Partnerships

Introduction

A common risk-reduction strategy, especially in therapeutics development, partnership is a way to access markets, specialized expertise, proprietary capabilities, and of course, capital. Constructing partnerships that benefit the partnering firms, and the patients you seek to serve, is a complex and multivariate exercise, which seeks to align, incentivize, and reward prudent risk-taking.

What

In any partnership, the whole should be greater than the sum of the parts. The concept of value creation and mutual benefit (in deal-making) should be the focus. Value capture is important, but secondary, and too often the focus. Common partnerships in therapeutics development are options, licenses, sponsored research agreements, collaboration agreements, joint ventures, co-development agreements, and distribution agreements. There are near-infinite variations on these themes.

When

Similar to trade sales, partnership can be strategic or opportunistic. Ideally it is both. “When they’re passing cookies, take a cookie” is a reasonable position. Your strategy may define where you would or would not partner. We recommend that a partnership should be seriously considered whenever multiple partners are willing to provide term sheets, whenever the expectation of patient benefit can be significantly increased, whenever access to a platform or proprietary skill set would accelerate your development or reduce your risk, or when overall risk management or cash management would dictate. 12

Why

Deal-making is an art, and the more familiarity you have with the available tools and common terms, the more likely you’ll be able to move from a tactician to a creative and value- creating force. The financial implications are obvious, but management of risk, competitive pressure, and patient benefits should also be part of the conversation.

Learning Goals

Common deal types, deal structures, and deal processes in therapeutics development.