Why Mutually Beneficial Partnerships Can Be Hard To Find For Startups

By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL

During the early days of the company, partnerships with other pharmas served as a way to just keep the doors open at Xencor.  “As a small, growing company, we tended to engage in a fairly standard type of partnership: You give us some money up front, we’ll make new drugs for you, and if those drugs succeed, we get milestone payments and/or royalties,” explains Bassil Dahiyat, Ph.D., president and CEO of Xencor (subject of a feature in Life Science Leader magazine’s July issue). “Eventually we realized these types of partnerships were money losers for us. You’re so invested in making it work that you always end up spending more time and effort and using more people than they are actually paying you for."

Dahiyat believes these so-called FTE deals are a bad way to try to build a business — even if you are hard up for cash. When it comes to doing deals today, he says Xencor is much more selective, “because the value comes from us building our own pipeline.” The company remains interested in licensing its technology and/or partnering on molecules being worked on in the clinic, though a component of today’s deals includes being able to participate in the drug’s eventual commercialization. “We’d rather put up some of our own money to be part of a partnership as a co-equal than to have an asset go totally away."