Biotech is about making deals between the small biotech company and a larger pharma or biotech company. The structure of such a deal serves 3 basic purposes. It should

• Reflect the relative contributions of each party (content)
• Address the goals and interests of each party, and
• Balance the risk and reward between the parties.

Thus, deal structuring is about getting elements and clauses in place that regulate decision making, access to data, markets and improvements, etc. And it is about getting the payments and split of income right. Fortunately, deal structuring is not a zero-sum game. The negotiating parties often have different interests and strategic goals and deal terms should take advantage of these differences and maximize both the financial and the strategic elements of the deal.

In preparation for a deal negotiation, it may be helpful to consider the following steps:

• How can the deal be structured so as to maximize the value not only to you but also the value to your partner?
• Clarify your deal goals, desired risk/reward balance and where to give in
• Determine the realistic value of the asset the deal is about
• Estimate a realistic share of the asset value that you can obtain
• Decompose this share in realistic upfront, milestone and royalty payments
• Define your negotiation strategy and fall-back positions

From the negotiation of multiple executed deals, we have gained quite some experience in what is achievable in biotech deal making. In combination with good preparation, we are therefore able to help our clients prepare for and conduct deal negotiations from A-Z. It may be as a back office or sparring support, or as lead negotiators. This includes preparation of term sheets and deal contracts.