Data for the this analysis was compiled using the DealForma database on deals. We applied initial filters for deal types, therapeutic areas, stage 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 using our data and carefully curated profiles on deals, pipelines, companies, funding, and business executives by visiting dealforma.com to schedule your personalized demo.
Partnerships are the lifeblood of the biopharmaceutical industry — a way to bolster pipelines and access innovation for Big Pharma, a source of capital for the innovator, and a way to accelerate development and commercialization of promising potential therapies. But what is the most advantageous time for a biotech company to partner an asset, and at what stage of development and valuations are deals taking place?
Deal Analysis Methodology
As the annual JP Morgan Healthcare Conference Week, perhaps the most important and best attended event in the industry for dealmaking, fast approaches, we decided to look at DealForma’s extensive database for historical partnering trends. Looking at deals announced from January 1, 2008 through November 26, 2018, we decided to narrow our focus to development and commercialization deals and joint ventures focused primarily on cancer therapeutics with upfront cash or total milestones of at least $5 million. We excluded R&D only deals, option deals, and asset purchases. We also focused on deals that at least covered a major market. We looked at deals from platform/discovery through Phase III assets at deal signing. We ended up with 420 partnering deals primarily focused on oncology assets.
For our analysis we excluded the Nektar Therapeutics/Bristol-Myers Squibb announced in February 2018 as an outlier. It included $1 billion in an upfront payment, an $850 million equity investment, and Nektar retaining ownership of its investigational immunotherapy drug, which was to be tested in combination with Bristol’s cancer drugs.
While the database can be used to break down deals based on structure, for this analysis we focused on two things: deal value and number of deals by stage of asset at deal signing. The data is looked at as a whole and also broken down into two periods: 2008 – 2012 when the capital markets were tight and the economy was struggling to right itself from the recent recession, and 2013 – 2018 when markets opened up and money flowed into biotech, and new technologies such as immunotherapies, combination therapies, and cell therapies made huge advances.
Cancer Deal Activity by Stage at Signing
The total number of completed oncology development and commercialization deals rose by one third from the first five year period 2008 – 2013 to the last five plus years to date. Some of this can be attributed to the mega-M&A deals of early 2009: Pfizer acquiring Wyeth, Merck acquiring Schering-Plough, and Roche acquiring the rest of Genentech, which necessitated focusing on merging their organizations. Also, due to the collapse of the stock markets in 2008 and lower biotech valuations, acquiring assets through M&A rather than licensing became an attractive option.
Over time, there is also a strong trend toward earlier stage deals. Whereas in 2008, platform/discovery deals made up just a quarter of all deals, by 2018 they accounted for more than half of the oncology partnering development and commercialization major market deals. As far as number of deals, it peaked in 2015 at 58, of which more than one third were platform/discovery deals and only one tenth were for Phase III assets.
In fact, the number of platform/discovery years for oncology assets have doubled when comparing the five years from 2008 through 2012 with the next five plus years to date. This is due to a number of factors including the continued externalization of R&D by big pharmaceutical companies, and as drug development has gotten more complex, Big Pharma/Big Biotech can use their expertise to better shape the direction of research programs.
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Specifically for Biotech, Pharma, Device, and Diagnostics
Upfronts, Milestones, and Total Deal Values
What about changes in the value of biotech assets? The data show that innovative biotech companies are in a stronger position today as far as the value of their assets.
Potential partners are increasingly willing to raise overall values of the earliest stage deals, mainly through developmental and sales milestones.
Platform and discovery median total deal values have risen from $462 million in the period between 2008 and 2012 to $535 million in the period between 2013 and the present as promising new technologies such as gene and cell therapies, gene editing, and immunotherapies have gained traction. This is due both to increases in upfront cash and potential milestones. For a look at the highest payers in 2018, see our earlier data set which was featured in Endpoints News.
On the other end of the asset spectrum, total deal values for Phase III assets have remained relatively unchanged even as the potential for milestone payments has grown. It is also interesting to note that deal values for Phase I and Phase II assets have dropped between the 2008-2012 period and the 2013-2018 period.
Platform / Discovery Deals Bringing in Larger Upfronts
Two examples of oncology focused development and commercialization deals highlight some of the difference in higher value placed on platform/discovery stage assets today. Both deals involved exclusive global rights to multiple assets derived from the collaboration and no shared costs.
These were deals for platform/discovery stage assets.
In February 2010, GlaxoSmithKline paid Proteologics $3 million in upfront cash and an equity commitment for up to six small molecules developed using its ubiquitin platform with the potential for up to $1.1 billion in milestone payments plus royalties if all the molecules were successfully developed.
Eight years later, in July 2018, Merck tapped Sutro Biopharma to leverage its cell-free protein synthesis platform to develop immune modulating cytokines for oncology and autoimmune indications. Merck paid Sutro $60 million in upfront cash with the potential for up to $1.6 billion in milestones plus royalties if multiple therapies are successfully developed.
Deal comps analyses like this are simple to perform across multiple therapeutic areas, technologies, targets, and mechanisms using the DealForma platform. Better yet, subscriptions to the database include analyst time to have the work done for you. Schedule your demo today.
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.
More Research by DealForma
January 2022 Top Biopharma Deal: Beam – Pfizer In Vivo Base Editing and Delivery Programs for Rare Diseases
The top deal upfront for January 2022 was the Beam Therapeutics research partnership with Pfizer with an option to license in vivo base editing programs. Beam will receive $300M up front, up to up to $1.05B in development, regulatory, and sales milestones, plus royalties per licensed program. If Beam opts in to co-develop/co-promote a program, the companies will share cost and profits 65%/35% (Pfizer/Beam).
December 2021 Top Biopharma Deal: Foghorn – Loxo using Gene Traffic Control for New Oncology Treatments
The top deal upfront for December 2021 was the Foghorn – Loxo (Eli Lilly) partnership for Foghorn’s Gene Traffic Control platform. Foghorn will receive $300M up front, a $80M upfront equity investment, and up to $1.3B in potential milestones, plus a US cost/profit split and ex-US royalties.
November 2021 Top Biopharma Deal: Sanofi – Owkin artificial intelligence and federated learning platform to advance Sanofi’s oncology pipeline
The top deal upfront for November 2021 was the Owkin – Sanofi artificial intelligence and federated learning platform research partnership to advance Sanofi’s oncology pipeline. Owkin will receive a $180M upfront equity investment, $90M in R&D funding over 3 years, and is eligible for additional undisclosed R&D milestones.
The top deal upfront for October 2021 was the Xencor – Janssen deal for plamotamab and XmAb bispecific antibodies and new XmAb B-cell targeting bispecific antibodies for CD20-expressing hematologic malignancies. Xencor will receive $100M in upfront cash, $25M in an upfront equity investment, and is eligible for up to $1.18B in dev., reg., and sales milestones, plus tiered mid-teens to low-twenties royalties.
The top deal upfront for September 2021 was the REGENXBIO – AbbVie deal for RGX-314 for wet AMD, diabetic retinopathy, and other chronic retinal diseases. REGENXBIO will receive $370M up front and is eligible for up to $1.38B in milestones, plus tiered royalties on net sales of RGX-314 outside the US and 50% of profits in the US.
August 2021 Top Biopharma Deal: RemeGen – Seagen HER2-targeted ADC, Disitamab Vedotin for Solid Tumors
The top deal upfront for August 2021 was the RemeGen – Seagen deal for HER2-targeted ADC disitamab vedotin for solid tumors. RemeGen will receive $200M in cash up front and is eligible to receive up to $2.4 billion in milestones, plus tiered, high single-digit to mid-teen royalties.
Top Biopharma Deal July 2021: Arvinas – Pfizer ARV-471 PROTAC Protein Degrader for ER+/HER2- Breast Cancer
The top biopharma deal upfront for July 2021 was Arvinas and Pfizer’s partnership for PROTAC protein degrader ARV-471 ER+/HER2- breast cancer. Arvinas will receive $650M in cash up front, $350M in an equity investment, and is eligible to receive up to $1.4 billion in milestones, plus a 50% cost and profit split.
The top biopharma deal upfront for June 2021 was iTeos and GSK’s partnership for anti-TIGIT mAb EOS-448. iTeos will receive $625M up front, up to $1.45B in milestones, a U.S. profit split and ex-U.S. tiered royalties.
Top Biopharma Deal May 2021: Agenus – BMS for AGEN-1777 Bispecific Anti-TIGIT Antibody for Non-Small Cell Lung Cancer
The top biopharma deal upfront for May 2021 was Agenus and BMS’ partnership for anti-TIGIT mAb AGEN-1777. Agenus will receive $200M up front.
Top Biopharma Deal April 2021: CRISPR – Vertex for CTX001 for Sickle Cell Disease and Transfusion-Dependent Beta-Thalassemia
CRISPR Therapeutics and Vertex Pharmaceuticals amended their 2015 deal to develop and commercialize gene editing therapies. This expansion is for Phase I/II CTX001 for severe sickle cell diseases and transfusion-dependent beta-thalassemia. CRISPR will receive $900M up front, up to $200M in milestones upon the first regulatory approval, and a cost/profit split of 40%.
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