Due Diligence in Life Science Transactions, 2nd Edition

Table of Contents

Chapter 1: Executive Summary

Chapter 2: Introduction

• What is Due Diligence?
• How to Use this Guide

Chapter 3: Due Diligence and Life Science Businesses

• The Role of Due Diligence in Life Science Transactions
• Goals for Due Diligence
• The Due Diligence Process
• External Parties that can be Tapped for Expertise as Needed
• Examples of Due Diligence in the Life Sciences
  • Eli Lilly and Centocor
• Important, Common Traps to Avoid
  • Not Enough Expertise on the Team
  • Lack of Coordination
  • Inadequate Confidentiality Coverage
  • Too Specific/Too General a Request for Information
  • Relying Entirely on Seller-provided Information

Chapter 4: Investigation Areas

• Corporate Information
  • Corporate Information Summary
  • Corporate Information Questions
    • Transaction Rational
    • Company Structure and Founders
    • Management / Shareholder Relations
    • Business Vision
    • Investor Composition and Relations
    • Equity Structure
    • Subsidiaries and Affiliates
    • Stock Restrictions
  • Corporate Information Checklist
• Financials
  • Financials Summary
  • Financials Questions
    • Financial Statements
    • Accounting Issues
    • Profitability and Expenses
    • Burn Rate and Funding
    • Extraordinary Financial Events
    • Liabilities and Debt
    • Taxes
  • Financials Checklist
• Products and Market
  • Products and Market Summary
  • Products and Market Questions
    • Current Products
    • Customer Satisfaction
    • Data on Marketed Products
    • Competition
    • Marketing Strategy
    • Sales Techniques and Channels
  • Products and Market Checklist
• Research and Development
  • Research and Development Summary
  • Research and Development Questions
    • Group Structure and Talent
    • R&D Strategy
    • Product Development
    • R&D Technologies
    • Bioinformatics
    • IP and Publications
  • Research and Development Checklist
• Intellectual Property
  • Intellectual Property Summary
  • Intellectual Property Questions
    • Patents and Ownership
    • Freedom to Operate and Infringement
    • Patent Coverage
    • Trade Secrets
    • Copyrights
    • IP Processes
    • Third-Party Agreements
  • Intellectual Property Checklist
• Operations 4-14
  • Operations Summary
  • Operations Questions
    • Suppliers
    • Manufacturing
    • Distribution
    • Information Technology
    • Asset Valuations
  • Operations Checklist
• Legal and Corporate Issues
  • Legal and Corporate Issues Summary
  • Legal and Corporate Issues Questions
    • Corporate Minutes
    • Stock Purchase Records
    • Contracts
    • Ownership of Assets
    • Litigation
    • Permits
    • Conflicting terms
    • Antitrust
  • Legal and Corporate Issues Checklist
• Human Resources
  • Human Resources Summary
  • Human Resources Questions
    • Organizational Structure
    • Executive Background
    • Executive Teamwork
    • Executive Compensation
    • Employees
  • Human Resources Checklist

Chapter 5: Independent Investigation

• Creative Sources of Information
• Primary Sources of Information
  • Internal Primary Information
  • External Primary Information
• Secondary Sources of Information
  • World Wide Web Precaution
  • Secondary Source Listing
    • Company Background
    • General Databases
    • Financial Information
    • Management Information
    • Life Sciences Industry

Chapter 6: Conclusion

Chapter 7: Appendices

• Example Confidential Disclosure Agreement
• Example Request for Information (RFI)
• SWOT Analysis
  • Strengths
  • Weaknesses
  • Opportunities
  • Threats
• Example Memorializing Memo
• Example Due Diligence Report Executive Summary

TABLE OF EXHIBITS

• Exhibit 3.1 Life Science Transactions Requiring Due Diligence
• Exhibit 3.2 Venture Capital Investments in Various Sectors of the Life Sciences Space
• Exhibit 3.3 M&A Activity in Terms of Number of Transactions and Amount Paid
• Exhibit 3.4 Due Diligence Steps for a Buyer
• Exhibit 3.5 Top 10 Due Diligence Flags for Venture Capitalists
• Exhibit 3.6 You Can' t Know Everything
• Exhibit 3.7 Due Diligence Issues in Select Recent Life Science Deals
• Exhibit 3.8 Beware Royalty Stacking
• Exhibit 5.1 Tips for Conducting Primary Interviews
• Exhibit 6.1 Possible Results of Due Diligence
• Exhibit 7.1 Example SWOT Analysis of a Hypothetical Company