Tech Transfer eNews Blog

Term sheet template for life science deals aims to reduce bickering and hasten license negotiations

By Jesse Schwartz
Published: January 18th, 2023

A detailed article on the new term sheet template for life science deals developed by a group of top TTOs, law firms, and VCs, and its impact on reducing negotiating time as well as on license agreement terms, appears in the January issue of Technology Transfer Tactics. To subscribe and access the complete article, or for further subscription details, click here.

A term sheet template for life science licensing deals developed by a group of prominent university tech transfer programs, venture capital firms, and attorneys could help eliminate much of the haggling over routine issues and establish a baseline of what is typical or most commonly found in license agreements.

The template, which addresses life sciences IP but may have utility in other agreements, could be most useful for universities that do not license IP in high volume and are less experienced with negotiating terms. The developers suggest that using the template could cut the time and cost of licensing life sciences IP by as much as 80%.

The consortium of representatives from 14 universities, nine venture capital firms, and three law firms worked on the project for three years.

The template is generating good feedback so far, says Orin Herskowitz, executive director of Columbia Technology Ventures at Columbia University in New York City. He led the project and attributes positive reaction to the template addressing a key frustration among tech transfer leaders and everyone else involved in licensing IP — the drawn-out negotiations that can typically take six to nine months.

“In many ways, this is less about trying to resolve any specific sticking point and more about trying to avoid the theatrics that tend to get performed even when experienced parties are negotiating against each other,” he says. “When you have tech transfer offices that might do 20 or 30 start-ups a year, and a venture firm which might do 20 or 30 start-ups a year, when we get in the room together we all know what the deal will look like in the end.”

Nevertheless, Herskowitz says, everyone expects that the universities will come in high and the venture capitalists will come in low. The dance begins and might go on for nine months.

“It’s just an absolute and total waste of time,” he says. “You could save three to four months off the bat by not having pointless conversations about things that aren’t even worth negotiating, because we all know how they’re going to end.”

The other big benefit from the term sheet template is for TTOs that are less experienced with life science start-ups than the larger offices that helped develop the model. An institution that does only three start-ups a year probably just has not seen enough deals to know what the norms are, Herskowitz notes.

The license template can serve as a baseline, showing the less experienced parties what the bigger or more experienced institutions usually agree to in a license. “Those entities can look at something like this and say ‘this outcome here has been endorsed as a perfectly reasonable deal for most situations,’” he says. “We can spend nine to 12 months yelling at each other or we can just take this and be done in two months.”

Shortening the negotiating time can result in significant cost savings on legal fees, and it frees up personnel to work on additional projects. In the life sciences, however, a shorter time to license can have a more significant impact given what’s at stake, Herskowitz says.

“With therapeutics, a six-month delay in getting funded translates pretty directly to a six-month delay in getting into the clinic, which translates to a six-month delay in getting approvals,” he explains. “That translates to a six-month delay in patients receiving the drug. So this has a real direct impact on patient care.”

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