Licensing Deals Research Articles

The Effect of Longer Development Times on Product Pipeline Management Performance

In the pharmaceutical industry, value is being destroyed through longer product development times. Given that patent lives are (normally) fixed at 20 years, the double hit of increasing time to market is evident - higher R & D costs and less time at market before generic competitors are able to be released into the marketplace. The Policy implications are massive: A huge and permanent shift away from internal R & D towards partnerships, licensing deals and acquisitions of more innovative biotechnology companies. In this study, we build a system dynamics model of the product development pipeline for a single company operating in the pharmaceutical market. The study shows that in the presence of loss of value due to longer lead times, it is more advantageous to: (a) work faster to reduce the backlog of projects; (b) increase the number of projects started whenever it is possible reduce complexity in the pipeline; and also (c) the optimal decision on resource allocation is independent of the loss of value due to longer lead times.

Latest developments in the field of stem cell research and regenerative medicine compiled from publicly available information and press releases from nonacademic institutions 1 February-31 March 2015.

Dusko Ilic Stem Cell Laboratories, Guy’s Assisted Conception Unit, Division of Women’s Health, King’s College London Faculty of Life Sciences & Medicine, London, UK dusko.ilic@kcl.ac.uk Collaborations, partnerships & alliances Co-development agreement: Merck Serono & Otsuka Merck (Germany; www.merckgroup.com) subsidiary Merck Serono (Germany; www. merckserono.com) has amended its development and license deal with Opexa Therapeutics (TX, USA; www.opexatherapeutics. com) for Tcelna (imilecleucel-T), handing over US$3 million to further support an ongoing trial with the personalized immunotherapy for multiple sclerosis. Merck’s payment will help fund the current Phase IIb clinical study assessing Tcelna for patients with secondary progressive multiple sclerosis, as well as support planning of potential late-stage trials. Under their original 2013 deal, Merck Serono paid Opexa a US$5 million upfront fee for the option to exclusively license Tcelna – a potential first-in-class personalized therapy, which has received USA fast-track designation for the treatment of multiple sclerosis. Merck’s option can be exercised prior to or upon completion of the ongoing midstage study, top-line data from which is expected in the second half of 2016. If this occurs, Merck will pay Opexa another US$25 million (or US$15 million, depending upon whether certain conditions are met) for worldwide development and commercial rights excluding Japan, and fund its further development.

Implementation of Dice coefficient to identify target for IP asset licensing

Licensing has proven to be most preferred way to recoup investments and make money out of business of inventing. The most crucial step of licensing process is picking the right company to license the invention. The present study relates to an analytical method that can be used by client organisation having single/set of patent(s) to identify target organisations that might be interested in licensing said patents. For this, the article uses Dice coefficient calculation using IPC as vector. More specifically, this method calculates Dice coefficient between client IPCs and target organisation IPCs to identify similarity and differences between their patent portfolios of a subject area. The ideal licensing deal can be made between those who have more in common or similarity per se. The method combines the significance of both similarity analysis and citation analysis for identifying licensing targets by overcoming some of the weaknesses inherent with citation analysis.

The End of Meta Search Engines in Europe?

The technology behind the meta search engines supports countless number of Internet services ranging from the price and quality comparison websites to more sophisticated traffic connection finders and general search engines like Google. Meta search engines generally increase market transparency, intensify competition and decrease transaction costs of consumers. Because they are also capable of disturbing established business models of the indexed websites, a number of lawsuits were filed against the various operators of meta search engines over the last years in Europe. The scrutiny of the operation of some of them was recently even escalated to the Court of Justice of the European Union. In December 2013, the Court handed down its Innoweb C-202/12 ruling, where it held that operation of meta search engines is likely to infringe the database right of the indexed websites, assuming that they constitute a protectable subject matter. This paper therefore analyses the legal and practical consequences of this landmark decision for innovation, consumers and e-commerce in general. This investigation then comes to the following conclusions: meta search engines sourcing product and price information from websites that directly sell services/goods are not likely to be affected by the decision due to lack of database protection of the used parts. On the other hand, meta search engines that source user generated content are likely to be affected and will need to acquire the licenses from the database owners. It is submitted that the Innoweb decision might increase the barriers-to-entry by prescribing licensing deals for new entrants, what may negatively impact the competition between different meta search engines and thus ironically foster the position of meta search incumbents. And also that this newly acquired blocking right will be mostly invoked in the Member States with a monopolistic structure of the indexed industries and serve predominantly as a tool to prevent the competition, rather than a new licensing opportunity. Last but not least, it is argued that the Directive 2006/114/EC concerning misleading and comparative advertising could remedy this inconsistency by serving as an external limit (an exception) to the sui generis protection in some scenarios.

Technology Licensing and Firm Innovation: The Moderating Effect of Slack and Organizational Myopia

Although licensing has repeatedly been acknowledged to be a major vehicle for firms to acquire external knowledge, surprisingly little is known about how firms use it as part of their overall inventive efforts. Furthermore, with the exception of absorptive capacity, the organizational determinants that facilitate or constrain firms' ability to deal with licensed-in technologies have received little attention. This paper starts investigating in a longitudinal setting the effect of technology licensing on the number of patents produced by the licensee within the three years subsequent to the technology acquisition. The findings indicate that technology licensing is positively related to the number of inventions produced by the licensee in the years subsequent to the licensing deal. Subsequently, I investigate the moderating effect that organizational slack and myopia have on this main relationship. The findings also suggest that high levels of Organizational Slack (available financial resources) strengthen the positive effect of licensing on innovation. However, higher levels of Organizational Myopia (the extent to which a firm draws on its own knowledge) can decrease the main effect of licensing.

A Report from Lebanon on Publishing in the Arab World

Lebanon’s publishing industry is mainly turned towards export to the Arab market; subsequently, the analysis of the Lebanese book production can provide a fair overview of the state of publishing in the Arab world. And the picture is far from bright; however resourceful and dynamic, Arab trade publishers cannot reach the sales figures one would expect in a region of more than 362 million people. A relatively low purchasing power and the lack of efficient distribution channels, in addition to piracy and censorship, are endemic problems they have to face on a daily basis, not only in marketing their books throughout the region, but also in dealing with foreign publishers and agents. Indeed for many of these, the Arab market remains incomprehensible and not transparent. However, it is only through apprehending its reality that they can adapt their level of expectations to it in order to achieve successful licensing deals and establish sound partnerships in the region.

Roche Signals Return to Antibiotics Development with Polyphor Licensing Deal

After exiting antibiotics R&D in 2000 with the spin out of its anti-infectives discovery division into Basilea Pharmaceutica, Roche has highlighted its renewed commitment to the field by licensing global rights to develop and commercialise Polyphor’s macrocyclic antibiotic POL7080, which has potential in the treatment of multidrug-resistant Pseudomonas aeruginosa infections. Derived from Polyphor’s protein epitope mimetics (PEM) drug discovery platform, POL7080 has demonstrated clinical safety and tolerability in a Phase I study. The deal follows a February 2013 collaboration between Genentech and RQx Pharmaceuticals for the discovery and development of novel small molecule antibiotics active against an undisclosed target.

Lundbeck and Otsuka Expand Alliance with Deal for Late-Stage Alzheimer’s Disease Programme

In the largest single product licensing deal of 2013 so far, H. Lundbeck and Otsuka Pharmaceutical have partnered for the development of Lu AE58054, a selective 5HT6 receptor antagonist that has completed a Phase II trial in patients with moderate Alzheimer’s disease. Otsuka will gain co-development and co-commercialisation rights to Lu AE58054 in the US, Canada, major European countries, Nordic countries and East Asia, including Japan. The deal represents an expansion of the companies’ November 2011 alliance for the co-development and co-commercialisation of up to five CNS products.

Patent Disclosure and the Timing of Licensing

In this paper, we study the effect of invention disclosure through patent publication on the market for ideas. We do so by analyzing the effects of the American Inventor’s Protection Act of 1999 (AIPA) — which required US patent applications to be published 18 months after their filing date rather than at patent grant — on the timing of licensing deals in the biomedical industry. We find that post-AIPA US patent applications are significantly more likely to be licensed before patent grant and shortly after 18- month publication. Licensing delays are reduced by about ten months, on average, after AIPA’s enactment. These findings suggest a hitherto unexplored benefit of the patent system: by requiring inventions to be published through a credible, standardized, and centralized repository, it mitigates information costs for buyers and sellers and, thus, facilitates transactions in the market for ideas.

Journal print subscription price increases no longer reflect actual costs

Journal subscription prices and their annual increases have traditionally been reported as and based on institutional print prices. This methodology for calculating price inflation and its budgetary impact on libraries no longer reflects the actual costs to the purchasing institution. Other factors – particularly digital acquisition, bundled licensing and consortia deals, a large growth in published content and the commensurate growth in usage – have altered and significantly changed the real cost of scholarly journals. While the print-based method of evaluating subscription price increases shows a three-fold increase in costs from 1990 to 2010, the real effect is only 9% after taking all these factors into consideration. Librarians and publishers should work together to adopt a more reasoned and transparent approach to evaluating institutional investment in serials collections

The relevance and importance of business development and licensing in the biopharmaceutical industry.

The importance of the business development and licensing (BD&L) function in the global biopharmaceutical industry has grown significantly over the past 20 years as pharmaceutical companies have sought to supplement their internal R&D with innovative products and technologies sourced from biotechnology and drug delivery companies. This has required companies to employ BD&L executives to search, evaluate, negotiate and alliance manage deals ranging from small biotechnology companies to the largest of the Big Pharma companies. Nowadays all the large companies have BD&L teams, sometimes in excess of 100 people. To inform new BD&L entrants and to improve the professionalism of the experienced BD&L executives, various training courses are offered by not-for-profit associations and commercial organisations. The leading not-for-profit association in Europe for biopharmaceutical executives is the Pharmaceutical Licensing Group and in the US it is the Licensing Executive Society. Both organisations offer basic training courses but as far as is known, the only university accredited Master’s degree qualification in BD&L is the distance learning MSc offered by the University of Manchester. The dissemination of specialist knowledge and best practice is through the journals and conferences of the professional associations. The need for well-qualified BD&L executives in the biopharmaceutical industry is demonstrated by the fact that 25% or more of Big Pharma sales come from third party products and the cost of licensing deals alone is over $200m on average.

New Deal For AstraZeneca

In a bid to stay competitive in treating respiratory diseases, AstraZeneca is paying up to $1.15 billion for the privately held biotech firm Pearl Therapeutics. The acquisition is the latest in the British drug company’s piecemeal rebuilding of a new-product pipeline that has fallen apart in recent years. AstraZeneca brought in Pascal Soriot as CEO last October to find new products that could offset patent losses on top-selling drugs such as the antipsychotic medicine Seroquel. In March, Soriot unveiled a strategy that couples R&D consolidation and layoffs with small acquisitions and licensing deals. Since then, the company has announced three acquisitions and a string of partnerships. The pacts cover multiple modalities but are focused on three areas: oncology, respiratory disease, and cardiovascular and metabolic diseases. The Pearl acquisition is crafted both to add a late-stage drug and to maintain AstraZeneca’s stronghold in the respiratory arena. Pearl’s most advanced drug candidate ...

Industry Update: the Latest Developments in Therapeutic Delivery

The present industry update covers the period 2-28 February 2013, with information sourced from company press releases, regulatory and patent agencies, as well as from scientific literature. With the US presidential inauguration in January, the inevitable 'fiscal cliff' and with the healthcare reform taking shape, there are many challenges ahead for the world's largest healthcare market. Healthcare providers are preparing for the 'accountable care organizations' paradigm shift and it has been reported that the pharmaceutical industry is low in public perception; only 'for-profit' health insurers rank lower according to a survey recently published. Although in 2012 one could still observe a decline in the overall number of drug delivery partnering deals announced, there has been a slight recovery, thus, meaning a repeat of the lows of 2011 have not been witnessed. The experts expect a reversed trend in 2013 as larger companies seek to refill pipelines with new candidates and drug-delivery solutions. There is a lot of emphasis on altered oral delivery profiles to provide patient compliance. This is indicated by the recent licensing deals, such as that between Radius Health Inc. and 3M, TissueGen and Biomedical Structures, and new financing rounds of companies, such as SKL, Catalent and BioActiva. Injectable technology, including needle-free delivery, continues to be prevalent in deals, such as those between Clearside and Kala until compelling alternatives to the delivery of biologicals are available. Alternative routes of administration, such as nasal, buccal (Kala), sublingual (Stallergenes) see growing interest; however, bioavailability and reproducible dosing will continue to be a challenge in the foreseeable future.

Management Insights

Management Insights

Managing Licensing in a Market for Technology

Technology licensing is an important means for companies to extract more value from their intellectual assets. We build a model that helps understand how licensing activity should be organized within large corporations. More specifically, we compare decentralization—where the business unit using the technology makes licensing decisions—to centralized licensing. The business unit has superior information about licensing opportunities but may not have the appropriate incentives because its rewards depend on product market performance. If licensing is decentralized, the business unit forgoes valuable licensing opportunities because the rewards for licensing are (optimally) weaker than those for product market profits. This distortion is stronger when production-based incentives, especially private benefits, of business unit managers are more powerful, making centralization more attractive. Surprisingly, we find that interdependency across business units may result in more, not less, decentralization. Furthermore, even though centralization results in less information, centralized licensing deals are larger. Our model conforms to the existing evidence that reports heterogeneity across firms in both licensing propensity and organization of licensing. This paper was accepted by Bruno Cassiman, business strategy.

Merck & Co. Out-Licenses Second CNS Programme to Cerecor

Cerecor has signed a second licensing deal with Merck & Co., this time gaining global rights to Merck’s small molecule NMDA (N-methyl-D-aspartate) receptor subunit 2B (NR2B) antagonist MK-0657 (now CERC-301) for all human indications, including depression. MK-0657 was initially developed for the treatment of Parkinson’s disease, but failed to show efficacy for this indication in a Phase I study. Cerecor plans to initiate clinical trials of the drug candidate in patients with treatment-resistant depression. The deal comes a month after the company licensed global rights to Merck’s catechol-O-methyltransferase (COMT) inhibitors.

"New Frontiers of Research in Creativity, Scientific Discovery, and Innovation"

Research on creativity, scientific discovery, and innovation is growing exponentially in the management literature. This growth is a result of a convergence of at least three major drivers: 1) the increasing perception by managers that innovation is one of, if not the, most important competitive levers for their organizations, 2) rapid increases in availability of new large datasets on innovation activities or outcomes due to digitization and electronic delivery of information (e.g., electronic datasets on patents, alliances, drug approvals, licensing deals, citation databases), and 3) rapid growth in the availability of sophisticated new tools with which to collect and examine such data (e.g., network analysis tools, web crawlers/scrapers, fuzzy matching algorithms, fMRI techniques). As a result, research in innovation has not only grown in quantity, but also in diversity, with new technological trajectories being pioneered, and increasingly sophisticated methods of data collection and analysis emerging. The intensity of research activity in this area makes it challenging to create a mental map of where we have been, and where the most fruitful areas of future inquiry might be. In this panel, five innovation scholars will take a step in this direction by summarizing some of the key takeaways of prior research, highlighting what they have learned and found most intriguing. They will then discuss what they believe are some of the key trajectories for future research on creativity, scientific discovery, and innovation, while describing some of the projects they currently have underway.

The influence of firm and industry characteristics on returns from technology licensing deals: evidence from the US computer and pharmaceutical sectors

This study examines the relationships between firm and industry characteristics and firms' abnormal stock market returns accompanying the announcement of technology licensing deals. In particular, I examine the fit among firms' licensing activities, their resource endowments, and their industry context, and develop hypotheses on its impact on abnormal stock market returns after licensing deals. Analyzing 11 years of inward and outward licensing transactions in the US computer and pharmaceutical industries between 1990 and 2000, I find support for my argument that while firms profit from both inward and outward licensing, the magnitude of such profits is determined by licensing firms' resource endowments, and that these determinants have a different impact in different industry contexts. Understanding these relationships helps explain when firms should use licensing to exploit their proprietary technologies and make better predictions about the impact of licensing transactions on firm performance.

Industry Update: the Latest Developments in Therapeutic Delivery

This month’s article covers 6 December 2011–5 January 2012, typically a fairly quiet period for business activity. Despite this, a number of significant announcements were made during this period. These included licensing and collaboration deals between Liquidia and PATH, Arecor and Lilly, and Arrowhead and Alnylam. Christmas presents arrived early for Endo and Grünenthal in the form of US FDA approval for their crush-resistant Opana® ER formulation and the granting of a patent covering its formulation by the US Patent and Trademark Office. Pulmatrix also had something to celebrate when on 5 January 2012, the European Patent Office approved a patent that protects the composition of matter of its lead dry powder formulation.

Targeting DNA With Fingers and TALENs.

Researchers have long recognized that the random introduction of new DNA into the genome could result in unpredictable genetic effects due to bilateral influences between transgenic and endogenous sequences. Hence, precise editing or replacement of mutant genes has been a major goal of gene therapy since its inception. That goal looked possible with the publication of studies demonstrating that targeted cleavage of chromosomal sequences and enhanced homologous recombination (HR) could be achieved using chimeric molecules composed of a nuclease domain and separate, designer DNA-recognition domains.1,2 Zinc-finger nucleases (ZFNs) are artificial endonucleases that consist of a FokI cleavage domain tethered to engineered Cys2His2 zinc-finger, DNA-binding polypeptides.3,4,5 ZFNs have gained considerable momentum and are widely considered the most mature nuclease technology in the gene therapy field.6 However, after 15 years in the spotlight, a new chimeric nuclease has emerged, Transcription Activator-Like (TAL) Effector Nucleases (TALENs).7,8,9,10 Here, we describe functional and design characteristics of ZFNs and TALENs and discuss their expanding role as tools for research and gene therapy.