The University of Michigan (U-M) inked a deal with health care investment firm Deerfield Management Co. (Deerfield) in a quest to jointly commercialize therapeutic projects that hold promise in the pursuit of solving unmet clinical needs. As a result of this deal, U-M and Deerfield announced the launch of Great Lakes Discoveries LLC. With a commitment of up to $130 million over the next decade to invest in biomedical research at U-M, Deerfield’s pursuit of life-saving drugs involves a tight partnership with the Wolverines’ academic discovery and translational operation. This is just the latest in a flurry of major drug discovery-to-commercialization arrangements Deerfield is closing with major academic research centers across the nation. Is the company outmaneuvering other private equity groups focused on the important life sciences sector?
TrialSite News offers the Investor Watch network a brief breakdown of this update.
What is the key premise behind this deal?
William Slattery, a Deerfield partner, summarized it nicely, commenting that major academic research centers such as the University of Michigan are instrumental in the drug development value-chain—initiating and offering “much of the novel insights that advance our understanding of disease.” He continued that ultimately any “commercially promising innovations eventually outgrow the lab, requiring greater resources and more focused development expertise that an academic setting can typically provide.” Hence, Deerfield helped drive this importance initiative forward—to marry these two vitally complementary worlds.
James Flynn, a managing partner at Deerfield and alumnus with U-M and a member of the U-M Life Sciences Institute’s Leadership Council, commented, “Part of this involves continuously identifying the most important early-stage research and ensuring its advancement in a timely way and without unnecessary barriers.” He continued, “With its vast research platform, the University of Michigan is the ideal partner and we look forward to the innovations that we expect this alliance will bring.”
What is the primary goal of this alliance?
The parties seek to accelerate the discovery and associated translational research needed to accelerate the commercialization of cutting-edge therapies in high-need therapeutic areas and rare diseases.
What will be the primary function of the new venture called Great Lakes Discoveries?
Great Lakes Discoveries will primarily focus on the preclinical research stages of drug discovery and development targeted selected projects.
What does Deerfield bring to the deal?
Importantly, capital ($130 million) and, just as key, expertise in drug development to help shepherd potential cutting-edge treatments. Moreover, as excitingly declared by Marschall Runge, dean of the U-M Medical School and executive vice president for medical affairs, “We are excited to be able to collaborate with Deerfield in a way that will catalyze our translational research efforts by supporting preclinical and commercial clinical development of U-M therapeutics to improve patient care by developing new therapeutics.”
And director of U-M Life Sciences Institute and vice provost for the Biosciences Institute Initiative reports this alliance surely compliments U-M’s existing translational infrastructure.
How will the new entity called Great Lakes identify projects for the pipeline?
Starting this fall, U-M researchers will have the ability to submit proposals for review by a Great Lakes committee composed of scientific leadership representing both the university and Deerfield.
What happens once a project is selected by the Great Lakes committee?
Thereafter, these fortunate proposals get funding and operational support by Deerfield for a development plan aimed at achieving Investigational New Drug (IND) readiness. Successful projects that achieve IND-enabled status may be eligible for additional capital from Deerfield. Great Lakes Discovery, in exchange for the funding, would receive an option to license intellectual property that is developed at U-M under this agreement. Of course, Deerfield can then monetize such license with big pharma, for example.
What office will oversee and manage the Deerfield alliance?
The U-M research and technology transfer office is led by Kelly Sexton, Associate Vice President for Research – Technology Transfer and Innovation Partnerships. Ms. Sexton reports that the funds generated from this deal are instrumental in advancing drug candidates toward impact.
What does U-M’s drug development pipeline look like?
Well, according to Ms. Sexton, it looks good. She was quoted in the university’s press release: “The University of Michigan has one of the most massive academic therapeutic pipelines in the world, with 14 drug candidates currently in various stages of clinical trials and over 130 preclinical drug discovery, drug repurposing and novel drug target validation programs underway in our labs across campus.” The technology transfer and licensing executive emphasized that the deal would “help us to realize the promise of this pipeline.”
What other academic deals has Deerfield been involved with?
Deerfield has been on a roll structuring and closing deals with major academic research centers across the United States including partnerships with University of Illinois at Chicago, Columbia University, Johns Hopkins University and Northwestern University.
During June last year Deerfield inked a similar deal with Columbia University in New York City, setting up Hudson Heights Innovation with an identical deal structure involving $130 million and a 10-year term.
And as we reported a couple months earlier during April 2019, Deerfield inked an up to $65 million deal with University of Illinois at Chicago to develop and commercialize new drugs. In a seemingly similar structure to the Wolverines deal, they set up a third party venture called West Loop Innovations that exists to help commercialize and monetize university inventions.
And in November of 2018, Deerfield closed a $65 million drug discovery and development fund alliance with Northwestern Universitym forming Lakeside Discovery LLC.
Launched in 1994 with $17 million in equity by founder James Edward Flynn, Deerfield Management seeks to advance healthcare through investment, information and philanthropy. As of late 2019, the firm manages nearly $10 billion in assets. The investment firm maintains a combined portfolio of more than 200 private and public investments across the life science, medical device, diagnostic, digital health and health service industries at all stages of evolution, from startup to mature company.
According to some reports, the firm has made 42 investments and 20 exits to date, including Foundation Medicine (Roche), Orchard Therapeutics (GSK) and Alector.