Report: Late Stage Deals: Strategy, Structure and Payment Terms TOC

Executive summary

1. Introduction

2. Why do companies partner late-stage compounds?

2.1. Summary
2.2. The role of partnering in corporate strategy: 2.2.1. Licensing out; 2.2.2. Licensing in
2.3. Partnering for revenue
2.4. Partnering in for pipeline development: 2.4.1. Case studies; 2.4.1.1. Bristol-Myers Squibbs approach to in-licensing; 2.4.1.2. GlaxoSmithKlines approach to in-licensing

3. The evolving role of partnering in biopharmaceutical development

3.1. Summary
3.2. Licensing to partnering
3.3. The traditional licensing model
3.4. The evolution from licensing to partnering
3.5. Sharing risk and reward: 3.5.1. Phase I to II stage deals; Excerpt 3.1 Roche-Kosan agreement dated September 2002; 3.5.2. Phase III stage deals; 3.5.2.1. Case study Genome Therapeutics - Versicor; Excerpt 3.2 Genome-Biosearch Italia agreement dated October 2001; 3.5.3. Filed and marketed product stage deals
3.6. Sharing knowledge
3.7. What has been learned from the partnering model?
3.8. Complex partnering models: 3.8.1. Process; 3.8.2. Structure; 3.8.3. Financing
3.9. Future trends: 3.9.1. Biotechs competing with pharma for deals

4. Late-stage deal strategies and structures

4.1. Summary
4.2. Considering the deal
4.3. When do companies partner?: 4.3.1. License early; 4.3.1.1. Early stage case studies; Case study 4.1 Genentech-Dendreon; Case study 4.2 Roche-Vernalis; Case study 4.3 Roche-Antisoma; 4.3.2. License late; 4.3.2.1. Late-stage case studies; Case study 4.4 Idenix-Novartis (development stage); Case study 4.5 Eli Lilly-Amylin (development stage); Case study 4.6 Genta-Aventis (development stage); Case study 4.7 Isis-Eyetech (development stage); Case study 4.8 King-Aventis (marketed products); Case study 4.9 Cubist-Chiron (FDA-approved); Case study 4.10 First Horizon-AstraZeneca (product acquisition); 4.3.3. University licensing; Case study 4.11 Scripps Research Institute-Cyanotech
4.4. Early and late-stage deals-a cost comparison: 4.4.1. What do companies spend on partnering?
4.5. Licensing strategy case studies: Case study 4.12 Neurocrine Biosciences; Case study 4.13 Actelion; Case study 4.14 Vicuron Pharmaceuticals (previously BioSearch Italia); Case study 4.15 ImClone Systems; Case study 4.16 SkinMedica; Case study 4.17 Galen Holdings
4.6. Deal types

5. Payment strategies

5.1. Summary
5.2. Deciding a strategy
5.3. Payment options: 5.3.1. Upfront payments; 5.3.1.1. Conditionality of upfront payments; 5.3.2. Loans; 5.3.3. Convertible loans; 5.3.4. Equity; 5.3.5. R&D funding; 5.3.6. Annual fixed payments; 5.3.7. Milestone payments; 5.3.8. Innovative forms of payment-quids; 5.3.8.1. Products; 5.3.8.2. Extended rights to pipeline/technology; 5.3.8.3. Skills transfer; 5.3.8.4. Public relations; 5.3.8.5. Other quids; 5.3.9. Royalties; 5.3.9.1. Issues affecting royalty rates; 5.3.9.2. Royalties on combination products; Case study 5.1 Scripps Research Institute-Cyanotech; 5.3.9.3. Guaranteed minimum/maximum annual payments; 5.3.9.4. Royalty stacking; 5.3.9.5. Royalties and supply/purchase contracts; 5.3.10. Option payments; Case study 5.2 Neotherapeutics (now Spectrum)-Johnson Matthey

6. How to make the right deal

6.1. Summary
6.2. Constructing the deal
6.3. Finding the right partner: 6.3.1. What attracts a partner?; 6.3.2. Where to look for a partner; 6.3.3. Sources of information; 6.3.4. Building a network; 6.3.4.1. Late-stage networking events; 6.3.4.2. Networking for biopharmaceutical executives; 6.3.5. Becoming partner of choice
6.4. Deal timeframes
6.5. Deal valuation: 6.5.1. Factors contributing to the deal valuation; 6.5.1.1. Intellectual property; 6.5.1.2. Development phase; 6.5.1.3. Cost of clinical trials; 6.5.1.4. Time to commercialization; 6.5.1.5. Benchmark values; 6.5.1.6. Clinical data; 6.5.1.7. Risk of failure; 6.5.1.8. Size and value of therapeutic market; 6.5.1.9. Pricing and reimbursement; 6.5.1.10. Competition for licensing rights; Case study 6.1 Celltech CDP 870; Case study 6.2 Genentech-OSI; 6.5.1.11. Partners expertise/reputation in given field; 6.5.1.12. Impact on internal R&D programs; 6.5.2. Due diligence as a valuation tool
6.6. Guidelines for late stage deal payments: 6.6.1. Upfront payments; 6.6.2. Milestone payments; 6.6.3. Royalties
6.7. Keeping a deal successful: 6.7.1. Commitment to the deal; 6.7.2. Know your partner; 6.7.3. Thorough due diligence; 6.7.4. Patent and IP management; 6.7.5. Comprehensive deal agreement; 6.7.6. Feasible and achievable milestones; 6.7.7. Proactive management of issues; 6.7.8. Regular communication; 6.7.9. Tracking of payments and royalties
6.8. When to negotiate termination
6.9. What makes a deal newsworthy?

7. Deal terms and trends-a data analysis of early-stage deals

7.1. Summary
7.2. Putting it into practice
7.3. Public data
7.4. Survey data
7.5. Headline valuations
7.6. Components of the deal: 7.6.1. Equity involvement; 7.6.1.1. Upfront payments; 7.6.1.2. Milestone payments; 7.6.1.3. Royalty rates
7.7. Late-stage deal details

8. Appendices

8.1. Glossary of terms
8.2. Resources
8.3. Complex deal terms: an outline
8.4. Late-stage partnering agreements
8.5. Payment clause from Spectrum-Johnson Matthey, August 2001
8.6. Press releases 1: Excerpt 3.1 1; Excerpt 3.2 1; Case study 4.1 Genentech-Dendreon 1; Case study 4.2 Roche-Vernalis; Case study 4.3 Roche-Antisoma 1; Case study 4.4 Idenix-Novartis (development stage); Case study 4.5 Eli Lilly-Amylin (development stage); Case study 4.6 Genta-Aventis (development stage); Case study 4.7 Isis-Eyetech (development stage); Case study 4.8 King-Aventis (marketed products); Case study 4.9 Cubist-Chiron (FDA-approved); Case study 4.10 First Horizon-AstraZeneca (product acquisition); Case study 4.12 Neurocrine Biosciences; Case study 4.13 Actelion; Case study 4.14 Vicuron Pharmaceuticals (previously BioSearch Italia); Case study 4.15 ImClone Systems; Case study 4.17 Galen Holdings; Case study 5.2 Neotherapeutics (now Spectrum)-Johnson Matthey; Case study 6.2 Genentech-OSI
8.7. References