Ask the Experts: The Importance of Including Subject Matter Experts in Deal Discussions

One of the most important elements of successful deal discussions is establishing your credibility to a potential partner. This can be done in a multitude of ways, but one of the most direct is by including relevant subject matter experts in the process to speak to the value of your product, plan and/or team. This is as true on the buy-side as it is on the sell-side, since a key element of buy-side success is often convincing the counterparty that you are the right partner for their asset (see “The Best Buyers are the Best Sellers” ).

With deep pockets, extensive track records and well-known management teams, Big Pharma companies generally don’t have much trouble establishing their credibility. For smaller companies with less brand equity to leverage, it is very important to engage experts who can answer hard questions about clinical, development, regulatory, commercial and other issues critical to the deal, particularly when negotiating against larger players. The expert can be an internal resource who is able to speak with authority on an important issue that is critical to a due diligence process.  Locust Walk has helped our clients leverage subject matter experts during deal processes with great effect. For example, in the case of TesoRx, a company with whom Locust Walk has done two regional sell-side deals (THG -1001 and TSX – 002) in the men’s health/urology space, discussions led by the company’s Chief Medical Officer, a practicing urologist, were instrumental in successfully articulating the positioning and demonstrating the value of the product. On the buy-side, we recently helped Strongbridge Biopharma acquire the rights to an approved Orphan drug (http://www.locustwalk.com/strongbridge/), and establishing the commercial expertise of the management team based on their previous successful product launch experiences was a key success factor.

Regardless of the subject in question, a subject matter expert obviously needs to be qualified to speak with authority. In many cases smaller companies may not have qualified internal resources to match those of a potential partner, and so may struggle to credibly engage in discussions around clinical plan, regulatory path, commercial potential, etc. Additionally, an employee or consultant with a vested financial interest in doing a deal will obviously introduce a potential bias. Therefore, an alternative strategy is to use an independent, external expert to speak to relevant aspects of the product, development or commercial plan. For example, on the sell-side, Locust Walk often asks potential prescribers or key opinion leaders who are familiar with a development-stage product to speak to partners about its potential clinical importance and therapeutic niche. In those cases, the opinion of an unbiased expert is often weighed heavily by potential partners.

Including a relevant subject matter expert, whether internal or external, in conversations with a potential partner is a great way to answer difficult questions with authority, creating credibility and increasing the chances for a successful deal. For that reason, Locust Walk routinely employs this strategy on our engagements. If you’d like to discuss how we can help you develop a strategy for maximizing your credibility and deal success, please contact nick@locustwalk.com.


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 Witten by Nick DeLong, PhD