PharmaTelevision - AstraZeneca: Shaun Grady

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Video title: AstraZeneca: Shaun Grady

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In this episode of PharmaTelevision News Review, filmed at BioEurope 2012 in Hamburg, Germany, Fintan Walton talks to Shaun Grady the Vice President, Strategic Partnering and Business Development at AstraZeneca

Deal with Amgen

Fintan Walton:

Hello and welcome to PharmaTelevision News Review here at BioEurope in Hamburg, in 2012. On this show I have Shaun Grady, who is Vice President of Strategic Partnering and Business Development at AstraZeneca, welcome.

Shaun Grady:

Good morning, good to be back.

Fintan Walton:

It is good to you have back Shaun because it was about over a year ago when you were on this particular show, AstraZeneca has changed, and is changing all the time and in over the last year there has been some significant events that's happened at AstraZeneca, what's driving those events?

Shaun Grady:

Yes, I mean it is good to be back, I think it's probably about a year or 15 months ago since we last spoke when we were pretty much sharing with you the sort of organizational change that we were making and the changes to the operating model to give us ourselves a better prospect to being successful in our business development aspirations, and what's good about being back today is that in the, that intervening 18 months or so we've actually seen the sort of fruits of our labors in terms of the transactions that we are very pleased to have been able to secure. What's driving our change is many fold. In the first instance it's pretty well known and a matter of record that we've unfortunately had our fair share of late stage slips and trips with our late stage pipeline. So our business development strategy today is very much based around replenishing the late stage and on market portfolio, and maybe we can talk a little bit about some of the deals that we've been successful in achieving in that regard, but actually it's a lot broader than that and we are now and have been for sometime completely committed to the sense that we are agnostic as to the source of our programs from the very beginning of the precompetitive into preclinical, and then into the clinic, we try and look at internal and external opportunities in exactly the same way, so recently a big focus on late stage but actually if you look at it each phases of the development and discovery pipeline we are actually having some significant successes bringing new science and technology into AstraZeneca.

Fintan Walton:

Right, and looking at the deals, I mean some of these deals are big and you are doing deals not obviously with biotech companies but also with other major pharmaceutical companies, so maybe you can give us some insight into the deals that you've done, for an example one of the early ones in over the last 12 months is the one you've done with Amgen [PharmaDeals ID = 46253] for an example?

Shaun Grady:

Yes absolutely, so I think to answer the question may be we go back a little bit further to the partnership we put in place with Bristol in diabetes [PharmaDeals ID = 26257] where two of Bristol's programs were co-developed and now we are getting into a co-commercialization. So we learnt a huge amount through that experience with Bristol, I think the success of that partnership in bringing products actually to market through Onglyza and Kombiglyze, the combination with Metformin, has had our colleagues in peer pharma set up and take notice of that and we and no doubt Bristol get approached periodically by other pharma companies who are looking to embrace that risk share, cost share, and profit share approach in some of their late stage molecules, and that's exactly what happened with Amgen [PharmaDeals ID = 46253], Amgen had an abundance of riches in their late stage pipeline, obviously there is a cost and a risk associated with that, so they reached out to a number of companies to explore the opportunity to co-develop and then co-commercialize that portfolio, and we are delighted that AstraZeneca, MedImmune, these being biologics, so it was principally our MedImmune colleagues who lead the push there, were successful in securing that deal which is over five clinical phase programs, the most advanced of which is now in Phase III, that's a psoriasis program. So to be able to work with a high quality company like Amgen on five clinical phase assets, one in Phase III, on such a sort of good quality, sort of basis of science and technology which is you know it was very pleasing. What's interesting about the Amgen deal [PharmaDeals ID = 46253] is that we've kind of learned from and developed our philosophy around peer to peer the partnering as we have gone. I think it's fair to say when we first started to work with Bristol we were looking to sort of do everything two by two and so would we would have two everything and we would kind of double up a kind of as we describe it Noah's ark approach to development and commercialization and over time we've got much more confidence in relying on each other's skills and capabilities, and competency and therefore we've been reshaping the Bristol collaboration, but we took that learning into our discussions with Amgen from the get go, so it's very much now based on who's actually got the best skills and capability, who is strongest in a particular therapy area or geography and will actually determine who does what that's a later point in time and because the deal is structured as a profit share actually we should be both agnostic as to actually who does what, who is the best person taking on the activity that makes the value creation.

Fintan Walton:

So it's a true partnership, its true partnership in recognizing the limitations of each side and ensuring that you have come out with the strengths?

Shaun Grady:

We would probably focus on the strengths rather than the limitations, yes.

Fintan Walton:

Well though that's exactly what the purpose is.

Shaun Grady:

And I think, you know to be fair I think it's evolutionary, unlike lot of these things, it's based on trust and confidence in what the partner brings to the particular party.

Fintan Walton:

Right.

Shaun Grady:

So that was a really nice deal to have started, to have start a deal with.

Partnership with Amylin

Fintan Walton:

And then of course then there was the Amylin deal [PharmaDeals ID = 47571]

Shaun Grady:

Yes and Amylin was, is pretty high profile.

Fintan Walton:

Indeed.

Shaun Grady:

As people know from the point in time where Amylin and Lilly divorced [PharmaDeals ID = 43933] and that partnership separated [PharmaDeals ID = 11452], Amylin became a top tip as a takeover target pretty quickly thereafter, Bydureon was then approved by the FDA> and so there was a lot of noise around what would happen to Amylin.As I mentioned already we've already got our diabetes alliance and partnership with Bristol [PharmaDeals ID = 26257], so it was, it wasn't long before we were sort of having a bit of a chat with our friends in Princeton saying look isn't this something that we should look at together, and actually together with Amylin's capabilities we would be best placed to maximize Bydureon and then Byetta in the GLP-1 franchise, and there is no question that the fact that we had the existing partnership for saxa and dapa gave us the platform in order to make this sort of joint approach. As everybody knows it was Bristol who made, actually made the acquisition [PharmaDeals ID = 47571], but AstraZeneca funded 50% of the total acquisition costs and then we dropped the GLP-1, the Amylin franchise into the existing collaboration. So having that existing diabetes arrangement basically gave as the platform to think about this on a kind of joint enterprise. I wouldn't say it's unique but it's pretty rare for big pharma to get together to make an acquisition of that size and scale, I mean the total.

Fintan Walton:

It was different?

Shaun Grady:

Total out going is sort of $7 billion, a $3.5 billion each, having worked through that with our friends at Bristol you can see why these things don't happen regularly or routinely, but it kind of comes back to trust and confidence. So when we first engaged with the Bristol executives about whether this was something we should explore, it was quite clear that Bristol was already engaging with Amylin, and so one of the ground rules we set was that Bristol would continue to interface with the target and its advisors, so we didn't duplicate and slow things down, it was the first point. And the second and terribly important point, principle we agreed was that we would leave the expansion of the collaboration until a later stage, so the fear was that we would actually spend all our time talking and negotiating between Bristol and AZ about how we would change the collaboration and we'd kind of lose the prize.

Fintan Walton:

Exactly.

Shaun Grady:

So we made a very clear commitment to each other that we would focus on winning in the auction and then we would look at the expansion of the collaboration at a later point in time, which was actually quite sort of courageous in many ways and particularly for AZ, because the existing collaboration was very much based around two programs that had originated in Bristol, so all the kind of key governance around final say and deadlock resolution was very much with BMS and rightly so, so we were particularly patient, so okay we will get to all of that subsequently and indeed that's what's happened and we've actually now finalised the negotiation of the revised collaboration agreement but actually only in the last few weeks, because these things, as we envisaged at the time, these things are complex.

Fintan Walton:

Right, and of course it reinforces the message that partnering is all about courage and trust with the other side?

Shaun Grady:

Yes I would say so and in a way its bit of a sort a of cliche and it's a, but I think ultimately and fundamentally it is and it's kind of hard enough getting some of these bigger projects done in your own organization and we have really subscribed to this phrase it takes a village, you know the number of people you have to bring along, working in partnership on something of this scale with, even with an existing partner, it magnifies all of those issues. So I couldn't agree more. There was a key and core group of people who had that sort of transparency and honesty in terms of what really mattered to the two organizations which really was a critical success factor. So Demetrios Kydonieus in Bristol who is was my opposite number on the deal, he and I were very close throughout the whole process, but we were closer to each other than we were into our teams at different points in time.

Regional types of deals with Forest, Ironwood

Fintan Walton:

Right, right over important, of course these are big deals and of course there are other types of deals you've done, for an example with the regional types of deals you are doing, so they are also important to the overall AstraZeneca strategy?

Shaun Grady:

Yes, I mean I think all things being equal, big pharma would prefer ideally to do the global deal to have the assets everywhere. You can then leverage the trial results and the money you are investing in the trial across multiple geographies in that kind of the whole economics and commercial rationale makes much more sense, but we are as a sector and certainly as a company and are much willing now to look at different geographies where we have particular strengths rather than insisting on a global deal if the real strategic attraction and the commercial benefits and the value creation are there. So for us a couple of examples would be the partnership we have with Forest in infection [PharmaDeals ID = 33746], where Forest licensed their Non- American, Non-North America rights to their infection programs to AZ, we then actually did a similar thing to the Amylin deal [PharmaDeals ID = 47571] with Forest where we acquired Novexel [PharmaDeals ID = 34427] and we split the rights between North America and ROW. So we've had some sort of presence around big regional plays and more recently you may have seen we have put together a profit share partnership in China for linaclotide with Ironwood [PharmaDeals ID = 49280], so again not only, not a regional deal but actually a single country deal or bigger in the case of China, it's got a hugely important market for both AZ and Ironwood, hence the structure of a partnership as it was terribly important to Ironwood to have a piece of what was happening rather than to sort of pass on the entirety of the opportunity to AZ in a conventional licensing type fashion.

Deal with Pfizer in OTC area

Fintan Walton:

Sure, and then the deals also extend into the OTC areas, so you've done one with Pfizer [PharmaDeals ID = 48137]?

Shaun Grady:

Yes, we so on the kind of cell side, so the looking at sort of generating revenues and creating value for AstraZeneca shareholders kind of the other way around we were really pleased to partner with Pfizer on the NexiumOTC partnership where Pfizer will become our global strategic partner for the conversion of Nexium to over-the-counter. I think it's fair to say Nexium as an OTC candidate was a highly sought after asset there was a significant amount of interest from multiple OTC type companies, it was a bit highly sort of contested auction process. It was quite nice to be on the sell side actually for once, but I have to say Pfizer did a terrific job, really differentiated themselves as the partner, if you will the partner of choice, you know again another clich", but they absolutely did and we were very pleased with the deal that we put together, the financials are attractive to AZ as I am sure they are to Pfizer and then that creates sort of income that we can look to redirect into the buy side or other sources of funding in AZ.

Partnership strategy and future plans

Fintan Walton:

Right, and I suppose obviously you've done a lot of deals? Is the perception of AstraZeneca changing, is there any evidence that people's view of AstraZeneca has changed?

Shaun Grady:

Yes I mean I would like to think so, and I would say so wouldn't I, I mean really I will go back always to 2007 when the group that I now run was formed, SPBD when we really made a concerted strategic focus on partnering, which actually isn't that long ago really it's sort of a five-year, five to six-years sort of time frame. Most recently we were very pleased to see the BCG reports and the Silico survey read out where we have made demonstrable sort of improvements up the league tables in terms of partner perception of AZ. If I may say so I think the BCG survey is considered a bit of a benchmark, generally it comes out every two-years, there are all sorts of metrics and measurements, but in terms of being the sort of preferred partner, two-years ago in 2010 on one measure AZ was like 12th or 13th or something, which we actually used as a bit of a motivational tool with the BD people to say 12th you know,who wants to who just gets out of bed in the morning to be 12th at anything and we you know look as we don't like being 12th but we put a lot of real concerted effort into how we interact with partners to try and be the most responsive tailored, a timely pharma who gets back to people with a meaningful response rather than the usual sort of dismissive kind of comments. So it was extremely pleasing to see our movement up to the kind of the top four or five in the BCG, sort of metrics as a whole, and there was a new category this year which was kind of the most approachable BD Group which AZ led and actually by some distance as it happens.

Fintan Walton:

All right.

Shaun Grady:

So they are kind of funny these sort of partnering surveys on there, when you do well there are an article of faith, when you don't do so well you kind of dismiss them, but in this case because we actually strategically and tactically said this is where we were going to go, this is how we are going to differentiate ourselves from the competition through this tailored form responsive positioning of ourselves, to see that translate into the views that third parties are collecting about us is extremely pleasing.

Fintan Walton:

And of course getting tangible deals as well?

Shaun Grady:

Yes, and of course if you are not getting the deals you are not going to get good scores.

Fintan Walton:

Yes exactly.

Shaun Grady:

So it's all sort of part and parcel yes.

Fintan Walton:

Yes, and coming up towards the end of 2012, more deals to come?

Shaun Grady:

Yes, I mean you can only be wrong on your making commitments about business development transactions, but we've got two or three things that are kind of in the hopper that we are working towards, I am reasonably hopeful that we will complete and conclude those this side of the festive season, but we will look at them on their merits. We've got a new Chief Executive Officer in AZ and all our impressions are is that our business development appetite is unchanged, may be even accelerated, but we are going to we will look at those projects very much on their own merits.

Fintan Walton:

Shaun Grady, thank you very much indeed for coming on the show.

Shaun Grady:

My pleasure.

Fintan Walton

Dr Fintan Walton is the Founder and CEO of PharmaVentures . After completing his doctoral research on the genetics of cell proliferation at the University of Michigan(US)and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).

Shaun Grady

Vice President

At the time of recording this PTV interview Shaun Grady serves as VP Strategic Partnering and Business Development at AstraZeneca. Shaun Grady has global responsibility for the Strategic Partnering and Business Development (SPBD) function, dedicated to broadening AstraZeneca's access to scientific innovation outside our own laboratories - a key strategic priority for AstraZeneca. The scope of his team includes in-licensing, acquisition and partnering activities from early stage Discovery through to on-market commercial opportunities. Shaun originally joined ICI as an attorney and held positions in the Pharmaceuticals, Petrochemicals, and Head Office Legal Departments. Upon the demerger of Zeneca from ICI he was appointed Assistant General Counsel, Corporate. He worked on the merger of Astra and Zeneca, the merger of Zeneca Agrochemicals with Novartis Agribusiness to form Syngenta, and the creation of Avecia.

PharmaVentures

PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialisation.

AstraZeneca

AstraZeneca is a global, innovation-driven biopharmaceutical business with a primary focus on the discovery, development and commercialization of prescription medicines for gastrointestinal, cardiovascular, neuroscience, respiratory and inflammation, oncology and infectious disease. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide.