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2 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
4 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 2 nd 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 own 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 Deloitte Recap 2009 10
Pharma Cuts Pharma Cuts Spending Spending 43,000 Big 43,000 Big Pharma Layoffs Pharma Layoffs in 2010 in 2010 Fierce Biotech
Bloomberg
st half of 2011 M&A Up in 1 M&A Up in 1 st 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 VCs getting rewarded for risk HBM
Hard to get early funding Hard to get early funding Series A and later stage / Total healthcare % Later stage/Total % Series A/Total Healthios
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!
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