Stock Watch: Should A Biotech’s First Product Be Out-Licensed Or Self-Marketed?

A key decision for a biotechnology company is whether to out-license or self-market a product. Profit shares or the retention of some marketing rights offer a less binary path, but with potentially disparate outcomes from these decisions, even past experience makes determining the optimal strategy a conundrum.

In 2007, Microbia, Inc., a private biotechnology company with limited drug development and commercialization experience, licensed its lead drug to a partner with the financial resources and experience it lacked, to take its drug beyond Phase II. The 50:50 partnering transaction between Microbia – which later became Ironwood Pharmaceuticals, Inc. – and Forest Laboratories, Inc. – itself, later acquired by Allergan plc, which was subsequently acquired by AbbVie Inc. – involved a product that became Linzess (linaclotide)