This article is a sample from the DealForma Quarterly Deal Trends Report provided to database subscribers. Data for this analysis was compiled using the DealForma biopharma deals database. We applied initial filters for deals involving R&D and commercialization, therapeutic areas, asset stages at signing, and deal payment terms. From there, we exported the data to Excel and used pivot tables and charts to do the rest. All data are based on publicly disclosed figures. We invite you to answer interesting questions on biopharma business development and licensing using our data and carefully curated profiles on deals, pipelines, companies, funding, and business executives by visiting dealforma.com to schedule your personalized demo.
Partnering is the lifeblood of biopharma and 2019 started with a bang as the first quarter saw global biotech and pharma partnering deal values hit $38 billion in 282 deals, according to DealForma’s extensive deals database. The strong deal trend followed a solid fourth quarter in 2018 when R&D partnering deal values hit $33 billion in close to 324 deals.
Total upfront cash and equity that flowed to the licensor in deals struck in Q1 2019 also remained in line with Q1 2018 values, to close the first quarter at $3.9 billion with another $1 billion in deals announced in just the first two weeks of Q2 2019. The 2018 numbers were buoyed by a strong fourth quarter when nine deals alone brought in $2.3 billion in upfront cash and equity.
The first quarter of 2019 comes off a strong 2018 for R&D biopharma partnering when total disclosed deal values soared to $97.9 billion, a 40 percent increase over 2017, while total upfront cash and equity hit a record $11.2 billion. The record numbers were part of an upward trend over the past five years when in 2013 total disclosed deal values were just $27.1 billion in 830 partnerships. The number of signed R&D partnerships rose to 1,071 in 2018, a 28 percent increase from the 837 deals signed in 2017.
Top 10 R&D Deals in Q1 2019 by Total Deal Value
First quarter 2019 numbers were heavily weighted by a handful of megadeals. The top ten deals in Q1 2019 by total deal value crossed $24.4 billion, or 64 percent of the all partnering deal values for the quarter.
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Top 5 R&D Deals in Q1 2019 by Total Upfront Cash and Equity
The list changes slightly when sorted by total upfront cash and equity payments:
Still while a handful of deals contributed the bulk of money exchanging hands, a better marker that assets are commanding higher values is the change in the median upfront cash and equity payments, which shot up to $30 million in Q1 2019, compared to an average of $13 million over the previous 11 years.
By now, everyone in this industry knows that total deal values are comprised of upfront cash and equity, back end development and sales milestones, and royalties if the deal leads to a commercialized product (i.e., the deal benchmarks for deal comps). Sometimes these values are referred to as “biobucks” because most of the total deal value is realized on the back-end reaching specific development and sales milestones. As the median upfront payments show, the actual money exchanging hands is just a tiny fraction of the potential value of the deal. In the risk-averse days of 2008-2011, many deals were back-loaded with a significant portion of “biobucks” dependent on achievement of sales targets. As Big Pharma began externalizing its R&D, they have moved toward more risk-sharing deals, and thus larger upfront payments to access technologies of interest.
The $100 Million Plus Club
What happens if we take the universe of deals where a partner shells out $100 million or more in upfront cash and equity to seal a deal?
Looking at this subset of deals, there was a sharp increase in 2018 in the number of deals where the partner/licensee shelled out $100 million or more upfront in cash and equity to seal a deal, compared to 2017. This trend continued into Q1 2019 with 10 such deals totaling $2.9 billion in upfront cash and equity payments, plus 2 more deals in just the first 2 weeks of Q2 to bring the total year-to-date total to $3.8 billion.
Deals by Stage at Signing
Earlier stage deals continue to predominate, a trend that has continued since 2014. More than 65 percent of therapeutics deals were signed at platform / discovery and preclinical stages, while deals for approved products rose back to 14 percent.
This trend really took off for deals in the $100M-plus club in 2018 as the spread of stage at signing is more evenly spread out over the past ten years.
Top Therapeutic Areas for Deals
Cancer targets remain the top therapeutic area for dealmaking with significant annual increases and more than $26 billion in upfront cash and equity paid out since 2008. Neurologic disorders are the second most prevalent therapeutic area for R&D biopharma partnering. This trend is also evident among deals in the $100 Million Plus Club.
These trends have continued into 2019 as companies focus on immunotherapies and cell and gene therapies. Recently signed megadeals in these categories include Roche’s Genentech signing a $2.3 billion partnership with Adaptive Biotechnologies to develop off-the shelf T cell therapies for a range of cancers using Adaptive’s platform. The deal came with an upfront payment of $300 million.
At the end of January, Neurocrine Biosciences paid Voyager Therapeutics $165 million in upfront and equity payments for a license to four of its mid-stage neurology gene therapy programs; and Janssen Pharmaceutical paid MeiraGTx Holdings $100 million up front to gain access to its early stage gene therapy targeting X-linked retinitis pigmentosa.
Another large immune-oncology deal, valued at $4.2 billion, was struck between GlaxoSmithKline and Merck KGaA wherein GSK paid Merck $346.6 million up front for rights to a bifunctional fusion protein targeting PD-L1 for various cancers.
But the largest deal in Q1 2019 went to AstraZeneca, which shelled out $1.35 billion in an upfront payment to Japanese pharmaceutical Daiichi Sankyo in a partnership to jointly develop and commercialize Daiichi’s antibody-drug conjugates, the most advanced being an ADC for which Daiichi expects to submit a BLA for approval to treat HER2-positive metastatic breast cancer previously treated with Genentech/Roche’s Kadcyla. It is also in several other late-stage trials for various indications. The collaboration has a total deal value of $6.9 billion if all milestones are achieved.
Marie Daghlian is a freelance writer and editor who reports on the business of biotechnology and healthcare technologies and on rare diseases for Global Gene’s Rare Daily. She also covers the industry for Big4Bio, a daily newsletter focused on the four major biotech centers in the United States.
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The top deal upfront for Oct 2022 was the MacroGenics research partnership with Gilead with an option to license MGD024. MacroGenics signed a research partnership with Gilead to develop MGD024, a bispecific antibody, and two additional bispecific therapies using MacroGenics’ DART platform with an exclusive, worldwide option to license MGD024 for the treatment of certain blood cancers, including acute myeloid leukemia (AML) and myelodysplastic syndromes (MDS). MacroGenics will be responsible for Phase I clinical trials of MGD024 as a monotherapy and combination therapy for multiple indications. Gilead may exercise its option at predetermined decision points. MacroGenics will receive $60M in cash up front and is eligible for up to $1.7B in development, regulatory, and commercial milestones, and undusclosed option exercise fees, plus tiered, double-digit royalties for MGD024 and a flat royalty for two other therapies.
The top deal upfront for Sep 2022 was the SpringWorks expanded clinical collaboration with GSK for Nirogacestat in combination with GSK’s Blenrep. SpringWorks granted GSK non-exclusive rights to develop and commericalize Nirogacetat,an oral gamma-secretase inhibitor, in combination with GSK’s Blenrep, an antibody-drug conjugate targeting B-cell maturation antigen for the treatment of multiple myeloma. SpringWorks will receive a $75M equity investment in shares of common stock at a premium to the 30-day volume-weighted average share price on Sept 2, 2022, and is eligible to receive up to $550M in development and commercial milestones.
The top deal upfront for Aug 2022 was the Sanofi development and commercialization deal with Innovent for SAR408701 and SAR444245. Sanofi granted Innovent exclusive rights to develop and commercialize its SAR408701 (tusamitamab ravtansine) for the treatment of non-small cell lung cancer (NSCLC) and gastric cancer in China. Additionally, Sanofi and Innovent will co-develop SAR444245 for the treatment of multiple cancer drugs. Sanofi will invest EUR300M (approx. $306.6M) in Innovent up front at HK$42.42 (approx. $5.40) per share in Innovent common stock. Sanofi is eligible for EUR80M (approx. $81.7M) in development milestones plus royalties for SAR408701, while Innovent is eligible to receive EUR60M (approx. $61.3M) in development milestones and royalties for SAR444245.
The top deal upfront for July 2022 was the Orion co-development and co-commercialization deal with MSD for ODM-208. Orion granted MSD rights to co-develop and co-commercialize ODM-208 for the treatment of metastatic castration-resistant prostate cancer. Orion and MSD have an option to convert the co-development and co-commercialization agreement into a global exclusive license to MSD. Upon exercising the option, MSD will retain the responsibility for all accrued and future development and commercialization expenses associated with the program. Orion will receive $290M up front, including $221M recognized as income, and approximately $60.3M reserved to cover Orion’s share of ODM-208 future development cost. Orion is eligible for undisclosed development and commercialization milestones, plus double-digit tiered royalties.
June 2022 Top Biopharma Deal: Sanofi – Regeneron Pharmaceuticals for Cancer/Inflammation drug Libayo
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May 2022 Top Biopharma Deal: Dragonfly Therapeutics – Gilead Sciences NK cell engager for cancer/inflammation
The top deal upfront for May 2022 was the Dragonfly Therapeutics development and commercialization deal with Gilead Sciences for solid tumors. Gilead has an exclusive, worldwide option to develop and commercialize additional NK cell engager programs by using its Tri-specific NK Engager (TriNKET) platform after the completion of certain preclinical activities. Dragonfly will receive $300M up front and is eligible to receive undisclosed opt-in payments and development, regulatory, and commercial milestones, plus up to 20% royalties.
April 2022 Top Biopharma Deal: Harbour BioMed – AstraZeneca Bispecific Antibody for Cancer Treatment
The top deal upfront for April 2022 was the Harbour BioMed development and commercialization deal with AstraZeneca for solid tumors. AstraZeneca will be responsible for all costs for development and commercialization. HBM will receive $25M up front and is eligible for up to $325M in development, regulatory, and commercial milestones, plus undisclosed tiered royalties.
March 2022 Top Biopharma Deal: IGM Biosciences – Sanofi IgM Antibody Platform for Cancer and Immunology/Inflammation
The top deal upfront for March 2022 was the IGM development and commercialization deal with Sanofi for cancer, immunology, and inflammation. IGM will receive $150M up front and is eligible to receive up to $6.015B in regulatory and commercial milestones, which includes $940M for each of 3 cancer targets and $1.065B for each of 3 immunology/inflammation targets. Additionally, Sanofi has expressed an interest in purchasing up to $100M of IGM non-voting common stock in a public financing.
The top deal upfront for February 2022 was the Heidelberg development and commercialization partnership with Huadong for HDP-101, HDP-103, and options for HDP-102 (CD37-ATAC) and HDP-104. Heidelberg will receive $20M up front and is eligible for up to $449M in milestones with additional $461M in option payments upon exercise. Additionally, Huadong will invest EUR 105M (35%) in Heidelberg, with an initial commitment of EUR 80M by purchasing 12,408,649 shares at EUR 6.44 per share.
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