What’s worth $500M-plus? The Big 6 deals of Q2 show you where the money is — and isn’t

You thought it was getting quiet on the deal front? You’re right. Those big licensing deals biopharma loves to boast about were on the wane in Q2.

Analysts for Cortellis tracked the big licensing game potentially worth a half billion dollars or more, and came up with only 7 in Q2, way down from the 17 seen in Q1. Altogether, they recorded 967 new deals of all sizes, down 8% from the 1,050 seen in the first three months of the year.

Quite a few biopharma writers love to pooh-pooh these deals, particularly when they are weighted to milestones. And in Q2, biobucks clearly ruled the game. But the way the deals are structured tells you a lot about where the most prominent drug developers are making their bets and budgeting hard R&D cash. Staying focused on development deals, I dropped Cortellis’ 7th pact, which highlighted a marketing deal between Pfizer and Basilea on an approved drug.

(Editor’s note: I’m adding in the Merck KGaA and F-star deal from June, which evidently was overlooked in this roundup.  The German Merck picked up rights to a bispecific checkpoint program and a slate of options on preclinical programs in the deal. Merck KGaA is paying $130 million in the first two years with an option that brings the total to $1 billion-plus. That would rank as a close tie for third place. You can read more about it here.)

Here are the top 6, ranked by grand totals:

AstraZeneca and Pieris start small with $2.1B PRS-060 deal

The scoop: Pieris is charged with taking their lead respiratory drug — PRS-060, an Anticalin against interleukin-4 receptor alpha — into a Phase I asthma trial. Once they do that, they can score $12.5 million to add to the $45 million upfront they are getting in the pact. That’s a tiny part of this deal, which scales up to $2.1 billion if everything works. It’s a small gamble on AstraZeneca’s part, if you examine what Pieris gets to bank on.

Bottom line: For a Big Pharma player, AstraZeneca’s R&D group does not have a lot of hard cash to play with. So it’s no wonder they beefed up the biobucks and stuck with the small numbers for the upfront.

Biogen advances on tau as Bristol-Myers retreats from neurosciences

The scoop: Biogen gets control of Bristol-Myers’ BMS-986168, an anti-eTau compound in clinical development for Progressive Supranuclear Palsy, for $300 million upfront and $410 million in milestones. Biogen is also assuming the obligations Bristol-Myers took on when it acquired iPierian in 2014 for $175 million in cash and $550 million in milestones. Total deal package: $1.26 billion. That iPierian deal focused heavily on the tau program, along with Bristol’s interest in pursuing it as a combo for Alzheimer’s — which oddly arrived months after Bristol’s decision to retreat from neurosciences work in 2013. But in recent years Bristol’s interest in Alzheimer’s has faded, while Biogen has been exciting the industry with early-stage data on aducanumab, an amyloid therapy.

Bottom line: Biogen’s new CEO is all-in on neurosciences, and he needs to do some deals to quickly build up the late-stage pipeline. He has the cash and the inclination, but good programs will be hard to find. Bristol, meanwhile, will keep its focus on immuno-oncology, licensing out non-core programs.

J&J has a PeptiDream, and in it they spend more than a $1B

The scoop: Here’s another heavily back-ended discovery deal, this time between J&J and Tokyo-based PeptiDream. Worth more than a billion dollars in total, we probably won’t hear much more about this for years, if ever. In the deal PeptiDream will use its platform tech to “identify macrocyclic/constrained peptides against multiple metabolic and cardiovascular targets of interest selected by Janssen, and to optimize hit peptides into therapeutic peptides or small molecule products.”

Bottom line: J&J was one of the few big players this year to actually do something big in M&A when it bagged Actelion for $30 billion. The BD team is very selective when it comes to spending the big bucks, but they have a rep for finding successful late-stage drugs for the pharma giant.

J&J inks another $1B deal, but it’s mostly milestones

The scoop: J&J has come in with a $50 million upfront — a sizable amount for a preclinical program — and a full slate of milestones worth up to $940 million to gain exclusive worldwide licensing rights to Protagonist’s PTG-200.The IL-23 peptide antagonist is being built to treat Crohn’s disease, one of its top inflammatory bowel disease targets.

Bottom line: Another small ante for something we won’t hear about for quite some time. In Big Pharma, the real money is in play for late-stage assets, and most of the execs don’t like the valuations Phase III programs can fetch.

Pfizer demonstrates zeal for gene therapy in $545M Sangamo pact

The scoop: Pfizer has been a serious player in gene therapy of late, buying in new programs and lining up the manufacturing and more needed to roll out some of the early therapies expected to hit the market. The pharma giant underscored all that with a $70 million upfront and $475 million in milestones to partner on Sangamo’s hemophilia A program, which includes SB-525.

Bottom line: Pfizer has been willing to do a blizzard of deals to beef up its pipeline where it wants new drugs. They’ve hit the pause button on M&A for now, but their BD team stays active. They have the cash and the inclination.

Shire stays focused on eye diseases with $535M Parion pact

The scoop: Lexington, MA-based Shire agreed to pay Parion $40 million in an upfront and near-term cash to get its hands on worldwide rights to a Phase II dry eye disease drug. Hundreds of millions more are on the table in promised milestones, bringing the potential deal value up to $535 million. Shire has been drawn to the biotech’s work on ENaC — epithelial sodium channel — inhibitor molecules. In this case P-321 is designed to amp up tear volume on the eye surface, and investigators have some preliminary efficacy data from a Phase I/II safety study that indicates they may be on to something.

Bottom line: It’s early days on this drug, but Shire CEO Flemming Ornskov has a stubborn interest in building an eye drug franchise, and he’s still willing to invest moderate amounts to bring in new drugs. Again, though, we’re seeing a deal heavily tilted to biobucks, de-risking the effort.

Image: Shutterstock

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Recursion Pharmaceuticals Salt Lake City, UT
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Atlas Venture Cambridge, MA

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