The WAVE/Pfizer Collaboration
In 2015, WAVE Life Sciences was a small biotech company seeking its first big research and development collaboration deal. It had developed a novel technology platform for the discovery and development of new oligonucleotide therapeutics for a wide range of diseases, and was advancing lead candidates in several of its key therapeutic areas. WAVE had identified a promising collaboration opportunity: a multi-program, option-based drug discovery, development and commercialization deal with Pfizer. This deal would combine WAVE’s proprietary oligonucleotide platform with Pfizer’s liver targeting technology, and leverage Pfizer’s drug development and marketing expertise. Pfizer would provide R&D funding, and would have options to acquire exclusive worldwide license rights to therapeutics for several liver-related disorders.
It is the classic startup dilemma. Small biotechs want a strategic deal with Big Pharma for technology validation and development funding, but worry about limiting their growth potential by giving up rights to core programs or losing operational independence. Additionally, small biotechs are usually at a significant disadvantage in these negotiations: they have fewer resources, more significant time constraints, and often much less experience in negotiating large research collaborations, which address a wide range of complex topics, including intellectual property prosecution and enforcement, exclusivity and non-compete provisions, option rights, governance and decision-making matters, regulatory issues and market economics.
Aware that they needed experience and negotiation savvy to help structure and negotiate this transaction, WAVE enlisted the Faber team to assist. The senior team members at Faber have both big firm and in-house experience – giving them a wide range of expertise, experience structuring and negotiating major research collaborations, and the insights gained from living with, renegotiating, and in some cases terminating these agreements to regain rights to technology programs.
Faber Principal Rob Aboud was an ideal fit for this transaction, given his experience – he had been a biochemist at Merck, worked as a biotech patent attorney, served as lead in-house counsel to several GlaxoSmithKline R&D units, as well as Vice President for Business Strategy for the unit that pioneered its option-based drug discovery and development partnerships with biotech companies. Rob’s experience taught him which key issues to focus on and fight hard for, what issues crop up in renegotiations later in a deal’s lifecycle, and how to craft win-win solutions for both parties. Rob also had been involved in many deals around a variety of oligonucleotide platforms and products, and could immediately help WAVE tailor its approach to the unique aspects of this deal.
Negotiating the Transaction
In the WAVE-Pfizer deal, as in most biotech collaborations, there were a number of key issues to be addressed: scope of technology being licensed, intellectual property, non-compete provisions, diligence and termination consequences.
Scope of Technology & IP
One of WAVE’s concerns was to avoid granting exclusive rights to drug targets in WAVE’s core therapeutic areas of interest. That meant that carefully defining the process for selecting and replacing targets was critical to a successful deal. Rob’s experience crafting complex target selection and substitution mechanisms enabled WAVE to safeguard its interests while providing Pfizer with sufficient flexibility to follow the science to the most promising targets.
Rob also helped WAVE think through how the allocation of intellectual property rights arising under the programs could play out, given the potential overlap of rights covering the platform technology for oligos and rights covering the therapeutic products Pfizer would develop. Rob spent considerable time in the trenches with the lead scientists and patent counsel on both sides of the deal to determine the best way to protect WAVE’s intellectual property – and he counseled WAVE when to stand firm against Pfizer’s requests for overly broad rights, leveraging his deep understanding of Big Pharma R&D culture. As a result, WAVE retained control of intellectual property that would impact its core technology platform, and Pfizer gained the rights it needed to develop therapeutic oligos as products.
As in other areas of biotechnology, the nucleic acid therapeutics landscape is complex, with overlapping technologies and competing approaches. Big Pharma is rightly concerned that its small biotech partners do not find other partners to develop competing approaches using different aspects of their technology platform to develop competing products. Small biotechs, however, want the right to move into promising new areas and develop other collaboration partners. Reconciling WAVE’s interests with Pfizer’s desire to have the freedom to test and use the best approach across multiple intersecting technologies was another challenge. Rob’s prior in-house experience, like that of his senior Faber colleagues, enabled him to help craft a set of non-compete provisions with nuanced carve-outs that respected the interests of both companies.
Planning for Contingencies
A successful research and development collaboration anticipates future contingencies and is realistic from the perspectives of both parties. A small biotech is always concerned that the Big Pharma partner will fail to be appropriately diligent in complying with its obligations or will terminate the program in order to focus on another initiative.
Rob - like his fellow Faber Principals - has considerable in-house experience negotiating collaborations, living with those collaboration agreements, and renegotiating or terminating those agreements as determined by the scientific results or changing strategic priorities and market conditions. Rob’s experience helped WAVE negotiate an appropriate set of diligence obligations and reversionary rights if Pfizer were to lose interest in the program.
Rob’s patient, collegial style, together with his background in handling the deal’s most challenging aspects, enabled him to successfully represent WAVE opposite a team of Big Pharma lawyers. WAVE was able to achieve all its goals for this important strategic partnership.
WAVE had a successful IPO in November 2015, and the Pfizer agreement was completed the following May. The agreement called for Pfizer to provide $40 million in upfront cash payments, including $30 million in the form of an equity investment, and a potential of over $800 million in milestone payments, plus royalties, tiered up to low double digits, on sales of products resulting from the collaboration.
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