Takeda makes strategic investment in Lectus Therapeutics

Through its venture capital arm, Takeda has recently invested in three emerging biotechnology ventures, including Lectus Therapeutics, a functional proteomics-focused company. Datamonitor's Mark Belsey explains how this will strengthen Takeda's long-term pipeline development and help to drive the company's increasingly globalized R&D collaboration infrastructure...

Takeda is Japan's largest pharmaceutical firm and was ranked in the top 20 in terms of ethical pharmaceutical sales in 2003. The company had cash reserves of $9.2 billion in 2003 and a reasonably low level of debt. Therefore, there is scope for Takeda to increase licensing and M&A activity to boost pipeline development.

The company is currently focusing on expanding its early-stage pipeline, utilizing an increasingly globalized R&D collaboration infrastructure. Historically, Takeda has used its position as an attractive development and marketing partner for smaller Japanese companies to generate a number of Phase I and II products, which would then drive long-term pipeline development.

However, Takeda's R&D alliance strategy is becoming increasingly focused towards international partners, to enable it to rapidly develop its pipeline. Takeda is currently building an international alliance network utilizing its joint venture with Abbott, TAP, to support business development, in addition to expanding its venture arm, Takeda Research Investment (TRI), to drive innovation.

TRI helps to drive the development of Takeda's international alliance network

Headquartered in California, TRI made key investments in three early-stage biotechnology ventures in the US and the UK in May 2004. Of these, the only named biotechnology venture was Lectus Therapeutics, which is based in Bristol, UK. TRI's investment in Lectus focused on the latter's proprietary functional proteomics platform known as LEPTICS, designed to generate highly selective ion channel modulator leads to treat urinary bladder disorders, angina and hypertension.

Roland Kozlowski, co-founder and CEO of Lectus told Datamonitor, "This strategic partnership with TRI is a huge endorsement of the company's technology and commercial strategy. With the investment from TRI and the competitive advantages afforded by LEPTICS, a technology which clearly differentiates Lectus from other ion channel businesses, the company is positioned to exploit ion channel drug targets that are otherwise inaccessible to existing technologies. This will enable Lectus to advance its own programs, as well as those of its partners, other pharmaceutical and biotech companies, and boosts the company's anticipated valuation to several million dollars."

Major players are exploring emerging biotech opportunities

Takeda's investment is characteristic of a growing interest among major pharmaceutical or biotechnology companies (fully integrated players) to explore small molecule or biologics opportunities in the emerging biotech sector. For example, in 2003 Johnson & Johnson purchased Scios (manufacturer of the therapeutic protein Natrecor) while Amgen signed a long-term small molecule development deal with Biovitrum.

This trend has continued into 2004. In January, Amgen made a $25 million equity investment in Infinity to develop small molecule therapeutic agents and in April, Genzyme announced its intention to acquire ILEX (manufacturer of the therapeutic antibody Campath and a number of small molecule oncology pipeline programs) for more than $1 billion.

Early-stage funding for biotechs

From the point of view of the emerging biotechnology company, the early-stage funding climate has become a difficult place over the past few years, with private equity investments scarce. The growing number of deals involving direct stock purchase, licensing, or M&A established by venture capital arms of leading fully integrated pharmaceutical or biotechnology players has driven greater biotechnology funding. It has also diversified the risk associated with pipeline development for major pharmaceutical or biotechnology companies.

The collaborations that TRI has formed this month demonstrate the development of Takeda's venture arm into a valuable contributor to the development of the company's early-stage pipeline. The investments also highlight Takeda's strong long-term development strategies. However, Takeda now needs to address the lack of late-stage pipeline products to ensure continuing success in the short and medium term.

Related Research:

• PharmaVitae 2003: Takeda

• The Mid-Cap Japanese Pharmaceutical Sector: Evolving to Survive in the Face of Rising Competition

• Japanese Pharma to 2008: Innovation and Expansion Will Counter the Western Threat

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