Deal terminations can throw even the most confident companies for a loop, dealing a blow to the perceived value of even still-promising assets. Finding a new partner saves the day, but it takes careful strategic planning, according to panelists at the recent Allicense 2014 meeting in San Francisco.

With more than 1,300 therapeutics deals announced in the last three years, according to Thomson Reuters Cortellis and Recap, some are bound to fall apart. The reasons behind break-ups can vary. Clinical partnerships are typically terminated by the partnering company as a result of non-compelling clinical data, lower than expected commercial opportunity, development delays or a reassessment of strategic fit, according to Locust Walk Partners LLC managing director and co-founder, Jay Mohr.

The story of Progenics Pharmaceuticals Inc.' Relistor (methylnaltrexone bromide) illustrates one possible path following strategic reassessment. Relistor was approved in 2008 for opioid-induced constipation in patients with advanced illness who are receiving palliative care. Progenics regained rights to the drug a year later, having sought them shortly after it heard about the merger between its then-partner Wyeth and Pfizer Inc., of New York. (See BioWorld Today, Oct. 15, 2009.)

"I had partnered it with Wyeth, but initial sales seemed weak," said Progenics CEO Mark Baker, during a panel discussion about strategies to repartner returned assets. "So I said to the Wyeth execs, 'Things aren't really going well. Why don't you give Relistor back to us?'"

Navigating Relistor's revival during that time threatened to become a career limiting move, Baker recalled.

To find a new partner, Progenics had to shift its focus from big pharma to the smaller companies. In February 2011, Baker struck a new licensing deal with Salix Pharmaceuticals Ltd. Though the milestones offered by Salix proved somewhat less that the original arrangement with Wyeth had offered, the $60 million Salix provided Progenics up front matched the original Wyeth deal, providing solid funding for Progenics to move ahead.

"Drugs are bought, not sold, so you talk to everybody," Baker noted. "My advice is hang tough on terms once you find that new home."

While Progenics got Relistor back during phase III, most terminations occur in phase II, Mohr said. If an asset is successfully repartnered then, the success often follows a significant inflection point, such as a positive phase III trial result or new drug application approval. Delaying partnership until additional data are available or approval is won can take a lot of patience, but it can also enhance potential deal value and recapture more of the value lost from the terminated deal, he said.

Alexza Pharmaceuticals Inc.'s experience with Adasuve (inhalation powder, loxapine) illustrates the potential for key events to revive a returned program. In February 2010, Alexza licensed Adasuve to Biovail Pharmaceuticals Inc. (later acquired by Valeant Pharmaceuticals International Inc.) for an up-front fee of $40 million and up to up to $90 million in potential milestones. Following receipt of its first FDA complete response letter for Adasuve, Valeant returned rights to the drug to Alexza, leaving it to deal with the "taint that came along with the regulatory rejection," said Alexza CEO and Allicense panelist Tom King.

Alexza thought it could address the issues on its own, but had low expectations of being able to find a new partner until achieving a significant milestone, which finally came with the drug's FDA approval in December 2012. Following that success, in May 2013 Alexza was able announce a new deal with Teva Pharmaceutical Industries Ltd., complete with yet another $40 million up-front payment and up to $195 million in milestones, plus tiered royalties. (See BioWorld Today, May 9, 2013.)

Striking such a new licensing deal on a once-partnered asset is "the epitome of non-dilutive financing," joked King.

In addition to sharing war stories, Mohr and the panelists also counseled the audience on the virtues of preparedness and honesty in getting through the sometimes rough journey between receipt of a returned asset and eventual recovery. Structured partnership agreements with careful termination provisions can help facilitate a smoother, faster repartnership process, Mohr explained.

"Never ever leave the termination provisions to the lawyer," added veteran dealmaker Richard Brudnick, vice president and co-head of business development at Biogen Idec Inc. "It's always better to negotiate those at the beginning when everyone is still expecting things to go well."

If things don't go well, and one does need to repartner a returned asset, "you really have to be objective about why it was returned," Brudnick added. "If the best answer you can come up with is that my former partner is stupid, you're probably not being completely honest with yourself."