Deal analysis part two – the good

ApexOnco has already taken a look at the worst notable oncology deals of recent years. Now it’s the turn of the best transactions.

What's clear is that deals deemed successful by this admittedly unscientific approach have been much fewer and further between. And some of the transactions identified as positive by ApexOnco still have something to prove to justify the full extent of the purchase price involved.

The standout win of this analysis, which takes into account both outlay and the success of any projects gained, was AstraZeneca’s licensing from Daiichi Sankyo of the HER2-targeting ADC that became Enhertu. Although at $1.4bn up front this seemed pricey, that transaction has paid off, and spurred a new wave of interest in ADCs that is still going strong.

The jury is still out on Astra’s follow-up deal with Daiichi, over the anti-Trop2 ADC datopotamab deruxtecan. This produced mixed pivotal data last year, marred by concerns over patient deaths and a lack of benefit in squamous disease. Astra and Daiichi have just filed the project in second-line NSCLC, but only in non-squamous patients, something that could limit the therapy's market.

The best notable oncology deals since 2016

 Notes: *licensing deal; **combined sales from Astra & Daiichi. Source: OncologyPipeline.

ApexOnco scoured oncology deals of over $1bn – plus a couple of notable ones that fell short of this valuation – and rated them, from good to undecided to bad, based on a number of criteria including clinical and commercial success, and up-front spend. 

On the last measure, Johnson & Johnson’s deal with Legend over Carvykti now looks like a bargain, although the big pharma will have invested significantly in the BCMA-targeting Car-T therapy’s development.

Other deals deemed winners in this analysis are more arguable. Novartis’s radiopharmaceutical buys gave it two marketed products in an area that has recently become hot. However, Pluvicto will only fulfil its potential if it gets the nod in pre-chemo castration-resistant metastatic prostate cancer, which is still an open question.

Lutathera is approved in the smaller niche of gastroenteropancreatic neuroendocrine tumours (GEP-NETs), and current sales of around $600m per year might not justify the almost $4bn that Novartis paid for its originator, Advanced Accelerator Applications. However, the Swiss group believes that use in first-line GEP-NETs could drive peak annual sales of over $1bn; in this indication, Lutathera recently had a win in the Netter-2 trial. 

Similarly, it might be too soon to crack open the champagne over Lilly’s purchase of Loxo, given relatively small sales numbers for Retevmo and Jaypirca. However, the latter only just got approved in the important chronic lymphoblastic leukaemia setting, and could change the face of BTK inhibition. If this comes to pass, the $8bn Lilly shelled out for Loxo could look like money well spent.

Not only that, but the Loxo deal has also given the big pharma a footing in oncology that could lead to further products.

Too pricey?

Other deals have produced a decent output, but now look expensive. This includes Gilead’s $12bn swoop for Kite and Celgene’s $9bn takeout of Juno – although the latter’s price tag became irrelevant when Bristol Myers Squibb dropped $74bn on Celgene during the biotech boom years in what looked like another case of overpaying.

GSK’s $5bn purchase of Tesaro produced a mediocre PARP inhibitor, Zejula, but a decent PD-1 blocker, Jemperli, that nevertheless might be too late to the checkpoint party. 

Pfizer’s $11.4bn takeout of Array is tricky to assess given the slew of assets that target had been developing. At the time of the agreement Pfizer cited as key drivers Braftovi and Mektovi, and Array’s royalty stream and research platform – which, collectively, have probably not done enough to justify the outlay.

In any case, Pfizer’s focus will now be on its $43bn purchase of Seagen, and it will be a long time before it becomes clear whether that was good value for money.

Merck & Co famously missed out on Seagen, but paid $5.5bn up front for three Daiichi projects in October. One of these, the HER3-targeting ADC patritumab deruxtecan, is already filed and is due an FDA decision in June in third-line EGFR-mutated NSCLC.

Still, in terms of ADC deal-making, both Pfizer and Merck have a long way to go to emulate what Astra has done with Enhertu.

This is the second of a series of deal analyses. Stay tuned for future stories.