Resurgence of conventional and untrendy therapy area product deals in 2009

Analysis

EP Vantage’s latest instalment of deal trend analysis in 2009 offers an insight into which therapy areas and product technologies were hot last year, producing some surprising results.

While 2008 was mainly about deals over biotech products within the oncology sector (Product deal trends in 2008, January 19, 2009), last year saw a resurgence of deals within hitherto less trendy therapeutic areas of gastro-intestinal (GI), genito-urinary (GU) and sensory organs, perhaps indicative of companies identifying and focusing more on areas of unmet medical need which in the past may have been considered too low value but now offer a greater chance of regulatory and commercial success. Meanwhile deals over conventional technology products stabilised last year and managed to grab share off biotech products in terms of the overall number and value of deals (see tables below).

Oncology still hot, smaller areas resurge

The data displayed below, taken from EvaluatePharma, shows how the number and value of deals within the oncology space continue to dominate the industry; unsurprisingly five of the top ten deals last year were struck over cancer products (AstraZeneca tops the product deal charts in 2009, February 16, 2010).

Deals by Therapy Area Product Deal Count Total Deal Value ($m)
2009 2008 09 vs. 08 2007 2009 2008 09 vs. 08 2007
  Oncology & Immunomodulators  119  162  -27%  146  12,085  9,645  25%  11,031
  Central Nervous System  82  85  -4%  140  5,426  8,325  -35%  7,454
  Systemic Anti-infectives  76  69  10%  95  2,501  2,094  19%  2,976
  Gastro-Intestinal  43  43  0%  42  2,313  186  1143%  1,358
  Cardiovascular  24  41  -41%  38  1,395  2,501  -44%  1,376
  Blood  12  22  -45%  36  1,094  711  54%  1,420
  Musculoskeletal  27  32  -16%  45  882  3,677  -76%  4,008
  Genito-Urinary  27  16  69%  28  743  85  774%  754
  Endocrine  24  35  -31%  39  608  1,177  -48%  2,908
  Respiratory  13  41  -68%  47  410  1,495  -73%  1,362
  Dermatology  28  23  22%  32  117  249  -53%  1,147
  Sensory Organs  30  17  76%  20  13  438  -97%  202
  Various  19  13  46%  34  1,389  -  -  685
Grand Total  524  599  -13%  742  28,978  30,582  -5%  36,682

Although the number of oncology deals declined 27% last year to 119, the combined value of those deals actually rose 25% to a staggering $12.1bn, higher even than the bumper deal year in 2007.

Conversely, deals within the other major therapeutic categories of central nervous system (CNS) and cardiovascular continue to decline as big pharma companies in particular turn their backs on research into diseases in which it is notoriously tricky to prove a therapeutic benefit, in the case of CNS (Alzheimer’s excluded) or areas with largely met medical needs, as is the case with many cardiovascular disorders.

In terms of deal volumes, GU and sensory organs showed the most dramatic gains last year. Roche’s $335m deal for Plexxikon’s phase I c-raf kinase inhibitor, RG7376, for polycystic kidney disease was by far the biggest GU deal last year.

Although the value for deals over sensory organ products last year was low, this is mainly because two-thirds of the deals were struck for products in early stage development, phase I and below, with limited disclosure of financial terms. Novartis’ ongoing $49bn acquisition of Alcon and Sanofi-Aventis’ recent $528m purchase of Fovea Pharmaceuticals is indicative of renewed interest in this area.

Shift in favour of conventional

Although the number of deals over conventionally derived products, mainly small molecule drugs, declined by 7% last year to 387, this was less than the 24% drop in deals for biotech products (see table below).

As a percentage of overall deal volumes, conventional drugs made up 74% of the 522 deals last year, up from 70% in 2008. Indeed, seven of the top ten biggest deals last year were struck over conventional technology products.

In 2008, a staggering volume and value of deals were signed for products based on unproven technologies like antisense therapies and recombinant proteins/peptides. Last year, however, deals over monoclonal antibodies returned to the top of the biotech league table.

Johnson & Johnson’s deal with Elan over bapineuzumab and Bristol-Myers Squibb’s licensing of Alder Biopharmaceuticals’ phase II immunosuppressive agent, ALD518, were the biggest monoclonal antibody deals least year.

Deals by Technology Product Deal Count Total Deal Value ($m)
2009 2008 09 vs. 08 2007 2009 2008 09 vs. 08 2007
  Biotechnology
    Monoclonal antibody  43  51  -16%  57  4,999  3,713  35%  6,924
    Antisense therapies  10  30  -67%  22  2,349  5,028  -53%  1,173
    Recombinant product  30  50  -40%  38  1,525  2,286  -33%  2,151
    Bioengineered vaccine  37  31  19%  45  1,221  833  47%  1,670
    Monoclonal antibody (conjugated)  4  4  0%  2  294  -  -  10
    Cell therapy  3  5  -40%  6  50  500  -90%  925
    Gene therapy  7  1  600%  7  -  -  -  -
    Transgenic product  -  5  -  3  -  309  -  1
    Other biotechnology product  3  4  -25%  10  130  720  -82%  669
Total (Biotechnology)  137  181  -24%  190  10,568  13,388  -21%  13,523
  Conventional
    Small molecule chemistry  361  392  -8%  497  18,369  15,958  15%  22,885
    Plant extract  5  2  150%  16  40  10  305%  9
    In vivo diagnostics  8  2  300%  4  -  -  -  -
    Chiral chemistry  5  11  -55%  7  -  452  -  175
    Protein extract  4  7  -43%  25  -  774  -  90
    Vaccine  4  3  33%  2  -  -  -  -
    Miscellaneous  -  1  -  1  -  -  -  -
Total (Conventional)  387  418  -7%  552  18,410  17,195  7%  23,159
 Grand Total  524  599  -13%  742  28,978  30,582  -5%  36,682

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