2018 Clarivate/Cortellis Year in Review
Analysis premiered during the JP Morgan Week San Francisco, California 7-10 January 2019 2 Presenters
Jamie Munro leads the Portfolio & Licensing practice at Clarivate Analytics including heading up CMR International, the R&D benchmarking service. Dr Munro has significant life science experience including over 15 years large pharma experience as well as a PhD in Finance.
Helen Dowden is a strategic intelligence professional with more than 20 years pharmaceutical industry experience. She has a PhD in pharmacology, and is currently working as a Consultant within Clarivate’s Life Sciences Professional Services team. Helen has expertise in oncology deals analysis. [email protected] 3 Contributors
Laura Vitez has over 25 years of experience in the life sciences industry. She has held lead or advisory roles at multiple small biotechs, a mid-sized pharma company, and two consulting firms, bringing in over $2B deal dollars. She holds an MS in biochemistry and a BA in mathematics and chemistry. [email protected]
Lisa Christadore has 5+ years consulting with pharmaceutical clients across R&D, clinical, competitive intelligence, and BD. She has interviewed over 100 physicians, scientists, and investors and works closely with Clarivate’s Deals Intelligence team. She is a medical writer, deals enthusiast, and holds a PhD in Biochemistry with a focus on drug discovery. [email protected]
Isabel Rodriguez has over 15 years of experience in the pharmaceutical business from early discovery research to the clinical practice, and works with clients on a range of assignments including the analysis of disease landscape, competitive intelligence, business development and licensing, disease target evaluation, technology assessment and intellectual property trends. Isabel holds a Doctorate in Pharmacy from the University of Barcelona. [email protected]
Paul D’Souza has over 11 years as a pharmaceutical industry analyst, maintaining and analysing content on various competitive intelligence databases, including Clarivate Analytics’ Cortellis Deals Intelligence module, to support decision making across the pharmaceutical sector. He currently analyses quarterly trends in pharmaceutical mergers & acquisitions and licensing activity and holds an MBA and a BSc in Pharmacology & Physiology. [email protected]
Karen Pihl-Carey is an analyst and writer for BioWorld who has tracked the biopharma industry since 1999. She manages databases of deals, financings, FDA approvals and clinical data that provide historical background and indicate industry trends. [email protected] 4 Contents
Introductions 2
Recap of 2017 implications 7
Dealmaking 2018 Year-in-Review 8 Overview 9 Mergers and Acquisitions (M&A) 11 Licensing, Joint Ventures, and Research Collaborations 16 IPOs and VC 25 Top Pharma Dealmaking Activity 29
Biopharma Industry 2018 Year-in-Review 33 Oncology: Still the biggest driver of deal activity 34 Approvals and Other Drivers of ROI 45 Summary 62 5 Clarivate Analytics Life Sciences
Clarivate Analytics is the global leader in Cortellis Competitive Intelligence providing trusted insights and analytics Leading pipeline database for depth and breadth of content to accelerate the pace of innovation. Cortellis Deals Intelligence Rapid insights into critical deal making trends Building on a heritage going back more than a century and a half, we have built Cortellis Regulatory Intelligence some of the most trusted brands across Most comprehensive regulatory content and analysis the innovation lifecycle, including Web of Cortellis Clinical Trials Intelligence Science, Cortellis, Derwent, Techstreet, Broadest source of clinical trials intelligence CompuMark, and MarkMonitor. MetaCore Today, Clarivate Analytics is a new and Proprietary toolbox for discovery of biological pathways independent company on a bold Integrity & Drug Research Advisor entrepreneurial mission to help our Unique provider of multifaceted drug research content clients radically reduce the time from new ideas to life-changing innovations. BioWorld News Daily actionable intelligence and incisve analysis Disclaimer
This report contains general information only and is based on the experiences and research of Clarivate Analytics practitioners. Clarivate Analytics is not, by means of this report, rendering business, financial, investment, or other professional advice or services. This report is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Clarivate Analytics, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this report. 7 Let’s take a look at what we said last year…
o Industry continues to innovate & will need to continue
Targeted therapies addressing unmet need
Oncology to remain a focal point
Challenges for NS, anti-infectives o Challenges remain
Value generation o Levers
Revenues – price challenges
Costs – hurdles
Pick winners – long term, beyond the tenure of many CEOs
Business development • M&A – tax / repatriation • Licensing to fill gaps and deliver strategy • Regional opportunities / China Dealmaking 2018 Year-in-Review 9 Overview of all life sciences deals captured by Cortellis in 2018 by percentage
Funding 15%; Commercial 2%; Service 0.2%; Other 1.2%
Service Other M&A Asset 1% 10% 11% Purchases 5%
Commercial 14% Licenses 4014 26% $428 B Total transactions Total deal dollars announced in announced in 2018 Licenses 2018 M&A Funding 41% 64% 18%
Asset Purchases 5%
• Unless otherwise noted, all dollars throughout presentation are USD and are nominal figures (not corrected for inflation). • Transaction types: M&A = 50-100% acquisitions, mergers, reverse mergers; Licenses = licenses, joint ventures, research collaborations; Asset Purchases = products and business unit acquisitions; Funding = acquisitions of < 50% equity, grants, loans, other funding types; Commercial = distribution, supply, co-promotion agreements; Service = contract services; Other = royalty buyouts, spin-outs, settlements. 10 All life sciences deals in 2018 vs. 2017 by number and total deal size $ billion
Volume Announced $ billion 5000 $450 4522 $428 B Other, 50 $392 B ** 4500 $400 Asset Purch, $22 Service, 465 Other, 53 ** 4014 Asset Purch, 4000 $350 $33 Commercial, Service, 376 Licenses, 563 $111 3500 Commercial, $300 Licenses, $88 560 3000 Funding, 941 $250 Funding, 734 2500 Asset Purch, 210 Asset Purch, $200 184 2000 $150 1500 Licenses, M&A, $276 Licenses, M&A, $256 1811 1658 $100 1000
500 $50 M&A, 482 M&A, 449 0 $0 2017 2018 2017 2018
** Funding $6.0 (2017), $14.9 (2018); Commercial $24.0, $2.0; Service <$0.1, $0.2; Other (royalty buy-out, spin-out, settlement) $4.4, $1.2. 2018 Dealmaking Year-in-Review
Mergers and Acquisitions (M&A) 12 Ten years of life sciences M&A transactions (adjusted $)
600 $400
No. transactions $347 $350 500 Aggregate M&A $ billion*
$300
$276 $276 400 $262 $250 $239
300 $200 561
489 $157 482 443 449 $150 200 $125 $124
$122 351 Aggregate announced $ billion $ announced Aggregate $100 293 277 $94 254 261 100 $50
0 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
*Dollars are adjusted for inflation. Chart Includes all announced M&As plus four mega Asset Purchase transactions: Nestle/Pfizer Nutrition (2012), Novartis/GlaxoSmithKline Oncology (2014), Bayer/Merck Consumer Care (2014), Teva/Allergan Generics (2015). 13 Top twenty M&As of 2018 by total size 14 2017 vs. 2018 M&As by known therapeutic focus
Volume breakdown by Rx Area 2018 vs. 2017
60 Not shown: 50 2017 TAs for which there
2018 were ≤5 M&As 40 announced in 2018: • Immune • Toxicity 30 • Inflammatory
20 No. M&A transactions M&A No.
10
0
Analysis covers M&A transactions with an identifiable core therapeutic focus. Ten years of life sciences megamergers (nominal $) 15
Year Partner/Prinicpal Pfizer/Wyeth 2009 Announced M&A deals > $10 billion Merck/Schering-Plough 2010 Sanofi/Genzyme $80 J&J/Synthes Takeda/Nycomed 2011 Express Scripts/Medco $70 $68.0 $69.0 Gilead/Pharmasset $66.0 $66.0 $67.0 2012 Nestle/Pfizer Nutrition $62.3 2013 Thermo Fisher/Life Tech $60 Allergan (fka Actavis)/Forest Novartis/GSK oncology products Zimmer/Biomet $50 $49.6 Bayer/Merck Consumer Care 2014 Medtronic/Covidien Merck/Sigma-Aldrich $42.9 $40.5 BD/Carefusion $40 Actavis/Allergan billion $ Pfizer/Hospira $32.0 Valeant/Salix $30 $29.1 $30.2 2015 AbbVie/Pharmacyclics $25.0 Teva/Allergan Generics $23.6 $24.2 Shire/Baxalta $20 $20.1 $19.7 $20.8 AbbVie/Stemcentrx $16.0$17.0 $17.0 $16.6 $14.3 Abbott/St Jude $13.7 $13.6 $13.4$14.2 $13.0 2016 $11.9 $12.2 $11.9$11.6 Bayer/Monsanto $10 $11.2 $11.1 $10.4 Pfizer/Medivation J&J/Actelion Reckitt Benckiser/Mead Johnson $0 2017 BD/C R Bard Gilead/Kite 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CVS/Aetna Sanofi/Bioverativ Year Cigna/Express Scripts 2018 GSK/Novartis consumer HC Dollars are the announced nominal values, not Takeda/Shire adjusted for inflation. 2018 Dealmaking Year-in-Review
Licenses, Joint Ventures, and Research Collaborations 17 Five years of licensing and collaborations by quarter (adjusted $)
No. announced transactions Aggregate announced $B (adjusted) 600 $45.00
$40.04 $40.00 500 $35.00
$31.66 $32.32 400 $30.00 $27.80$28.55 $26.24 $25.27$25.72 $25.31 $25.58 $25.00 $24.31 300 $22.32 $22.03 $20.62 $20.33 $20.00 $18.16 $16.47 $17.02 200 $15.00 $13.39
No. announced transactions announced No. $11.59 $10.00
100 Aggregate announced deal dollars ($B)* dollars deal announced Aggregate $5.00
0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 $0.00 2014 2015 2016 2017 2018
*Dollars are adjusted for inflation. Chart includes all announced License, Joint Venture, and Research-Only collaborations. 18 Ten years of average and median total license size (adjusted $)
No. announced transactions Average (Inflation-adjusted) $M Median (Inflation-adjusted) $M
2000 $400
$371 1800 $350 $330 $330 1600 $300 $293 1400 $281
$251 $250 1200 $231 $225 $204
1000 $196 $200 $ million* $ 800 $150
600 No. announced transactions announced No. $101 $100 $87 400 $80 $63 $67 $51 $50 200 $40 $36 $31 $33
0 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
* Dollars are adjusted for inflation.. Chart includes all announced License, Joint Venture, and Research-Only collaborations. 19 Top 20 $1 billion-plus licensing transactions of 2018*
Merck & Co/Eisai $300 $4,355 $1,100 Oncology/Launched Genentech/Affimed $4,950 Oncology/Discov Janssen/Arrowhead $175 $3,500 Infection/Phase 2 Eli Lilly/Dicerna $200 $3,505 Diversified/Discov Bristol-Myers Squibb/Nektar $1,850 $1,780 Oncology/Launched Kite/Sangamo $150 $3,010 Oncology/Discov Allogene/Cellectis $2,800 Oncology/Discov Biogen/Ionis $1,000 $1,350 Neuro/Discov Celgene/Prothena $150 $1,688 $425 Upfront + equity ($M) Neuro/Discov Takeda/WAVE Life Sciences $170 $2,000 Neuro/Phase 2 Milestones ($M) Eli Lilly/AC Immune $131 $1,788 Neuro/Discov Akcea/Ionis $350 $1,530 Neuro/Pre-reg Remainder ($M) Gilead/Agenus $150 $1,622 Oncology/Discov Gilead/Tango $50 $1,700 Oncology/Discov Discovery stage alliances Merck & Co/Sutro Biopharma $80 $1,600 Diversified/Discov Cilag/arGEN-X $300 $1,300 Oncology/Phase 2 bluebird/Gritstone Oncology $1,565 Oncology/Discov Gilead/Scholar Rock $80 $1,425 Inflam/Discov Boehringer Ingelheim/OSE… $1,370 Oncology/Clinical Roche/SQZ Biotech $1,250 $125 Oncology/Discov $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Total announced deal size $ million
* A total of 32 licensing deals valued at > $1B were captured Cortellis as of 2 January 2018. Only the top 20 are displayed here 20 Ten-year trend in upfront cash license payments (adjusted $)
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
$60
2018 upfront cash $50 25th percentile $3 M
Median $10 M $40 75th percentile $40 M
Average $38 M
$30 $ million* $
$20
$10
$0 25th Percentile Median 75th Percentile Average
* Dollars are adjusted for inflation. Chart includes all announced License, Joint Venture, and Research-Only collaborations that reported an upfront cash payment. (2017 data exclude Merck/AstraZeneca and Biogen/Forward) 21 Top 20 upfront cash payments in 2018 licensing transactions
Rank Licensee Licensor Upfront $M Stage Rx Area 1 Bristol-Myers Squibb Nektar $1,000 Approved Oncology 2 United Therapeutics Arena $800 Phase 3 Cardiovascular 3 Biogen Ionis $375 Discovery Neurology 4 Merck & Co. Eisai $300 Approved Oncology 5 Cilag (J&J) arGEN-X $300 Phase 2 Oncology 6 Janssen Arrowhead $175 Phase 2 Infection 7 Kite Pharma Sangamo $150 Discovery Oncology 8 Akcea Therapeutics Ionis $150 Pre-registration Neurology 9 Sanofi Denali $125 Phase 1 Neurology & Autoimm/Inflam 10 Gilead Agenus $120 Discovery Oncology 11 EUSA Janssen $115 Approved Immune 11 Takeda WAVE Life Sciences $110 Phase 2 Neurology 11 Novartis Spark Therapeutics $105 Registered Ophthalmologic 14 Eli Lilly Dicerna $100 Discovery Cardiovascular & Neurology 15 Celgene Prothena $100 Discovery Neurology 16 Janssen Theravance $100 Phase 1 Gastrointestinal 17 AbbVie Morphic Therapeutics $100 Discovery Autoimm/Inflam 18 Shionogi SAGE Therapeutics $90 Phase 2 Neurology 19 Eli Lilly AC Immune $81 Discovery Neurology 20 Roche Ionis $75 Phase 2 Ophthalmologic 22 2018 licenses by therapeutic area
Hematologic, 17 Respiratory, 17 Toxicity/Intoxication, 13 Musculoskeletal, 23 Inflammatory, 25 Genitourinary/Sexual Function, 30 Immune, 33 Ocular, 34
Other/Miscellaneous, 34
Cardiovascular, 37 Cancer, 515
Dermatologic, 39
Gastrointestinal, 63
Endocrine/Metabolic, 63
Diversified, 91
Infection, 129 Neurology/Psychiatric, 183
Chart includes all announced License, Joint Venture, and Research-Only collaborations where a Therapy Area is defined 23 Deal-making by Chinese companies dwarfed by US but showing robust growth
China Japan South Korea 90 90 90
70 70 70
50 50 50
30 30 30
10 10 10
-10 -10 -10
China Principal (sell) China Partner (Buy) Japan Principal (Sell) Japan Partner (Buy) S Korea Principal (Sell) S Korea Partner (Buy) China/China Japan/Japan S Korea/S Korea USA USA 700 700 600 600 500 500 400 400 300 300 200 200 100 100 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
USA/USA Inter-country USA Principal (Sell) USA partner (Buy)
Country refers to company HQ location. Includes all announced License, Joint Venture, and Research-Only collaborations. 24 Notable China inter-regional buy-side deals in 2018 – aimed at access to innovative meds in China
Total Phase of Sellside Buyside Date Asset/Technology (Upfront) lead asset
Zymeworks Rights to Azymetric and EFECT platforms to develop and commercialize up to BeiGene 05/2018 $722 ($20) Discovery (Canada) three other bispecific antibodies worldwide AstraZeneca Luye Pharma Sale and license of rights to Seroquel and Seroquel XR in UK, China and other 01/2018 $546 ($260) Launched (UK) Group international markets
Zymeworks Develop and commercialize ZW-25 and ZW-49 HER2-targeted bispecific BeiGene 02/2018 $430 ($40) Phase I (Canada) antibodies in Asia (excl. Japan), Australia & New Zealand Agios C-Stone Develop and commercialize ivosidenib (Tibsovo, AG-120) for AML and Pre- 06/2018 $424 ($12) (US) Pharmaceuticals cholangiocarcinoma in China, Hong Kong, Macau and Taiwan registration
Incyte Develop and commercialize pemigatinib, itacitinib and parsaclisib in Innovent Biologics 12/2018 $392 ($40) Phase III (US) hematology and in China, Hong Kong, Macau and Taiwan Blueprint C-Stone Develop and commercialize avapritinib , BLU-554 and BLU-667 for cancers in 06/2018 $386 ($40) Phase III (US) Pharmaceuticals China, Hong Kong, Macau and Taiwan Revance Shanghai Fosun Develop and commercialize DaxibotulinumtoxinA (RT-002) against aesthetic and 12/2018 $260 ($30) Phase III (US) Pharmaceutical neuroscience conditions in China, Hong Kong and Macau Puma Develop and commercialize Nerlynx (neratinib oral) against cancer in China, CANbridge 01/2018 $255 ($30) Launched (US) Taiwan, Hong Kong and Macau Verastem Develop and commercialize products containing duvelisib in China, Hong Kong, CSPC Pharmaceutical 09/2018 $175 ($15) Launched (US) Macau and Taiwan for all oncology indications MacroGenics Develop and commercialize three I-O programs margetuximab , MGD-019 and Zai Lab 11/2018 $165 ($25) Phase III (US) MGD-013 in China, Hong Kong, Macau and Taiwan Karyopharm Develop and commercialize selinexor, eltanexor and KPT-9274 for oncology, and Antengene 05/2018 $162 ($12) Phase III (US) verdinexor for non-oncology in various Asian countries Adocia Develop, manufacture and commercialize BioChaperone Combo and Lispro for Tonghua Dongbao 04/2018 $135 ($50) Phase II (France) diabetes in China and other designated countries
Mirati Develop, manufacture and commercialize sitravatinib in Australia, New Zealand BeiGene 01/2018 $133 ($10) Phase II (US) and Asia excl. Japan VBI Vaccines Develop recombinant, protein-based immuno-therapeutic, VBI-2601 against Brii Biosciences 12/2018 $128.5 ($4) Discovery (US) chronic HBV in China, Hong Kong, Taiwan and Macau Tocagen Develop and commercialize Toca-511 against high-grade glioma (HGG) in ApolloBio 04/2018 $127 ($16) Phase III (US) China, Hong Kong, Macau and Taiwan 2018 Dealmaking Year-in-Review
IPOs and VC 26 Biopharma IPOs – significant uptick in last 5 years
90 $9,000.00
80 $8,000.00
70 $7,000.00
60 $6,000.00
50 $5,000.00
40 $4,000.00
30 $3,000.00
20 $2,000.00
10 $1,000.00
0 $0.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Number of financings Year total ($M)
Source: BioWorld (data current as of end of November 2018) 27 Biopharma VC investment also shows strong growth
400 18000
350 16000
14000 300
12000 250
10000 200 8000
150 6000
100 4000
50 2000
0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Number of financings Year total ($M)
Source: BioWorld (data current as of end of November 2018) 28 China begins to emerge as a centre for VC investment in recent years
250 $12,000
$10,000 200
$8,000
150
$6,000 No. financings
100 Totalraised ($M)
$4,000
50 $2,000
0 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
China # USA # Europe # China $ (M) USA $ (M) Europe $ (M)
Source: BioWorld (data current as of end of November 2018) 2017 Dealmaking Year-in-Review
Top Pharma Dealmakers 30 2018 top large pharma dealmakers
Deal-making volume in 2018 vs. 2017 revenues and R&D spend for the top 30 pharma companies
40 $50,000
35 $45,000 $40,000 30 $35,000 25 $30,000 20 $25,000
15 $20,000 million $ $15,000 10
$10,000 No.announced transactions 5 $5,000
0 $0
CSLLtd
UCB SA UCB
Shireplc
PfizerInc
Bayer AG Bayer
Sanofi SA Sanofi
MylanNV
BiogenInc
AmgenInc
AbbVie Inc AbbVie
Allergan plc Allergan
NovartisAG
Eli Lilly & Co & Lilly Eli
Merck KGaA Merck
Celgene Corp Celgene
Merck & Inc Merck Co
AstraZeneca plc AstraZeneca
Novo Nordisk A/SNordisk Novo
Roche Holding AG RocheHolding
Gilead Sciences Inc Gilead
JohnsonJohnson &
AstellasPharma Inc
GlaxoSmithKline plc GlaxoSmithKline
Daiichi Sankyo Co Sankyo Daiichi Ltd
Otsuka Holdings Co Ltd Co OtsukaHoldings
Bristol-Myers Squibb Bristol-Myers Co
Takeda Pharmaceutical Co Ltd Pharmaceutical Co Takeda
Teva Pharmaceutical Industries Ltd Teva Pharmaceutical
Boehringer Ingelheim International… BoehringerIngelheim Valeant Pharmaceuticals Ireland Pharmaceuticals Ltd Valeant
TOTAL LicJVRsch TOTAL M&A TOTAL OTHER 2017 Revenue ($M) 2017 R&D spend ($M)
• Graph covers key transaction types: M&As, Licenses/joint ventures, and Research-only deals • Not shown: Other Funding, Service, Distribution, Co-promotion only, Supply only, and Settlement transactions. • 2017 revenue from PharmExec.com Top 50 Companies (August 2018) 31 2018 top large pharma dealmakers
BUY-side versus SELL-side activity of top pharmas
35
30
25
20
15
10
5 No. announcedtransactions
0
TOTAL BUY TOTAL SELL
• Graph covers key transaction types: M&As, Licenses/joint ventures, and Research-only deals • Not shown: Other Funding, Service, Distribution, Co-promotion only, Supply only, and Settlement transactions. • 2017 revenue from PharmExec.com Top 50 Companies (August 2018) 32 2018 therapy area focus for top large pharma dealmakers
• Covers announced total deal size for key transactions types, M&As, Licenses/joint ventures, Research-only deals, and Other (Asset Purchases, Equity Stakes, Spin-outs), with identifiable therapeutic focus areas. • Not shown: Toxicity, Unknown and Not Applicable therapy areas. • Diversified total does not include Takeda/Shire acquisition (Total for Diversified is $92,934 with deal included). • Companies are the Top 30 in terms of 2017 revenue (derived from PharmExec.com Top 50 Companies, August 2018) Biopharma Industry 2018 Year-in-Review 2018 Biopharma Industry Year-in-Review
Oncology 35 Oncology represents the greatest activity in deal making
Number of buy-side transactions by therapy area for top pharma dealmakers
BI
AZ
J&J
CSL
GSK
UCB
BMS
Teva
Shire
Bayer
Pfizer
Merck
Roche
Sanofi
Mylan
TOTAL
Gilead
Biogen
Otsuka
Takeda
Amgen
AbbVie
Astellas
Celgene
Allergan
Novartis AG Novartis
Eli Lilly&Co Eli
Merck KGaA Merck
Novo Nordisk Novo Daiichi Sankyo Daiichi
Oncology 9 17 8 12 2 3 3 9 6 4 5 5 3 7 1 6 1 2 1 1 3 108 Neuroscience 6 1 3 3 3 3 1 1 1 2 1 7 3 2 1 2 40 Immuno/Inflam 2 1 4 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 23 Endo/Met 2 3 1 8 1 1 16 Infection 1 1 1 2 5 1 1 2 1 1 16 Diversified 1 3 1 2 3 1 1 1 13 GI 2 1 4 1 1 9 Dermatology 3 1 1 5 Hematology 1 2 1 1 5 Ophthalm 3 1 1 5 Respiratory 1 1 1 1 1 5 Cardiology 1 2 1 4 Total 27 20 20 18 14 14 13 12 12 12 9 8 8 7 7 7 6 6 6 3 3 3 3 3 2 2 2 2 0 222
• Covers key transactions types, M&As, Licenses/joint ventures, Research-only deals, and Other (Asset Purchases, Equity Stakes, Spin-outs), with identifiable therapeutic focus areas. • Covers all technologies. • Not shown: Other, Genitourinary, Musculoskeletal, Toxicity, Unknown and Not Applicable therapy area deals. • Companies are the top 30 pharmas as ranked by 2017 revenues. 36 Clarivate’s data and methodologies for oncology transactions
All announced business transactions were extracted from Cortellis for Deals Intelligence database between January 2014 and end of 2018 in the following categories:
• M&As - 183 • Licenses, Joint Ventures and Research Collaborations – 2,483
Unless otherwise noted the analysis focuses only on deals aimed at therapeutics:
• Included: Small molecules (MTT), Biologics (mAbs, siRNA, peptides, etc), Cell therapies, Vaccines, Gene therapies. • Excluded: Medical devices, Diagnostics , Biomarkers, Discovery Technology, Software, Generics, OTC products. 37 $331 billion aggregate deal dollars in oncology announced since 2014; 64% of the deals are focused on therapeutic assets
Formulation, 36 Instruments/Software/Service, 79 Other, 11 Generic/Biosimilar/OTC, … Devices, 80 Genomics/Other Drug Discovery Technologies, 235
Therapeutic, 1703
Biomarkers/Diagnostics /Imaging, 495
Breakdown of Therapeutic asset deals
Proteins/peptides, 68 Other , 14
DNA/RNA/OligonucleotidOligonucleotides/ e/GeneGene & Cellcell Small molecule, therapy/Oncolytictherapy/Cancer 705 virus/Othervaccines, cancer 401 vaccines, 401
Antibodies, 491 • Source: Cortellis Deals Intelligence. • Covers key transactions types with an identifiable technologies; all included. GSK Novartis asset purchase not included 38 In 2018, both large and small pharma are active participants oncology licensing
In-licensing activity for big pharma (95 total deals; $31.8 billion total value) Licensee/Licensor Total/Upfront Notable Assets Phase Indication Merck & Co./Eisai $5.8 B/$300 M pembrolizumab, lenvatinib Launched Broad cancer focus Roche/Affimed $5.0 B/unspecified NK cell engager-based immunotherapies Discovery Broad cancer focus Bristol-Myers Squibb/Nektar $3.6 B/$1000 M Nivolumab, ipilimumab, NKT-214 Launched Broad cancer focus Gilead/Sangamo Therapeutics $3.2 B/$150 M Cell therapies using zinc finger tech. Discovery Broad cancer focus Gilead/Agenus $1.9 B/$120 M I-O therapies incl. AGEN-1423 Discovery Broad cancer focus Gilead/Tango Therapeutics $1.8 B/$50 M I-O therapies Discovery Broad cancer focus Cilag (J&J)/arGEN-X $1.6 B/$300 M cusatuzumab Ph II AML, MDS Boehringer Ingelheim/OSE $1.4 B/$18 M OSE-172 Clinical Solid tumors Roche/SQZ Biotech $1.4 B/$125 M Antigen-presenting cell-based therapies Discovery Broad cancer focus Janssen/Yuhan $1.3 B/$50 M lazertinib Ph II NSCLC Notable activity for smaller biotechnology (246 total deals; $17.6 billion total value ) Licensee/Licensor Total/Upfront Notable assets Phase Indication Allogene/Cellectis $2.8 B/unspecified UCAR-T cell therapies Discovery Broad cancer focus Bluebird/Gritstone $1.6 B/$20 M Cell therapies using EDGE tech. Discovery Broad cancer focus Oncologie/Mologen $1.3 B/$4 M lefitolimod Registered Broad cancer focus ONO/Fate Therapeutics $1.3 B/$10 M CART-cell therapies Discovery Broad cancer focus Seattle Genetics/Pieris $1.2 B/$30 M Bispecific antibody-anticalin fusion proteins Discovery Broad cancer focus LG Chem/Cue Biopharma $1.1 B/$5 M CUE-101 Discovery Broad cancer focus AML = acute myeloid leukemia; MDS = myelodysplastic syndromes; NSCLC = non-small cell lung cancer
Includes therapeutic-focused deals with oncology as a major focus 39 Early-phase small molecules make up largest percentage of oncology deals and significant portion of total value
No. oncology deals Total announced value ($M)
41 $15,858 120 $12,366
228 $45,115
$124,386 818 139 $18,417
Discovery Phase 1 Phase 2 Phase 3 Pre-reg/Reg
Includes M&A, Licensing, Joint venture, Research only and significant Asset Purchase deals (2014-2018). Excluded: Medical devices, Diagnostics , Biomarkers, Discovery Technology, Software, Generics, OTC products. Excluded: Deals where stage of asset at signing is “Launched” or unknown. 40 Increase in oncology licensing at large pharma companies is driven in part by greater overall deal activity
Upfront payment trends ($M) Total deal size trends
$4,000 $60 $35,000 $800
$3,500 $700 $50 $30,000 $3,000 $600 $25,000 $40 $2,500 $500 $20,000 $2,000 $30 $400 $15,000 $1,500 $300 $20 $10,000 $1,000 $200
$10 MedianUpfront range ($M) $5,000
$500 $100 Median Deal Valuerange ($M) Totaland Max Upfront range($M) $0 $0 Totaland Max Deal Value range($M) $0 $0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Max Upfront ($M) Total Upfront ($M) Median Upfront ($M) Max Deal Value ($M) Total Deal Value ($M) Median Deal Value ($M)
2014 2015 2016 2017 2018
Number of deals 36 45 36 22 25
Includes Licensing, Joint venture, Research only deals where deal terms disclosed.. Excluded: Medical devices, Diagnostics , Biomarkers, Discovery Technology, Software, Generics, OTC products. 41 $2.8 billion paid upfront; $26 billion downstream for top 10 oncology licensing deals by size in 2018
Technology/ Total Upfront1 Licensee Licensor Date Downstream fees and terms Mechanism of action $M $M $650 million Option rights through 2020 $450 million Reimbursement for R&D expenses Merck & Co. Eisai 03/2018 PD-1/lenvatinib I-O combination 5,755 300 $385 million Regulatory and sales milestones $3,970 million Sales milestones associated with Lenvima $250 million Development milestones NK cell engager-based $1,100 million Roche Affimed 08/2018 5,046 ND On receipt of regulatory approvals immunotherapeutics $3,600 million Sales milestones Tiered royalties $1,430 million Bristol-Myers Nektar 1,000 Development and regulatory milestones 02/2018 PD-1/NKT-214 I-O combination 3,630 Squibb Therapeutics (plus 850 equity) $350 million Sales milestones $1,260 million Kite Pharma Sangamo Engineered cell therapies using zinc 02/2018 3,160 150 Research, development and first commercial sale milestones (Gilead) Therapeutics finger nuclease technology platform $1,750 million Sales-based milestones if annual worldwide net sales reach.$455 million Allogeneic UCAR-T cell therapy $185 million per target for 15 targets Allogene Cellectis 04/2018 2,800 ND Tiered royalties in the high single digits on net sales of any products programs commercialized by Allogene $553 million Development and commercial milestones High single digit to mid-teen percent royalties on AGEN-1423 120 $50 million Gilead Agenus 12/2018 I-O therapies incl. AGEN-1423 1,872 (plus 30 equity) Option exercise fee for each option after exercising $520 million Additional dvlpt and commercial milestones for each option program High single digit to mid-teen percent royalty payments for each option Tango $1,700 million Gilead 10/2018 I-O therapies 1,750 50 Preclinical fees and development, regulatory and commercial milestones Therapeutics Low double-digit tiered royalties on net sales across all programs 300 Anti-CD70 antibodies incl. $1,300 million Cilag (J&J) arGEN-X 12/2018 1,600 (plus 200 equity cusatuzumab Development, regulatory and sales milestones under separate deal) Gritstone 20 $129 million per therapy product & $27.5 million per target product Bluebird 08/2018 Cell therapies using EDGE tech. 1,595 Development, regulatory, and commercial milestones Oncology (plus 10 equity) Low single-digit tiered royalty payments upon on annual net sales $18 million OSE Boehringer Myeloid checkpoint inhibitor On initiation of a phase I clinical study Immunothera 04/2018 1,389 18 $1,350 million Source:Ingelheim Cortellis. press releases antibody, OSE-172 peutics Development, commercialization and sales milestones Royalties on worldwide net sales 42 Top 10 oncology M&A deals in 2018 total $21.7 billion and include new technologies
Stage Financials Asset/ Sellside Buyside Date D I II III PR/R L $M Technology Juno Celgene 01/2018 $9,000 Cell therapy Therapeutics Small TESARO GlaxoSmithKline 12/2018 $5,100 molecule ARMO Biosciences Eli Lilly 05/2018 $1,600 MAb
$1,040 ($140 UF, Recombinant BeneVir Biopharm Janssen 02/2018 $900 milestones) virus
$781 ($83 UF, Tusk Therapeutics Roche 09/2018 Antibody $697 milestones)
Cascadian Small Seattle Genetics 01/2018 $614 Therapeutics molecule
$575 ($110 UF, Small AurKa Pharma Eli Lilly 05/2018 $475 milestones) molecule
$465 ($18 UF, Denali Therapeutics F-Star Gamma 05/2018 MAb $447 milestones)
Intratumoral Viralytics Merck & Co. 02/2018 $394 I-O therapy Boehringer Recombinant ViraTherapeutics 09/2019 $210 Ingelheim virus
1 Only M&A deals for therapeutics were considered, and where “Cancer” is the primary focus 43 Percentage of oncology licensing deals from 2014-2018 by region
~5% (Asia → North America) ~7% (North America → Asia) ~41% (North America → North America)
~10% (Europe → North America) ~11% (Europe → Europe) ~10% (North America → Europe ~8% (Asia → Asia) ~1% (North America → Israel/M. East) → <1% (Israel/M.East North America) ~1% (Asia → Europe) ~3% (Europe → Asia) <1% (Europe → Israel/M. East) <1% (Israel/M.East → Europe) <1% (Asia → Aus/NZ) <1% (Aus/NZ → Asia) <1% (North America → Central/South America) <1% (Central/South America → North America)
~1% (Aus/NZ → Aus/NZ) <1% (Aus/NZ → Europe) ~1% (Europe → Aus/NZ )
~1% (North America → Aus/NZ) ~1% (Aus/NZ → North America) 44 Summary of findings
• Oncology represents the largest number of deals
• High value deals driven by immuno-oncology
• Median deal value rose in 2018 but upfronts static
• Discovery-stage deals capable of commanding high value
• Oncolytic virus technology make a prominent showing in M&A activity
• Opportunity remains for inter-regional deal-making 2018 Biopharma Industry Year-in-Review
Approvals and Other Drivers of ROI Analysis suggests large pharma ROI has continues to fall 47 But an orphan NME approval is not the end of the story…
Incremental growth in eligible patients for treatment with Keytruda (2014-2017)* 1200
1000
800
600
(1000s) 400
200
Number of eligible US patients patients US eligible of Number 0
Additional indications First FDA approval Advanced PD-L1+ Recurrent/metastatic (orphan indication) for NSCLC that has head and neck advanced melanoma progressed after squamous cell refractory to ipilimumab other treatments carcinoma (PD-L1 and BRAF inhibitors and independent) that has with V600 BRAF mutation progressed after platinum-containing chemotherapy
Source: IPD, NCI Cancer Stat Facts, and various publications * Patient number estimates are based on the prevalence of the cancer in the US. Assumptions have been made with regard to the proportion of patients eligible for Keytruda therapy (stage of disease, line of therapy, etc,) 48 Pharma's broken business model – An industry on the brink of terminal decline by Stott
o Stott suggests that the industry that is entering a vicious cycle of negative growth and terminal decline as its fundamental business model has run out of steam by the Law of Diminishing Returns 49 Biopharma R&D Productivity and Growth 2017: Big Pharma closes the gap (Catenion)
o There is a limited correlation between R&D productivity and Company Performance Enterprise Value Jan 2010 – Dec 2018 51 Large pharma revenues have been driven by older products
Sales from products approved in last five years (2013-2017) 35
30 Established products are driving sales 25
20
15 pharmasales 10
5 Off-patent sales as % total sales (2017) 80% 0 70% 0 1000 2000 3000 4000 5000 6000 7000 Sales Sales from productsapproved in last five as years total % 60% Sales from products approved 2013-2017 ($M) 50% 40% 30% 20% 10% Sources: Clarivate Analytics 2018 0% Approvals data from Cortellis Regulatory Intelligence and FDA Product and company sales data from company Annual Reports/20-F or 10-K filings Patent expiry data from company reports (as above) and Newport Exchange rates from www.x-rates.com 52 The cost per from US$2 billion in 2014 to US$3 billion mark in 2016 and 2017
2014 2015 2016 2017 3500 3239 3252
3000
2500 2601
2000 1903
1500
Cost in US$ million US$ in Cost 1000
500
0 2014 2015 2016 2017 Year
o While the cost per NME approval has increased by 50% between 2014 and 2017 the median peak sales value per FDA approval has remained fairly constant at $1.0 billion during the same period.
Approvals limited to lead projects. Adjusted to account for co-developments between companies. Limited to 2018 participants and includes companies that have provided expenditure for each year and have at least 0.5 approvals Source: 2018 CMR R&D and Investment Metrics programmes 53 Record-breaking year for FDA NME approvals: orphan drugs exceed >50% for first time
No. US FDA CDER NME approvals 2010-2018
70 100%
90% 60 80%
50 70%
60% 40 50% 30 40%
20 30% No. CDER FDA approvalsNME 20%
10 approvals % directed orphanatindications 10%
0 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018*
SM Biologic % orphan approvals
Source: FDA 54 Only 19% of 2018 NME approvals forecast to generate sales >$1Bn by end of 2023
Approvals with forecast sales >$1B
Major pharma, 7
Other pharma, 4
Approvals with forecast sales <$1B, 48 55 Important observations from FDA NME approvals
o Most of the NMEs filed with US FDA get approved (non-approval rate much lower than a decade ago) o Approvals rose in 2018 but a drop in filings (up to end of November) so may not be as high a number in 2019
Source: FDA/CMS Summit, 11-12 December 2018 56 Oncology no longer main driver of approvals and most approved for orphan indications
2018
Other orphan Other non-orphan approvals, 20 approvals, 21
Oncology non- orphan approvals, Oncology orphan 4 approvals, 14
Source: FDA, Clarivate Analytics analysis 57 Trends in 2018 approvals
New drugs continue to address fewer patients
US FDA CDER NME approvals Patients covered by approved indications (M)1
190
168* 59
21
2010 2018 2010 2018
* Two of the drugs approved drugs in 2018 have been assigned as “zero” patients: TPOXX (tecovirimat) for the treatment of smallpox when used as a bioweapon MOXIDECTIN (moxidectin) for onchocerciasis (river blindness) due to Onchocerca volvulus. There are no cases in the US, but the WHO estimates 18 M patients worldwide
Source: FDA, IPD, Clarivate Analytics analysis 1 Epidemiology data from IPD and published scientific literature. Patient numbers are for US only 58 Pricing remains a source of contention
Source: Novartis Investor Day, 5 November 2018, Slide 48 59 Percent of US NME approvals sponsored by top pharma companies has been falling year on year
70%
60%
50%
40%
30%
20%
10%
0% 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Top 20 pharma sponsors
Note: Acquisitions or licensing deals bringing in assets from a non Top 20 pharma that occurred within one year of eventual approval not counted for the Top 20 Pharma (usually not listed as sponsor in these cases anyway). Co-development of a molecule with a non Top 20 pharma company counted as half an approval
Source: FDA, Clarivate Analytics analysis 60 Deal-making still accounting for more than 50% of NME approvals
US FDA CDER NME approvals resulting from licensing/acquisition (2010-2018)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0% 2010 2011 2012 2013 2014 2015 2016 2017 2018*
All NME approvals Oncology NME approvals The funding challenge (illustrative) 61 2018 Biopharma Industry Year-in-Review
Summary 63 Summary
o Industry continues to concentrate BD on areas of unmet medical need, e.g. oncology, rare diseases o With differences between biopharma and VC in terms of investing at risk, i.e. neuroscience o China deal-making continues to grow o Some of the doom-and-gloom papers suffer from methodological issues o Companies are creating value although it is driven commercially and questions remain about ROI o Rare disease/niche remains an attractive strategy which will continue to keep the spotlight on drug pricing o Greater funding challenges remain which will require further innovation and bold leadership Q&A 65 Contact us
Jamie Munro, PhD Global Practice Leader, Portfolio & Licensing Mobile +44 782 447 4864 ; Office +44 207 433 4910 Friars House, Southwark, London, UK [email protected]
Helen Dowden, PhD Consultant, Portfolio & Licensing Mobile +44 (0)7553 855 669 [email protected] Powering life sciences innovation with trusted content, analytics & technology.
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