The Handbook on Alliances & Deals in Biotech Business

Summary

"The only way to win in this business is to have alliances, both for small companies and large ones." (Executive manager of a large biotech company). The number of new alliances has increased ten-fold within a 10 year period (1992-2001), from approximately 100 per year to close to 1000 per year today. In-licensing are becoming more and more important. Number of drugs that originated in-house has decreased from 80% in the 70th to only 40% in the beginning of 2000. If the pharmaceutical industry increased early deal prices substantially they would have a better chance economically. Several small companies have held back on out-licensing due to poor deal terms. Several evaluations of the relationship between deal value and developmental stage clearly demonstrate an unexpected small difference in values. These factors will drive the need for increased frequency and earlier stage deals.

There is still a large difference between in-licensing behaviors among the larger companies (BMS 53% and Eli Lilly 19%, year 2000). Over 10% of the approved in-licensed drugs have achieved blockbuster status whereas "only" approximately 5% of the internal drugs do so. According to estimations made by Wood Mackenzie's licensing deals will up to 2010 grow to become the largest driver for big pharmaceutical companies. And expectations that almost 50% of revenues in major pharma will emerge from licensed compounds by 2005-2010. New collaborations are as likely to be made between two (small-large or large-large) biotechnology companies as they are between a biotechnology company and a pharmaceutical giant.

In the "Handbook on Alliances & Deals in Biotech Business" BioSeeker Group describes important structural issues for optimizing your deal value. Any management executive can use this strategic document as a guide of assistance in their tedious out-licensing efforts. Of outmost importance is the structure and time-line you work with. The most important issues to consider are discussed.

All biotechnology companies want to discover and develop treatments with a blockbuster potential. In addition, they want to be in charge of their products or services in the moneymaking process and to obtain every bit of revenue their product can convey. Realistically, almost no biotech company is ever going to have enough capital to achieve all of the steps needed. At the same time large pharmaceutical companies are more and more realizing the possibilities of future growth in revenues in the oncology field. Most of them do not have a strong pipeline and as well lack technology platforms, which force them to cover their needs by in-licensing or acquisitions. The licensing situation is changing. A stronger demand for earlier stage projects has become a reality since there is a dry for late stage projects. Doing business in the biotechnology arena changes constantly. And since many biotechnology companies must explore the possibilities for out-licensing product rights in the early hours in order to gain funds to maintain their existence or to move their pipeline products closer to commercialization they are dependent on constantly scanning the business climate. Most small company executives are more concerned about the time to sign the collaboration with a larger pharmaceutical company, to commercialize the product, than whom they are partnering with. Smaller pharmaceutical companies have introduced fresh technologies and new classes of drugs. The pharmaceutical companies are hungry for new products so, it is not difficult to come across various interesting associates. Knowledge of progress in drug discovery technologies and clinical trial design are as well of immense importance for keeping your company in the forefront, providing competitive advantage. And remember that a deal will send a clear signal to the investors!

A long list of key factors have to be considered. BioSeeker Group is confident that the choice of collaborator is more significant for success than the timing of the agreement. Using the cancer market as an example we structures and assesses important bullet-points you need in your deal making process. As well, provide several detailed descriptions of real case deal scenarios for your benchmarking.

The report includes

Description of the partnering process
Deal and partner strategies
Guide for increasing value on your pipeline
Identify your risk of missing good leads
Checkpoints for out-licensing
Real case scenarios

Contents

• Executive summary
• Table of contents
• Introduction & Market Outlooks
• Figure 1. Worldwide oncology market values of a selection of drug/therapy
• types in 2001 and 2000 (MUSD)
• Table 1. Leading cancer drug sales (2001-2002)
• Figure 2. Number of cancer drugs in clinical trials 1991-2001
• Table 2. BioSeeker Group structure of current cancer therapeutics.
• Table 3. Therapeutic Strategies of a specific interest
• Table 4. Novel approaches to cancer therapy.
• Table 5. BioSeeker Group structure of future cancer therapeutics (mechanisms of action).
• Historical FDA Approvals for Cancer Therapeutics
• Alliances & Deal Values
• Tools for deal making
• Driving factors
• Box 3. Bullet-points to increase value on your pipeline drugs.
• Box 4. Checkpoints for out-licensing your project
• Determinants of deal prices
• Table 6. Relation of perceptions of value driving factors
• Key factors for deal success
• A key role in strategy
• Table 7. Probabilities of success at differing development stages
• A long list of issues to be considered!
• What do the big pharma & biotech look for?
• Novelty
• Explore new areas
• Do not think you know - Find out!
• Validation & Activity
• Get ""expertise"" comments on your science
• Clinical issues
• Several questions have to be addressed:
• Present data frequently!
• Approval and commercialization
• Reimbursement issues
• Improve your strategy for reimbursement:
• The Handbook Business
• Company issues
• Describe your advantage in the competitive situation
• Criteria in evaluating the fundamentals of a potential partner
• The partnering process
• Deal homework
• Deal planning
• Deal implementation
• Hazards in your partnership
• Real case scenarios
• Case I: It has taken 20 years
• Case II: New therapeutic strategy
• Case III: Steady flow of licensing fees
• Case IV: Early stage can be expensive
• Case V: A success story
• Case VI: Exchange money for market
• Case VII: Revenues and credits
• Case VIII: Up and down
• Case IX: BioPharma mega deal
• Case X: Continuous efforts - payoff?
• Table 8. Overall structure of deals described in this section
• Disclaimer
• Liability
• Completeness

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