AstraZeneca tops the product deal charts in 2009

Yet another blockbuster bio-dollar deal by AstraZeneca, this time for Rigel Pharmaceuticals’ phase II rheumatoid arthritis (RA) drug, fostamatinib (R788), must place the UK pharma giant as currently the most lucrative partner of choice for small biotech companies (Rigel delivers top-dollar deal with AstraZeneca for oral RA candidate, February 16, 2010).

The $100m upfront fee for a phase II product is substantial and would rank the deal, in terms of cash paid upfront, within the top ten overall in 2009 and within the top six deals over the last five years for a phase II candidate. Indeed, last year Astra paid a record amount upfront for a phase II drug, licensing Targacept’s anti-depressant, TC-5214, for $200m as part of an overall deal worth up to $1.24bn, the third largest in 2009 (see tables below).

Topping the charts

Last year, Astra signed two of the three biggest product licensing deals, while perhaps unsurprisingly the overall league table is dominated by companies that were not involved in mega-mergers; the likes of Pfizer, Merck & Co, Roche and Novartis have clearly been more focused on completing their large deals and managing the inevitable pipeline restructuring required.

The following table, extracted from EvaluatePharma, excludes any products sourced from company acquisitions and lists the top ten licensing deals in 2009, in terms of overall deal value, related to an individual or group of products, along with some of the key research platform partnerships.

Interestingly, last year also saw a significant shift back in favour of conventional small molecule drugs, as just three deals over biotech products make it into the league table. In contrast, the biggest deals in 2008 were dominated by biotech products (Most valuable product deals in 2008, January 19, 2009).

Top marks for securing the best possible terms for key pipeline candidates must go to Medivation, the only licensor company to feature in the league tables in the last couple of years. Having licensed Alzheimer’s candidate Dimebon to Pfizer in 2008 for $225m upfront and $725m overall, Medivation secured Astellas Pharma’s services last year to develop prostate cancer drug, MDV3100, outside the US for $110m upfront and potentially $765m overall (Medivation hits another jackpot, October 27, 2009).

Cash on the table

While total deal values are a useful assessment of the kind of money that companies are prepared to commit to any given product, often they are heavily back-end loaded, with the bulk of the value only being released when some pretty ambitious regulatory and sales milestones are met.

Therefore, ranking by upfront fee can provide a more immediate assessment of a product’s value, and last year eleven product deals commanded an upfront fee of $100m or greater, matching the same number of deals above this threshold in 2008.

Johnson & Johnson’s deal with Elan over another Alzheimer’s hopeful candidate, bapineuzumab, grabs top spot, although admittedly the $500m paid to create a joint venture to develop Alzheimer’s drugs gives J&J access to more than just bapineuzumab (J&J comes riding to Elan’s rescue, July 2, 2009).

Whereas in 2008 the top five biggest upfront fees were all for late stage products, in phase III or above, last year three of the top five cash payments were for phase II drugs, with Astra’s collaboration with Targacept the stand out deal (AstraZeneca gives late stage pipeline another boost, December 3, 2009).

The increasing upfront fees for earlier stage products is a theme that EP Vantagewill return to shortly with some interesting analysis and is perhaps indicative of the fact the big pharma is scrambling over each other to secure vital pipeline assets, thereby driving up the price of earlier stage products.

As far as benchmarking cash upfront fees is concerned, the following table shows the top five deals attracting the biggest lump sums at each of the clinical stages of product development.

Naturally the most lucrative cash upfront can be secured for a phase III candidate, but there are still some staggeringly high fees paid for early stage drugs, mostly within the last couple of years.