Unpartnered Products: Partnerships that could be Game Changers

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Unpartnered Products
Partnerships that could be
Game Changers









A complimentary copy of the full report can be downloaded
at http://www.medtrack.com/bio-partnerships
Steven Muntner
Analyst, Medtrack

an informa business
Unpartnered Products: Partnerships that could be Game Changers



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As the pharmaceutical landscape continues to consolidate through acquisitions and
partnerships, we examine the untapped market of unpartnered products, which represents a
potential multi-billion dollar opportunity.
Opportunities for companies of all sizes:
Large pharma along with smaller cash-rich pharma companies have a unique chance to enter new
therapy areas and strengthen their existing pipelines through product partnerships and acquisitions.
There may be instances for big pharma to off-load some of their existing assets if they arent critical to
their growth strategy or if they would be a better fit for other companies willing to pay a premium. On
the flipside, cash-rich big pharma has the opportunity to replenish potentially depleting pipelines by
acquiring smaller biotech/pharmaceutical companies, or co-developing drugs that have not been
partnered.

This analysis examines:
1. Unpartnered branded, investigational & biologic drugs
by therapy area and phase
2. Private company pipelines
with unpartnered products
3. Public company pipelines
with low cash on hand that could hold potential for out-licensing deals
4. Recent licensing deals and royalty rates
across the pharma and biotech space

Unpartnered Products: Partnerships that could be Game Changers



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Unpartnered branded, investigational & biologic drugs
The data below was obtained from informas Medtrack pharmaceutical intelligence and deals
database, and took into account all unpartnered drugs from Research to Phase III, including
branded, investigational and biologic drugs.

The graph above shows that the therapeutic areas with
the greatest number of unpartnered drugs are: Oncology,
CNS and Infectious Disease, while Genitourinary and
Gastroenterology have the fewest.
Furthermore, there is less competition to
partner at the PreClinical phase, since more
than half (56%) of drugs are available for
licensing. Phase II had the second highest
percentage of unpartnered products at 16%.
A potential licensee or acquirer will need to
weigh the costs vs. benefits of licensing or acquiring drugs at these differing stages. Licensing an asset at
an earlier stage (such as PreClinical) would require a greater cash outlay to a potential licensee over the
longer time horizon, given the potential higher R&D costs involved and greater risk of approval, and
therefore would demand a greater return on investment. Companies with drugs that have successfully
Unpartnered Products: Partnerships that could be Game Changers



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moved into Phase II will expect a higher premium for their drugs due to the greater funding in R&D that
already has been committed and will need to be recouped. This can partly be seen in the greater royalty
rates paid out to Phase II & III assets as opposed to those in earlier stages.
Private company pipelines
The analysis below examines North American private companies with a large number of unpartnered
products (branded, biologics and investigational) in phases Research through Phase III. These
companies have fairly robust unlicensed pipelines, which potentially represent out-licensing
opportunities.












Aphios has the greatest number of unpartnered candidates, with a Phase III drug, Zindol, for the
treatment of cancer chemotherapy induced nausea and vomiting. GlobeImmune has many early-stage
products in oncology that are potentially ripe for partnering and is also in the process of going public.
Unpartnered Products: Partnerships that could be Game Changers



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Public company pipelines
While traditionally smaller biotech and pharma companies would need the most help developing their
unpartnered products due to lack of funding, no infrastructure to conduct major clinical trials, and less
access to sales/distribution channels, there are numerous more established public biotech/pharma
companies that are nearing the end of their cash balances and may need to out-license drugs to
replenish their cash reserves. The analysis below examines these companies that are public,
headquartered in North America and have less than one year of cash remaining.





Unpartnered Products: Partnerships that could be Game Changers



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The graph below shows the percentages of drugs by therapeutic area in the combined pipelines of these
companies.

Along with the general market trend, it appears that Oncology still holds the greatest opportunity for
partnering, followed by CNS and Infectious Disease. Perhaps rather than out-licensing, these companies
could also become acquisition targets for larger pharma as a way for them to strengthen their pipelines
in a non-organic manner.

Recent licensing deals and royalty rates
In order to predict the future, it is often necessary to analyze the past. Medtrack reviewed all licensing
partnership deals in phases Research Phase III in the 2013 calendar year for both public and private
companies combined. The graph below clearly indicates that Oncology deals were greatest in number in
2013, followed by Diagnostics and Central Nervous System deals.

Unpartnered Products: Partnerships that could be Game Changers



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Partnership deals analysis by phase
The average total implied deal value varied by phase, with Research deals* demanding the greatest
cumulative total value at $15.2 bn, followed by those deals involving Phase II assets with $5.8 bn.

*Deals marked at Research phase may also include those at an unknown phase of development at time
of deal signing
Royalties analysis by phase and therapeutic area
Along with total deal value, a key financial component of many deals is the royalty rate paid to licensors
for their products. By receiving royalties, licensors remain vested partners in the development of their
out-licensed products and have their interests aligned with licensees. As expected, those candidates
further along in development receive higher royalty rates to compensate licensors for the costs and
development time already committed and to account for their greater likelihood of approval.

Unpartnered Products: Partnerships that could be Game Changers



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As seen in the bar graph in the previous page, those in PreClinical averaged royalty rates of 7.2% over
the last five years, while those in Phase III averaged more than double at 15.2%. It is also useful to
analyze royalty rates by therapeutic category to see if any particular TAs demand greater royalty rates
than others. The analysis above indicates that Genitourinary, Hematology and Dermatology deals
reward their licensors with the highest rates, nearly 15% on average. On the other hand, deals in
Ophthalmology, Immunology/Inflammation, and Oncology received lower royalty rates, averaging
around 8%.










Unpartnered product and partnership data was obtained from Informas Medtrack, a
pharmaceutical intelligence and deals database, and took into account all unpartnered drugs
from Research to Phase III, including branded, investigational and biologic drugs.
Medtrack follows nearly 36,000 biopharmaceutical companies, 135,000 ethical and generic
drugs and over 111,000 deals including partnerships, mergers, acquisitions, venture financings,
public offerings and private placements for both private and public companies worldwide.
To learn more about Medtracks platform and see a quick demo contact +1 212 652 5365 in the
US or +44 207 551 9312 in the EU or visit www.medtrack.com.


Unpartnered Products: Partnerships that could be Game Changers



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