Intellectual Property:With these people as friends...

In this issue

Keeping friends with friends, on how "alliance management" is helping new partners to live with each other | Rewrite IP law, says charter, on calls for a new approach to intellectual property rights | Ethics, on ensuring that commercial interests don't affect academic values

Keeping friends with friends

In pharmaceuticals and biotech licensing is moving on from arms-length deals to partnerships that require companies to work together day-by-day. In response a new discipline - alliance management - is emerging to handle the interchange and ensure both parties get what they want from an agreement.

The ink is dry, and after months of negotiation and due diligence, the deal is done. Now begins the hard part of steering the alliance through the milestones set out in the contract, to deliver the headline value.

"It is absolutely impossible to write contracts that cover every single circumstance, and therefore you need mechanisms in place to deal with that," said John Wilkinson, Head of International Life Sciences Practice at the law firm Bird and Bird, introducing a workshop on licensing at the Cordia BioTechnology Convention 2005, held in London this month.

As Roger Lloyd Head of Global Licensing at AstraZeneca put it, "In the good old days deals were simple. You exchanged money for a licence and it was possible to maintain rigid oversight. Now projects are far more complicated and you could be working together for 20 years."

How the relationship develops, and the ultimate success depends, on the mechanisms put in place to manage the collaboration. These not only have to stand the test of time, but changes in the strategic direction or ownership of either party, new personnel and failed trials.

"Alliance management is the oil," said Lloyd. "It works from the very beginning to make it clear to people at an operational level, what their responsibilities are."

The function of alliance management is two-fold, believes Tobias Kiechle, Head of Global Alliance Management at Roche. "Early in business development it handles due diligence, taking a deal to closure, and then integrating [the technology]. From then on the alliance manager is dedicated to the alliance to ensure relationships are smooth, parties comply and issues are identified before they blow up."

While pharma has the manpower, it is often difficult for small biotech companies to accept they need specialised alliance managers. "I was sceptical about having a dedicated person, but they are worth their weight in gold," said Nick Adams of the oncology specialist Antisoma. "You need someone who is not part of any team, and has a helicopter view of what is going on."

Within Roche there is a centralised alliance management function. While individuals are dedicated to particular partnerships, typically they handle from three to five different contracts. AstraZeneca has a centralised function for small discovery alliances, but for larger partnerships it operates a decentralised model, with alliance managers embedded within the project team.

One of AstraZeneca’s larger alliances is with Cambridge Antibody Technology (CAT), a company that has learned the need for alliance management the hard way. It was forced to take Abbott Laboratories to court when the pharma company reduced the royalty rate CAT receives for discovering the antibody on which Abbott’s $1 billion-selling rheumatoid arthritis drug, Humira, is based. On Oct. 26, the two companies settled their patent dispute, with Abbott agreeing to pay more than $300 million to CAT, the British Medical Research Council, and others.

This spat highlights two sources of tension that alliance management aims to defuse. Not only was the deal was agreed as long ago as 1995, it was not between CAT and Abbott, but CAT and the German pharmaceutical company Knoll, which was subsequently acquired by Abbott.

Despite the bad experience, "Alliances have been and will remain central," said Richard Mason, Head of Licensing at CAT (though not at the time the Knoll deal was struck). The company has moved on from fee-for-service contracts. "Now we don’t only contribute technology, but also capital," said Mason. "And because our own capital is at risk we need to manage the alliance closely."

The other element that the CAT/Abbott row illustrates is the inevitable imbalance of power between biotechs, most of which are yet to turn a profit, and pharmaceutical companies that are about to spend millions on clinical development.

"We feel we have equality of contribution, but at some point the bucks will be very large, and will be spent by pharma. You’ve got to be realistic - they know how to do it," Mason said, adding, "An imbalance of power is definitely inevitable, but it is manageable."

Similarly, Antisoma has a large-scale and intimate partnership with Roche. Adams of Antisoma believes the bear hug can be resisted if the deal is structured correctly. "With Roche we have clear delineation. We do development up to Phase II; Roche does Phase III, so it is not an issue. We have a joint committee overseeing development of all programmes."

But he added, "You will never, ever capture all eventualities, and there will always be differences. You’ve got to deal with them."

And, cautioned Alan Warrander of consultants Wood Mackenzie, alliance management is not a sticking plaster. "Like any relationship [a successful partnership] depends on people interacting. At the end of the day, no matter how good the molecule is, it will fail if the relationships are no good."

Rewrite IP law, says charter

The over-zealous application of intellectual property rights is impeding research and innovation, throttling ethical decision making, widening the gap between rich and poor, and contributing to global insecurity, according to John Sulston, head of the UK’s contribution to the sequencing of the human genome.

The Nobel laureate was speaking at the launch of a charter that sets out principles on which new copyright and patent laws should be based. The Adelphi Charter was drawn up by an international commission of scientists, artists and legal experts, under the auspices of the Royal Society for the Encouragement of Arts, Manufactures and Commerce, a body that as early as the 1840s was criticising patent laws for being too restrictive and hampering the flow of knowledge.

The current system of patents and copyright is out of touch with modern ways of thinking and working, and does not take account of public needs for access to knowledge, says the charter. It sets out public interest criteria for creativity, innovation and intellectual property, and calls upon governments to use public interest tests when changing copyright and patent laws.

One of the signatories is Gilberto Gil, culture minister of Brazil, a country that has taken a stand against intellectual property rights, threatening to make generic copies of AIDS drugs unless the price of their patented counterparts is reduced, and migrating government computer systems from Microsoft Windows and to open source software.

If right-holders’ interests are in conflict with the public interest - as with the price of AIDS drugs - public interest should take precedence, says the charter. Other examples include granting free access to scientific papers reporting results from publicly funded research, and banning the patenting of traditional remedies and crop plant varieties.

Sulston played a large part in marshalling the public contribution to the human genome project, narrowly avoiding the sequence information becoming the near monopoly of Celera Genomics. "Some regard this episode as an extreme example, but actually it is far from unique," said Sulston.

"The attempt to privatise the human genome is paralleled by many similar activities. It is just one example of a culture of excessive patenting and privatisation, even in the case of fundamental activities that clearly belong to nobody."

Ethics

Partnering with industry, licensing intellectual property and spinning out start-ups are increasingly taken as measures of the standing and quality of universities. But there is a risk that commercial considerations may pollute academic values and ultimately damage reputations.

A guide to setting an ethical framework to navigate these issues has been published in the UK, based on contributions from 100 institutions. ‘Ethics Matters’ discusses the issues that are raised when universities get involved in the commercialisation of research, such as protecting academic freedom and dealing with conflicts of interest. The guide is published by the Council for Industry and Higher Education.