Why Scientific Due Diligence Is Most Critical for Pharma and Biotech Licensing Deals

Licensing and partnering are critical growth strategies in the biopharma industry. The effectiveness of licensing and partnership relies heavily on rigorous due diligence. Of all types of due diligence, the most critical is scientific (including clinical) due diligence. This pivotal process entails a comprehensive assessment of the data, methodologies, regulatory compliance, and overall feasibility of a drug or therapy. For prospective pharmaceutical licensees, dedicating sufficient attention to due diligence is paramount. It ensures the soundness of investments, mitigates risks and positions them for commercial success in the market. In this article, we delve into the pivotal role of scientific and clinical due diligence in the realm of pharmaceutical licensing and partnering.

Illustration of Scientific Due Diligence Services provided by BiopharmaVantage

Robustness of Data

Within the context of pharmaceutical licensing, ensuring the accuracy of data is of utmost significance. Prospective licensees must validate that all scientific and clinical data provided by the licensor are precise, comprehensive, and dependable. This involves critically analyzing data, study reports, and supplementary documentation to confirm that the data substantiates the claims of efficacy and safety. Rigorous data appraisal prevents the perils of basing licensing efforts on erroneous, incomplete, or misleading data. However, to perform this task, it is vital to have an understanding of various statistical methods used in pharmaceutical R&D.

Validation of Trial Design

The validation of research methodologies utilized in clinical trials is essential for assessing the credibility of the outcomes. Due diligence involves examining methodologies to ensure their scientific robustness, proper execution, and reproducibility. This encompasses evaluating study design, patient selection criteria, statistical analyses, and endpoint measurements. Confirming the validity of research methods assures the licensee of the results’ reliability and resilience under regulatory scrutiny, thereby increasing confidence in the drug’s potential for market success.

Regulatory Compliance

Adhering to regulatory standards is crucial for a biopharma asset to reach the market. Ensuring that all developmental work aligns with FDA and/or EMA guidelines and agreements is essential. Due diligence validates that the drug or therapy complies with all relevant regulatory prerequisites and standards, including Good Clinical Practice (GCP) guidelines and FDA or EMA regulations. This process involves reviewing regulatory submissions, approvals, and communications with regulatory authorities. Confirming regulatory compliance not only streamlines approval processes but also reduces the likelihood of regulatory bottlenecks and delays in product commercialization.

Identifying Potential Risks

The identification of potential risks associated with a drug or therapy is crucial for making well-informed licensing decisions. Historically, several pharma assets have reached the market, but their side effects have hindered commercial success. Scientific and clinical due diligence plays a vital role in uncovering an array of risks, including adverse effects, patient outcomes, and gaps in clinical trial data. By proactively identifying these risks, licensees can incorporate additional investment requirements, adjust the probability of success and ensuing valuation and conduct sensitivity analysis around key drivers. Moreover, they can negotiate terms that include risk mitigation strategies such as milestone-based payments and contingent value-based structures.

Optimization of Clinical Trials

Enhancing or optimizing the study design based on due diligence findings can significantly elevate the drug’s prospects for approval and commercial viability. By benchmarking or meticulously assessing the existing study design and aligning it with regulatory requirements, licensees can identify areas requiring modifications. These may include more rigorous patient stratification, precisely or acceptable defined endpoints, or comprehensive safety monitoring. Improved study designs can yield more compelling efficacy and safety data, ultimately enhancing the probability of regulatory and market success

Foundation for Commercial Success

A comprehensive understanding of an asset’s core elements—its scientific and clinical attributes—is crucial for achieving commercial success. Properly conducted scientific and clinical due diligence serves as the foundation for this success by ensuring the asset’s fundamental attractiveness and superiority. Without a robust scientific and clinical value proposition, even the most well-crafted marketing strategy may face challenges in achieving commercial success. Consider this: How many blockbusters exist despite having poor clinical attributes? From a licensing and investor perspective, we advocate for selecting the most clinically attractive asset rather than assigning a lemon to the commercial team and expecting them to turn it into a melon.

To summarize, scientific and clinical due diligence plays a pivotal role in pharmaceutical licensing and partnerships. It ensures data robustness, highlights potential risks, validates research and trial methodologies, audits regulatory compliance, optimizes study designs, and lays the groundwork for commercial success. By rigorously performing scientific and clinical due diligence, pharmaceutical companies can select fundamentally sound and attractive assets for licensing, thereby increasing the probability of commercial success.

While many consulting groups help with commercial aspects, not many are adept at analyzing scientific data. At BiopharmaVantage, we translate scientific and clinical data into business implications. We specialize in providing scientific due diligence, wider licensing and partnering, and related decision-making services to pharma and biotech companies. If you would like to explore how we can assist you, please contact us.