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FACTORS DETERMINING WHETHER A PRIVATE COMPANY LICENSES TO/FROM OR COLLABORATES WITH ACADEMIC INSTITUTIONS Patrick P. Zaretski, Esq. Director of Intellectual Property ExL Pharma – 2 nd Pharmaceutical Research Collaborations Summit August 15, 2012

PPZ ExL presentation, 8 15-2012

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From my proposed presentation at the ExL 2nd Pharmaceutical Research Collaborations Summit in Boston from August 2012.

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Page 1: PPZ ExL presentation, 8 15-2012

FACTORS DETERMINING WHETHER A PRIVATE COMPANY LICENSES TO/FROM OR COLLABORATES

WITH ACADEMIC INSTITUTIONS

Patrick P. Zaretski, Esq.

Director of Intellectual Property!

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Page 2: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Disclaimer

The views expressed herein and today are my own and not necessarily those of Cornerstone Pharmaceuticals, Inc. or its management.

Page 3: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Introduction to Cornerstone Pharmaceuticals, Inc.

•  Founded in 1999, Cornerstone Pharmaceuticals is a privately-owned 15-employee clinical stage drug development company with headquarters in Cranbury, New Jersey and additional laboratory space at both the Long Island High-Tech Incubator in Stony Brook, New York and on the campus of the State University of New York at Stony Brook.

•  Cornerstone was one of the first drug development companies to devote research to the field of cancer metabolism. The company has two active pipelines in development:

•  a first-in-class small molecule that exploits cancer metabolism via an apparently novel mechanism of action, exclusively in-licensed from the Research Foundation of the State University of New York;

•  a proprietary lipid-oil-water nanoemulsion drug delivery molecule that exploits cancer cells’ metabolic requirements, based on technology exclusively in-licensed from a private company.

Page 4: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Introduction to Cornerstone (concluded)

•  Under the terms of the license agreements with each licensor, contingent upon maintaining all license fees and reaching all agreed-upon milestones, any technology developed subsequently by Cornerstone is the sole intellectual property of Cornerstone, which the company is thereupon free to exploit as seen fit.

•  Consequently, Cornerstone has entered into or is in negotiations to enter both licensing agreements with third parties as well as collaboration agreements with both academic and governmental entities.

Page 5: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Factors considered by commercial companies to determine involvement with academic institutions

Page 6: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Primary considerations

•  Much like considering whether collaboration with or licensing to a second private company is proper given the commercial circumstances, a private company has many considerations to take into account when deciding whether to collaborate with an academic institution versus licensing its technology to or from that institution.

•  Indeed, many of these considerations can also be applied to decisions regarding work with governmental agencies as well.

•  The primary criterion for a private company in this position is: will this transaction or alliance be in the best interest of the company? Generally, this is answered by determining what will ultimately maximize the company’s PROFIT.

Page 7: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

General strategic considerations

•  Upon determining that there is common interest between the company and an academic institution (e.g., intellectual property), it is vital from the outset to determine the potential for successful interaction:

•  Quantify the sales and earnings potential.

•  Gauge and understand the academic institution’s aims, commercial focus, and competitive position relative to the company’s own.

•  Prior to any transaction, identify potential exposure from the academic institution’s commitments.

•  Evaluate the risk of compliance failures and/or aggressive practices by either party.

•  Ensure that cultural compatibility will exist (e.g., disclosure versus adequate patent protection).

Page 8: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Specific strategic considerations

From Cavalla D (2003). The extended pharmaceutical enterprise. Drug Disc. Today 8(6):267-74.

Page 9: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Specific strategic considerations (continued)

From Cavalla D (2003). The extended pharmaceutical enterprise. Drug Disc. Today 8(6):267-74.

Page 10: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Specific strategic considerations (concluded)

From Cavalla D (2003). The extended pharmaceutical enterprise. Drug Disc. Today 8(6):267-74.

Page 11: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Further strategic considerations

•  Be mindful of two factors not often acknowledged in deciding whether to interact with a potential business partner:

•  Tax risks; and

•  Antitrust considerations (especially where the competitive space is not crowded or where technology is “blockbuster”).

•  Whether a collaborative or a licensing agreement is reached, ensure that a protective post-transaction implementation plan is in place.

Page 12: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Appendix

Page 13: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Tactical considerations: terms of the agreement

•  No matter what the form of agreement reached between a private company and an academic institution, for mutual protection and clarity, and to ensure success, the terms of the agreement should include the following:

•  An explicit statement of the objective of the agreement.

•  Definitions of important terms used throughout the agreement.

•  Representations and warranties that each party (or both) is relying upon when entering the agreement.

•  The duties and responsibilities of each party.

•  A description of the subject matter to be shared by one party with the other for purposes of achieving the objective (can be further listed in an appendix).

Page 14: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Terms of the agreement (continued)

•  Set of limitations as to the use of disclosed information (and licensed property, if any).

•  Granting the right to or prohibiting sublicense rights.

•  Establishment of ownership of new developments arising out of the agreement, where applicable.

•  Allocation of responsibility and establishment of appropriate process for prosecution of patents for new developments, where patentable.

•  Definition of marking requirements for new developments (and licensed property, if any) to demonstrate provenance of ownership.

•  Allocation of responsibility and establishing appropriate process in event of patent infringement by third parties.

Page 15: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Terms of the agreement (concluded)

•  An explicit assurance that any previously-executed confidential disclosure agreements are still in force and for what term.

•  A designation of the required treatment of trade secrets and know-how, to comply with applicable laws pertaining to trade secret protection.

•  A statement of termination provisions and post-termination obligations of each party.

•  A statement of mutual indemnity and liability limitations, if agreed upon.

•  An assertion of the governing law (and the jurisdiction and even venue, if possible) under which the agreement is to be litigated in the event of breach or tortious conduct.

Page 16: PPZ ExL presentation, 8 15-2012

ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit August 15, 2012

Thank you for your attention!

Patrick P. Zaretski, Esq. Director of Intellectual Property

Cornerstone Pharmaceuticals, Inc. One Duncan Drive

Cranbury, New Jersey 08512-3629 Ph#: 609-409-7050 x216

FAX#: 609-409-6035