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21 Feb 2024

A case based understanding in co-development deal

In a Co-Development Agreement the intellectual property is typically licensed by the licensor to the alliance partner, and as well, the two partners together jointly undertake the further development of the intellectual property. In this way the licensor seeks to continue to add value to the development of the intellectual property, beyond just granting a license. By continuing to add value in this way, the licensor is entitled to greater financial remuneration, than if the licensor had passively granted a license and not contributed further to the development of the intellectual property.

Key Points to note in co-development deal

  • In a Co-Development Agreement the alliance partners will often collaboratively undertake research.
  • The collaboration may occur in different cities, or indeed in different countries, this not being at all unusual in pharmaceutical strategic alliances. The collaboration may occur with the staff of the alliance partners in separate laboratories, or with the staff of the alliance partners working side by side in the same laboratories.
  • Developing new intellectual property that builds upon the licensed intellectual property is the aim of the collaboration.
  • The parties will have to address how that new intellectual property will be owned. They may agree that they will jointly own all the new intellectual property. Or, they may agree that each will own the intellectual property that each separately develops, and any joint ownership is restricted to any intellectual property that may be jointly owned.

Case Study : Tarveda – SciClone Co-development deal

Co-development deal is quite a common in pharmaceutical and biopharmaceutical industry. Here we will analyse a co-development deal for understanding the concept better.

Tarveda Therapeutics, Inc. is a clinical stage biopharmaceutical company. Tarveda is developing a new class of potent and selective precision oncology medicines, which it refers to as Pentarin® miniature drug conjugates, for the treatment of patients with various solid tumor malignancies.

SciClone Pharmaceuticals International Ltd. has entered into a licensing agreement for PEN-866, the initial clinical program from Tarveda’s HSP90 binding miniature drug conjugate platform, which is designed to bind to the activated form of Heat Shock Protein 90 (HSP90) to accumulate and release its potent topoisomerase 1 inhibitor (SN-38) payload in solid tumors.

SciClone being a leading specialty pharmaceutical company with valuable experience developing and commercializing oncology and infectious disease products will be a valuable partner in advancing PEN-866.

Financials of the deal

  • Under the terms of the agreement, SciClone will obtain exclusive licensing rights to co-develop and commercialize PEN-866 in the Greater China territory, including mainland China, Hong Kong, Macau and Taiwan.
  • SciClone will be responsible for development, product registration and commercialization in these territories.
  • As per the agreement, SciClone will pay Tarveda an upfront payment of U.S. $4 million with the right to make a future equity investment in Tarveda of up to U.S. $5 million.
  • Tarveda will be eligible to receive up to $75 million in aggregate development, approval and commercial sales milestone payments.
  • Tarveda is also eligible to receive royalties based on sales in the Greater China territory. Shanghai Yafo Capital Asset Management Co., Ltd acted as banking and financial advisor on this transaction for Tarveda.

PEN-866 is a miniature drug conjugate that preferentially binds to the activated form of HSP90 in solid tumors and is linked to the topoisomerase 1 inhibitor (SN-38), a potent anti-cancer payload. PEN-866 is designed to accumulate and be retained in tumors. As the SN-38 payload is cleaved in the tumor over time, the sustained release of SN-38 in the tumor results in prolonged DNA damage and tumor regressions as demonstrated in multiple patient-derived and other xenograft tumor models. PEN-866 has recently completed the Phase 1, all-comers, dose escalation and safety portion of its Phase 1/2a clinical trial. PEN-866 is the first miniature drug conjugate from Tarveda’s HSP90 binding drug conjugate platform.

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