Milestone Payments or Royalties? Contract Design for R&D Licensing

Milestone Payments or Royalties? Contract Design for R&D Licensing

Step by step. The benefits of stage-based R&D licensing contracts

We examine how a licensor can optimally design licensing contracts for multi-phase R&D projects when he does not know the licensee’s project valuation, leading to adverse selection, and cannot enforce the licensee’s effort level, resulting in moral hazard. We focus on the effect of the phased nature typical of such projects, and compare single-phase and multi-phase contracts. We determine the o...

Strategic alliances and market risk.

Strategic alliances in product development and marketing are crucial to the biotechnology industry. Many alliances, however, are terminated before the drug reaches the market. In this article we make the case that strategic alliances can fail because of how they are negotiated. Alliance contracts are often inflexible and do not allow for changes in market conditions. We propose a model for cont...

Deals or No Deals: Contract Design for Online Advertising

Billions of dollars worth of display advertising are sold via contracts and deals. This paper presents a formal study of preferred deals, a new generation of contracts for selling online advertisement, that generalize the traditional reservation contracts; these contracts are suitable for advertisers with advanced targeting capabilities. We propose a constantfactor approximation algorithm for m...

Research and Development Project Valuation and Licensing Negotiations at Phytopharm plc

We describe an R&D project valuation model developed for Phytopharm plc, an emerging pharmaceutical company based in Cambridge, UK. The model allows the company to value the projects in its R&D portfolio, and is used for licensing negotiations with potential product development and marketing partners. It is based on different valuation methods, including Net Present Value, Decision Analysis and...