NEWS FEATURE

Oncology dealmaking in 2020

After a slow start due to the COVID-19 pandemic, oncology dealmaking thrived in 2020 as immuno-oncology fueled a number of high-value drug licensing deals and a string of billion-dollar M&As were announced.

Credit: SciePro / Science Photo Library

Despite the challenges of the COVID-19 pandemic, 2020 was a landmark year for investment in biotech and pharma (Nat. Rev. Drug Disc. 20, 93–94; 2021). Once again, oncology played a large part in dealmaking (Biopharma Dealmakers B23–25, December 2020) with $133 billion total disclosed deal value. Drug licensing activity accounted for $59 billion of that, and, while there was a general downturn in large mergers and acquisitions (M&A) throughout 2020, oncology M&A totaled $45 billion in disclosed deal value.

Licensing trends

Immuno-oncology (IO) continues to feature strongly in oncology dealmaking, being involved in 49% of drug licensing transactions and representing 66% of the total disclosed deal value. Of the 21 oncology drug licensing deals larger than $1 billion in value, 15 were for IO-related assets, and 9 of those were for multi-targeted approaches such as bispecific antibodies and antibody–drug conjugates (ADCs) (Table 1). AstraZeneca topped the drug licensing list again this year with its partnership with Daiichi Sankyo, paying $1 billion upfront with a total potential value of $6 billion to license the anti-TROP2 ADC datopotamab deruxtecan, following the pair’s successful development and commercialization of the anti-HER2 ADC trastuzumab deruxtecan in 2019.

Similarly, Merck & Co. licensed Seattle Genetics’ phase 2 anti-LIV1 ADC ladiratuzumab vedotin for $600 million upfront and with a total potential value of $3.2 billion. Also noteworthy are AbbVie’s agreement to license Genmab’s phase 2 bispecific antibodies for $750 million upfront with a total projected value of $3.9 billion, the third largest drug licensing deal of 2020, and Genentech’s agreement to license Bicycle Therapeutics’ drug discovery platform for $1.7 billion total projected value and $30 million upfront. This is the largest ever deal for Bicycle’s novel protein-binding technology, which pairs a bicyclic binding protein to a toxin to create a bicyclic–drug conjugate.

Interestingly, of the six non-IO top drug licensing deals, three were for precision medicine drugs with potential values of greater than $1.5 billion, with the largest of these being GlaxoSmithKline’s deal to license IDEAYA Biosciences’ synthetic lethality drugs, which has a total projected deal value of $3 billion and includes $100 million paid upfront (Table 1). This represents one of the largest ever payouts for a technology that promises to drug the undruggable.

Table 1 | $1 billion-plus oncology drug licensing deals in 2020

Buyer

Seller

Total projected value ($ million)

Upfront payment ($ million)

Mechanism

Drug(s)

Status (deal start)

IO

AstraZeneca

Daiichi Sankyo

6,000

1,000

Antibody–drug conjugate

Datopotamab deruxtecan

Phase 1

Pfizer

Myovant

4,250

650

Hormone receptor antgonist

Relugolix; relugolix + estradiol + norethindrone combination

Launched

AbbVie

Genmab

3,900

750

Bispecific T cell engager

GEN-1044; GEN-3009; epcoritamab

Phase 2

Merck & Co.

Seagen

3,200

600

Antibody–drug conjugate

Ladiratuzumab vedotin

Phase 2

Janssen

Fate Therapeutics

3,100

50

CAR T cells

Drug discovery platform

Discovery

GlaxoSmithKline

IDEAYA

3,030

100

Precision medicine; synthetic lethality

IDE397; Pol-theta inhibitors; werner inhibitors

Preclinical

AbbVie

I-Mab

2,940

180

Anti-CD47 antibody

Lemzoparlimab

Launched

Astellas

CytomX

2,580

80

Bispecific T cell engager

Drug discovery platform

Discovery

Merck & Co.

Taiho

2,550

50

Precision medicine; KRAS inhibitor

Drug discovery platform

Preclinical

Innovent

Roche

2,100

Unspecified

Bispecific T cell engager; CAR T cell

Drug discovery platform

Discovery

Roivant

Affimed

2,091

40

Bispecific natural killer cell engager

AFM-32 and others

Preclinical

Gilead

Arcus

2,000

175

Anti-ITIM antibody; anti-PD1 antibody

Domvanalimab; zimberelimab

Pre-registration

Incyte

MorphoSys

1,955

750

Anti-CD19 antibody

Tafasitamab

Pre-registration

Genentech

Bicycle

1,720

30

Peptide–drug conjugate

Drug discovery platform

Discovery

Roche

Blueprint

1,702

675

Precision medicine; RET inhibitor

Pralsetinib

Pre-registration

Astellas

Adaptimmune

1,457.5

50

CAR T cells

Drug discovery platform

Discovery

EQRx

CStone

1,300

150

Anti-PD1 antibody; anti-PDL1 antibody

CS1003; sugemalimab

Phase 3

AstraZeneca

Accent

1,155

55

RNA-modifying protein inhibitors

Drug discovery platform

Discovery

Abpro Bio

Abpro

1,100

Unspecified

Bispecific T cell engager

ABP-100; ABP-201

Preclinical

AbbVie

Frontier

1,055

55

Protein degradation targets

Drug discovery platform

Discovery

Merck & Co.

Janux

1,001

Unspecified

Bispecific T cell engager

Unspecified drug candidates

Preclinical

Multi-target drugs achieved the highest drug licensing deal values in 2020, accounting for 37% of the total licensing deal value despite only accounting for 12% of transactions (Fig. 1). Unlike in 2019, where there were multiple deals around fusion protein technologies, the majority of the multi-target drugs licensing deals of 2020 were for ADCs and bispecific antibodies, and they accounted for 80% of the multi-target deal value. The past few years have seen growing interest and investment in these drugs. This year’s dealmaking reflects the clinical success of these modalities, as there are now 10 ADCs that have received regulatory approval globally, and, while only 3 bispecific antibodies are registered, 11 are in phase 3 clinical trials.

Licensed oncology drug technologies

Fig. 1 | Licensed oncology drug technologies. Drugs were categorized using the ‘Technologies’ field of oncology deals extracted from Cortellis. Multi-target drugs capture the highest accumulated deal value and upfront payments, where disclosed. Small molecule deals account for 41% of drug licensing transactions by volume. Data are from Cortellis Deals Intelligence from Clarivate.

In terms of development stage, drug licensing deal volume has been largest at the discovery stage in recent years, and that continued to be true in 2020 (Fig. 2). What was surprising in 2020 was the volume of activity around drugs in phase 1 of clinical development, with nearly twice as many phase 1 drug licensing deals signed in 2020 compared with 2019 (Biopharma Dealmakers B2–4, March 2020). Drugs in phase 1 achieved the highest average deal values ($842 million) and average upfront payments ($263 million) in 2020, where disclosed; however, the averages are inflated by the AstraZeneca/Daiichi Sankyo pact, which was the largest drug licensing deal in 2020, as discussed earlier. Drugs in phase 1 do not normally achieve such high price tags, but this deal follows a very successful collaboration between the two companies on trastuzumab deruxtecan, an ADC that was then in phase 2 and went on to demonstrate clinical success, gain regulatory approval, and is predicted to be a blockbuster by 2024, according to Clarivate. Removing the AstraZeneca/Daiichi Sankyo deal from the 2020 averages, phase 1 drugs achieved the lowest average upfront payments ($17 million) and total potential deal value ($198 million) in 2020, with the highest upfront payments achieved in the later stages of drug development and the highest total deal potential coming in the early discovery and preclinical stages, though those deals will be subject to numerous milestones (Fig. 2).

Oncology drug licensing values in 2020 by development phase

Fig. 2 | Oncology drug licensing values in 2020 by development phase. Development phase refers to the furthest status of any asset included in the deal at deal start. The greatest volume of transactions occurs at discovery stage, and the majority of these are for drug discovery platforms. The highest average deal values were achieved by assets in phase 1, where disclosed. Data are from Cortellis Deals Intelligence from Clarivate.

Indeed, of the top $1 billion-plus licensing transactions in 2020, eight were for drug discovery platforms (Table 1), representing high value in developing novel technologies from an early stage. Discovery stage transactions account for 30% of licensing transactions and represent a variety of drug technologies, including cell therapy (29%), small molecules (28%), multi-target drugs (18%) and antibodies (9%), perhaps indicating an industry-wide interest in diversifying the early-stage pipeline (data not shown). The highest value discovery stage transaction was Janssen’s deal with Fate Therapeutics for access to its induced pluripotent stem cell-derived cell therapy platform, paying $50 million upfront with a total potential of $3.1 billion. There were also large payouts for bispecific T cell engagers, precision medicines and protein degradation modulators (Table 1).

M&A trends

While M&A activity in biopharma was comparatively slow in 2020, there were seven $1 billion-plus M&A deals in oncology (Table 2). Interestingly, four of the acquisitions were for IO-related drug assets and the other three were for genetics-based diagnostics platforms.

Similarly to the high-value licensing activity in 2020, there were high-value M&A deals around multi-targeted therapies. The highest-value M&A deal in 2020 was Gilead’s acquisition of Immunomedics following the US Food and Drug Administration approval of its anti-TROP2 ADC sacituzumab govitecan for metastatic breast cancer. Merck & Co. acquired VelosBio for $2.75 billion, gaining its anti-ROR1 ADC, VLS-101, which is in phase 2 of clinical development. Boehringer Ingelheim agreed to acquire NBE-Therapeutics for $1.3 billion based on its next-generation iADC platform that generates highly specific, immune-stimulatory ADCs. The company’s lead candidate, NBE-002, has since entered into phase 2 clinical trials for various solid tumors in multiple sites across the USA. In a non-ADC-related purchase, Gilead also acquired Forty Seven for $4.9 billion, gaining its anti-CD47 antibody magrolimab, a first-in-class IO target that looks promising in treatment for newly diagnosed myelodysplastic syndrome.

Diagnostics were also prominent among M&A deals, with three of the $1 billion-plus M&A deals executed by diagnostics companies (Table 2). The diagnostics giant and worldwide leader in next-generation sequencing, Illumina, sought to reacquire its spinout GRAIL for $8 billion, gaining back its blood-based diagnostics expertise focused on early detection. Exact Sciences acquired Thrive Earlier Detection for $2.15 billion, also focused on early detection and screening of multiple cancer types. Finally, Invitae acquired ArcherDX for $1.4 billion, gaining its portfolio of precision medicine and liquid biopsy products.

Table 2 | $1 billion-plus oncology M&A deals in 2020

Seller

Buyer

Total projected ($ million)

Technology

IO

Immunomedics

Gilead

21,000

Antibody–drug conjugate (sacituzumab govitecan)

Grail

Illumina

8,000

Diagnostics (genomics)

Forty Seven

Gilead

4,900

Anti-CD47 antibody (magrolimab)

VelosBio

Merck & Co.

2,750

Antibody–drug conjugate (VLS-101)

Thrive Earlier Detection

Exact Sciences

2,150

Diagnostics (genomics)

ArcherDx

Invitae

1,400

Diagnostics (genomics)

NBE-Therapeutics

Boehringer Ingelheim

1,379

Antibody–drug conjugate (NBE-002)

Conclusion

In summary, 2020 was another big year for oncology dealmaking. IO continued to drive high-value drug licensing deals, and there was a return to high-value IO M&A deals compared with 2019. Multi-targeted therapies again featured prominently in drug licensing activity but also appeared in high-value M&A deals in 2020, with ADCs featuring in both the highest-value drug licensing transaction (AstraZeneca/Daiichi Sankyo) and M&A deal (Gilead/Immunomedics) following continued clinical success of these drugs in solid tumor indications. While M&A activity was slow across biopharma in the beginning of 2020, oncology M&A deal activity remained high, with 48 agreements and a total disclosed deal value of $45 billion. As the pharmaceutical industry gears up to deliver coronavirus vaccines across 2021, it will be interesting to watch investment in oncology trends across this year.

Sarah Hardison is Therapeutic Area Director, Immunology & Immuno-oncology at Clarivate.

Nature Briefing

An essential round-up of science news, opinion and analysis, delivered to your inbox every weekday.

Sign up to Nature Briefing

An essential round-up of science news, opinion and analysis, delivered to your inbox every weekday.

Nature Briefing

Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily.

Get the most important science stories of the day, free in your inbox. Sign up for Nature Briefing