2007 BIO International Convention BOSTON– LAWFUEL – The Law Newswi…

2007 BIO International Convention
BOSTON– LAWFUEL – The Law Newswire –Foley Hoag LLP today announced at BIO 2007 preliminary results of its survey, Terms and Trends in Patent License Agreements with Universities and Other Research Institutions. As a service to the life sciences industry, Foley Hoag surveyed biotechnology companies, universities and other research institutions to identify trends and gauge the “market” for specific terms in license agreements.

“Many biotechnology companies, especially start-ups, enter into license negotiations with universities and other research institutions and do not know what to expect. There is very little public data regarding terms from comparable deals. As longtime counselors to the biotechnology community, we wanted to fill that information gap and balance the playing field,” said Jeffrey L. Quillen, a partner in the Life Sciences practice at Foley Hoag LLP. “Many research institutions are also supportive of this survey, as they welcome more rational negotiations of these increasingly important transactions.”

Survey respondents expect to enter into more patent license agreements than they did in 2005 and 2006, with approximately 60% of respondents looking forward to an active 2007. About 38% of respondents expect the levels to remain at a healthy, steady rate. Almost none of the respondents expected less licensing activity in 2007.

More than 61% of the license agreements related to products in the earliest stages of clinical development. Recognizing the high risk of failure of early-stage products, these license agreements typically provide for relatively low up-front payments (a median of $50,000) and much higher payments upon achievement of clinical milestones (a median of $500,000 for FDA approval). Once a product is approved, the license agreement usually requires the biotechnology company to pay the research institution a percentage of its revenues from sales of that product (a median royalty rate of 2.25%). In approximately 15% of the license agreements surveyed, biotechnology companies, especially start-ups, issued stock to the research institution, typically in the range of 1 – 10%.

Survey results varied significantly based on the type of product to be developed, the stage of development at the time the license was signed, and the scope of the license.

When asked the most difficult parts of agreements to negotiate, oft-cited responses included milestone fee amounts, royalty rates, and indemnification and termination provisions.

The full survey also includes useful, detailed information on annual license maintenance fees, exclusivity, rights of research institutions to purchase stock of biotechnology companies and rights of biotechnology companies to access future inventions made by research institutions.

The above information reflects survey responses received between mid-April 2007, and May 3, 2007. Foley Hoag will continue to collect survey responses through June 30, 2007. After that date, Foley Hoag will provide a written report of the survey results to all of the companies, universities and other institutions that participated in the survey.

To complete the survey, please visit www.foleyhoag.com. BIO participants may take the survey by visiting the Foley Hoag booth, #212. All responses will be kept anonymous and not attributed to the participants.

Foley Hoag’s Life Sciences Practice provides a full range of services including patent litigation, prosecution and strategy; corporate finance and securities; mergers, acquisitions and strategic alliances; FDA and reimbursement; government strategies; venture capital and emerging companies, and product liability and complex tort.

About Foley Hoag

Foley Hoag provides comprehensive legal services to clients throughout the United States and around the world. We serve a wide range of industries including biopharma, energy and utilities, financial services, manufacturing, and technology. With 250 lawyers located in Boston, Washington, DC, and the Emerging Enterprise Center in Waltham, MA, we provide creative solutions and results-oriented advice in the areas of bankruptcy, restructuring and workouts; corporate finance, mergers and acquisitions, and IPOs; labor and employment; litigation; environmental issues and land use; government strategies; intellectual property; tax, trusts and estates; and white collar and business crimes. For more information, visit www.foleyhoag.com.

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