Astra deals add to ballooning up-front payments

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
MEDI4736 Celgene AstraZeneca 2015 Phase III 450
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
Roxadustat AstraZeneca FibroGen 2013 Phase III 350
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
Duvelisib AbbVie Infinity 2014 Phase III 275
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.

To contact the writer of this story email Elizabeth Cairns or Edwin Elmhirst in London at news@epvantage.com or follow @EPVantage on Twitter

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