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Multiple Assets Diversify the Deal

October 27, 2011
With a recent surge in pharma companies collaborating earlier on with small biotech companies, discovery stage partnering deals are becoming increasingly popular.  Striking a discovery stage deal can be extremely beneficial for both parties in today’s environment – pharma gets to fill its ever elusive R&D pipeline as patent expirations loom, and the small biotech struggling to raise money to stay alive gets the capital infusion necessary to stay in play.

Panelists in the “Broad is Beautiful – Multiple Assets Diversify the Deal” session at the 10th Annual BIO Investor Forum agreed that pharma is actively looking for specific biologics and targets, and early stage companies hold great promise for the future of the sector.

“These aren’t nice to have deals, but rather need to have deals,” said Ali Tehrani, PhD, President and CEO of Zymeworks Inc. “They have a problem to address and are looking for solutions.”

There are many important considerations throughout the partnering process that speakers agreed were critical for success.

“It’s essential to establish very clear boundaries of what is important for each side, that will save money, time and keep Boards happy,” said Tehrani.

A key theme of the session was a focus on the long range implications of the partnership.

“We plan for the long-term, it’s in our DNA whenever we negotiate a deal,” said Christine Grygon, PhD, Venture Capital Liaison/BI Partnering, Boehringer Ingelheim.

Appropriate due diligence going into the deal is critical, and companies must have a stellar legal team backing them up.

“Issues always come up, so it’s important to take time to look at all potential outcomes up front before entering into a partnership,” said Michael Margolis, RPh, Managing Director, ROTH Capital Partners.

The deal structure is an important consideration in giving the partnership the greatest chances for success. Panelists agreed that having options and flexibility should be necessary components of any deal.

“It’s essential to put the right amount of resources behind the program, make no assumptions and actively manage the partnership,” said Steven E. Hall, PhD, Venture Partner, Lilly Ventures.

For emerging biotech companies, keeping options open should be a priority.

“We have to think through the deal carefully, otherwise our future could be stifled,” said Tehrani.

Hall added that there should be clarity around what happens if the program is not immediately picked up. “If too much of a company’s portfolio is committed, it’s difficult to have much of a future,” he said.

The session was moderated by Carl Spana, PhD, President & Chief Executive Officer, Palatin Technologies, Inc.