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Pfizer business head details new $500M project for investing in public biotechs.

Pfizer announced Tuesday that it had launched a new initiative for investing in biotechnology companies and committed up to $500 million to fund the effort. The Pfizer Breakthrough Growth Initiative will focus mostly on publicly traded biotechs working in the same core areas as the pharmaceutical giant — internal medicine, inflammation and immunology, cancer, rare diseases, vaccines and hospital treatments. Pfizer plans to take non-controlling stakes in these companies and help usher their medicines forward.

The initiative comes about a year and a half into Albert Bourla's reign as Pfizer CEO.  Over this period, Bourla and his executive team have tried to recast Pfizer as a more nimble, innovative and biotech-like organization, rather than the quintessential lumbering big pharma. To that end, the company in recent months bought the targeted cancer drugmaker Array BioPharma, expanded its already growing gene therapy ambitions and linked up with Germany's BioNTech to develop a vaccine for the novel coronavirus.

BioPharma Dive spoke with Doug Giordano, Pfizer's senior vice president of business development, to get more details on how the initiative came to be and what, specifically, the pharma giant is looking for when it considers making new investments.

The following conversation has been edited and condensed for clarity

Why did Pfizer choose to launch this initiative? 

Giordano: I've seen a gap in the area of working with publicly traded, clinically staged companies to provide them our insights and then, potentially, leverage some of our scientific capabilities without actually taking a direct position in their assets. So this gives us an opportunity to actually help promote breakthrough science companies and fuel their continued progress in a unique way.

We've done some of this [before], more on an ad hoc basis. An example that has been cited is our recent investment in Amplyx, which is a later-staged venture-backed company with clinical-stage assets, where we participated in an equity position and also provided some scientific advisory support.

That, plus some other things we've done in the past, kind of fueled the thinking around: "Can we do this in a more meaningful way?"

If Pfizer had already been making these types of investments, though, what does this initiative add to the company?

Giordano: It provides structure and a very specific vehicle. We also as a company are very much focused on simplifying the way we do business. That's been a big focus for Albert [Bourla], our chief executive officer.

This is one manifestation of that vision — we're making it easier for us to make these investments, which should [establish] a framework to quickly evaluate and decide and then move forward. That's not to say things were overly complicated in the past. [But] this moves us to a faster and simpler way.

Pfizer said the initiative will focus mostly on companies working in its core therapeutic areas. What additional color can you provide about the type of company Pfizer is looking to invest in?

Giordano: It's going to be primarily focused on publicly traded companies, although it's not limited to that. I could see us participating in companies that are moving toward the public markets but aren't necessarily there yet. But the sweet spot will definitely be clinically staged public companies.

We are very focused as a company on breakthrough science. And so our focus will be on working with companies [whose drugs] have the chance to be best in class, first in class. Those are the assets and the types of companies that we're going to gravitate toward.

What size of company are you looking to invest in? Pfizer has thus far signaled companies with "small- to medium-sized market capitalizations​."

Giordano: It's probably going to be companies that are under a half a billion dollars in market cap. But it could go above that. We're not going to try to draw any specific, hard limits. 

If pre-IPO companies could also be on the radar, could there be some overlap with Pfizer's venture arm? How are the these divvying up responsibilities?

Giordano: The good news is both the venture capital team and this team will be part of the business development organization that I'm responsible for. And there's a pretty clear difference between the kinds of venture-backed companies that are going to be emerging and early, and the kinds of companies that are approaching their crossover [to] the public markets.​

If you think about venture investing, it's working with other venture capitalists, typically in a syndicate. Here, certainly we may invest alongside others, but it wouldn't be in a similar type of syndication approach.

But [if] folks come in and start a conversation with us through this initiative, and we think it's better suited for the venture syndicate, we have the opportunity and some of the same people will be involved that will allow us pivot [and try to pull one together].

Is there any cap to these non-controlling stakes that Pfizer's planning to take?

Giordano: We're going to look to stay below 20%, probably 10%. It depends on the size of the company. We're looking to invest into somewhere between seven and 10 companies — so you can do the math in terms of what level of investment that would be.

And is Pfizer planning to take board seats on most of the investment companies?

Giordano: No. Actually, we expect we wouldn't have board seats on most.

There may be some situations where [companies] would want [us to take] either a scientific advisory role or a board role. But that would not be a specific requirement of doing this investment.

Author:Jacob Bell

Published:June 3, 2020

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