JPM2023 Trendspotting: driving growth through collaboration

Hogan Lovells
Contact

Hogan Lovells

As the industry readies itself for the January 2023 pilgrimage to the J.P. Morgan Healthcare Conference (JPM) and Biotech Showcase in San Francisco, our market-leading life sciences and health care industry team has prepared a series of updates that we hope will help strategically guide your 2023 partnering and investment decisions.

Caution remains a strong theme in the current market downturn. But caution should not lead to paralysis. Life sciences companies must confidently seek out and approach the opportunities that do exist. Now more than ever, companies must think strategically and be more nimble about attracting investments and/or strategic partnerships, pathways to regulatory approval, and product commercialization. The field of personalized medicine, in particular, presents significant opportunities to generate value through collaboration. What are the possible pain points to keep in mind – on both sides of the deal?

The last ten years have seen a remarkable increase in the number of therapeutic products that have received regulatory approval with a companion diagnostic (CDx) test. This trend has been a boon to patients, allowing health care providers to prescribe a drug that is more likely to be effective, and less likely to cause safety issues, for the individual patient than a drug that is developed and approved for all patients. The trend also reflects the value that drug developers derive from a more targeted approval, in the form of lower clinical development costs and shorter timelines to approval. And of course, diagnostic manufacturers have seen revenue growth through their collaborations with drug makers.

While CDx collaborations between pharma companies and diagnostic manufacturers can bring tremendous benefits, they can also present a number of issues that result in significant push and pull between the parties. These include the following:

Payment structure. A diagnostic company typically seeks meaningful upfront payments and no payment risk for its work, while a pharma company may want to incentivize successful completion of the development program.

IP ownership. A pharma company often expects to own intellectual property (IP) that it is paying to develop, while a diagnostic company may insist on owning any biomarker-related IP and any improvements to its assay that may result from the collaboration.

IP risk. Neither party wants to bear the risk of infringement of third-party IP relating to biomarkers that would be infringed through the conduct of the diagnostic test.

Development diligence. A pharma company almost always pushes for a strong commitment for the CDx to be ready at drug launch, while a diagnostic company will seek to limit exposure for delays, particularly those beyond its control.

Commercialization diligence. A pharma company may want assurance that the CDx that it helped pay to develop will be commercially available on an ongoing basis, while a diagnostic company may be reluctant to make strong commitments well into the future.

Remedies. A pharma company often insists on the ability to commercialize the CDx, or have a short path to obtaining approval of a replacement, in the event of a failure by the diagnostic company, while a diagnostic company may not want to risk allowing its IP (particularly trade secrets or otherwise unpatented IP) to fall into the hands of a competitor.

These (and other) issues can make the negotiation of a CDx collaboration agreement a challenge, but given the significant scientific and economic benefits of these agreements, the parties are often able to bridge their differences to add value on both sides and bring life-changing personalized medicines to patients.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Hogan Lovells | Attorney Advertising

Written by:

Hogan Lovells
Contact
more
less

Hogan Lovells on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide