James A. McCarthy
CLP Head of Corporate Development, Asklepion Pharmaceuticals, LLC, Baltimore, Maryland

Ben Bonifant
Practice Area Leader Campbell Alliance, Raleigh, NC, USA

Licensing thrives within the life sciences industry. Each year, thousands of transactions transferring intellectual property rights are negotiated among hundreds of parties. These deals support a system in which organizations with vastly different resources, missions, skills, and ownership structures contribute to advance innovations from initial scientific insight to practical therapeutics for the treatment of human diseases. Through licensing deals, an academic institution founded on a research and educational mission can transfer the value of early understanding of a new therapeutic to a biotech company that is designed to take on high risk clinical development programs that require modest levels of investment. The same product may be transferred again once proof of concept has been established and further development depends on large-scale clinical trial processes, commercial skills, and access to higher levels of investment. At that point, a large pharmaceutical company may be the appropriate organization to move the project forward (Diagram 1). Such transition reflects an industry very dependent on licensing as a core modus operandi. These deals create thresholds that reward one organization for overcoming one set of risks and facilitate a transfer of ownership to an organization that may be better positioned to take on the next set of challenges. The terms for these deals reflect expectations for the value of the technology, the scarcity of similar programs, the remaining uncertainty and risks associated with the program, and the level of differentiation of the skills and capabilities of the licensing organization. They reflect the critical resources and competencies required to advance an opportunity through each level of development and to commercial execution.