Oncology, driven by the promise of IO, dominates biopharma deals landscape

Spurred by the promise of immuno-oncology (IO), oncology dominated the biopharma dealmaking landscape last year, a new article by Jamie Munro and Helen Dowden, of Clarivate Analytics, shows. The acute interest in IO continues a trend, the article noted: The technology has been a factor in 32 of the 35 multibillion-dollar oncology licensing deals over the last five years.

“A key driver here is presumably the current dominance and expected growth in the oncology market,” wrote Munro, global practice leader, portfolio & licensing, and Dowden, portfolio & licensing consultant, at Clarivate. Their article, “Trends in Oncology Dealmaking,” appears in the March issue of BioPharma Dealmakers, the quarterly magazine that is distributed in Nature Biotechnology and Nature Reviews Drug Discovery.

Munro and Dowden examined both licensing and mergers and acquisitions (M&A) in oncology from 2013 to 2017 and found that activity rose more sharply in the first three years. A likely contributor to the spike, they noted in the BioPharma Dealmakers article, was the approval in 2014 of the first two PD1–PD-L1 checkpoint inhibitors—Keytruda (pembrolizumab) from Merck & Co. and Opdivo (nivolumab) from Bristol-Myers Squibb. This “accelerated a wave of dealmaking, not only around other checkpoint inhibitors, but also for molecules and technologies that could offer synergistic benefits when used in combination with these drugs,” they wrote.

The authors noted that the volume of oncology dealmaking decreased in 2017 slightly from the levels in the two preceding years, down 6% from 2015 and 4% from 2016. “Possible factors that may have contributed include companies awaiting the impact of repatriation tax changes in the U.S. and the potential plateau in the number of PD1 or PD-L1 combination therapy options,” Munro and Dowden wrote.

Nevertheless, the total dollar value of these deals has been maintained, the authors pointed out.

Munro and Dowden’s analysis looked at data covering the last five years that had been filtered to exclude non-therapeutic-focused deals using the “technologies” categorization in Clarivate’s Cortellis database. Deals in which the primary focus was any of the following were excluded: assays, bioinformatics, biomarkers, diagnostic methods, drug formulation, drug screening, generics, genomics technologies, imaging, instruments, lab reagents, manufacturing, medical and other devices, radiolabeling, service agreements and software. In addition, any “pending” deals and “terminated” acquisition deals were also excluded. Thus, 94 mergers and acquisitions and 1,385 licensing and joint ventures were studied in the resulting Cortellis datasets.

Other highlights from the BioPharma Dealmakers analysis included:

  • Discussion of the July 2017 mega-deal between AstraZeneca and Merck, which focused on the clinical evalua­tion of AstraZeneca’s PARP inhibitor Lynparza (olaparib) and MEK1/2 kinase inhibitor selumetinib, used in combination with the compa­nies’ PD1-specific and PD-L1-specific antibodies. The deal is valued at $8.5 billion inclusive of contingent payments.
  • While the AstraZeneca–Merck deal is the largest recorded in oncology within the past five years, there were an additional 34 licensing deals in this time period with a total value in excess of $1 billion, the authors noted.
  • Of the 35 blockbuster licensing deals, as noted, 32 are focused on immuno-oncology, and many involve emerging platforms, such as chimeric antigen receptor (CAR) T cell therapies.
  • In terms of the distribution of licensing deals by phase of develop­ment of the lead asset at the time of deal-signing, 58% of deals were signed at the discovery stage.
  • The authors found that the drivers behind the 14 largest oncology M&A transactions within the same time period were more diverse comprising next-generation hormone-based therapies and small-molecule tyrosine kinase inhibitors as well as IO.
  • Not surprisingly, perhaps, large pharmaceutical companies dominated the multibillion-dollar M&A transactions during the study period. But the authors pointed out that many smaller companies were just as active in terms of the volume of their M&A activity. They cited Juno Therapeutics, as an example. Juno snagged four companies (ZetaRx, X-Body, AbVitro and Redox) for less than $400 million in total.

The full oncology article is available via the Biopharma Dealmakers website; although access is free, you may need to register on the site: Trends in Oncology Dealmaking.

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