Suggestions for biopharma co’s on positioning BD efforts to investors: 1) Don’t suggest that you’ll partner out your lead program. Generally inv’s will appreciate licensing deals for the revenue they bring in to reduce dilution as well as for the validation they provide. 1/12

...However, once a program is in the hands of a partner, it’s rarely viewed as a reason to invest in and of itself. Licensing out Asian rights could be acceptable and reasonable; these deals are achieving higher upfronts than a few yrs ago. But there are some pharmas who...2/12

...will want worldwide rights in an acquisition. Partnering in Europe further reduces the universe of likely M&A buyers. Still, as long as US rights are retained – or in some cases, a US co-promote (opt in to co-promote is a bigger maybe) – inv’s may still see the asset as...3/12

...strategic (vs. just a way to drive cash to fund other programs). Program 2 may be where there’s the most value, & sometimes there are solid reasons to no longer push forward with dev't of the lead. But if your first program is highly valuable, try your best to retain...4/12

...it & focus partnering on say, early pipeline assets or those outside your core area of expertise. 2) Think carefully about the “depth of the pond” before doing multi-target deals. Early in the life of a co, multi-target deals with a pharma can look very attractive to...5/12

...platform co’s. The upfronts can be substantial, and sometimes the pharma kicks in equity capital at a much higher val than financial inv’s would pay (this can create its own problems later though). There’s significant validation to be had with these deals too. But it's...6/12

...important to carefully consider the “depth of the pond” –e.g., if drugging a particular enzyme class, how many exciting targets are there actually likely to be? How many do you have biological support AND starting chemical matter for? If you believe there will be dozens...7/12

...of great targets & turns out there are five, w/ a pharma having rights on three, the options for proprietary programs will be constrained. Of course, the agreements can be written in ways that protect the originator to some extent. But I think the best partnerships...8/12

...are those where the programs licensed out are beyond the expertise of the originator – e.g., CNS applications when the co is focused on liver applications. 3) For platform co that initially start out selling a service, don’t wait too long to hone in on where to develop...9/12

...proprietary programs. A small # of co’s (e.g., Adimab) have built wildly successful businesses on selling a service or innovation that enables some new aspect of drug dev't. But for the most part, biopharma inv’s are interested in co's that develop their own products. 10/12

..Of course, co’s can successfully do both. But shifting from selling your platform to developing your own programs may require different hires & a long soul-searching period. And sometimes after that soul-searching it becomes clear that the co has unfortunately partnered...11/12

...out the most exciting indications or even whole therapeutic areas. It's important for early-stage co's to take a strategic, relatively long-term view toward BD (esp. in today's robust financing env., when partnering dollars are less critical) to maximize long-term value. 12/12