Q&A with Norbert Riedel

Norbert Riedel visited the Law School as part of the DPELC-MSL Speaker Series. Below are some of the questions that were asked by students following the talk.

If you haven’t read the post on the content of his talk, you may want to start here!

What kinds of patents does Naurex/Aptinyx get? Mainly, composition of matter patents. These are rock solid.

Why did Naurex sell to Allergan instead of developing the drugs on their own? It would have cost so much money, and they couldn’t have remained a small private company; sometimes a company has to let go of assets to be economically sensible.

Why did Naurex sell such valuable assets? Depression is such a large area; to dwell in this area, you would need hundreds of sales representatives and a full global marketing operation.  Large companies like Allergan have this in place already and they are able to use their existing expertise for the new products.  A small private company like Naurex usually doesn’t have the core competency to take on these functions without growing a lot.  Naurex decided to go in a less-traveled direction that was more manageable and more conducive to being done in-house.  Aptinyx will pursue these more “niche” opportunities.

How did you [Dr. Riedel] find your way to working in a startup? Dr. Riedel noted that he was originally in academia, but  was never really satisfied with research for academic research’s sake. As pharma moved from being chemistry-driven to being more biology-driven, he decided to leave the academic side and head up a large lab.  But he always remained networked and connected to academia.  When at Baxter, he had extensive relationships with Northwestern faculty; he said that he didn’t necessarily want to influence their choice of research, but when they were already doing science that they were interested in, they would get involved.  He was also involved in creating Baxter Ventures, and that kept him connected to the entrepreneurship side.  He said he was always comfortable in the space between industry, universities, and government, and that led him naturally to becoming an entrepreneur.  Now he gets to spend a lot of time with University people and also being on boards; this is a great mix for him.

There was a question about small molecules, the blood-brain barrier, how the molecule was toned down to make it work.  I [the blog post writer, not Dr. Riedel] totally did not understand this question, but it definitely sounded like a good question. I *think* the answer was that it was a real challenge to tone down the molecule, but they managed to do it.

How does Aptinyx feel about offers they get to be acquired? Offers on early stage assets usually aren’t going to be very good, and these are not good offers to take, unless one is desperate; to get a reasonable offer, there usually has to be compelling Stage 2 data, and they are still at least a year away from this. A company has to ask: at what value are we willing to let go of the assets; there is an ongoing battle between staying independent and taking an offer.

Why didn’t Nuarex do a licensing deal instead of selling the assets to Allergan? When Naurex sold, they had just done a C round and raised 80 million dollars. Their investors had invested with the goal of going public. It would have been hard to compel those investors to accept a licensing deal where the up-front money was not that great and Naurex would have carried all of the risk going forward.  So they decided to sell instead.

What do you have to disclose with your patents? What is the company’s IP strategy? When we file a patent, we give the name of molecules, but not their structure. Academics are usually more liberal in sharing information, but we knew the molecule wouldn’t have been safe if we had to disclose its structure.

Are you worried that Allergan has your molecules and will want to work on things that relate to those molecules and overlap with Aptinyx’s business? It isn’t easy to spin off a new company and find enough freedom to operate so as not to get in the way of the acquirer.  We had a long and complicated set of negotiations with Allergan and eventually we agreed to a contract that allowed Allergan to acquire the molecules but only to work in the space of psychological disorders and Alzheimer’s.  Allergan agreed not to do clinical trials that would lead outside of these specified areas.    The deal was just to sell to Allergan the molecules for the areas that Allergan already dealt with – depression and Alzheimer’s.  We have to accept that we may be vulnerable to violation of the contract, but there is only so much that can be done to define the risks on paper.  Most of the time, people play well in the sandbox, and, if they don’t, that is when the law comes in.  But if Allergan thought that Aptinyx’s research would impact their franchise, Allergan would more likely offer to buy Aptinyx, rather than litigate over the contract.

Why would you go after NIH grants when those funds are a drop in the bucket for your company? We applied for the NIH grant because investors want you to find non-diluted sources of funding.  We were doing the research anyway.  Plus, peer-reviewed validation pleases investors and can bring in additional investors.

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