Business
example of a company being too far ahead of the acceptance curve.
In contrast, Recursion
Pharmaceuticals started its DRPx-PD3 programme in a much more conducive timeframe (founded 2013) where investors at least understood the poten- tial advantages (as well as disadvantages) to such an approach. This acceptance has manifested in the form of significant investments into Recursion Pharmaceuticals, which has facilitated a burgeoning pipeline and steady growth of the company. Dr Andrew Reaume, Founder and CEO of
Melior Discovery/Pharmaceuticals, has stated that the company(s) “is(are) comprised of a self-sus- taining discovery core and risk-laden, value-gener- ating pharmaceutical companies”. He also suggests “valuation is very much a perceptional quantity. The Melior business approach has kept us away from the investment community and like Moderna in stealth mode, but for an entirely different rea- son. I have no basis to say that, as a PD3 company, we are receiving increased valuation because we are not testing this in any way”. While the state- ment by Reaume is understandable, it can also be argued that the way that Melior has constructed its PD3 approach is highly innovative and led to a company with high quality drug candidate assets and a process that is self-sustaining as well as sig- nificantly derisked. The epitome of how to increase value in your company!
Conclusions The argument concerning the valuation of PD3 companies articulated above is still being contest- ed. The examples discussed here provide ammuni- tion to support either supposition. However, Saxe has argued that the PD3 model has given the rise to the “third wave” biotech IPOs, wherein “public companies’ technology has evolved to the point of providing personalised medicine backed by wide- ranging biological platforms, that is, underlying tech that can be used to produce an eclectic mix of drugs across the disease spectrum, has given both drug makers and investors more cover”11. In the case of Moderna, the PD3 approach has provided 21 different drug candidate assets. In the minds of investors this means that a single failure of a drug candidate does not necessarily mean catastrophe for the company, since other pipeline candidates can supplant the failed entity. This argument by Saxe is dependent on the fact that the underlying platform technology is valid and continues to pro- vide bona fide drug candidates. Whether or not that happens is still somewhat of an unknown. But Saxe predicts that public offerings by PD3 compa- nies will continue to thrive in 201911. In business,
Drug Discovery World Spring 2019
arguments are often settled by the refrain ‘follow the money’ in determining success.
Acknowledgements We thank Dr Andrew Reaume, Founder and CEO of Melior Discovery and Melior Pharmaceuticals, for his thoughtful analysis of valuation as it per- tains to PD3 companies.
DDW
Dr Stephen Naylor is a Co-Founder, CEO and Board Chairman of ReNeuroGen LLC, a virtual pharmaceutical company developing systems phar- macology therapies for the treatment of neurologi- cal diseases. He is also a Co-Founder and COO of iMetabolic Biopharma Corporation. In addition he is the Founder, Chairman and CEO of MaiHealth Inc, a systems/network biology level diagnostics company in the health/wellness and precision medicine sector. He was also the Founder, CEO and Chairman of Predictive Physiology & Medicine (PPM) Inc, one of the world’s first per- sonalised medicine companies. He serves also as an Advisory Board Member of CureHunter Inc, a computational biology drug discovery company, and as a business adviser to the not-for-profit Cures Within Reach. In the past he has held pro- fessorial chairs in Biochemistry & Molecular Biology; Pharmacology; Clinical Pharmacology and Biomedical Engineering, all at Mayo Clinic in Rochester, MN, USA. He holds a PhD from the University of Cambridge (UK) and undertook a NIH-funded fellowship at MIT located in the ‘other’ Cambridge, USA. Address correspondence to him at
snaylor@rngen.com.
Dr Kirkwood A. Pritchard Jr is a Co-Founder, CSO and Board Director of ReNeuroGen LLC, a virtual pharmaceutical company developing systems phar- macology therapies for the treatment of neurologi- cal diseases. He is also a Co-Founder and Board Director of HDL-Dx, a diagnostics company devel- oping an assay to determine functionality of HDL. In addition, he is a tenured Research Professor in the Division of Pediatric Surgery, Department of Surgery, at the Medical College of Wisconsin (Milwaukee, Wisconsin, USA). He has broad and diverse translational research interests in a number of disease indications including, stroke, multiple sclerosis, traumatic brain injury, sickle cell disease and bronchopulmonary dysplasia in premature babies. He holds a PhD from Ohio State University (Columbus, Ohio, USA), and undertook a postdoc- toral fellowship at Albert Einstein College of Medicine (New York, NY, USA).
Continued from page 50
9 Buvailo, A. A Landscape of Artificial Intelligence (AI) In Pharmaceutical R&D. BiopharmaTrend
https://www.biopharmatrend.c om/m/charts/10th January (2019). 10 a) Naylor S and Schonfeld JM. Therapeutic Drug Repurposing, Repositioning and Rescue: Part I: Overview. Drug Discov. World. 2014; Winter Edition, 49-62 (2014). b) Naylor, S, Kauppi, DM and Schonfeld JM. Therapeutic Drug Repurposing, Repositioning and Rescue: Part II: Business Review. Drug Discov. World. Spring Edition, 57-72 (2015). c) Naylor, S, Kauppi, DM and Schonfeld JM. Therapeutic Drug Repurposing, Repositioning, and Rescue: Part III: Market Exclusivity Using Intellectual Property and Regulatory Pathways. Drug Discov. World. Summer Edition, 62-69 (2015). d) Kauppi, DM and Naylor, S. Therapeutic Drug Repurposing, Repositioning and Rescue: Part IV: Financial Model and Analysis. Drug Discov. World. Winter Edition, 54-63 (2016). 11 Saxe, J. Moderna had the most important IPO within the biotechnology business. Biz Online Updates
http://bizonlineupdates.com/m oderna-had-the-most- important-ipo-within-the- biotechnology-business-heres- what-the-way-forward-for-the- business-says/ December 9th (2018).
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