Creating Consistent Value in Biotech Without Diluting Stakeholders


Xconomy National — 

One of the greatest challenges for pre-commercial biotech companies is consistently generating capital necessary for operating costs and for R&D of new products that provide value to stakeholders, both for investors and patients. At OSE Immunotherapeutics we implemented a business model that allows us to be one of the rare French biotech companies without commercial products able to generate revenue and advance multiple clinical stage assets without needing dilutive funding since our 2015 IPO.

Our business model relies on three important factors 1) strong ties with leading academic research centers, 2) an effective translational research science engine and 3) strategic partnerships that provide regular milestone payments and help advance later-stage clinical development. While the first two factors are important for creating a steady stream of novel drug candidates, strategic partnerships are integral to our ongoing business operations.

We’ve always encouraged our R&D team to keep close relationships with leading academic research facilities. While pharma mostly drives advances in clinical testing, academia is the primary source for most cutting-edge scientific advances, often being the first to identify truly differentiated potential drug targets.

Many bench scientists are willing partners with companies seeking to help with advanced development. Given their strong reliance on the need to control the immune system, our connections with leading centers in transplant surgery have been extremely fruitful in helping identify multiple novel targets for drug development. Their insights on immune system regulation are quite applicable to problem solving in related indications such as immuno-oncology and autoimmune disease, our primary areas of focus.

There is both an art and science to taking a novel target known to modulate immune function and translating that potential into a therapeutic agent suitable for clinical testing. Many targets in this space are biologics, often antibody-based, requiring protein biochemists to “humanize” proteins identified in animal model systems before use in a clinical setting. Early testing often requires high-throughput screening of drug candidates, often a timely and expensive process for those without that specific expertise. As part of our in-house translational research engine, we have many ex vivo tumor models that allow rapid screening of drug candidates.

We have also developed several proprietary in vivo models where candidate molecules can be administered to mice that express human tumor tissue. By developing and validating our own preclinical testing models, we can efficiently advance novel targets towards entry into clinical testing.

With many larger pharma companies investing less on early R&D and instead moving towards the in-licensing of promising targets, there’s a strong market for strategic partnerships that provide value for all parties. Pharma companies excel at and have ample capital for running large late-stage clinical trials. They also maintain infrastructure for a successful commercial launch of any products that cross the finish line.

Smaller biotech often face a multitude of logistical issues with both late-stage testing and commercial launch, leading to numerous well-known failures to execute. A well-planned partnership can provide significant resources for continued R&D and early development through regularly spaced developmental milestone payments.

In 2019 alone, two fruitful partnerships we have with Boehringer Ingelheim and Servier provided €25 million in predetermined milestone payments. In addition, we recently updated our Servier partnership to accelerate payment of an additional €5 million of the remaining pending milestones in order to ensure we have flexibility with our clinical operations throughout 2020.

Positioning OSE Immunotherapeutics at the interface between academic research scientists lacking ability to efficiently translate their science to the clinic and larger pharma companies that excel at commercialization, we have established a viable business model that generates consistent value for all associated parties that does not rely on the constant need for dilutive financing. While many smaller biotechs struggle with the scale and cost of late-stage development, we believe that strategically identifying the correct value for an asset early on and turning that value into capital can create consistent success in an industry that is known for frequent failure.

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