Transcribed notes lightly edited. Executive Call Series: How to build a solid BD Strategy. All Levels. August 13, 2019, Tuesday, 8:00 - 8:30 AM
Erin: Good morning everyone. You might not be able to speak if you're muted, but hopefully, you can all hear me. If not, you can shoot a message into the chat and we'll make sure that everyone is on and ready to go. We know you're all busy executives like ourselves, so we're not going to take up too much of your time this morning. We have half an hour booked. We're going to try to keep it to 20 minutes barring any juicy discussion topics which have been known to happen on webinars. So I'm Erin O'Halloran, I'm the VP of Commercial Operations at MotionHall. Good morning to all of you. Thanks to everyone who's registered and taken the time to complete the pre-webinar survey and submit your questions in advance. We have a lot of really great questions. Many of them were similar. So that's great to know that several of you are experiencing similar challenges and have similar questions. If you do have questions throughout the webinar, you can email me at email@example.com. We'll do our best to answer any live questions. And I'm going to move on to introducing our guests who I'm really excited to have here.
So I’d first like to introduce Paul Brennan. Paul is from Pacific BioPartners, and he is an experienced dealmaker with a very extensive deal sheet, including M&A, corporate restructuring in-licensing, out-licensing, regional deals, and litigation resolution. He brings more than 25 years of experience in building and leading pharmaceutical and biotech companies internationally, and has a strong track record in regulatory affairs, market development, and partnering. On the pharma side, he's held executive positions in Astra Draco and AstraZeneca and in biotech has held executive positions at several companies, including Arbutus Biopharma, Aspreva, Tekmira, and Anormed. Mr. Brennan played a significant role in the sale of Aspreva to Vifor Pharma for $915 million. The sale of Anormed to Genzyme for $580 million, and the merger of Tekmira and Oncore to create Arbutus Biopharma. Most recently, he was responsible for an exclusive license agreement for Japan and other APAC regions between Astellas and Aquinox. Mr. Brennan has also served in senior BD and Regulatory Affairs roles with AstraZeneca in Sweden, UK and Canada. Quite the file. We're really excited to have you here, Paul.
And good morning, Rachael.
Rachael: Good morning.
Erin: Aside from being my boss, Rachael is the Co-Founder and CEO of MotionHall, a Silicon Valley VC backed artificial intelligence company, serving BD and the life sciences with modern cloud-based tools, comprehensive data and predictive analytics, including the OutMatch platform which provides predictive partner recommendations for sell-side biotech companies. MotionHall’s luminary fund is Village Global, which is backed by Michael Bloomberg, Bill Gates and Jeff Bezos. And while building the company, Rachael worked with some of the most reputable names in biotech deal-making, investment banking and VCs including Cliff Stocks, Fred Frank, Steve Holtzman and Rod Ferguson. Prior to building MotionHall Rachael acted as interim CEO and executive to numerous biotech, medical device and tech companies. And her background spans business, neuroscience and software engineering.
Alright, I'm going to turn it over to our guests to answer some of the questions that were submitted. And hopefully, you're all driving safely or enjoying your coffee.
Rachael: Awesome, thank you so much. What I loved about these questions that we received is there's a range, and we’ve got some topics that are basic/intermediate up to fairly advanced. And so as Paul and I run through the questions, I think we're going to get to run that gamut, which I'm excited about.
Audience Question #1: What is the best way to find a good licensing partner? What's the most efficient way to identify them and keep track of the markets?
But the first questions start fairly basic. We have, ‘What is the best way to find a good licensing partner?’ and ‘What's the most efficient way to identify them and keep track of the markets?’ I want to start by asking for your opinion on these, Paul.
Paul: So the first question, what is the best way to find a licensee, there are two parts:
What's the way to find the licensee? What you're doing when you're trying to find a licensee is look for synergies or interests in the commercial component, development, and research component.
So in terms of looking at commercial components, what you really want to do is look at the therapeutic field that you're in and look for companies that are market leaders in your therapeutic field. Typically, the way you can get that is through IMS statistics. Or if you don't have access to IMS statistics, you can access different reports that typically are available online and are free. So that's the first one, commercial interests.
Second, you're looking for pipeline overlaps, companies that are actively doing research in the same field as you. So you know, for instance, if a company's doing CNS research, they have an interest in investment in the future in CNS, and therefore might have an interest in your product, that's a CNS product. Again, there are different ways to look at pipeline, or reports available. There are databases with pipelines, you can go through clin trials and look at what's in certain therapeutic areas, you can mine the web for lots of information around pipelines. Research is a little bit earlier than pipelines, so research is defined as things that haven't yet entered the clinic. And again, you're looking at people that have overlap research interests, that same research interests as you have, it's a little bit harder to do, it's a lot harder to mine the web for that. You can do it through looking at publications, you can do it by going to different scientific congresses and seeing who's presenting within a certain area. Similar or an associated way is to look through patent applications and see whether or not people are filing in the same area as you but essentially, it's actually quite comprehensive in terms of the effort you need to do. But there's quite a lot there in terms of finding synergies.
Finally, the last element that's really quite important is most companies will actually state what they're looking for. Most of the larger companies will state what they're looking for. So if you go to a Roche’s website, their partnering interests are there. So mining the different partners, for the large companies, if you're looking to partner with a large company, they often stated specifically, what they're looking for.
Rachael: When you're looking for synergies. Paul, how valuable do you find it to talk to the actual BD buy-side leaders on that company team early on?
Paul: Absolutely. In fact, that's sort of where I was going. So you're looking for the synergies and the way that you can find those synergies, is one, by going to conferences but two, connecting with the individuals within the company. One of the best ways to do that is to go to partnering conferences such as BIO, initially if you're starting out, and trying to get your network files, an excellent conference where most companies attend, they will state their interests, you can put your product up in terms of this is what we're trying to partner, they can come to you, you can try and approach them. But you know, that's an excellent way.
Rachael: That’s pretty comprehensive. Maybe the one we missed is monitoring a company’s transactions history and trajectory.
Paul: That's extremely important. In terms of trying to identify who's your best partner, you want to work with companies that do deals, and not all companies are active in doing deals. So what you want to look for is a company that has a history of doing deals within your therapeutic area. So if you're working in Alzheimer's, it's nice to know which companies have done deals in the Alzheimer's field. And they’re active and doing deal-making and which ones don't do deals, even though they may be active in Alzheimer's, you really want to target the companies that are active in deal-making.
Rachael: So, I think a lot of your answer focuses on how much the biotech or the sell-side dealmaker is responsible for understanding the type of deal they're looking for. If you don't understand the deal you're looking for, it's going to be hard to understand the best partner to fit.
Paul: Exactly. And, you know, to build on that, I focus predominantly on trying to identify partners that are big pharma partners. Those are the partners that tend to put what they're looking for out on things like BIO, their partnering websites. But sometimes a big pharma partner isn't your best partner. And that's actually where digging deeper really helps. That's where understanding where people are publishing, understanding where their patenting, partnering conferences, digging deep to look for those synergies for those experts that are experts in your area that have joined the company. That's where going beyond the big pharma companies, that type of information is going to be helpful.
Rachael: And we definitely see a lot of our membership preferring either regional partners, medium, and specialty pharmas, because they can be easier to transact with, and because there's a lot of opportunities there. Maybe by partnering with a smaller company they get more control over the future of their product, or greater royalties, which are all considerations that you need to understand for your company before you can determine the best partner.
Returning to part 2, ‘What's the best way to find the licensee?’
Paul: So, what's the best way to find the licensee. What's the best way to do that? What's the best way it can be? How's the quickest way to do it? What's the way to understand which partners are going to be best suited or most likely to transact with you? Frankly, my experience, if you want to do this accurately, quickly, using the MotionHall Outmatch utility is really a fantastic way and the best way that I see to be able to do it. Maybe you can talk more about that.
Rachael: Sure. Rather than focus too much on that, though, I think, obviously, we agree. But if you want to look at other sorts of traditional methods to do this, it will be a tremendous amount of research and pre-deal planning, and you should want to get comprehensive in your partner search and find the best partners, all the elements that you mentioned, are things that we take into account at MotionHall that any best practice search takes into account. So we look at stated interest, have they done deals like this in the past? Have they possibly got an interest in doing a deal like yours? Can they afford it? And what's their cash situation like? Are the sales channels in place? Can this go into an existing salesforce sort of kit bag and be delivered out to patients? Does it fit the pipeline? Is there a clinical capability there? Is there the fit with their science that you're looking for? What's the state of the BD team? All end up being considerations and understanding that goodness of fit. And so then, how do you most efficiently identify and keep track of potential partners? I think if we ask Paul, you might say in the MotionHall system.
Paul: Yes, that's the most efficient.
Rachael: So there are other less efficient ways that are still quite good to do this, certainly better than not having a process at all. And so again, if you’re not working with us you have to put that elbow grease in and manual research, and you will have a hard time. But you whether you work with MotionHall or not, you have to be tracking all of this in the best way that you're capable of.
Paul: Yes, I mean, either way, if you really want to be on top of things and know who your best partners are it requires research. And you need to research constantly, as well as being out in the field. Interaction with potential companies, whether it's a BIO or a J.P. Morgan, and not to forget the scientific conferences because most pharma companies are available at those conferences in the same field as you.
Rachael: Would you agree that the market is typically moving in important ways throughout the beginning of considering a deal strategy to actually executing that deals strategy in ways that you're going to want to track, which means continually updating?
Paul: This is a dynamic market and your field may have competitors. And transactions may occur with your competitors, or potential targets might get acquired or do a deal with a competitor. So it's really important to understand that it's not a static situation where you map who your potential partners are, and then don't worry about it for the next 12 months. So it’s dynamic. Again, MotionHall OutMatch really helps keep track of that.
Rachael: So, a situation that we occasionally come across, you don't want to be sending your high-gloss tailored teaser material to somebody who's just in-licensed a competing product, right? You want to know about that and be able to adapt your strategy accordingly. Ideally, you've planned so that you’re out-competing before that transaction happens.
Paul: Absolutely agreed.
Audience Question #2: What terms should I expect around my licensing deal?
Rachael: So, the next question is ‘What terms should expect around my licensing deal?’ And I know you and I are both fans of benchmarking.
Paul: So the question of what terms to expect, that's kind of like asking, how long is a piece of string? Terms are never the same. They vary quite a lot from one deal to another. And it's really one of the hardest questions to answer when someone says, you know, what can I expect for a deal? Because really, it depends on your technology, it depends on the competition within the technology, the disease area, pricing, market size. There's a whole number of things that influence your ability to do a deal and the size of a deal. But really there's never a single answer. So then without a single good answer, you have to start at what's the best way to approximate an answer. And there's really two methodologies. The first is benchmarking, which is something that I've made a lot of use of most recently and use more and more as I progress and work in the business development field. A lot of that comes from the banking side because that's typically how they value companies. And I've learned that through my experience in M&A where bankers will go and they'll have a number of different methodologies. And the first one is always benchmarking. What are deals acquisitions that have occurred with a similar look as yours? And so that really applies also when licensing, really to understand what your expectations are for a deal. The best way really, the number one methodology is to look at what are similar deals that have been done in the same space as me. And so then the trick becomes how do we define the same space as me? Is the same space as me orphan diseases that are phase one in the hematology space? Well, that's a really narrow space, and you might not be able to find the reference deals that can apply. Is it all phase III products? Is it antibodies or nucleotide products? So what you need to do is look at, okay, what's my space? What's a good sample size of deals that are comparable to mine? And what's a space that I can define where I can find at least 10 deals that are similar to mine? And then you start looking at, okay, what's the average deal size? What's the median deal size? What are near term payments, or mid-term payments was a long term payments?
Rachael: If I remember your stories correctly, sometimes that benchmarking comes up in actual negotiations, right? And you’ve used it to put a basement on a fair price, is that right?
Paul: Oh, absolutely. In fact, in a recent negotiation, we did exactly that. We were being presented with a number of upfront figures and total milestone figures. We basically said, “Look, this is the benchmark.” And the pharma company that partnered with us said, “Well, what is benchmark?” which I was quite surprised, they asked the question. So we had done some pretty good work at benchmarking. We flipped the figures knowing that if we hit benchmark, it would actually be in our strategic gains. So we flipped them the figures and were straightforward with them, every deal that we can see that was published that was related to the deal that we wanted to achieve. And they immediately came back with a term sheet that hit the benchmark.
Rachael: So as deal people, I want to take this question from a different angle. At MotionHall, we really believe that the way you plan your licensing strategy and the way you run your deal cycle can inform the value equation for your company, particularly when setting up your deal cycle to gain leverage or drive competition.
I'm curious how you think about this. We end up coaching our members on this quite a bit, especially if they have an asset that's potentially harder to transact, or one that they want to drive an auction process for. There's almost certainly a very different outcome in terms of deal value, if they don't run that competitive process then if they do, and are able to catalyze an auction, or even just two competing bids for the product.
Paul: Yeah, absolutely. I mean, certainly the way that you approach your business development efforts absolutely influence your ability and the size of the transaction that you eventually have. And that's really about setting up the options that you have as a company. Imagine, as an example, that you really have very few partners to choose from, and you put yourself in a position where after your Phase II data comes out, your only option is to partner. So you haven't really put yourself in position to finance to go to Phase III, or to have those development capabilities to go Phase III. And you're just stuck waiting to partner. And especially if you are not in an auction process where you can go to a higher bidder, those partners will recognize that weakness, and they'll take advantage of that weakness and they'll drive the price down. Okay, so prepping understanding a) are you going to be in a position where you're going to have multiple bidders, and you can just auction? b) are you going to be a position where you're going to have one or two bidders? And, and they can take advantage of you if you don't have alternate situations?
Rachael: Awesome. We're getting close to time. And we've got two more questions, one that just came out, I think is quite good. So we will approach these two together.
Audience Questions #3 & #4:
For those of us without a strong rolodex, what's the best way to approach and get through to decision makers at an organization?
When looking to license or find a partner, are some conferences better than others, or are BIO and J.P. Morgan the only ones that matter?
Rachael: The question is, ‘For those of us without a strong rolodex, what's the best way to approach and get through to decision makers at an organization?’ which I think is really interesting. And you are engaging a very different set of strategies, if you're looking at quite large pharma, like a Roche or Pfizer, versus something medium specialty that doesn't have as many moving parts. And the other question that we've got here is ‘what is the best conferences to attend?’...seems a little easier…’when looking to license or find a partner, are some better than others, are BIO and J.P. Morgan the only ones that matter or are there others?’
Paul: And so I'll start on the first one, and actually also let you pipe in on that because you're one of the very best people at opening doors. But if you don't have a strong rolodex, then really what you need to do then is understand who is it that you're trying to contact and there's basically a lot of research and sweat that needs to go behind that in terms of who are the active people are within a company that are responsible for the things that you are trying to license out. So within a big pharma they'll be multiple divisions, and they'll be a CNS division, and you're looking for who's responsible for certain components within CNS, not just from a business development perspective, but also within research. Some people might be doing Alzheimer's, some people might be doing MS. So understanding who those people are, and what their research interests are, is really helpful. Because then you can use, if you can find overlaps, then you can use your technology as an entrance. There are, you can also meet people at conferences or partner conferences, such as BIO or J.P. Morgan. If you can find common interests, people that you know that they know, and get introductions, really, introductions are one of the best ways to get through to people, because people pay a little bit more attention to your email if they've been introduced by a colleague or a friend.
Rachael: And then you know, I’ve got some caveats on this one. I think warm introductions are fantastic, especially if they're coming from someone reputable, someone who means a lot to the person you're looking to be introduced to. The big caveat on that is that you really want to be prepared to make the most of that introduction, once you've received it, which pulls us all the way back to the first question that we answered, which is, who's the best partner, because you want to come to these people with a very deep understanding of why your technology matters to them, their company, their strategy, and present yourself using ideas that they already care and understand, right? So these people have limited attention spans just like the rest of us. And the amount of deal flow that a person might see, when representing a pharma can be tremendous, particularly at conferences. So the more that you can use the knowledge you've gathered beforehand to tailor the way that you speak to them and empathize with the way that they're thinking, the more likely you are to sort of click in that person's mind to be memorable, and advance your product through the process. We talked about how I open doors and master networking, both with MotionHall and other companies, and so much of it is really working to deeply empathize with that person before I even meet with them, researching to understand their situation, their company, and how what I do should matter to them.
Paul: So if we go to the next question, which is one of the what a conferences that you can go to? So I mentioned BIO and J.P. Morgan. BIO is massive and it's great for making introductions. It's also massively busy. And sometimes you can't make introductions because the people you're looking for are so busy they don't have time for you. There are other partnering conferences; BIO Europe is another one, is fairly good. There's BIO Japan, which I've never been to, but actually hope to go to this September, November for the first time. But one should not forget that the scientific congresses are actually probably better opportunities to meet people. So if you're visiting hematology, anybody who's doing research and development, and you've told you it will be at ASH, and really, that's an excellent opportunity. Most scientific congresses have both a US meeting and a European meeting. And they're usually attended by both the North American and European offices for any company. And those are really the best areas to meet the researchers, the BD people will be there and you want to meet both. The more specialists your area the more specialist a meeting that you might go to. So for instance, if you're in myelofibrosis, as an example, which is a sub area of hematology, ASH is one area to go but look for the conferences that are specific to myelofibrosis diseases, because those will be attended by the companies that are doing research in that field.
Rachael: So maybe, to cap us off with our last few minutes, I'll tie the conference question and to the previous one, 'for those of us without a strong rolodex' together. We started with a warm introductions are great, but what if you can't get a warm introduction to the person that you want to meet? What do you do? And so if you look at that tailoring piece, again, it's amazing how many doors you can open with a well-targeted, highly tailored, cold email or LinkedIn connection. Most people won't do all of that work to empathize with the person that they're reaching out to, and obviously, our tools at MotionHall help with that, so you can accelerate your research to understand where that person is coming from and what they might care about in their job. And if you can speak to that very clearly and concisely, that's the first step in the door. And sometimes that can be even more powerful than a warm introduction, because you get to fully control the interaction. Where that ties into conferences then, is that, yes, you can meet people at conferences, and it will be a busy time, and get that time with them. But if you can master this art of writing well-tailored cold emails, you can start to build your own opportunities to meet with people on your own timeline. And of course, that's very powerful, as well.
Paul: Totally agree. Excellent, excellent advice.
Erin: Maybe a future webinar will be ‘tips and tricks for writing tailored cold emails’. I'm sure that would be valuable. Thank you both very much for the morning and the informative conversation. I hope it was valuable to people on the call, thanks to all of you who took the time out to join us and for submitting questions beforehand and during the conversation. Several of you are already working with us as members and many more of you have reached out prior to this to book a time with me to discuss your partnering strategies and learn more about MotionHall Outmatch. If you'd like to learn more, you can send an email. We do have future webinars booked, including one that we're planning in September around dealmaking in China. So hopefully, that'll resonate with some of you guys. We do have a short survey that will send out to each of you. I know you're all very busy like we are. But we tried to make it easy to answer and I really appreciate the feedback. We want to make this as valuable as possible to you and your time. So that's all for this morning. And we hope you have a great day.
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Rachael Craig, CEO E: firstname.lastname@example.org Erin O'Halloran, VP Commercial Operations E: email@example.com www.motionhall.com