Oncology Pharmaceuticals: Update on Trends, Deals, Valuations and Players in the Market.
Executive Summary

July 19, 2022

This presentation provides an overview of the evolving marketplace for oncology transactions and drugs.

This updates statistics in a Torreya presentation made at the Sachs Conference on September 26, 2019.

In this presentation we discuss:

  • The growing market for oncology drugs.
  • The types of products that oncology drug marketers are looking for and typical deal terms.
  • The battle for strategic “real estate” in oncology and the tactics that various players are using to map out a viable commercial strategy.
  • The leaders in M&A and licensing activity over the last eight years.
  • Details on key players including commercial oncology companies and U.S. public biotechs involved in oncology.
  • Recent clinical highlights.
  • The areas in which we think oncology business development will be the highest in the decade to come.

Key points:

  • The largest player in oncology therapeutic revenue in 2021 was Bristol-Myers Squibb (in 2019 it was Roche).
  • Analyst forecasts suggests that in 2025, BMS will remain #1 and J&J will take the #2 position which today is held by Roche.
  • Looking back, it is clear that 2019 was an all-time record year for oncology M&A dollar volume.
  • Oncology M&A spend has dropped substantially in the last three years.
  • While 2022 does not look (so far) like it will break into the record books for oncology M&A, the number of oncology licensing deals is on track to break a record this year.
  • The relative contribution of licensing dollars to M&A dollars has risen substantially in the last three years.
  • The total number of oncology licensing deals in the pre-clinical and Phase 1 stages has risen relative to late-stage transactions in the last two years.
  • Today, more than half of oncology licensing transactions involve discovery or pre-clinical dealmaking.
  • Not surprisingly, there is an exponential rise in transaction upfronts as assets march towards approval. The average upfront M&A payment for a preclinical deal is one percent of the average upfront paid for a company with an approved asset.
  • Merck has been the most frequent acquiror in the last eight years while Bristol-Myers Squibb, Gilead and AbbVie have been the highest spenders overall on M&A and licensing deals combined.
  • The pharma sector is consolidating and we expect to see the rate of oncology dealmaking stay quite high.
  • Oncology BD and M&A revolves around ownership of “real estate” in key therapeutic areas.
  • Buyers are shopping within asset classes that are seen as less risky including antibody-drug conjugates, related conjugate structures, T-cell engagers and genetically-driven targets (precision oncology). There is declining interest in cytotoxic agents, cell therapy and immuno-oncology.
  • Based on recent conversations, critical areas for future business development include precision oncology, T-cell engagers, bispecifics undruggable targets and ADCs.
  • Big pharma accounts for 92% of deal volume in oncology transactions. Torreya conversations with big pharma at ASCO revealed that interest in immune-oncology is cooling and the focus is increasingly on novel precision targets – where prospective efficacy is high.
  • Oncology M&A deals are getting done at lower fundamental values.
  • Not surprisingly, control premia have shot up in recent years. Yet, despite this, valuations being achieved in the market appear to be significantly lower.
  • Within the population of U.S. public oncology biotechs, the two largest segments are precision oncology with 32% of the value, IO antibodies with 17% of the value and allogeneic cell therapies with 13% of the value. Traditional targeted therapies and cytotoxics have shrunk in importance since our last look at the oncology market in 2019.

Please contact the Torreya biotechnology team if you have any questions or comments:

Kelly Curtin  |  Managing Director, London  |  kelly.curtin@torreya.com  |  bio
Stephanie Léouzon  |  Partner, London  |  stephanie.leouzon@torreya.com  |  bio
Gwen Melnyk  |   Vice President, New York  |   gwen.melnyk@torreya.com  |  bio
Tim Opler  |  Partner, New York  |   tim.opler@torreya.com  |  bio