Report: UCSF Strikes $85M Deal With Pfizer to Develop Biotech Drugs

Xconomy San Francisco — 

UC San Francisco has struck a big sponsorship deal with Pfizer, the world’s largest drugmaker, to develop innovative new biologic treatments, according to an online report from the Wall Street Journal.

This deal, to be announced tomorrow, calls for Pfizer (NYSE: PFE) to pay as much as $85 million over the next five years to help take UCSF discoveries from the laboratory through the “valley of death” where many drug candidates fail to attract federal grant support or venture capital financing, according to the Journal report. Pfizer will set up joint laboratories on campus, combining its knowledge of drug development with the basic research expertise at UCSF, the Journal said.

UCSF researchers would be allowed to publish their research findings in academic journals and share the knowledge with peers, while the university will also share with Pfizer the ownership rights to new drugs, the Journal said.

Such broad strategic alliances have been around for years, and Pfizer and UCSF established a smaller, three-year $9.5 million R&D agreement in June 2008. Pfizer, like many pharma companies, has been struggling to find new medicines to replace the sales it will lose when multi-billion dollar sellers like atorvastatin (Lipitor) starts facing competition from cheaper generics in 2011. At the same time, the economic downturn of the past couple years has caused venture capitalists to turn more cautious, and require more and more evidence from scientific entrepreneurs, like some university faculty, before they will consider financing promising new therapies through clinical trials.

Broad strategic alliances between pharmaceutical companies and academic institutions have their thorny set of issues. Last month, my colleague Ryan McBride reported on a legal dispute that arose after Dana-Farber Cancer Institute contended that it wrongly licensed a potential cancer drug to a Bay Area biotech startup, Gatekeeper Pharmaceuticals, when it said the intellectual property should have been awarded to Novartis, a longtime backer of the Dana-Farber.

It will be interesting to see how UCSF balances the interests of the university with those of its corporate sponsor, and whether the deal leads to more new therapies, or headaches.

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