Boehringer deal shows growing interest in Alzheimer’s space

The fact that Boehringer Ingelheim, a company not know for its extravagance when it comes to both company M&A and even in-licensing deals, is paying Vitae Pharmaceuticals a $42m upfront fee for what is essentially a research project in Alzheimer’s, shows the growing desire among pharma companies to be the one that makes the breakthrough in the disease that is thought to effect 18 million people worldwide.

In the last 10 years there have been a total of 210 deals around Alzheimer’s products. While the majority of these have been either in-licensing or acquisition of individual products, the table below shows that there is an increasing trend for companies to buy whole businesses that have Alzheimer's drugs.

Count of Alzheimer's Product Deals per Year
License M&A Total
 2009 (YTD)  3  11  14
 2008  9  8  17
 2007  15  4  19
 2006  18  13  31
 2005  13  5  18
 2004  15  6  21
 2003  22  4  26
 2002  8  1  9
 2001  6  7  13
 2000  21  3  24
 1999  14  4  18
Total 144 66 210

This year Roche increased its presence in the market with a $50m acquisition of Memory Pharmaceuticals, giving it rights to eight Alzheimer’s products, including two that it had previously partnered. This year there have already been 11 products sourced from company acquisitions, up from the 8 that occurred during the whole of 2008.

While the Memory deal may have been for phase I and II products, like many in the space the Boehringer deal is for products that have yet to reach the clinic. Since 1999 just under 70% of deals have been struck over either pre-clinical drugs or even earlier research products (see table below).

Product licensing / acquisition deals since 1999
Phase Product Count Average upfront fee ($m) * Average deal value ($m) *
 Marketed  6  -  -
 Filed  1  -  -
 Phase III  10  242  419
 Phase II  9  14  552
 Phase I  18  25  289
 Pre-clinical  31  26  386
 Research project  69  27  152
Total 144
 * Upfront fees and deal values calculated only for deals with disclosed terms

What is also interesting is that the relative early stage of many of the products has not prevented pharma companies from paying high looking upfront fees for what are very risky products. At the pre-clinical stage the average upfront fee is $26m, while for research projects the fee is surprisingly slightly higher at $27m.

But given the stats surrounding the disease it is easy to understand why pharma companies are happy to spend the money to ensure that if a breakthrough in Alzheimer’s is found they will be one of the beneficiaries. Last year Alzheimer drug sales reached $5bn, a figure that Boehringer estimates will rise to $14bn by 2015.

Although the number of product deals last year declined in comparison to the average number for the preceeding five years, the value of the deals was significant; the top four biggest single-product deals signed in the last ten years were all completed in 2008.

To date the most expensive deal for a single Azheimer’s product is $780, struck between Astellas Pharma and CoMentis for phase I product CTS-21166, a beta secretase (BACE) inhibitor similar to Vitae's candidates. But while the biodollar amount may look impressive the prize for the company which has scooped the most amount of cash up front for a single product goes to Medivation for Dimebon, which pocketed $225m in its deal with Pfizer last year (Medivation hits jackpot with Pfizer deal, September 3, 2008). A further $500m is due over the course of the development of the drug.

The majority of deals in the space have also tended to be for beta amyloid products, the in-licensing of Vitae’s products marks only the seventh deal for a BACE product in the last ten years.

Top five biggest single-product licensing deals for Alzheimer's candidates
Product Pharmacological Class Company Deal Partner Status on Deal Deal Date Total Deal Value ($m)
CTS-21166 Beta secretase (BACE) inhibitor Astellas Pharma CoMentis Phase I  2008  760
Dimebon Acetylcholinesterase inhibitor & NMDA receptor antagonist Pfizer Medivation Phase III  2008  725
ADX63365 Metabotropic glutamate receptor 5 (mGluR5) antagonist Merck & Co Addex Pharmaceuticals Pre-clinical  2008  477
Flurizan Gamma secretase inhibitor Lundbeck Myriad Genetics Phase III  2008  350
AZD3480 (TC-1734) Alpha 4 & beta 2 nicotinic agonist AstraZeneca Targacept Phase II  2005  300

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