 | PTC Therapeutics: Deloitte Recap’s Data from ‘Trusted Source’ Helps Guide
Discovery Deals
Agreements with Roche, Schering-Plough and Others
Since 2003, PTC Therapeutics has been using Deloitte Recap’s suite of tools to help guide decisions, said Morgan Conn, PTC’s executive director of business development. Among the PTC deals in which Deloitte Recap’s databases proved helpful was the March 2006 exclusive collaboration and licensing agreement between PTC and Schering-Plough to develop PTC’s orally delivered compounds for hepatitis C virus (HCV) and other viral diseases. PTC, which was paid $12 million upfront along with potential milestone payments of more than $200 million, designed the small molecules to inhibit HCV translation through an unexploited viral target. The collaboration was a scientific success, with PTC announcing a milestone payment of $2 million in connection with the designation of a development candidate in 2009.
“That was a very competitive time for [HCV] deals,” said Conn, in his 10th year with PTC. To study the market for comparable terms in such agreements, PTC was checking Deloitte Recap’s comprehensive database “on an almost monthly basis” to keep track of the details behind the latest deal developments. For programs at the Phase I stage or earlier, he noted, establishing valuation models is considerably more challenging than modeling more advanced programs, and PTC’s program was preclinical when negotiations with Schering-Plough began. Examining historical outcomes provided by DEVELOPMENT optimizer proved beneficial, said Conn, who has “become a big fan of the success-rate data,” Conn said. “I like the attrition graphs, and being able to separate large molecules from small molecules, as well as by therapeutic area.”
Another agreement helped by Deloitte Recap’s data was the more recent pact with Roche for the development of orally bioavailable small molecules using PTC’s Gene Expression Modulation by Small Molecules technology. Focused initially on four central nervous system disease targets to be jointly selected, the collaboration brought $12 million upfront for PTC, research funding, and the potential for $239 million in milestone payments per target.
Consistency of Data Sets a Vital Feature
Developing multiple products across varying therapeutic areas, PTC “probably uses DEAL builder the most,” Conn said, adding, “with every single one of those discovery deals, we’ve gone to DEAL builder and looked at comparables. DEAL builder is useful in determining a sense of where we should be in financial terms” when discovery agreements are negotiated.
From a general business development point of view, Conn said, “the most frustrating aspect of this is trying to choose a [success rate] number. All [these] numbers are limited in some way, but it can be difficult to get a consistent set” from some sources, he said. While some publications provide data about the probability of Phase I, Phase II, and Phase III attrition based on past success, many do not break down the data by therapeutic area, nor do they specify the number of patients involved in clinical-trial programs, by therapeutic area. DEVELOPMENT optimizer helps here, too.
“The more you can flesh out the data, the better,” and Deloitte Recap’s tools provide the necessary detail, Conn said. “We’re a small-molecule company; the antibody success rates are not relevant [when estimating internal program success]. I want to be able to strip those out.” The capacity becomes important internally as well as during negotiations, in which we always reference Deloitte Recap,” Conn said. “We’re very upfront about where we get our deal information and our comparables, and that’s helpful because Deloitte Recap is a trusted source.” |
IQ Series Key Facts
|  | 34,700+ deals for over 4,000 organizations |
| | 4,800+ unredacted SEC-filed contracts |
| | 9,500+ SEC-filed contracts from universities, Pharmaceutical, and Biotech firms |
| | 8,000+ SEC filings, including IPOs, SPOs, and annual reports |
| | 1,700+ clinical development records and timelines |
| | 17,120+ corporate press releases |
| | 7,500+ clinical trials with 5,080+ scientific abstracts from both major medical meetings and peer reviewed journals |
| | Analytics backed by detailed drug development histories |
| | 1,450+ regulatory records and links to clinical trial records in clinicaltrials.gov |
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Making Benchmarks, Internally and Externally
In VALUATION analyzer, PTC has found a powerful feature in the Effective Royalty Rate tabulator, Conn said. “These are real data showing the inflection points from Phase II to Phase III, and you can separate out university vs. commercial [deals],” he noted, and the numbers come from filed contracts, with “everything from the perspective of biotech. [Data from] pharma companies aren’t entered, unless they happened to get licensed to a biotech company,” so the focus is relevant to PTC’s goals and interests.
When the company is internally debating when to consider initiating partnering discussions, DEAL builder and VALUATION analyzer help the company determine reasonable expectations for an eventual agreement at varying points in the development process, if the program moves ahead, Conn said. “We can look at a therapeutic area and a stage and say, “For this program, these are the expectations today, and these are the expectations for next year, based on the comparables,” he said. By weighing deals against each other according to compound, therapeutic area, stage and deal type, “we’re working to think about what stage we would want to push forward to partner”.
Current market conditions naturally override history when deal terms are hammered out, but Deloitte Recap tools “definitely” provide an edge in negotiations, Conn said. “If we know what a company has done before, then they have to explain why they want to vary from that, or we have to explain why we want them to vary from that.” Long before the deals are considered, “pointing to the trends over 10 years in deals can be helpful when talking to internal stakeholders and saying, ‘This is where the market is going. We will or will not be able to get the same terms as five years ago. This is where the terms are trending,’” he said, and after deal terms are agreed upon, data can show investors how the decisions were made. |