Roche Holdings AG (SWX: ROG) was the first foreign pharmaceutical company to systematically and seriously invest in Israeli drug development start-ups. Two years ago, it signed a cooperation agreement with Pontifax Fund, with the support of the Office of the Chief Scientist, which has already led to the founding of six companies. Roche also has a strategic cooperation agreement with Yissum Technology Transfer Company of the Hebrew University of Jerusalem.
Roche head of Global Academic Innovation Partnering Zafrira Avnur is responsible for the company's collaborations with start-ups and academic institutions. A former Israeli, she is responsible for collaboration with companies from Israel and 14 other countries where Roche has cooperation agreements to set up start-ups based on the model first tried in Israel. Earlier this month, she attended the ILSI Biomed 11th National Life Sciences and Technology Week in Tel Aviv.
"The collaboration with Pontifax currently handles five companies, and we intend to found more. They are making good progress, and our scientists love working with their Israeli peers," Avnur told "Globes".
Roche invests initial capital in these companies, in contrast to investments in established companies, but it also provides non-cash assistance. "The main thing we offer is direction, experience in drug development, and scientific know-how," Avnur says. "We also offer them use of laboratories and equipment as needed. Pontifax's job is to establish the companies legally, ensure their intellectual property rights, and manage them in the field."
"Pontifax partner Romer Kariv once said that, working with Roche, he felt like a fly on an elephant, and said, 'How much wind are we making'. But, in Israel, Pontifax is no elephant."
As for relations with Yissum, Avnur says, "We have nine joint projects with Yissum, and our relations are excellent. There is extensive sharing of science."
Avnur says that two projects with Yissum have already resulted in licensing agreements, and that Roche is developing the products. Another project with Yissum became SCTherapeutics Ltd., in cooperation with Pontifax and Van Leer Ventures Jerusalem Ltd. All the projects are breakthrough projects. Were a project obvious, we'd have done it alone."
Israel's drug industry is in its infancy
"Globes": How do the collaborations reflect the difference between Israeli and Swiss drug development industries?
Avnur: "There is a huge difference, which is the advantage of the cooperation, because Israel has excellent science and outstanding innovative ideas, but does not really have a developed pharmaceutical industry. The pharmaceutical industry is very hard, long term, and expensive. A company in the field needs a lot of experience and has to be huge.
"In Israel, this industry is in its infancy, and there are a lot of things that Israelis don’t know, but they seem to think that they know more than they really do. There's great naiveté about what is really needed to develop drugs. That is why, in Israel, small companies usually die during the Phase II clinical trial.
"I believe that Israel will one day have a real pharma industry, because it has the scientific capability, and strong will and ambition in this area, including at the government level. The country's size is not in itself a reason not to have an industry. Switzerland is not big, and it has two world-class pharmaceutical companies: Roche and Novartis AG (NYSE:NVS; LSE: NOV; SWX: NOVZ). But, the Israeli pharmaceutical industry is still in its infancy; it's only 12 years old. There's a lot to learn, and some of the learning can come through collaborations with companies like ours."
Israel's drug industry is mainly based on Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) graduates.
"Even Teva, as a highly appreciated generics company with global sales, is not an original drug company, and if it wants to become a real drug company, it will have to dramatically change its workforce in favor of original drugs.
"It has the size, it is multinational, and it has distribution channels to some extent, although the channels of generics companies are slightly different from the channels of original drug companies. It would be great if Teva were to become an original drug company, because then Israel will have a pharmaceutical industry.
"By the way, Roche has very good relations with Teva, despite the history of tensions between the generics and original drugs industries. Previous executives at both companies were very close, and now that management has changed, I believe that the good relations will continue, because the new managers know each other."
Israelis are great at inventing technologies
Israeli companies are trying a wide range of methods to shorten drug development, in the hopes of shortening development time and lowering costs. What do you think about this approach?
"Converting a drug to a new use does not really save expensive and complex clinical trials, but only shortens the initial stages - safety and efficacy trials - by a few years. A cocktail of two drugs also shortens the initial stages, if the drugs are known, but it is liable to subsequently lengthen the development, because of the need to prove, in addition to the safety of each ingredient, the efficacy of the combination. It is also necessary to prove that there are no negative interactions between the two ingredients.
"As for the 'innovative drug delivery mechanisms', such as delayed release, we believe in it, and we think that it's welcome. Israelis are outstanding in inventing technologies of this kind, albeit here too, the later development stages require pharmaceutical know-how and quite a lot of money."
Pharma companies currently face the challenge of R&D efficiency. How is Roche dealing with this?
"I cannot discuss Roche's whole strategy, but only about by own field - innovation in the early stages of development. Due to all the circumstances you mentioned, the failures and regulatory changes and economics, there are now fewer results in exchange for investment in R&D.
"Some companies have decided to cut back on in-house innovation, and improve their profitability through income from generics, non-prescription drugs, veterinary products, and so one. Time will tell where this will take them. Roche chose a different path - to emphasize innovation. The company has four R&D departments, for pharmaceuticals, diagnosis, and the departments of two of our acquisitions Genentech and Japan's Chugai. We also expanded our collaborations, like the ones for which I am responsible in Israel. In general, we have a long-term perspective, and meanwhile Roche has an excellent pipeline, and we do not expect a decline in income when the patents expire."
Published by Globes [online], Israel business news - www.globes-online.com - on May 29, 2012
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