Today Fierce Biotech published a piece from BioWorld that shows an analysis of Big Pharma deals with Biotechs for drug development that have been terminated since Jan 2011 - so far there have been 13 this year. This represents an increase from 8 over the same period in 2010. Four partnership dissolutions have been announced this week alone (which nearly accounts for increase total over 2010).
The analysis for "done deals" was performed at Deloitte Recap LLC coverign the period 1977 to 2010 and looked at 474 alliances that were terminated prior to reaching commercialization. The reasons cited for termination can be grouped:
- 38% of deals were stopped due to reprioritization by the pharm partner
- 37% had an issue with either efficacy or safety of the product in clinicals
- 7% were stopped for "lack of diligence" - code for not enough commercialization effort beign made
- 7% were due to M&A activity - usually the biotech involved was acquired and pharma took opportunity to back out
- 15% were stopped for the dreaded "other" -- usually lack of progress with one partner buying up project
Most projects died in phase II (29%) or in phase III (35%). However dissolution of the partnership didn't mean the project died. In fact, 55% of the drugs involved in these failed marriages are still alive -- which 42% of that total finding a new partner. So nearly 25% found new backers.
Analysts say more of this can be expected as Big Pharma continues to scrub its pipeline and cut costs. They note that many of the projects were started many years ago and are just reaching phase II or phase III where some attrition will occur. With cost-cutting, pharma isn't waiting as long for bad news and is cutting its perceived losses earlier rather than fund "higher risk trials". A penny saved is a penny earned so to speak.
Posted by Bruce Lehr May 16th 2011.