Wednesday, November 16, 2011

Guest Post: In Oncology, Is Early Partnering The Name Of The Game?

By Jonathon Fendelman, Senior Practice Executive, Campbell Alliance

The Celgene/Quanticel tie-up announced November 4, typifies a trend we’ll be discussing in greater detail at the coming Therapeutic Area Partnerships meeting: the trend of partnering early in oncology. Under the terms of the agreement, Celgene will commit $45 million to Quanticel during the initial three-and-a-half-year alliance term, with the ability to extend the collaboration in exchange for additional funding. Celgene will also take an equity stake in Quanticel and retains an exclusive option to acquire the company.

As IN VIVO Blog outlined in this post, Quanticel will utilize its platform to conduct single-cell genomic analysis of patient tumor samples and to identify predictive biomarkers for Celgene’s investigational drugs. Quanticel will also perform its own drug discovery, and via the acquisition option, Celgene retains the ability to access those pipeline candidates.

The upshot? As competition for good assets strengthens, pharmas are beginning to lock up rights to assets long before proof-of-concept data are in hand. To put some numbers on the trend, Campbell Alliance used Elsevier’s magic eight ball – also know as Strategic Transactions-- to identify the total number of alliances year-to-year with upfront payments of more than $10 million. We were only interested in deals centered on assets (as opposed to those centered around the resolution of patent disputes or R&D support, for example).

Using this metric, we found that the total number of licensing deals completed over the last several years has remained relatively consistent. In 2008, there were 62 deals completed based on our criteria. This was followed by 61 deals in 2009 and 62 in 2010. This year should see a similar number of deals, given 42 deals were completed as of the end of September.

What does this have to do with oncology deal making? In 2008 and 2009, 24% of the alliances were for oncology products. 2010 saw a slight downward blip, with only eight of the 62 deals, or 13%, in this therapeutic area. But oncology deals appear to have bounced back in 2011, with 28% of the 42 deals year-to-date involving cancer medicines.

Further analysis showed that in 2008 and 2009, there was a bias in the oncology deals toward products in Phase I and Phase II development. But in 2010, that bias swung even earlier, with five of the 8 oncology deals revolving around assets that were in preclinical or Phase I development.

As we'll discuss at TAP, that trend has continued in 2011. Of the 42 deals completed thus far this year, 12 involve oncology products, with half of those in Phase I development or earlier. These six alliances all involved first-in-class compounds that work via new mechanisms of action.

We see a clear enthusiasm for early-stage oncology deals. In the context of this enthusiasm, we anticipate any new oncology deals will also center on early-stage products, particularly compounds that work by a novel mechanism of action. Such assets offer the differentiation payers are more likely to reimburse for upon approval.

Not wanting to be caught with me-toos, drug makers are forced to tie-up rights earlier, before proof-of-concept, hedging their risk with option style alliance structures. As competition continues –and let’s face it, nearly every big pharma wants to be a top player in oncology – that energy will create a positive feedback loop, creating further incentives for earlier oncology partnering.

Image courtesy of flickrer Carol Myra used with permission through a creative commons license.

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