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External innovation is transforming Takeda

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The May 2018 acquisition of Shire for $57 billion has helped to vault Takeda Pharmaceutical Co. into the ranks of Big Pharma leaders, but the company’s transformation—and in particular its embrace of external innovation as a means to do so—began years before that blockbuster deal.

Nenad Grmusa, head of Takeda’s Center for External Innovation, notes that Takeda has inked more than 200 partnerships since 2016, around the same time the Center for External Innovation (CEI) came online as part of a 2015 R&D overhaul that narrowed Takeda’s therapeutic areas of focus and took a hard look at how the company approaches the science outside its own labs. “We wanted to instill within the therapeutic areas and drug discovery units an externally oriented mindset as they approach innovation,” says Grmusa. “We don’t make distinctions about where molecules are invented.” Today Takeda’s R&D efforts focus on four key therapeutic areas: oncology, gastroenterology, neuroscience, and rare diseases.

The CEI reports up through the R&D organization led by Andy Plump and was formed to connect Takeda’s Boston-based R&D nucleus to the outside world with a group that combines strategic alliances, venture capital, and even company formation (the company also boasts more than 45 venture investments and more than 25 new company creations since 2016). The CEI evaluates opportunities across the drug discovery and development spectrum, from target identification through Phase 3 development and is closely aligned with Takeda’s corporate development group that handles opportunities like regional commercial or manufacturing partnerships and acquisitions.

“We pride ourselves in creating these collaborations and in valuing the capabilities our partners bring to Takeda, but we also value what we can offer to our partners as well,” says Grmusa, whose time at Takeda dates back to the company’s 2008 acquisition of the pioneering biotech Millennium Pharmaceuticals, where he had roles in financial planning and portfolio management. “It’s a two-way exchange, and the talent of our research teams is a big part of our external innovation.”

The Shire deal beefed up Takeda’s rare diseases franchise, says Grmusa. Currently, roughly half of its pipeline of new molecular entities in the clinic holds orphan drug designation. Shire also boosted Takeda’s capabilities in technologies like gene therapy, he says, and Takeda continues to build out its rare disease strategy with a variety of different modalities. Indeed, across each of its therapeutic areas of focus, “everything starts with the strategy, then the target, and then we determine the right modalities,” he says. “And external engagement is our operating model. That’s just how we work.”

That has led Takeda in a variety of directions. Grmusa points to several interesting alliances involving cell therapies—from a 2016 deal with GI-focused stem cell company Tigenix (Takeda eventually acquired the company in 2018), to several academic alliances, to a 2017 investment of up to $100 million (alongside Abingworth Ventures) in an oncology/auto-immune startup called GammaDelta Therapeutics, which grants Takeda an exclusive option to acquire the T-cell therapy company within four years of the deal.

The GammaDelta deal also illustrates Takeda’s growing venture presence, which is unabashedly strategically aligned with its R&D priorities. For example in August 2018, Takeda teamed with Third Rock Ventures in a $60 million Series A financing for Ambys Medicines, a liver-disease startup. There, the company has an equity investment and an R&D collaboration from the get-go, says Grmusa. In the case of the gene therapy startup StrideBio, Takeda’s investment in the company’s 2018 Series A led to a March 2019 collaboration worth up to $710 million. Takeda may also incubate companies on its own, and invite other investors in later. “We brought the venture team closer to our R&D nucleus,” he says.

Select Takeda Acquisitions by Value, July 2016–June 2019

Deal Date Company Acquisition Value Focus
May 2018 Shire $57 billion Broad portfolio of products and candidates in  genetic diseases, blood conditions, immunology indications, ophthalmology, and neuroscience
January 2017 Ariad Pharmaceuticals $5.2 billion Marketed cancer therapy Iclusig (ponatinib), a multi-targeted kinase inhibitor
January 2018 TiGenix $621 million Regenerative medicine

SOURCE: Strategic Transactions

Select Takeda Alliances by Potential Deal Value, July 2016–June 2019

Deal Date Company Potential Deal Value Focus
February 2018 Wave Life Sciences $2.2 billion Co-development and co-commercialization of nucleic acid therapeutics in CNS disease
January 2018 Denali Therapeutics $1.2 billion Option to license global rights to three neurodegenerative disease drug candidates
October 2016 Crescendo Biologics $790 million Discovery/development of domain antibody-drug conjugates for immuno-oncology
March 2019 StrideBio $710 million Discovery/development of gene therapies for CNS diseases
October 2018 Enterome $690 million Co-development and co-commercialization of EB8018, an FimH inhibitor in Phase 1b for Crohn’s disease
September 2018 Molecular Templates $663 million Co-development and commercialization of CD38-targeted engineered toxin bodies (ETBs) for oncology indications
October 2017 HemoShear Therapeutics $470 million Discovery and development of new treatments for NASH
July 2016 TiGenix $434 million Allogenic stem cell transplant for complex fistulas in Crohn’s disease patients
August 2017 AstraZeneca $400 million Co-development and co-commercialization of preclinical MEDI1341 for Parkinson’s disease
July 2017 Tesaro $340 million Japan and other Asia territory rights to the PARP inhibitor niraparib

SOURCE: Strategic Transactions

Chris Morrison has covered the biopharmaceutical industry for 20 years as a writer and editor for several industry publications. He is a former editor of In Vivo: The Business and Medicine Report and "The Pink Sheet" where he focused on trends in biopharmaceutical finance, business development, and research and development. Chris contributes to a variety of publications, including In Vivo, Datamonitor, Nature Biotechnology, and Nature Reviews Drug Discovery.

Read his most recent report, The Ultimate Biopharma Dealmakers Report for Alliances and M&A's where he analyzes the latest game-changing deals and what they indicate for the future of the biopharma industry.

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