Pain Licensing: Upfront Gains Fall As Deals Get More Experimental
Executive Summary
229 alliance deals were signed in the pain management sector between 2012 and November 2016, worth more than $1bn in upfront payments and around $11bn in total potential value. But an increase in deals for riskier, earlier stage assets has pushed down upfront payment values for the sector, knocking it out of sync with other therapy areas.
Surprisingly, companies developing pain therapeutics – a well-served market – are also some of the most prolific researchers, with more than 341 Phase I to Phase III/IV active clinical trials as of November 2016. The sector has also signed 229 pain management-focused deals over the last five years, worth a combined $11bn in total potential value.
This value ranks pain partnerships as some of the most lucrative within the CNS field, according to data from Informa Pharma Intelligence's Medtrack and Strategic Transactions databases.
The aggregated central nervous system (CNS) field, including pain management, is the joint-second most lucrative space in terms of total potential partnership values, worth $38bn. CNS and its co-leader, the endocrine and metabolic therapeutic space, are beaten only by oncology – which saw a total deal value of $113bn for the 2012-2016 period.
A new report from Informa Pharma Intelligence, titled Pressures and Opportunities in Pain, found that within the CNS space, the value of pain management deals towers over other indications such as depression, worth only $2bn; and epilepsy, at $380m. Furthermore, CNS and pain deal values aggregated over the last five years have higher values than other huge sectors, such as hematology, respiratory and immunology and inflammation.
Total partnership deal values by therapy area, 2012–16*
|
Therapy Area |
Deal Value ($bn) |
|
Oncology |
113 |
|
CNS |
38 |
|
Endocrine, metabolic and genetic diseases |
38 |
|
Gastroenterology |
24 |
|
Immunology and inflammation |
22 |
|
Infectious disease |
22 |
|
Cardiology |
15 |
|
Respiratory |
15 |
|
Genitourinary |
14 |
|
Musculoskeletal |
13 |
|
Hematology |
12 |
|
Ophthalmology |
12 |
|
Dermatology |
8 |
*2016 is through to November. The data include drug-focused deals by all pharmaceutical and biotech companies. Deal value consists of up-front, milestone, and other disclosed payments.
Value Versus Volume
On average, there were 46 transactions signed in the pain management sector per year between 2012 and 2016. This peaked at 53 partnerships in 2015.
While the volume of deals for pain therapies has remained steady, a decline could be seen in coming years as the value of upfront payments has decreased. Upfront proportions in pain pacts reached a low of 2% in 2015, compared to 27% in 2012.
Authors of the Pharma Intelligence report note that "the resulting implication is that pain deals have gradually become riskier for the licensees, which are tying up more of the money into event-based milestones as opposed to paying for pain drugs outright."
However, through to November this year, the upfront proportion of deals has picked up from the extreme low seen in 2015 – reaching 19%,
Amanda Micklus, principal analyst at Datamonitor Healthcare and one of the authors of the report, told Scrip that other therapeutic areas are seeing the opposite trend for upfront deal payment values than in the pain space. Big pharma particularly has spent more on upfront deal payments between 2011 and 2015.
According to figures from Datamonitor Healthcare, big pharma's average upfront payment spend went from $44m in 2011 to $74m in 2015. There was also a bigger proportion of Phase I agreements for big pharma in 2015 versus 2011.
Deal Targets
Between 2012 and 2016, 31% of pain alliances involved programs treating non-nociceptive pain, compared with 21% geared toward nociceptive pain. The remaining deals are focused on other or unspecified types of pain. The report authors note: "The split between nociceptive and non-nociceptive pain partnerships has not changed annually over the five-year period, with more deals consistently focused on non-nociceptive pain."
The report also found that drugs addressing cancer pain form the biggest market in the pain deal-making area. During 2012-2016, nearly half (40%) of the volume of nociceptive pain partnerships involved treatments for cancer pain, while products for back pain featured in 33% of the deals.
However, unlike in the volume split, back pain led cancer pain in deal values, $4bn versus $2bn, over the five-year period. "The back pain deals category was boosted recently by the $2bn partnership between Teva Pharmaceuticals and Regeneron Pharmaceuticals for the nerve growth factor inhibitor fasinumab in low back pain," the report authors highlight.
While a large proportion of pain deals over the five-year period focused on marketed products or those awaiting approval, interest in preclinical pain assets is growing. This indicates that in-licensers are showing an interest in refilling their pipelines with early-stage, potentially innovative pain products.
Micklus noted that this might be another reason for the decreasing value of upfront payments for deals in the pain space. "The decreasing proportion in the pain deal dataset might be a factor of the increase in proportion of licensing deals for early-stage preclinical candidates, which would be riskier bets than, say, marketed pain drugs, which concurrently have decreased in share."
Micklus expects to see more early-stage deals around the development of non-opioid pain therapeutics, "such as the recent Purdue/AnaBios collaboration in ion channel blockers. I also think we’ll see a lot more deal-making in abuse-resistant formulations of opioids," she said.
Purdue Pharma LP and AnaBios Corp. will collaborate under a Dec. 2016 deal to accelerate Purdue’s Nav1.7 sodium ion channel drug candidates utilizing AnaBios’ Phase-X discovery platform.
Further analysis of the pain management market can be found in the Informa Pharma Intelligence report Pressures and Opportunities in Pain. Find out more at pharmaintelligence.informa.com.