I have been trying to get a better understanding of the mechanics of a buyout/partnership, there are videos you can find on Google along with podcasts that make great listening, most end up not quite being what you expect but if you look long enough there is information to help us understand.
Here are some of the things I have picked up.
- Different companies have different approaches, some have big R&D departments with multiple trials running and others have pared them back and rely on small biotech companies to do the hard work before picking up deals.
- Confidential discussions can go on in the background for a long time. 2 years is not unusual. One person who specializes in deal making said the quickest was 3 months but this was an outlier, most take much longer.
- All BPs have staff who's job it is to keep an eye open in the small biotech space to see what is out there. There are also many consultants/companies and merchant banks out there who operate as middle men bringing small companies and bp together.
- Relationships are very important, a small biotech company will start courting important people and build on these relationships over time. Having other relationships with key opinion holders is very important. Things like Scientific advisory boards, and prestigious universities along with organizations is a huge help. E'g The Healey Platform and our star studded advisory board. Double tick there.
- ODD is a very big thing. Don't underestimate it.
- A partnership is a good way for bp to get a foot in the door while mitigating their risk. E.g 500 million up front with agreed milestones is safer that 2 billion, even though if successful they will pay more, but this de-risks their investment. Remember if bp is spending less on their own research and development they have saved a lot of money already.
- Sometimes a small biotech company has great science, but lack in the business area, Sergio's experience as a partner at Deloitte along with his other past positions is a great addition to PAA, along with Marcus Hughes.
- With BP a lot depends on their strategic plan and how a particular drug may fit in with their pipelines and their pipeline patent protection, there are a lot of moving parts. Which is why having outside help can be a huge benefit.
- Other things like strong patent protection, GMP tablets, production supply lines etc are also important.
- Having cash in the bank is important, it gives small biotech companies a swagger when dealing with bp.
Its well worth looking into, many articles/videos/podcasts don't lead anywhere and you end up going down a few rabbit holes but it can be interesting.
My takeaway is if P2/3 shows success it's a no brainer, but it could also come sooner. There are discussions going on,
because discussions are always going on. We just don't know what stage they are at, and potential partners would not like their name thrown around until their ready.
Cheers
(20min delay)