LS&HC Horizons 2023 - Flipbook - Page 32
Hogan Lovells | 2023 Life Sciences and Health Care Horizons | Transactions
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Companion diagnostics in collaborations
Personalized medicine, particularly the use
of companion diagnostics (CDx), presents a
significant opportunity for biopharmaceutical
companies (Biopharma) and diagnostic
manufacturers (Dx) to generate value through
collaboration. While CDx collaborations can
bring tremendous benefits, negotiating the
terms of the collaboration often requires a
delicate dance to bridge competing interests.
These include:
Payment structure. Dx typically seeks
meaningful upfront payments and
minimal payment risk for its development
activities, while Biopharma may want to
incentivize successful completion of the
development program.
IP ownership. Biopharma often expects
to own intellectual property (IP) that it is
paying to develop, while Dx may insist on
owning biomarker-related IP and any assay
improvements that may result from the
collaboration.
IP risk. Neither party wants to bear the risk
of IP infringement arising from the conduct
of the diagnostic test.
Cullen G. Taylor
Partner, Northern Virginia
Development timeline. Biopharma almost
always pushes for a strong commitment for
the CDx to receive regulatory clearance at drug
launch, while Dx will seek to limit exposure
for delays, particularly those beyond its control.
Assurance of CDx supply. Biopharma may
want assurance that the CDx that it helped
pay to develop will continue to be available to
prescribers and patients following drug launch,
while Dx may be reluctant to make strong
commitments well into the future.
Remedies. Biopharma will often insist
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
Dx, which may require Dx to provide a license
to its core IP and to provide a technology
transfer and regulatory support to Biopharma
or its designee. Dx, however, may not want
to risk allowing its IP to fall into the hands
of a competitor.
These issues can make the negotiation of a
CDx collaboration a challenge, but given the
significant benefits, parties are often able
to bridge their differences to generate value
and bring personalized medicines to patients.
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Transactions team.
