One Nucleus Annual Review 2022

Increasing Sophistication in the Pharma/ Biotech Partnership Model The last couple of years have seen the life sciences industry propelled into the mainstream news. Advanced technologies like mRNA vaccines and novel antivirals have received unprecedented public attention, and for good reason as the sector provides a powerful toolkit to respond to the global challenge of the COVID-19 pandemic. Investment in the sector has been strong with reports of 2021 surpassing previous records for fundraising for UK life sciences and biotech companies, reaching some £4.5bn. This will support and drive forward continuing innovation Teamed with exceptional levels of investment, we are also seeing increased activity amongst peer-to-peer dealmakers in the sector. Biotech companies with strong proprietary technologies can offer new routes to tackling unmet need alongside more tried and tested approaches to drug discovery. This dynamic can shift the power balance in favour of the smaller partner, which enable it to retain more control over the applications for its technology.

Important strands for a biotech partner include the following points.

Define carefully the scope and extent of each licence. While licences in the past might have been broadly cast to allow a wide range of activity and target-seeking on the part of the licensee, there is now greater sophistication in the allocation of fields of activity between technology users. In addition to helping the biotech innovator to realise full value for its technology, it also enhances the likelihood that important patient benefits will be realised across a broad range of needs. A licensee will focus R&D effort on its own areas of interest, leaving neighbouring fields to be taken forward by others. Mechanisms to make this work include gatekeeper arrangements that serve both to protect the biotech’s in house programmes and those of all of its licensees.

Identify and retain control of fields for in-house R&D. We are seeing biotech innovators select fields that will be reserved for in-house R&D. While biotech companies may in the past have left drug discovery and development to major players with an international presence and well-resourced development machine, many now see carefully defined projects as a part of their own remit. If progressed effectively, these can offer an important potential source of revenue. The high risk profile of in-house development can be offset by revenue streams from out-licensing in other areas.

Consider per-target pricing models. Biotech companies are increasingly looking at pricing that is based on the number of targets that a partner will select and take forward using the licensed technology. Where a particular target does not progress well, a replacement mechanism is usually appropriate. However, retaining control over the ultimate number of projects helps the biotech provider to realise full value from its technology.

The different shape and character of any particular collaboration will determine the extent to which these considerations apply, but we see these factors coming into play across many types of activity.

James Fry, Mills & Reeve www.mills-reeve.com www.onenucleus.com | 39