US Licensing Experts: Innovation Is Still Happening, Let’s Help It Along

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BOSTON – Early stage innovation is still strong in the United States, but parties need to work better together and address bottlenecks in the middle stages, a panel of university and private sector experts said this week. Meanwhile, the president of global biotechnology company Genzyme said the industry is not in crisis and the company is hopeful about its recent merger with Sanofi.

“Innovation from the early stages is probably as good as ever,” said Robert Langer, a professor at the Massachusetts Institute of Technology (MIT). But “bottlenecks” occur in the middle stages of the innovation process due to less available funds from governments and venture capitalists, and the increased cost of doing research. Also, the increase in company mergers in the industry is reducing opportunities, speakers said.

In order to address this, parties such as universities and the pharmaceutical sector need to learn to work better together, said Daniel Behr, senior vice president of Access BridgeGap Ventures. For instance, universities should not assume entrepreneurs are trying to take advantage of them, but rather just that they are out to make as much money from the innovation as possible.

They spoke at the 15-17 May Licensing Executives Society spring meeting in Boston, entitled, “Licensing to Solve the Innovation Gap,” with a spotlight on the life sciences. The panel was moderated by Mark Nawacki of Paladin Labs in Canada.

Jeff Elton, CEO & co-founder of the KEW Group, said he has found that successful academic labs are often connected to successful firms, forming a sort of “virtuous value chain.” But what is important, he said, is to ask, “even if I am successful, will I care?” By that he meant that an idea can be truly innovative, and be developed properly, but unless the resulting product will have the effect of removing cost from the value chain, it may not have the desired impact. That is, as another speaker put it, it is necessary to ask why the innovation is a “must-have” before assuming it will be successful.

Investors are looking more carefully at the quality of the science and patent claims in innovations, as well as how far along they are, panellists said.

Speakers offered some ideas on how to keep the innovation process open. For instance, the people themselves are important, they said. Boston and Cambridge, Massachusetts are rich in talented people, as is northern California, they said, and other areas should keep putting resources into these areas as well. The speakers agreed that New York in particular is taking off in the area of technology and investment.

A graph was displayed that showed a downward trend on replacement by large pharmaceutical companies, leading the moderator to ask, “Are we heading for train wreck?”

The speakers generally did not appear to think so, though there are concerns. For instance, larger companies may have more difficulty innovating simply because “there are more people who can say no,” said Langer. Elton said emerging economies offer a new element in the market but that they probably will not look like the United States of 5-10 years ago (when the US was at its strongest) because they are more government-centric and less market-driven.

Behr said big pharm is trying to change. They still have significant financial resources, and act as the “bank”, but they are not sure how to change to innovate, with universities playing a role.

One speaker noted that universities are increasingly bringing former industry people with experience in developing drugs on board in their technology transfer and business development offices. Changes are also being seen in openness and confidentiality, with some universities beginning to take additional steps to protect intellectual property during development such as by creating small, separated project spaces that do not have “so many PhD students walking through.”

What is needed, they concluded, is investment, top talent, and lowering barriers such as immigration restrictions. Other factors: more collaboration among the academic community, funds to support entrepreneurs and a nucleus of experienced entrepreneurs, and a culture of innovation.

The speakers also mentioned “big ideas,” like nanotechnology, saying that these require new research, big investments, and present new regulatory challenges.

And in the development of medical treatments, Elton said that these will be increasingly moving away from personalized medicine and become “system-based”, so they will involve “a lot of peoples’ IP rights.” The solution for addressing this is not yet known, he said, but could be a patent pool or other approach.

Elton said in academic institutions, 1 to 3 percent of intellectual property drives the portfolio of as many as thousands of licences. IP itself is not usually a product, but rather is an enabler, he said.

Another suggestion from speakers was that investors not expect a product on a timeline, but rather take the view that they will be in the process for a while, will get some good patents and discoveries, and will develop relationships with students and researchers.

And they said a shift may need to occur in the traditional venture capital model, as more funds are needed.

Langer summarised the panel by saying, “Dream big and never give up. If you do that, innovation will happen.”

Genzyme CEO Sees No Crisis

Also at the event, David Meeker, president and CEO of Genzyme since October 2011, opened his keynote speech by declaring that industry is going strong.

“I don’t think there’s a crisis,” Meeker said. “I’m as bullish on this industry as ever.”

He said health is an issue that will always be important, and the opportunity and need is “enormous.”

Meeker described the successes of Genzyme as it developed critical enzyzme replacement especially for rare diseases. Now under Sanofi, he said, the company will retain its identity and focus on rare diseases and multiple sclerosis, while leveraging the advantages of being part of a larger corporation.

What has been successful for the company has been its business model of pricing high, he said, so high that the company was actually ordered to testify before Congress at one point to explain itself. When it explained that it took 22,000 placentas to make one enzyme for one patient with Gaucher disease, Congress understood, he said. The company then continued to innovate to make it less costly to produce.

Meeker said the orphan drug legislation in US Congress has been a “powerful driver” of innovation, but the business model has been equally motivating, because “when people realised they can make a living out of this, they invest.”

He said that getting regulatory support for an idea can be easier when the result of the treatment can be seen more easily, for instance when the patient can be totally cured. But he said it should not be overlooked that there are equally important treatments that can save lives and stop the disease, but may not be able to repair damage that was already done.

Workshops

There were other panels and workshops during the meeting, including one on “Innovative Dealmaking that Pivots on Collaboration between Competitors.”

A central message that emerged in the workshop was that innovators and licensing experts increasingly look for ways to navigate around the intellectual property that already exists. For instance, in Pfizer’s case, it worked to develop a genetically modified mouse for lab testing that was “outside of IP,” the speaker said, something that is increasingly hard to do as even mice are being patented.

And an alliance between Merck and Roche to work on hepatitis C contains an IP agreement that allows both members the right to use the technology, a Merck representative said.

William New may be reached at wnew@ip-watch.ch.

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