Eiffel targeting big pharma in 'low risk' strategy

When Eiffel Technologies' CEO Christine Cussen said last December that the company would start this year with $6.2 million in its back pocket, she outlined several ways the funds would be used. One of these -- pursuing drug re-engineering research to extend patent protection -- could prove particularly lucrative given that drugs worth more than $US42 billion will come off patent in the next three years.

"Today, blockbuster drugs are not being delivered -- big pharmas used to aim to put out at least one major drug a year, but it simply isn't happening any more," Cussen said.

"The big companies are just squeezing the most out of existing products by marketing the hell out of them, but they know that the value of those drugs will plummet as soon as they come off patent."

Eiffel's approach is to apply its supercritical fluid (SCF) technology to an existing drug, in order to improve the compound's delivery, and at the same time allowing for an extension of the patent to prolong its useful commercial life.

One big attraction of SCF is that it is already a proven production technology, as used in producing decaffeinated coffee. This means potential users can rely on an established industrial process -- not just a hard-to-reproduce lab result.

But will big international pharma want to hook up with an Australian biotech in a bid to ward off generic erosion of sales? The executives at Eiffel seem to think so. "Big Pharma need our technology to prevent the enormous drop in sales they are facing within the next five years," said Eiffel director Rod Tomlinson. The SCF technology has been researched at the University of NSW, and the company is now capable of using this across at least four platforms to reduce the size of the particle, thus significantly absorbing its ability to be absorbed by the human body.

"The added advantage to applying our technology is that not only does it extend the life of the patent, which is a very big issue, but the reduced particle can be used to deliver the drug as a spray, a tablet, inhaled or in patches," added Cussen.

Graeme Wald, biotech analyst at stockbroking firm Burdett Buckeridge Young, agreed that one of the issues that has so far helped Eiffel is the way it has stuck to its process development guns, and avoided being lured into a production scenario.

"In some ways you could say that [Eiffel] has stayed away from being a pure biotech company. It has concentrated on developing the process which is less risky than taking a pure biotech product approach.

They are looking to license to all big pharmas, across a broad range of applications. This alone means demand for their IP is much more compelling," he asserted.

The major difference between Eiffel's approach and that of a 'conventional' biotech is the targeting of the technology to maximise ongoing income stream. Cussen noted that instead of trying to invent or manufacture that elusive new product, the company was instead being market-savvy about which approaches would generate income for the company in a predictable way.

"We are being very particular about which drugs we are looking at for possible re-engineering," he said. "We have 'cherry-picked' a list of targets that we will work on, some with the help of our international advisory panel."

The company has focused in on re-engineering compounds that have low bioavailability and poor solubility, products that would benefit from reformulation to a more patient-friendly form such as inhalation or implant, and drugs with a patent due to expire over the next three to five years.

According to Cussen, this targeted approach means the company can expect upfront fees, milestone payments as re-engineering proceeds, and ongoing royalties once the new product reaches full production.

"So our approach means we will be getting money all the time; none of that extended money-burn drought that can happen during the research process," she added.

This business-up approach has been applied not just to the product, but to marketing too. From the word go, Eiffel has concentrated on applying its networking and selling expertise to it's company goals, instead of simply relying on a great idea to sell itself.

In its just-released half-yearly report, Eiffel showed a healthy cash balance of over $4.5 million (up from $0.88 million last annual report) thanks to investor confidence. However, Eiffel's cash is flowing out faster than income, with a loss of $2.4 million compared to $0.75 million the previous year, with receivables also taking a hit to just over $425,000 from a previous $2.1 million.

Describing the current biotech market as "tough" -- the company's share price is hovering around the 8c mark -- Cussen asserted that the only way to survive was to ensure the company was seen as a serious player, not just another small Australian start-up.

As a result, it has appointed advisory board members such as Prof Robert Langer from Massachusetts Institute of Technology, Prof David Ganderton from the United Kingdom, and Prof Anthony Hickey from the University of North Carolina, all respected players on the international scene.

Cussen said this association with international experts was vital to the image of any company, and critical if it is to be taken seriously by major pharma.

Allied to this networking approach is a deliberate intent to talk to any prospective customer on what Cussen called "their" territory. If this means tailoring the sales pitch to the critical business interests of the company being approached, then that is what they will do.

"Anybody who wants to survive in this industry has to be smart. It is very easy to waste time and resources [selling] your product. Remember all the big pharma have at least seven or eight people banging on their doors every week trying to sell them ideas. Strategic selling is incredibly important," she added.

Burdett Buckeridge Young's Wald went on to say that such an approach was an asset when it comes to filling the venture piggy bank. He noted that the risk was not then dependent on a single "go or blow" success story, but on the company's ability to modify its core technology to suit a range of potential customers' needs.

"What they are selling is ways to make big pharma more productive. This makes Eiffel as much an engineering company as a biotech. And it reduces the risk -- I would say it's just a matter of time before they sign the big one," he added.