Download - Pharm Collaborations Cbi Pres
![Page 1: Pharm Collaborations Cbi Pres](https://reader037.vdocuments.us/reader037/viewer/2022110309/5584d363d8b42ae0138b523b/html5/thumbnails/1.jpg)
Key Considerations for Structuring a Winning Deal- A Biotech ApproachKey Considerations for Structuring a Winning Deal- A Biotech ApproachThomas Hess
Former Chief Financial Officer of Adolor Corporation Former Chief Financial Officer of Adolor Corporation (currently CFO of Yaupon Therapeutics)(currently CFO of Yaupon Therapeutics)
September 16, 2008© 2008 Adolor Corporation. All rights reserved.
![Page 2: Pharm Collaborations Cbi Pres](https://reader037.vdocuments.us/reader037/viewer/2022110309/5584d363d8b42ae0138b523b/html5/thumbnails/2.jpg)
Adolor- Pfizer Delta Collaboration
Considerations and motivations for entering into the deal! Adolor was awaiting approval of Entereg- their lead compound.
The cost of developing a new compound (Delta) is significant.
Risk
Expertise
Focus
2
![Page 3: Pharm Collaborations Cbi Pres](https://reader037.vdocuments.us/reader037/viewer/2022110309/5584d363d8b42ae0138b523b/html5/thumbnails/3.jpg)
Biotech Perspective Timeline and Activities in Establishing a Partnership
3
Engage Parties
Initial Preparation
Due Diligence
Negotiation Execution
• Internal Buy In
• Develop Prospectus
• Identify Potential Partners
• Establish CDA with Interested Parties
• Confidential Presentation (and Sell)
• Initial Discussion on Terms
• Additional Asset Data Exchange
• Draft Term Sheet Exchange
• Establish Timeline for Completion
• Establish Document Room and Media/Forum for Review
• Initiate the Drafting of Definitive Agreement
• Partner Pitch on Collaboration • Draft Agmnt. Exchange
• Multiple F2F Negotiations
•GetAccountant to Review
• Know when to Say “Enough”
• BOD Presentation on Deal Terms and Conditions
• Partner Governance Approval on Deal
• Establish Committee Members
• Plan Your First Post Deal Close Meeting
Timeframe can run from 3 months to + 12 months
![Page 4: Pharm Collaborations Cbi Pres](https://reader037.vdocuments.us/reader037/viewer/2022110309/5584d363d8b42ae0138b523b/html5/thumbnails/4.jpg)
n Date: December 2007
n Focus: Delta opioid agonists for pain
n Milestones: $232.5MM
n Back End
United States
Profits/Losses shared 60% to Pfizer and 40% to Adolor
- US development expenses (external) to be shared in same proportion
Rest of World
Adolor to receive royalties on Pfizer net sales
n Provisions for adding compounds and indications
n Development Collaboration
Adolor: IND filings and clinical program through Phase 2a
Pfizer: Subsequent worldwide development and regulatory approvals
4
Adolor/Pfizer Collaboration
![Page 5: Pharm Collaborations Cbi Pres](https://reader037.vdocuments.us/reader037/viewer/2022110309/5584d363d8b42ae0138b523b/html5/thumbnails/5.jpg)
Recent Benchmark Example Pain Compounds in Phase IIa
5
Adolor/Pfizer Targacept/GSK Glenmark/Lilly
Transaction Date December 4, 2007 July 27, 2007 October 30, 2007
Pain Target Delta Opoid Receptor Neuronal Nicotinic
Receptor
Transient Receptor Potential
Vanilloid Sub-family 1 (TRPV1)
Lead Compound ADL5859 TC-2696 GRC 6211
Upfront Payment $30 Million +
$1.9 Million reimbursement for Phase 2a
studies
$20 Million
Plus $15 Million
in Equity
$45 Million
Milestones
-Development
-Regulatory
-Commercial
Total
Not Disclosed
Not Disclosed
Not Disclosed____
$232.5 MM
Not Disclosed
Not Disclosed
Not Disclosed
$1.5 B
Not Disclosed
Not Disclosed
Not Disclosed
$215 MM
Back End US – 40/60 Profit Split
ROW Royalties
Undisclosed Double Digit Royalty ~15% Royalty in the Territory
Territory Worldwide Worldwide North America, Europe, and Japan
Cost Sharing 40/60 US
100% Pfizer in ROW
Targacept to fund through Phase 2
POC. Then 100% GSK if they opt
to take the compound
100% Lilly in Territory - no
mention of access to Lilly trial
data
Co-promote Option Yes – US Specialty Yes – US Specialty for first two
compounds
Yes – US
![Page 6: Pharm Collaborations Cbi Pres](https://reader037.vdocuments.us/reader037/viewer/2022110309/5584d363d8b42ae0138b523b/html5/thumbnails/6.jpg)
Adolor had the “option” to attend all JSC meetings!
Adolor is not obligated to attend- collaboration meetings.
Allows for recognition of the up front payment.
6
Deal Structure for Revenue Recognition
![Page 7: Pharm Collaborations Cbi Pres](https://reader037.vdocuments.us/reader037/viewer/2022110309/5584d363d8b42ae0138b523b/html5/thumbnails/7.jpg)
Accounting for Upfront Payments
Collaboration signed December 2007
Two compounds in the clinic as of the collaboration date.
Adolor is responsible for the development of each compound
through Phase II a and then Pfizer assumes all responsibilty.
Adolor’s project management projects that compound I & II will
be completed in February 2010 (26 months).
Amortize the upfront over 26 months.
Adjust if Phase II takes more/less time.
7
![Page 8: Pharm Collaborations Cbi Pres](https://reader037.vdocuments.us/reader037/viewer/2022110309/5584d363d8b42ae0138b523b/html5/thumbnails/8.jpg)
Strategies for Communicating & Reporting the Deal Externally
Involve investors relations from both parties up front.
Create timeline for preparation, review, sign off (both parties)
and distribution of press release and Form 8-K
Reach out to the analysts.
8
![Page 9: Pharm Collaborations Cbi Pres](https://reader037.vdocuments.us/reader037/viewer/2022110309/5584d363d8b42ae0138b523b/html5/thumbnails/9.jpg)
Lessons Learned
Insert yourself early in the process.
Obtain term sheet and draft agreement.
Include the external auditors and audit committee upfront.
Involve investor relations up front.
9