Drugs, Deals and Discovery A view from
800-pound Gorilla: Pfizer

Everyone wants to know what the 800-pound is doing. After all, they are (not so) arguably leader as well as trendsetter in the pharma And that means the biotech business. So here’s whatthe world’s largest pharma company has to say. JimMcLoughlin, Director of Strategic Alliances at New York headquarter-based Pfizer Inc., shared his insights with me recently. What disease areas is Pfizer looking into? Pfizer, especially after the acquisitions of Warner-Lambert (and Parke-Davis) and Pharmacia (and Upjohn), is involved in most disease areas. “We groupdiseases and therapy indications into 10 or so groupsfor management purposes,” says McLoughlin. “Andwe are interested in virtually every disease category.”Dermatology has come up recently as an area of inter-est. Organ transplant is one of the only areas Pfizer isnot actively looking at (although McLoughlin hedgeda bit on that). McLoughlin is loathe to turn his atten­tion away from any category because of some excitingpotential he might miss that doesn’t fit into a neat littlebox. “We are trying to be a nimble 800-pound gorilla.”

What kind of deals do you like to do?

“People say that we are just late stage. That’s nottrue.” McLoughlin is part of the Strategic Alliancesgroup that looks at technology platforms and early-stage licensing (strategic alliances) prior to having alead candidate. They go as far as, and a bit into, Phase1 entities. Herb Ormsbee (Senior Director, Licensingand Development) is part of Lisa Ricciardi’s groupthat starts at Phase 1 and goes forward looking intolater entities (Phases 2 and 3). The two groups dove-tail so that there is continuity.

As for deal structures, Pfizer tries to create a dealthat will best suit the company they are partnering with, to maximize the partner’s ability to deliver. Sometimes that means cash, other times it means something else — an extended research program, the ability and capability to generate a chemistry family in support of patenting, other downstream technologies in formulation, imaging or the potentialto more rapidly reach a proof-of-purchase-concept Phase 2 endpoint.

When asked about what kind of deals they like to do, McLoughlin and Ormsbee told a story recently

about how they like to start a conversation with the potential partner and see where it goes. Sometimes they start the conversation about licensing a productand it leads to a deeper discussion about other tech­nologies the company has and sometimes to the company itself. They may have been speaking of Pfizer’ s recentexperiencewithEsperion Therapeutics, Inc., a biopharmaceutical company focused on the discovery and development of HDL-targeted therapies for the treatment of cardiovascular disease. That experience started as a conversation about a single entity and kept expanding until Pfizer purchased the whole company. Esperion is now a division of Pfizer Global Research and Development.

“One of the reasons people come to Pfizer is for ourability and track record of building products — as wego earlier and earlier [in the process of drug develop­ment] we have a strong record of managing relation-shipsandbuildingproducts and matching opportunities with internal capabilities (either in-house or brought in through partnership),’ says McLoughlin. One of the biggest examples, at the moment, is Pfizer’s interest in biomarkers and related imaging capabilities.

What effect, if any, has there been on R&D since the absorption of the other two pharma companies in recent years?

“The percentage of internal/external research hasn’t changed that much,” comments McLoughlin. “But our technology investments have changed.” Until recently the Strategic Alliances group has beenlooking at genomic-type platforms and other tools to reduce attrition in the portfolio. “More and more now, we’re focusing on candidate-producing collabo­rations while continuing to partner at the later stage.”they take the place of a traditional venture capitalistwhen it’s appropriate, by doing an equity deal, partic­ularly in early-stage companies. However, Pfizer does not have a separate VC arm.

So how many deals does an 800-pound

gorilla do a year?

Their strategic alliances number a couple of hundred a year, but they are pretty small investments. Pfizer will probably look to make about six clinicallicensingdeals (meaning Phases 1-3).

What’s your take on the current licensing environment?

The licensing environment has changed as a resultof industry dynamics. VCs, for instance, are focusingon Phases 1 and 2. Also, pharma companies acrossthe board are having pipeline issues. There’s “a lot ofpeoplechasingfewerthingsharder,”says

“I start to wonder if we’re

in a licensing bubble”

McLoughlin. The result is a seller’smarket.Additionally, “We’re competing with VCs. We have to put in more diligence to make sure these leads are where they should be.”

Most important for Pfizer is that trials and testing are done in a manner appropriate for the therapy indication. “So we talk to partners to make sure thatstudies are done rigorously and within an appropriatetimeline,” says McLoughlin. “We usually see things as taking longer than our partners.”

The licensing environment is also very active now. “I start to wonder if we’re in a licensing bubble.” When the bubble bursts what’s going to happen? “We’re not going to wait for that to happen. We’re anticipating now.”

What’s on the horizon?

Looking at a window from now to about three yearsout, McLoughlin is excited about genomics and systems biology. “These technologies are telling usother ways to address either known or emerging targets.There’s no longer a tight focus solely on a target, aPD4 enzyme [cardiovascular — Pfizer’s Cardura product]and a PD5 enzyme [erectile dysfunction — Pfizer’sViagra product]. There’s something else. The way welook at disease is just not straightforward anymore.”

McLoughlin’s personal interest is in inflammation, which is a perfect example of systems biology. “Inflammation has a bigger impact than anyone —well, most people — thought five or ten years ago.”

Who has the answers? “The best opportunities comefrom the scientists - they have a finger on the pulse.”