Why launch a drug developing venture?

The majority of pharma and biotech venture creations are aimed at one or both of two fundamental objectives, bringing a novel therapeutic to patients and generating returns for their founders and investors. Often, pathways are poorly understood by the bootstrap team, and professional “help” is being sought from incubators, boards, investors and advisors, embedding possibly conflicting perspectives and goals into the core fabric of the company. As the company flourishes and goes through evolutions along the development stages of its portfolio, significant strategic debate commonly unfolds about when and how to involve industry partnerships in the further and broader development.

When to build bridges?

Most of this debate is required, and key to appropriately weighing arguments for one or another strategy. However, venture teams and their stakeholders are well advised to not ignore that in a vast majority of instances, it will not be in the realm of possibilities for the company, to bring a therapeutic to patients absent involvement of established industry. This has vast ranging implications for how a company is being set up and run. If teams have accepted for their specific situation, that partnerships are a necessity to achieve any of the fundamental objectives named above, then a long term game plan can be devised that appropriately knits product development, corporate finance, and strategic business development into a cohesive pathway forward that can be evaluated, pursued, monitored, and if required modified along the way.

Great term sheet vs. great partner

Putting together strategic partnerships will always remain a highly commercial undertaking; however, equipped with the necessary strategic understanding of that partnership’s role and implications along the company’s pathway forward, as well as potential alternatives, venture teams will be able to more effectively identify ideal partners, negotiate appropriate terms, and devise governance that ultimately delivers on what the venture requires out of the partnership. It is that long-term result of a partnership that mostly drives sustainable value, and hinges significantly on the venture’s upfront ability to forego “great term sheets” to go with the best partner, which may not be the best deal on paper.

Corona implications

We observe that within pharma, the business of partnering has not stopped at all during Corona. Rather, it appears that business development and strategic executives are more focused than ever to identify emerging technologies that fit their portfolios, but also are more open to step outside narrowly defined areas of core strategic activity. Decisions are long being taken in virtual environments and limitations on abilities to travel or meet in person are not at all affecting things getting done. However, it emerges that at least for another while, the value of preexisting personal relationships carries far into the deal making environment, such that team building strategies aimed at “improving access” are highly suited to have a decisive impact on the deals a pharma venture may be able to strike.

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