Bio Bootcamp Nicholas 2010 Final

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Presentation at BIO conference in Chicago May 2010 at "Bootcamp" for biotech entrepreneurs

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Bio Bootcamp Nicholas 2010 Final

  1. 1.   Christa Nicholas Director [email_address] LICENSING, PARTNERING, STRATEGIC ALLIANCES: ROLE OF AN INTERMEDIATE
  2. 2. GUIDING PRINCIPLE: <ul><li>BE A GLOBAL COMPANY FROM DAY 1… </li></ul><ul><li>IF YOU AREN’T, YOUR COMPETITORS ARE! </li></ul> 
  3. 3. SUCCESSFUL PARTNERSHIP & STRATEGIC ALLIANCES: IMPACT ON BUSINESS MODEL <ul><li>Access external resources and capabilities </li></ul><ul><ul><li>Clinical and regulatory expertise </li></ul></ul><ul><ul><li>“Eyes and ears” on market dynamics </li></ul></ul><ul><li>Financial resources </li></ul><ul><ul><li>Cash from partnering proceeds </li></ul></ul><ul><ul><li>Access to equity capital </li></ul></ul><ul><li>Share product development cost/risk </li></ul><ul><li>Validation of technology (and company) </li></ul>
  4. 4. R&D INVESTMENT VS. NEW DRUG APPROVALS: INNOVATION GAP DRIVES DEAL FLOW
  5. 5. POTENTIAL PARTNERS: BIG PHARMA AND MATURE BIOTECH COMPANIES
  6. 6. CHANGING BUSINESS MODELS
  7. 7. <ul><li>The partnership/alliance should be strategically central to your partner’s business </li></ul><ul><li>Internal competing program would not confound decision making </li></ul><ul><li>The partner should offer significant added value in R&D capabilities, marketing prowess in key markets (may be a regional market) </li></ul><ul><li>Partner has a strong history in successful alliances </li></ul><ul><li>Good cultural fit, partner values your team’s input “let the best ideas win!” </li></ul>SELECTING THE RIGHT PARTNERSHIP, ALLIANCES: IMPORTANT FACTORS
  8. 8. RISK FACTORS OF LICENSING, PARTNERING AND STRATEGIC ALLIANCES <ul><li>Daunting odds facing all dealmakers </li></ul><ul><ul><li>200+ “real” deals worldwide for >5000 biotech companies </li></ul></ul><ul><ul><li>Average time to complete a deal is ~17 months </li></ul></ul><ul><ul><li>False positives throughout the process </li></ul></ul><ul><li>Partnering valuation dependent on a wide range of factors </li></ul><ul><ul><li>Market and stage of development-related </li></ul></ul><ul><ul><li>Franchise fit for partner </li></ul></ul><ul><li>Important to recognize that “the process” is: </li></ul><ul><ul><li>Demanding </li></ul></ul><ul><ul><li>Complicated </li></ul></ul><ul><ul><li>Highly relationship- and network-driven </li></ul></ul><ul><ul><li>Requiring of the right expertise at the right time </li></ul></ul><ul><li>Balance of internal and external resources </li></ul>
  9. 9. “ OPTION” STRUCTURES GREW IN 2009 Source: Windhover Biopharma and selected Diagnostic deals; Burrill & Co analysis Transactions > $20M announced through 12/31/09 (1)Excludes 4 deals with an option to co-develop / profit share in 2007 and 1 in 2008; counted in “Option” Deals category 154 142 131 Total Partnering Transaction Numbers <ul><li>COMMENTS </li></ul><ul><li>Generally, upfront payments are down with the exception of Phase II (where 22 deals produced an average of $55m upfront) </li></ul><ul><li>Deal numbers are continuing to trend downward and buyer leverage is increasing; </li></ul><ul><ul><li>Co-development and “profit shares” less frequent </li></ul></ul><ul><ul><li>Option structures on the rise </li></ul></ul>154 142 154 142 154 Total Partnering Transaction Numbers 142 154
  10. 10. PARTNERING MARKET – RECENT OBSERVATIONS <ul><li>Licensees are currently focusing on: </li></ul><ul><ul><li>FDA/regulatory pathway clarity </li></ul></ul><ul><ul><li>Strong human PoC data (only exceptions for novel MOAs in high unmet need areas) </li></ul></ul><ul><ul><li>Heightened safety requirements, especially in cardio/metabolic </li></ul></ul><ul><ul><li>Generic entry threat </li></ul></ul><ul><ul><li>Managed care perception of product value and associated pricing potential </li></ul></ul><ul><li>2009 was a difficult market in which to sell development stage assets; 2010 showing slight improvement </li></ul><ul><ul><li>Many potential buyers had insufficient capital to fund their internal programs </li></ul></ul><ul><ul><li>Raising new capital challenging and expensive </li></ul></ul><ul><ul><li>Many programs/companies “for sale” – including big uptick in Big Pharma out-licensing </li></ul></ul>
  11. 11. VALUE OF AN EXPERIENCED INTERMEDIARY <ul><li>Extensive Relationships and Access </li></ul><ul><ul><li>Seasoned senior deal-making team with broad life sciences expertise </li></ul></ul><ul><ul><li>Direct access to the in-licensing universe of CEOs and Chairmen </li></ul></ul><ul><ul><li>Broad distribution capabilities to increase deal competition </li></ul></ul><ul><ul><li>Network of relationships allows simultaneous start of all target companies </li></ul></ul><ul><li>Deal-Making Acumen </li></ul><ul><ul><li>Leverages team expertise, transactions database and “Horse Race” competitive approach </li></ul></ul><ul><ul><li>Facilitates every step of the deal process, provide appropriate resources to the task </li></ul></ul><ul><ul><li>Shared commitment of two organizations </li></ul></ul><ul><li>Strong scientific capabilities to assist in presenting opportunities </li></ul>
  12. 12. PARTNERING, STRATEGIC ALLIANCES: FROM AN INTERMEDIARY’S VIEWPOINT <ul><li>Good strategy drives good deal-making </li></ul><ul><ul><li>Internal value creation </li></ul></ul><ul><ul><li>Connection to partner strategic interests </li></ul></ul><ul><li>Deal-making requires intensely focused effort </li></ul><ul><ul><li>Identify the right mechanism, ideal partner </li></ul></ul><ul><ul><li>Manage the deal process </li></ul></ul><ul><li>Competition drives success </li></ul><ul><ul><li>Getting the deal done </li></ul></ul><ul><ul><li>Getting reasonable valuation </li></ul></ul><ul><ul><li>Getting a timely outcome </li></ul></ul>
  13. 13. <ul><li>Business development consultants </li></ul><ul><ul><li>Management consultants </li></ul></ul><ul><ul><li>Free lance seasoned business development professionals </li></ul></ul><ul><ul><li>Therapeutic or geography focused </li></ul></ul><ul><li>Boutique banks </li></ul><ul><ul><li>Niche focused </li></ul></ul><ul><ul><li>Domain expertise (diagnostics, medtech, service sector) </li></ul></ul><ul><ul><li>Global or regional </li></ul></ul><ul><li>“ Investment banks” </li></ul><ul><ul><li>Financially focused </li></ul></ul><ul><ul><li>Target larger transactions </li></ul></ul>CHOICES OF INTERMEDIARIES: “BEST TEAM” TO ASSIST YOU IN MEETING YOUR STRATEGIC OBJECTIVES
  14. 14. GOAL: GETTING TO SIGNATURE QUICKLY! <ul><li>Strategy : Ensure licensing, partnering and alliance opportunities aligned with corporate strategy and therapeutic franchise </li></ul><ul><li>Execution : </li></ul><ul><ul><li>Introduction of partners </li></ul></ul><ul><ul><li>Provide valuable input on presentation and the value proposition </li></ul></ul><ul><ul><li>Creation of transaction structures </li></ul></ul><ul><ul><li>Coordination of due diligence </li></ul></ul><ul><ul><li>Negotiation of term sheets </li></ul></ul><ul><ul><li>Management of agreement drafting process </li></ul></ul><ul><ul><li>Positioning for corporate approvals </li></ul></ul><ul><ul><li>Introduction to funding sources </li></ul></ul><ul><li>Address partner requirement and concerns </li></ul><ul><li>Speed & momentum: establishing a shared culture for success </li></ul><ul><li>Implementation of the deal post-signing </li></ul>Transaction Planning Definitive Agreement Approach Targets Negotiations, Due Diligence
  15. 15. TEAM ROLES Company Intermediary <ul><li>Lead the process </li></ul><ul><li>Extend company’s business development capability </li></ul><ul><li>First point of contact with prospects </li></ul><ul><li>Be the “friend of the deal” and vigorously pursue all means to maximize chances of success </li></ul><ul><li>Maintain and manage a “horse race” </li></ul><ul><li>Act as a “surrogate partner” to react to, and provide ideas and improvements to Company’s approach </li></ul><ul><li>Recommend and win prior sign-off for deal structure and terms </li></ul><ul><li>Lead negotiations </li></ul><ul><li>Actively engage in the project and contribute to the content </li></ul><ul><li>Communicate openly on all aspects of the proejct (positive and negative) </li></ul><ul><li>Manage and communicate the process within the organization </li></ul><ul><li>Set expectations with BOD </li></ul><ul><li>Represent and help sell the technology at key meetings </li></ul><ul><li>Manage due diligence details </li></ul><ul><li>Provide/fund legal counsel </li></ul>
  16. 16. GLOBAL COMPANY FROM DAY 1… IF YOU ARE’T, YOUR COMPETITORS ARE! <ul><li>C ompete globally </li></ul><ul><li>C onfidently align with the right partners </li></ul><ul><li>C reatively resource your company </li></ul><ul><li>C onsult with external experts to maximize the use of your resources and increase your odds of success </li></ul>

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