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Up Front Or Back End? Considering The Best Structure For Milestone Fees

 
• By Joseph Haas

PwC partner Dmitri Drone explained that a deal for an asset with high commercial expectations is best structured with more emphasis on pre-approval than post-approval payments. A post-approval focus on shared risk is more appropriate when an asset is licensed at an earlier stage of development.

Businessman comparing two documents, neutral background

If a biopharmaceutical company negotiates a license for an asset with significant commercial expectations for the drug candidate, it makes financial sense to structure a deal with higher upfront and pre-approval payments than fees that will be paid after commercialization, according to PwC Partner Dimitri Drone.

"Where you think the likelihood of getting to market is very high, [the licensee should] push the payments earlier, i.e., in the pre-approval phase, because they'll be cheaper for you...

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