Biotech Values

[DewDiligence]

(MDCO PFE) Re: Drugs out-licensed by Big Pharma/Big Bio

In general, I’d agree with your contention that drugs out-licensed by Big Pharma (or Big Bio) warrant a more skeptical view than those out-licensed by academia.

ApoA1 Milano may be an exception, however. Fifteen months ago, PFE shocked the world by proclaiming that it would no longer develop drugs for cardiovascular indications: #msg-32523077. Hence, one could say that PFE’s decision to out-license ApoA1 Milano merely means that PFE is doing what it said it would do.

Moreover, MDCO fancies itself a specialist in resuscitating failed drugs from Big Pharma/Big Bio by virtue of having in-licensed Angiomax from BIIB.

Whether MDCO can hit pay dirt a second time remains to be seen, but they aren’t risking much in the ApoA1 Milano deal because the economics are heavily backend-loaded. In the webcast slides (see link in #msg-44863685), MDCO disclosed that only $20M of the $410M in potential milestones to PFE are attributable to events prior to regulatory approval. Further, if ApoA1 Milano fails to attain annual sales of $500M, MDCO’s total milestones payable to PFE are capped at $110M.

Perhaps more important, MDCO does not consider ApoA1 Milano to be a typical cardiovascular program where clinical trials have to be enormously expensive. It will be interesting to see how MDCO defines the market for this drug in a way that enables it to run small, targeted studies. Whether MDCO can pull off this market-definition task is probably the greatest risk in the program, IMO.