James Mullen backs Vicarius’ $22M series A to equip ex-Biogen, Elan team to offer U.S. biotechs a route to Europe

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23/08/2017

James Mullen has teamed up with colleagues from his days leading Biogen to help U.S. biotechs bring drugs to market in Europe. The resulting startup has raised CHF 21 million ($22 million) to get off the ground—and plans to return for about 10 times that once its business gets up to speed.

Vicarius Pharma will use the series A money (PDF) to begin building a business it sees providing biotechs with a better option for commercializing drugs in Europe. Led by ex-Biogen and Elan COO Hans Peter Hasler, Vicarius will use its own money to build European commercial subsidiaries for U.S. biotechs to manage everything from regulatory strategies to postlaunch activities. After a certain point, the biotechs will take over the running of their subsidiaries.

“We really manage and build the structure. We don't just sell the product. If your company's called 'XY' you'll have your 'XY' affiliate established with a team,” Hasler said.

Hasler is now talking with about five U.S. biotechs that have drugs in late-phase development and are interested in teaming up with Vicarius. Most of these companies are aiming to bring products to market in Europe in 2019 or 2020.

The plan is to agree on net present values for the assets, decide on whether to split it 30:70, 40:60 or some other way and then set a milestone at which the biotech will recapture the subsidiary. The deals could also reward Vicarius with milestone payments and royalties.

Hasler thinks the easiest point to transfer the running of the subsidiary to the biotech is after it has broken even. At that point, product sales will have offset Vicarius’ investment in the subsidiary. But biotechs that want to claim their subsidiaries early can do so by paying Vicarius for its work.

“We are ready and able to hand back at any time. The day you tell us you want this back, we're not going to stand in the way, you will get it back,” Hasler said.

A third way for commercialization

The model is intended to address some of the difficulties U.S. biotechs, many of which have little to no European commercialization experience, face when trying to get drugs approved, reimbursed and sold in the region.

Today, biotechs outlicense their assets or bring them to market themselves, either with or without the support of a contract sales and commercialization group. Neither option is ideal.

Biotechs that outlicense risk giving up some of the value of their assets and handing control of them to companies that won’t prioritize their prospects. Companies that try to oversee the European launch themselves run into a fragmented reimbursement landscape that can infuriate even large, experienced biopharma companies. And, most critically in Hasler’s view, they have to quickly identify and attract the hires that can guide them through this maze.

“Hiring the right people fast enough in Europe is not easy. There is just a limited number of top people in Europe,” he said. “You need to go out and find a leader, and that leader starts to find a second guy, a third guy. It takes a lot of time and there's no guarantee that the leader is going to be able to do this well.”

Hasler acknowledges the quick building of 200-person commercial organizations could challenge Vicarius, too.

The challenge is compounded by the complexity of the markets Vicarius looks set to go after, with its current list of prospects skewing toward movement disorders, cancer, pain and neurology. But with Vicarius’ team reading like a who’s who of former leaders from Biogen, Elan and other companies, Hasler thinks the experience and network his startup possesses mean it is as well placed as any group to meet the challenge.

Key members of the team built their reputations working alongside Hasler at Biogen in the 2000s. This gives them firsthand experience of the challenges their clients will face if they go it alone in Europe.

Biogen and other U.S. biotechs with aspirations to grow into long-lasting, standalone players tried to tackle Europe solo. But between getting the initial launch infrastructure in place and then increasing staffing on the fly in a bid to gain traction, Hasler thinks a lot of time and value were wasted.

This led to talks between Hasler and Mullen about “how to do European launches better than we did at the time,” and ultimately to the formation of Vicarius.

Raising more money

Mullen is “is one of the main investors” in Vicarius, Hasler said, and will influence its work from the position of chairman. The ex-Biogen CEO was joined in the series A by other private investors.

Hasler sees the CHF 21 million taking Vicarius up to when the first of its partners’ drugs wins approval. Beyond that, Vicarius will become an increasingly money-hungry organization. And that means it will need to return to investors if it is to grow into a sustainable business.

“One launch we're looking at will cost 100 million, approximately. To do three [launches] you'll need 2, 300 million over the next five years,” Hasler said. “From then on we could finance the launches with our own cash. Because we're a private company we could actually decide to reinvest in more launches.”

The resource requirements of each launch, both from a financial and expertise perspective, mean Vicarius will limit the number of products it takes on. This will allow the core team to monitor and advise each of the subsidiaries, while leaving some of the day-to-day tasks to the employees hired by each offshoot.

Vicarius also needs to be picky as its business model entails it taking on some risk. The company will invest in teams to support drugs before they start racking up sales. Regulatory setbacks and lackluster launches could leave it out of pocket. These risks are mitigated by the fact Vicarius can cherry-pick from a pool of drugs that have already reached late-phase development.


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