Getting benefits of research to patients faster: Collaborations with big pharmas

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Monday
March 10
Getting benefits of
research to patients
faster: Collaborations
with big pharmas
03/10/2003 07:56 AM
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Biotech & Life Sciences
By Thomas F. Holt Jr. and Jeffrey P. Donohue
While financial pressures to develop the “new, new therapy”
continue to mount for drug companies, the relationship among
commercial sponsors, researchers and their host institutions has
become increasingly complex. Ensuring harmony in this
relationship is important to the development and ultimate use of
new drugs to treat disease.
Acquisitions and conventional licensing agreements are frequently
the preferred business models. However, they may not be the best
ways to replenish a pharma’s product pipeline or speed a new drug
to the market. Other approaches, such as partnership with smaller
biotech firms or university-based researchers, can allow pharmas
to tap into new talent and access unique compounds or
methodologies. Under this model, collaboration pervades.
Biotech/pharma collaboration has yielded a range of therapies from
biologics such as erythropoietin, which is a treatment for anemia,
to such new chemical entities as the drugs used in the treatment of
HIV/AIDS. These collaborations and the resulting drugs have
already had a significant beneficial effect on the practice of
medicine and the lives of countless patients.
While structuring a collaboration with a big pharma is not a simple
task, the relationship between the commercial partner and the
researchers is sometimes more important in getting a drug to
market than the science behind the drug discovery program. The
key to these relationships is to align the incentives that drive the
parties to meet goals of both the pharma and the collaborator.
American City Business
Although every collaboration is unique, there are certain areas that
will need to be addressed in almost every deal. Pharmaceutical
companies and their collaborators must determine who will retain
ownership or control of discoveries made during the course of any
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collaborative efforts.
The concept of control can be difficult to resolve. However, there
are ways to split the baby. Often, a pharma seeks to retain all
fruits of the biotech’s labor with only milestone or royalty payments
made to the collaborator. On the other hand, a biotech with a
highly effective drug discovery platform may be able to exploit its
technology to retain significant rights in compounds or technologies
discovered during the course of the collaborative efforts.
In some collaborations, intellectual property rights follow the
inventor (for legal purposes, the inventor owns the resulting
invention). In other collaborations, rights follow an underlying
technology (so-called “fields of use” are carved out and allocated
among the parties).
In still other collaborations, ownership is allocated based on
determinations made by joint steering committees or through some
combinations of these arrangements.
The optimal strategy will depend on the goals of the parties, the
planned responsibilities of each, and the technological and financial
resources that can be brought to the table.
Inevitably, the question that remains from the collaborative
development of a drug is: Which party will be able to control the
drug’s manufacture and production? Thoughtful negotiation of
these rights will be the key to realizing a return on a drug
discovery program.
When a pharma retains commercialization rights, it may find
biotech-derived drugs to be relatively more expensive (in the sense
that a royalty must be paid) than homegrown alternatives —
namely, compounds for equivalent indications developed in-house
within the pharma. When that occurs, even promising drugs may
find limited commercialization efforts behind them.
On the other hand, a biotech may also seek to retain rights to reteam with an alternative collaborator or a commercializing pharma
company in areas outside the scope of the geographic areas
typically supported by the pharma company. To enhance a
successful outcome of biotech/pharma collaboration, the parties
should avoid falling prey to a zero-sum gain mentality.
Although deal structures never guarantee the success of a
development effort — particularly when approximately 90 percent
of drug candidates never reach commercialization — structuring a
deal that keeps interests aligned will help speed drugs to the
market.
Thomas F. Holt Jr. is a partner and Jeffrey P. Donohue is a senior
associate in the Boston office of national law firm Kirkpatrick &
Lockhart LLP.
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