Partnering Returned Assets – Understanding Strategies to Maximize Value

Allicense 2014

At the recent Allicense Conference in San Francisco, one of the many interesting panels centered on how to re-partner a returned asset, or as Jay Mohr of Locust Walk Partners (the panel’s chair) phrased it, “how to retread a flat tire”.

There were many lessons learned from the experiences related from the panelists’ deep pool of experience, but a common theme in virtually every story was that the key success factor is to demonstrate that the asset has been de-risked. There is a perceived taint on an asset that has been the subject of a terminated partnership, and success in finding a second (or even third) long-term partner depends on removing that perception by demonstrating that risk has been discharged. From the panelists’ stories, it seemed the best strategy is to advance or improve the asset before seeking a new partner.

Once an asset has been returned, the company faces an important choice: to seek a new partner immediately, or to invest resources into advancing or improving the asset first. If the company has sufficient resources and support from its Board, avoiding the temptation to immediately partner can be the best option. As cautionary examples, a few stories (including one from the Locust Walk Partners team’s own experience) described situations in which a second partnership yielded a significantly eroded deal value compared with the first.

In contrast, Steven James (now CEO of Labrys Biologics, formerly of KAI) related a story from his career in which an acquisition left a promising cardiovascular drug without meaningful support from the initial partner. After reacquiring the asset, KAI reformulated the program for IV delivery (it had previously been delivered during surgery), and was then able to partner it with BMS with significantly improved terms, compared with the first deal.  Several other panelists related similar stories in which deal value improved after clinically advancing their respective programs.

The bottom line is that BD professionals that believe in the value of an asset should look for ways to realize that value, even after a first attempt at partnership is unsuccessful. By focusing on creating new value and reducing risk, or even repositioning the story, second partnerships can be executed successfully.  In some cases, those deals may create more value than the first.

The panel included Mark Baker (CEO, Progenics Pharmaceuticals), Richard Brudnick (VP and Co-Head of Business Development, Biogen Idec), Natalie Holles (Senior Vice President, Corporate and Business Development, Hyperion), Steven James (President and CEO, Labrys Biologics), and Thomas King (President and CEO, Alexza Pharmaceuticals).

At the recent Allicense Conference in San Francisco, one of the many interesting panels centered on how to re-partner a returned asset, or as Jay Mohr of Locust Walk Partners (the panel’s chair) phrased it, “how to retread a flat tire”.

There were many lessons learned from the experiences related from the panelists’ deep pool of experience, but a common theme in virtually every story was that the key success factor is to demonstrate that the asset has been de-risked. There is a perceived taint on an asset that has been the subject of a terminated partnership, and success in finding a second (or even third) long-term partner depends on removing that perception by demonstrating that risk has been discharged. From the panelists’ stories, it seemed the best strategy is to advance or improve the asset before seeking a new partner.

Once an asset has been returned, the company faces an important choice: to seek a new partner immediately, or to invest resources into advancing or improving the asset first. If the company has sufficient resources and support from its Board, avoiding the temptation to immediately partner can be the best option. As cautionary examples, a few stories (including one from the Locust Walk Partners team’s own experience) described situations in which a second partnership yielded a significantly eroded deal value compared with the first.

In contrast, Steven James (now CEO of Labrys Biologics, formerly of KAI) related a story from his career in which an acquisition left a promising cardiovascular drug without meaningful support from the initial partner. After reacquiring the asset, KAI reformulated the program for IV delivery (it had previously been delivered during surgery), and was then able to partner it with BMS with significantly improved terms, compared with the first deal.  Several other panelists related similar stories in which deal value improved after clinically advancing their respective programs.

The bottom line is that BD professionals that believe in the value of an asset should look for ways to realize that value, even after a first attempt at partnership is unsuccessful. By focusing on creating new value and reducing risk, or even repositioning the story, second partnerships can be executed successfully.  In some cases, those deals may create more value than the first.

The panel included Mark Baker (CEO, Progenics Pharmaceuticals), Richard Brudnick (VP and Co-Head of Business Development, Biogen Idec), Natalie Holles (Senior Vice President, Corporate and Business Development, Hyperion), Steven James (President and CEO, Labrys Biologics), and Thomas King (President and CEO, Alexza Pharmaceuticals).