Biotech Licensing

The biotechnology business is unusual compared to many sectors in that many companies are acquired or IPO without any revenue or product. It is common for biotech start-ups as they are science-based often with technologies that have originated from universities or technical institutes. Therefore a dominating feature of these companies is that licensing is a major component of these businesses. Biotech start-ups almost never produce and sell biopharmaceuticals. They instead license their intellectual property (IP) to large pharmaceutical companies. However, they themselves have generally licensed IP from universities where the discoveries have been made and protected through patent applications.

The terms of the licenses from the university to the biotech-startup is critical. The questions that commonly arise are:

• How much equity does the university take?
• Should the terms be front or back loaded?
• Should there be milestone payments, royalties or both?
• Is it right for the university to only cover their costs?
• Should the deal be lucrative for the university given the research was publically funded?
• What if other technologies such as formulation are required and the royalties begin to stack up?
• Will a future pharmaceutical partners be put off by the terms of the deal?

Therefore it is absolutely vital to have the right experience with both the technical and commercial aspects of a project to get this right from the outset.  Failing to do so could have catastrophic consequences years later.  GRA has experience of helping construct licensing agreements as well as general agreements, whether with academia, other technology companies or large multinational pharmaceutical companies.  Please contact us if you wish to discuss.