Therapy area licensing in 2012 – Rags and riches

As if it were not enough that licensing in the pharma sphere has been on the decline, for developers in certain therapy areas there were almost no deals whatsoever to be had in 2012. Those working in clinical-stage genito-urinary disease, blood disorders and sensory organ treatments were unlucky in 2012, racking up a combined eight deals and precious little in the way of disclosed payments.

Though oncology remains a popular field, it too experienced a falloff from the $6bn in licensing fees and royalties promised in 2011. Four therapy areas experienced an increase in collective licensing payments, but only one of those, dermatology, saw a rise in the number of product deals (see tables).

Nobody immune

The decline in product licensing that began in 2011 was felt across nearly every therapy area in 2012, with only dermatology measuring an uptick in the number of deals struck; even then these only rose from five to six.

In terms of cash exchanging hands immediately, disclosed up-front fees were absent in five therapy areas. Among those were endocrine and cardiovascular disease, where developers and big pharma have ever-higher regulatory hurdles to leap – witness Tresiba’s difficulty in gaining FDA approval (Dizzy day for Novo as FDA rejects Tresiba, February 11, 2013).

Phase I to III product deals by therapy area
Product deal count  Up-front payments ($m)  Total deal value ($m) 
2012  2011  2010  2012  2011  2010  2012  2011  2010 
Oncology & immunomodulators 51 93 51 446 662 713 5,360 6,713 3,408
Systemic anti-infectives 33 34 25 204 50 398 774 226 1,226
Central nervous system 22 49 42 105 297 199 874 2,488 2,884
Gastro-intestinal 13 21 19 85 23 108 504 76 1,765
Respiratory 11 14 13 22 58 10 82 150 25
Musculoskeletal 10 13 6 189 100 145 1,659 347 1,455
Endocrine 8 14 8 0 409 95 0 3,146 2,155
Cardiovascular 7 16 17 0 2 148 54 9 2,421
Dermatology 6 5 12 40 0 0 52 0 0
Various 6 6 8 23 5 45 26 23 373
Blood 4 7 8 0 2 167 2 364 1,094
Genito-urinary 3 7 17 0 0 213 0 0 1,364
Sensory organs 1 10 7 0 45 60 0 420 230
Totals 175 289 233 1,114 1,652 2,301 9,387 13,961 18,399

This does not suggest that no money changed hands at all; the terms of deals with private companies are rarely disclosed; also, as the analysis here is restricted to clinical-stage assets, it does not recognise the fact that the biggest deal of the year concerned a marketed cardiovascular drug, Bystolic (Top licensing deals of 2012 - Glimmers of hope, February 18, 2013).

Still, the fact that no up-front fees were recorded in so many therapy areas is a sign about the hunger for dealmaking in 2012.

Big deals

Dermatology is increasingly seen as an attractive speciality area, and its six deals were led by the licensing in of Welichem Biotech’s psoriasis drug WBI-1001 by GlaxoSmithKline’s Stiefel division for $35m up front. This deal comprised nearly all of the $40m in up-front fees paid out in dermatology in 2012.

Dermatology was one of three areas that saw a rise in the amount paid out to complete the licensing deals. Systemic anti-infectives saw a big jump up, to $204m in up-front fees, although this was still only half of the $398m paid in 2010. This area was dominated by Merck & Co’s deal with the private German firm AiCuris, for which the New Jersey group paid €110m ($136m) for rights to the cytomegalovirus treatment AIC246.

An increase from $23m to $85m in up-front fees was recorded by developers working on gastro-intestinal treatments. This was also dominated by a single big pharma company, AstraZeneca: first with Ardelyx, $35m for the irritable bowel syndrome treatment RDX5791, and then with Ironwood, $25m for Chinese rights to IBS drug Linzess (Patient approach pays off for Ardelyx, October 8, 2012).

Developers working on musculoskeletal drugs could also take heart in the increase in up-front payments, to $189m, experienced in 2012. Once again, this was dominated by a single deal: Abbott Laboratories’ pact with Galapagos on the rheumatoid arthritis drug GLPG0634, which at $1.35bn was the second biggest of the year on deal value.

Highs and lows

Even with a drop in licensing activity, oncology remains the place to be for drug developers. Big pharma partners were willing to shell out $446m up front in 2012, more than double that of the next biggest area, systemic anti-infectives. In bio-dollar terms, this amounted to $5.36bn, spread over 51 deals.

Emerging discoveries about tumour biology are no doubt a driving factor; also, the relative ease with which some cancer drugs can earn regulatory approval makes oncology an attractive area, not to mention the price they can command once on the market.

It is surprising to see a steep fall, from 93 to 51, in the number of product deals signed in 2012. Oncology developers can take some solace in the fact that the up-front and the total deal values did not drop quite as much.

Merck & Co’s billion-bio-dollar deal for Endocyte’s ovarian cancer drug EC145 ranks at the top of the oncology dealmaking, with an up-front fee of $120m (Endocyte gets big deal but more validation needed, April 17, 2012). Joining it in the billion-bio-dollar club, or nearly that much, were Genmab’s HuMax-CD28, licensed by Johnson & Johnson, and Astellas's ASP015K, also signed by J&J; together, these three accounted for more than half of all the money promised and delivered to cancer drug developers.

Averages for disclosed clinical-stage oncology deals ($m)
2012 2011 2010 2009
Average up-front Phase III 65 46 5 40
Phase II 30 35 59 33
Phase I 11 20 29 23
Average deal value Phase III 366 476 5 158
Phase II 359 282 235 259
Phase I 43 284 205 206
Averages for disclosed clinical-stage CNS deals ($m)
2012 2011 2010 2009
Average up-front Phase III 21 41 13 32
Phase II 1 - 25 115
Phase I 1 5 20 89
Average deal value Phase III 59 332 134 310
Phase II 115 2 245 683
Phase I 1 55 192 141

While the ebbs and flows of dealmaking in oncology are clear – phase III is the only stage where average up-fronts are on the rise – it is a more promising area to work in than CNS, which yielded next to nothing in immediate payments last year for any candidate less advanced than phase III. The biggest CNS deal of the year was Forest Laboratories’ $65m up front for Adamas Pharmaceuticals’ Arimenda, a candidate for Alzheimer’s dementia.

Clinical failure in CNS has been driven by poorly characterised disease states that have made trial recruitment difficult, along with a lack of sophisticated scientific understanding of brain chemistry, so it is not surprising to see big pharma partners shying away from the field.

Word that the US might invest billions of dollars in a human brain mapping project in coming years could drive future innovation. But for now, CNS looks like it will remain an afterthought in dealmaking.

All data sourced to EvaluatePharma.

To contact the writers of this story email Jonathan Gardner or Joanne Fagg at news@epvantage.com or follow @JonEPVantage or @JoEPVantage on Twitter

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