1 2 Match Making: Identifying Partners, Match Making: Identifying - - PowerPoint PPT Presentation

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Match Making: Identifying Partners, Match Making: Identifying Partners, Creative Collaborations and Long Term Creative Collaborations and Long Term Outcomes Outcomes

Panelists Panelists

Moderator: Ri Richa chard K d Kaufman man, Partner, Foley & Lardner LLP Speakers: Linda Pullan Linda Pullan, Pullan Consulting Roy Wu Roy Wu, Senior Vice President for Business Development, NovaBay Pharmaceuticals Ethan K. Knowlden Ethan K. Knowlden, Vice President, Business Development & Licensing, Corporate Counsel, Novartis Diagnostics

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Deal Trends Deal Trends

Linda M. Pullan, Ph.D. www.PullanConsulting.com

$112B in Patent expirations in 5 years $112B in Patent expirations in 5 years

$20B in 2011, including Lipitor Lose average 75-90% by time 2nd generic enters (Cutting Edge)

Sales forecasts Evaluate Pharma

Approvals trend down Approvals trend down

Partnering is important Partnering is important

Many from early deals

Historically more money by stage Historically more money by stage

Phase 1 high

In-licensors want Ph 3 In-licensors want Ph 3 Ph 1 & 2 Upfront Ph 1 & 2 Upfronts down

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Evaluate Pharma

The RE The REAL MON AL MONEY = ROYALTIE Y = ROYALTIES

Calculated effective royalty rates on an assumed $500M in net

sales

– The effective royalty rate is the simple percentage of assumed sales that result from the sum of applying each tier of the royalties. – The median effective royalty rate was

Discovery deals

7%

Lead stage

8%

Preclinical

10.3%

Phase 1

11.5%

Phase 2

15%

Phase 3

19.3%. – Antibodies get substantially higher effective royalties (35%) at Phase 3

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Deloitte Recap 2009

Pharma Cuts Pharma Cuts Spending Spending

43,000 Big 43,000 Big Pharma Layoffs Pharma Layoffs in 2010 in 2010

Fierce Biotech

Bloomberg

M&A Up in 1 M&A Up in 1st

st half of 2011

half of 2011

HBM

2011: B 2011: BIG Deals from Smaller Comp G Deals from Smaller Companies anies

Company Company Biggest Upfront Biggest Upfront # de # deals als Lilly $410 8 Astellas $203 3 Allerg llergan an $105 2 Abbott $85 1 Va Valeant leant $78 4 Salix Salix $60 2 Verte Vertex $60 3 Sanofi $50 8 HGS HGS $50 1 Pu Purdu rdue $50 1

VC $ in Biotech leveling off VC $ in Biotech leveling off

First Half 2011 $2B NVCA

VC Returns are up from 2010 VC Returns are up from 2010

HBM

VCs getting rewarded for risk

Series A and later stage / Total healthcare % Series A/Total % Later stage/Total Healthios

Hard to get early funding Hard to get early funding

May YOUR deal be w ay above average!

Linda Pullan www.PullanConsulting.com lpullan@msn.com 805-558-0361

Roy Wu Roy Wu, Senior Vice President for Business Development, NovaBay Pharmaceuticals

Trends in Deal Structures Trends in Deal Structures

Traditional license agreement vs. Risk sharing

– Option agreements – GSK model

Earlier stage deals

– Novel targets – Niche indications – Unique product characteristics

Getting the Deal Closed Getting the Deal Closed

Understand the needs of the partner and try to

determine if the goals of both parties are in allignment

Identify the “Internal Champion” and have them guide

you through the internal review process

Work with “KOLs” and “SAB Members” to influence

potential partner

Be upfront and honest, don’t oversell Be flexible with negotiations, “give and take”

Key Success Factors Key Success Factors

Manage expectations Be sensitive to Pharma company’s internal process Get agreement on target product profile, development

plan and timeline

Clearly define as much as possible, milestones and

goals upfront

– PoC definition – Formulation feasibility

Be prepared, unexpected will always happen!