It is a commonplace practice now for biotechs to team up with big pharma to help continue their clinical trial development and to make the most of their existing infrastructure, particularly on the commercial side of things. This article will deal with what you and your company needs to know before entering an agreement with a big pharma company – whether you should partner or not and how you can find the right partner to suit your organization’s interests.
Should you Partner?
One of the key aspects to consider in partnering with a big pharma company is are you ready to partner? This mainly centers around the timing of the partnership and if it is a good fit for your organization. Generally, the larger the company is, the longer it takes to make decisions. This is the case with big pharma companies. So if you are a start-up looking for an almost immediate deal then the timeline may be too long for your liking, as big pharma companies typically have many existing partnerships and so going through the process of creating a new one isn’t overly time-sensitive compared to the biotech’s side.
Before any potential partnership, your biotech should ensure it has all of its resources at hand – especially financially. During the partnership, you may find your company investing more time and money into the deal than anticipated, with both of those also being used when finding an initial partner. Time has to be invested in searching for and analyzing your potential partners. While, since you are unlikely to have an in-house legal team, your biotech may also have to pay a lawyer to review the proposed licensing agreement to ensure that it is mutually beneficial to both parties. Whilst the partnership is in progress, the big pharma company may also request meetings or particular reports which can be a time-consuming task for your organization.
Another aspect to take into consideration is where your asset(s) are in terms of their clinical development timeframe. It could be beneficial to wait for a particular milestone or phase to make the most of potential partnerships and provide a stronger USP for the asset. The further that you can take your own research, the better the deal you will be offered in terms of upfront payments, milestone payments, and royalties. Although there is a very strong risk-reward element that must be balanced when it comes to the choice between developing your own asset further or entering into a partnership. If you partner too early, you may get less than you deserve albeit it is less risky. While the further you take your research by yourself, the more likely it is that you’ll collect data that doesn’t support the overall endpoint of the study, potentially leaving you with nothing at all. In addition, you need sound understanding or, preferably, expertise on the value of your asset and how the deal should be structured (more information about asset valuation and deal structuring is available on Venture Valuation’s website).
Oftentimes, biotechs opt to start the search for partners before Phase 3 trials of the asset begin due to the high costs associated with that phase, a median of USD 19 million. As well, greater costs are incurred subsequent to Phase 3 trials, such as sales and marketing, regulatory approval, and distribution. Big pharma organizations already have existing infrastructure and experienced teams in place to handle these tasks, so it makes more sense for a biotech to take advantage of this instead of setting up their own areas for this function, causing a further expense in both time and money.
Finding the Right Partner
Finding a partner that is the right fit for your organization’s interests can be a rather daunting task, although there are a few ways to go about it. Many big pharma companies publish their partnering interests on their website, so you can see if one is a match for your asset development. See Novartis or Bristol Myers Squibb for an example.
As well, potential partners are often found through conferences, which are typically centered around either business development or R&D. For the latter, these can provide a platform for you to present your asset and its underlying clinical trial data. In this scenario, this can cause a big pharma company to approach you instead of the reverse, giving you greater leverage when it comes to negotiating a deal. Business development-oriented events, meanwhile, typically focus on one-to-one partnering. While participation in most of these events comes with a significant fee, a free alternative is Biotechgate Digital Partnering, a fully virtual event hosted four times a year.
Overall, if you are a biotech looking to partner with a big pharma organization, the most crucial aspect is striking the right timing between developing your asset with your own resources and seeking the assistance of another company. While further development can mean taking on more risk, it can ultimately make for greater rewards and an enhanced licensing deal for your organization.