Best practices can be just as important in the final stretches of a partnership as they are when development and trials are proceeding apace or the revenue stream is peaking. How to gracefully negotiate that last stretch before the parting handshake was the focus of “The Graceful Exit: Preserving Value and Relationship at the End of the Lifecycle” presented at the 2015 ASAP BioPharma Conference on Sept. 10 by Diana L. Brassard, CA-AM, of external partnerships at Basalta US Inc., Mark Coflin, CSAP, senior director of alliance management global business development & licensing, bioscience, at Baxalta US Inc., and Julia Gershkovich, head of US R&D alliance management at Sanofi.
Good preparation for terminations preserves companies’ reputations and secures future opportunities. “Preparation is critical,” said Gershkovich. “If a partner decided to terminate, the project team may not be already there. When you get to the termination point, all internal stakeholders need to be aware and agree on this point. There needs to be respect toward the partner and transparency—a lot of times we are dealing with smaller companies, and it means a lot to them.”
“One termination that comes to mind was with a Japanese company that was well-prepared and respectful,” recalled Coflin. “We thought about how we were going to communicate with them and how to deliver the message, including whether we should be meeting with them face-to-face. It needs to be done in mutually respectful way, because there might be future business.”
The termination process often is very long and termination activity can take two years, observed Brassard. “There is a need internally to lock in and assure that you have resources, budgets assigned, and clarity with respect to senior leadership and with respect to obligations.”
Go through very defined, structured procedures, followed by putting together a table for when the transactions would go through—before the termination is completed, she added. “This is all very important for business development and legal procedures, and eventually for resource allocations to maintain the core team.”
When is it appropriate to wear more of a project management hat as an alliance manager during the termination process? “There were one or two projects where I played both roles,” said Brassard. “When things started getting more negative, and the data coming in was negative, there was a decision that the alliance manager was going to take more of a key role. The alliance management best practices were not complimentary to each other, so it was very helpful to have project management tools. A lot of what I was trying to do was maintain a respectful relationship.”
“I was fortunate in most of my cases,” added Gershkovich. “I had project managers working with me, and they were great. We had to deliver the messages, and in one case it was clear that it was mutually understandable because the data didn’t work out. But in another case, we had to go to district resolution to stop the program, and we were still able to continue the relationship and preserve the value.”
A smattering from their list of dos and don’ts:
- Let partners know as soon as possible.
- Map out a communication plan.
- Meet regularly.
- Get together with legal stakeholders, and go through the legal provisions of the contract.
- Be aware of cultural differences, sensitivities, and time zones.
- Negotiate in a way where value is preserved; present it in a way that they can take it right away.
- Intellectual property is important—be prepared that all checkpoints are done.
- Prior to a termination notice, communicate with your partner—the process is so much easier with good communication if the program doesn’t work out.
- Include public and investor announcements, but if a company may go bankrupt and/or the product may be taken out of the pipeline, minimize the announcement.
- Craft the termination carefully, and keep in mind there may be ongoing studies.
- Don’t assume your partner is going to be as organized and experienced as you are.
- Don’t assume they have plans for receiving the asset that you have made.