Co-promotes: No Longer Biotech’s Holy Grail

You could see it coming. Well, kind of. Idenix on Friday snuck out the news that it was bailing out of its US and European co-promote with Novartis on its Hep B drug Tyzeka (Sebivo in Europe).

Co-promotes have until recently been most biotech’s holy grail, and co-promote options, at least, a sine qua non of much of recent licensing activity with larger pharma. It’s all part of that fully-integrated, ‘we-want-to-become-the-next-Genentech’ dream; we wrote about whether the dream made real-world commercial sense in IN VIVO in April.

We also pointed to data showing that barely more than a tenth of biotech-pharma co-promote plans become reality. When they do, they can be a nightmare--there was certainly no love lost between ICOS and Eli Lilly over Cialis before that (inevitable) acquisition.

Now of course, Big Pharma would say that co-promotes are a nightmare: they don’t like diluting their control over commercialization—which is, for all the talk of value inflection points throughout drug development, where the actual money comes from. But some of the arguments they put forward are sound: commercialization costs a helluva lot, even for so-called specialist sales forces, it’s increasingly complex as regulatory and reimbursement hurdles multiply, and, frankly, biotechs would make more profits by securing a good royalty share.

Idenix seems to have come to at least some of those conclusions, too. The biotech needed to rein in after the failure of its Hep C candidate a couple of months back, and this move will save it $40-45 million a year, apparently, by laying off the Tyzeka sales staff. “We have changed our agreement for Tyzeka to a royalty stream arrangement,” said Idenix CEO Jean-Pierre Sommadossi in the release outlining a wider re-structuring at Idenix.

In the original deal, outlined here, Idenix received sales-linked payments only in territories not covered by the co-promote. Neither those, nor the level of the new royalty stream, is revealed, but we’re certainly talking levels far from the single-digit tokens that grateful biotech used to have to put up with.

Funny, though, the timing: just a day or two before the announcement, Susan Koppy, SVP business and corporate development at Idenix, was on a panel at Windhover’s Pharmaceutical Strategic Alliances conference in New York. (Read here and here, for examples of what you missed.) She described the co-promote with Novartis as “a true co-promote,” in response to a question about which of the partners effectively had control (don’t forget that Novartis owns 56% of Idenix). But then, she added: “The relationship may well evolve as we go forward.”

Indeed it has. And it’s a fair bet that the evolution of other biotech co-promotes, real or planned, will go the same way. Biotechs are discovering and developing the drugs right now and benefiting handsomely from that. “Stick to what you do best” applies to them, as much as to Big Pharma.