The Post-JP Morgan Pivot: Key Points to Transition Your Collaboration Deal From Discussions to Negotiations

After the frenetic activity of the annual JPMorgan Healthcare Conference, companies are now firming up transaction discussions, exchanging nondisclosure agreements and drafting term sheets for potential transactions.

Below are a few key deal points that, when adequately addressed in early-stage negotiations for collaborations and partnerships, can increase the chances of a successful collaboration.

Control Over Development Activities in Regional Transactions: Many smaller companies are considering licensing an asset to a regional partner for development and commercialization in that region (e.g., Europe or Asia). For some such companies, a regional deal is an adjunct to their own continuing development and commercialization that optimizes the asset’s global reach; for others, the regional deal may be a precursor to licensing rest-of-world rights to another partner.

• Regional partners often want control in designing and conducting clinical trials in their territory as they are most familiar with the regional regulatory pathway and commercial considerations that can influence clinical development strategies.
• Licensors are often concerned that regional clinical or regulatory activities can adversely affect development in rest-of-world and that later rest-of-world partners will want veto rights over those activities.
• Term-sheet stage agreement on the initial regional development plan, and a governance structure for how that plan can be changed and supplemented, can help alleviate this tension point during agreement drafting.

 Including “Backup” Molecules in Transactions: “Backup” molecules are often developed in collaborations as a fallback if the lead development candidate fails.

• In any collaboration, determining early in negotiations whether and to what extent “backup” molecules will also be licensed can streamline negotiations of the definitive agreement.
• In multiple-molecule collaborations, negotiating the innovator company’s obligation to develop “backups” if initial molecules do not pan out early in the process similarly can avoid deal hiccups