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New Strategies  for Successful Licensing Acquisitions Peter McFarland, PharmD Postdoctoral Fellow, Clinical Development Fo...
Session Panel  <ul><li>Aaron Pelta, MBA   Sr. Manager, Corporate Development  Cubist Pharmaceuticals </li></ul><ul><li>Yav...
What do each of these products have in common? <ul><li>Fosamax ®  (alendronic acid) </li></ul><ul><li>Lipitor ®  (atorvast...
They’ve all been licensed! <ul><li>Fosamax ®  (alendronic acid)  </li></ul><ul><li>Instituo Gentili SpA -> Merck & Co., In...
Licensing Overview  <ul><li>Cost of R&D has increased substantially </li></ul><ul><li>Blockbuster drugs and patent expirat...
Session Objectives  <ul><li>How to identify licensing opportunities  </li></ul><ul><li>Critical things to consider when co...
Identifying Licensing Opportunities  Aaron Pelta, MBA Senior Manager, Corporate Development Cubist Pharmaceuticals
Identifying License Opportunities <ul><li>What are you looking for? </li></ul><ul><li>How do you find it? </li></ul>
What Are You Looking For? <ul><li>Corporate Strategy </li></ul><ul><ul><li>Long-term vision that defines the scope of busi...
Strategy to Tactics <ul><li>Specific actions required to implement corporate strategy </li></ul>of acute care drugs develo...
Quantify Opportunity Targets <ul><li>Development and commercialization of acute care drugs for the treatment of unmet medi...
Examples <ul><li>Our mission is to be the leading biotechnology company, using human genetic information to discover, deve...
Environment <ul><li>Over 50,000 drug opportunities 1 , and you are not the only one looking </li></ul><ul><li>Innovation l...
How Do You Find It? <ul><li>Maintain a robust pipeline of potential opportunities </li></ul>Sniff Test Preliminary Evaluat...
Where Do You Find It? Quality Your Network Banks Finders Management Venture Capital Conferences Publications Databases Aca...
Challenges <ul><li>Access to quality opportunities </li></ul><ul><ul><li>Why should I talk to you? </li></ul></ul><ul><li>...
One Winning Approach Most Attractive (Most Likely) No Value No Value Accurate Inaccurate Consensus Non-Consensus No Value
Identifying Opportunities Scientific Assessment Identifying  Opportunities Scientific Assessment Deal Finalization
Strategies for Conducting New Product Scientific Assessment (Due Diligence) Yavuz S. Silay, MD,CCRP Associate Director of ...
Pharmaceutical Licensing Trends and the Role of Science <ul><li>Pharma is struggling to maintain its pipelines and portfol...
Overview of the Licensing Process Out-licensing   In-licensing   Source: MedTRACK, Sept ’07. Datamonitor   Identification ...
What therapeutic areas are more popular? Recent trends? CNS  15% Other  12% Infections  15% Cardiovascular  12% AIID  10% ...
Due Diligence for Evaluating  In-Licensing Opportunities <ul><li>Licensing is not an exact science though, and consequentl...
Due Diligence <ul><li>Due diligence of scientific content from quality standpoint (required to be done in accordance with ...
Team Effort and Timing  are Crucial <ul><li>Due diligence SCOUT team may include; scientists, physicians, legal, regulator...
Avoiding Pitfalls <ul><li>Does the company keep a clear head? </li></ul><ul><li>Did you set out a rigorous but realistic s...
Current and New Sources of Scientifically Valid Deals <ul><li>Through targeting biotechs and medical schools, creative com...
A BALANCED APPROACH: NEITHER SCIENCE NOR BUSINESS CAN BE SACRIFICED FOR THE OTHER OR THE RESULTS WILL BE DISSAPOINTING <ul...
ASK THE APPARENT QUESTION PROACTIVELY: ARE THERE ANY EXPERTS TO REVIEW THE DATA AND ARE THERE ENOUGH DATA TO BE REVIEWED B...
Attitude and Knowledge Matters <ul><li>Therefore, the attitude of the small company is as critical as the larger … the sma...
Why do licensing deals fail? <ul><li>The most common reason why deals fail is because the product does not reach the crite...
Factors leading to partnership breakdown during licensing deals
Key Elements
Key Factors
The Tools of Science and Current Data Channels <ul><li>Below is a list of sources that can be used to identify the most su...
The Tools of Science and Current Data Channels <ul><li>Interviews  – with industry experts, sometimes retirees from the ta...
Scientific Assessment Deal Finalization Identifying  Opportunities Scientific Assessment Deal Finalization
Alliance Management & Finalizing the Deal Raj Riswadkar Sr. Director Business Enterprise Development K V Pharmaceutical
Why Alliances ? <ul><li>Relatively lower cost and speedy approach to accelerating growth </li></ul><ul><li>Alliances give ...
Alliance Management – 80% Art <ul><li>Alliance Management can be less or more difficult (never easy), depending on…. </li>...
Typical Alliance Menu HIGH Deals more likely to close HIGH “ Alliance Complexity/Cost Matrix” (Easy to Exotic)** LOW Costs...
Alliance Success <ul><li>Typically, alliances close quickly and are successful if; </li></ul><ul><ul><li>The deal is simpl...
Alliance – Geographical, Scale, Scope Expansion <ul><li>Easier to manage and close since both parties are needy and compli...
Alliance – Reducing Costs <ul><li>Many deals fall through on commercial terms </li></ul><ul><li>If commercial terms unfavo...
Alliance – Development & Supply of Product <ul><li>If partner cultures are disparate, success can be elusive  </li></ul><u...
Alliance – In-licensing Unique Products/technologies <ul><li>High risk, high reward – these deals are expensive </li></ul>...
Alliance Management – 80% Art <ul><li>Improve Alliance Management by; </li></ul><ul><ul><li>Spotting the land mines early ...
Finalizing the deal – How? <ul><li>Typical process involves making a non-binding offer, conducting due-diligence and then ...
Tactics for Finalizing the deal <ul><li>Tactics depend on leverage and timing </li></ul><ul><li>Key is ‘flexibility’ and ‘...
Finalizing the Deal: Differentiate Yourself  <ul><li>Key factors are typically in your control? </li></ul><ul><ul><li>Pric...
Identifying  Opportunities Scientific Assessment Deal Finalization Successful License Acquisition
Question? Answer!
Key References  <ul><li>Please provide </li></ul>
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Strategies for Conducting New Product Scientific Assessment - Yavuz SILAY - DIA Presentation 2008

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Strategies for Conducting New Product Scientific Assessment - Due Diligence - New Strategies for Successful Licensing Acquisitions , DIA , Session Panel, June 22 2008,

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Strategies for Conducting New Product Scientific Assessment - Yavuz SILAY - DIA Presentation 2008

  1. 1. New Strategies for Successful Licensing Acquisitions Peter McFarland, PharmD Postdoctoral Fellow, Clinical Development Forest Labs, Inc. / St. John’s University
  2. 2. Session Panel <ul><li>Aaron Pelta, MBA Sr. Manager, Corporate Development Cubist Pharmaceuticals </li></ul><ul><li>Yavuz Silay, MD Associate Director, Clinical Science KV Pharmaceutical, Ther-Rx and Ethex Corporations </li></ul><ul><li>Raj Riswadkar Sr. Director, Business Enterprise KV Pharmaceutical </li></ul>
  3. 3. What do each of these products have in common? <ul><li>Fosamax ® (alendronic acid) </li></ul><ul><li>Lipitor ® (atorvastatin) </li></ul><ul><li>Pravachol ® (pravastatin) </li></ul><ul><li>Zithromax ® (azithromycin) </li></ul><ul><li>Lexapro ® (escitalopram) </li></ul>
  4. 4. They’ve all been licensed! <ul><li>Fosamax ® (alendronic acid) </li></ul><ul><li>Instituo Gentili SpA -> Merck & Co., Inc </li></ul><ul><li>Lipitor ® (atorvastatin) </li></ul><ul><li>Parke-Davis & Co. -> Pfizer Inc </li></ul><ul><li>Pravachol ® (pravastatin) </li></ul><ul><li>Sankyo Co Ltd -> Bristol-Myers Squibb Company </li></ul><ul><li>Zithromax ® (azithromycin) </li></ul><ul><li>Pliva -> Pfizer Inc </li></ul><ul><li>Lexapro ® (escitalopram) </li></ul><ul><li>Lundbeck -> Forest Labs, Inc. </li></ul>
  5. 5. Licensing Overview <ul><li>Cost of R&D has increased substantially </li></ul><ul><li>Blockbuster drugs and patent expiration </li></ul><ul><li>Increased pressure from various sources </li></ul>
  6. 6. Session Objectives <ul><li>How to identify licensing opportunities </li></ul><ul><li>Critical things to consider when conducting a clinical/scientific review (due diligence) </li></ul><ul><li>Important aspects to building/managing alliances and finalizing the deal </li></ul>Identifying Opportunities Scientific Assessment Deal Finalization
  7. 7. Identifying Licensing Opportunities Aaron Pelta, MBA Senior Manager, Corporate Development Cubist Pharmaceuticals
  8. 8. Identifying License Opportunities <ul><li>What are you looking for? </li></ul><ul><li>How do you find it? </li></ul>
  9. 9. What Are You Looking For? <ul><li>Corporate Strategy </li></ul><ul><ul><li>Long-term vision that defines the scope of business opportunities that you will consider </li></ul></ul><ul><li>Cubist Pharmaceuticals is a leader in the development and commercialization of acute care drugs for the treatment of unmet medical needs </li></ul>
  10. 10. Strategy to Tactics <ul><li>Specific actions required to implement corporate strategy </li></ul>of acute care drugs development and commercialization for the treatment of unmet medical needs Stage of Development Treatment Setting Indication hospital based programs through products not “me too”
  11. 11. Quantify Opportunity Targets <ul><li>Development and commercialization of acute care drugs for the treatment of unmet medical needs </li></ul><ul><li>Non “me too” programs and products used in the hospital setting </li></ul><ul><li>Metrics </li></ul><ul><li>Financial: Revenue, profit potential </li></ul><ul><li>Technology: Biologic, small molecule </li></ul><ul><li>Therapeutic Area </li></ul>More Detail
  12. 12. Examples <ul><li>Our mission is to be the leading biotechnology company, using human genetic information to discover, develop, manufacture and commercialize biotherapeutics that address significant unmet medical needs 1 (Genentech) </li></ul><ul><li>Salix is committed to being the leading U.S. specialty pharmaceutical company licensing, developing and marketing innovative products to health care professionals to prevent or treat gastrointestinal disorders in patients while… creating exceptional value for our stockholders 2 (Salix Pharmaceuticals) </li></ul>1. http://www.gene.com/gene/about/corporate/, accessed May 8, 2008 2. http://www.salix.com/about/index.aspx, accessed May 8, 2008
  13. 13. Environment <ul><li>Over 50,000 drug opportunities 1 , and you are not the only one looking </li></ul><ul><li>Innovation lagging </li></ul><ul><li>FDA scrutiny increasing </li></ul><ul><li>It’s a seller’s market </li></ul>1. Thomson Pharma® database accessed May 6, 2008
  14. 14. How Do You Find It? <ul><li>Maintain a robust pipeline of potential opportunities </li></ul>Sniff Test Preliminary Evaluation Full Diligence Deal Close
  15. 15. Where Do You Find It? Quality Your Network Banks Finders Management Venture Capital Conferences Publications Databases Academia Unsolicited
  16. 16. Challenges <ul><li>Access to quality opportunities </li></ul><ul><ul><li>Why should I talk to you? </li></ul></ul><ul><li>Access to quality information </li></ul><ul><ul><li>Data vs. interpretation </li></ul></ul><ul><li>Strategy vs. Opportunity </li></ul><ul><li>Internal politics </li></ul>
  17. 17. One Winning Approach Most Attractive (Most Likely) No Value No Value Accurate Inaccurate Consensus Non-Consensus No Value
  18. 18. Identifying Opportunities Scientific Assessment Identifying Opportunities Scientific Assessment Deal Finalization
  19. 19. Strategies for Conducting New Product Scientific Assessment (Due Diligence) Yavuz S. Silay, MD,CCRP Associate Director of Clinical Science, Clinical and Medical Affairs KV Pharmaceutical, Ther-Rx and Ethex Corporations
  20. 20. Pharmaceutical Licensing Trends and the Role of Science <ul><li>Pharma is struggling to maintain its pipelines and portfolios with products developed in-house. Companies are increasingly turning to licensing </li></ul><ul><li>However, the late stage developmental products are becoming tougher and more expensive, and companies are now looking toward licensing earlier-stage compounds </li></ul>
  21. 21. Overview of the Licensing Process Out-licensing In-licensing Source: MedTRACK, Sept ’07. Datamonitor Identification of the company’s limitations, and what is required to overcome these Identification of what products can be licensed and to who Performing evaluations Identification of gaps in the portfolio; Assessment of what it can offer as a partner? Evaluation of needs and identification of potential candidates Signing confidentiality agreements, drawing-up term sheets, due diligence Licensing Strategy Identifying Opportunity Licensing Evaluations Finalizing the Deal and Alliance Management
  22. 22. What therapeutic areas are more popular? Recent trends? CNS 15% Other 12% Infections 15% Cardiovascular 12% AIID 10% Cancer 7% Women’s Health 7% Digestive System 5% Multiple 4% Respiratory 5% Blood 4% Metabolic/Endocrinology 4% Marketing and Promotion Deals by therapy area, 2005-06 Source: MedTRACK, Sept ’07, Datamonitor
  23. 23. Due Diligence for Evaluating In-Licensing Opportunities <ul><li>Licensing is not an exact science though, and consequently, both licensors and licensees need to do their homework before entering into the actual process of licensing </li></ul><ul><li>Why due diligence? </li></ul><ul><li>How to apply science and at what stage and what intensity scope of scientific due diligence is required ? </li></ul>
  24. 24. Due Diligence <ul><li>Due diligence of scientific content from quality standpoint (required to be done in accordance with the GCP, GMP and GLP) </li></ul><ul><li>Check final study reports, make sure signed by the study director, audit reports signed off </li></ul><ul><li>Safety and efficacy issues; lower dosing preferred by FDA </li></ul><ul><li>Depending on the phase of the compound toxicology / carcinogenicity studies done properly to avoid any regulatory problems down the line </li></ul>
  25. 25. Team Effort and Timing are Crucial <ul><li>Due diligence SCOUT team may include; scientists, physicians, legal, regulatory, corporate growth and strategy, marketing, licensing experts </li></ul><ul><li>There is no small issue! </li></ul><ul><li>Attention to detail and patience are critical values! </li></ul><ul><li>Trust is not assurance! </li></ul><ul><li>Keep information channels open! </li></ul><ul><li>Streamline processes internally and externally </li></ul><ul><li>Make sure you have the full scientific background </li></ul><ul><li>The recent challenge is receiving ALL THE DATA AT THE RIGHT TIME to make an objective assessment and defend internally if the decision is made to pursue! </li></ul>
  26. 26. Avoiding Pitfalls <ul><li>Does the company keep a clear head? </li></ul><ul><li>Did you set out a rigorous but realistic search criteria? (having a corporate licensing strategy) </li></ul><ul><li>Setting unrealistic expectations (by not having a solid strategy for applying the science to the candidate product, underestimating the developmental risk, overestimating the perceived market size, or having limited availability of capital necessary to actualize a successful licensing agreement) </li></ul>
  27. 27. Current and New Sources of Scientifically Valid Deals <ul><li>Through targeting biotechs and medical schools, creative companies have been able to significantly increase the number of licensing deals they have entered into in recent years. </li></ul>
  28. 28. A BALANCED APPROACH: NEITHER SCIENCE NOR BUSINESS CAN BE SACRIFICED FOR THE OTHER OR THE RESULTS WILL BE DISSAPOINTING <ul><li>During the negotiation process it is critical to be clear and upfront: </li></ul><ul><li>Companies have to be driven by the “ DILIGENT REVIEW OF PRODUCT CONCEPT FROM A SCIENTIFIC STANDPOINT AND THE RIGOROUS REVIEW OF SCIENTIFIC DATA –SAFETY-EFFICACY” and not with a mere mentality of “ LET’S SQUEEZE THIS COMPANY! THEY ARE ONLY 20-30 PEOPLE AND THEY’RE RUNNING OUT OF CASH !” </li></ul>
  29. 29. ASK THE APPARENT QUESTION PROACTIVELY: ARE THERE ANY EXPERTS TO REVIEW THE DATA AND ARE THERE ENOUGH DATA TO BE REVIEWED BY THE EXPERTS? <ul><li>Unfortunate fact: </li></ul><ul><li>You see very often these days that you sign a confidentiality agreement and you get maybe 15% of the confidential data that the company has. Step by step, you receive more and more things. That is not making things easier for companies because there are internal processes within any company that require careful assessment and defense of an opportunity! </li></ul>
  30. 30. Attitude and Knowledge Matters <ul><li>Therefore, the attitude of the small company is as critical as the larger … the small company should help… </li></ul><ul><li>Smaller companies should know the needs of licensing people in larger companies. It is not only so that the licensing experts should know the needs of the small company of the license, it is also the other way around </li></ul>
  31. 31. Why do licensing deals fail? <ul><li>The most common reason why deals fail is because the product does not reach the criteria in the R&D plan so it is a no-go decision (toxicity, safety, efficacy reasons) </li></ul><ul><li>Co-development deals are one of the main culprits because there is no clear accountability and responsibility </li></ul><ul><li>Take-home message: Do not underestimate the cost of development ! </li></ul>
  32. 32. Factors leading to partnership breakdown during licensing deals
  33. 33. Key Elements
  34. 34. Key Factors
  35. 35. The Tools of Science and Current Data Channels <ul><li>Below is a list of sources that can be used to identify the most suitable product candidates for in-licensing: </li></ul><ul><li>Company published literature – including annual reports and press releases, and conference literature, plus presentation material produced by prospective licensees; </li></ul><ul><li>Industry publications and databases – a sample of some appropriate publications include; Scrip, InVivo, Drug & Market Development, Nature Biotechnology, while databases include LifeScience Analytics’s (Datamonitor) MedTRACK, Informa’s PharmaProjects, ADIS R&D Insight, and IMS Health’s R&D Focus; </li></ul><ul><li>Research reports – brokers, industry analysts or consulting firms reports on the company, its technology or on the relevant industry segment </li></ul>
  36. 36. The Tools of Science and Current Data Channels <ul><li>Interviews – with industry experts, sometimes retirees from the target company, as well as events such as conferences where Pharma and Biotechs can network; </li></ul><ul><li>Regulatory filings – such as patent filings as well as investigational new drug applications (IND); </li></ul><ul><li>Existing licensing partners – entering into new licensing deals with existing partners can be a particularly effective strategy; </li></ul><ul><li>Unsolicited applications – Biotechs with a drug candidate eligible for outlicensing frequently make themselves and their situation known to potential licensees. Pharma companies have subsequently produced licensing opportunity profiles, which would-be licensors can complete to start the ball rolling </li></ul>
  37. 37. Scientific Assessment Deal Finalization Identifying Opportunities Scientific Assessment Deal Finalization
  38. 38. Alliance Management & Finalizing the Deal Raj Riswadkar Sr. Director Business Enterprise Development K V Pharmaceutical
  39. 39. Why Alliances ? <ul><li>Relatively lower cost and speedy approach to accelerating growth </li></ul><ul><li>Alliances give access to needed resources as variable costs </li></ul><ul><li>Thus preferred over investment in organic resources or acquisitions in many cases </li></ul><ul><li>With diminishing R&D pipelines industry wide and extensive generalization, alliances are highly sought in Pharma </li></ul><ul><li>I discuss successful management of the alliance process and consummation of alliances </li></ul>
  40. 40. Alliance Management – 80% Art <ul><li>Alliance Management can be less or more difficult (never easy), depending on…. </li></ul><ul><ul><li>The DEAL – What are you trying to do? </li></ul></ul><ul><li>Successful closing (partly) depends on…. </li></ul><ul><ul><li>The DEAL – What are you trying to do? </li></ul></ul><ul><ul><li>Other factors like </li></ul></ul><ul><ul><ul><li>Negotiator’s/Licensee/Licensor sophistication </li></ul></ul></ul><ul><ul><ul><li>Needs/motivation of both parties </li></ul></ul></ul>
  41. 41. Typical Alliance Menu HIGH Deals more likely to close HIGH “ Alliance Complexity/Cost Matrix” (Easy to Exotic)** LOW Costs to Close (Licensee) LOW Contract manufacturing to reduce costs <ul><li>Typically buyer initiates the deal to reduce costs or to free up capacity </li></ul><ul><li>If exchange of technology is involved complexity increases </li></ul><ul><li>Unique technology/product, but one of many possible available unique solutions </li></ul>Eg - Difficult to make Generics (control release, steriles, injectables) Geographical, scale, scope expansion – Adding partner for selling Product X <ul><li>If licensee initiates the deal for a unique product then the ‘cost to close’ can be high </li></ul><ul><li>Typically partner choices are few and they know they are a good fit from the outset </li></ul><ul><li>In-licensing of differentiated, unique, patented product/and or technology </li></ul><ul><li>Both sides contribute technology, assets or resources (Joint Venture) </li></ul>- In-license of unique product or technology - Joint contribution of unique product or technology Degree Of Complexity ** - not MECE
  42. 42. Alliance Success <ul><li>Typically, alliances close quickly and are successful if; </li></ul><ul><ul><li>The deal is simple with non-overlapping, non-syncing tasks between partners </li></ul></ul><ul><ul><li>The competencies of partners are complimentary as opposed to synergistic </li></ul></ul><ul><ul><li>Both parties are motivated to close and there is minimal competition (the luck factor) </li></ul></ul><ul><li>I illustrate these points through examples on the following pages </li></ul>
  43. 43. Alliance – Geographical, Scale, Scope Expansion <ul><li>Easier to manage and close since both parties are needy and complimentary competencies are sought </li></ul><ul><li>Value to each party is relatively easier to determine </li></ul><ul><li>‘ Cost to close’ directly correlated to partnering options </li></ul><ul><li>Typically, no negotiation leverage shift to either side </li></ul><ul><li>Such alliances typically close out on success or failure </li></ul>Alliance Pros and Cons <ul><li>Management is simpler because typically, both parties have clearly defined tasks with minimal overlap of tasks. </li></ul>Implications For right fit partners, closure risks are typically low. Closure risks increase with competition for the product Typical Risk to Closure - Santarus co-promotion of Zegerid (PPI) with TAP - Vernalis UK’s out-license of Frovatriptan for Migraine in the US to Endo Pharmaceuticals Examples Expanding product penetration geographically, adding customers or for expanded indications Type of Alliance
  44. 44. Alliance – Reducing Costs <ul><li>Many deals fall through on commercial terms </li></ul><ul><li>If commercial terms unfavorable, deal falls apart eventually </li></ul><ul><li>Deal value to each party is typically not difficult to determine </li></ul><ul><li>Cost of closing such deals is relatively low (immediate volumes for supply act as incentive) </li></ul><ul><li>If technology is involved then complexity of deal multiplies </li></ul>Alliance Pros and Cons <ul><li>Limited task overlap and a limited need for oversight </li></ul><ul><li>If either party brings something unique to the table then the value of the deal is tilted in that party’s favor </li></ul>Implications Deal structure simpler hence closing is not difficult. Agreeing to commercial terms takes the most time Typical Risk to Closure <ul><li>Contract manufacturing by Asian companies for US markets </li></ul><ul><li>Outsourcing of clinical studies to clinical research organizations in Asia/CIS/Latin America </li></ul>Examples Low cost manufacturing of already launched products Type of Alliance
  45. 45. Alliance – Development & Supply of Product <ul><li>If partner cultures are disparate, success can be elusive </li></ul><ul><li>R&D component/technology complicates the deal </li></ul><ul><li>Multiple buyers and suppliers skew expectations and result in unsustainable deals </li></ul><ul><li>Approval and competition uncertainty impacts valuation </li></ul><ul><li>Lower cost compared to branded product in-licensing </li></ul><ul><li>Oversight of the legal, R&D, commercial and regulatory issues is taxing </li></ul>Alliance Pros and Cons <ul><li>Deal execution is complex because tasks overlap </li></ul><ul><li>Either side may have some leverage in negotiations </li></ul>Implications Challenges in verifying the R&D capabilities and ‘cGMPness’ of the partner and then agreeing to commercial terms Typical Risk to Closure In-licensing/supply of generic pharmaceuticals from Asian companies by generic companies like Teva, Akorn and Mylan Examples Research & Development and supply of products with or without a technology exchange Type of Alliance
  46. 46. Alliance – In-licensing Unique Products/technologies <ul><li>High risk, high reward – these deals are expensive </li></ul><ul><li>Negotiations and due-diligence within crunched time frames </li></ul><ul><li>Upfront investment and possible gestation interval before commercialization – only high value products chased </li></ul><ul><li>Oversight of the legal, R&D, commercial and regulatory issues is taxing </li></ul><ul><li>If JV, then control issues can arise during execution </li></ul>Alliance Pros and Cons <ul><li>Overlapping tasks/competencies complicate deal execution </li></ul><ul><li>Typically, seller has leverage in negotiations </li></ul>Implications Deal complexity and multiple buyers pose closing challenge High level of due diligence and risk aversion Typical Risk to Closure <ul><li>Alza out-licensing of Oros to Pfizer </li></ul><ul><li>Merck and Schering JV on Vytorin (simvastatin and ezitimibe) </li></ul>Examples In-licensing of a unique product and/or technology, or Both sides contribute assets - Joint venture (JV) Type of Alliance
  47. 47. Alliance Management – 80% Art <ul><li>Improve Alliance Management by; </li></ul><ul><ul><li>Spotting the land mines early </li></ul></ul><ul><ul><li>Picking your deals wisely (if you have the choice) </li></ul></ul><ul><ul><li>Understanding and managing expectations on both sides </li></ul></ul><ul><ul><li>Understanding your competition and, </li></ul></ul><ul><ul><li>Establishing yourself as a, ’can do’ partner that people like to deal with </li></ul></ul>
  48. 48. Finalizing the deal – How? <ul><li>Typical process involves making a non-binding offer, conducting due-diligence and then finalizing the deal via a binding legal, agreement </li></ul><ul><li>Tactics for finalizing the deal depend on; </li></ul><ul><ul><li>The size of your company </li></ul></ul><ul><ul><ul><li>Mid Pharma – can ill afford mistakes or loss of a needed deal </li></ul></ul></ul><ul><ul><li>The size of the deal, it’s complexity </li></ul></ul><ul><ul><li>The competition </li></ul></ul><ul><ul><li>How badly you need the deal </li></ul></ul><ul><ul><li>Counter party’s needs </li></ul></ul>
  49. 49. Tactics for Finalizing the deal <ul><li>Tactics depend on leverage and timing </li></ul><ul><li>Key is ‘flexibility’ and ‘nimbleness’ </li></ul><ul><li>Some approaches seen in finalizing the deal – </li></ul><ul><ul><li>Showing reduced interest or delaying tactics to capture value depending on leverage </li></ul></ul><ul><ul><li>Closing on key binding commercial terms for a small duration before conducting due diligence </li></ul></ul><ul><ul><li>Closing in two steps to capture exclusivity </li></ul></ul><ul><ul><li>Use of exploding offers and creative approaches (options) </li></ul></ul>
  50. 50. Finalizing the Deal: Differentiate Yourself <ul><li>Key factors are typically in your control? </li></ul><ul><ul><li>Price – be flexible – structure to meet other party’s ‘overall value’ needs </li></ul></ul><ul><ul><li>Speed – be nimble – meet other party’s needs </li></ul></ul><ul><ul><li>the ‘Annoyance Factor’ – minimize it </li></ul></ul><ul><ul><ul><li>Due diligence – focus on key relevant issues </li></ul></ul></ul><ul><ul><ul><li>Style of negotiations – non-controversial </li></ul></ul></ul><ul><ul><ul><li>Demonstrate openness and authenticity </li></ul></ul></ul><ul><li>Strike a balance between the three to achieve value creating alliances </li></ul>
  51. 51. Identifying Opportunities Scientific Assessment Deal Finalization Successful License Acquisition
  52. 52. Question? Answer!
  53. 53. Key References <ul><li>Please provide </li></ul>

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