Patent Licensing Experts Share Lessons Learned In Making Deals

NEW YORK – Experts at a recent conference on licensing revealed some of the behind the scenes thinking within industry on how to do great deals and keep from getting burned.

The speakers were panellists at the 4-6 May Licensing Executives Society spring meeting (IPW, Patent Policy, 6 May 2011).

Ruth Plager, president of ZenithBio, formerly with Enzon and Pfizer, was moderator, and said the key to any deal is in the data.

Michael Yeomans, president of Partners in Pharma, formerly senior vice president for Bayer Global Business Development, said that from the “big pharma” view, it was “enlightening how little interest there would be in some products even with late stage data.” At Bayer, he insists that they look at all the data before making a decision.

Jeff Jonker, chief business officer for Satori Pharmaceuticals, formerly at Gloucester and Genentech, said, “Unlike online dating, collaborating is no longer optional,” meaning buyers and sellers must work together. Industry generally does “a poor job of communicating with each other,” he said, adding that more transparency and being forthright about what you are seeking would help this process.

With industry deal-making, “if there’s no second date after a first date, you never know why,” Jonker said. The marketplace would be more efficient if that information were shared.

His company creates “data packages” where they give a copy to prospective buyers for comments to make sure there are no surprises, such as when they find they lack the funding to do what the other company is asking them to do.

Carolyn Green, cofounder, president and COO of Logical Therapeutics, recommended double-checking the data, because the peer review process it goes through “doesn’t mean they actually reproduced the data.” She also suggested verifying data from universities very early on, and to hold back equity until it is validated. For instance, the results may have involved specific know-how from their laboratory, she said.

Bradley Campbell, senior vice president, Amicus Therapeutics, who was formerly business director of Genzyme’s cardiovascular unit, said the area of rare diseases has become “more interesting,” and early interest is not a problem. What should be asked is what the vision is for bringing a product forward. “There are vast differences in views of drug development,” he said. Also, he said that in discussing licensing deals, there must be communication and trust. Furthermore, he suggested not to talk about data as missing, but rather as what is needed, he said.

Participants also discussed the significant changes in the industry right now, especially with mergers and acquisitions, and noted these sometimes can leave workers without a job.

Yeomans said he was brought to Germany to help with the integration of Bayer and Schering, and was told it should not be too difficult since they were both German companies. But it turned out there were still plenty of differences to work through.

Green said that small companies should consider carefully what they invest in, as for instance they usually won’t get back investment in capital infrastructure. She said her small firm has gone “100 percent virtual,” shutting down its lab.

Jonker also said that many mergers and acquisitions are on the basis of the lead product only. “Others in the pipeline are not getting attention,” so may not be worth the investment, he said. He also raised the need to consider strategies to gain tax benefits.

In the end, Green said it is important to make sure the data is solid, and that the company has made a reasonable market forecast.

It was also suggested that some areas, like rare diseases, might require an explanation of the philosophy as to why it is important. Some markets are more obvious than others.

Finally, the panel said it is not advised to try to hide something that is not positive. As Jonker put it, “every product has warts, so call the warts out.”

Deals can take months or years, so you can do more trials along the way, he said, noting that “cleaning up is part of doing development.” One of the panellists’ companies recently did a $230 million deal with GlaxoSmithKline.

A speaker said that for dealing with the big firms, using any connections you may have can help as they may have hundreds or even thousands of projects to consider. Another speaker said that from the big company perspective, if they do not end up doing business with a smaller firm it is likely “not that your baby is ugly, there’s just a lot of babies.”