GVK BIO tries out a new model with deal on cancer drugs
E. Kumar Sharma January 9, 2013Hyderabad-based contract research organisation (CRO) GVK BIO on Wednesday, January 9, inked an agreement with US-based Onconova Therapeutics to develop new cancer drugs. Onconova is a biopharmaceutical company that primarily focuses on discovery and development of "novel small molecules for oncology". Oncology is the branch of medicine that deals with tumours and cancers.
GVK BIO is part of the GVK Group, an infrastructure development conglomerate, with interests in energy, resources, airports, roads, hospitality and lifesciences.
"This is a new model by any Indian CRO, where we are setting up a joint venture that will make a pipeline of products, and where both the partners will own the intellectual property (IP)," says Manni Kantipudi, CEO of GVK BIO. "We have never been owners of IP and here both the partners will jointly own the IP," he told BT.
Much will depend on how far the drug molecules being developed are successful. If they are successful, then, on exit, GVK BIO could get a good lumpsum payment. And nothing at all, if it fails. "It is a calculated risk," concedes Kantipudi. But, he adds: "The joint venture company will also need to get the work done and therefore it will also outsource work to GVK BIO." In other words, the Indian company could recover some of its investments in the joint venture.
Analysts tracking this segment see more companies trying out new models to de-risk their businesses. "We will see more services companies getting into products and bulk drug players getting into formulations or finished dosages," says Ajit Mahadevan, Partner, Life Sciences, Ernst & Young in India.
The joint partnership between GVK BIO and Onconova will be based in the U.S. and will align research priorities and technological expertise from both companies to facilitate moving certain Onconova oncology assets from early discovery to the clinical development stage. According to a press release by the company, Dr E. Premkumar Reddy, founder and director of Onconova and a leading molecular oncologist, will oversee the biology and biomarker aspects of the partnership.
Under the terms of the partnership, Onconova will provide two discovery targets with early chemical equity, while GVK BIO will "use its multi-disciplinary discovery platform to advance these programs". GVK BIO, according to the release, "will gain an increasing share of the programs as they advance, up to a 50/50 split based on achievement of milestones/funding brought into the joint partnership. Onconova retains the rights to buy back the programs."
GVK BIO's Kantipudi, however, did not share details on the investments made or the valuation calculation methods agreed upon in case Onconova exercises its option to buy back the programs.