Torys’ Tips™: Licensing for Life Science Companies
By Cheryl Reicin and Adam Falconi
As cross-border life science lawyers, we provide support and strategic direction for companies through all stages. This includes corporate structuring, licensing and strategic collaborations, private and public financings (angel, venture capital, public offering, etc.) M&A and joint ventures, and IP management. One common question that life science companies have is how to navigate licensing their technology in a way that brings the highest strategic and economic value.
Below are some of the key considerations to keep in mind.
An important first step is to clearly map out your goals and business plan so that your licensing strategy dovetails with your business objectives. Licensing can validate and advance your science, provide additional resources to further develop or commercialize your product, and provide extra revenue, amongst other advantages. However, a short-sighted approach to licensing can hinder these benefits.
Licensing is a flexible instrument that can be customized to suit your company’s needs, so clearly identifying your strategic goals and operational needs will help you determine the terms of any license.
It is important for both the licensor and licensee to carry out due diligence before entering the negotiation of a license transaction. The licensor will want to be confident that the license is likely able to perform its financial and operational obligations under the license. The licensee will want. assurances that the licensor has the legal right to license the technology and as to the status of any patents or encumbrances on the intellectual property.
Research other companies that have partnered with your potential licensee/licensor and what their experience was. Review your potential partner’s experience in developing and commercializing products in the relevant industry, and check to see if it has been involved in any disputes.
Discuss the clear goals of each party and define the basic terms upon which both parties agree. Some of the key terms of a license include the scope of the license (field of use, territory, breadth of the licensed intellectual property, exclusivity), diligence requirements of the licensee, control of IP (ownership, prosecution, enforcement), and the financial terms (upfront payments, milestones, royalties).
For more information on the work that Torys does to support life science companies, reach out to our team.