David Scott
PharmaConsulting, Licensing & Business Development Consultant Loughborough, England

Increasingly, before taking on new inward licensing opportunities, pharmaceutical companies are seeking to identify and include back-up compounds, so as to reduce he risk if the lead compound fails in development.

As a result, many of the major companies, such as Astra-Zeneca, now explicitly include the availability of back-up compounds in their set of initial in-licensing evaluation criteria. Indeed, many press releases for reported deals, in particular license agreements between biotech or early stage companies with the major pharma companies such as GSK, Roche and Novartis, now frequently include references to backup compounds.

This article seeks to review the reasons why companies will wish to include back-up compounds in any license agreement and to set out licensing terms that can successfully incorporate one or more backup compounds in a way that meets both licensor and licensee needs.