Interview with the founder of TGN
Hanneke Later-Nijland explains about the importance of a collaboration between regulatory lawyers and M&A-lawyers within The Genotype Network.
By Yilmaz Biter
The biotech and life sciences sector is a rapidly changing sector, especially during the COVID-19 pandemic. At the same time the general public has seen the value of the sector. But more importantly, as the sector grows and develops, biotech and life sciences need more guidance from lawyers. Hanneke Later-Nijland, the founder of TGN, explains about the need for more legal guidance.
First of all, why did you start this network?
‘”Somewhere last year, I was talking to a colleague about the transactions I had been involved in and then I realized that there was no network yet for regulatory and corporate lawyers in life sciences. As we expect deal volumes in life sciences to continue - as opposed to a decrease in general deal volumes, whereas at the same time the Bio Revolution is complicating these transactions, The Genotype Network will actually bring together regulatory and corporate lawyers. There is a natural synergy between these lawyers that has a lot of potential. TGN is to function as the spark converting this potential to actually connecting corporate layers with regulatory lawyers, who will be together in an active trust-based community.’’
The goal of this community will be threefold, according to Hanneke. ‘’First of all, the protection of unsensible decisions while operating in this highly complicated and highly regulated space. Secondly, to help the acquirer or investor in valuation and transaction price issues. And thirdly, to structure the deal with regulatory components in mind from the outset. So that's because if you do not do that and you will have regulatory issues, then that can negatively influence the deal for its lifespan. And that's obviously what you need to avoid.’’
What is the added value of a regulatory lawyer in a M&A-deal? ‘’The regulatory lawyer is very important, because in the end it is about the product: the turnover the product generates, i.e. the multiples. So, if the product cannot be marketed for the price envisioned due to unforeseen price caps or, cannot be made available for the (larger) patient group envisioned due to trial designs or there will be other hurdles because of not adequately managing a product into a particular regulatory framework, that can have a tremendous negative effect on the multiples on the outcome.’’
Growing interest
It looks like there is more interest from investors in biotech.
‘’So we are currently, of course, at the doorstep of the so-called Bio Revolution, which is really advancing patient care. Covid-19 has showcased the role of new technologies. At the same time, it cannot be denied that we are facing somewhat of a difficult situation, because of the geopolitics, the inflation and all the other issues. We have logistical problems that we still have after Covid-19. We are seeing a slightly lower deal volume - in general, and perhaps even an increase in distressed deals. At the same time, private equity still has a very large war chest. So they will be going for companies to invest in. The shift that I anticipate on is towards more high quality assets, because in those high quality assets the deal volume and the multiples are expected to remain high. We do expect that pharma, medical and biotech will show the most activity for the coming twelve months.’’
Because of the patent cliff in 2025, in which a lot of companies will lose market exclusivity in the United States and Europe. ‘”What we expect to see is that many medicinal products are coming off patents and therefore the companies need to fill their pipelines again and that is done by acquiring companies with interesting products, either to license those in. Obviously, when you are doing this, you need to be 300% sure that the company you are acquiring or investing in indeed has the product with most potential to actually come to market and beat the competition.’’
I guess in the last decade, we have seen the biotech and life sciences sector maturing in Europe and also in the Netherlands. Hanneke Later-Nijland clarifies this development. ‘’First of all, the logistics are good here. Amsterdam is very well connected. Also, I think that the moving of the EMA from the United Kingdom to the Netherlands had also that effect. I've seen many companies that are from the United States and if they want to start in Europe they start mostly in Amsterdam.
Besides the geographical developments, also private equity has become more mature on its own in investing in biotech and life sciences. The acquisition of Life Sciences Partner (LSP) by EQT is a perfect example. Hanneke admits to this development. ‘’ You also see that private equity in this way is becoming engaged in an early stage biotech, because usually private equity only comes in at a later stage. Now private equity is (indirectly) engaged in early stage.’’
Should we look critical at the involvement of private equity?
‘’I think it remains to be seen in the coming years whether indeed there will be an effect of private equity stepping in in an earlier phase. We have to await to experience how this is going to work out, but venture capital is obviously used to taking somewhat more risk in early stage companies.’’
Looking into the future
Hanneke Later-Nijland explains more about the future of biotech and life sciences. ‘’Considering that 2021 was the year of the next-gen CAR-Ts and genetic modification now being the norm for cell therapies, this development will intensify. Besides, more gene therapies will come to market. This development is reflected in the name of the network: a patients’ genotype will become (much) more important in therapies. My other expectation is that we’ll focus more on the serious diseases with a high mortality rate. So that's very much what I'm looking forward to because on the one hand the multiples are expected to remain high and on the other hand, with these products we're really harnessing the Bio Revolution for the benefit of patients and the general health of the people.’’
Will the new technology help to make the general public make more aware of biotech and life sciences?
‘’As soon as this new type of medicinal products – let's say the cell-based and the gene therapies – they will show what they are capable of and truly decrease the number of people that die from cancer, they will definitely showcase their worth. That will definitely help and show everyone what this sector is worth.’’
Lastly, Hanneke explains her choice for the name of this network, referring to the genotype itself. ‘’So, a genotype actually has a twofold meaning. On the one hand, it's the complete set of genes. On the other hand, what people also use the word ‘genotype’ for is, the genotype determining the physical traits like blond or brown hair or brown or blue eyes. And that's determined by the genotype passed on by the parent.’’
‘’Certain genotypes may respond better to certain therapies or need maybe need less of medicinal products or have more or less adverse effects. So that all relates to the genotype concerned. So it's an incredibly important feature in the medical space. And of course, we use this figuratively because The Genome Network selects lawyers with, again figuratively speaking, the genotype with the most potential to optimize the success of transactions in the life sciences space. In other words: lawyers with the most appetite to use innovative analysis to really optimise the outcome of the transaction, as are becoming more complex and larger in size’’, according to Hanneke.
So, we are now launching this network and we are very much looking forward to building a solid yet sophisticated network of lawyers, who are not only very good at what they do, but who are also authoritative leaders in this space.
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