Market Overview

Exclusive Licensing Gives Biologics CROs Major Advantage

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NEW YORK, April 26, 2019 /PRNewswire/ -- Biopharma companies rise and fall on the back of research and development. Success in the biopharma industry has always been about patents. The exclusive right to market life-saving treatments is how all the industry titans made their names. Johnson & Johnson (NYSE:JNJ) and Pfizer Inc. (NYSE:PFE) both amped up on R&D and the ensuing patents. As such, companies rise and fall on these developments, and can spend months, if not years, researching, developing, and testing a new compound. When they're successful, these major breakthroughs can be worth billions in revenue for those who commercialize these drugs. Many biopharma companies, such as, AbbVie Inc. (NYSE:ABBV), Thermo Fisher Scientific Inc. (NYSE:TMO), and ImmunoPrecise Antibodies Ltd (OTCQB:IPATF) (TSXV:IPA), are hitting home runs in the pharmaceutical discovery process, which lands them lucrative and exclusive contracts with big pharma.

As major firms continue to search for new potential proprietary breakthroughs, they have begun to recognize the value in outsourcing this process to smaller, more specialized companies. Often focused on highly niche areas, these small research firms have succeeded in securing exclusive agreements with major institutions simply because their expertise is so hard to come by. In turn, a large number of lucrative breakthroughs have come as a result of these partnerships, with many CROs poised to explode in value thanks to their success.

The Changing Nature of the Biopharma Discovery Process

Decades ago, drug makers did their own discovery work almost entirely in house. In the past few years, however, outsourcing this process has become increasingly common. The rapid growth of various Contract Research Organizations (CROs) in the niche biopharma world has attracted most of the experts in these specialized areas. This means that major companies looking to jump into areas such as gene therapy, biologics, and other niche sectors are better off working with these firms rather than competing with them. Some CROs, such as ImmunoPrecise Antibodies Ltd (OTCQB:IPATF) (TSXV:IPA), bring decades worth of specialized expertise that is almost impossible to compete with.

Multi-billion-dollar pharmaceutical corporations such as Johnson & Johnson (NYSE:JNJ) have already begun incorporating various CROs into their research and development projects. According to one report[1], the global CRO market was valued at around $36 billion in 2017 and is expected to grow to $56 billion by 2023 as the demand for outsourcing testing and specialized expertise continues to grow.

This isn't surprising, as it's easier for large companies to outsource these programs - that aren't a core focus - to a more specialized company with expertise in that area. According to statistics released by global consulting firm Charles River Associates, around 75 percent[2] of new developments in niche biotech areas came from companies that aren't commercializing the product. Even outside these specialized areas, CROs are expected to make over one-third[3] of all global drug-discoveries by 2021. This means most major discoveries aren't coming from major companies such as Thermo Fisher Scientific Inc. (NYSE:TMO), but rather originate from highly experienced CROs.

Even industry leader Pfizer Inc. (NYSE:PFE) has already partnered with these types of companies. Signing an agreement with Pharmaceutical Product Development, this marks the third strategic CRO partner the company announced. At the time, Pfizer Inc. went on to say[4] that these partnerships are what will "provides us with additional flexibility" and the "enhanced global reach" necessary to ensure their portfolio remains competitive.

Major Breakthroughs

Thanks to these agreements, there has been an explosion of breakthroughs in the biopharma industry. One company that has partnered with AbbVie Inc. (NYSE:ABBV), Voyager Therapeutics, has been making progress in a potential treatment for Parkinson's disease. Using vectorized antibodies targeted at specific proteins, Voyager's new technology could revolutionize how the disease is treated and give hope to millions of Parkinson's patients. If successful, such a treatment could be worth billions in revenue.

Another highly lucrative breakthrough was spearheaded by ImmunoPrecise Antibodies Ltd (IPATF) (IPA). Known as an industry leading CRO in the cutting edge field of biologics, ImmunoPrecise Antibodies Ltd (IPATF) (IPA) secured an exclusive license with Stanford University recently. The arrangement would see ImmunoPrecise Antibodies' Ltd (IPATF) (IPA) wholly-owned subsidiary, U-Protein Express, act as the exclusive provider of a highly specialized protein, Wnt surrogate-Fc.

Wnt proteins are used in the body to signal cells to multiply and grow. Wnt surrogate, on the other hand, can be used as a growth factor in developing specific tissues and even cultivating organ parts. The license awarded from Stanford University would make ImmunoPrecise Antibodies Ltd (IPATF) (IPA) the only manufacturer and supplier of Wnt surrogate Fc in the entire world. Currently, there are hundreds of research groups focused on the organoid space, an area that's poised to expand considerably over the upcoming years. Almost all of these companies will end up requiring growth factor proteins such as Wnt surrogate in the future for their experiments.

As the only provider of this critical, niche compound, ImmunoPrecise Antibodies Ltd (IPATF) (IPA) has quickly cemented itself as a world-respected CRO and a cutting edge leader in the biopharma space.

Further Biopharmaceutical Developments

Pfizer Inc. (PFE) announced recently that it had seen excellent results from a phase 3 study evaluating one of their compounds, Tanezumab. The study had looked at the effects of the drug on patients with osteoarthritis. At the moment, the compound is part of an investigational class of non-opioid chronic pain medications that could revolutionize the market.

Johnson & Johnson (JNJ) also had good news regarding its own compound, Invokana (canagliflozin), which was found in a phase 3 study to drastically reduce the risk of renal failure in patients. People with type 2 diabetes and chronic kidney disease may see this drug used in the future as a treatment option.

The Federal Drug Administration (FDA) recently gave approval of an interleukin-23 inhibitor called Skyrizi. The producer of the drug, AbbVie Inc. (ABBV), already has an impressive immunology portfolio treating a variety of conditions. Skyrizi, in particular, would seek to treat patients with moderate to severe plaque psoriasis.

As biopharma investors wait in anticipation for the sectors' quarterly financial earnings, Thermo Fisher Scientific Inc. (TMO) impressed analysts with strong Q1 revenue figures. The company went on to say that its revenue grew by five percent year over year. First quarter revenues were at $6.12 billion, compared to the $5.85 billion during the same period last year.

For a FREE research report on ImmunoPrecise Antibodies Ltd (TSX.V:IPA) (OTCQB:IPATF), visit www.microsmallcap.com

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[1] Business Wire Press Release, Nov 6, 2018
https://www.businesswire.com/news/home/20181106005397/en/Global-Contract-Research-Organizations-CRO-Market-Valued 

[2] BioSpace, Sept 13, 2018
https://www.biospace.com/article/am6a-report-sheds-light-on-importance-of-licensing-agreements-in-biopharma-industry/

[3] Nature International Journal of Science, April 11, 2018
https://www.nature.com/articles/d41586-018-04163-8

[4] Outsourcing Pharma, April 21, 2015
https://www.outsourcing-pharma.com/Article/2015/04/22/Pfizer-reveals-PPD-as-third-strategic-CRO-partner

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SOURCE Microsmallcap.com

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