Pre-commercial payments

Like other early stage R D alliances, a large fraction of total pre-commercial payments from pharma licensee to biotech licensor in CC alliances comes in the form of R D reimbursement. Such reimbursement is usually negotiated as a minimum annual payment per year (R D/yr), either on a fixed dollar basis or as a function of the number of biotech full-time equivalent scientists (FTEs) expected to conduct the alliance program. In addition, R D reimbursement is usually negotiated for an expected number of years (R D term), although often it is possible for the licensee to cancel R D reimbursement prior to the completion of the R D term. 

Biotech licensor Pharma licensee Firm payments Upfront fees Equity R D/yr R D term (years) Contingent equity 

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The first section will describe the basis upon which the 20 CC alliances were chosen for analysis and the general characteristics of these alliances as a group. The second section reviews the pre-commercial payments to the biotech (biotech is used hereafter to imply a biotechnology company) partner in each alliance, with emphasis on noncancelable payments (firm payments). The third section then subdivides these agreements on the basis of what CC services are made available to the biotech s commercialization partner. The fourth section compares several CC biotechs methods of allocating compound exclusivity among their respective alliance partners. 

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