Valuing PYC’s science is no easy exercise! Firstly, you have to value Phylogica’s proprietary peptide library for which it also provides drug screening services for pharma. This has been the company’s principal scientific identity/bread and butter to date. However, in the near future, Phylogica may be better known as an intracellular drug delivery platform technology company. Great leaps forward have been made in this area in the past couple of years. Perhaps the company name will become synonymous with antibiotics. Currently it’s collaborating with Genentech to discover and develop novel antibiotics to fight superbugs and that partnership has a potential valued of US $142 million. Then there’s TonyIndo’s favourite, which is currently being developed with UQ – a low-cost, universal peptide-based biosensor device that can provide rapid identification of biomarkers (eg. of cancer or illegal drugs) at point-of-care. What could that be worth if it comes through? Finally, there’s my personal favourite, Phylogica’s in-house oncology program, focused on breast cancer and likely targeting the Myc oncogene/transcription factor. Phylogica has said it hopes to have in vivo data by later this year and if results are successful it plans to license then.
Just focusing on the last asset, the oncology program, I’ve been attempting to ascertain the likelihood of licensing interest at pre-clinical stage - trying to determine if a deal's a solid chance, or really just a pipedream. Some relevant facts I’ve found:
In recent years, all of the top pharmas have expressed partnering interest in oncology (1)
In recent years, oncology has been the Number One area of licensing. The highest number of M&A deals have also been in oncology, which has also had the highest deal value by therapeutic area.(1)
Looking forward, oncology looks set to remain a “hot” area for pharma.(2)
The most sought-after areas of therapeutic target in oncology have been hematological, GI, prostate, lung and pancreatic cancer. As well as being an established driver of breast cancer, the Myc transcription factor has also been implicated in these (and other) cancers. If PYC can demonstrate Myc inhibition in a breast cancer animal model, I think pharma interest will surely be piqued in Myc inhibition in other cancers. (1, 3, 4, 5, 6, 7)
As commercial risk in drug development grows, pharma is becoming more accepting of scientific risk (that is, doing deals at pre- POC stage), but only for assets with perceived zero commercial risk. It is argued that the current era of pharma deals is driven by “Proof of Relevance”. Hitting a hitherto “undruggable” cancer target which is implicated in the majority of cancers surely passes the relevance test. (8)
Recent licensing deal statistics suggest that preclinical stage has already become a major inflection point for deals. An examination of 325 licensing deals signed in 2013 showed that around a third were signed at Lead/Preclinical stage. In comparison, Phase 2 and 3 deals combined represented only 20% of deals. Average deal value for Lead/Preclinical assets was $300 million, compared with an average of ~ $400 million at Phase 2 and 3 (8)
I’ve concluded that, if PYC’s in vitro and in vivo trials this year are successful, the likelihood of PYC attracting a licensing deal in oncology at this stage is high.
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