Right of first negotiation agreements have become a staple of biopharma licensing deals—a seemingly elegant way for Big Pharma to secure optionality on promising assets while smaller biotechs gain upfront capital and partnership validation. But a new Jefferies analysis of 50 ROFN agreements over the past decade reveals an uncomfortable truth: most don't lead to acquisitions.
The standout exception? Sanofi, which has consistently converted ROFN clauses into actual deals, most recently with its $470 million acquisition of Vigil Neuroscience after securing rights to the company's Alzheimer's asset just eleven months earlier.
This pattern reveals something fundamental about negotiation success that goes far beyond contract clauses and legal frameworks. It's about organizational power—the ability to influence outcomes through internal alignment, external credibility, and strategic execution.
Jefferies' comprehensive review paints a sobering picture. While ROFN agreements have proliferated across biopharma partnerships, they've largely failed to deliver on their implicit promise of future consolidation. Many Big Pharma companies secure these rights but never exercise them, leaving biotech partners with theoretical optionality that never materializes.
The reasons vary—regulatory setbacks, strategic pivots, internal competing priorities, or simply changing risk appetites. But the pattern suggests something deeper: securing a right of first negotiation requires one set of organizational capabilities, while successfully executing on that right requires another entirely.
Consider the recent challenges facing companies like Aldeyra Therapeutics, which partnered with AbbVie in a deal worth up to $400 million. Despite AbbVie's ROFN on Aldeyra's ophthalmology pipeline, the relationship has been tested by two FDA rejections of their lead asset reproxalap. AbbVie's option remains open, but regulatory headwinds have clearly complicated the path forward.
Meanwhile, the Biogen-Denali Therapeutics partnership illustrates how even well-funded collaborations can unravel. After Biogen invested over $1 billion in the relationship, the companies have scaled back their collaboration, with Biogen ending programs that weren't expected to read out until 2031.
What sets Sanofi apart isn't luck or superior deal-making—it's organizational power applied with precision and consistency. The French pharmaceutical giant has structured its approach to ROFNs as part of a broader strategic framework, not as isolated tactical moves.
In RED BEAR's framework, organizational power operates through two critical dimensions: internal alignment and external credibility. Sanofi demonstrates mastery of both.
Internal Alignment: Sanofi's track record suggests strong internal processes for evaluating, approving, and executing on ROFN opportunities. When they secured rights to Vigil's VG-3927 in July 2024 with a $40 million investment, they weren't just buying optionality—they were positioning for rapid decision-making. Eleven months later, they executed a full acquisition.
This speed requires exceptional internal coordination across multiple functions: business development, clinical development, regulatory affairs, finance, and executive leadership. Organizations without this alignment often get bogged down in internal negotiations that delay or derail external opportunities.
External Credibility: Sanofi's consistent execution on ROFN agreements has created a reputation that likely influences how biotech partners approach these relationships. When a company knows their pharma partner has a history of following through, it changes the dynamic of the entire negotiation—from initial licensing terms to ongoing collaboration decisions.
This credibility compounds over time. Sanofi's willingness to execute creates a virtuous cycle where promising biotechs are more likely to engage seriously with their partnership overtures, knowing they represent genuine acquisition potential rather than just another licensing fee.
RED BEAR teaches that organizational power becomes most effective when negotiators prepare not just their tactics, but "the story of their company's value, structure, and alignment." Sanofi's ROFN strategy exemplifies this principle in several key ways:
Strategic Positioning: Rather than treating ROFNs as individual deals, Sanofi appears to view them as components of a portfolio strategy. Their outstanding agreements with Ventyx Biosciences, Zucara, and MeiraGTx suggest a systematic approach to building optionality across therapeutic areas, particularly in CNS disorders where they're building expertise.
Resource Allocation: Successful ROFN execution requires not just financial resources but organizational bandwidth. Companies that struggle to convert these agreements often lack the internal infrastructure to evaluate opportunities quickly and decisively. Sanofi's track record suggests they've built this capability as a core competency.
Risk Management: By structuring initial investments that provide both ROFN rights and early partnership validation, Sanofi creates multiple pathways to value creation. Even if full acquisitions don't materialize, they gain insights into promising technologies and management teams.
For pharmaceutical companies considering ROFN strategies, Sanofi's approach offers several organizational power lessons:
Build Internal Decision-Making Infrastructure: ROFNs are time-sensitive by nature. Organizations that can't move quickly from evaluation to execution will consistently lose opportunities to more agile competitors.
Align Incentives Across Functions: Business development teams may secure ROFN rights, but successful execution requires buy-in from clinical, regulatory, and commercial teams. Internal organizational power depends on this cross-functional alignment.
Develop Consistent Evaluation Criteria: Ad hoc decision-making leads to inconsistent results. Companies with clear frameworks for evaluating ROFN opportunities are more likely to execute successfully.
For biotech companies, the analysis suggests important considerations about partnership selection:
Evaluate Track Records: Not all ROFN agreements are created equal. Partners with histories of execution deserve different consideration than those collecting options without follow-through.
Structure for Success: ROFN terms should account for the partner's organizational capabilities and strategic priorities. Agreements that don't align with the pharma partner's core competencies are less likely to convert.
Maintain Strategic Optionality: While ROFN agreements provide capital and validation, they shouldn't preclude exploration of alternative partnerships, especially with organizations that have stronger execution track records.
The biopharma ROFN landscape reflects broader trends in complex B2B negotiations across industries. Organizations with strong internal alignment and external credibility consistently outperform those that rely solely on legal structures or financial resources.
As RED BEAR's research on organizational power demonstrates, successful negotiations increasingly depend on how effectively companies can mobilize their entire organizational ecosystem—not just their negotiation teams. In an environment where strategic partnerships are becoming more complex and time-sensitive, this capability becomes a sustainable competitive advantage.
Sanofi's ROFN success story isn't just about pharmaceutical strategy—it's a masterclass in organizational power applied systematically over time. For companies across industries looking to convert partnership agreements into meaningful outcomes, the lesson is clear: secure the right, but more importantly, build the organizational capability to exercise it.
The difference between winners and wishful thinkers isn't in the contracts they sign—it's in the organizational power they bring to making those contracts meaningful.