ant since ex-CEO Chris Viehbach­er re­cruit­ed him in 2009, set­ting him on a mis­sion to cre­ate the kind of R&D struc­ture at a glob­al op­er­a­tion that can be man­aged ef­fi­cient­ly and gen­er­ate im­por­tant new ther­a­pies.

There wasn’t a hint in that ex­change that Sanofi had its eyes on Medi­va­tion, a com­pa­ny that had played a break­through role in treat­ing prostate can­cer and fol­lowed that up with a ma­jor league PARP in­hibitor deal as it jock­eyed for po­si­tion against some big ri­vals. But look­ing back, you can see all the in­tel­lec­tu­al build­ing blocks that de­fine what makes Medi­va­tion — or a sim­i­lar biotech — the per­fect takeover tar­get for the French phar­ma gi­ant and its new CEO, Olivi­er Brandi­court.

Zer­houni, who had re­cent­ly dropped an op­tion to buy Warp Dri­ve Bio in fa­vor of a long­time col­lab­o­ra­tion, be­lieves that any phar­ma com­pa­ny that wants to buy a plat­form biotech–build­ing a pipeline out of its own dis­cov­ery en­gine–is on a fool’s mis­sion.

“Every com­pa­ny that ac­quires a plat­form com­pa­ny kills it,” he told me blunt­ly. So a few years ago when the board at Sanofi start­ed ask­ing about buy­ing Re­gen­eron, a close part­ner which Sanofi al­ready owns a big stake in, he wasn’t in­ter­est­ed.

Zer­houni’s re­sponse: “That would be the stu­pid­est thing you could do.”

At that point I not­ed that Viehbach­er—who al­so told me in a re­cent in­ter­view that he didn’t be­lieve any Big Phar­ma op­er­a­tion could be tru­ly in­no­v­a­tive — had once men­tioned in an in­ter­view that if Sanofi had bought Re­gen­eron, they would prob­a­bly just screw it up.

“I told Chris that,” re­spond­ed Zer­houni em­phat­i­cal­ly.

I was re­mind­ed of that con­ver­sa­tion as I was read­ing over Medi­va­tion’s caus­tic kick­back against Sanofi’s $9.3 bil­lion buy­out of­fer. Medi­va­tion is any­thing but a plat­form com­pa­ny. It was go­ing af­ter prostate can­cer at the same time it was mak­ing a failed bet that a Russ­ian an­ti­his­t­a­mine could be the per­fect new drug for Alzheimer’s. (Wrong.) But they scored block­buster gold with Xtan­di, a drug that came out of the UCLA lab of Charles Sawyers, one of the lead­ing lights in an­dro­gen re­cep­tor drug tech now at Memo­r­i­al Sloan-Ket­ter­ing. Pick­ing up their com­ple­men­tary late-stage PARP in­hibitor, ta­la­zoparib,  last year from Bio­Marin was a pure play add-on deal.

There wasn’t any­thing in­no­v­a­tive about it. But it was smart. And Medi­va­tion CEO David Hung is a very smart deal­mak­er. One of the best.

If the PARP drug works, it will be be­cause the drug is ef­fec­tive, rel­a­tive­ly safe and the de­vel­op­ment team didn’t screw it up. Xtan­di is al­ready a known, ap­proved prod­uct. Medi­va­tion’s jab at Sanofi’s failed Bi­Par deal won’t fly. If Big Phar­ma is good at any­thing, it’s as­sem­bling deeply pro­fes­sion­al de­vel­op­ment teams and spend­ing big on con­vinc­ing Phase III da­ta. Sanofi, with its $6 bil­lion an­nu­al R&D bud­get, is every bit as good at that as any of its Big Phar­ma brethren.

It’s not in­no­v­a­tive.

If the drug doesn’t work, that will be on the Medi­va­tion team that bought it — as much as Sanofi for tak­ing a gam­ble on it. It’s as low risk as it gets in R&D.

Over­all, Zer­houni es­sen­tial­ly gives him­self a sol­id though not spec­tac­u­lar grade on new prod­uct de­vel­op­ment, to date. Start­ing with “noth­ing in the pipeline,” he’s scored 18 prod­uct launch­es, a record he de­scribes as “good, not great,” in­clud­ing some drugs that he read­i­ly of­fers weren’t all that in­no­v­a­tive to be­gin with. And he’s done it while re­struc­tur­ing R&D, cut­ting the head­count 37%, from 14,000 to about 8,000 (“I closed 22 sites”), and switch­ing a pri­ma­ry fo­cus on small mol­e­cules to one that is now 75% bi­o­log­ics, which can cut de­vel­op­ment times from 7 to 4 years.

For what it’s worth, I agreed with Zer­houni that I have rou­tine­ly not­ed Sanofi’s lack of in­ter­nal in­no­va­tion. That seems more than ob­vi­ous, though per­haps Zer­houni is right and Sanofi can one day re­form its in-house R&D im­age. But Re­gen­eron has proved re­peat­ed­ly that it has one of the best de­vel­op­ment ef­forts in the in­dus­try. And far from sug­gest­ing that Sanofi “just buys” in­no­va­tion, I’d say that af­ter watch­ing a slew of Big Phar­mas waste bil­lions of dol­lars chas­ing sci­en­tif­ic shad­ows, I give high marks to any­one that can strike the right kind of part­ner­ships and push them in the right di­rec­tion.

Sanofi has de­vot­ed con­sid­er­able ef­fort and cash to make the Re­gen­eron deal work, as it is do­ing with Al­ny­lam and a host of oth­er com­pa­nies. If you want to know how Zer­houni thinks of it in chart for­mat, here’s the schemat­ic he drew up:


In Zer­houni’s world, he sits in the mid­dle of a host of re­la­tion­ships with big and small com­pa­nies that have plen­ty of in­no­v­a­tive plat­form work go­ing on. He doesn’t want to buy and kill any of it. He does want to fos­ter it and prof­it from the work.

In Medi­va­tion, Sanofi has a per­fect mix of late-stage and com­mer­cial­ized prod­ucts. There’s no plat­form to kill. And it speaks to the phar­ma com­pa­ny’s in­tent when its ex­ec­u­tive crew say they’re de­ter­mined to com­plete the merg­er. Medi­va­tion, or a com­pa­ny just like it, fits neat­ly in­to Zer­houni’s view of the bio­phar­ma food chain.

Qual­i­ty Con­trol in Cell and Gene Ther­a­py – What’s Re­al­ly at Stake?

In early 2021, Bluebird Bio was forced to suspend clinical trials of its gene therapy for sickle cell disease after two patients in the trial developed cancer. As company scientists rushed to assess whether there was any causal link between the therapy and the cancer cases, Bluebird’s stock value plummeted – as did those of multiple other biopharma companies developing similar therapies.

While investigations concluded that the gene therapy was unlikely to have caused cancer, investors and the public may be more skittish regarding the safety of gene and cell therapies after this episode. This recent example highlights how delicate the fields of cell and gene therapy remain today, even as they show great promise.

Law pro­fes­sors call for FDA to dis­close all safe­ty and ef­fi­ca­cy da­ta for drugs

Back in early 2018 when Scott Gottlieb led the FDA, there was a moment when the agency seemed poised to release redacted complete response letters and other previously undisclosed data. But that initiative never gained steam.

Now, a growing chorus of researchers are finding that a dearth of public data on clinical trials and pharmaceuticals means industry and the FDA cannot be held accountable, two law professors from Yale and New York University write in an article published Wednesday in the California Law Review.

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Novavax CEO Stanley Erck at the White House in 2020 (Andrew Harnik, AP Images)

As fears mount over J&J and As­traZeneca, No­vavax en­ters a shaky spot­light

As concerns rise around the J&J and AstraZeneca vaccines, global attention is increasingly turning to the little, 33-year-old, productless, bankruptcy-flirting biotech that could: Novavax.

In the now 16-month race to develop and deploy Covid-19 vaccines, Novavax has at times seemed like the pandemic’s most unsuspecting frontrunner and at times like an overhyped also-ran. Although they started the pandemic with only enough cash to last 6 months, they leveraged old connections and believers into $2 billion and emerged last summer with data experts said surpassed Pfizer and Moderna. They unveiled plans to quickly scale to 2 billion doses. Then they couldn’t even make enough material to run their US trial and watched four other companies beat them to the finish line.

FDA of­fers scathing re­view of Emer­gent plan­t's san­i­tary con­di­tions, em­ploy­ee train­ing af­ter halt­ing pro­duc­tion

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Brad Bolzon (Versant)

Ver­sant pulls the wraps off of near­ly $1B in 3 new funds out to build the next fleet of biotech star­tups. And this new gen­er­a­tion is built for speed

Brad Bolzon has an apology to offer by way of introducing a set of 3 new funds that together pack a $950 million wallop in new biotech creation and growth.

“I want to apologize,” says the Versant chairman and managing partner, laughing a little in the intro, “that we don’t have anything fancy or flashy to tell you about our new fund. Same team, around the same amount of capital, same investment strategy. If it ain’t broke, don’t fix it.”

But then there’s the flip side, where everything has changed. Or at least speeded into a relative blur. Here’s Bolzon:

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Sen. Patty Murray (D-WA) (Graeme Sloan/Sipa USA/Sipa via AP Images)

Sen­a­tors to NIH: Do more to pro­tect US bio­med­ical re­search from for­eign in­flu­ence

Although Thursday’s Senate health committee hearing was focused on how foreign countries and adversaries might be trying to steal or negatively influence biomedical research in the US, the only country mentioned by the senators and expert witnesses was China.

Committee chair Patty Murray (D-WA) made clear in her opening remarks that the US cannot “let the few instances of bad actors” overshadow the hard work of the many immigrant researchers in the US, many of which have won Nobel prizes for their work. But she also said, “There is more the NIH can be doing here.”

Michel Vounatsos, Biogen CEO (Biogen via YouTube)

Damn the crit­ics, Bio­gen CEO Vounatsos or­ders full speed ahead on prep­ping a con­tro­ver­sial ad­u­canum­ab launch as FDA de­ci­sion looms

Right now one of the most interesting parlor games on Wall Street is offering odds on Biogen’s chances of getting an FDA OK on their controversial Alzheimer’s drug aducanumab.

For most objective players, it looks about like a coin toss, maybe a little worse than 50/50, as the Street balances the bull case of a full, mega blockbuster approval, a restricted approval or a disastrous order to go back to the clinic and mount a new Phase III. That last option was clearly the guidance most of the outside experts in the panel review offered the agency, as the industry is still puzzling out the question of whether or not the FDA is getting tougher in its oversight of drug development.

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Jenny Rooke (Genoa Ventures)

Ear­ly Zymer­gen in­vestor Jen­ny Rooke re­flects on 'chimeras' in biotech, what it takes to spot a $500M gem

When Jenny Rooke first heard of Zymergen back in 2014, she knew she was looking at something different and exciting. The Emeryville, CA biotech held the promise of blending biology and technology to solve a huge unmet need for cost-effective chemicals — of all things — and a stellar founding team to boot.

But back then, West Coast venture capitalists didn’t see in Zymergen the one thing they were looking for in a winning biotech: therapeutic potential. Rooke, however, saw an opportunity and made her bets. Seven years later, that bet is paying off in a big way.

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Saurabh Saha at Endpoints News' #BIO19

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