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the preclinical data seemed reasonable, there were anomalies in the ways the trials
were conducted (some years previously by TherapeuticCo) that they believed would
cause problems in getting FDA approval (e.g. notes from the original experiments were
sub-standard and only a single dose study had been done). Bioclinical concluded that
an additional investment in multiple-dose pre-clinical trials would be required, especially
if they were to convince venture capitalists to provide the investment needed. That this
had not been picked up earlier reflected DiagnosticLabs’ lack of regulatory expertise,
rather than a lack of scientific expertise – the DiagnosticLabs scientific team had to
understand biological mechanisms underpinning the disease in order to have devel-
oped their original diagnostic. Nevertheless, it implied significant additional financial
investment, with Bioclinical estimating an extra nine months of work costing around $1
million. TherapeuticCo’s intentions were not distrusted by DiagnosticsLabs. Rather, the
problem was put down to the fact that the IP development project in TherapeuticCo
had happened some time before and that this particular project had never been core to
their product portfolio, so TherapeuticCo were unaware themselves of the problems.
[TherapeuticCo] represented what they had as best they could. Everything we did
was picking up somebody’s technology that they decided not to commercialize.
You know, it’s a little bit like this box here. You’ve got to look through the boxes
and find out whether you’ve got something that’s good, and until you’ve actually
got the boxes in your possession, you know, you don’t come across the Rembrandt
and find that the Rembrandt’s a fake.
(CEO, DiagnosticLabs)

From TherapeuticCo’s point of view, making additional investments in pre-clinical
development of a non-core area did not meet their interests, which were to license
out the available IP at minimum additional cost. Up to this point the different proj-
ects had interacted largely informally (Bioclinical having conducted due diligence on
a ‘goodwill’ basis in anticipation of a future share in the project), and none of the
partners were willing to make the additional investments needed to move the project
forward. Therefore, THERAGNOSTIC was eventually abandoned.

>> SKIN CASE
Cell is a medium-sized biotechnology company located on the US west coast, which
started as a university spin-out. The foundational project for Cell was to develop a prod-
uct called ‘SKIN’ in the area of regenerative medicine based on tissue engineering. Inter-
nal development work on SKIN resulted in an IND application to start clinical trials. At
that time, however, the Cell team realized that they did not have the commercial exper-
tise to market the product, so they licensed out the global sales and marketing rights of
the product to GlobalPharma, which had a division that sold immunosuppressive drugs
to support transplantations. GlobalPharma believed that organ transplantation would
ultimately be replaced by tissue-reengineering and so wanted to move into this technol-
ogy area, despite the fact that it was (and remains) an as-yet unproven technology com-
mercially. The idea was that Cell would continue to do the development project work
and conduct the early phase clinical trials, using the money from the license agreement

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