Licensing deals rack up in 2021

This year has yet to see a blockbuster-style deal, but prices remain punchy nevertheless.

Biotech investors might be longing for an uptick in M&A to lift spirits, but at least licensing deal activity remains healthy. More than $9bn in up-front fees has changed hands so far this year, and 2021 is not yet over.

Only this week Astrazeneca paid $200m for rights for a phase 3 amyloidosis project from Ionis, with a further $485m contingent on approvals. The terms looks rich considering that this disease area is already competitive, with projects from both Pfizer and Alnylam on sale and others in late-stage trials. But, as this analysis shows, the licensing deal market has not been immune to price inflation.

High prices have been evident across the sector for some time now, particularly in takeout premiums. And, while company valuations have tumbled this year, competitive assets are still commanding rich price tags. The chart below shows that exactly the same applies to licensing deals, or at least the initial fees needed to secure these transactions.

This analysis, based on data from Evaluate Pharma, concerns only deals in which the up-front payment was disclosed. This figure is announced in around a quarter of licensing transactions, so the real volume of activity is much higher than this chart suggests. Future milestones are far from guaranteed, however, so focusing on total deal values, or so-called “biodollars”, does not accurately reflect the actual amount of money changing hands each year.

True, a couple of outsized deals are partly responsible for this upswing. These include the $4bn that Gilead signed over to Galapagos in 2019 for wide-ranging access to the European biotech’s pipeline, and the two huge up-front fees – $1.4bn and $1bn – that Astrazeneca paid Daiichi Sankyo for the antibody-drug conjugates Enhertu and datopotamab deruxtecan.

The largest up-front paid this year was the $700m Glaxosmithkline handed over to Alector for two antibodies targeting neurodegenerative diseases. That an oncology deal is not topping the table is notable; even more remarkable is that a neuroscience project features so prominently. The transaction shows that this field really is attracting more attention, and investment, after years of neglect.

But billion-dollar up-front deals are very much a feature of recent times, and are mostly found in the oncology space. What is interesting is that 2021 has yet to see a licensing transaction anywhere close to these outliers.

Perhaps that means that 2021 has one more megadeal to offer. Or maybe valuations really are on the way down. 

Top five deals, by up-front fee, of 2021 so far
Company/partner Details  Up front  Total deal value 
Glaxosmithkline/Alector Global collaboration over AL001 (ph2) and AL101 (ph1), progranulin-elevating MAbs for neurodegenerative diseases $700m $2.2bn
Novartis/Beigene Development and commercialisation rights to tislelizumab, anti-PD-1 MAb, globally ex-China $650m $2.2bn
Pfizer/Arvinas Global collaboration over ARV-471, ph2 protein degrader in breast cancer $650m $2.4bn
Glaxosmithkline/Iteos Global collaboration over EOS-448, ph1 anti-Tigit MAb for cancer $625m $2.1bn
Bristol Myers Squibb/Eisai Global collaboration over MORAb-202, ph1/2 FRα ADC for cancer $450m $3.1bn
Source: Evaluate Pharma. 

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