On Triumvirates and Licensing 
Posted by Carlos on Aug 17, 2016

 

A triumvirate is a three-person (or three-group) organization which is established for a specific administrative task(s). In Ancient Rome, the First Triumvirate was established between Julius Caesar, Pompey the Great, and Marcus Crassus.

Once Crassus dies, a civil war between Caesar and Pompey was fought, resulting in the death of Pompey and the establishment of Julius Caesar as the first Roman dictator (and, arguably, the official end of the Republic).

We were reminded of the First Triumvirate when thinking about the forces which drive Big Pharma in-licensing. What are the groups of characteristics which makes a particular therapeutic area or indication interesting to licensees? We came up with three of them:

Unmet Medical Need – This is a group of variables or issues which define the medical need that is present and which can be resolved by an available technology or asset.

Commercial Attributes – Epidemiology, pricing and reimbursement, current and future competition, safe and effective generics…all of the variables which are woven into the Revenue forecast.

Innovation & Technology – The characteristics of the asset or technology itself. It is a completely new mechanism of action? What animal data (if any) are available? What will it take to de-risk the asset to the point where it is licensable?

Looking at our Venn diagram, the overlaps amongst these groups of variables also lead to questions which are important, such as:

1. Can the unmet medical need be satisfied with an ROI that meets internal objectives relative to other opportunities?

2. How does this opportunity compare relative to others being assessed?

3. Are assets even available? If so, where? How can they be sourced and assessed?

One issue we see and hear over and over again is that companies looking to form some sort of partnership with a large pharmaceutical company simply fail to look at their asset or technology from the perspective of the potential partner.

Their stories are constructed to build the strongest revenue case possible, while simultaneously underestimating the investment required, underestimating risk, and by failing to consider other competitive opportunities which that potential partner may be examining.

Our triumvirate line of thinking also helps explain why some therapeutic areas with clear unmet medical needs fail to interest multinational companies, and is also why potential licensors struggle to find partners in the presence of significant unmet medical needs. Therapeutic areas such as HIV, diabetes, dyslipidemia, and others come to mind.

Our intention here is not to bash or criticize “Big Pharma.” If anything, our intention is to help potential licensors improve their understanding of what the “other side” may be considering when evaluating their opportunity.

For example, opportunities are always evaluated relative to others. So is the asset your trying to out-license better than others which are available for licensing AND better than what is already on the market? How do you know this? Do you consider that the products on the market will be genericized by the time your product is approved? If so, how will the sharply lower price influence treatment paradigms?

In future posts, we will explore these questions by focusing on specific therapeutic areas and indications, with HIV being the first one. Others may include some of the ophthalmic indications, metabolic diseases, and respiratory diseases.

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