strategic planning and licensing biopharm products
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Strategic Planning and Licensing Biopharm Products. Prepared for LES Annual Conference By Donna Hackett. When to license. “Partner early and often” – Corixa Inc As late as you dare. What do you need?. Intellectual Property (Patents, know-how) - PowerPoint PPT PresentationTRANSCRIPT
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June 2003
ProPharma Partners Limited
Strategic Planning and Licensing Biopharm Products
Prepared for LES Annual ConferenceBy
Donna Hackett
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June 2003
ProPharma Partners Limited
When to license
• “Partner early and often” – Corixa Inc
• As late as you dare
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June 2003
ProPharma Partners Limited
What do you need?
1. Intellectual Property (Patents, know-how)2. Proof of concept (plus defined development plan)3. Detailed Information Memorandum 4. Outline valuation (including cost of development)5. Patience and Persistence6. Access to Experience
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June 2003
ProPharma Partners Limited
Information Memorandum
1. Outline of technology2. Market overview3. Details of technology4. Outline development plan5. Competitive position (including IP)6. Ballpark value
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June 2003
ProPharma Partners Limited
The Licensing Process1. Prepare Executive Summary (usually from IM)2. Contact likely targets3. Arrange CDAs4. Send Information Memorandum5. Follow-up calls and visits6. Due Diligence7. Negotiations and Close8. Party
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June 2003
ProPharma Partners Limited
Selecting Target Licensees
• Therapeutic Focus• Licensing/Acquisitions Focus• Tailor presentation to Target
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June 2003
ProPharma Partners Limited
Due diligence - what is it?• Process of information gathering and
evaluation• Includes confidential and public domain
data• Two-way process, although buyer
(licensee) frequently more thorough than seller (licensor)
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June 2003
ProPharma Partners Limited
Due diligence - when?
• To be valuable, must be completed before conclusion of deal
• Typically, formal process begins when– parties showing serious interest– confidentiality agreement in place– outline commercial terms have been discussed,
or even agreed (“subject to due diligence”)
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June 2003
ProPharma Partners Limited
Due diligence - why?
• No current or reasonably foreseeable blocks to commercialisation exist
• The price is fair in relation to the risk of failure and the potential return
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June 2003
ProPharma Partners Limited
Due diligence - pre-visit• Assemble list of key issues
– CMC (Chemistry, Manufacturing and Controls)– Preclinical– Clinical– Regulatory– Financial– Commercial– Legal and administrative
• Key issues will vary according to project
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June 2003
ProPharma Partners Limited
Due diligence - CMC• Can a product be made
– Which complies with all relevant requirements - FDA, MCA, etc
– At an economic price– With secure, validated sources of raw material– With a robust, preferably simple, validated
process– With acceptable capital investment, if required
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June 2003
ProPharma Partners Limited
Due diligence - preclinical• Is the product safe and what effects does
it have in animals? – Acute/subacute/repeated dose toxicity– Carcinogenicity– Genotoxicity– Reproductive toxicity– ADME, pharmacology safety studies
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June 2003
ProPharma Partners Limited
Due diligence - clinical• Is the product safe and effective in
humans?– Full details of clinical trials, completed, in
progress and proposed– Pharmacodynamics and pharmacokinetics data– Safety data– Dose ranging– Side effect profiles
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June 2003
ProPharma Partners Limited
Due diligence - regulatory• Are the Regulatory Agencies likely to
grant Product Licences in the territories of interest?– All of the above plus:
• Full details of submissions to Regulatory Agencies• Planned labelling• Contacts/meetings/communications with Regulatory
Agencies
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June 2003
ProPharma Partners Limited
Due diligence - financial and commercial
• Can we make a good profit from the Product and for how long?– Detailed materials/manufacturing costings– Market data, sales forecasts and price projections– Sales and marketing costs– Exclusivity– Competitors, current and future
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June 2003
ProPharma Partners Limited
Due diligence - legal
• Could patent or other legal issues prevent development and sale of Product?– Does the licensor have:
• all the necessary rights to the Product/process• all necessary governmental/other
permits/authorisations to make the Product• any current or pending litigation which might block
production or sale of Product
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June 2003
ProPharma Partners Limited
Due diligence - legal cont.
– Are the patents strong?• If not, do other factors reduce risk of competition
eg. know-how, orphan drug status• Does their exercise require licences to other IP• If so, could such licences be obtained (and for how
much)• Are there any oppositions to the patents
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June 2003
ProPharma Partners Limited
Due diligence - legal cont.
– Are current patent applications likely to be granted
• If not, what are the commercial implications– Do third party patent applications have the
potential to block ours– Environmental issues/ liability/ H & S
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June 2003
ProPharma Partners Limited
Due Diligence
• Make it easy – impressions count
– Availability of people and data is important
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June 2003
ProPharma Partners Limited
Licence Negotiations
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June 2003
ProPharma Partners Limited
Points to Consider
• Breadth of licence• World-wide vs. Regional• Claw-back (diligence clauses)• Co-promotion rights• Equity vs. cash
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June 2003
ProPharma Partners Limited
Breadth of Licence• Determine what licensee really needs• Indication-specific licence
– Not always acceptable to licensee even if he only intends to develop one indication
– Consider a “develop or sublicense” clause• Dosage-form specific licence
• May be more acceptable as market is protected
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June 2003
ProPharma Partners Limited
Ensuring Optimal World-Wide Marketing Coverage
• Very few companies have genuine global marketing strength
• Some therapies have major market outside US/Europe, e.g. Hepatitis
• Consider regional deals for Japan, Pacific Rim, Eastern Europe, Latin America
• No longer possible to sub-divide EU
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June 2003
ProPharma Partners Limited
Ensuring Optimal World-Wide Marketing Coverage
Factors to Watch when Constructing Regional Deals:• Who will ‘police’ the Territories?• Watch for parallel imports• Not a problem if there is little price differential• Price cannot be controlled but supply can• It is necessary to keep control of the supply chain for
this licensing strategy to work
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June 2003
ProPharma Partners Limited
‘Claw-Back’ Clauses
Reasons:• To ensure development of out-licensed
technology• To ensure adequate prosecution of assigned
or licensed intellectual property
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June 2003
ProPharma Partners Limited
‘Claw-Back’ Clauses
Creation of ‘Claw-Back’ Clauses:(a) For IP - monitor prosecution
- return on abandonment of any coverage
(b) For technology- first option- matching offers
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June 2003
ProPharma Partners Limited
Co-marketing & Co-promotion
• Co-marketing vs. Co-promotion• Retention of limited Co-promotion rights is
usually of interest to Biotech companies and often helps to secure the deal
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June 2003
ProPharma Partners Limited
Co-promotion
• Does the size of the market and margin warrant a large-scale marketing effort?
• If so, share revenues in proportion to marketing effort
• If not, consider limiting number of reps, share revenues after deducting marketing costs
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June 2003
ProPharma Partners Limited
Equity instead of Up-Fronts• Pharma
– Wants asset to back payment otherwise considered too high
– Potential for double gain– Favourable PR
• Biotech – wants validation of (and usually premium on) share
value– No obligation to repay
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June 2003
ProPharma Partners Limited
Biotech v. Big Pharma
The Growth Paradox
• As big pharma companies grow and consolidate they increasingly become specialist development and marketing organisations which outsource innovation
• This usually puts biotech in a strong bargaining position
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June 2003
ProPharma Partners Limited
Advantages of Licensing to Big Pharma
• Perceived greater validation• Important if large sales force required
e.g. GP or OTC product• High standard of product development
(not necessarily fast)
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June 2003
ProPharma Partners Limited
Advantages of Licensing to Smaller Companies
• Usually greater focus on project• Usually speedier decisions and greater
transparency• Often leaves some rights with licensor
- allows selling the project several times
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June 2003
ProPharma Partners Limited
Closing the Deal
• Focus on what the parties need, not what they say they want
• Build valuations around real market data and agreed forecasts
• Don’t rely on “industry norms”
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June 2003
ProPharma Partners Limited
Ensuring the Deal is Closed in a Timely Manner
Reasons:
• To beat competitors to the deal
• To maintain momentum in the development programme
• To maintain internal momentum in favour of the deal
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June 2003
ProPharma Partners Limited
Timely Closing of the DealFactors for Achieving Timely Closing:(a) Get lawyers involved early - at least at
‘Draft Heads’ stage(b) Keep negotiating teams fully
empowered and small (2-3 people)(c) Set aggressive timetable for completion(d) Set calendar of negotiating days at the
outset
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June 2003
ProPharma Partners Limited
Summary• Consider what product is
• What is needed for Information Memorandum to ensure interest
• Have all people and information necessary for due diligence at hand
• Know what your most favoured deal is and be willing to negotiate
• Timely closing secures the deal
• Others, e.g. Training, R&D funding, Improvements can also be important
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June 2003
ProPharma Partners Limited
Don’t Forget to Party