What Does Biotech License-out Mean?

License-out is an increasingly important transaction model in the internationalization process of innovative drug companies.

Simply put:

License-out is when a company authorizes another company to develop, register, or commercialize a drug, technology, or related rights within an agreed-upon region or scope.

I. What Does a License-out Transaction Include?

A transaction may typically involve:

• Regional rights;
• Global rights;
• Development rights;
• Commercialization rights;
• Co-development rights;
• Exclusive or non-exclusive licenses.

II. How is the Transaction Value Formed?

The value of an innovative drug asset is usually related to the following factors:

• Clinical stage;
• Clinical data;
• Unmet clinical needs;
• Market size;
• Competitive landscape;
• Intellectual property;
• Global development potential.

III. Why are Chinese Innovative Drug Companies Placing More Emphasis on BD?

For innovative drug companies, BD can bring:

• Upfront payments;
• Milestone payments;
• Commercialization royalties;
• International R&D resources;
• Overseas market channels.

Therefore, BD is becoming an important part of a company’s capital strategy.

T-Capital’s View

In the future, innovative drug companies will need to think not only about:

“How to develop a good drug?”

But also:

“How to make global industrial capital understand and realize the value of this drug?”