Value creation for Life Sciences companies

Patents are core business assets for emerging life sciences companies that underpin fundraising, partnerships, and potential exits. Patent strategy needs to evolve from seed to exit stage, keeping pace with available resources as well as commercial objectives.

At the seed stage, with limited resources and high financial uncertainty, the filing strategy is usually to protect the company’s core innovation at the lowest cost possible, while more funding can be obtained. At the seed and Series A stages, investors can accept a lean patent portfolio. The priority is capturing core inventions early, maintaining options and avoiding premature disclosures. Filing strategies at this stage should emphasise broad concept coverage and speed.

By Series B, investors expect to see a more refined filing strategy and a broader portfolio with competitors in mind and containing defensive as well as potentially offensive patent filings to secure a competitive edge. This is also the time to consider follow-on filings with emerging clinical data, formulations, dosing, biomarkers, patient sub-populations, and building a patent thicket that extends the commercial runway.

Freedom-to-operate analysis becomes essential as products come close to launch. Global filings must align with planned trial geographies and future markets, and regulatory exclusivities (SPCs, PTEs) should be incorporated into long-term planning. Companies approaching later rounds or IPO must also ensure watertight ownership, assignments, licensing terms, and a diligence-ready data room. Hence, patent strategy must mature from reactive protection to proactive value creation.

Complying with regulatory transparency requirements while extending the commercial runway through follow-on patent filings; how to balance and protect value?

Early in development, composition of matter (COM) patents are the cornerstone of protection for a new pharmaceutical or biological product. These patents protect the product itself and typically offer the strongest, broadest protection because they cover the product itself, irrespective of how it is manufactured or used.

However, as foundational patents approach expiry, follow-on patents play an increasingly important but more unpredictable role. Such follow-on patents can protect improvements made to the original product (such as polymorphs, analogues, variants and formulations) or protect new clinical findings (such as new therapeutic indications or dosage regimens).

In the pharma and biotech space, strategic tension arises from the interaction between clinical trial transparency and patentability. To conduct clinical trials, companies must submit clinical trial applications, publish clinical trial protocols and provide informed consent materials to patients. Such documents can publicly disclose dose levels, drug formulations, administration routes or dosage regimens. This information can then become prior art against later-filed follow-on patent applications.

The timings of follow-on filings are therefore a crucial strategic decision. Filing before clinical trial material is publicly available avoids the risk of detrimental disclosures, but early applications may lack sufficient efficacy data to support patentability. Filing after such a matter is publicly available may mean that stronger clinical data is included, but such applications will have a higher prior art burden.

This balancing act is becoming even more challenging as regulatory frameworks move towards greater transparency. For example, recent changes to the EU Clinical Trial Information System significantly expanded public access to clinical trial information by removing the previous deferral mechanism and limiting redaction options.

Ultimately, while COM patents remain the foundational protection for innovative therapeutics, well-crafted follow-on IP remains essential – but strategies must adapt as regulatory landscapes shift.

What are some unusual strategies for value creation using patents?

When we talk about value creation with patents in life sciences, three less-obvious plays stand out.

First, industry-standard patent pools. Participating in, or helping to shape, collaborative patent pools can reduce litigation risk and accelerate cross-licensing in emerging and complex therapeutic areas. The growing interdependence of biotech R&D makes these pools increasingly important for accelerating innovation and market access. Well-structured pools can also help cut transaction costs and clear patent thickets.

Second, unlocking capital with IP-backed financing. A company can monetise dormant patents by using them as collateral for loans, which can improve liquidity without equity dilution. This particularly attracts specialised patent-focused funds that invest in IP-rich biotech firms to boost valuation and growth potential.

Third, maximise tax efficiency with Patent Box regimes. The UK Patent Box taxes qualifying IP profits at 10%. Similar incentives exist across Europe (e.g., Belgium, France, Ireland, the Netherlands, Spain) and in non-EU countries such as Switzerland and Turkey. Hong Kong’s newer regime offers 5%. Patent Boxes are especially valuable for diagnostics, where fast innovation cycles bring earlier tax benefits.

In short, pool to go faster, finance to go further, and use Patent Boxes to keep more of what you make.

When should a life science company perform an FTO review?

For life science innovators, a freedom-to-operate (FTO) review should not just be a single milestone but instead should be a strategic thread running through the entire R&D and commercial lifecycle. The patent landscape around pharma, biopharma and biologics is dense, fast-evolving, and increasingly shaped by parallel UPC and EPO activity. Making the right calls on when to conduct an FTO review as part of the ongoing strategic consideration can shape early-stage decisions on R&D direction, create investability and prevent costly late-stage surprises.

An initial, high-level FTO assessment should be carried out early in discovery, when selecting targets, modalities or technology platforms. At this stage, the goal is to avoid pursuing inherently blocked or contested areas. A deeper FTO review becomes essential at lead candidate selection, once sequences, constructs, formulations or manufacturing routes are sufficiently defined. This is the moment when design flexibility remains high, and the cost of course correction is still manageable.

Showing that you have properly reviewed FTO and established plausible positions to mitigate known risks is essential when negotiating with investors. Also, a thorough FTO review is critical before entering clinical trials, and further FTO checks should be triggered by material changes to manufacturing processes, delivery systems, or product composition. Finally, a comprehensive FTO assessment is indispensable before commercial launch, including evaluation of SPCs, divisional filings and pending oppositions.

At each stage, expert guidance matters. EIP’s integrated life sciences team provides strategic, technically rigorous FTO assessments that align legal risk with scientific and commercial realities. From early landscaping to pre-launch clearance, EIP supports companies in navigating complexity with clarity and confidence.

Is a relevant third-party patent right always an FTO problem?

Encountering a third-party patent right during an FTO review is not always the barrier it first appears – these rights can be challenged. In addition to national litigation, centralised EPO oppositions remain a powerful and inexpensive tool to attack problem patents, and the UPC is growing in popularity in European life science litigation.

Many patents that initially appear to represent FTO problems can be challenged centrally at the EPO. The procedure is relatively fast (typically less than 16 months to reach a first instance decision), inexpensive, and achieves either complete revocation or limitation in most cases. One caveat is the short 9-month window following the date of the grant in which the opposition must be filed; to ensure this is not missed, companies need to be monitoring relevant applications before the grant as part of their ongoing FTO management.

In addition, the UPC has added a second strategic layer to clearing problematic rights. By mid-2025, the court had already handled 883 cases, with 369 being central revocation actions and 26% of all matters concerning pharma/biotech. The UPC offers a rapid, EU-wide route to clearing rights that threaten market entry or clinical progression. Notably, around half of patents subject to UPC revocation proceedings had also been opposed at the EPO, showing how companies now routinely use both forums in tandem to neutralise problem patents.

With coordinated opposition, UPC action, and/or a well-timed design-around, companies can often remove or limit the impact of potentially problematic patents. EIP’s integrated life sciences team helps innovators assess, challenge and manage third-party rights, turning potential blockers into actionable, confident pathways forward.

How can a life sciences startup build an IP portfolio cost-effectively?

For early-stage life science companies, intellectual property is often the most valuable asset they possess, yet also one of the most expensive to develop. A cost-effective IP strategy is therefore not about spending less, but spending smarter. The goal is to build a defendable, investor-ready portfolio that grows in step with scientific and commercial milestones on the route to market, investment, or acquisition.

Rather than filing broadly and everywhere, startups should focus on protecting what truly differentiates their technology in the key markets for the planned product. Early landscaping and targeted FTO analysis help avoid wasteful filings in crowded or blocked spaces, while identifying areas where a strong, narrow filing can have real commercial leverage.

Next comes planned strategic staging. Filing an initial priority application gives 12 months to generate data, refine embodiments and validate the platform. During this window, companies can raise capital, generate partnering interest and review potential markets so as to make informed decisions about which territories to pursue patent protection in. Filing a PCT application can be used to buy a further 18 months of pendency before significant decisions are made.

A cost-effective portfolio also relies on smart claim drafting, ensuring applications support future divisional strategies, SPC eligibility and downstream cases directed to a lead asset, formulation, dosage regime or manufacturing process. These additional filings provide layers of protection for different aspects of the project, along with extending exclusivity beyond the initial patent lifetime.

EIP’s integrated life science practice helps startups with focused patent drafting, jurisdictional prioritisation, and long-term portfolio planning, aligned with regulatory and commercial pathways. With the right guidance, even the leanest innovators can build an IP portfolio that protects value, attracts investment and scales with ambition.