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Turning Pfizer Discards Into Novartis Gold: The Story Of Ziarco

John LaMattina
Contributor
I cover news on drugs and R&D in the pharma industry via my Following

Mar 15, 2017,
 
This article is more than 6 years old.

It is a situation that happens all too often these days. A biopharmaceutical company undergoes a major change, be it a merger/acquisition, downsizing or simply shifting therapeutic area focus. In times like these, a company will likely eliminate whole R&D programs, disband the team working in these areas or shelve projects. The people working on these programs then move on with their lives, either seeking new jobs within the company or seeking employment elsewhere.

This is what happened to Dr. Mike Yeadon, a 17-year Pfizer veteran at Pfizer’s R&D unit in Sandwich, England. Mike was told in the fall of 2010 that Pfizer was closing the Allergy & Respiratory Diseases programs and his own role as the CSO of this group was being eliminated. Rather than seek employment elsewhere, Mike had other ideas:

I deduced, rightly as it later turned out, that the UK site was to close. Armed with this deduction, having decided that I was not interested in chasing another big pharma job elsewhere as my family was well settled, and aware that compounds would likely be abandoned, I cooked up the notion of founding a biotech, right here.

Well, on paper that sounds pretty good. But, there were two big challenges that needed to be overcome. First, Pfizer didn’t have a big history in licensing programs to others:

In principle, at first it didn’t look too hard. I simply showed chutzpah and asked the senior-most people up the research line and they said OK, assuming you raise private capital. In practice, it took a long time, at least six months. The key was in getting Pfizer to recognize that we could not pay cash for the assets, but we were willing to grant equity in exchange for their assignment, while spinning the dream of therapeutic use in areas that, at the time, they had little interest in. Essentially, we would create upside in which they’d share and they needed to do nothing but agree to our proposition, the alternative most likely being that everything would be lost.

Having access to the Pfizer compounds was a terrific accomplishment. But now Mike was faced with the daunting task of raising millions of dollars to run the R&D studies to convert these early-stage compounds into drugs. This wasn’t easy. To help in these efforts, he recruited two former Pfizer colleagues who were equally committed and became co-founders–Steve Liu and Lynn Purkins. They were later joined by Arif Shivji.

I’d never raised a dollar privately, so I had the advantage of the certainty of the convert and the energy from having started off being very fit physically–and I needed all of that fitness. The first informal pitch was in February 2011, two days after the UK site closure announcement. It wasn’t until May 2012 that we had an anchor investor. I tried in the UK, continental Europe, China and the east coast of the U.S. I ended up finding the anchor investor almost by chance through a personal recommendation to a financier in San Francisco. Uniquely, they didn’t ask for–or invest in–a plan for a specific medicine, but the opportunity itself: a bunch of subject matter experts who’d led the invention of these compounds, a compelling story of flexible medical application, the quality of Pfizer molecules and a legitimate reason for their availability. We also learned that they liked the founders and believed that we would go at it with determination.

I describe this decision-making process as one somewhat like being chromatographed in the medium of biotech reality! It was not the fastest to proof-of-concept [POC], nor the most unique. But it had the most exciting story; we held the most advanced agent in our chosen indication; the molecule had no known flaws of substance; and it was orally available–all properties most desirable by future partners. There was only one other such drug in clinical development and it was owned by a large pharma company. We believed we could be more nimble in decision making and execution. In addition, they were pursuing indications that we had rejected for business reasons, based on investor and pharma feedback. So, all we had to do was be correct in our hypothesis, flawless in execution and really lucky in the way things came out.

The Ziarco team, did in fact, perform very well. In the POC study involving 98 patients, ZPL-389 showed a clinically and statistically significant reduction of eczema after eight weeks as measured by the EASI (Eczema Area and Severity Index), reducing the EASI score by 50% compared to the 27% observed in the placebo arm. No significant side effects were seen. Ziarco had a potential important new drug to treat a significant dermal disease. They got the result that they had hoped for. Yet, there was still another big hurdle–finding a partner who could take ZPL-389 through regulatory approval and eventually to the market.

We engaged many potential partners over a long period of time, right from starting the company in 2012 up to the exclusivity period in 2016. Many would have been good partners, but fortune on all sides favored the tumblers falling into place with Novartis. There were many twists and turns, and it seemed likely that we would be acquired even earlier by a different party as we had good bids from several companies. I was constantly surprised by the many and various reasons–always nothing to do with Ziarco–why bidders fell by the wayside: changing internal priorities, a deal champion changing roles, etc. It proved to have been a good decision never to do contract research with the cheapest external providers, but only with those with good reputations. This was true not only for drug substance and product, but toxicology studies, clinical, advisors, market assessment, legal and tax. Those good providers racked up the bills but, in the sale process, quality names “ticked the box” and made diligence more straightforward–though exhausting!

On December 16, 2016, Novartis announced that it would acquire Ziarco. Besides ZPL-389, Novartis also got ZPL-521, a topical treatment for eczema, as well as an inhibitor of cPLA2, an early mediator in the arachidonic acid cascade, a key component of the inflammatory response. Terms of the deal were not announced. However, speculation is that the deal is worth up to $1 billion in a combination of upfront payments, milestones and royalties.

Mike and his team pulled off an amazing feat. They had a strong belief that the drugs that emanated from their Pfizer research work had value. But, converting that belief into reality was difficult. “The intensity of effort took me away almost completely from my family and other interests for almost five years and you get only one life.” Yet their belief was well-founded and their hard work was recognized with great success. Someday millions of eczema patients will be thankful for their efforts.

(The author is the former president of Pfizer global R&D and served as an advisor to Ziarco in 2013 and 2014.)

John LaMattina
I was the president of Pfizer Global Research and Development in 2007 where I led the efforts of more than 13,000 scientists and professionals in the United States, Europe, and Asia. I’ve received numerous awards including an Honorary Doctor of Science degree from the University of New Hampshire. I am also the author of “Drug Truths: Dispelling The Myths Of R&D” and the recently published Devalued And Distrusted: Can The Pharmaceutical Industry Restore Its Broken Image?” I am also a senior partner at PureTech Health.

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