When it comes to investing in biomedical innovation research earlier is better.
WINTER HAVEN, Fla., Feb. 14, 2023 /PRNewswire/ — Impact BioMedical, in concert with its research partner Global Research and Discovery Group, find themselves in the right place at the right time as the biomedical investment industry shifts toward Discovery-phase funding in biomedical research, licensing and intellectual property and away from waiting until Phase 2 or Phase 3 clinical trials. This shift sets the partnering companies on a path that could help stabilize the future of the industry.
“The fact that we have been able to secure investments at the early stage not only reflects industry trends, it also reflects our philosophy of innovation and forward-thinking strategies that attract investment interest,” said Daryl Thompson, Director of Scientific Initiatives at Global Research and Discovery Group. “It used to be that funding came in later stages or trials, but fortunately that seems to no longer be the case.”
That early investment in biomedical research is on the rise should not come as a surprise to those who have watched the market develop over time.
According to a J.P. Morgan message to investors about biomedical licensing and venture funding, biopharma dealmaking overall was off to a slower start in 2022. The one bright spot was that more investment came early in the research process, which, since the early 2000s has taken larger shares of the investment dollar.
“Big pharma is in-licensing earlier into discovery and technology platforms,” said the release. “Large-cap biopharma has been signing deals earlier in development since the early 2000s.”
According to the FDA, after the Discovery and Development phases there are three to five other steps:
- In Phase 1, a small study is conducted on typically healthy volunteers or patients with the target condition in order to study safety and dosage. According to the FDA, 70 percent of treatments move to the next phase.
- In Phase 2, a larger study is conducted — looking at the efficacy and side effects of the treatment — on up to several hundred patients, for up to two years. According to the FDA, 33 percent of treatments move to the next phase.
- In Phase 3, the studied group increase to up to 3,000 volunteers and studies can last as long as one to four years. The purpose of the study is to monitor efficacy and adverse reactions. According to the FDA, approximately 25-20 percent of treatments move to the next phase.
In this process, the length of time it takes for treatments to reach the public can be more than 6 years. This lengthy research and development results in a financial strain on biomedical innovation and long-term viability.
Prior to 2008, 70 percent of investment in biomedical research was initiated in Phases 1, 2 or 3 and only 30 percent came in the Discovery phase. Now, according to J.P. Morgan, “[a]s high as 90 percent of deals happened in preclinical and earlier stages in 2019 and over 90 percent of in-licensing partnerships in the first quarter of 2022 were for Discovery phase platforms.”
“Impact BioMedical and GRDG recognized the potential of investing in the Discovery phase and positioned itself early to take advantage,” said GRDG’s Thompson. “The Discovery phase was the red-headed stepchild for the research process, but over the past few years it has become a vital part of the market and has moved to the forefront of innovation and investment.”
A large number of those licensing partnerships bring in double-digit upfront payment terms to the out-licensor. In the first quarter of 2022, there were 25 biopharma R&D licensing deals with $10-100 million in upfront cash and equity and five deals that were over $100 million.
The large number of up-front licensing partnerships not only brings an influx of capital into the market, but, more importantly, it also enables companies to continue to innovate and may help lessen what industry insiders call a $200 billion “Patent Cliff.”
The Patent Cliff
A Patent Cliff is a phenomenon that occurs when the patent expires on a product or a group of products that represent a high percentage of the total market. The abrupt drop in sales that follows and the subsequent decrease in a company’s annual revenue impacts that company’s ability to continue research and development for future patents.
In the pharmaceutical industry, for example, a patent cliff is noticed when it affects “blockbuster products,” which the industry defines as a product with sales exceeding $1 billion per year.
There is a growing wariness about the period from 2025-2030, when many big brands will lose market exclusivity in the United States and Europe and face generic or biosimilar competition for the first time. Industry watchers forecast that from 2023-2030, the industry’s top pharmaceutical companies will suffer from revenue declines of more than $200 billion.
The top ten (10) pharmaceutical manufacturers combined have more than 46 percent of their revenues at risk during that time frame, and five companies have more than 50 percent of their revenues at risk, according to ZS Associates.
According to the World Health Organization, since 2013 about 95 percent of the world’s essential medicines are off-patent, meaning that the other 5 percent represents patented medicines, whose income is supporting further pharmaceutical research and development.
As that 5 percent move out of patent protection and into the marketplace for generic alternatives, there could be an additional $100 billion impact on the whole industry, which will shrink a company’s financial ability to research new medicines and therapies, stunting the growth of the industry and affecting the ability of the healthcare industry to keep the population safe.
For Frank Heuszel, President of Impact BioMedical, Inc., the shift toward discovery is a step in the right direction of easing the Patent Cliff and will help create and utilize new avenues of research and discovery.
“Today’s announcement could signal a fundamental reshaping of the pharmaceutical world and the way we help expand and maintain this industry,” he said. “Now, more than ever, Discovery is the key to the immediate future of biomedical innovation.”
About Impact BioMedical Inc.
Impact BioMedical Inc. (“Impact BioMedical”) is a wholly owned subsidiary of DSS. Impact BioMedical strives to leverage its scientific knowledge and intellectual property rights to provide solutions that have been plaguing the biomedical field for decades. By tapping into the scientific expertise of GRDG Sciences, LLC, Impact BioMedical pledges to undertake a concerted effort in the R&D, drug discovery and development for the prevention, inhibition, and treatment of neurological, oncological and immuno-related diseases. For more information on Impact BioMedical visit http://impbiomedinc.com/
Safe Harbor Disclosure
This press release contains forward-looking statements that are made pursuant to the safe harbor provisions within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, but are not limited to, statements related to the Company’s intended use of proceeds and other statements that are not historical facts. Forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that may cause actual results or events to differ materially from those projected. These risks and uncertainties, many of which are beyond our control, include: risks relating to our growth strategy; our ability to obtain, perform under and maintain financing and strategic agreements and relationships; risks relating to the results of development activities; our ability to attract, integrate and retain key personnel; our need for substantial additional funds; patent and intellectual property matters; competition; as well as other risks described in our SEC filings, including, without limitation, our reports on Forms 8-K, 10-K and 10-Q, all of which can be obtained on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date on which they are made and reflect management’s current estimates, projections, expectations, and beliefs. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events, conditions, or circumstances on which any such statement is based, except as required by law.
SOURCE Global Research and Discovery Group Sciences