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
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
The top deal upfront for June 2022 was the Sanofi development and commercialization deal with Regeneron for Libtayo (Amended Agreement). Sanofi granted Regeneron exclusive, worldwide rights to develop and commercialize Libtayo for the treatment of cancer. Regeneron and Sanofi signed a license agreement in 2015 to develop Libtayo. Sanofi will receive $900M up front and is eligible to receive up to a $100M milestone upon the first approval by either the FDA or EMA for Libtayo in combination with chemotherapy for first-line treatment of certain patients with NSCLC and up to $100M as a sales milestone in the next two years, plus 11% royalties.
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.
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.
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