To market an academic invention, a company is usually required to acquire a license for the development of the invention. This licensing process often causes challenges. Therefore, a working group commissioned by FAST developed a guideline to assist research institutions in conducting effective and realistic negotiations for socially responsible licensing.

“The concept of ‘socially responsible licensing’ is often used in the context of therapy development but is more broadly applicable—actually anywhere inventions developed with public funding need to find their way to the market. Although this concept extends beyond FAST’s scope, it aligns closely with FAST’s objectives to promote the availability and affordability of new treatments,” says Ivo de Nooijer, who also contributed to the development of the so-called ‘Ten Principles for Socially Responsible Licensing’ by the Netherlands Federation of University Medical Centers (NFU) in 2019 and the accompanying toolkit in 2021. However, applying these principles in practice has still led to significant challenges, partly because academic scientists often lack sufficient understanding of the efforts and investments required by companies in the development process.

“We need to understand that academia and the business are completely different realms with entirely different expertise. Each party needs the other, and the question is how to bring them together in the best possible way,” says biotech entrepreneur Markwin Velders. “In practice, this often leads to problems during contract negotiations. This is what we aim to prevent with this guideline, by emphasizing better preparation and a deeper understanding of the business perspective, such as the required development process,” says Vincent van der Wel, who founded companies including Orfenix and Haltex Therapeutics. De Nooijer, Velders, and Van der Wel jointly developed the FAST Guideline for Socially Responsible Licensing.

Social Responsibility

Attention to socially responsible licensing (SRL) emerged in the previous decade, as knowledge institutions increasingly focused on knowledge valorisation. Academic knowledge deserves to be translated into practice by market players. While initial efforts primarily sought business collaborations, there was also a growing desire, partly driven by political pressure, for companies to handle inventions developed with public funding in a socially responsible manner. Velders notes, “Initially, SRL focused heavily on reducing drug prices. However, this is not a realistic expectation, as at the time of licensing, it’s usually impossible to make meaningful statements about pricing.”

De Nooijer adds, “As a license holder, you can influence other societal aspects. For instance, ensuring that the company doesn’t shelve the invention but instead invests in further development, possibly investing in people and resources in the Netherlands. Also, making the invention available to Dutch patients and consumers as soon as possible, perhaps as part of the development trajectory. Therefore, SRL concerns much more than future pricing.” Van der Wel states, “In practice, we often see opportunities for SRL, especially if academic researchers remain involved in the development process. This mutual involvement clarifies the necessity of each party’s contributions, allowing the knowledge institution to set conditions for their participation in development.”

However, there are two important considerations regarding the requirement for socially responsible licensing. First, the SRL conditions are connected to potential financial returns for the knowledge institution. “SRL also represents value,” explains De Nooijer. “If you demand a high price and add SRL requirements on top, you imply that these SRL conditions have no value. You need to look beyond just the financial aspect and explore alternative ways of value exchange.” The second, and perhaps most critical, point highlighted by Van der Wel, Velders, and De Nooijer is that “not licensing at all is fundamentally irresponsible.” In such case, inventions developed with Dutch taxpayer money are doomed to remain unused and fail to benefit Dutch healthcare or the economy.

Four Steps

At the core of the new SRL guideline is a funnel model that research institutions can use when preparing for contract negotiations for a new company or licensing to an existing one. The first step, which includes a questionnaire, aims to provide a broad understanding of the invention, its added value, and the subsequent steps needed for use and market entry. In the second step, this development process is examined in much greater detail with input from external experts. Velders notes, “The Biotech Booster programme also addresses this step by involving a group of 200 experienced entrepreneurs who assess whether a project is promising.” De Nooijer adds, “The second step is actually the most exciting and novel part of our model. My research into licensing clearly shows that understanding the development process is the biggest difference between public and private parties. Researchers in academic medical centers often have many misconceptions about the clinical development process, and underestimate its complexity and the required expertise. This leads to incorrect assumptions at the negotiation table.”

In the third step, the parties involved assess whether there is sufficient consensus and shared understanding to move towards a contract, ensure the right people are at the table, and confirm that they have the authority to make legally binding agreements. The fourth and final step involves linking the expected outcomes to societal objectives and thoroughly discussing them with all involved parties.

According to the developers of the guideline, building mutual understanding and a future-focused collaboration is perhaps even more important than the final contract. Van der Wel comments, “The more involved you remain in the development process, the more influence you have on its progress and societal impact. But it all starts with a realistic view of your own contribution and that of the other party. If you overestimate your own role and underestimate the other’s, reaching an agreement becomes very difficult. Our goal was to contribute to this realism to enable more and faster development.”

Dr. Markwin Velders earned his PhD in molecular immunology before transitioning to business. He has been involved in numerous (start-up) biotech companies and served for many years as the chairman of HollandBio.

Mr. Ivo de Nooijer studied both Biopharmaceutical Sciences and Law and has been active for many years in translating academic knowledge into business, including as director of Luris (TTO Leiden University and LUMC), owner of AMLUG, and coordinator of the Growth Fund application for BiotechBooster.

Vincent van der Wel studied medicine and health economics and focuses on the combination of societal impact and profitability of innovative therapies through his company Orfenix and various other initiatives.