M&A between large, publicly traded companies in the biopharma industry appears to many to have run its course, as the largest seem to have been paired, but M&A involving smaller companies is likely to continue in 2016 and may affect many Alliance Managers. Alliance Management executives have the opportunity to play a significant role on either side, whether an acquirer or being acquired. This presentation, given to an audience of Alliance Management professionals in May 2016, addressed the issues that arise when a small biotech or pharma company receives an offer to be acquired or merged into another company, and how Alliance Management at that company can step up and make its mark in the response. How should Alliance Management respond? What information will be required? Conversely, on the side as the larger acquirer, what does Alliance Management need to know and what questions should be asked to reduce risk and extract the expected value from the merger? And as a key take-away, how can Alliance Management play an important role in the post merger integration?

1. GOING WITH THE FEEDING FRENZY:
ALLIANCE MANAGEMENT
FROM BOTH SIDES OF THE
MERGERS AND ACQUISITIONS BOOM
Harry Atkins
VP Corporate Development
ImmunoRestoration, LLC

2. DISCUSSION OUTLINE
– Rationale
• Key concepts around an M&A event
• The point at which Alliance Management should get involved in the
acquisition process
– Vision
• Two Key Roles for the Alliance Manager in an Acquisition
• The Alliance Manager’s expertise and qualifications for being an
important contributor in M&A
• Suggested steps you can take to clarify the role of Alliance
Management in an acquisition process
– Implementation
• Case study of using Alliance Management tools to position yourself
for a key role
– Resources
• More Recommendations and Resources for understanding your
potential role
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3. 2015 WAS A BANNER YEAR FOR M&A
HOW DOES THAT AFFECT YOU?
Some of the largest M&A deals closed in 2015 were
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Source: Thomson Reuters Dealmaking 2015; Locust Walk Partners 2016
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4. RECENT TRENDS IN M&A
WHAT WAS ATTRACTIVE TO BUYERS
 Volume of early stage transactions up 13% in 2015 versus 5 year average
from 2009-2013
 while volume of transactions for companies with approved assets were down
23% in the same 5 year period
 What to expect in the rest of 2016
 Large pharma are focusing their funding on acquiring mid-to-late stage
programs rather than in-house preclinical research.
 Mid-cap company stock valuations are down, meaning they are attractive
 New companies from the IPO boom in 2013-2015 are looking to acquire
4Source: Thomson Reuters Dealmaking 2015; Locust Walk Partners 2016
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5. KEY CONCEPTS
AROUND AN M&A EVENT
There are some perceived differences between the typical
Alliance Perspective on a partnership timeline and the
typical M&A Perspective on an acquisition timeline
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Alliance
Transformation
Alliance Management Perspective
on Key Activities
Agreement
Signing
R&D Commercialization
Alliance
Integration
Alliance
Maintenance
Alliance
Transformation
Alliance
Negotiation
M&A Perspective
on Key Activities
Agreement
Signing
M&A Due
Diligence
M&A
Evaluation
M&A
Negotiation
HSR-
AntiTrust &
Closing
Post
Merger
Integration
Deliver
Value
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6. TWO DIFFERENCES IN IMPLEMENTATION
– In Alliances, it is to everyone’s benefit for Alliance Management to move
its expertise earlier upstream into negotiation support.
• Weighing in on issues that will lead to a productive and successful
licensing alliance.
– knowing the most hotly contested negotiation points that the partner fought for
– gather diligence information on reputation (yours and theirs)
– important terms and conditions of a license to pay attention to when
operationalizing the alliance: IP and trade secrets, competition, financial terms,
termination, indemnification, ownership of rights.
– In M&A, it is unlikely that even at the Acquiring company, the Alliance
Management function will be involved until after the agreement is
signed.
• Closely held process, particularly when one or both parties to the
potential acquisition are public companies.
• It’s a numbers driven process for the business case to be built.
– Key Takeaway
• Alliance Management’s opportunity for impact in M&A is still
significant, but the timing to take action may be sudden.
• It is key to get aligned with management beforehand 6
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7. A STANDSTILL- OR AN OPPORTUNITY?
– Hart Scott Rodino (HSR) and Sherman Act – AntiTrust laws
• Imposes 15 day (if all cash) to 30 day waiting period after
signing of agreement and filing with the Federal Government
before merger might be approved
• No filing required if the size of transaction is < $78.2M
• Waiting period could become shorter- or much, much longer,
depending on the competitive picture
– Unlike an Alliance launch process, there are restrictions on
cooperating during the waiting period
• Government fines imposed if companies don’t continue to
behave as two separate companies until closing.
– sharing confidential, customer-specific, marketing and pricing
information
– prematurely integrating marketing operations, assets, and decision-
making efforts.
– This waiting period is the point at which Alliance Management
should get involved in the acquisition process 7
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8. TWO KEY ROLES
FOR ALLIANCE MANAGERS IN M&A
– Rationalizing the Acquired Portfolio
• Some preliminary assessment and strategic conclusions will have
been completed during diligence.
• Heavy lifting has yet to take place.
• Take a leadership role in evaluating, rationalizing and integrating
the remaining elements of the acquisition target's alliance portfolio
– The Internal Communication Process
• Establish your role in the all-important, incessant communication
process that is needed during the post-merger integration process.
• In high stakes situations where insufficient information is available
about what's going on
– People speculate, read too much into the tea leaves
– Both companies employees will make up and disseminate
theories of what they think is going on
– most of these information-generating activities don't contribute
to a successful integration – they undermine it.
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9. ALLIANCE MANAGERS-
SINGULARLY QUALIFIED TO CONTRIBUTE
– You’re qualified for an important role in Post Merger Integration.
• Great opportunity for Alliance Managers to `step up' in a
visible way to demonstrate their value to the business (and
enhance their position in the company, becoming part of the
senior management team).
• But - you have to sell it internally, and in advance.
– Gain alignment in your own organization about the role of
Alliance Management in the M&A process.
• On a regular basis, find the opportunity to discuss the `what
if' situation regarding Alliance Management involvement,
with the right people in your company.
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10. ALLIANCE MANAGERS-
BUILDING YOUR CASE TO CONTRIBUTE (1)
– TIP #1: How the ‘what if’ conversation could go.
• As a way of being prepared for anything on its alliances, Alliance
Management is always looking at contingency plans.
• Fully aware that if there’s M&A, there will be an Integration
Management Office (IMO) running the process.
• Because of the urgency to close and integrate as fast as possible,
Alliance Management will be ready to support the IMO.
• Where AM qualifies for a key support / leadership role is having
demonstrated a good track record of
– working with diverse partners
– addressing miscommunications and strategic changes within
the alliance
– Developing a trust-worthy reputation in dealing with parties
outside the acquiring company
– All this translates into Alliance Management being considered for an
important role in the post-integration team.
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11. ALLIANCE MANAGERS-
BUILDING YOUR CASE TO CONTRIBUTE (2)
– TIP #2: Work in the discussion during employee appraisals.
• Choose Alliance Management skills that are graded against during
performance evaluations
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Show how the Alliance Management function
and your team demonstrate these skills in
alliance-facing roles, but they will also be
necessary skills for a successful acquisition /
post merger integration.
Skill Levels, Behaviors & Attitudes…
BUILDING AND
MAINTAINING TRUST
INFLUENCE
MANAGEMENT
GAINING VALUE FROM
DIVERSITY OF IDEAS
EFFECTIVE
COMMUNICATIONS
-must be developed to a much higher degree-
than what is normally needed to succeed in a
direct-influence, internally facing role

12. CASE STUDY –
ALLIANCE MANAGEMENT IN M&A
Endo Pharma acquisition of Indevus Pharma- $637M
– Timing
– Endo merger offer for Indevus signing and announcement -
Jan 2009
– FTC closing - March 2009
– Integration deadline goal date- June 2009
– Alliance Management role
– Extremely complex because there were 16 existing licensing
relationships to be integrated.
– Alliance Management goal was to ensure that the value that
was contemplated from the acquisition gets delivered long-
term
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13. CASE STUDY –
PRIORITIES DURING WAITING PERIOD
• Target company
• The acquiring company almost always chooses a
“line” operating executive to lead the integration from
the target company side.
• Assemble Information
– Get access to the diligence information, and much more
– Set out a timetable to provide inputs to the Integration
Plan as required
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14. CASE STUDY –
PRIORITIES DURING WAITING PERIOD
• Team building
– Immediately make your availability and support known
– Show up with a plan and checklist
– Interview your counterparts
– Establish a relationship and build trust with third party
alliance partners of the target company
• Acquiring company
– Integration Management Office leader: Might be Finance,
or Corporate Portfolio Management, but could be the
Business Unit head, or Project Management head,
depending on the leading asset that the acquisition is
based upon
– Business Development: get access to diligence files
– Legal: Contract, IP and FTC compliance attorney
– Manufacturing
– Finance 14
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15. CULLING THE DATA – LOOKING BACK AND FINDING INFO
ON THE ACQUIRED ALLIANCES
AT EVERY STAGE OF MATURITY (1)
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Alliance
Integration
Alliance
Maintenance
Alliance
Transformation
Alliance
Negotiation
Alliance Management Key Activities
Alliance Management Tools & Data
Agreement
Signing
R&D Commercialization
Negotiate
and Close
the Deal
Evaluate
Individual
Candidates
Assess
Alliance
Candidates
Identify
Alliance
Candidates
Pre-alliance Assessment and Negotiation
 Understand
and
communicate
sources of
alliance value
 Advise on
the deal
governance
and
operation Assess
alliance fit
 Advise on
selection of
alliance
targets
 Assess
opportunity
for
workable,
shared
objectives
 Tiering and
prioritization
analysis
 Governance
principles
review
 Licensing-to-
Kickoff
Transition
Scorecard
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16. CULLING THE DATA – LOOKING BACK AND FINDING INFO
ON THE ACQUIRED ALLIANCES
AT EVERY STAGE OF MATURITY (2)
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Alliance
Integration
Alliance
Maintenance
Alliance
Transformation
Alliance
Negotiation
Alliance Management Key Activities
Alliance Management Tools & Data
Agreement
Signing
R&D Commercialization
Start-up the
Alliance
Plan and
Organize the
Start-up
Alliance Start-up
 Create a
collaborative
setting, build
collaboration
skills
 Develop the
operations
integration plan
 Integrate
human
resources
 Create the
integration
architecture
 Model
capabilities
and
processes
 Create a
shared
vision
 Alliance
Team Charter
Template
 Licensing-to-
Kickoff
Transition
Scorecard
 Alliance
Management
Guidelines
 Alliance
Kickoff and
Acceleration
Template
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17. 17
Alliance
Integration
Alliance
Maintenance
Alliance
Transformation
Alliance
Negotiation
Alliance Management Key Activities
Alliance Management Tools & Data
Agreement
Signing
R&D Commercialization
Operate
Alliance and
Maximize
Value
Alliance Operation
 Mentor teams to
maintain trust
 Maintain and
improve
collaboration skills
 Establish
links across
corporate
cultures
 Alliance
Competency
Assessments
Templates
 Cultural
Diversity
Training and
Workshops
 Alliance Skill
and Competency
Models
 Rewards,
Motivation and
Recognition
Programs
 Team Member
Performance
Feedback
 Team
Performance
Enhancement
Resources
 Bi-Annual
Alliance Health
Check (Survey)
 Senior
Management
Sponsorship
Guidelines
 Alliance
Competency
Development
Resources
 Quarterly
Alliance
Performance
Scorecard
 Ensure senior
leadership
involvement
continues
 Resolve conflicts
 Foresee problems
and changes
CULLING THE DATA – LOOKING BACK AND FINDING INFO
ON THE ACQUIRED ALLIANCES
AT EVERY STAGE OF MATURITY (3)
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Alliance
Integration
Alliance
Maintenance
Alliance
Transformation
Alliance
Negotiation
Alliance Management Key Activities
Alliance Management Tools & Data
Agreement
Signing
R&D Commercialization
Exiting a non-
strategic or
under-
performing
Alliance
Reshaping the
alliance
Alliance Adaptation
 Terminating a relationship in a way
that does not damage own company’s
reputation in the industry
 Re-valuing complex
assets
 Re-directing resources
due to changes
 Alliance
Change
Planning
Guidelines
 Alliance
Termination
Health Check
Alliance Termination
 Alliance
Project
Close-Out
Summary
 Alliance
Lessons
Learned
Repository
 Re-balancing the
partner’s interests
due to competitive
or clinical trial
changes
CULLING THE DATA – LOOKING BACK AND FINDING INFO
ON THE ACQUIRED ALLIANCES
AT EVERY STAGE OF MATURITY (4)
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19. Overview of range of tools that an alliance-mature acquired company might employ,
and which should be assessed
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Guidance
Resources
Assessment Resources Development Resources
Alliance Management Guidelines Licensing-to-Kickoff Transition
Scorecard
Alliance Competency Development
Resources
Alliance Team Charter Template Quarterly Alliance Performance
Scorecard
Team Performance Enhancement
Resources
Alliance Kickoff and Acceleration
Template
Bi-Annual Alliance Health Check
(Survey)
Cultural Diversity Training and
Workshops
Alliance Skill and Competency
Models
Alliance Competency Assessments
Templates
Alliance Change Planning Guidelines Alliance Termination Health Check
Alliance Project Close-Out Summary Alliance Lessons Learned Repository
Senior Management Sponsorship
Guidelines
Alliance Senior Management
Interviews
Rewards, Motivation and Recognition
Programs
Team Member Performance
Feedback
CULLING THE DATA – LOOKING BACK AND FINDING INFO
ON THE ACQUIRED ALLIANCES
AT EVERY STAGE OF MATURITY (5)
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20. TEAM CHARTER AS A KEY M&A ASSESSMENT TOOL
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Purpose:
Provides focus, alignment
and operational guidance to
each alliance relationship.
Serves as an operational
reference and guide through
the alliance lifecycle as a
companion to contractual
agreements and project
plans.
Key Sections:
• Alliance mission,
objectives and spirit
• Roles and responsibilities
• Working guidelines
• Metrics and performance
measurement
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21. ALLIANCE HEALTH CHECK SURVEYS
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Purpose:
Primary measurement
mechanism for
Relationship Performance
factors
Key Features:
 Provides regular
checkpoint on essential
Alliance competencies
 2-3 “sensor” questions per
Relationship factor
 Results discussed with
partner, to identify and
understand areas for
improvement and reasons
for successful outcomes
 Action plans developed
and implemented through
Alliance Team
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M&A TOOL
(REPURPOSED ALLIANCE MANAGEMENT TOOL):
ALLIANCE SUMMARY
Purpose: Alliance Management’s
guide for other functions to more
easily see the obligations they are
responsible for.
 Forward looking
 Last-Next-Comments
 Cross check so as not
to miss an obligation
Focus
Key Features:
 Very practical, not legal. Make it
clear that if there is any doubt,
the legal contract supercedes
any summary.
 Governance- Joint Committee
timing and obligations.
 Reporting- Dev Plans, Marketing
Plans, Royalty Reports
 Milestones- financial obligations,
regulatory or sales milestone
payments and when, royalty
payments and when.
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23. CASE STUDY –
OUTCOME
• A great testimonial for Alliance Management
• VP of Project Management at the target company:
• It became very obvious to us as well as our
partners who were desperate for information, that
no one at the acquiring company had a stake in
maintaining alliance relationships. Until we
connected them with Alliance Management.
• Before this, I didn’t always ‘get’ the value of
Alliance Management, but when our partners kept
calling and I couldn’t give them any answers, it
was critical to have someone with credibility at
the acquiring company who was interested in
preserving the value of that relationship.
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24. ADDITIONAL RESOURCES–
M&A FURTHER READING
• www.mergerintegration.com – large number of downloadable
presentations and templates
• Five Frogs on a Log- groundbreaking and easily readable
book on post merger integration from PWC. Summarized at
www.pwc.com
• www.alliancestrategy.com – Brandeis alliance professor Ben
Gomes-Cassera does some great work at the intersection of
mergers and alliances
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25. Questions
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