Unlike software startups that can scale with minimal resources, biotech startups need frequently to rely on collaborations with big strategic players to get to scale. This is an interview with one of the top attorneys in arranging such deals, David Glazer of Morgan Lewis. I learned much from David; I hope you will too.
- Sal Daher Introduces David Glazer of Morgan Lewis, the Biotech Deal Wiz
- Why Collaborations with Strategic Partners Are So Necessary for Biotech Startups
- Sal Connected with David by Courtesy of Armon Sharei of SQZ Biotech; David Advised SQZ on the $1.3 Billion Roche Deal
- Collaborations May Last Ten or Twenty Year; Picking the Right Partner is Crucial
- A Strategic Partner Can Be Immensely Valuable with Dealing with the Complexities & Cost of Getting a Compound of Technology to Market
- Strategics Offer Clinical, Regulatory & Commercial Expertise Startups Lack
- “You got one partner signed up and then the dominoes start to fall, it provides a validation.”The Topics that Dominate the Discussions Between Biotech Startups and Strategic Partners
- The Tradeoffs Central to the Negotiations
- An Important Metric of Biotech Deals Is Elucidated
- Picking Mechanisms Determine Who Takes the Lead in Which Circumstance
- Reward Follows Risk in Biotech Deals
- “Careful what you ask for when you’re the biotech company…” – The Law of Unintended Consequences
- Collaborations Can Give Startups the Capacity to Develop Their Own Internal Projects
- Resources from Collaborations Can Help Startups Mature Their Tech
- “I would say I spend about 50% of my time with the pharmaceutical, the strategic players, and about 50% with biotechs.”
- Since They Represent both Biotechs & Strategics, Morgan Lewis Has a Good Sense of What Motivates the Players and What Deals Can Get Done
- How Deals Go Awry
- Sal Daher Puts in a Plug for His Syndicate List
- How David Glazer Became a Biotech Deal Maker
- “…then in 2000, the [tech] bubble popped and I ended up spending almost all of my time working for the pharmaceutical and biotech companies back in the day.”
- How the Acquisition of One of His Clients Expanded David Glazer’s Network
- Morgan Lewis Has Afforded David Glazer the Opportunity to Do Interesting Pro Bono Work
- David Glazer’s Closing Advice to Biotechnology Companies Thinking About Collaborations
- “…I’ve always found it helpful to have a champion at the pharmaceutical company who is very interested in your deal.”
Transcript of “Biotech Deal Wiz”
GUEST: DAVID GLAZER
Sal Daher Introduces David Glazer of Morgan Lewis, the Biotech Deal Wiz
Sal Daher: Welcome to Angel Invest Boston, conversations with Boston’s most interesting angels and founders. I’m Sal Daher, your host who is very interested in the process of how groundbreaking companies of tomorrow are being built today. Now, there is no area of entrepreneurship that is more consequential than in the life sciences and in particular in biotech, which is the area that I focus on. Today I have with me David Glazer of Morgan Lewis.
David Glazer: Hi Sal, thanks for having me.
Why Collaborations with Strategic Partners Are So Necessary for Biotech Startups
Sal Daher: Tremendous David. Now, the reason that I wanted to have David on is that David is an expert on the partnerships, the arrangements, the collaborations, the strategic deals that are done between biotech companies or startups of various kinds and large strategic players. And so, I thought I would have him on the program because this is basically part of the life cycle of life science companies. Life science companies rarely grow up to go and have an IPO like Vertex or companies like that. They don’t go public usually. Usually what happens with them is that they enter into a collaboration or various collaborations with a strategic player. Strategic player could be a pharmaceutical company. It could be a large biotech company. It could be a large medical equipment manufacturer. It could be a large diagnostics company. The reason for that is the peculiar competitive dynamic of the life sciences.
You see, in technology we talk about software usually, there’s no patent protection, someone can copy your patent. So if you develop some really cool piece of code, it’s pretty easy for somebody to re-engineer that and to steal your lunch. So there’s not a lot of incentive for software companies to collaborate with big players, plus the amount of capital that’s required to develop a software company is very little. You can do that on a shoe string and you have access to markets, you can build markets pretty quickly if you develop a really good product that has a good product market fit. But life science companies are very different in a sense that they require a lot of capital to develop and it’s not just monetary capital, it’s also human capital, experience and so forth, and that comes from partnerships. And this is what David does, and is extremely important aspect of building a life science company. So David, I’m sorry for going on so long, is there anything you want to add to that?
David Glazer: Maybe just clarify, I should say, I think you said that not every biotech company or pharmaceutical company ends up going public and while that’s true, that doesn’t mean they don’t have collaborations along the way.
Sal Daher: Absolutely true. Sometimes they have collaborations along the way of going public.
David Glazer: Yes.
Sal Daher: It’s basically a rite of passage for biotech companies to do strategic deals with larger companies because the larger companies have facilities, they have experience, they have so much knowledge and capital that a startup cannot access and so why reinvent the wheel when you can have much faster access to markets, much faster results by entering into a collaboration, which is made possible by the fact that the pharma company can’t just copy your technology because you have patent protection and that’s enforceable.
David Glazer: Yeah, and I think I was reading somewhere that recently the statistics are saying it takes eight to 12 years to get a product to market from.
Sal Daher: Oh, absolutely. Yeah.
David Glazer: And over a billion dollars to get the drug approved, when you factor in all the failures and the backups and the like that might not make it, the various clinical trials along the way, depending on the indication or the field, the type of product, a billion dollars goes up or down for rare disease indications, smaller populations, targeted cell therapies and the like. And out of all 10,000 or so compounds being worked on, maybe one gets the approval. It’s a big endeavor, it’s a large risk and it takes a lot of players to help get these lifesaving drugs to market.
Sal Connected with David by Courtesy of Armon Sharei of SQZ Biotech; David Advised SQZ on the $1.3 Billion Roche Deal
Sal Daher: There are no lone wolves in biotech in the life sciences. That’s an understatement, it’s an understatement, I means it’s all… it’s a massive amounts of teamwork, massive amounts of collaboration, huge amounts of capital, and one part of that equation is creating these deal structures that allow those collaborations to occur and this is what David does at Morgan Lewis. I mean the reason I connected with David is that I got in touch with SQZ Biotech with Armon Sharei. I asked him who’s the person who was advising you of these deals, because the SQZ has a strategic collaboration, which is publicly announced, if I’m not talking out of turn here. With Roche Pharmaceuticals, they have other strategic collaborations and it illustrates the importance of these things. Armon put me in touch with David. He says that David has been extremely helpful to us and so I thought that I would pick David’s brain about how these deals work. What are the incentives of the different parties, the parties at play and what drives each group? So have at it, David.
David Glazer: Sure. Well, first again, thanks, and I’d like to thank Armon for referring myself to you, working with SQZ and that team was a great pleasure and a joy to help them navigate that collaboration arrangement with Roche. They’re doing great work out there.
Sal Daher: Let me just mention, David mentioned Savran. I’m on the board of Savran, I was an early investor in SQZ Biotech and I put together the angel round then went to SQZ, right before they got there they did their Series A with Polaris and some other guys. I also helped put together the seed round for Savran and that’s what prompted me to talk to Armon about this. And then I got the idea, this is a very interesting topic, it’s not just Savran, it’s not just SQZ that’s interested in this, there’s lots of other companies are interested in this particular aspect. So I thought it would be really useful. So, please continue.
Collaborations May Last Ten or Twenty Year; Picking the Right Partner is Crucial
David Glazer: Yeah. So, when the biotechs and the early stage companies are considering strategies for growth, minimizing risk and the like, oftentimes they are out there looking for partners, how to get a molecule advanced, validation for their technology and one of the first questions they have to ask themselves is this the right time to partner our particular platform or technology or molecule? With whom are the right partners to do so? There are a number of strategic players out there that might make good partners. They have to fit from an indication, a field-based area of interest and just the people in general. I like to say the lawyers are there for the fight, not necessarily a fight, the working, getting the deal paper, but these collaborations go on for 10, 20, hopefully longer years and we as lawyers are done, at least the outside counsel are done with them, but it’s very important to pick your partners who you’re going to have good working relationships with.
A Strategic Partner Can Be Immensely Valuable with Dealing with the Complexities & Cost of Getting a Compound of Technology to Market
If there are collaborations, there’s lots of give and take. There’s lots of stress points along the way and you need to be able to work through these issues. So figuring out when you’re going to partner a particular program, with whom you’re going to partner a particular program are very important first steps even before getting the lawyers involved. The number of reasons for wanting to partner, again, as we discussed a little earlier, it’s very expensive to get a program compound to market, it’s a way of minimizing risk, spread the cost and expenses of the program around, while you as the biotech have an extremely proficient expertise in your area with your compound and developing it, researching it, getting it to a particular proof of concept, proof of principle stage.
Strategics Offer Clinical, Regulatory & Commercial Expertise Startups Lack
You might need both the purse strings and expertise of bigger biotechs, bigger pharma who’ve gone through this before who have clinical expertise, regulatory expertise, particularly commercial expertise, market access to get the products through the various stages of development and commercialization. Another reason for wanting to partner a drug or a platform in particular is validation. You got one partner signed up and then the dominoes start to fall, it provides a validation. It provides justification for what you’ve been doing and enables you to concentrate on the next stage, the next product, improving the platform that you’re working on.
“You got one partner signed up and then the dominoes start to fall, it provides a validation.”
Sal Daher: Yes. This is particularly, I’m someone who likes to invest in biotech platforms and I can see the value of that because in an ideal world, if we knew everything about the future, then you could go to investors and say well, we have this biotech technology that is going to be dominant in the market in five years. And they will advance you at a very, very, very flattering valuation, $500 million. You can take all that money and hire all the people, do all this stuff, but even if you could do that, even in that counterfactual situation, you could not gather the experience that these large players have. You couldn’t build the facilities, you couldn’t build the markets, people think that markets can be built overnight. No, it takes years and years and years to build a market and so the collaboration makes sense if you have a technology that can 10 X the profitability, or a hundred X the profitability of a product line of a strategic player, one of these big companies.
They will say, oh yeah, I’m interested in cutting you a check because, huh? You can really put me in a different level. You can 10 X a business that we have going already that exists already, so all these reasons for doing it. Please explore a little bit the dynamics, the things that people look for and the things that dominate the conversations. What are usually the conversations about, David?
David Glazer: Besides financials, which is a big one.
Sal Daher: What do you mean besides financials? I mean they’re looking at the financials of these bioethics. They don’t have financials [inaudible 00:10:46].
The Topics that Dominate the Discussions Between Biotech Startups and Strategic Partners
David Glazer: I’m sorry. When I said financial, I meant what are the payment terms? How are they structured? Are there upfronts, milestones along the way, royalties, is there a profit share?
Sal Daher: Okay.
David Glazer: Access to follow on products, follow on compounds, other technologies and the like are all value drivers.
Sal Daher: What are the tradeoffs there? Can you map for me some different deals that you’ve done and how they are different? Things that are public, I don’t want you to be disclosing any confidences. Contrast a couple of deals, say this biotech had this situation and they did this kind of deal. These guys had a different situation and did this kind of deal.
David Glazer: Sure. Let’s talk more in general terms rather than using specific, how many, I just don’t know what’s in their public filings off the top of my head.
Sal Daher: Oh, absolutely.
The Tradeoffs Central to the Negotiations
David Glazer: But for instance, the tradeoffs are perhaps the more money you can get up front, the less likely you are to either have control of the program as it goes along because the strategic players, the pharmaceutical companies may be saying look, we paid you upfront, we want just to take it over, advance it ourselves, you can go off and work on your other programs, we might still need you for various parts. I would say with structures where there’s more upfront, there’s less downstream payments made by the strategic players of the pharmaceutical companies, whereas if the biotech is taking on more risk early on, they are the ones responsible for developing it, providing certain proof of concepts, data points and the like, and getting it to a further stage of development along the way and de-risking the molecule or the technology for the strategic players, the greater percentage, the greater return that biotech company can get with the downstream-
Sal Daher: Okay.
David Glazer: …incentives.
An Important Metric of Biotech Deals Is Elucidated
Sal Daher: I remember in the case of SQZ, that their collaboration with Roche was initially a $500 million collaboration, and this is public information. And then eventually, I guess they hit enough milestones on their collaboration with Roche, that they struck a new deal, which was up to something like 1.3, $1.4 billion in collaboration. I don’t know exactly how they measure that amount, I suppose it probably means, is it anticipated revenues? Royalties?
David Glazer: When those numbers are disclosed in press releases it’s usually what are the potential milestones that could be achieved? I don’t do the public filings for any of the companies I work with, but I think it’s usually the calculation of if all the milestones are achieved, what is that total potential value?
Sal Daher: So, what are the payments that are going to be made to the biotech company from the strategic, if they do everything right?
David Glazer: In terms of milestones, I would say they’re not saying, well, if it’s a $10 billion a year drug and you’re getting an X percent royalty that we calculated over 20 years or however long it is, that’s not factored into those numbers.
Sal Daher: So those are just basically resources that the strategic will make available to the program if the program goes according to plan.
David Glazer: Yeah. Success-based milestones.
Sal Daher: Yeah, success-based. So if you hit all the milestones, everything goes as anticipated, they could draw up to 1.3 billion or 500 million or 250 million?
David Glazer: Right, whatever they’ve negotiated, yes. For examples are like approvals in the US and then there could be approvals in Europe or Japan, first commercial sales. There could be sales-based milestones, any number of different ways to structure those success-based payments.
I was going say another way, deals are structured to enable biotech companies to stay involved in the process, perhaps achieve a greater percentage of downstream future success. Payments are for them to participate in profit shares, for the biotech company to be responsible for a percentage of the development costs or the commercialization costs, be it through FTE, full time equivalent, internal costs and expenses of their people working on it, putting up their own money to pay for clinical development and the like.
Picking Mechanisms Determine Who Takes the Lead in Which Circumstance
And then you can structure either higher royalties down the lane because you’ve invested more, you’ve shared in the risk with the strategic and the pharmaceutical, or even profit shares where the biotech company if they eventually would get big enough would want to commercialize it themselves in certain markets, you see a lot of deals where the strategic partners are willing to give up especially in compound multi-product deals where there’s a picking mechanism per se. One company takes the first two strategic, gets the first two molecules and then if there’s enough success and more compounds or cell therapies, whatever come out of the clinics, the biotech company gets that one and that’s the one they become the lead commercialization party on.
Perhaps you’ve partnered with a pharmaceutical or a strategic partner that focuses more in Asia or Europe. They keep those markets where the biotech company would be the lead party in the United States for different promotion and commercialization, enabling the biotech company to book sales and show top line revenue as opposed to royalty income, which would be below the line. So, any number of ways to structure those deals. One trend we’ve been seeing in the last couple of years are number of option deals where the strategic partner puts up some money up front and tells the biotech company go get it to a certain point. Show us proof of principle by completing a Phase One trial, by completing a Phase Two trial.
Reward Follows Risk in Biotech Deals
And if those results are successful, then we’ll update, we’ll exercise our exclusive license and take over further development and the commercialization from there. But by doing so, because they’re the pharmaceutical company other than the upfront payments, or perhaps reimbursement of development expenses along the way, depending on tax structuring, they’ve put more of the risk on the biotech company and therefore the financials, when and if an option is exercised, they’re going to be greater than had you given an outright license from the beginning where the risk on those early stage clinical trials rest solely with a pharmaceutical company.
Sal Daher: Yes.
“Careful what you ask for when you’re the biotech company…” – The Law of Unintended Consequences
David Glazer: Careful what you ask for when you’re the biotech company or what you’re considering.
Sal Daher: Right.
David Glazer: One of my early deals I know, I was working for a biotech company, they were partnering with a big pharmaceutical company and the biotech company was doing one of those deals where they were going to share in the profits. There was a profit share for this particular molecule and they were putting up a certain percentage of development costs, whatever it was, two thirds, one third, and the pharmaceutical company had to put up the greater percentage. But my client, the biotech was worried that at some point maybe the pharmaceutical company would lose interest, would deprioritize it as one of their assets and so they fought and negotiated for a number of diligence obligations on the pharmaceutical company to make sure they spent X dollars per year on doing various clinical studies and what happened was the pharmaceutical company actually became enamored with it and wanted to double triple the development budgets, for which then the biotech company was like, we don’t have enough money to match what we’re supposed to. It went the other way. They were like, we-
Sal Daher: I can’t play on this poker game.
David Glazer: We can’t play. So they had to renegotiate either their percentage sharing or they had to opt out of a particular molecule and switch it to the royalty option. So, no matter how-
Sal Daher: We couldn’t keep up.
David Glazer: Hard we try to get what’s needed in a contract, the other things could happen.
Sal Daher: The law of unintended consequences.
David Glazer: Yes.
Sal Daher: It’s like the last thing you’re expecting, turns around to bite you.
David Glazer: Yes. So that was an interesting call they had to make, I assume when they said, remember when we said we want you to spend more, we don’t want you to spend more.
Sal Daher: It’s like too much. Yeah. That is interesting.
Collaborations Can Give Startups the Capacity to Develop Their Own Internal Projects
David Glazer: Just yesterday, I didn’t work on this deal, but I saw in the press that even in today’s pandemic environment with COVID, deals are getting done every day, there’s lots of them being announced. One I saw the other day was Takeda did a deal with Cambridge based Carmine Therapeutics and as we were discussing earlier, one of the reasons biotechs typically do this is so they can get some money in and then they can let the pharmaceuticals take a particular program forward while the biotech advances other programs and other platforms and in particular a quote from the CEO of Carmine said just that. “This provides Carmine with significant funding to further develop their platform and advance their wholly owned programs.”
Sal Daher: Right. That gets us to an important topic here. You do a collaboration and you expect that they’re going to be milestone payments, but those milestone payments, the money is fungible in the company and frequently when you’re developing a program, you are also developing your technology. You’re making it more automated, you’re making it more reliable, you’re improving the chemistry. There’re all kinds of things that happen instead of doing 50 full time equivalent employees, you’re working 500 FTEs. You tend to learn a lot about your platform and your platform matures.
Resources from Collaborations Can Help Startups Mature Their Tech
So, this is another sort of hidden advantage that exists in doing these collaborations because a lot of the parts of the platform that these companies have are common. They can be applicable in different areas and the companies become more developed. There’re parts of it that are highly, highly specialized, highly specific. If they’re using a particular antibody for particular assay and so forth, then it’s very specialized. But then there are other aspects of it that are not, that are general. So that’s very interesting.
Now, David, let’s talk about the industries that you work with. Are you mostly pharmaceutical, drugs, or do you work with… the strategics that you work with, are they also medical equipment, diagnostics, these different areas?
“I would say I spend about 50% of my time with the pharmaceutical, the strategic players, and about 50% with biotechs.”
David Glazer: Sure. My practice itself, I’ve been with Morgan Lewis for over 20 years now, working in this life sciences industry. I’m a member of the life sciences transactional practice at Morgan Lewis. My practice in particular, I focus on strategic alliances, collaborations, licensing joint venture deals and all of the support agreements that go along with those deals, supply distribution, clinical trial agreements and the like and I work with life sciences companies all the way from those being spun out of universities, startups, to the top five, 10 pharmaceutical companies. I would say I spend about 50% of my time with the pharmaceutical, the strategic players, and about 50% with biotechs.
I have a fairly even split depending on the years and where the transactions are, it goes up or down and those are with life sciences, pharmaceutical, biotech, ranging from small molecule, cell therapies, gene therapies, therapeutics and the like. I work with our medical device group and representing the companies in their various stages of development commercialization. I work closely with any number of colleagues at Morgan Lewis. We represent the complete life cycle with intellectual property colleagues, FDA regulatory, antitrust, depending on the deals, if there’s fraud, abuse, Medicare, Medicaid, reimbursement issues and the like. Morgan Lewis represents companies all across the globe in spectrum through their various life cycle issues throughout for life science companies.
Sal Daher: Do you represent more of the biotechs or the strategics?
Since They Represent both Biotechs & Strategics, Morgan Lewis Has a Good Sense of What Motivates the Players and What Deals Can Get Done
David Glazer: I split probably 50/50 and I think that gives me as well as others at Morgan Lewis, where we don’t tend to focus on either just the strategic pharmas or the biotech. When we come to these collaborations, we have experience representing both sides and understand each different sides, touch points, where things are going to end up. We’re never taking positions that we think are unreasonable, it’s about getting the deals done in a collaborative way and making sure that the parties, it comes out as a win-win and the parties are able to work together and as I said, I go away after the deal’s done, hopefully, and I don’t ever have to look at the contract again.
Sal Daher: Like an obstetrician, like a midwife, you give birth to the contract and the contract goes forth into the hands of a pediatrician or a general practitioner or a primary care physician and so on, but never comes back to you.
David Glazer: I hope it never comes back. For a number of reasons It means everyone involved has done a good job documenting and removing any ambiguity, but it also means more importantly the collaboration is going smoothly and no one has to look at the contracts because when things are going smoothly, the scientists are doing what they’re doing. The researchers are doing what they’re doing, the marketing people are all doing what they’re doing. Everyone’s working harmoniously and advancing the products and the pipelines and then I’m done. When I’m able to turn on the television one day and I see advertisement for a product I worked on and I know it made it to market, I can finally tell my wife, I helped with that. I was part of the process that got the two companies together. I had a very small part in documenting it, the real heroes of that are the people who worked on it, developed it, advanced it through the pipeline.
Sal Daher: Do not underestimate the value of a well-structured deal, a well-documented deal, a well-structured deal that avoids conflict between the parties. So basically it’s hard to find a parallel for this, but you are enabling the creation of some of the most powerful technology. Marc Andreessen, some decades ago said that software was eating the world. Well, I think going forward, it’s going to be the life sciences are going to be eating the world for the next few decades, because a lot of the innovations that have happened in the last several decades are going to start coming to fruition, because technology has been built that people did not even imagine before. I mean David, let me put you in a time machine, back to… so your early 1970s, you’re a young man. I was an undergrad at MIT in engineering, but you had to have two semesters of calculus, two semesters of physics, one semester of chemistry, but biology – you didn’t have to have that.
They thought that high school biology was good enough. Biology with some kind of a fossilized science like botany or something. Now, flash forward to today, over 30% of the work that’s done at MIT is in the life sciences. It wasn’t very long after that, that they started discovering all sorts of ways to manipulate genetic material that they hadn’t known how to do before and they discovered eventually they were able to sequence the genome and they added computers to the whole equation and so forth. That’s just the beginning, we have been witnessing the infancy of biotech and the life sciences. It’s just beginning to take flight. And so, I think in the next several decades, the life sciences, biotech is going to be eating the world the way that software has been eating the world for a while.
Not to say that software is not going to continue to eat the world, I mean with artificial intelligence, machine learning and all that, which also has interactions with the life sciences and so forth, in many different ways, there’s a lot of stuff that’s going on and you are in the very center of this by helping create these deals that work really, really well. Speaking with you as a work, do you have any more deals that you know about? It doesn’t necessarily have to be deals that you’ve worked on, but have gotten a ride because people got too clever for themselves, too clever by half?
David Glazer: I don’t know of how many have gone awry because they’ve gotten too clever.
Sal Daher: Or give me a sense of deals have gone awry and why they’ve gone awry.
How Deals Go Awry
David Glazer: Sometimes I would say deals have gone awry, they weren’t properly planned out from the beginning, they didn’t bring in the appropriate advisors be it for a tax reason or whatever to appropriately structure it.
Sal Daher: Yes.
David Glazer: Sometimes things just go awry, not because the deal is structured wrong, because circumstances change, companies get bought and sold and programs get deprioritized, or there’s competing products that have to happen. Sometimes deals go awry before they’re signed, because they’re just taking too long to get there and even if the parties thought maybe they had agreement at the term sheet stage, when you’re trying to turn a three or four page term sheet into a 90, 100 page collaboration agreement, there’s lots of holes that needs to get filled and words that need to be put on the bone that the two sentences in the term sheet, whereas everyone thought they had agreement just didn’t. And for whatever reason, the one party or the other, or both, it’s a very important point and they can’t get to it, but then maybe it wasn’t the right deal, is that afterwards things go awry, your competition who is behind, catches up. There’s an advancement and things need to be rethought or changed. I don’t want to say awry, they’re mostly collaborations. They do go awry, I usually don’t see them, they go to the litigators.
Sal Daher: Yeah. Your oncologists. You’re only obstetrician, the midwife, you only do the happy stuff. That’s the oncologist and the surgeons.
David Glazer: I do the wedding ceremonies, not the divorces.
Sal Daher: That’s right. David, do you want to talk a little bit now about how you got into your very interesting line of business.
David Glazer: Sure.
Sal Daher Puts in a Plug for His Syndicate List
Sal Daher: But before we do that, I just want to put in a plug for one of the reasons I do the podcast. I started this podcast as a vehicle for learning but the other thing that I use it for is really to connect with people who are potential investors in the really interesting companies that I work with. So if you are someone who is an Accredited Investor, I urge you to join my syndicate list. You go to angelinvestboston.com and there’s a syndicate area and you fill out the form and qualify yourself as an accredited investor and it will automatically arrange for us to be able to chat about the interesting transactions that we have going at the moment.
And as David will well, tell you, I cannot talk about these things in public. It would be a public offering and create all sorts of security nightmares, security laws nightmares for lawyers, not in his specialty. But anyway, so I urge you to check out my syndicate list because I see some very interesting companies. SQZ Biotech for example, as I say, I led the angel round in investing in SQZ and many, many other interesting companies.
How David Glazer Became a Biotech Deal Maker
Anyway, in law school were you thinking I’m going to do biotech deals for a living?
David Glazer: No, probably things much further from that than you would think. Going into law school, I thought I’d like to be an environmental lawyer. I’d like to work with organizations and protect wildlife, climate change and the like and I guess I don’t know if it’s true, but for most of the interviews I was getting the law firms that were doing environmental law were mostly representing insurance companies and they were just fighting over clean up and the like. And so that wasn’t nearly as idealistic as I had hoped and there are many great organizations out there who are protecting the environment and are doing it. I just wasn’t able to connect with them while I was in law school.
Sal Daher: Well, I understand, a lawyer that’s coming out of law school has a lot of student debt, they get the bus that’s coming, they’re not sitting around saying oh, this bus is too full, they take the bus that comes along. It reminds me of my old late business partner Bobby Smith, Bob Smith. He was the most unlikely lawyer, he went to BU Law School, but he really didn’t want to be a lawyer. He was going to do anything but law, he was to be a lawyer because he wanted to please his father. So Bob, when he’s graduating from BU Law School, it was a time of utter disaster in the legal profession, it was very, very hard to get a job.
And they had this lawyer who’d been out for a few years and who worked for the Boston University Law School, helping to find jobs for the recent graduates. That was his full time job. There was one law firm hiring, he quits his job at BU and takes that job and runs off and leaves the graduates in his class, they are all high and dry. So I sympathize with a young lawyer starting out in a career. Anyway, what happened? So you…?
David Glazer: So not going into environmental law, thought I wanted to be a litigator and I got a job with a great law firm in Jersey City, small law firm, there were about 30 attorneys but it afforded me the opportunities right away to be much more involved in litigations. I could go to court, I could conduct depositions, they provided valuable and early on training and experiences that I wasn’t sure I would get in a large, a thousand person, New York law firm where you’re doing all sorts of other things. And so I appreciate the opportunity, but after a couple of years, I really wanted to work with a different client base. In particular, I wanted to work with the high tech and the internet companies. This was in 1998, ’99, right before the bubble popped and Morgan Lewis had an opening to work with those types of clients. The technology transactions group, as it was called at that time was hiring. I had happened to be in the corporate group and I interviewed and they afforded me the opportunity to try and I was able to work with those companies. It was a great transition over-
Sal Daher: The corporate group is basically, these are the guys who are helping technology companies set up, create vesting agreements for people they’re hiring and that kind of stuff. Kind of creating like a corporation and setting up and so on. So that’s the corporate work that you were talking about.
“…then in 2000, the [tech] bubble popped and I ended up spending almost all of my time working for the pharmaceutical and biotech companies back in the day.”
David Glazer: That corporate work, I was given opportunities to work with a lot of, I guess they call them web agreements at the time where everyone was getting paid on click-throughs, a lot of vertical integrations, horizontal integrations among companies doing those types of deals in the early days of AOL. Deals where companies had particular… I guess, there weren’t podcasts at the time, but particular areas that AOL trumpeted and the like. A lot of marketplaces, software companies that were going online. That was taking up most of my time when I first joined Morgan Lewis, there was a number of companies that Princeton office where I’m based out of also represented big pharma, so that took up a little bit at the time and then in 2000, the bubble popped and I ended up spending almost all of my time working for the pharmaceutical and biotech companies back in the day.
Sal Daher: Inter what? What’s the internet? What’s that thing?
How the Acquisition of One of His Clients Expanded David Glazer’s Network
David Glazer: Yeah. We had a phenomenal relationship with, it was Aventis at the time and we were involved in almost all of their strategic transactions. I was able to stay very busy during those times after the internet bubble popped and focus exclusively, basically since 2000, working with the pharmaceutical biotech companies, doing the strategic collaborations. And then after Aventis was acquired by Sanofi, a number of the players previously at Aventis went to other companies and we expanded the network and the opportunities to work.
It’s been a great experience at Morgan Lewis and for my career as well and the opportunities that have been presented to me and that I’ve been able to work with through the various stages of the biotech life sciences, pharmaceutical companies, trajectory and see as you were saying, the dynamics change, going from a lot of small molecule, me too type of deals to now the cutting edge cell therapies and gene therapies and any number of interesting companies that I get to work with and just the experiences of their scientists and clinicians and strategists and the like, and the sheer joy and scientific knowledge that’s at these companies is truly amazing.
Sal Daher: Yeah. The whole thing is building in the direction that is just astonishing. It’s like a wave, one of those huge surfing waves, just building and building and building. That’s very, very impressive.
Morgan Lewis Has Afforded David Glazer the Opportunity to Do Interesting Pro Bono Work
David Glazer: In addition, as you’re saying, I get to help these companies structure deals and create the foundations to help them partner and move through their collaborations and advance their programs beyond just the contract stage has been great. But the opportunities that Morgan Lewis has allowed me to do as well have been phenomenal. Morgan Lewis is deeply committed and devoted to committing pro bono efforts, asylum cases, indigent case, all sorts of various cases. Through the efforts and the support of Morgan Lewis I’ve been able to actually work with Alex’s Lemonade Stand Foundation, a phenomenal charitable organization that’s helping in the life sciences space and their work on providing grants and any number of other programs to assist and help companies combat childhood cancer. So that has been great. I’ve been able to take the life sciences work that I’ve been doing and actually use it with pro bono efforts and through the support of the firm, and their contributions to those efforts have been phenomenal.
Sal Daher: Yes. Well, I think you should count this as part of your pro bono effort as well, because you are right now contributing to potential founders, understanding better what it takes to get their company off the ground. I think you should add that to your pro bono hours.
David Glazer’s Closing Advice to Biotechnology Companies Thinking About Collaborations
David Glazer: I’ll see if they’ll count that, but I don’t think they’ll count that as pro bono per se. But to wrap up, a few points for the biotechnology companies to keep in mind when considering entering into strategic partnerships, evaluate your structures early to know what you need upfront, whether it’s money now, to work on different programs, whether you’d like various expertise along the way to help your programs. Are you structuring these option deals, licenses, forms of both and the likes, so it’s very important. Make sure, as we were talking earlier, find the right partners, not just the ones that are going to pay the most money, which is always nice, but sometimes for the long-term success, it’s better to find strategic fits in terms of the marketplace, as well as corporate goals and the attitudes of the people you’re going to be working with for hopefully years to come, both in the labs, the clinics marketing the various governance committees.
“…I’ve always found it helpful to have a champion at the pharmaceutical company who is very interested in your deal.”
And that leads me to the next point. When the contract’s done and inked and signed, make sure you have good governance provisions going forward. Good communication, that everyone’s on the same page afterwards. While you’re negotiating, I’ve always found it helpful to have a champion at the pharmaceutical company who is very interested in your deal. There’s lots of competing interests at pharmaceutical and strategic companies. They look at a lot of deals, they have a lot of term sheets, for any of you know who’ve been to conferences like JP Morgan. These companies rent out hotels and lineup companies to interview and see what’s going on. Just like you’re interviewing them, they’re interviewing you, they have lots of choices and they have internal programs that the scientists and the researchers always want to see their own programs succeed as well.
It’s very important to have a champion, someone who’s very interested and invested in your program and bringing it forward as well. Make sure you know what your goals are, what your needs and wants are, what’s again, most important to you in getting these deals structured. Eventually, get the right lawyers involved, not that I want to plug lawyers, they make a big deal and there are a number of law firms who specialize in life sciences transactions and not just Morgan Lewis. Make sure you have one who typically does this. We always find it easier, it’s a better deal process to be across the table from someone who understands the industry, understands the particular nuances that’s needed for these types of transactions and does them frequently and often and are repeat players.
Sal Daher: That’s pretty helpful and I think from my experience of many decades of putting together deals, all the things you’re saying are consonant with my experience as well. David, I’d like to express my gratitude to you for making time to have this conversation. I’ve certainly learned a lot and I hope that our listeners will as well.
David Glazer: Thank you again, Sal. It’s been a pleasure and I really enjoyed the time and the questions and learning more about your podcast and everything you do with the angel community.
Sal Daher: Awesome. This is Angel Invest Boston, I’m Sal Daher.
I’m glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McKusick. Our graphic design is by Katherine Woodman-Maynard. Our host is coached by Grace Daher.1 LIKES