Get your technology the attention it deserves
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It is vital for out-licensing companies to increase shareholder value and out-licensing one or more of their programs is a way to achieve this. The effort to attract and manage a company’s attention can take considerable time. Not managing appropriately your assets or being trapped with the wrong partner can jeopardize the future of your company. In this paper, we address ways to optimize out-licensing or co-development partnering process.
The marketplace is full with licensing opportunities, and it becomes increasingly difficult for smaller companies to gain visibility and to achieve a good valuation in a timely manner.
Often biotech companies depend on the short-term revenues—and long-term royalties—to stay in business. It can take as much as 18 months to close a deal, and the average duration of deals between biotech and life sciences companies is around 3 to 4 years. This offers plenty opportunities for non alignment. Biotech partnerships are like marriages—it is wonderful once you find the right partner, but a nightmare being trapped in the wrong one.
The difference between a not so good deal and a very good deal can be huge, and not only in terms of revenues. Choosing the right partner is not rocket science, but a step-by-step and time-consuming approach. Many small companies neglect this. To optimize time and outcome, it can be well advised to hire professional assistance from a business development company that can provide its insight, experience, network, and proven processes, with a best-practice and infrastructure that can methodically and proactively present their technology.
1. Define pertinent search criteria
Competition is fierce out there and you will need to do your homework first: what are your key differentiating factors? If you have a technology platform: where does your technology best add value ? What is precisely the market segment where you can run ahead competition or differentiates from well-established solutions? Manage your credibility and be realistic. Your market is not the entire therapeutic or technology area, but a subset.
Search criteria fall into the science or business category. Starting from the scientific side, companies must identify the complementary skills they need from target partners in therapeutic or technology areas, technology platforms, experience, and R&D competence.
From a business perspective, search criteria might include geographic proximity to the company's own headquarters, markets attractiveness, etc. as well as strategic, cultural, and organizational fit.
2. Develop a database of potential partners that might meet your criteria
A good and continuously updated partnering database is a winning investment for a startup. Mailing list to the top 40 mid-to-large companies is usually the wrong approach and results in lower success.
In addition to your direct and indirect network contacts, some of the standard sources of information and contact routes includes:
- Scientific conferences and literature searches to identify interesting contacts
- Search for commercial parties as part of a grant or subsidy applications
- LinkedIn to identify decision makers
- Life science partnering conferences for business development, such as Bio and partnering360
- Patent database searches is an essential tool to identify potential partners but also your competitors working in similar technology fields
- Internet searches to identify companies working in related fields
- Several global lead sourcing databases are available such as Biotechgate or Informa to identify and evaluate potential business partners, new leads and benchmark for your deals.
3. Create a licensing summary that sells
Have a clear value proposition that sells. A value proposition is a promise of value to be delivered to your partner, the primary reason he should work with you. In a nutshell, value proposition is a clear statement that:
- Explains how your product solves your partner’ problems or improves his situation (relevancy)
- Delivers specific benefits (quantified value)
- Tells the ideal customer why they should buy from you and not from the competition (unique differentiation)
The competitive business aspect is what will secure an investment from your partner. Your audience needs to know that you understand the competition — current and emerging. They need a solid understanding on costs and sales.
It is essential to customize the information sent to potential partners based on your research findings. Skipping this step will dramatically reduce the probability of passing an initial screening since you will fail to demonstrate early benefits to the partner
A good non-confidential licensing summary is a concisely written, 2-3 page document including:
- Problem: Unmet need
- Solution: Concise product description
- Key Differentiating Benefits
- Regulatory filing status and strategy
- Manufacturing and development plans
- Market prospects
- Cost benefits
- Intellectual property
- Company overview / selected biographies
Your potential licensing partner will study your document looking for assurance that your licensing opportunity is credible and that your value proposition is complete enough to share for further internal evaluation.
The first contact person in the company can help you to better understand the corporate, R&D and commercial strategies, as well as current company priorities. Armed with this information, you can adapt your licensing summary for that company.
4. Qualify the companies and individuals on your outreach list
Understanding the size and structure of the company you are approaching is essential here. Multinational companies have typically large business development groups who handle licensing, and are organized by activity area. These managers have a very good understanding of their company’s unmet needs, and will quickly recognize an attractive offering, especially if is credible, targeted to their needs and with a clear value proposition.
This is different with smaller and mid-size companies, where BD teams responsible for the initial screening and evaluation are smaller. It can be advisable to enlist at least one of their scientific management as an internal champion for you to help communicate the value of your offering before they are approached.
Entry through an internal champion can speed up the process. This support can be provided by an external business development firm with existing networking capabilities.
Generic introductory e-mail template together with a non-confidential licensing summary to anyone on your mailing list can very often be a waste of time and can turn a perfectly good licensing opportunity into spam.
BD executives are flowed under opportunities, and they will spend their time on the most credible ones that make a good first impression and are presented appropriately.
So your opportunity will be measured not only against the others, but also against the internal ones being championed by their own product developers. Another reason to make an excellent first impression.
5. Develop a team of opportunity champions at target companies
Now that you have finally a good internal contact and captured the interest of a potential partner, your document will circulate to a specific team charged with evaluating and conducting due diligence.
Decision process in a complex organization is coordinated. You will need to help your BD contact to sell the deal “up the organization” and respond in a convincing way to questions about issues such as regulatory strategy, development plans, patent protection, competition, pricing, marketing strategies, sales projections, and competition.
Learn the internal team dynamics and communicate with all members on their terms.
In summary it is vital for out-licensing companies to increase shareholder value and out-licensing one or more of their programs is one way to achieve this.
The effort to attract and manage a company’s attention can take considerable time. A solution is to consider hiring professional support from an outside consultant firm that can provide its experience, network, and proven processes.
At Partnering4Biotech, our partner identification process contains a step-by-step approach adapted to your needs, where you can choose the level of support you require.
- Step I: Prepare a list of potential partners based on your partnering strategy and specific search criteria
- Step II: Support you in preparing a licensing summary
- Step III: Initiate contact with potential partners
We are happy to provide you with more information about our services.
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