Repurposing existing drugs for new indications has emerged as a powerful strategy in modern drug development. Yet, the business models that underpin successful repurposing ventures remain diverse and highly dependent on how intellectual property (IP) is managed. In this post, we examine various business models for drug repurposing, the role of IP within them, and how IP serves as a connecting link between stakeholder interests and venture sustainability.
The business of second chances
Repurposing requires significant investment in clinical validation, regulatory approval, and market access—even if the compound is already known. And this assumes the compound can still be procured. Without a sustainable business model, many promising repurposing efforts stall before reaching patients. A key to viability is how IP, especially data exclusivity, formulation patents, and second medical use patents, can be structured to enable investment while ensuring access.
1. Public-driven model: grant-funded with public IP retention
In this model, academic or non-profit entities lead the project, often with public or philanthropic funding. The public partner or a foundation retains IP. The primary goal is maximizing patient access rather than commercial return. Pricing strategies are typically aligned with cost recovery, and IP is used to prevent monopolistic behaviour. A challenge is often accessing sufficient funding and moving at speed for smaller projects. For larger projects with substantial grant funding, such as the example below, the challenges are usually related to the governance and the project focus (usually on research).
Example: REMEDi4ALL is a Horizon Europe-funded initiative aimed at transforming drug repurposing in Europe by pooling public research efforts, computational tools, and clinical expertise. It operates as a public consortium involving universities, patient groups, and public funders. All IP developed within the project is managed under terms that prioritize open access, shared data, and public health-focused licensing.[1]
Stakeholders:
- Academia and public funders ensure research remains open and patient-oriented, benefiting public health.
- Philanthropy focuses on ensuring affordability and equitable access, advocating for non-exclusive licenses.
- Regulators need transparent governance and commitment to affordability.
IP use: IP is used defensively to prevent exclusive appropriation by third parties. Licensing structures may prioritize open access or limited exclusivity bound by pricing and availability terms. This maintains public stewardship while preventing downstream barriers to access.
2. Lean biotech model: startup-led with out-licensing strategy
This model involves startups identifying repurposing opportunities and driving early development (e.g., proof of concept or Phase IIa trials). IP is created around second medical use or formulation, then out-licensed to a commercial partner for further development and commercialization or the startup is acquired by a partner that further develops the product. Many startups that follow this approach use AI and similar tools to optimize costs. A challenge, at least to ensure public interests are met, is ensuring that the product remains accessible to the intended patients as this model follows more traditional investment models. Additionally, the type of funding may limit the available time to reach significant milestones.
Example: Healx, a Cambridge-based startup, illustrates this model effectively. In 2022, Healx secured an exclusive licensing option from Ovid Therapeutics to explore a new indication for gaboxadol, originally developed by Roche and later by Ovid for neurological disorders. Healx has since progressed the compound into further clinical validation through its drug-repurposing AI platform, retaining IP rights for the new indication and positioning itself to out-license to a larger pharma partner based on clinical milestones.[1]
Stakeholders:
- Entrepreneurs need IP to serve as a valuable asset for securing funding and partnerships.
- Investors benefit from milestone-based returns.
- Pharma companies expect licensing-ready assets backed by robust IP.
IP use: IP, typically, serves as the cornerstone of valuation, particularly in cases of second medical use or formulation patents. It offers licensees exclusivity for commercial returns while enabling early-stage startups to de-risk their offering. This IP creates a bridge between scientific discovery and commercial interest, aligning stakeholder motivations.
3. Hybrid access model: public-private partnership with shared IP
Here, public institutions and private partners co-develop a repurposing candidate. IP ownership is jointly structured or licensed under ethical use provisions. This balances private investment incentives with public health goals. This approach balances the interests of both public and private partners, and it can focus on contractual access obligations embedded in governance in combination with moderate margin arrangements. A challenge often lies in control-related issues, as maintaining alignment between the two groups can be difficult. In particular, when development requires substantial effort from the industry, the university’s contribution becomes less significant. This may also impact the required flexibility to develop a product successfully.
Example: A successful case of this model is the collaboration between Bordeaux University and Pierre Fabre Laboratories in developing an oral pediatric formulation of propranolol for the treatment of proliferating infantile hemangiomas.[1]
Stakeholders:
- Public funders want guarantees of societal return on investment.
- Industry gains structured access to novel indications, protected by licensing frameworks.
IP use: Shared IP governance ensures that no single entity can deviate from agreed impact goals. IP licenses often include conditions for access, pricing, and availability. This promotes investment without compromising patient outcomes or public returns.
4. Impact-driven independence model: enterprise with mixed funding
that retains control over IP. Instead of exit through acquisition or IPO, the aim is long-term delivery of affordable medicine with reinvestment of proceeds. In effect, this is creating a special-purpose vehicle for the development and subsequent offering of the drug being developed. A challenge in this model is getting the governance right to ensure interests are secured, while also retaining sufficient flexibility and the long-term commitment required of the various partners to bring the project to successful completion.
Example: Medicines Development for Global Health (MDGH) is a hybrid private entity structured as a not-for-profit pharmaceutical company, supported by private impact investors, charities, and public funding.[1]
Stakeholders:
- Impact investors require measurable outcomes alongside modest returns.
- Funding: grants and public support to finance late-stage development.
- Founders prioritize governance structures that maintain mission focus.
IP use: IP is structured to restrict price gouging and prevent resale or exclusive licensing that compromises access. The company retains IP ownership and uses it to enforce responsible commercialization, aligning mission and operations without exit pressure.
IP as the linking pin
Intellectual property sits at the intersection of science, policy, and economics. In repurposing ventures, it offers rights holder the opportunity to determine access conditions to:
- Incentivize investment through time-limited exclusivity
- Enable ethical commercialization by embedding access conditions
- Protect public investment by preventing strategic shelving
When aligned with stakeholder interests and goals, IP can provide benefits to multiple types of stakeholders. If the resulting IP arrangements are crafted to reflect these interests and goals —e.g., through access clauses, use-it-or-share-it provisions, or tiered pricing—the result is greater alignment, trust, and project continuity.
Conclusion
The business model for drug repurposing must be more than just a financing plan; it is a governance structure and IP plays a central role. IP, when used strategically, supports venture formation, ensures alignment of stakeholder interests, and makes the difference between innovation that reaches patients and one that remains a promising paper. Societally responsible models offer not only ethical justification but also practical tools to mobilize resources while potentially benefiting public health outcomes. When access and alignment are built into the model, IP becomes a bridge and not a barrier to sustainable, impactful drug development. To read more, check out our other posts on IP and exclusivity.
References
[2] https://healx.ai/healx-and-ovid-therapeutics-enter-strategic-partnership/
[3] Jonker, A. H., O’Connor, D., Cavaller-Bellaubi, M., Fetro, C., Gogou, M., ’T Hoen, P. A. C., de Kort, M., Stone, H., Valentine, N., & Pasmooij, A. M. G. (2024). Drug repurposing for rare: progress and opportunities for the rare disease community. Frontiers in Medicine, 11, 1352803–1352803. https://doi.org/10.3389/fmed.2024.1352803
