What to do when your technology is good but a licence is terminated
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Manon Cox is Chief Operating Officer of Protein Sciences Corporation. She joined the Company in 1998 as Director of Business Development. Previously she held scientific and business development positions with Gist Brocades BV in the Netherlands. Dan Adams is President and Chief Executive Officer of Protein Sciences Corporation and has been there since 1996. He has been in the biotechnology industry for 30 years founding and heading companies such as Biogen, Advanced Genetic Sciences and Plant Genetic Systems.
Keywords: partnering, biotech, licence, termination, recovery, staying alive
What to do when your technology is good but a licence is terminated Manon Cox and Dan Adams Date received (in revised form): 2nd May, 2005
Abstract One of the biggest challenges in the biotech industry is to secure sufficient funding to support product or technology development. Partnering with companies that have cash and expertise – which, for the most part are larger biotech or pharmaceutical industries – may for many small biotech companies be more appealing than dealing with the financial community – venture capitalists and the like. The risk to the small biotech, however, is enormous because the partner may decide to return the rights to the product. This event usually leaves the product in limbo and the technology used to develop it tainted because of uncertainty regarding the real reasons for the return and the assumption in the world at large that there is something wrong with the product/technology. Thus, the licensor is left in the dark and is faced with ‘what’s next?’ Here our company’s strategy to overcome the terminated licence disaster or alternatively to take advantage of the terminated licence opportunity is described.
INTRODUCTION
Manon Cox Protein Sciences Corporation, 1000 Research Parkway, Meriden, CT 06450, USA Tel: þ1 203 686 0800 Fax: þ1 203 686 0265 Email: [email protected]
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This paper provides a case history of the major challenge that biotech companies in today’s world are facing: how to secure funding to progress a technology or product to the next stage, preferably commercialisation, without ‘betting the company’. Although there are hundreds of venture funds out there shopping for deals, it is very difficult to identify one that shares your vision. Teaming up with a group that almost certainly does not share the biotechnology company’s vision, because they (frankly) do not understand your business, can doom the company. Venture capitalist (VC) funds are not interested in advancing a product to market per se. Their stated objective is to secure for their investors the highest possible return on investment. The way most VCs try to accomplish this today is by seeking to reduce the pre-money valuation of the company to compensate for the fact that eight or nine out of ten of their investments lose money and they strive to make their entire return on the one or two that do make money. VCs
thus should, but usually do not, recognise that they have little or no ability to identify which prod
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