Biotech and pharma insolvency in the UK: a new article

Volume 10, issue 5 of the Bio-Science Law Review, published six times a year by Lawtext Publishing, carries a ten-page article, "Implications of Licensor becoming Insolvent: An English Law Perspective" by Sangeeta Puran and Sarah Nagel (Mayer Brown, London). Though the title suggests a general review of the subject, the authors are pointing it in the direction of a biotech and pharma readership. According to the abstract,

"While many in the biotech and pharmaceutical sectors see outright acquisitions gaining preference with cash-strapped biotech companies, the out-licensing of development programmes remains a popular option for cash-rich rights owners confident of the value in their programmes. Nevertheless, in the context of the current climate, it is imperative that a licensee understands the implications of their licensor becoming insolvent and is aware of the practical steps that can be taken to protect its licence.

This article explores the consequences for a licensee of a licensor becoming insolvent under English law. Issues considered include the possible disclaimer of a licence by a liquidator and the ability of a licensee to enforce its rights in the event of a possible disposal by a liquidator or an administrator of the intellectual property assets licensed to the licensee.

The article then goes on to advise on the viability of the different ways a licensee can protect its licence and ways of mitigating risks. These options include assignment of ownership of the intellectual property in question, entering into co-ownership arrangements and taking security over the licence.

The article references several legislative provisions, case law authorities and academic authority to give a broad view of the risks and options for a licensee on the insolvency of the licensor".