The Devil is in the Details: What BioPharma Press Releases Don’t Say


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off the competitive playing field. They have no plans to actually develop the drugs that they are building the deal around. Why would a company sign a deal to gain the rights to a drug that they have no intention of developing? Companies will do this when they find out that your organization has some IP that may interfere or compete with their own internal drug development programs. Alternatively, they fear that a competitor will acquire and exploit your technology to their detriment. The contract is put in place to give them freedom to operate, even it that phrase is not found within the paperwork.

How do you recognize this type of deal? The larger company will license the intellectual property in question for peanuts (i.e. a small upfront payment) and dangle some huge future payoff, mixed in a cocktail of sweet talk and bravado, as an incentive to do the deal. Then they will sit on their hands and do nothing to develop your drug. If you are ever approached with this type of proposal, protect yourself. Make absolutely sure to put in a due diligence clause that triggers the return of the IP/molecules to you if your partner fails to make any progress and hit early and significant milestones. Specify that you will require written reports on a set schedule, and tie those milestones to these reports. Don’t let them pay you a pittance to put your drug on their shelf!

It’s not always the junior partner that gets the short end of the stick in biopharma deals. Sometimes deals blow up in the face of the deep-pocketed acquirer. A recent example of this was Bristol-Myers’ ill fated $2.5 billion purchase of Alpharetta, GA-based Inhibitex for their hepatitis C drug INX-189. The gestational period from the inception of this deal to the explosion turned out to be less than eight months. The drug showed itself to be toxic in clinical trials and Bristol-Myers was left with a $1.8B write-off and what are likely a number of future lawsuits. This story will likely become a business school case study of what can happen when industry goliaths are competing against each other for a limited number of strategic acquisitions in a “hot” marketplace. Either the proper due diligence doesn’t get done, or someone overpays big time. Interestingly, the explosion here inflicted serious collateral damage on another company, Cambridge, MA-based Idenix Pharmaceuticals, that wasn’t even part of the deal. They were developing a similar type of drug that they wound up shelving after the FDA put a hold on their clinical trials even though no problems had been seen.

For those of us sitting on the sidelines, be leery the next time you read about one of these high-powered deals if you don’t have access to the fine print. What may appear to be a good deal may actually represent someone getting snookered. As George Bernard Shaw once put it “When an apparent miracle happened…it proved divine mission to the credulous, and proved a contract with the devil to the skeptical.”

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Stewart Lyman is Owner and Manager of Lyman BioPharma Consulting LLC in Seattle. He provides strategic advice to clients on their research programs, collaboration management issues, as well as preclinical data reviews. Follow @

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3 responses to “The Devil is in the Details: What BioPharma Press Releases Don’t Say”

  1. Ellen says:

    The term ‘biobucks” is widely used to describe the inflated values in press releases.

  2. Johnny T. Stine says:

    Stewart – I got hosed big time on my two pharma deals. I got verbal confirmation (ie. lies) that they would act fast with my mab(s), but nothing happened. Subsequent to this, I finally put language in my contracts in a clause which I cleverly titled the “Shit or get off the pot” clause. That took care of everything. Only one pharma was offended by the title – a large conservative pharma in the mid west. I changed the word to “crap” for them. ha!

  3. Good points. It is useful to note that some additional info can often be found in a more expansive 8-K filed on the same day as the press release, and/or in redacted license agreements filed with quarterly/annual SEC reports.