Author: Sam Honey
Key Contact: Declan Goodwin and Andrew McGlashan
Following our recent article on the protection of intellectual property (IP) for biotechnology start-ups, we explore how to commercialise your IP after its protection.
Commercialising Biotech IP: From Protection to Market Impact
In biotechnology, ideas alone do not create value. It is the ability to protect, exploit, and commercialise intellectual property that determines whether innovation translates into real-world impact. Securing patents, trade secrets, and regulatory exclusivity is only the first step. IP must then be actively exploited through licensing, partnerships, or investment to realise its value. For investors, the breadth and enforceability of a biotech company’s IP portfolio is often the decisive factor of valuation. For start-ups, effective commercialisation can mean the difference between a promising lab project and a market-changing enterprise.
Exploiting IP: Licensing, Partnerships, and Beyond
Commercialisation takes many forms, depending on the size and goals of your company.
- Licensing: The biotech world thrives on licensing. Whether out-licensing to a large pharma company or in-licensing complementary technology, clarity is key. Agreements should carefully define scope, territory, exclusivity and financial terms. Do not underestimate due diligence: choosing the wrong partner can sink a promising asset.
- Cross-licensing: Biotech products often rely on complementary technologies. Cross-licensing ensures that developers can use all necessary tools, while royalty stacking prevent margins from being eroded by overlapping licences. Sanofi and Regeneron’s collaboration on the cholesterol lowering PCSK9 inhibitor Praluent illustrates this: shared IP, co-development and joint commercialisation made the drug possible.
- Strategic partnerships: Strong IP positions attract partnerships that share risk and accelerate development. A prominent example is AstraZeneca’s collaboration with Daiichi Sankyo to develop and commercialise the breast cancer antibody–drug conjugate Enhertu, combining complementary IP and know-how.
- Spin-outs and joint ventures: Universities and research institutes often commercialise discoveries through spin-out companies. A leading example of this is Oxford Nanopore Technologies, which spun out from the University of Oxford and has grown into a FTSE 250 listed company. For start-ups, co-founding joint ventures with established pharma or medtech players can reduce risk while ensuring IP is monetised at multiple stages.
- IP-backed financing: Increasingly, IP portfolios themselves can serve as collateral. Specialist funds and lenders, such as Royalty Pharma, now offer IP-backed loans, enabling companies to raise capital directly against their intangible assets. This is especially powerful for biotech companies that are pre-revenue but IP-rich.
Finally, no commercialisation strategy is complete without being prepared to defend IP.High-profile disputes such as those concerning CRISPR gene-editing (UC Berkeley v Broad Institute) illustrate the importance of litigation readiness.
Key Considerations in Licensing
Licensing underpins almost every route to commercialisation. Its value depends on the strength of the underlying agreement. Key aspects include:
- Scope of rights: Be clear on the permitted uses, sublicensing rights, obligations around improvements, and timelines for commercialisation.
- Duration and termination: Typically tied to the life of the patent. Agreements should spell out renewal terms and the conditions under which the licence can be terminated (e.g. non-payment, breach, or failure to meet milestones).
- Financial terms: Structure a balanced package of upfront fees, milestone payments, running royalties, and minimum royalties to fairly share risks and rewards.
- Due diligence and performance: Licensees must confirm that the IP is valid and enforceable, while licensors may impose performance obligations (such as development milestones) to ensure the asset is actively exploited.
- Regulatory compliance: Allocate responsibility for filings and approvals with the relevant regulatory agencies to avoid costly delays or duplication.
- Confidentiality and data ownership: Protect sensitive information (clinical data, know-how, trade secrets) and clearly allocate ownership of new data or improvements.
- Governing law and dispute resolution: Decide in advance how disputes will be handled. Arbitration is often favoured for its confidentiality and enforceability across jurisdictions.
Best Practices for Successful Licensing
To maximise value and minimise risk, parties should:
- Conduct rigorous due diligence on IP strength, market potential, and regulatory risks.
- Define rights and obligations clearly to avoid ambiguity.
- Build flexibility to adapt to changing market or regulatory conditions.
- Put robust confidentiality agreements in place before sharing sensitive information.
- Seek specialist legal, scientific, and financial advice to balance technical and commercial interests.
Turning IP into Impact
In biotechnology, protecting IP is necessary, but commercialising it is decisive. Licensing, partnerships, and creative financing turn intangible assets into tangible value, enabling life-changing innovations to reach patients, farmers, and society at large.
For advice on exploiting and protecting your IP portfolio, please contact our Commercial and Technology team.
