Media Coverage

Covenant R&D Pathway Unscathed by Outside Pressures


Sep 09, 2020 - IHS Markit
By: Joseph Harvey

Covenant Animal Health Partners has proven the resilience of its R&D strategy, as it continues to move its pipeline towards commercialization.

The company was founded in 2018 as a collaboration between Reliance Animal Health Partners and US venture development specialist TechAccel. Covenant is providing a new option for developing market-ready animal health products. The firm aims to license product candidates through third-party agreements, work through development and then sell them to companies that will take on commercialization.

Tom Overbay – one of Covenant’s partners – said the company had witnessed very limited impact from COVID-19. Aside from minor difficulties with the importation of certain materials, the company has “stayed on schedule”.

Speaking to IHS Markit Animal Health at the recent virtual summit hosted by the Kansas City Animal Health Corridor, he noted: "Everything is going as planned. We are finding and advancing some projects that have come to us directly. We've also got a very good relationship with a top 10 animal health company and we've got a series of projects we're lining up where we'll work on some of their assets. They've got an option to buy back."

Covenant’s team, with over 150 years of combined experience in animal health, utilizes external contract service providers to speedily work on product candidates and bring them to approval.

Dr Overbay stated: “We never set out to develop blockbusters of over $100 million sales. We’re focused on $15-45m potential peak yearly sales. We’re finding a lot of projects in this range.”

The firm’s business plan as a virtual company enables it to move quickly and reduce the amount of corporate distractions, as well as avoid any major upheaval when obstacles such as COVID-19 rear their heads.

As well as projects licenced in from the top 10 partner, Covenant also has a pipeline of licenced-in product candidates that are at different stages of development. Dr Overbay expects the company's first two products – cattle pharmaceuticals – to be authorized in the US early in the third quarter of 2021.

While the global pandemic has not hurt Covenant’s ability to develop its candidates, it has changed the access that commercial partners have to veterinarians and livestock producers. This creates challenges for the introduction of a new product.

As the company looks for partners for its two cattle pharmaceuticals, Dr Overbay said it is taking this into account as it seeks potential collaborations. Covenant is considering using phased purchase agreements to help mitigate any commercial risk for the eventual acquirer of these assets.

Dr Overbay said the majority of Covenant's pipeline are projects that have been brought to its attention by partners. He estimated there will be a 3:1 ratio in favor of projects from collaborators, compared to candidates that Covenant has sought out itself.

”I think this is a reflection of the changes going on in the industry,” Dr Overbay remarked. “Companies want products that are ready to be marketed. They’re being really selective of the projects that take to their internal R&D.

”I think we have the capacity to take on more projects. Although, we have to be careful we don’t create for ourselves the same problems that we’re trying to solve by getting any bigger.”

Increased innovation

Dr Overbay said the animal health industry is particularly innovative at the moment. He suggested this has been prompted by the major firms, which now have a large enough top line to take some R&D risks on new projects.

The relatively strong global economy has also driven heightened innovation in animal health, especially in the area of pets. Dr Overbay pointed out the increased spending on companion animals by their owners, with a growing consumer focus on quality of life.

”This is an industry that is always innovating,” he noted. “We’re dealing with innovation that we see on the fringes.”

While Covenant aims to be nimble along the development chain, it also intends to speed up the regulatory process for some of its candidates. Dr Overbay applauded the US regulators it is currently collaborating with.

”Instead of debating on different sides of the table, we’ve moved to the same side of the table,” he explained. “This doesn’t happen overnight.”

Covenant has been using scientific data to argue its case regarding a certain candidate in its pipeline. In repeat dialog with the regulators, the company has been successful in reducing the approval timeline for this product.

The firm's unique business model requires it to make projects as affordable as possible, Dr Overbay explained. This has forced Covenant to be far more persistent with the regulators than some of the larger companies might be when finding new ways to speed up the approval process.

Reprinted with permission of IHS Markit

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