Uncovering biopharma’s hidden treasures

Which deals accidentally brought in the biggest biopharma blockbusters? A new analysis by Vantage reveals all.

Deals are the lifeblood of the biopharma industry, but they do not always turn out as expected. Big hopes can fall by the wayside and, very occasionally, a compound buried deep in a target’s pipeline can turn out to be a surprise blockbuster.

The best example of such serendipity is Keytruda, which had yet to enter the clinic when Merck & Co bought Schering-Plough back in 2009; the $41bn merger was largely designed to stop Merck dropping off a precipitous patent cliff. But this is far from the only example of hidden treasure: EvaluatePharma data reveals several more instances where a preclinical or phase I asset has unexpectedly justified the outlay on a target company, and then some.

Largest total sales from acquired early-stage assets
Product Status on acquisition Acquiring company Acquired company Year acquired Deal value Total sales*
Keytruda Preclinical Merck & Co Schering-Plough 2009 $41.1bn $103bn
Eliquis Phase I Bristol-Myers Squibb Dupont Pharmaceuticals 2001 $7.8bn $76bn
Opdivo Phase I Bristol-Myers Squibb Medarex 2009 $2.4bn $68bn
Stelara Research project Johnson & Johnson Centocor 1999 $4.9bn $66bn
Ibrance Preclinical Pfizer Warner-Lambert 2000 $90.0bn $51bn
Simponi Research project Johnson & Johnson Centocor 1999 $4.9bn $24bn
Kalydeco Research project Vertex Aurora Biosciences 2001 $592m $10bn
Edurant Preclinical Johnson & Johnson Tibotec-Virco 2002 $320m $8bn
Ninlaro Research project Takeda Millennium Pharmaceuticals 2008 $8.8bn $8bn
Gazyva Pre-clinical Roche Glycart Biotechnology 2005 $180m $7bn
*Includes historical sales plus forecast sales up to 2024. Source: EvaluatePharma.

When Merck got its hands on Keytruda it would have had no idea it was sitting on a goldmine. The compound was discovered by the European biotech Organon, which Schering had previously acquired, and was not a top priority.

Indeed, Merck shelved the asset until promising data with Bristol-Myers Squibb’s rival checkpoint inhibitor, Opdivo, spurred it to take another look. 

Opdivo also came to Bristol via stealth mode, through the purchase of Medarex. At the time of the deal Bristol was more interested in Yervoy, which has turned out to be in a very different league to the anti-PD-1 antibodies.

Still, in terms of commercial potential Opdivo pales in comparison with Bristol’s biggest drug by 2024 sales, the blood thinner Eliquis. This was gained through the purchase of Dupont, a deal primarily struck for access to the HIV drug Sustiva and the anticoagulant Coumadin. At the time the Dupont takeover was criticised for being too expensive, a complaint that looks deeply unjust in retrospect.

Without these strokes of luck, Bristol would be a very different company today.

The same could be said of Vertex, whose transformation into a cystic fibrosis specialist began with its purchase of Aurora Biosciences in 2001. The deal was designed to improve Vertex’s drug discovery capabilities, but also yielded the blockbuster Kalydeco, after Vertex took a chance and extended a pre-existing agreement between Aurora and the Cystic Fibrosis Foundation.

Small outlay, big gain

The Vertex-Aurora tie-up represents one of the smaller deals in the table above. But even tinier deals than this have yielded decent assets. This is particularly apparent when looking at the gain in sales compared with M&A outlay.

For example, Biomarin’s 2001 purchase of Ibex’s enzyme products for up to $20m did not break the bank, which no doubt was a relief to investors when the company abandoned Ibex’s main draw, Neutralase, just two years after striking the deal.

But the preclinical phenylketonuria project Phenylase, now known as Palynziq, looks to have made up for any disappointment. The drug was approved last year and could bring in $563m by 2024, according to EvaluatePharma sellside consensus.

Any biopharma players looking to emulate these success stories should bear in mind that they have, on the whole, been down to luck more than judgement. And the early-stage nature of the projects means that they have required large subsequent investments in clinical trials. Still, this analysis shows that hidden treasures can be found in even the most unpromising-looking deals.

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