The brace of licensing deals unveiled by AstraZeneca today are remarkable for their generous up-front payments – but not as remarkable as they might once have been. An analysis of the biggest up-front outlays of the past 10 years shows that these large fees are becoming more common.
The top spot is taken by Pfizer’s $850m swoop on Merck KGaA’s checkpoint inhibitor avelumab back in November. The larger of Astra’s deals, under which Celgene has acquired certain rights to another anti-PD-L1, MEDI4736, for $450m, comes in at number four (see table below). But one fact illustrates the growing willingness of companies to stake big money up front: of the top 15 deals of the past decade, all but two were forged in the last five years.
And this trend has been accelerating since then: five of these same 15 licences were agreed in the past 12 months.
EP Vantage looked at up-front payments a year ago, prompted by Celgene’s $710m up-front bid for Nogra Pharma’s GED-0301. The antisense oligonucleotide for Crohn’s disease was the subject of what then was the biggest sign-up fee in biopharma’s history (Celgene’s record-breaking deal hangs on phase II data, April 25, 2014).
Upping the ante
The analysis below shows how things have changed since then. This covers deals struck over R&D-stage products within the past 10 years.
Pfizer for instance obtained worldwide rights to Opko Health’s growth hormone project Lagova earlier this year. The deal included provision for a further $275m in milestone payments – $20m less than the up-front. The risk inherent in such a front end-loaded deal was perhaps mitigated slightly by Lagova being in phase III trials – and by the companies’ estimate of the global growth hormone market being worth more than $3bn.
Another asset in late-stage R&D is Infinity Pharmaceuticals’ blood cancer project duvelisib, also in phase III. AbbVie paid $275m to secure a profit share in the US and a royalty elsewhere. This arrangement was more weighted towards milestones than the Pfizer/Opko pact, with AbbVie promising an additional $405m should duvelisib reach market.
But it is Pfizer’s willingness to fork over the best part of a billion dollars for Merck KGaA’s anti-PD-L1 antibody MSB0010718C, now known as avelumab, that rewrote the licensing rules (German Merck no longer the immuno-oncology underdog, November 17, 2014). Immuno-oncology might have been the stand-out area of 2014, and the deal did see Pfizer essentially buy half of the asset under a global alliance. But even so this was a huge play for a phase II asset. With milestones totalling up to $2bn, Pfizer is obviously hugely bullish about its chances.
If companies remain willing to make these kinds of bets it will surely not be long before the sector sees its first $1bn-plus up-front payment.
|Biopharma's biggest licensing deals by up-front payment – the top 15 of the past 10 years|
|Project||Company||Source||Deal date||Status at deal||Up-front ($m)|
|Avelumab||Pfizer||Merck KGaA||2014||Phase II||850|
|GED-0301||Celgene||Nogra Pharma||2014||Phase II||710|
|Fotagliptin Benzoate + Pan-HER Inhibitor*||Sellas Life Sciences||Fosun||2013||Preclinical||518|
|Bardoxolone methyl||Abbott (now AbbVie)||Reata||2010||Phase II||450|
|Tradjenta + Jardiance||Eli Lilly||Boehringer Ingelheim||2011||Phase III||409|
|RTA 404 + 403||AbbVie||Reata||2011||Preclinical||400|
|Lagova||Pfizer||Opko Health||2015||Phase III||295|
|Alzheimer’s Disease Program||Merck & Co||Alectos Therapeutics||2010||Research||289|
|Alnylam/Roche RNAi collaboration||Roche||Alnylam||2009||Research||289|
|Eliquis||Pfizer||Bristol-Myers Squibb||2007||Phase III||250|
|IPH2201||AstraZeneca||Innate Pharma||2015||Phase II||250|
|mRNA Therapeutics||AstraZeneca||Moderna Therapeutics||2013||Research||240|
|*Deal terminated after eight months owing to Sellas failing to settle a payment.|