Risk Sharing in Drug
Development
BIOCOM CRO Committee
Workshop
15 September 2011
Athanasios (Thanos) Maroglou, Ph.D.
Chief Business Officer, Cato Bioventures
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Risk Sharing in Drug
Development
Presentation Objective:
Examine successful venture-supported
models in building viable companies
from promising strategic assets
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Biopharma market dynamics
• 545 first round
financings
• more mega-mergers
and big acquisitions
•Shrinking returns
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http://lifescivc.com
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Cato Research
• Integrated Clinical Research and
Development Organization
– Private, international, mid-size company
– Founded in 1988
– Approximately 300 employees
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Strategic Locations
RTP
Rockville
Boston
San Diego
South San Francisco
Montréal, Canada
Tel Aviv, Israel
Cologne, Germany
Graz, Austria
Johannesburg, South Africa
Hyderabad, India
Strategic Alliances:
Netherlands, Italy, Spain, Poland, Russia,
Ukraine, Korea, France, Japan, China
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CATO Involvement Adds Value
• CATO is effective at identifying companies
with technologies that have a high
probability of success
• Through its involvement, CATO is able to
identify and streamline the pathway to
approval
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Cato Research – History of Impact
• Pivotal role in approval of multiple
sponsors’ compounds and therapeutic
products
– Involved in 3 of the 22 FDA new product
approvals in 2008, and 3 approved in 2010
• 13 approved marketing applications have
been submitted in eCTD format
– One of the first companies to perform electronic
submissions
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CATO Involvement Leading to Marketing Approval
Sponsor
Product
Indication
Year of MA
2010
Photocure
Cysview™
Cystoscopic detection of
invasive papillary bladder
cancer
Vanda
Pharmaceucticals
Fanapt™
Acute Schizophrenia
2009
Regeneron
Arcalyst™
Cryopyrin-Associated
Periodic Syndromes
(CAPS)
2008
Prestwick
Tetrabenazine
Chorea of Huntington’s
Disease
2008
Photocure
Metvixia™
Actinic Keratosis
2008
Astellas
Vaprisol®
(Conivaptan)
Euvolemic hyponatremia
2007
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Quality People
Quality Data
Quality Service
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CATO Involvement Leading to Marketing Approval
Sponsor
Product
Indication
Year of
Marketing
Approval
United
Therapeutics
Remodulin ®
(Treprostinil)
Pulmonary arterial
hypertension
2006
CV Therapeutics
Renaxa™
Chronic angina
2006
TEVA
Azilect(Rasagi
line)
Parkinson's disease
2006
CryoCath
Technologies,
Inc.
Freezor
Max ®
Freezor
XTRA ®
Cardiac arrhythmias
2006
Astellas
VESIcare
Bladder and urinary tract
muscle spasms
2004
®
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Quality People
Quality Data
Quality Service
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CATO Involvement Leading to Marketing Approval
Sponsor
Product
Indication
Year of
Marketing
Approval
Serono
NutreStore™
Zorbtive™
(somatopin)
Short bowel syndrome
2004
Schering Plough
Doxie/Caclyx
(liposomal
doxorubicin)
Metastatic breast
cancer
2004
Eli Lilly
Humalog ®
(Insulin Lispro)
Diabetes mellitus
2004
California
Department of
Health Services
BabyBIG
Merz/Forrest
Nameda
(Memantine)
®
Infant Botulism types A
2003
and B
Dementia of Alzheimer
type
2003
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Quality Service
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Cato Bioventures
•
•
•
•
•
Venture capital affiliate of Cato Research
Internally funded for over 20 years
Broad investment focus
Multiple investment models
Leverage Cato Research “CRO Service
Capital®”
–
–
–
–
Strategic Scientific development partnerships
Extensive development and regulatory expertise
Unique portfolio management model
Proven track record
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Wholly Owned Model
• Technology NewCo Model
– Acquire technology
– Advance the technology for 24 to 36 months
in a majority-owned portfolio company by
leveraging CRO Service Capital® and modest
internal funding
– Exit through M&A or out-licensing
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Example
•
Intellectual property
– Patent covering a
combination therapy for
obesity-related
hypertension
•
Scientific Expertise
•
Drug Development
Resources
– Nonclinical
– Clinical
– CMC
•
•
•
Regulatory Expertise
Startup Capital
Management
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Portfolio Companies
Cato Holding Company
(Founded 1988)
Cato Bioventures
Cato Research Ltd
(CBV)
(Outsourcing Partner)
Advanced Pain Remedies
Hemodynamic Therapeutics
Indication: Pain
Pre-IND opportunity
Indication: Hypertension
Phase 2b opportunity
Cancer Advances
Indication: Oncology
Phase 3 opportunity
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Technology NewCo Exits
St Elizabeth’s Hospital,
CBV, Human Genome
Sciences
VEGF-2 gene therapy
for cardiovascular
disease
Exit = Pubco M&A
(VGI)
Univ. of Miami and
CBV
Drug-delivery
technology for
insoluble drugs
Exit = Pubco M&A
Skye Pharma
(SKYE)
Topical penetration
enhancer for
dermatologic applications
FDA approvable letter for
lead compound
Exit = Pubco M&A Echo
Therapeutics
(ECTE.OB)
NRP
NRC, Brigham and
Women’s Hospital, Serono
and CBV
Proprietary combination
therapy for the treatment of
short bowel syndrome
Obtained FDA approval
Exit = License to Pharma
Emmaus Medical
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Risk Sharing Model
• Strategic Scientific Development Partnership
– Strategic Master Services Agreement
– CRO Service Capital® for minority equity
– Immediate access to milestone-enabling
CRO services
– Start-up & Special Warrant structure
– Typical investment covers up to 20% of
partner’s projected development and
regulatory needs
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Portfolio of Active Investments
Partial list:
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PIPE Model
• PIPE – Private Investment in a
Public Entity
– Immunovaccine, Inc.
– Neuren Pharmaceuticals
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Summary
• Flexible venture financing models
• Product/technology validating due-diligence
process smoothes venture capital funding
• Fast and efficient IND filing
• Design and run market focused POC clinical
studies
• Excellent regulatory agency interaction
• Support from fund raising all the way to a
profitable exit
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