Pharma Licensing In 2018: Big Pharma Goes Outbound For Discovery Opportunities

7 Feb

By Lucy Parkinson, VP of Investor Research, LSN

While raising early stage capital is vital to a life science startup’s journey from the bench to the bedside, it’s also important for entrepreneurs to make connections with potential strategic partners.  Big pharma licensing and M&A is the ultimate exit strategy for most biotech startups, and in taking an in-depth look at 2018’s licensing deals, LSN found that the major pharmas are looking earlier than ever for promising new assets.

In addition to curating the LSN Investor Platform and organizing the RESI Conference series, LSN also provides the LSN Company and Licensing Deals platforms, which provide information on life science activity all over the world.  Our Licensing Deals data includes any deal announced that includes a financial metric (such as an up-front or milestone payment).  Therefore it doesn’t capture deals that are announced with no financial specifics, but it does provide a broad overview of current activity in the pharma dealmaking space.

So what happened in 2018?  The most stark point is that many deals were made very, very early.

In reading the notes attached to these deals, one often sees the words ‘Drug discovery platform,’ followed by descriptions of cutting edge technologies.  By contrast, very few deals mention ‘drug delivery’, which in past years was a major topic in pharma licensing.

The effect of this high level of interest in novel drug discovry platforms is that a large proportion of 2018’s deals took place at a research or preclinical stage – in total, 60% of the deals we tracked involved assets that had yet to enter human clinical trials.  Many biotech entrepreneurs underestimate the importance of targeting a pharma partnership – some believe their asset is too early stage, but many are held back by the belief that the only reason a big pharma company would be talking to an early stage startup is because the pharma company wants to steal their ideas.  While it’s important to have strong IP protection, the data makes clear that the reason pharma wants to talk to you early is because they are increasingly inking deals early – deals which benefit everyone involved.

In terms of indication, oncology remains the largest area of dealmaking, but CNS assets also provided a significant number of deals, as did metabolic diseases and dermatology.

One trend that continues to hold is that deals are now rarely about me-too technologies; instead, almost every deal represents a new cutting edge.  Undiscovered targets in the microbiome.  Protein degradation drug candidates.  Tumor-specific targets.  Gene therapy.  Major themes in new biotechnologies are finally flowering at the deal stage – precision medicine, -omics, synthetic biology, cell therapies, CRISPR.  With global pharmaceutical companies bringing these technologies into their pipelines, we hope that new treatments will not be far away.

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