Who’s Who Legal brings together Brian Cordery of Bristows and Yuval Horn of Horn & Co to discuss growth areas in the legal field, the recent challenges faced by their clients and how their firms have responded to the changes in the life sciences industry.
WWL: Describe your current activity levels. Have there been any growth areas in terms of legal work for the practice?
Brian Cordery: The English Patents Court lists at all levels continue to be dominated by life sciences and telecoms cases. The workload in Bristows’ patent team reflects this with many of our partners and associates being devoted more or less full-time to one sector or the other. Having said that, we have some interesting cases relating to other industries including gas and oil, and wind turbines. We also continue to receive instructions in less high-tech areas such as drinks dispensers and food packaging.
Yuval Horn: 2014 was a remarkable year for Israeli life sciences companies, and a busy year for our firm. Nine companies raised $432.2 million from the public in the US, compared to four IPOs in 2013. Our firm advised the issuer in one IPO, and principal shareholders in several others. In addition, in 2014 Israeli companies continued to increase their exposure to the major international players, and several transactions were announced. Medivation, Inc, which our firm advised, entered into a licence and manufacturing agreement with Curetech Ltd. Several other Israeli companies entered into investment and licensing transactions with big pharma companies.
The number of transactions involving Chinese companies investing and entering into licensing transactions with Israeli companies has also increased during 2014. Several of our team members focused on these transactions.
Several multinational companies sought our advice with respect to doing business in Israel, including with respect to regulatory, corporate and employment matters.
The focus on US funding and transactions in China and advice to multinational companies doing business in Israel was dominant, and is expected to remain dominant in 2015.
WWL: What has been the biggest challenge facing your clients over the past year?
Brian Cordery: The uncertainty of the global economy has impacted many of Bristows’ clients. We tend to act for rights holders and we can sense increased pressure on IP counsel at large companies to defend their IP as rigorously as possible, but using less resources to do so. This has led to a recalibration of priorities for many clients – focusing on the most important rights and cutting back on peripheral projects. There is no doubt that the UPC will bring challenges – and opportunities – for many rights holders.
Yuval Horn: The most significant challenge our clients face, other than the need to succeed in the development, is the need to raise funds throughout a long period of development, with no assurance to the investors that the funding would suffice. A subset of this issue relates to companies whose shares are listed on the Tel Aviv Stock Exchange (TASE). The TASE BIOMED index increased in 2013 by approximately 45 per cent. In 2014 (YTD), however, it decreased by 33 per cent. Many companies that raised funding from the public during 2009–2012 are facing decreasing share prices due to market size and general lack of trust by investors. Companies with impressive technology and management are struggling with the need to fundraise at low valuations. Some valuations have become so low that it has become extremely difficult to raise significant amounts of funds for further development. An additional challenge that the companies face is growing pricing pressure from the markets. As payors decrease their spending, companies are facing the challenges of addressing pricing pressures, which add to the already existing scientific and regulatory challenges. This, in turn, creates focus on efficient clinical trials and target patient groups. It has also allowed for an evolution of foundation supported drug development. These activities involve patient associations and not-for-profit organisations supporting drug development, with a view to reducing the development costs and pricing.
WWL: How has your firm responded to the changing market conditions in the life sciences industry? Including increased regulatory oversight and geographic shifts in innovation.
Brian Cordery: There is no doubt that the last 10 years has witnessed major changes in the life sciences industry. Everyone accepts that financial compensation is necessary in return for the huge and uncertain investment that originators make to provide innovative healthcare solutions addressing the evolving needs of patients and societies. However patent holders are being scrutinised more closely than ever before to ensure they obtain and enforce their rights appropriately. This period has also seen an increasing collaboration between the patent, regulatory and antitrust advisers within originator businesses and it is now vital for external advisers to think and advise in a joined-up way too.
The next decade is likely to see a mounting focus on biological medicines and a consequential blurring of the divide between originators and generics. There is also likely to be a convergence of the digital/health care sectors and we are very excited about that, given our capabilities in both areas.
Yuval Horn: During 2011–2013, major transactions of our practice included the structuring of creative means of financing for companies with funding pressure, such as the upfront purchase of controlling interest by a strategic partner, over negotiated milestones and in consideration for predetermined amounts; options to license non-core intellectual property; and funding at distressed terms. Many of our clients were involved in several “down rounds” in private companies with carve-out mechanisms to protect management. Since the third quarter of 2013, the funding and transactional markets for our clients offered an abundance of opportunities, as described above. This shift in market conditions was a positive one, with the pace and complexity of the transactions growing. These transactions were in addition to many research and development agreements with non-Israeli partners and academic institutions, as well as agreements in which the parties sought governmental financial support (such as those from the Office of the Chief Scientist in the Ministry of the Economy, BIRD, FP7). Our team grew in order to accommodate the requirements of the extensive transactions. We found these new challenges part of the positive outlook and growing maturity of the Israeli market.