Transfer Risk: The Diligence Gap Altruist Executives Say Biotech Buyers Miss

A licensing deal transfers intellectual property with precision, but it cannot transfer the tacit knowledge that makes a biologics process reproducible — and two Altruist Biologics executives argue that gap deserves its own diligence category before any contract is signed.

Sun Chau Siu, PhD, executive director and head of regulatory affairs and project management at Altruist Biologics, and Kaisong Zhou, PhD, the company's chairman and CEO, lay out the argument in a viewpoint published by GEN – Genetic Engineering and Biotechnology News. Their core claim: the industry prices scientific, commercial and regulatory risk carefully, yet routinely fails to ask whether the acquiring organization can actually inherit the development system without materially relearning it.

What does a biologics license actually buy?

The molecule still comes first, the authors concede. If the biology is weak, the target undifferentiated or the clinical rationale unconvincing, no amount of technical discipline rescues the program. But in biologics, the asset is never just the molecule.

The full package includes cell line history, process development logic, analytical methods, comparability strategy, manufacturing experience, documentation discipline and the technical judgment accumulated over time. A licensing agreement can specify rights to those assets and the obligations around their transfer. It cannot guarantee the development system behind them stays reproducible once another organization takes over.

At signing, an asset can appear meaningfully de-risked — compelling target, persuasive early package, attractive market. Even so, technical liabilities can lurk until transfer, scale-up, validation or regulatory review exposes the gap between a promising molecule and a reproducible development system.

How does transfer risk stay hidden?

The authors describe a characteristic failure pattern. A potency assay performs consistently in the originating laboratory. The method transfers on paper, the receiving team follows the procedure, initial results look acceptable. Months later, differences in reference standards, laboratory conditions or system suitability behavior start producing unexplained variability.

What looked like an analytical transfer becomes a development problem, because the originating team's tacit understanding of the assay never moved. A comparability strategy may exist on paper but fall short once process changes accumulate. A program can transfer successfully at pilot scale and still need substantial redevelopment before Process Performance Qualification or commercial readiness, simply because the development rationale was never designed to travel.

Scientific risk reveals itself at multiple stages, including in the clinic. Transfer risk often doesn't. It stays buried until another organization must reproduce the process, defend the analytics and explain the development history under different operating conditions.

Why don't incentives catch it early?

The authors point to a structural problem. After signing, the seller has closed the deal, while technical teams on both sides are still negotiating how knowledge, responsibilities and decisions will transfer. Problems that might be correctable early compound quietly instead, becoming harder and more expensive by the time they surface.

Their verdict is blunt: transfer risk begins the moment the transaction is signed.

The industry's reflex response — more documentation — misses the point, the authors argue. Documentation is not the same as understanding. In many programs, the knowledge that determines reproducibility lives in a handful of people: the scientist who characterized the founding cell line, the process development lead who resolved early instability, the analyst who knows why the potency assay behaves differently after a weekend shutdown.

That knowledge rarely appears in a batch record. When those individuals are engaged in the transfer, problems surface earlier. When the transfer leans on documentation alone, the problems hide until they're costly. Some programs are reproducible performances, held together by the people who run them. Licensing moves the rights. It does not move the cast.

What should diligence ask instead?

The authors propose treating transfer-readiness as a distinct diligence dimension, alongside scientific, commercial and regulatory assessment. They offer a four-question test:

• Is the process sufficiently understood, rather than merely functional?
• Are the analytical methods reproducible across laboratories, not just demonstrated within one?
• Can the comparability strategy withstand expected process evolution?
• Does critical institutional knowledge live in the system, or primarily in the people who built it?

Existing CMC diligence, they note, already assesses regulatory compliance, batch history, manufacturing experience, process understanding and analytical readiness. The gap is that none of those assessments directly answers whether the underlying development rationale can be reproduced by a new organization.

The distinction matters because transfer-readiness is not development maturity. An early-stage asset can be intentionally immature yet highly transferable if its critical knowledge, assumptions and decision logic are well understood and captured. A more advanced asset can carry heavy transfer risk if too much development knowledge remains tacit or organization-specific.

Where the money lands

The economic consequences are direct. An asset requiring substantial process redevelopment, analytical remediation or knowledge reconstruction after licensing may still be worth acquiring, but its timeline, resourcing requirements and risk profile differ sharply from those of an asset that transfers with minimal relearning. Transfer-readiness therefore shapes not just technical execution, but how an asset is valued, resourced and integrated post-deal.

Not every transaction rests on a mature development system; some deals are option bets, acceleration strategies or pipeline-replenishment moves. The authors say those motives don't change the nature of the risk. A buyer inherits not only scientific potential, but the consequences of how that potential was developed.

The stakes rise with complex modalities such as antibody-drug conjugates, where development depends on tightly linked knowledge across the antibody, linker and payload, the conjugation process, analytical methods, raw materials and multiple internal or external suppliers. An ADC transfer may require reconstructing an entire network of technical relationships and control strategies — not simply reproducing a process.

Altruist Biologics is an Innovent CDMO, which gives its executives a vantage point on both sides of transfer deals. Their closing framing is one R&D and portfolio leads can take to the next diligence meeting: biotech licensing starts with differentiated molecules, but in biologics, value isn't created by discovery alone. The question is whether the knowledge system that made the asset valuable can move with it — and until buyers test that before signing, transfer risk will keep surfacing after the ink is dry.