Most biotech licensing agreements I have read about have...

Most biotech licensing agreements I have read about have required the licensor to pay for all further development. These costs are not calculated as part of the headline deal value. Sometimes there is a 50/50 agreement and occasionally the licensing company continues to pay for development costs, but I think this would be more likely to occur if the asset was already in Phase 3.

Below are details of three licensing agreements I had notes on.

BMS paid $175 m upfront to acquire Iperian, a company with a lead, preclinical asset in progressive supranuclear palsy (orphan indication) which also had potential as a treatment for Alzheimer’s. BMS committed to pay a further $550 m to Iperian and then ran several Phase 1 trials in the drug before agreeing to license the drug to Biogen in April 2017. Biogen paid $300 m upfront, agreed to a further $410 m in milestones and assumed all further development costs (i.e through full Phase 2 and Phase 3). Biogen also committed to pay the $550 m to Iperian sharholders, which included a near-term $60 m milestone. That’s potentially over $1.2 bn to be paid + Ph 2 and beyond development costs.

In the same month, BMS also licensed to Roche another drug about to commence Phase 2/3. Roche paid $170 m upfront and agreed to a further $205 m in milestones for the orphan asset which was intended to improve outcomes in DMD, a disease for which there is already an approved treatment. Although not explicitly stated, my reading is that Roche assumed all further costs as it was to lead all further development.

https://www.borderless.net/bristol-myers-offloads-anti-tau-dmd-assets-to-biogen-roche/


In December 2016, Akebia Therapeutics and Otsuka Pharmaceutical Co announced a collaboration and license agreement in the U.S. for Akebia’s drug, vadadustat, which had commenced a Phase 3 trial for the treatment of anaemia associated with chronic kidney disease.

Akebia was to receive $265 m in committed funds from Otsuka, including a payment of $125 m upon signing and another payment of approximately $35 million within the following three months. Otsuka was to also pay $105 m or more of the costs of the global development program for vadadustat and further development and commercial milestones of $765 m.
The companies agreed to equally share commercialization costs and revenues from vadadustat in the US, where sales of the current standard of care were valued at $3.5 bn.

“This collaboration achieves our goal of funding our global PRO2TECT and INNO2VATE Phase 3 studies for vadadustat while retaining significant long-term value for Akebia,” stated John P. Butler, President and Chief Executive Officer of Akebia.

https://www.otsuka-us.com/discover/articles-985