By Randall Osborne

SEATTLE ¿ Arrogance, obvious bluffing, lack of reliability during first talks, and premature talk of money are the most likely deal destroyers when biotechnology companies with promising therapies sit across the table from big pharmaceutical firms, said Ronald Pepin, director of external science and technology for Bristol-Myers Squibb Co.

As part of a panel at the annual conference of the Biotechnology Industry Organization (BIO) here, called ¿Case Studies and War Stories with Pharma/Biotech Deal Makers,¿ Pepin outlined ¿knucklehead approaches¿ taken by companies hopeful about alliances with the giant, New York-based Bristol-Myers.

He showed slides of ¿The Three Stooges,¿ and many of his bluntly made points were met with uneasy laughter from the audience, which included many biotechnology firms.

Overstating the technology while underplaying the negotiations game is a common mistake, Pepin said.

¿Sometimes, the good old boy network¿ is too good,¿ Pepin said. ¿We had a person, who went on [from Bristol-Myers] to become the CEO of a company, who told us he had the best technology since sliced bread ¿ something I¿ve only heard once or twice.¿

A meeting with Bristol-Myers¿ principals was arranged, but ¿when I went down to the front desk to find him, he wasn¿t there,¿ Pepin said. ¿He left other members of his entourage, and they didn¿t know where he was. Thirty minutes later I found out he decided to go have a latte with one of his old buddies in the research division. Needless to say, when he got back into that room with the vice presidents, the decision was already made. Nothing quite happened there.¿

Sometimes, the bravado is not mixed with indifference, and this can be even worse, Pepin said. At a meeting in San Francisco, he was approached by a man who said ¿he didn¿t want to talk to me,¿ Pepin said. ¿I just walked away, and he chased after me, asking, Don¿t you want to know why I don¿t want to talk to you?¿¿

The man eventually remarked that he has a company with technology so powerful it would ¿knock [Bristol-Myers] out of the oncology business in five years,¿ Pepin said.

¿I pulled out my calendar and marked it down, because I wanted to see this happen.¿ But a year later, the same man was ¿on his knees, begging for an audience with Bristol-Myers Squibb.¿

The best policy, Pepin said, is to be honest, straightforward and realistic.

Companies ¿try to put the squeeze on you [by saying], We¿re talking to your competitors,¿¿ Pepin said. ¿Three years later, they haven¿t done a deal.¿

Also, they ¿try to put the gun to your head for double-digit royalties on early-stage discovery deals,¿ he said. ¿Quite honestly, I think maybe one time I had a double-digit royalty and an early-stage discovery deal. I think it was royalties on sales of about $5 billion. The company wanted it in there just so they could say they could get double-digit royalties.¿

A clear statement about financial expectations, and an understanding ¿ just as clear ¿ about the pharmaceutical firm¿s budget are essential, Pepin said.

¿I¿ve had biotech companies tell me that money is not important,¿ he said. ¿So, I take it off the table. What happens is that very quickly you find out it is important to them, and they were bluffing. Don¿t tell me things that aren¿t true. I try to listen to what your needs are in negotiations. If you don¿t tell me what they are, I¿ll never know.¿

A biotechnology firm should never say it wants to co-promote its product if it really can¿t, Pepin counseled.

Especially in early-stage deals, he said, companies may say, ¿Sure, we only have five people in the company, but we¿re planning on scaling up and we can help you with co-promoting.¿ That doesn¿t fly with us. Come back when you grow up.¿

The bottom line, Pepin said: Explain the science thoroughly and well, and ¿follow the guidance of your [prospective] pharma partner, that business-development person on the other side.¿

More than 5,000 registrants are expected to attend the BIO ¿99 conference, which continues through Thursday. n