Campbell Alliance 2010 Deal Makers Intentions Survey Ppt

The 2010 Dealmakers’ Intentions Study ResultsThe 2010 Dealmakers’ Intentions Study Results

Presentation to BIO SuperPresentation to BIO Super‐‐SessionSession

May 2010May 2010May 2010May 2010

Copyright © Copyright © 2010 Campbell Alliance Group, Inc. 2010 Campbell Alliance Group, Inc. All Rights ReservedAll Rights Reserved..

Dealmakers’ Intentions Survey for 2010Dealmakers’ Intentions Survey for 2010IntroductionIntroduction

Many deal database resources are available.Many deal database resources are available.

They are indispensable, but can only tell us what has already They are indispensable, but can only tell us what has already happened.happened.

The Dealmakers’ Intentions Survey is designed to be more The Dealmakers’ Intentions Survey is designed to be more forward looking.forward looking.

As each year closes, we ask what Dealmakers expect in the new As each year closes, we ask what Dealmakers expect in the new year.year.

Companies of all sizes are includedCompanies of all sizes are included——but we segment the but we segment the responses.responses.

‐‐22‐‐Copyright © Copyright © 2010 Campbell Alliance Group, Inc. 2010 Campbell Alliance Group, Inc. All Rights ReservedAll Rights Reserved..

Dealmakers’ Intentions Survey for 2010Dealmakers’ Intentions Survey for 2010Why Is Dealmaking So Important Right Now?Why Is Dealmaking So Important Right Now?

In 2008 and 2009, with limited VC funding and a near disappearance of IPOs, the In 2008 and 2009, with limited VC funding and a near disappearance of IPOs, the primary means of realizing value for biotech companies has been through dealmaking.primary means of realizing value for biotech companies has been through dealmaking.

$3 500

$4,000 $4,000

VC FundingVC FundingFunding Through IPOsFunding Through IPOs

$2,000

$2,500

$3,000

$3,500

Fund

ing

(M)

$2,000$2,500$3,000$3,500

Fund

ing

(M)

$0

$500

$1,000

$1,500

Tota

l F

$0$500

$1,000$1,500

,

Tota

l F

Source: BioCentury. January 4, 2010

$01 2

Source: InVivo. February 2010

$01 22008 20092008 2009


Dealmakers’ Intentions Survey for 2010Dealmakers’ Intentions Survey for 2010Why Should We Focus on the Largest Companies?Why Should We Focus on the Largest Companies?

Companies with revenue greater than $1 billion contribute approximately 70% of Companies with revenue greater than $1 billion contribute approximately 70% of meaningful licensing and acquisition deals.meaningful licensing and acquisition deals.

Big Pharma Share of Licensing DealsBig Pharma Share of Licensing Deals11 Big Pharma Share of AcquisitionsBig Pharma Share of Acquisitions22

60%60%

70%70%

80%80%

60%60%70%70%80%80%

30%30%

40%40%

50%50%

60%60%

hare of D

eals

hare of D

eals

30%30%40%40%50%50%60%60%

are of Deals

are of Deals

0%0%

10%10%

20%20%

1 2

ShSh

0%0%10%10%20%20%

1 2

ShSh20082008 2009200920082008 20092009

1Share of the pharmaceutical and biotech licensing deals with an up‐front payment greater than $15M where the in‐licensor was a company with revenue greater than $1B (62 deals in 2008 and 59 deals in 2009)

Sources: Windhover Strategic Transactions Database for identification of deals; Campbell Alliance analysis


20082008 2009200920082008 20092009


p y g $ ( )2Share of the pharmaceutical and biotech acquisitions with value greater than $100M where the in‐licensor was a company with revenue greater than $1B (28 deals in 2008 and 31 deals in 2009)

Dealmakers’ Intentions Survey for 2010Dealmakers’ Intentions Survey for 2010Characteristics of RespondentsCharacteristics of Respondents

We received responses from senior decision makers representing a variety of company We received responses from senior decision makers representing a variety of company types.types.

R d tR d t TitlTitlR d tR d t TitlTitl CC TTCC TTRespondentRespondent TitlesTitles((n=156n=156))

RespondentRespondent TitlesTitles((n=156n=156))

Other 1%Other 1%

CompanyCompany TypesTypes(n=156n=156)

CompanyCompany TypesTypes(n=156n=156)

Other 1%Other 1%

SVP and Above

Director/Director/Sr. DirectorSr. Director DevelopmentDevelopment

F dF d

Commercialwith Rev > $1B

%

VP

SVP and Above42%31%31% FocusedFocused

45%45%26%

Commerciali h R $1B26% with Rev < $1B

28%


Source: Campbell Alliance Dealmakers’ Intentions Survey 2010 Source: Campbell Alliance Dealmakers’ Intentions Survey 2010

Dealmakers’ Intentions Survey for 2010Dealmakers’ Intentions Survey for 2010Respondent Role in DealsRespondent Role in Deals

We received responses from both inWe received responses from both in‐‐ and outand out‐‐licensors who had been active deal licensors who had been active deal makers in makers in 2009.2009.

R d t R l i Li iR d t R l i Li i N b f D l C l t d i 2009N b f D l C l t d i 2009Respondent Role in Licensing(n=156)

Respondent Role in Licensing(n=156)

ExclusivelyExclusivelyInIn--License 8%License 8%

ExclusivelyExclusivelyOutOut--License 10%License 10%

Number of Deals Completed in 2009Up‐Front >$5M (All Respondents*)Number of Deals Completed in 2009Up‐Front >$5M (All Respondents*)

MostlyM tl

Completed One Deal 21

Completed Two Deals 10

MostlyIn-License

28%

MostlyOut-License

28%

Completed Three Deals 4

Completed Four Deals 3

Equally In- and Out-License

26%*The sum of deals completed by all respondents was 106; when only in‐licensors were included, the sum was 84.

Completed Five or More Deals 7


Source: Campbell Alliance Dealmakers’ Intentions Survey 2010Source: Campbell Alliance Dealmakers’ Intentions Survey 2010

only in licensors were included, the sum was 84.

Dealmakers’ Intentions Survey for 2010Dealmakers’ Intentions Survey for 2010General Expectations for Deal ActivityGeneral Expectations for Deal Activity

Overall, the respondents with commercial operations expect levels of Phase III Overall, the respondents with commercial operations expect levels of Phase III dealmaking to remain steady. dealmaking to remain steady.

Expectations for Phase III DealsExpectations for Phase III Deals

60%60% InIn‐‐LicensorsLicensorsOutOut‐‐LicensorsLicensors

30%30%

40%40%

50%50%

Respon

dents

Respon

dents

OutOut LicensorsLicensors

10%10%

20%20%

30%30%

Share of R

Share of R

0%0%

Decrease over Decrease over last yearlast year

Remain the Remain the samesame

Increase over Increase over last yearlast year


Source: Campbell Alliance Dealmakers’ Intentions Survey 2010

n=54 In‐Licensors, 52 Out‐Licensors

Dealmakers’ Intentions Survey for 2010Dealmakers’ Intentions Survey for 2010General Expectations for Deal ActivityGeneral Expectations for Deal Activity

These respondents were even more optimistic about Phase II deal making activity.These respondents were even more optimistic about Phase II deal making activity.

E t ti f Ph II D lE t ti f Ph II D lExpectations for Phase III DealsExpectations for Phase III Deals


Expectations for Phase II DealsExpectations for Phase II Deals


30%30%

40%40%

50%50%

Respon

dents

Respon

dents

OutOut LicensorsLicensors

30%30%

40%40%

50%50%

Respon

dents

Respon

dents

10%10%

20%20%

30%30%

Share of R

Share of R

10%10%

20%20%

30%30%

Share of R

Share of R

0%0%




0%0%






n=54 In‐Licensors, 52 Out‐Licensors n=54 In‐Licensors, 52 Out‐Licensors

Expectations and IntentionsExpectations and IntentionsIntentions by Therapeutic AreaIntentions by Therapeutic Area

Dealmaking intentions are concentrated in a few therapeutic areas.Dealmaking intentions are concentrated in a few therapeutic areas.

Dealmakers’ IntentionsDealmakers’ Intentions(Share of respondents(Share of respondents rating their likelihood to complete a Phase II or IIIrating their likelihood to complete a Phase II or III

Dealmakers’ IntentionsDealmakers’ Intentions(Share of respondents(Share of respondents rating their likelihood to complete a Phase II or IIIrating their likelihood to complete a Phase II or III(Share of respondents (Share of respondents rating their likelihood to complete a Phase II or III rating their likelihood to complete a Phase II or III

deal in the therapeutic area as a 5 or greater on a scale of 7)deal in the therapeutic area as a 5 or greater on a scale of 7)(Share of respondents (Share of respondents rating their likelihood to complete a Phase II or III rating their likelihood to complete a Phase II or III

deal in the therapeutic area as a 5 or greater on a scale of 7)deal in the therapeutic area as a 5 or greater on a scale of 7)

Metabolics (4%)Metabolics (4%)Dermatology (3%)Dermatology (3%)

Women’s Health (3%)Women’s Health (3%)

Oncology (24%)Oncology (24%)

Cardiovascular (4%)Cardiovascular (4%)

Antivirals (4%)Antivirals (4%)Antibiotics (4%)Antibiotics (4%)

( )( )

CNS (excluding pain) (15%)CNS (excluding pain) (15%)

Vaccines (6%)Vaccines (6%)

Cardiovascular (4%)Cardiovascular (4%)

Pain (9%)Pain (9%)Immunology (12%)Immunology (12%)

Gastrointestinal (6%)Gastrointestinal (6%)

Respiratory (6%)Respiratory (6%)


Source: Campbell Alliance Dealmakers’ Intentions Survey 2010. N=66 (only including respondents who work for companies with commercial operations [i.e., revenue above $0] and who described their role as exclusively in‐licensing, mostly in‐licensing, or equally in‐ and out‐ licensing)

Immunology (12%)Immunology (12%)

Expectations and IntentionsExpectations and IntentionsExpectations for Deal ValuesExpectations for Deal Values

Dealmakers expect deal values to go up in the areas of expressed interest.Dealmakers expect deal values to go up in the areas of expressed interest.

Dealmakers’ Intentions(Share of respondents anticipating at least a 10% increase in up front payments

Dealmakers’ Intentions(Share of respondents anticipating at least a 10% increase in up front payments(Share of respondents anticipating at least a 10% increase in up‐front payments

for Phase II deals in the selected therapeutic areas)(Share of respondents anticipating at least a 10% increase in up‐front payments

for Phase II deals in the selected therapeutic areas)

CNS (excluding Pain)CNS (excluding Pain)

OncologyOncology

MetabolicsMetabolics

VaccinesVaccines

AntiviralsAntivirals

PainPain

( g )( g )

Value represents the share of respondents who identified themselves as having a role of

AntibioticsAntibiotics

ImmunologyImmunology

DermatologyDermatology

RespiratoryRespiratory

Women's HealthWomen's Health identified themselves as having a role of “mostly” or “exclusively” in‐licensing and choosing either “increase by 10%‐20%” or

“increase by more than 20%” when asked for expectations on up‐front payments for Phase II

0%0% 5%5% 10%10% 15%15% 20%20% 25%25% 30%30% 35%35% 40%40%

GastrointestinalGastrointestinal

CardiovascularCardiovascular

AntibioticsAntibioticsassets in the identified therapeutic area.



n=~35 (varied by therapeutic area) individuals who described their role as mostly or exclusively in‐licensing

Expectations and IntentionsExpectations and IntentionsProduct AvailabilityProduct Availability

Supply is also high in the areas of expressed interest . . . Supply is also high in the areas of expressed interest . . .

Comparison of Areas Where 10 Top Companies Express Licensing Interest and Est. # of Products AvailableComparison of Areas Where 10 Top Companies Express Licensing Interest and Est. # of Products Available

Therapeutic AreaNumber of Companies Expressing

Licensing InterestEstimated Number of Phase II and III Products Available for Licensing

Oncology 10 ~500

CNS (Excluding Pain) 9 ~200CNS (Excluding Pain) 9 200

Immunology 9 ~235

Pain 7 ~75

Vaccines 3 ~85

Respiratory 7 ~110

Gastrointestinal 2 ~90

Metabolics 10 ~30

Antibiotics 3 ~70

Antivirals 7 ~110

Cardiovascular 9 ~50

Dermatology 1 ~30

W ’ H l h 1 85


Women’s Health 1 ~85

Companies Included: Johnson & Johnson, Pfizer, Bayer, GSK, Novartis, sanofi‐aventis, Roche, AstraZeneca, Merck, Abbott, BMS, and Eli LillyNote: Therapeutic area included if company expressed licensing interest in any disease state within the therapeutic areaSources: Company websites and partnering brochures

Expectations and IntentionsExpectations and IntentionsLicensing InventoryLicensing Inventory

. . . making the “inventory” of available assets greatest in some of the areas of highest . . . making the “inventory” of available assets greatest in some of the areas of highest demand.demand.

Hypothetical Licensing “Hypothetical Licensing “Inventory”*Inventory”*Hypothetical Licensing “Hypothetical Licensing “Inventory”*Inventory”*Hypothetical Licensing Hypothetical Licensing InventoryInventoryHypothetical Licensing Hypothetical Licensing InventoryInventory

1515

2020

2525

YearsYears

55

1010

1515

00

*Th i h i f i ll il bl Ph II d Ph III

Sources: Campbell Alliance Dealmakers’ Intentions Survey 2010; Adis; Pharmaprojects; Windhover Transaction Tracker; Campbell Analysis


*The inventory measure represents the ratio of potentially available Phase II and Phase III assets divided by the number of deals completed in 2009 that had an up‐front value of more than $10M.

Expectations and IntentionsExpectations and IntentionsDeal TimingDeal Timing

So we looked at when our Dealmakers thought a deal should be done.So we looked at when our Dealmakers thought a deal should be done.

When InWhen In‐‐Licensors Say OutLicensors Say Out‐‐Licensors Should Do the DealLicensors Should Do the DealWhen InWhen In‐‐Licensors Say OutLicensors Say Out‐‐Licensors Should Do the DealLicensors Should Do the Deal

60%

70%

80%

20%

30%

40%

50%Share ofShare ofRespondentsRespondents

0%

10%

20%



Before End of Phase IIBefore End of Phase II Immediately Following Phase IIImmediately Following Phase II Following Phase IIIFollowing Phase III

n=42 to 69 depending on therapeutic area; only included respondents who indicated their role is exclusively or mostly in‐licensing or equally in‐ and out‐licensing.

Expectations and IntentionsExpectations and IntentionsDeal TimingDeal Timing

In three areas, we found a comparatively high share of inIn three areas, we found a comparatively high share of in‐‐licensors who see an licensors who see an opportunity to license prior to the completion of Phase II.opportunity to license prior to the completion of Phase II.

When InWhen In‐‐Licensors Say OutLicensors Say Out‐‐Licensors Should Do the DealLicensors Should Do the DealWhen InWhen In‐‐Licensors Say OutLicensors Say Out‐‐Licensors Should Do the DealLicensors Should Do the Deal

60%

70%

80%

20%

30%

40%

50%Share ofShare ofRespondentsRespondents

0%

10%

20%



Before Endof Phase IIBefore Endof Phase II Immediately Following Phase IIImmediately Following Phase II Following Phase IIIFollowing Phase III

n=42 to 69 depending on therapeutic area; only included respondents who indicated their role is exclusively or mostly in‐licensing or equally in‐ and out‐licensing.

Expectations and IntentionsExpectations and IntentionsHot AreasHot Areas

These biases separate what is truly “hot” from what is simply “in the neighborhood.”These biases separate what is truly “hot” from what is simply “in the neighborhood.”

Phase IIITherapeutic Area

Phase I Through Phase II Initiated

Phase II Completed

Phase III Completed

Through FiledMarketed

Share Completed on Phase II Data

Oncology 8 6 1 1 37%

Infectious Disease 4 1 20%Infectious Disease 4 1 20%

CNS(excluding pain)

1 3 2 3 56%

Gastrointestinal 1 2 66%

Cardiovascular 2 2 1 1 50%

Respiratory 1 1 50%

All Others 7 4 2 5 22%

Total 24 18 7 10 30%



Total 24 18 7 10 30%

Expectations and IntentionsExpectations and IntentionsHot AreasHot Areas

The upThe up‐‐front payments for oncology therapies in new but increasingly well characterized front payments for oncology therapies in new but increasingly well characterized mechanisms reveal the value of products in “hot” areas.mechanisms reveal the value of products in “hot” areas.

Out‐Licensor In‐Licensor Up‐Front Payment

Merrimack Sanofi‐aventis $60M

Trubion Facet $30M

Plexxikon Roche $60M

Ambit Astellas $40MAmbit Astellas $40M

Seattle Genetics Millennium $60M

Exelixis Sanofi‐aventis $140M*

*Covered two products

Ardea Bayer $35M


Source: Windhover Strategic Transactions Database for identification of deals

Expectations and IntentionsExpectations and IntentionsWhat Does Proof of Concept Mean Now?What Does Proof of Concept Mean Now?

InIn‐‐Licensors have different “proof” needs for different types of products.Licensors have different “proof” needs for different types of products.

Today’s “Proof Demands”Today’s “Proof Demands”Today’s “Proof Demands”Today’s “Proof Demands”

Category 1

Specialist Product

New (well

Description

New (well characterized) mechanism

“Proof Demand”Traditional Phase II

Clinical POC

Examples from 2009 Dealmaking

AC220 (AmbitBiosciences)

MM121


2009 Dealmaking MM121 (Merrimack)




Category 1 2

Specialist Product

New (well

Specialist Product

Established

Description


Established Mechanism

New Active Product


Clinical POC

Potential to EnterMarket Early in

SSequence



MM121

Amplixa (Targacept) Linaclotide



Linaclotide (Ironwood)




Category 1 2 3

Specialist Product

New (well

Specialist Product

Established

Specialist Product

Established

Description



New Active Product


Late Entrant or Established Active Product


Clinical POC


S

ClinicalDifferentiation and

Potential for Sequence

Reimbursement



MM121


Iloperidone (Vanda) DM1796




DM1796 (Depomed)




Category 1 2 3 4

Specialist Product

New (well

Specialist Product

Established

Specialist Product

Established

Any Product in Primary Care

Description



New Active Product


Late Entrant or Established Active Product

y


Clinical POC


S

ClinicalDifferentiation and

Potential for

Differentiation and Potential for

R i b tSequenceReimbursement

Reimbursement



MM121


Iloperidone (Vanda) DM1796

Intermezzo (Transcept) Voltaren Gel




DM1796 (Depomed)

Voltaren Gel (Novartis)

Business Model ImplicationsBusiness Model ImplicationsThe Biotech Business Model MapThe Biotech Business Model Map

These “proof demands” are forcing new behaviors by biotech leaders.These “proof demands” are forcing new behaviors by biotech leaders.

First TA Commercial ModelsFirst Product Technology Modelsgy

ConceptConceptRefinerRefiner

First Application First Application DeveloperDeveloper

Post POC DeveloperPost POC Developer

Post POC DeveloperPost POC Developer(Patron Model)(Patron Model)

Post POC DeveloperPost POC Developer(Independent Model)(Independent Model)

First Region First Region CommercializerCommercializer

First Region First Region CommercializerCommercializer

(Outsource Model)(Outsource Model)

First Region First Region CommercializerCommercializer(FIPCO Model)(FIPCO Model)

MultiMulti‐‐Region Region CommercializerCommercializer

MultiMulti‐‐Region Region CommercializerCommercializer


MultiMulti‐‐Region Region CommercializerCommercializer(FIPCO Model)(FIPCO Model)

Post POC DeveloperPost POC Developer(Polypartner Model)(Polypartner Model)

(Patron Model)(Patron Model) CommercializerCommercializer(Co(Co‐‐Pro Model)Pro Model)


License to Prove and

CommercializerCommercializer(Co(Co‐‐Pro Model)Pro Model)

( )( )

First Region Commercializer

Multi‐Region CommercializerPipeline Builder

P t POCP t POC

Improve

OCOC

Multi‐TA Commercial Models

(Multi‐TA, FIPCO Model)

(Multi‐TA, FIPCO Model)Pipeline Builder

(Acquisition Model)

p(Expansion Model)

Technology and Pipeline Expansion Models

*FIPCO Fully integrated pharmaceutical company

Post POC Post POC CommercializerCommercializer

(Multi TA, Multi(Multi TA, Multi‐‐Region Region Model)Model)


(Focused TA, Multi(Focused TA, Multi‐‐Region Model)Region Model)


(Multi TA, Single(Multi TA, Single‐‐Region Region Model)Model)


(Focused TA, Single (Focused TA, Single Region Model)Region Model)

Technology and Pipeline xpansion Models


*FIPCO—Fully integrated pharmaceutical company

Commercial Only ModelsModel)Model)Model)Model)

Business Model ImplicationsBusiness Model ImplicationsExpectations of Tried and True Business Model PathwaysExpectations of Tried and True Business Model Pathways

Some companies had a plan to pursue the “tried and true” pathway of developing a Some companies had a plan to pursue the “tried and true” pathway of developing a first product through Phase II proof of concept . . .first product through Phase II proof of concept . . .

Biotechnology Business Model PathwaysBiotechnology Business Model Pathways





. . . finding a partner . . .. . . finding a partner . . .







. . . and returning to their core capability to build out additional products in a pipeline.. . . and returning to their core capability to build out additional products in a pipeline.





Pipeline Builderp(Expansion Model)


Business Model ImplicationsBusiness Model ImplicationsNew Business Model Pathways for Some CategoriesNew Business Model Pathways for Some Categories

Instead, some firmsInstead, some firms——particularly those in Category 3particularly those in Category 3——are finding that they must are finding that they must adopt an independent postadopt an independent post‐‐POC development model.POC development model.




Post POC Developer(Patron Model)



Business Model ImplicationsBusiness Model ImplicationsNew Business Model Pathways for Some CategoriesNew Business Model Pathways for Some Categories

A few are even finding that they need to prepare for independent commercialization.A few are even finding that they need to prepare for independent commercialization.




Post POC Developer(Patron Model)


First Region First Region CommercializerCommercializer(FIPCO Model)(FIPCO Model)


Licensing OperationsLicensing OperationsThe Pipeline Challenge for InThe Pipeline Challenge for In‐‐LicensorsLicensors

InIn‐‐Licensors have their own challenges. Primary among these is keeping a full pipeline Licensors have their own challenges. Primary among these is keeping a full pipeline of opportunities.of opportunities.

Attrition in the Licensing PipelineAttrition in the Licensing PipelineAttrition in the Licensing PipelineAttrition in the Licensing PipelineAttrition in the Licensing PipelineAttrition in the Licensing PipelineAttrition in the Licensing PipelineAttrition in the Licensing Pipeline

Opportunities ReviewedNumber of Opportunities Reviewed( i b i )

Ten Programs Move to CDA

pp

Number of Programs Moving to CDA (varies by company size)

(varies by company size)

21%

49%

Share of Programs Moving from CDA to Binding Terms

Share of Binding Terms Going to Cl d T ti

OneClosedDeal

Closed Transactions

Closed Transaction


Source: Campbell Alliance Dealmakers’ Intentions Survey 2010. Only includes responses from individuals with in‐licensing responsibilities within companies with commercial operations.


A large share of the burden for filling the top of the funnel falls on Business A large share of the burden for filling the top of the funnel falls on Business Development leaders.Development leaders.

In‐Licensors First Contact for Opportunities(N=36)

In‐Licensors First Contact for Opportunities(N=36)

4%4% 1%BoardBoard OtherOther

10%

4%4% 4%4%MarketingMarketing

R&DR&D

19%BusinessBusiness

DevelopmentDevelopmentE tiE ti

62%19%ExecutiveExecutive

LeadershipLeadership



Opportunities must be identified from a variety of sourcesOpportunities must be identified from a variety of sources——but industry partnering but industry partnering meetings have taken a leading role.meetings have taken a leading role.

In‐Licensors Source for Opportunities(N=31)

In‐Licensors Source for Opportunities(N=31)

OtherOther

Partnering MeetingPartnering Meeting(proactive)(proactive)Scientific LiteratureScientific Literature

26%8%

11%

Scientific MeetingsScientific Meetings 11%

Partnering MeetingPartnering Meeting(reactive)(reactive)

Unsolicited ReceiptUnsolicited Receiptof Nonof Non Confidential MaterialsConfidential Materials

19%

26%


( )( )of Nonof Non‐‐Confidential MaterialsConfidential Materials

Campbell Alliance 2010 Deal Makers Intentions Survey Ppt

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