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Revised Alexza Deal Suggests Updated Strategy For Symphony Capital

Executive Summary

With the dissolution of Symphony Allegro and the return of the joint venture's three clinical programs to Alexza, Symphony Capital should have its exit from the $50 million investment it made in the biotech and its Staccato aerosol inhalation technology in 2006

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Given their diminishing R&D productivity, pharma companies have externalized more R&D in order to increase the number of drug projects and thus the chances of getting a major new product onto the market. But by and large, this externalization has used fairly traditional models, like product licensing, and hasn't fundamentally improved R&D's economics. Instead, these investment programs must increase the number of drug assets to which a pharmaceutical company has access - but without increasing to the same degree the capital or resource investment required to access them. Thus, a growing number of companies have begun to pursue new investment ideas that recognize that much of the value comes from having preferential access to the information needed to decide whether to exercise rights to programs - rather than day-to-day operational responsibilities. This article provides a framework for deciding among innovative models, and in particular, how to apply multiple approaches across an entire portfolio.

New Frontiers in Pharma R&D Investment

Given their diminishing R&D productivity, pharma companies have externalized more R&D in order to increase the number of drug projects and thus the chances of getting a major new product onto the market. But by and large, this externalization has used fairly traditional models, like product licensing, and hasn't fundamentally improved R&D's economics. Instead, these investment programs must increase the number of drug assets to which a pharmaceutical company has access - but without increasing to the same degree the capital or resource investment required to access them. Thus, a growing number of companies have begun to pursue new investment ideas that recognize that much of the value comes from having preferential access to the information needed to decide whether to exercise rights to programs - rather than day-to-day operational responsibilities. This article provides a framework for deciding among innovative models, and in particular, how to apply multiple approaches across an entire portfolio.

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