"Multi-track R&D" is, admittedly, a phrase to make the eyes glaze over but when Yoshihiko Hatanaka, executive president of Japan-based drugs company Astellas, quotes the term while saying its latest corporate venturing deal highlights the company’s future innovation strategy it is worth paying attention.
Hatanaka was talking about his company’s transfer of development of a drug to a virtual company, Telsar, managed by venture capital-backed Drais Pharmaceuticals.
Astellas Venture Management and venture capital firms InterWest Partners and Sutter Hill Ventures, which are the lead investors in Drais, will invest $14m into Telsar, which will try and develop ASP3291, a potential treatment of ulcerative colitis in phase IIa study.
The deal reflects a number of healthcare trends – how do you get experienced management to work on a potential drug without having to set up the full costs of a separate company or losing speed and potential inventiveness without a complex corporate hierarchy? GlaxoSmithKline and Johnson & Johnson are trying something similar by backing VC firm Index Ventures’ latest $150m fund.
For Astellas, if the ASP3291 drug works it can have potentially first bite of the proceeds in its domestic market, while the VCs get a supportive partner in helping it get through the regulators and a sales channel to promote it – as well as money.
The multi-track element signifies Astellas is developing its innovation toolkit – including R&D, venture-backed entrepreneurs and licensing – on an international scale so various units can work relatively independently on similar medical problems and leave it up luck and judgement as to which one might work and then be distributed if successful enough.
The challenge comes in deciding who to work with and when to spun promising treatments out. In this, trust is a crucial area as well as having alignment of interest through all sides having equity and an incentive to make it work.
For Astellas, trusting Drais comes in part from the VC-backed company’s chief executive, Donna Tempel, and fellow Drais co-founder, Robert Desjardins, being previously the senior management of Yamanouchi R&D, a precursor company to Astellas. The two then acted as the executive team of AkaRx, acquired by Eisai/MGI for $300m in 2010 after corporate venturing backing from Astellas. This long-term knowledge ofworking together and successfully will probably help the groups build Telsar.
As ever, success in strategy comes from a thorough understanding of how and by whom the tactics will be enacted by and where a competitive advantage lies.