When it comes to bringing an asset to market, emerging companies have far more options now than ever before. Today’s market is a more favorable environment than in the past, with more availability of financing and flexibility in deal structure (e.g., the potential to retain rights in markets of primary interest) (Fig. 1). Where once there were essentially two options for commercializing your asset—find an out-license partner, or go it alone—there is now a continuum of possibilities, each with its own unique set of pros and cons. In these new scenarios, the amount of financial commitment, risk and profit potential increases as you move toward starting up your own commercial organization (Fig. 2).
Furthermore, with great risk can come great reward. When we looked at the market cap of companies from USD 50 million to USD 3 billion and assigned a business model to them, based on data from BioCentury Online Intelligence, we were able to see that those that commercialized themselves had a higher valuation versus those who had done so through a partner (Fig. 3).
On the fundamental question of whether to partner or go it alone, there are many things that need to be considered. Here are a few:
1) Therapeutic area. In the disease area you are looking to commercialize in, how much investment is required? For example, if it’s a specialty indication with a more concentrated call point that doesn’t require as big an investment on the commercial side than some other disease area, it’s more feasible for a first-time company to enter into the market and expand.
2) Access to capital. Are you able to raise capital at a favorable enough rate that isn’t handicapping the rest of your pipeline, but allows you to build out your commercial capabilities and still progress the rest of your pipeline? You often cannot build an entire commercial-scale company on the back of one asset alone. You can certainly start and focus on the one asset, but eventually you will want to bring in additional assets that will bring down your commercial cost and leverage all of that commercial capability you have built.
3) Value of an established partner. Consider whether your asset is better off in the hands of a partner who already has an established presence in that disease area, which might be more economically favorable than commercializing yourself. Partnering with a large company may provide more value and benefits than going alone through their existing relationships with stakeholders (physicians, payers, patients, regulatory agencies, etc.). Even though you might give up a larger percentage, you are getting a smaller percentage of a bigger pie because that partner may be able to generate revenues faster to peak than you would as an individual company.
This is just a starting point—join Margarita Chavez, Managing Director, AbbVie Ventures; Jennifer Laird, Senior Director, Neuroscience, Eli Lilly; Brendan Luu, Head, Business Development, Technologies and Externalizations, Merck KGaA; Nerida Scott, VP, New Ventures & Transactions, Johnson & Johnson Innovation; and myself during our panel at BIO-Europe on Monday, November 6 at 17:15 as we discuss the many opportunities available to sellers and considerations for making the decision between partnering and going it alone.