5 Tips for Successful Biotech/Pharma Partnering22 October, 2014
Biotech companies know that it is essential to align with strategic partners to advance their drug candidates to market. To partner successfully the small biotech company must effectively play the partnering game.
The process requires determining when it’s best to seek out a partner, having a defined strategy, clearly communicating how your opportunity is unique, understanding the partnering process both from your perspective and the partner’s, and then reaching out to a variety of partners in order to find one that best fits your needs.
#1 Decide When to Play
Deciding when to seek out a partnership may be largely determined by what it is you want to accomplish. The goal of partnering is typically to obtain non-dilutive funding or to offload expenses when development costs, such as Phase III trials, become too burdensome. But a partnership can also be valuable for gaining a partner’s expertise and resources, or for the validation that partnership brings to your company. Also keep in mind that a partnership will generally increase the probability of that your drug will be approved.
Furthermore, don’t assume your drug has to be far along the development path in order to partner. The recent trend has been to do deals earlier and earlier. In fact, there’s been a drastic increase, especially in oncology, in discovery and pre-clinical deals, as opposed to deals with companies further along in the development process.
#2 Have a Clear Strategy
A clear strategy drives the deal. Know what you want, make sure everyone on your team is in sync, and know your alternatives. By defining your needs and wants, you’re defining those things that are essential to the deal and those things on which you’re willing to be flexible. Having alternatives gives you leverage to extract value, and as the deal moves along, you can assess if the developing terms of the deal are still more attractive than your alternatives.
Throughout the negotiation process, know what makes sense for you, but also consider what makes sense for your partner. It’s easier to persuade someone to jump through a hoop if you can show why it’s good for them. And, always consider as many scenarios as possible. What happens if the deal goes south? What if negotiations move slower than anticipated? What if the partner decides not to develop a second indication?
Maintain alternatives throughout the negotiation process—even at very late stages, deals often fall apart.
#3 Tell a Great Story
No matter the potential partner, tell a great story that clearly shows how you’re going to deliver value to the market. Don’t attempt to enter the partnering game before that narrative is polished, and don’t assume your data speaks for itself. The first question most large pharma companies will ask is, “What unmet medical need does it address?” If medical need is minimum, or unclear, they’ll pass. Next they’ll be interested in target validation. Only then will they want to see that your data speaks for itself.
Deals get done because of:
- The clarity of the value proposition
- Belief in market potential
- Belief that risks can be addressed early
- Internal champions
- Strategic imperatives
If the uniqueness of your opportunity is not clearly conveyed right from the start, a partner might not dig any deeper and might never appreciate the value you’re bringing to the table.
#4 Facilitate the Process
Partnering is a process for both parties. During the process, both you and your potential partner will be working toward defining the value proposition of your drug and determining if the relationship fits their criteria for doing a deal. For a big company, this may be a fit with their strategic portfolio. For the small company, part of that discernment will be determining if the partner truly recognizes the value of the opportunity and if they’re someone they can work with successfully after the deal.
Play an active role in the diligence process. Remember, your partner is trying to learn in weeks everything that it took you years to create. They might not always get it right, so it may be necessary to guide them through the learning curve. This is where a virtual data room becomes indispensable. A virtual data room provides the most convenient platform for sharing your data in a secure, organized and easily accessible way.
A good virtual data room let’s you easily organize data for the specific disciplines of the various team members and decide who gets to see what. It’s also very easy to stage the sharing of sensitive information until it’s necessary for the deal to move forward. Biology and clinical results are rarely held back because knowing them does not enable competition. Typically, chemical structures, manufacturing processes and unpublished patent applications aren’t shared until it becomes clear that the seriousness of the partner merits it.
#5 Play Often
As in any game, playing often increases the probability of winning. It also means you’ll be playing a larger field. A mistake many biotechs often make is developing a pre-conceived notion of the perfect partner for their opportunity. The public persona a company projects does not always reflect the current thinking inside the company. Often a single employee can influence a decision. Maybe the company has a new VP with a new vision or a past bad experience in your area. Sometimes your asset may seem to you like a perfect solution for a company’s past failure when in actuality that experience has made them reluctant to pursue that area at all.
Think broadly and you could be surprised. An attractive partner could be one that you never would have considered as a possibility. Corporate strategies change and companies can get excited by a therapeutic area they’re not currently in.
To win at the partnering game, it’s important to develop an effective partnering strategy. Know your company’s vision for the future and how a partnering deal will mesh with that vision. Ask yourself what scenario is best for the product. Will a partnership increase the probability of technical and commercial success? Does the potential partner have the resources to speed up or maximize the development of your product? Are there alternative funding options that make more sense than a partnership?
If it looks like it’s the right time for partnering, then have a clear strategy, tell a great story, facilitate the process, and play often.
Watch a webinar on the essential steps to forming a strong BioPharma partnership: