National Editor

SAN FRANCISCO - Toting cloth conference bags dyed the bright orange of hunters' vests, hundreds of attendees circulated in the hallways of the Westin St. Francis Hotel as the year's bellwether biotechnology meeting began.

The JPMorgan Healthcare Conference (still known as "H&Q" by many because of the event's past Hambrecht & Quist affiliation) has long been recognized as a prime stalking ground for money and deals. So it is, but as morning mist cleared away over Fog City, the picture inside the Westin was hardly one of a vast plain freely traversed by sharp-eyed marksmen. Instead, grumbling men and women found themselves inching forward in the crowded corridors and jammed heel-to-toe in rooms.

Nobody yelled, "Fire!" Not Monday, anyway, and hopes were high that the conference - customarily held at the Westin, even though the hotel has been outgrown - again would come off without a hitch. About 5,500 people were registered, with some walk-ins expected.

The meeting consists mostly of rote, individual company presentations. Most of the important action takes place behind closed doors, at private breakout sessions and during arranged one-on-one talks. Hands are shaken. Backs are slapped. Business cards exchanged.

Opening day included a single, late-morning panel discussion titled "Drug Deals: Pharmaceutical/Biotech Licensing Trends," and even that began to devolve into a string of company road show type offerings.

About halfway through, Leonard Schleifer, president and CEO of Tarrytown, N.Y.-based Regeneron Pharmaceuticals Inc., provided welcome relief. Regeneron signed a potential $485 million deal last fall with Aventis SA, of Lyon, France, focused on Regeneron's vascular endothelial growth factor antagonist technology known as VEGF Trap. (See BioWorld Today, Sept. 9, 2003.)

Schleifer said he was under the impression that "this session wasn't supposed to be a commercial for the company we work for." He promised an advertisement of that sort the next day at Regeneron's formal presentation.

In the meantime, he laid out his view of life "in the trenches" for a biotechnology firm, noting his 15 years of experience doing deals with international businesses. Schleifer ran down his top-10 list of "fibs" uttered by prospective partners.

"These are the guys from Glaxo[SmithKline], Pfizer and Merck," he said. "They don't really mean to tell you fibs, but they can't help it."

Among the fibs is the claim that partners would never participate in bidding wars, that they have "all the authority they need to do a deal on agreed-upon terms," and that they agree each side should have "equal say" in the deal.

"Our culture is open and flexible just like yours" is another falsehood, Schleifer said, adding: "My chairman is Roy Vagelos, former chairman of Merck, and he guarantees me that the culture of Merck is not exactly the culture of Regeneron. Big companies are different."

Vagelos, Regeneron's chairman since 1995, formerly was chairman and CEO of Whitehouse Station, N.J.-based Merck & Co. Inc.

Yet another fib by prospective partners is, "We're in it for the long haul," which is sometimes worded as, "We would never use the threat of termination to improve our deal."

The truth, Schleifer said, is that "guys pay up and when they don't like what they get, they put the thumb down on you. You just have to be tough and do what it takes. You made a deal. We should all live with it."

Other common lies, Schleicher said, come in the form of claims that the company either "can close a deal in 30 days" or "can't possibly close a deal in 30 days." Schleifer's view: "They can pretty much do what they want to do, when they want to do it."

Higher on his list are fibs regarding the "last, best and final offer," and how the big would-be partner's "primary motive is to help suffering patients." No.1 on his fib roster: "We will treat your molecule like it was discovered by our own scientists."

Occasionally, biotechnology firms also mislead, Schleifer allowed, although "none of these fibs has been uttered by Regeneron." He said one favorite claim by the biotechs is, "This is our crown jewel." Said Schleifer: "It's usually our only jewel," which drew a roaring laugh from the crowd.

More seriously, he outlined what biotech firms would be wise to seek when shopping for a partner.

"We look for the deal to be strategically central to your partner's business," he said.

"It's nice to hear Glaxo say they'll do a deal for anything, but that's a hard deal to do," since the partner is much more likely to keep at the collaboration if an interest in the disease area or drug class has been established before papers are signed, Schleifer said. (Earlier in the panel talk, London-based GlaxoSmithKline plc's Moncef Slaoui, senior vice president of worldwide business development, had spoken.)

Schleifer said visibility of top management early in the negotiations is important, too.

"Business development people are professional, nice people; they're all very nice," he said. "But top management - many of them are not so nice - is what you really need to see if you're going to get the deal done."

The first-year plan should be clearly outlined at the beginning, Schleifer advised.

"They promise you the world, the sky is the limit, but you should really have an idea what that's all about," he said - and the largest dollar amount offered is not always the best deal.

"I'm dead serious about this," Schleifer said, noting that the VEGF Trap technology bought by Aventis was at the center of a bidding war.

"All these companies that say they wouldn't be in a bidding war, they were in one," he said. "And [Aventis] was not the highest dollar bid."

The conference continues through Thursday.