From my proposed presentation at the ExL 2nd Pharmaceutical Research Collaborations Summit in Boston from August 2012.

1. FACTORS DETERMINING WHETHER A PRIVATE
COMPANY LICENSES TO/FROM OR COLLABORATES
WITH ACADEMIC INSTITUTIONS
Patrick P. Zaretski, Esq.
Director of Intellectual Property!
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

2. Disclaimer
The views expressed herein and today are my own and not necessarily
those of Cornerstone Pharmaceuticals, Inc. or its management.
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

3. Introduction to Cornerstone Pharmaceuticals, Inc.
• Founded in 1999, Cornerstone Pharmaceuticals is a privately-owned
15-employee clinical stage drug development company with
headquarters in Cranbury, New Jersey and additional laboratory space
at both the Long Island High-Tech Incubator in Stony Brook, New York
and on the campus of the State University of New York at Stony Brook.
• Cornerstone was one of the first drug development companies to
devote research to the field of cancer metabolism. The company has
two active pipelines in development:
• a first-in-class small molecule that exploits cancer metabolism via
an apparently novel mechanism of action, exclusively in-licensed
from the Research Foundation of the State University of New York;
• a proprietary lipid-oil-water nanoemulsion drug delivery molecule
that exploits cancer cells’ metabolic requirements, based on
technology exclusively in-licensed from a private company.
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

4. Introduction to Cornerstone (concluded)
• Under the terms of the license agreements with each licensor,
contingent upon maintaining all license fees and reaching all agreed-
upon milestones, any technology developed subsequently by
Cornerstone is the sole intellectual property of Cornerstone, which the
company is thereupon free to exploit as seen fit.
• Consequently, Cornerstone has entered into or is in negotiations to
enter both licensing agreements with third parties as well as
collaboration agreements with both academic and governmental
entities.
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

5. Factors considered by commercial companies to
determine involvement with academic institutions
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

6. Primary considerations
• Much like considering whether collaboration with or licensing to a
second private company is proper given the commercial
circumstances, a private company has many considerations to take
into account when deciding whether to collaborate with an academic
institution versus licensing its technology to or from that institution.
• Indeed, many of these considerations can also be applied to
decisions regarding work with governmental agencies as well.
• The primary criterion for a private company in this position is: will this
transaction or alliance be in the best interest of the company?
Generally, this is answered by determining what will ultimately
maximize the company’s PROFIT.
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

7. General strategic considerations
• Upon determining that there is common interest between the company
and an academic institution (e.g., intellectual property), it is vital from
the outset to determine the potential for successful interaction:
• Quantify the sales and earnings potential.
• Gauge and understand the academic institution’s aims,
commercial focus, and competitive position relative to the
company’s own.
• Prior to any transaction, identify potential exposure from the
academic institution’s commitments.
• Evaluate the risk of compliance failures and/or aggressive
practices by either party.
• Ensure that cultural compatibility will exist (e.g., disclosure versus
adequate patent protection).
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

8. Specific strategic considerations
From Cavalla D (2003). The extended pharmaceutical enterprise. Drug Disc. Today 8(6):267-74.
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

9. Specific strategic considerations (continued)
From Cavalla D (2003). The extended pharmaceutical enterprise. Drug Disc. Today 8(6):267-74.
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

10. Specific strategic considerations (concluded)
From Cavalla D (2003). The extended pharmaceutical enterprise. Drug Disc. Today 8(6):267-74.
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

11. Further strategic considerations
• Be mindful of two factors not often acknowledged in deciding whether
to interact with a potential business partner:
• Tax risks; and
• Antitrust considerations (especially where the competitive space is
not crowded or where technology is “blockbuster”).
• Whether a collaborative or a licensing agreement is reached, ensure
that a protective post-transaction implementation plan is in place.
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

12. Appendix
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

13. Tactical considerations: terms of the agreement
• No matter what the form of agreement reached between a private
company and an academic institution, for mutual protection and clarity,
and to ensure success, the terms of the agreement should include the
following:
• An explicit statement of the objective of the agreement.
• Definitions of important terms used throughout the agreement.
• Representations and warranties that each party (or both) is relying
upon when entering the agreement.
• The duties and responsibilities of each party.
• A description of the subject matter to be shared by one party with
the other for purposes of achieving the objective (can be further
listed in an appendix).
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

14. Terms of the agreement (continued)
• Set of limitations as to the use of disclosed information (and
licensed property, if any).
• Granting the right to or prohibiting sublicense rights.
• Establishment of ownership of new developments arising out of
the agreement, where applicable.
• Allocation of responsibility and establishment of appropriate
process for prosecution of patents for new developments,
where patentable.
• Definition of marking requirements for new developments (and
licensed property, if any) to demonstrate provenance of
ownership.
• Allocation of responsibility and establishing appropriate process in
event of patent infringement by third parties.
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

15. Terms of the agreement (concluded)
• An explicit assurance that any previously-executed confidential
disclosure agreements are still in force and for what term.
• A designation of the required treatment of trade secrets and know-
how, to comply with applicable laws pertaining to trade secret
protection.
• A statement of termination provisions and post-termination
obligations of each party.
• A statement of mutual indemnity and liability limitations, if agreed
upon.
• An assertion of the governing law (and the jurisdiction and even
venue, if possible) under which the agreement is to be litigated in
the event of breach or tortious conduct.
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012

16. Thank you for your attention!
Patrick P. Zaretski, Esq.
Director of Intellectual Property
Cornerstone Pharmaceuticals, Inc.
One Duncan Drive
Cranbury, New Jersey 08512-3629
Ph#: 609-409-7050 x216
FAX#: 609-409-6035
ExL Pharma – 2nd Pharmaceutical Research Collaborations Summit
August 15, 2012