LSN Database Feature: Discovery Stage Deals Becoming More Plentiful with Better Terms; CNS a Hot Indication Area.

8 May

By Dr. Karin Bakker, Managing Director, PharmaPlus Consultancy, B.V.

LSN’s deals database is a powerful tool for investors and corporate strategic groups looking to follow key trends in the area of licensing and product/technology specific transactions. This week, LSN takes a deeper look at three major trends indicated by life sciences deal activity around discovery stage assets in the last two years: First, the number of discovery stage deals worldwide is on an upward trend, deals including major upfront payments (greater than $20 million) for assets increased significantly, and the percentage of deals focused on CNS products has effectively doubled. The following charts explain the trends:

Worldwide deals trending upward: For discovery stage deals done between 2011 and 2012, there was an 8% rise in deals that had worldwide licensing rights. This means that the licensee has exclusive rights to research, develop, manufacture & commercialize, regardless of territory.

WWdealsUpfront payment sizes increasing: The number of deals surrounding discovery stage assets with an upfront payment of $20 million or less as part of the terms decreased from 50% to 42%. This translates to a significant increase in deals with large upfront payments, reflecting the trend that LSN identified a few months ago of Big Pharma looking closer to the source when it comes to in-licensing assets.

UpfrontCNS is one of the hottest indication areas: Among a number of shifts in primary indication areas associated with deal activity was a huge increase in CNS deals. The percentage of CNS deals effectively doubled year-on-year, suggesting that this is trending towards becoming one of the hottest activity sectors (soon to overtake oncology, which has seen a downward trend in deal activity).

typesIn summary, there is an increase in licensing activity surrounding discovery stage assets as a whole, an improvement in deal terms at this development phase as a whole, and a significant increase in activity surrounding CNS drugs. These trends will have a resounding impact on industry dynamics, and are critical for savvy players in the space to take into account.

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