Discovery and Research Deals Lead Partnering

Author(s):

Discovery and research deals led life sciences partnering activity in 2012 as pharmaceutical companies looked to partner with biotechs that have novel platform technologies.

This article published with permission from The Burrill Report.

Discovery and research deals led life sciences partnering activity in 2012 as pharmaceutical companies looked to partner with biotechs that have novel platform technologies. Overall, potential values of partnering transactions by life sciences companies dropped 2012 even as average deal values rose.

Global partnering deals were valued at $37.6 billion, a 1.3% decline from 2011. Many announced deals did not disclose financial terms and of the deals with disclosed terms, many were back-end loaded, often with significant milestone payments tied to achievement of sales targets for drugs that are approved and marketed.

Among the deals with disclosed values, research and discovery deals led the way with 70 transactions, followed by preclinical (45), phase 2 (43), marketed products (40), phase 1 (28) and phase 3 (25) transactions.

Although the number of disclosed deals fell, the average potential deal values rose 8% to $305 million. The largest deal was AstraZeneca’s $3.4 billion buy-in to collaborate with Bristol-Myers Squibb’s newly acquired Amylin’s diabetes franchise. Allergan’s collaboration and license agreement with Swiss biotech Molecular Partners was valued at $1.4 billion with $65 million in upfront payments to develop and commercialize a class of novel biologics aimed at treating serious eye diseases.

Looking ahead, we expect to see more deals in which pharma and biotech collaborate at the early stages of research and drug discovery. These deals will be small bets for pharma and have the potential to turn into big deal for startups. On the other hand, as the paucity of later stage deals shows, biotechs are looking for alternatives to partnering with pharma for late-stage testing, including reaching out to strategic investors around the world and identifying where they can develop their drugs and extract the most value for their companies.