VANCOUVER, British Columbia - The art of negotiation is an essential element to deal-making strategies, as are insights into recent trends and directions.

Both topics were among many discussed during the first day of the 2nd annual BioPartnering North America conference, an event held here in the northwest port city that serves as Canada's gateway to the Pacific. The more than 700 delegates in attendance on day one had an opportunity to take in tips on such strategies, and perhaps equally importantly, to simply bump into one another.

"This is a very efficient way to meet potential partners," said Robert Kilpatrick, a partner at Technology Vision Group LLC, which organized the conference. "We have representatives from 25 or more countries, as well as many American states and Canadian provinces. If you were to try to repeat a meeting opportunity that a conference like this provides by flying to those different destinations, it would be prohibitively expensive and no one has that kind of time."

The conference drew attendees from about 400 companies, including small and large biotech businesses, large pharmaceutical firms, investment banks and venture capital companies, university research labs and technology transfer companies.

Opening with a financial overview of the industry by James Watson, the director of strategic partnering services at Burrill & Co., looked at the past year but also provided a glimpse into expectations for partnering in the coming year.

Perhaps most notably, Watson said collaborative activities are moving toward earlier-stage product opportunities.

"Partnering has really become a critical and essential part of what we do, but it's getting more difficult," he said. "Deals are generally becoming more complex."

He said overall there is a shift upstream for licensing deals - there were more deals done for Phase I products in 2003 than Phase II.

Watson labeled that in part a consequence of the cost of later-stage deals, though he added that the average value of deals has grown to about $40 million. The volume of product collaborations has decreased as a whole, though. He said European deals increased in volume, but still are not worth the value of U.S. deals.

Watson forecast several partnering trends - a continued maturation of the European biotech business, increased collaborations with specialty pharmaceutical companies that will assume more risk than in the past by in-licensing earlier-stage products, a growing interest in large molecules by big pharmaceutical companies, and a continued move toward earlier-stage collaborations.

The latter point bodes well for small biotech companies, said the following session's moderator, Tracy Lefteroff.

"Clearly, strategic partnering and deals are in many instances the lifeblood of this industry, especially for young companies," said Lefteroff, the global managing partner for the life science industry at PricewaterhouseCoopers. "It can make the difference between success and failure in some instances."

Two panelists in the session spoke about partnering from the opposite perspective - that of the pharmaceutical industry. Mervyn Turner, the senior vice president of worldwide licensing and external research at Whitehouse Station, N.J.-based Merck & Co. Inc., and Margaret Flanagan, the global alliance director for enabling science, technology and information at London-based AstraZeneca plc, both noted that while their companies remain driven by internal research, they also take serious interest in gaining access to outside opportunities.

Another first-day session served as a workshop for developing collaborative relationships. Matthias Alder and Jane Adams, both of Cooley Godward LLP, a business that advises companies on partnering, addressed various principles integral to the process for companies to retain maximum value.

They stressed the importance of defining narrow rights in a collaboration, so as to allow for future partnerships in different territories or for different drug formulations and indications. They also stressed defining control for product development, options for co-funding development, target exclusivity and well-defined terms related to contract terminations.

Armed with that new knowledge, attendees moved on to the afternoon sessions.

The conference continues through today.

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