Three big pharma invest in a bold new model for emerging technology development.
By Kevin Davies and Vicki Glaser
Sept. 5, 2008 | In a novel and perhaps unprecedented model of big pharma cooperation, Merck, Pfizer, and Eli Lilly are jointly funding a new technology development company called Enlight Biosciences.
“This is totally new from everything I’ve seen,” says acting CEO David Steinberg, a partner with PureTech Ventures. “There are other things that on the surface contain elements of this, but nothing that combines all the elements of all three pharmas working together on an ongoing basis to address precompetitive technology needs with a commercial incentive.”
“I think it is very unique,” agrees Merck’s Reid Leonard, executive director of external research and licensing. “I can’t personally think of another example but that doesn’t mean there isn’t one of a situation like this.”
Of course, pharmas have participated in consortia such as the SNP consortium, but these are typically non-profit. “Participating from the beginning on the development of multiple technologies is not what you would typically see pharma companies coming together to do,” Steinberg says.
Enlight is the idea of PureTech partner Daphne Zohar (see p. 6). Two years ago at a conference, she told a pharma executive that PureTech reviews hundreds of technology proposals each year, but the industry as a whole was more enamored of drugs and clinical assets. But if the VC industry didn’t want to invest, maybe big pharma might, and thereby identify its unmet needs proactively.
PureTech, which has several senior partners with ties to Merck, brought the idea to Merck about two years ago. “We embraced it enthusiastically,” says Leonard. “We were involved in working with them in setting up what the major areas of focus might be.”
In creating Enlight, Merck, Lilly, and Pfizer share in the upfront investment as well as the early access to the future technologies. “Enlight is designed to be basically a virtual company that will start other companies, organizing information, identifying the needs of the pharmas, identifying technology opportunities, and getting the companies off the ground,” says Steinberg. “The pharma partners will have an option to make an equity investment in each new company formed. That gives them certain strategic and financial rights, including the products developed.”
Says Leonard: “The core operating principal around Enlight [is] to enable the development of technologies that are of genuine interest to a company like Merck or Pfizer or Lilly, but are not sufficiently enabling in terms of providing an immediate competitive advantage, that we would undertake their development by ourselves.” Merck and the other founders badly want to benefit from early-stage technology, but the development of that technology per se is clearly not part of Merck’s—or any pharma’s—core business.
Steinberg says he wasn’t surprised the company came together. “I think there is a major, major unmet need—a significant gap in technology development… We came up with a creative way of doing it that resonated, at least with these partners and potentially additional groups in the future.
Enlight is a semi-virtual company: most of the pieces are outsourced, but it will eventually have a physical headquarters. The research will take place with the inventors of the original technology and become more concrete in time. Its offices are temporarily co-located with PureTech in Boston.
According to Steinberg, the unmet needs Enlight is exploring in conjunction with its founding partners include “predictive models (prediction of tox, ADME, efficacy, other safety issues; in vivo, in vitro, or in silico); enabling platforms for discovery, development, and expression of biologics; biomarker discovery platforms—look at multiplexed markers in a very sophisticated and high throughput way.” Steinberg says each of these areas could yield multiple projects and companies. Other potential areas include drug formulation and delivery, as well as novel small molecule synthesis and production technologies and library screening. The first portfolio company, Endra, has an advanced program in non-invasive imaging and medical imaging.
“The timescale in which these spinout companies will be able to mature is much shorter [than traditional biotech companies],” says Enlight advisor Raju Kucherlapati, head of the Harvard Partners Center for Genetics and Genomics. “That’s also very exciting for the pharma companies—not only are they acquiring the technology but a very significant upside is that they have the opportunity to have a financial stake in their success.”
The pharma partners will have a role “as strategic advisors to the selection of projects for Enlight, but we’re not responsible for sourcing those projects,” says Merck’s Leonard. “The Enlight team is out scanning the academic technology space to identify programs within large areas that they’ve identified with our cooperation, as being areas where novel technology development could be of commercial interest, especially to pharma partners… They have the ongoing voice of the customer, plus they have access to technical opinion and expertise from the partners to help guide the development of the technologies.”
Enlight’s scientific advisory board is led by Nobel laureate Bob Horvitz (MIT). Steinberg says, “they are almost like co-founders [and have] a track record of actually making an impact in technology.” Raju Kucherlapati previously co-founded Millennium Pharmaceuticals and Cell Genesys. Rakesh Jain (MGH) is an authority in angiogenesis, and Stanford’s Sam Gambhir is an expert in molecular imaging and PET.
Steinberg says he was more surprised by the public reaction than that of pharma. “I think this really touched a nerve,” he says. “I think this is a model that will evolve over time… This is the kind of thing that may yield other similar efforts and potentially become even more of a standard for the way pharma companies think about facilitating the development of technologies that will help them do their core business.”
Since Enlight was announced in July, other pharmas have expressed interest in participating. Discussions are ongoing with several potential members, but Enlight wanted to announce the formation of the company with the core members. “We want to keep the size manageable to make sure we can do a good job for the partners involved. We will definitely be expanding the number of portfolio companies we start. Our goal is to start 1 to 2 of those per year,” says Steinberg. That said, he cautions that, “things like Enlight are not going to start cropping up left and right because it is hard to do.”
Facilitating collaboration among the pharma partners has been challenging, finding a mechanism to allow the partners to look at technologies in an open way. “We will very soon be having a cross-pharma summit in which they will be sharing ideas. Obviously they will not be bringing every secret to the table, but they are very open to it,” says Steinberg. Enlight director Frank Douglas, former CSO Aventis, calls it a “safe haven,” where participants are comfortable sharing ideas. Steinberg hopes Enlight will be able to take the founders’ technology specifications “and deliver something they can integrate into a proprietary package, and that doesn’t prevent the other partners from doing the same thing with their own independently developed compounds.”
Enlight aims to profit on its commercial technologies or instrumentation for a pharma customer base. These will be areas with scant interest from the venture investing community to get those projects off the ground because, compared to a medical device or a therapeutic entity, they’re less attractive. The founding partners will enjoy early access, but don’t want to own them, says Steinberg.
From Merck’s perspective, Leonard says the experiment will be a success if Enlight develops instrumentation or technology that Merck can purchase and integrate to accelerate drug discovery “and make better decisions on go/no-go projects… It’s our expectation that the areas of interest will migrate according to the interests of the pharma partners. That’s certainly a key driver to our participation and interest.”
“We would never presume to be able to cover the scope and depth of innovation that’s occurring outside our walls,” says Leonard. “So we’re trying to take a very focused and strategic approach to which areas make most sense for us to do ourselves, and which areas to do with other people. Enlight is just one more opportunity for us to leverage other people’s innovations, especially in a space where the activities fall outside our core business.”
This article appeared in Bio-IT World Magazine.
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