Discovery stage partnering

Discovery stage partnering refers to a commercial deal or alliance signed when two...

Discovery stage partnering refers to a commercial deal or alliance signed when two or more parties collaborate in order to identify new and novel drug candidates.
Discovery stage partnering refers to a commercial deal or alliance signed when two or more parties collaborate in order to identify new and novel drug candidates

What is drug discovery?

In the fields of medicine, biotechnology and pharmacology, drug discovery is the process by which new candidate medications are discovered.

Historically, drugs were discovered through identifying the active ingredient from traditional remedies or by serendipitous discovery. Later chemical libraries of synthetic small molecules, natural products or extracts were screened in intact cells or whole organisms to identify substances that have a desirable therapeutic effect in a process known as classical pharmacology.

Since sequencing of the human genome which allowed rapid cloning and synthesis of large quantities of purified proteins, it has become common practice to use high throughput screening of large compounds libraries against isolated biological targets which are hypothesized to be disease modifying in a process known as reverse pharmacology.

Hits from these screens are then tested in cells and then in animals for efficacy. Even more recently, scientists have been able to understand the shape of biological molecules at the atomic level, and to use that knowledge to design (see drug design) drug candidates.

Modern drug discovery involves the identification of screening hits, medicinal chemistry and optimization of those hits to increase the affinity, selectivity (to reduce the potential of side effects), efficacy/potency, metabolic stability (to increase the half-life), and oral bioavailability.

Once a compound that fulfills all of these requirements has been identified, it will begin the process of drug development prior to clinical trials. One or more of these steps may, but not necessarily, involve computer-aided drug design.

Discovery stage partnering

Due to the very high costs of progressing compounds into the clinic, many smaller companies need to partner their compound or product in order to obtain the necessary funds and expertise to complete testing required prior to registration and marketing approval.

On the other hand, larger biopharma companies are increasingly looking to third parties to exploit novel discovery technologies in order to identify novel compounds for further evaluation.

For the licensor

There are numerous reasons for the licensor company entering into discovery, preclinical and clinical stage deals:

  • Licensor unable to afford costs of further development   Licensor lacks the expertise or capacity to efficiently progress next clinical studies
  • Licensor seeking third party expertise to position clinical studies for maximum market opportunity and/or maximum chances of success with viable endpoint
  • Need to secure additional revenue streams for existing or new activities, or to reward investors unwilling to wait for commercialization
  • Alternative revenue stream to equity, bank or flotation routes when these routes are difficult to access
  • Licensor wishing to explore new therapeutic opportunities
  • Hedge against risk of clinical failure whereby value of asset may reduce to zero rapidly
  • Positioning to maximize market opportunity assuming successful clinical development
  • Expand market opportunity into additional territories
  • Co-promote to maximize market penetration in shortest possible time
  • Allow third party to exploit additional therapeutic opportunities outside core interest
  • A previous merger/acquisition has forced asset disposal
  • Access to quids in terms of training, marketing experience, products
  • Endorsement of product or technology to satisfy investors

For the licensee

There are numerous reasons for the licensee company entering into discovery, preclinical and clinical stage deals:

  • Seeking new drug candidates to bolster existing development pipeline   Identifying complementary drug candidates to existing product portfolio
  • Leverage existing expertise to accelerate promising drug candidates to the market
  • Leverage existing territorial expertise to optimize a licensors product opportunity
  • Hedge against own pipeline failures
  • Protect market position against a potentially threatening new entrant
  • Prevent competitor from accessing a product competitive to licensees market position
  • Allow rapid entry into new therapeutic areas and territories
  • Allow access to technology outside core expertise
  • Provide next generation product to existing declining product range

Report: Discovery Stage Partnering Terms and Agreements


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