PALO ALTO, Calif. – December 18, 2012 –-- Analyzing more than 1,000 biotechnology transactions between 2006 and 2012, Morrison & Foerster found the average up-front payment in licensing, collaboration, and development agreements was $35.5 million for all stages of development. But in the first quarter of 2012 the biotech market saw significant increases in the percentage of transactions involving approved products, with a corresponding increase in average upfront payment values—$90 million across 13 transactions—compared to prior years.
The increase is consistent with anecdotal observations that licensees have generally become more interested in later-stage assets to fill their drug development pipelines, according to MoFo BioMeter, a newly launched quarterly publication that indexes average up-front payments in licensing, collaboration, and development agreements between biotechnology companies and companies that pay for commercialization rights.
“BioMeter seeks to analyze trends in the value of development stage assets,” Stephen Thau, a corporate and life sciences partner in the firm’s Palo Alto office and editor of the newsletter, said. “Up-front payments are a particularly important component of that value. Our deep understanding of the industry allows us to keep a finger on the pulse of life sciences transactions across many sectors—biologicals, small molecules, and other therapeutics, as well as devices—and offer cogent insight onon the deal-making and financing environment.”
The inaugural issue of MoFo BioMeter is available here: http://www.mofo.com/files/Uploads/Images/121211-MoFo-
Mr. Thau noted that as venture funding for unapproved life sciences products has declined, income derived as a result of collaborations and other transactions has become increasingly important to smaller biotech companies—making a focused look at payment trends especially valuable to executives, attorneys, investors, and others making financial decisions within the industry.
“We hope that readers will find MoFo BioMeter a useful tool in keeping up to date with industry deal-making trends,” Mr. Thau said.
Additional findings from the BioMeter include:
+• In 2011 and Q1 2012 the highest percentage of biotech deals were for approved products (46% in 2012), demonstrating a willingness on the part of buyers to wait for removal of regulatory risk.
+• Pre-clinical asset transactions have hovered consistently around one-third of total deals over the last five years. While the total number of transactions decreased during this period from 201 in 2006 to 119 in 2011, BioMeter values stayed relatively constant through the first quarter of 2012, showing that pre-clinical assets remained valuable to the right buyers but that finding the right buyers was becoming more challenging.
+• While it’s too soon to announce a new trend, the course of 2012 after Q1 saw a marked decline in approved-product deals; 61% of Q3 transactions, meanwhile, involved therapeutics in the pre-clinical stages.
MoFo BioMeter is researched and written by Morrison & Foerster attorneys from a range of practice areas, including Life Sciences, Technology Transactions, Emerging Companies and Corporate out of the firm’s offices in the U.S., Europe, Japan, and China. Globally, MoFo’s life sciences clients include more than 600 companies and research institutions and the venture capital and investment firms that finance them. The publication follows the launch of other successful online newsletters produced by MoFo covering technology (MoFo Tech) and social media (Socially Aware).
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