GSK Ventures: Recycling R&D Assets
GSK's Ventures swaps unexploited and non-core R&D assets for equity in promising young companies, giving their programs a second chance in someone else's hands-at no cost.
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Nikem spun out its R&D assets with about a years' worth of funds to pursue development of its neuropathic pain and Parkinson's disease compounds, which are currently in preclinical development. The company, Brane, is seeking Series A funding.
Has a new biotech business model emerged for pure drug development companies, which start as corporate shells with top flight management teams and then proceed to in-license and further develop multiple products? While the business model is not new, clearly drug development is more fashionable today than drug discovery within the institutional investor community. The real question is whether the in-licensing model works any better than discovery.
Late-stage compounds are more expensive than ever; deals are now pushing the boundaries of economic viability. Drug companies are therefore looking for ways to cost-effectively expand their late-stage pipelines and expand their criteria for in-licensing candidates. In order to keep valuable development-stage products moving through its pipeline, rather than stopping some in favor of others it judges to be superior, Lilly has been trying to out-license assets to companies with spare development capacity. Lilly can buy the products back later if they prove worthwhile.Meanwhile, Abbott's late-stage dealmaking, while hardly inexpensive, aims to increase the set of choices, lower the cost, and increase the profitability of in-licensing by focusing on franchise markets.