Pharmacyclics strikes most lucrative single-product deal of 2011

Analysis

There are always exceptions that prove a rule and Johnson & Johnson’s licensing of novel Bruton's tyrosine kinase inhibitor PCI-32765 from Pharmacyclics for a staggering $150m upfront is just such an example. Against the backdrop of a gradual decline in the volume and value of product licensing deals over the last few years, the J&J deal is a timely reminder of the handsome price that big pharma companies are still prepared to pay for innovative, first-in-class assets.

The $150m upfront received by Pharmacyclics is the biggest single-product licensing deal so far this year and greatest amount paid to license a phase II asset since AstraZeneca splashed the cash on Targacept’s anti-depressant TC-5214 in 2009 for $200m (see table below). J&J clearly believes PCI-32765 is worth it and the deal provides another important test of the theory that ‘you get what you pay for’ in licensing deals (Does a top dollar upfront payment give a greater chance of success?,August 4, 2011).

Highest bidders

The table below, taken from EvaluatePharma, shows the biggest R&D product licensing deals in 2011. The deals struck by Eli Lilly and Lundbeck, with Boehringer Ingelheim and Otsuka respectively, have generated the biggest upfront fees so far this year but both transactions involved multiple products changing hands.

As such, the J&J-Pharmacyclics deal announced yesterday is the biggest single product licensing deal this year, illustrating the level of achievement by the California company’s negotiating team (J&J pays handsomely for first-in-class blood cancer drug, December 9, 2011). The deal is the biggest upfront to license a phase II asset since the Astra-Targacept collaboration; in a slightly different type of transaction Abbott Laboratories paid $450m to acquire Reata Pharmaceuticals' phase II bardoxolone outright last year.

Top 10 Upfront Fees Paid in Product Licensing Deals in 2011
Rank Company Product Therapeutic category Pharmacological Class Deal Partner Status on Deal Upfront Fee ($m) Total Deal Value ($m)
1 Eli Lilly Tradjenta + BI 10773 Anti-diabetics DPP-IV inhibitor + SGLT2 inhibitor Boehringer Ingelheim Phase III 410 1,261
2 Lundbeck Abilify Depot + OPC-34712 Anti-psychotics Atypical antipsychotic + D2 dopamine agonist Otsuka Holdings Phase III 200 600
3 Johnson & Johnson PCI-32765 Antineoplastics Bruton's tyrosine kinase (Btk) inhibitor Pharmacyclics Phase II 150 975
4 Astellas Pharma Tivozanib Anti-angiogenics VEGFr kinase inhibitor AVEO Pharmaceuticals Phase III 125 1,480
5 Abbott Laboratories BT-061 Anti-rheumatics Anti-CD4/CD25 MAb Biotest Phase II 85 85
6 Astellas Pharma Difimicin Anti-bacterials Bacterial RNA polymerase inhibitor Optimer Pharmaceuticals Filed 68 224
7 Allergan Levadex Anti-migraine 5-HT1B (serotonin) & 5-HT1D (serotonin) agonist MAP Pharmaceuticals Phase III 60 157
8 Human Genome Sciences HGS1036 Other cytostatics Fibroblast growth factor (FGF) antagonist FivePrime Therapeutics Phase II 50 495
9 Sanofi GBR500 Immunosuppressants Anti-VLA-2 MAb Glenmark Pharmaceuticals Phase I 50 663
10 Allergan MP0112 Eye preparations VEGF-A antagonist Molecular Partners Phase II 45 420

The top deal chart also shows that cancer remains hot property in terms of deal value, accounting for three of the top ten transactions in terms of upfront fees paid.

While Pharmacyclics managed to extract the largest upfront for a phase II asset, in bio-dollar terms Aveo’s deal with Astellas Pharma is larger; understandable perhaps give the drug in question has potentially broader utility in several solid tumour types.

A tyrosine kinase inhibitor that potently inhibits VEGF growth pathways, the first real test of the agent’s potential will emerge next year when a pivotal renal cell carcinoma study reports (Event – Aveo hoping for game-changing data from tivozanib, April 28, 2011).

Human Genome, meanwhile, paid handsomely for FivePrime’s FP-1039, now called HGS1036, one of the most advanced inhibitors of fibroblast growth factor ligands in development (Therapeutic focus - Expectations rising for FGF inhibitors, March 18, 2011). At the time the deal was struck a phase II study in patients with uterine cancer was being recruited; the companies plan to conduct further studies in multiple cancer types.

As to the ‘you get what you pay for’ theory, Astra’s high stakes gamble on TC-5214 is looking decidedly shaky after the recent failure of the first phase III trial of the Targacept drug (Targacept investors severely depressed by TC-5214 failure, November 8, 2011).

J&J will be hoping for much better luck in its bet on Pharmacyclics’ novel cancer agent.

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