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Do’s |
Don’ts |
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| 1 | Work with multiple potential partners in a structured process, if the demand can be generated | Let one partner speed you up too much, or another slow you down |
| 2 | Understand the value of your technology based on comparable deals and how you fit with other firms’ needs and goals; you want to prepare the first draft of the term sheet | Draw a line in the sand around a single deal element like royalty rate – it’s the overall package that counts |
| 3 | Know your market and how you satisfy unmet medical needs plus your distinctive competitive position; build target positioning and go/no go criteria | Project clinical data showing statistically significant separation between active and placebo groups based on a planned clinical trial [Yes Virginia, I did see this at JPMorgan!] |
| 4 | Make sure you understand the strengths and weaknesses of your patent portfolio; shore it up before you start talking to third parties | Tell potential partners you have no IP challenges on obviousness, inventiveness or infringement grounds, unless you’ve done your homework |
| 5 | Understand that the value of your technology is what a third party is willing to offer you for it today | Accept predatory offers: e.g. “We’ve got $1 million left in our research budget if we close the deal before year-end” – tell them “Hell, no!”, unless that valuation is one you can live with long-term |
| 6 | Understand the value of a proposed deal both for you and for your partner. Hire an experienced spreadsheet jockey to model economics | Tell pharma partners you will garner a 32.4% market share and peak sales of $3.5 billion |
| 7 | Be calm and analytical. Then be passionate and emotional. | License your whole company to a single partner without exacting a control premium |
| 8 | Have a credible and real alternative option until the final contract is executed | Assume that contract drafting is transparent or fair: their lawyer is earning $500/hour for a reason |
| 9 | Give one person authority to negotiate the best deal they can, subject to CEO and board approval | Have your CEO or a committee negotiate the deal |
| 10 | Insist on a “use it or lose it” clause where the license reverts to you if commitments are not honoured | Plan to slice the field of use as thinly as Prosciutto di Parma |