Cell line development (CLD), the process of engineering a cell line to manufacture human biologic therapeutics, has harnessed a multitude of technological advancements over the past few years. Traditional methods of gene transfection for biologics production are considered expensive, time-consuming, and riddled with unstable expressions.
The CRISPR/Cas9 system completely changed the CLD landscape with targeted knockouts of specific genes, as well as knock-in of the manufactured gene to a stable and highly expressed site. However, CRISPR/Cas9 rights to commercial freedom-to-operate (FTO) is highly contested and imposes heavy royalties for commercial CLD.
The preferred alternative, Cas-CLOVER, is Demeetra’s exclusive technology with full commercial FTO in a single license under issued patents in US, Europe, and Japan with additional world-wide patents pending. We offer single-fee commercial licenses for unlimited use from $1-4M.
Our case studies below are based on the 2019 MAb market economics with an average of $1.3B/year in sales1 and use a proprietary net present value (NPV) algorithm model. Other assumptions that apply to biotechs are: single product in early-stage development, with a 10% chance of success, a higher financial discount rate of 32.35%, $50M in R&D expenses and a $10M capital expense to get the product to market, including a 10% cost of goods (COGS), and 10% marketing expense.
Demeetra’s Cas-CLOVER single time $1M fee includes a complete license for unlimited products (single product is presented for this example).
A direct comparison of the product NPV to a royalty bearing CLD technology such as CRISPR/Cas9 which assumes a 5% royalty is shown below.
After comparison, it’s easy to see that licensing Cas-CLOVER for CLD would save stakeholders approximately $42.9M in asset value versus a royalty bearing technology.
Our assumptions for larger pharmaceutical company products are based on a more mature pipeline of 5 products, with a 30% chance of success, a lower financial discount rate of 14.71%, $500M in R&D expenses and a $100M capital expense to get the products to market. In addition, we estimate the legal and accounting expense of tracking royalties on multiple products is at least $100,000/year. In this scenario, CRISPR is only a 1% royalty on products.
Demeetra’s Cas-CLOVER one-time $4M fee for multi-product cash flow life-cycle is shown below. The expense for Cas-CLOVER licensing without royalties is so minimal that it is barely perceptible in year 1, 2022 (green bar).
In comparison, the table below is a royalty bearing technology, such as the CRISPR/Cas9, showing that green bars are 1% royalty payments to CRISPR technology.
In summary, by licensing Cas-CLOVER it would save a total of $872.7M in royalty payments to CRISPR or other royalty bearing technologies.
Published profit margins for biologics CDMOs are typically 20-30%. Therefore, paying a 5% or more royalty on sales does not make sense at all.
If your team has experienced inefficient licensing and FTO issues when using gene editing tools like CRISPR, you should partner with us. Demeetra will work out favorable licensing terms for your CDL programs. Contact us any time to discuss our flexible licensing options for Cas-CLOVER.