July 30, 2019

Inside MotionHall: When should my biotech company consider licensing strategy?


The secret to licensing success is to have your plan in place years in advance. In fact, many companies consider business development before capital investment occurs, either in the company or in an individual program.

When should my biotech company consider licensing strategy? The answer is, as early as possible.


Common questions to ask prior to making an investment include:

  • Who are the potential buyers for this asset, and how many of them are there?
  • What can we expect these potential buyers to pay?
  • Will it be possible to drive a competitive deal cycle, or will we have little leverage to command time and price for this asset?
  • Does the anticipated deal timing and financials fit the company’s plans?

The purpose of asking these questions is to ensure that when the company plans to license, the market will be there, and the company will be able to deploy the resulting payments towards new program development.

If the answers to these foundational business development questions are not positive, management may decide it’s best to invest in a different program, one in which the company and its stakeholders can be more confident that a transaction will occur at an acceptable time and value. This prioritization exercise is particularly helpful at companies who have many scientifically promising early-stage programs to choose from, such as those with high-output platform technologies.

The purpose is to ensure that when the company plans to license, the market will be there, and the company will be able to deploy the resulting payments towards new program development.


Alternatively, management may prefer to go ahead with an investment even when the market situation is difficult. This may be the case at companies working with just one or a few promising assets that don’t fit well with buyers existing strategy, and/or where buyers cannot easily appreciate the science. With careful planning and execution, many difficult market situations can be overcome with great success.

Of course, not every company does or is able to engage this best practice. If you are reading this, you can probably think of cases where companies failed to sufficiently evaluate partnering appetite for their product and experienced distress. At times, even very experienced company teams overestimate the appeal of a product that they are excited about. The key is still to begin evaluating the market and planning licensing strategy as soon as possible. The earlier a company comes to appreciate its situation, the easier it will be to develop and execute a sophisticated licensing strategy that can overcome market challenges.

With careful planning and execution, many difficult market situations can be overcome with great success.


In conclusion, early and thoughtful evaluation of a program’s transaction prospects de-risks investment and influences a company’s overall value. When a product’s attractiveness to the partnering market is well understood at the outset, a licensing strategy can be put in place that fits the company’s goals; these typically include maximizing deal value, closing on time, increasing confidence that the product will be developed successfully, and reaching patients globally.




MotionHall provides fast and easy tools that you can use to understand the partnering market for any deal. Our members use our Artificial Intelligence-based platform to guide early investment decisions and inform licensing strategy. We are proud to be of service to business development & licensing executives in every major pharmaceutical region.

If you would like to connect with our team to begin work or consultation, please contact us at:

Rachael Craig, CEO
E: rachael.craig@motionhall.com
www.motionhall.com

An extraordinary approach to effective partnering.