But for all the focus on M&A, there are also some interesting developments in the world of licensing. Deal size, especially up-front cash, is up. "Unambiguously there is a movement toward larger upfronts, particularly if you look at Phase I and II," says Ben Bonifant, leader of Campbell Alliance's business development practice. "It's very likely a matter of supply and demand. There's no mystery about which compounds are the more exciting ones."
There's also a return to the idea that a deal should be structured in a way that keeps the biotech committed to and working on the project, Bonifant says. Indeed, in some of the most ambitious new license deals, there's a tendency to license a platform technology instead of or in addition to a product—mirroring a distinct trend in the M&A space.What follows is a look at some of the hottest licensing deals of Q3 2007.
This deal between the British drug giant and the tiny California biotech is very much of the moment: a new pathway in the hot field of oncology and a cool $1.4 billion in milestone payments. What's as old as the industry itself, though, is the high likelihood that neither drug nor milestones will ever materialize.
The alliance was struck last December by GSK's Centre of Excellence for External Drug Discovery (CEED), a seven-member team that trawls the biopharma sea for innovative R&D and then cooks up partnerships for out-of-house drug development. The early financing was not disclosed, but OncoMed CEO Paul Hastings called it "a substantial amount of money to help push the company forward." OncoMed, which was founded in 2004, will grow from its current staff of 62 to "no more than 75 by the end of the year," Hastings added.
Despite the odds of success, the deal has several noteworthy features. Analysts were quick to point out that the potential overall price tag was the highest ever for a company that hadn't yet made it into the clinic. "There was speculation that Big Pharma would not do large deals for preclinical candidates," said Alan Mendelson, a partner at Latham and Watkins, which brokered the deal for OncoMed. "[This] is evidence that, for the right technology, with the prospect of multiple product opportunities, the far-sighted pharmaceutical companies [will]."