New Directions in Oncology Business Development:
Executive Summary

Record Activity Level in Oncology Transactions 1

September 26, 2019

This presentation provides an overview of the evolving marketplace for oncology transactions and is a summary of a presentation made at the Sachs Conference on September 26, 2019.

In this presentation we discuss:

  • 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 five years.
  • The areas in which we think oncology business development will be the highest in the decade to come.

Key points:

  • Oncology business development activity has been rising steadily in recent years, fueled by a land grab for exciting assets in immuno-oncology and targeted cancer therapies.
  • Nine months into 2019, it is clear that 2019 will be an all-time record year for oncology M&A dollar volume. Even without the Celgene deal, this is likely to be a record year.
  • This said, the total number of M&A and licensing transactions has been declining somewhat since a peak in 2016. Activity has shifted more towards M&A than licensing.
  • 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 two percent of the average upfront paid for a company with an approved asset.
  • Merck has been the most frequent acquiror in the last five years while Bristol-Myers Squibb, AbbVie and Pfizer have been the highest spenders. Including Licensing, the leaders have been Merck, Roche and BMS.
  • The pharma sector is consolidating and we expect to see the rate of consolidation stay quite high. This will continue to impact the oncology sector.
  • We expect to see activity levels in immuno-oncology and targeted therapeutics continue to be high. However, the share of deals involving these areas will decline due to growth in emerging areas.
  • Oncology BD and M&A revolves around ownership of “real estate” in key therapeutic areas.
  • For instance, two important areas that have been staked out by Novartis include (1) the inflammasome’s link to cancer and (2) radiopharmaceuticals:
    • Inflammasome: Novartis’ CANTOS data showed that treatment of chronic inflammation with an anti-IL1β drug reduced death from lung cancer by over 75% in a sample of more than 10,000 subjects. There has been a surge of interest in this area by companies such as Cantargia and Inflazome. Deal-making has been brisk in this new area of the inflammasome and oncology in 2019 – highlighted by Novartis’ recent duo of deals for assets from IFM.
    • Radiopharmaceuticals: Novartis’ march into radiopharma has been bold and appears well-considered. Companies such as AAA and Endocyte are bringing highly efficacious therapies to challenging disease states. The next step will involve marrying increasingly sophisticated radioligands with additional targets. We expect a long-term surge in radiopharma deals as new targets and cancer types are addressed.

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

Stephanie Léouzon  |  Partner, London  |  |  bio
Tim Opler  |  Partner, New York  |  |  bio
Mark Simon  |  Partner, New York  |  |  bio
Gwen Melnyk  |   Associate, New York  |  |  bio

1 Source: Licensing Deal Activity obtained from BioSci and Biopharm Insight Databases, M&A from Torreya database.