As children, we all liked stories. Stories appeal to children because of their logic, their flow, the presence of interesting characters, and their clear beginning, middle, and end. As adults, we are no different. We all enjoy memorable, character rich stories just like children do.
This same principle can be applied to business development. For example, consider the situation where a company is looking to out-license a new chemical entity with a unique mechanism of action. We have observed that many presentations start with a discussion of the pharmacology, the mechanism of action, and the drug properties itself.
This is because the authors of the presentation may be under the belief that the unique selling proposition is embedded in the drug’s unique pharmacology.
We have observed that this is rarely the case. Too often we review presentations and Executive Summaries that begin their story from a technical or scientific foundation, building to an economic crescendo. Unfortunately, this presumes that the audience has the time, patience, and/or expertise to wade their way through the technical details and reach a financial conclusion.
We believe this is approach is the reverse of how things should be presented.
We believe business development stories should be crafted with the economic crescendo first, supported by well-researched facts supporting economic claims.
Importantly, the evidence supporting the economic arguments must come from qualified external experts and professionals. For example, Key Opinion Leaders should be interviewed to discuss the opportunity, but must also be available to address questions from prospective licensing partners.
Similarly, Clinical development programs that are developed by internal personnel should be reviewed and validated by external experts, one or more of which should be from the CRO who may be overseeing the studies.
Unfortunately, many companies do not seek external validation because it can be expensive. The reality is that external experts can charge quite a bit on an hourly basis. Some CROs will not perform detailed analysis of a potential program without assurances that the potential client has the funds to move forward with the program. Regardless, external validation is a critical component of any story, especially one supporting an economic argument.
Another aspect of BD&L storytelling is the importance of thorough competitive intelligence, especially non-prescription and other alternative therapeutic options that patients may have. For example, as the ranks of the unemployed continue to rise, more and more individuals and families are experiencing reduced health care insurance benefits. This and related trends are causing many to turn to non-prescription therapies, which can be cheaper than the co-pays associated with an office visit and a branded prescription. This is especially true in therapeutic areas such as pain management, where innumerable non-prescription products are available.
Yet, many out-licensing stories fail to consider non-prescription options as a competitive threat. Why? We believe it is because many of us in the industry have an inherent bias towards defining “the market” are being the “by prescription only” market. Certainly this is true for many therapeutic areas, but not so for others.
Lastly, we have observed that some companies underplay the risks and uncertainties surrounding the technology they are trying to out-license. The thought is frequently based on the assumption that an optimistic story will bring interested parties to the table, at which point further due diligence will uncover the flaws in an opportunity. The net result is a lot of activity up front in terms of interested parties seeking confidential information. However, this initial burst of activity has a short half-life, as potentially interested parties usually uncover flaws fairly quickly, finding reasons to say “No,” and moving on to other things.
We believe that describing risks and flaws early in the process is preferable, especially if these are acknowledged and addressed very early in the process. The initial result may be that there are fewer companies executing confidentiality agreements and moving into due diligence. However, the few that do move forward have a stronger probability of actually signing a deal. It really is a variation of the 80/20 rule. In this case, the 20% are the few prospects who understand the opportunity, understand the risks, and who are willing to think beyond the risks towards a transaction.
These are just some of the factors to consider when developing an out-licensing story. This is where firms like Lacerta Bio can help. Business development consultancies can help weave a compelling and realistic story that counterintuitively engages fewer prospects, while increasing the probability of a successful transaction.