USA Trends and Developments Contributed by: David McIntosh, Matt Byron, Ryan Kramer, Sabrina Kim and Zoe Dettelbach, Ropes & Gray LLP
ID-19 pandemic, the total number rose slightly to 148 compared to 145 in 2023 – indicating that deal flow was relatively flat. However, in contrast with M&A deal values, the overall value of licens- ing deals improved, with deal value increasing from USD174 billion to USD183 billion. Notably, 28 licensing deals in 2024 involved upfront pay- ments of USD100 million or more, compared to 20 such deals in the previous year. In 2024, upfront deal value stabilised at approximately 7% of overall deal value (similar to 2023), con- tinuing the trend of lower upfront economics seen since the peak of 13% in 2019. Analysts note that deal option payments and milestone payments have also helped bolster deal sizes, as such payments distribute the financial risk through development and commercialisation. Licensing deals relating to biologics, later- stage assets, GLP-1-targeted therapies and GIP-targeted therapies have notably impacted licensing deal values in 2024. According to JP Morgan, biologics led the way in licensing deal values, followed by small molecules. Advanced modalities (including cell and gene therapies), which are generally more expensive to develop, lagged behind. From 2023 to the third quarter of 2024, USD4.9 billion in total announced upfront cash and equity was directed towards biolog- ics licensing deals, with USD3.1 billion directed to small molecule licensing deals. In contrast, the figures for more advanced modalities were much lower, in the multimillions. In terms of asset stage, large pharma companies’ focus on in-licensing late-stage assets has increased the value of programmes nearing approval, with notably higher median upfront cash and equity payments for Phase II and Phase III deals in 2024 compared to 2023. Finally, recent advances in GLP-1-receptor (GLP-1R)-targeted therapies and GIP-receptor-targeted therapies have driven collaborative activity in 2024, with a focus on
disease areas including obesity, diabetes, and other indications beyond metabolic diseases. In 2024, deals focusing on GLP-1-, GLP-1R-, and GIP-targeted therapies had a total announced potential deal value of USD8 billion, whereas deals focusing on obesity and diabetes totalled USD6.4 billion in announced potential deal value (according to JP Morgan). While licensing volume and upfront payments have remained steady in recent years, the impending patent cliff for large pharma com- panies is expected to incentivise companies to fill gaps in their pipelines, contributing to a promising outlook for licensing and collabora- tions in 2025. For instance, major drugs such as Johnson & Johnson/Bayer’s blood thinner Xarelto, Boehringer Ingelheim/Eli Lilly’s Jardi- ance, and AstraZeneca’s Farxiga will lose regu- latory exclusivity this year. Other significant pat- ents set to expire in the next few years include BMS’s Eliquis and Opdivo, Merck’s Keytruda, and Amgen’s Prolia and Xgeva, exposing these companies to substantial generic and biosimi- lar competition. Commentators believe that an increased focus on external innovation and stra- tegic partnerships will be crucial for companies seeking to maintain their competitive edge and ensure future growth. Other driving trends Surge in in-licensing from Chinese biotech companies Cross-border licensing transactions involving molecules invented in China became increasing- ly popular in 2024 – a significant 31% of the mol - ecules in-licensed by large pharma companies were sourced from China, up from 29% in 2023. Moving forwards into 2025, the availability of rel- atively inexpensive China-developed drug can- didates is expected to boost licensing between biotech companies in China and biopharma
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