Bio­phar­ma­ceu­ti­cal Deal­mak­ers’ In­ten­tions in 2018: Sup­ply and De­mand Ex­pec­ta­tions and Im­bal­ances

By Neel Pa­tel and Sachin Pur­war

In the decade since our first an­nu­al Deal­mak­ers’ In­ten­tions Study in 2009, there has been a per­sis­tent trend of buy­ers steadi­ly sharp­en­ing their ther­a­peu­tic ar­eas of fo­cus to gain com­pet­i­tive ad­van­tage while be­com­ing more se­lec­tive about who they en­gage with in the process. At the same time, com­pa­nies have been dri­ven to keep pace with tech­no­log­i­cal ad­vances — e.g., the ex­plo­sion in T-cell im­munother­a­py, ge­nomics, com­pan­ion di­ag­nos­tics — or risk ir­rel­e­vance. The law of sup­ply and de­mand is al­ways at work, how­ev­er, and ac­cord­ing to our 2018 Deal­mak­ers’ In­ten­tions Study has the po­ten­tial for sig­nif­i­cant im­pact on deal­mak­ing in the on­col­o­gy space and oth­er ther­a­peu­tic ar­eas com­pared to pre­vi­ous years.

Read the full study find­ings.

To gain more in­sight in­to 2018 deal­mak­ing trends and in­flu­ences, Sy­neos HealthTM  sur­veyed deal­mak­ers across the in­dus­try to as­sess their in­ten­tions for the next 12 months and put these find­ings in­to con­text for the year ahead. This year, we sur­veyed 66 mem­bers of the bio­phar­ma­ceu­ti­cal com­mu­ni­ty who par­tic­i­pate on ei­ther or both sides of deals and who are pre­dom­i­nant­ly ex­ec­u­tive-lev­el in­flu­encers on de­ci­sion-mak­ing. The 2018 Deal­mak­ers’ In­ten­tions Study, the 10th in our se­ries, cap­tures their ex­pec­ta­tions for deal ac­tiv­i­ty, sup­ply and de­mand for spe­cif­ic as­sets at dif­fer­ent de­vel­op­ment stages, and var­i­ous fac­tors af­fect­ing deal­mak­ing. In this sec­ond ar­ti­cle in a two-part se­ries, we take a close look at the sup­ply and de­mand pic­ture for 2018, by both de­vel­op­ment stage and ther­a­peu­tic area.

Sup­ply and De­mand by De­vel­op­ment Stage

Fol­low­ing the trend in pre­vi­ous years, buy­ers are con­tin­u­ing to show a strong in­ter­est in late-stage as­sets rel­a­tive to sell­ers (Fig. 8). How­ev­er, it seems that sell­ers are more in­vest­ed in see­ing pre-clin­i­cal as­sets through to Phase I and II be­fore look­ing to make a deal. There is a rel­a­tive shift from 2017 to 2018 in sell­er sup­ply to buy­er de­mand from pre-clin­i­cal (+35 per­cent) as­sets in­to Phase I (-15 per­cent) and Phase II (-24 per­cent) as­sets. This could par­tial­ly be a func­tion of the read­i­ly avail­able fi­nanc­ing cap­i­tal that is al­low­ing them to in­vest more in de­vel­op­ment and seek a stronger re­turn on cap­i­tal. It could al­so be that there is a stronger in­ter­est among buy­ers in ob­tain­ing pre-clin­i­cal as­sets that they can de­vel­op them­selves to beef up their pipelines at rel­a­tive­ly fa­vor­able prices.

Sup­ply and De­mand by Ther­a­peu­tic Area

As an­tic­i­pat­ed, on­col­o­gy re­mains the top ther­a­peu­tic area of in­ter­est for buy­ers and sell­ers. How­ev­er, it has be­come a much more at­trac­tive, op­por­tunis­tic mar­ket for buy­ers due to the spread be­tween an­tic­i­pat­ed sup­ply and de­mand in­creas­ing from 2 per­cent in 2017 to a fair­ly sig­nif­i­cant 15 per­cent in 2018. Twen­ty-one per­cent of buy­ers sur­veyed ex­pressed in­ter­est in on­col­o­gy as­sets, while 36 per­cent of sell­ers re­port­ed on­col­o­gy as­set sup­ply (Fig. 9). This sug­gests that pre­mi­ums in the on­col­o­gy space could start see­ing a po­ten­tial de­cline in the com­ing year for prod­ucts that are not high­ly dif­fer­en­ti­at­ed. Oth­er ar­eas where we are see­ing a sup­ply sur­plus in­clude in­fec­tious dis­ease (both an­tivi­ral and an­tibi­ot­ic) as well as in the CNS/psy­chi­a­try space. For sell­ers this means they have to be very mind­ful not on­ly about dif­fer­en­ti­at­ing their as­set but al­so mak­ing sure the core me­chan­ics of com­mer­cial suc­cess are be­ing con­sid­ered – things like pa­tient pop­u­la­tion tar­get­ing, ev­i­dence gen­er­a­tion that builds the val­ue sto­ry, and the like.

Ther­a­peu­tic ar­eas show­ing a de­mand sur­plus in­clude hema­tol­ogy, res­pi­ra­to­ry/pul­monolo­gy and re­nal. When we broke out the de­mand in­dex by tri­al phase (Fig. 11), no clear pref­er­ence emerged this year among buy­ers and sell­ers about the stage at which they pre­fer to make deals. This sug­gests that they are cur­rent­ly more fo­cused on iden­ti­fy­ing the best strate­gic fit and op­por­tu­ni­ty for their com­pa­nies.

The spe­cif­ic com­bi­na­tions of ther­a­peu­tic ar­eas and states of de­vel­op­ment an­tic­i­pat­ed to have the high­est sup­ply and de­mand im­bal­ances this year are sum­ma­rized in Table 1.

Table 1

Hottest Ar­eas for Li­cens­ing

CAR-T cell ther­a­py and CRISPR/Cas9 con­tin­ue to be among the hottest ar­eas for li­cens­ing in 2018, but in­ter­est in im­muno-on­col­o­gy and mi­cro­bio­mes has in­creased con­sid­er­ably since 2017. The top 10 ar­eas of in­ter­est in 2018 (in or­der) are:

  1. Im­muno-on­col­o­gy
  2. CAR-T cell ther­a­py
  3. CRISPR/Cas9
  4. Mi­cro­bio­me
  5. Can­cer vac­cines
  6. Ul­tra-rare
  7. Oth­er genome edit­ing
  8. An­ti­body-drug con­ju­gates
  9. Per­son­al­ized med­i­cine/ com­pan­ion di­ag­nos­tics
  10. Epi­ge­net­ics

While large-cap con­sol­i­da­tions may still be in our fore­see­able fu­ture, the over­ar­ch­ing trend of the last decade — i.e., the growth in emerg­ing com­pa­nies and the new fi­nanc­ing op­tions avail­able to them — means that small­er com­pa­nies have many deal­mak­ing op­por­tu­ni­ties avail­able to them. But as the 2018 Deal­mak­ers’ In­ten­tions Study demon­strates, these com­pa­nies will need to fo­cus on clear­ly demon­strat­ing prod­uct dif­fer­en­ti­a­tion and val­ue to ap­peal to in­creas­ing­ly dis­crim­i­nat­ing buy­ers while avoid­ing com­mon pit­falls in the deal­mak­ing process.

This is the sec­ond post in a se­ries re­lat­ed to the 2018 Deal­mak­ers’ Study. Our first post re­port­ed on high-lev­el deal­mak­ing trends, ex­pec­ta­tions by deal type, and fac­tors in­di­cat­ing buy­ers are be­com­ing a bit more se­lec­tive about the as­sets they are pur­su­ing and more risk averse. Fol­low us on our LinkedIn pages (Neel and Sachin) and check back on End­points to find ad­di­tion­al in­sights on fac­tors im­pact­ing bio­phar­ma­ceu­ti­cal deal­mak­ing.

Au­thors: Neel Pa­tel is Man­ag­ing Di­rec­tor, Com­mer­cial Strat­e­gy and Plan­ning for Sy­neos Health Con­sult­ing, and Sachin Pur­war is Di­rec­tor, Com­mer­cial Strat­e­gy and Plan­ning for Sy­neos Health Con­sult­ing. Sy­neos Health Con­sult­ing is an in­dus­try-lead­ing con­sult­ing firm spe­cial­iz­ing in the bio­phar­ma­ceu­ti­cal in­dus­try and part of Sy­neos Health, the on­ly ful­ly in­te­grat­ed bio­phar­ma­ceu­ti­cal so­lu­tions or­ga­ni­za­tion. We pro­vide ser­vices across a com­pre­hen­sive range of key ar­eas, in­clud­ing com­mer­cial strat­e­gy and plan­ning, med­ical af­fairs, risk and pro­gram man­age­ment and pric­ing and mar­ket ac­cess. Rec­og­nized by Forbes mag­a­zine as one of Amer­i­ca’s Best Man­age­ment Con­sult­ing Firms for three years run­ning, our in­dus­try fo­cus and depth of func­tion­al ex­per­tise, com­bined with strong sci­en­tif­ic and mar­ket knowl­edge, unique­ly po­si­tion us to tack­le high­ly com­plex busi­ness and mar­ket chal­lenges to de­vel­op ac­tion­able strate­gies for our clients. For more in­for­ma­tion, please vis­it sy­­lu­tions/con­sult­ing.

The top 10 block­buster drugs in the late-stage pipeline — Eval­u­ate adds 6 new ther­a­pies to heavy-hit­ter list

Vertex comes in for a substantial amount of criticism for its no-holds-barred tactical approach toward wresting the price it wants for its commercial drugs in Europe. But the flip side of that coin is a highly admired R&D and commercial operation that regularly wins kudos from analysts for their ability to engineer greater cash flow from the breakthrough drugs they create.

Both aspects needed for success in this business are on display in the program backing Vertex’s triple for cystic fibrosis. VX-659/VX-445 + Tezacaftor + Ivacaftor — it’s been whittled down to 445 now — was singled out by Evaluate Pharma as the late-stage therapy most likely to win the crown for drug sales in 5 years, with a projected peak revenue forecast of $4.3 billion.

The latest annual list, which you can see here in their latest world preview, includes a roster of some of the most closely watched development programs in biopharma. And Evaluate has added 6 must-watch experimental drugs to the top 10 as drugs fail or go on to a first approval. With apologies to the list maker, I revamped this to rank the top 10 by projected 2024 sales, instead of Evaluate's net present value rankings.

It's how we roll at Endpoints News.

Here is a quick summary of the rest of the top 10:

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David de Graaf now has his $28.5M launch round in place, build­ing a coen­zyme A plat­form in his lat­est start­up

Long­time biotech ex­ec David de Graaf has the cash he needs to set up the pre­clin­i­cal foun­da­tion for his coen­zyme A me­tab­o­lism com­pa­ny Comet. A few high-pro­file in­vestors joined the ven­ture syn­di­cate to sup­ply Comet with $28.5 mil­lion in launch mon­ey — enough to get it two years in­to the plat­form-build­ing game, with­in knock­ing dis­tance of the clin­ic.

Canaan jumped in along­side ex­ist­ing in­vestor Sofinno­va Part­ners to co-lead the round, with par­tic­i­pa­tion by ex­ist­ing in­vestor INKEF Cap­i­tal and new in­vestor BioIn­no­va­tion Cap­i­tal.

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Gene ther­a­py R&D deals turn red hot as Big Phar­ma steps up to play

This September will mark the 20th anniversary of the death of Jesse Gelsinger, a young man suffering from X-linked genetic disease of the liver. He was killed in a gene therapy study conducted by Penn’s James Wilson, and the entire field endured a lengthy deep freeze as the field grappled with the safety issues inherent in the work.

Some thought gene therapy R&D would never survive. But it did. And this year marked a landmark approval for Zolgensma, a new gene therapy for spinal muscular atrophy Novartis priced at $2.1 million.

“Gene therapy is the hottest item on the block now. But there was a time when we first got into this trial, where there wasn’t a person in the world who believed that gene therapy would work. We have to remember that,” noted gene therapy investigator Jerry Mendell told SMA News Today.

We’re still right on the pioneering frontier when it comes to getting approvals for gene therapies and launching marketing campaigns with the European green light for bluebird's leading program last Friday underscoring the nascent nature of the field. But gene therapy R&D is booming, and has been for several years now.

The rapid growth of gene therapy clinical development is well known, but we decided to put some numbers on it, to quantify what’s going on. DealForma chief Chris Dokomajilar took a lot over the past 10 years, as the number of deals, R&D partnerships and buyouts steadily gained steam, spiking last year and on track to maintain the surge in 2019.

The upfronts and totals for the dollars on deals so far in 2019 is already close to the 2018 mark, underscoring a new phase of negotiations as the major players step up to gain a piece of the late-stage and commercial action.

Once again, we’re looking at an “overnight” biotech success story, decades in the making.

At some point, that may start to brake the numbers we’re seeing. But for now, as rivals line up to compete for frontline prominence across a range of diseases, the arrows are all pointed north.

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Albert Bourla appears before the Senate Committee on Finance for a hearing on prescription drug pricing on Capitol Hill in Washington, DC, February 26, 2019. Chris Kleponis for CNP via AP Images

UP­DAT­ED: Pfiz­er CEO Al­bert Bourla is back in the M&A game, but why is he pay­ing $11.4B for Ar­ray?

Pfiz­er $PFE has cut short its time on the side­lines of bio­phar­ma M&A.

Mon­day morn­ing the phar­ma gi­ant un­veiled an $11.4 bil­lion deal to ac­quire Ar­ray Bio­Phar­ma, beef­ing up its on­col­o­gy work and adding a new re­search hub in Boul­der, Col­orado to its glob­al op­er­a­tions.

At $48 a share, Ar­ray $AR­RY in­vestors will be get­ting a 62% pre­mi­um off the Fri­day close of $29.59.

Pfiz­er, which has strug­gled to gain all the up­side promised in past buy­outs like Medi­va­tion, high­light­ed the ac­qui­si­tion of 2 ap­proved drugs in the deal — Braftovi (en­co­rafenib) and Mek­tovi (binime­tinib).

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Right back at you, Pfiz­er: BeiGene and a Pfiz­er spin­out launch a new­co to de­vel­op a MEK/BRAF in­hibitor that could ri­val $11.4B com­bo

A day af­ter Pfiz­er bought Ar­ray and its ap­proved can­cer com­bo, BeiGene and Pfiz­er spin­out Spring­Works have part­nered in launch­ing a new biotech that has an eye on the very same mar­ket the phar­ma gi­ant just paid bil­lions for. And they’re plan­ning on us­ing an ex-Pfiz­er drug to do it.

In a nut­shell, Chi­na’s BeiGene is toss­ing in a pre­clin­i­cal BRAF in­hibitor — BGB-3245, which cov­ers both V600 and non-V600 BRAF mu­ta­tions — for a big stake in a new, joint­ly con­trolled biotech called Map­Kure with Bain-backed Spring­Works.

Step­ping on Roche's toes, Mer­ck cuts in­to SCLC niche with third-line Keytru­da OK

In the in­creas­ing­ly crowd­ed check­point race, small cell lung can­cer has been a rare area where Roche, a sec­ond run­ner-up, has a lead over the en­trenched lead­ers Mer­ck and Bris­tol-My­ers Squibb. But Mer­ck is fi­nal­ly mak­ing some head­way in that di­rec­tion with the lat­est ap­proval for its PD-1 star.

The lat­est green light en­dors­es Keytru­da in the third-line treat­ment of metasta­t­ic SCLC, where it would be giv­en to pa­tients whose dis­ease ei­ther don’t re­spond to or re­lapse af­ter chemother­a­py, which would have fol­lowed at least one pri­or line of ther­a­py.

Sanofi aligns it­self with Google to stream­line drug de­vel­op­ment

Tech­nol­o­gy is bleed­ing in­to health­care, and big phar­ma is rid­ing the wave. Sanofi $SNY ap­point­ed its first chief dig­i­tal of­fi­cer this Feb­ru­ary, fol­low­ing the foot­steps of its peers. By May, the French drug­mak­er and some of its big phar­ma com­pa­tri­ots joined forces with Google par­ent Al­pha­bet’s Ver­i­ly unit to aug­ment clin­i­cal tri­al re­search. On Tues­day, the Parisian com­pa­ny tied up with Google to ac­cess its cloud com­put­ing and ar­ti­fi­cial in­tel­li­gence tech to spur the de­vel­op­ment of new ther­a­pies.

Af­ter watch­ing its share price soar on a Bloomberg re­port and heat­ed ru­mors, Bio­haven stock takes a bil­lion-dol­lar bath

Back in April, Biohaven Pharmaceutical became one hot biotech stock $BHVN based on a report in Bloomberg that some “potential bidders” had been kicking the tires at the biotech, which has a lead drug for migraines. Then the rumor mill really started to smoke when execs canceled a presentation at an investor conference a little more than a week ago.

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UP­DAT­ED: Roche fields first ap­proval for Ro­z­lytrek in the run-up to a show­down with Bay­er, Pfiz­er

While it’s wait­ing to hear back from FDA reg­u­la­tors, Roche is be­gin­ning the vic­to­ry lap for en­trec­tinib in Japan.

Roche is giv­ing Bay­er a run for their mon­ey with this tu­mor-ag­nos­tic drug, which tar­gets NTRK gene fu­sions. Now dubbed Ro­z­lytrek, it’s sanc­tioned to treat adult and pe­di­atric pa­tients in Japan with neu­rotroph­ic ty­ro­sine re­cep­tor ki­nase fu­sion-pos­i­tive, ad­vanced re­cur­rent sol­id tu­mors.