Materials Transfer Agreements: What They Are & When to Use Them

In my prior post, I discussed Pilot or Trial Agreements in the SaaS and software context. Those agreements cover scenarios where a potential customer is looking to evaluate a software or SaaS product for purchase, and will get access for a short period of time for free or a small charge. In today’s post, I discuss the analogue in the biotech and food tech space: Materials Transfer Agreements, including when one is needed, common key terms, and how they differ from NDAs. 

What’s an MTA & When to Use One 

Materials Transfer Agreements, or MTAs, cover the transfer of physical material between 2 entities, usually research institutions, universities, or companies. The physical material can be reagents, antibodies, and other compounds. The purpose of an MTA is to allow the receiving entity to test out a quantity of this material for a specific purpose, such as R&D with their own product line (such as combining the material with another compound), determining manufacturing capability, or other research purposes. 

Any time a company has developed a compound that it is providing for testing or evaluation, it’s ideal to use an MTA to cover confidentiality and IP ownership issues as well as logistics such as shipping, return of the materials, and quantity provided.

Common Key Terms

Here are some common key terms a well-written MTA should cover: 

• Material provided: the name of the compound
• Purpose and end outcome: what the receiving entity is going to do with the compound or what it will produce at the end of the evaluation, such as create a new compound, report, or something else.
• Timeline: how long the receiving company has to evaluate the compound.
• IP ownership: who owns the new compound, report, or end product. 
• Confidentiality: with whom the new compound, report, or end product can be shared, if at all, and any other non-disclosure requirements

How these and other sections are drafted will depend on the disclosing party’s ability to negotiate these terms, the industry the companies are in, the business objective, the compound provided, and other considerations specific to each company. Usually, MTAs are heavily negotiated. 

MTAs v. NDAs

Note that NDAs should not be used in lieu of an MTA if some tangible materials are being provided. NDAs generally cover only documents, files, and other verbal disclosures, but do not cover confidentiality and IP ownership of compounds and other materials. A commercial attorney can provide guidance on clauses to include in MTAs tailored to your specific company, product, and business objective, as well as provide guidance on leading discussions with the other company.