By Anna Louie Sussman
Feb 25 (Reuters) - The average value of biotech deals in
2012 fell dramatically, according to a new report from law firm
Morrison & Foerster.
In 2012, the average value of biotech industry deals fell
from $43.7 million to $21.2 million, about the same level as
2010, while deals for Phase 2 compounds rose in value, according
to The MoFo BioMeter.
The BioMeter is a quarterly report that analyzes dealmaking
across the life sciences industry and was launched in December
2012. It measures the average values of deals, including
collaboration, licensing and development agreements between
biotechnology companies and the companies that pay for the
rights to commercialize their research.
Stephen Thau, a MoFo attorney who created and authored the
report with his colleague Anelia Delcheva, said the patterns
could be attributed to the large number of approved-compound
deals in 2011, which tend to fetch higher values because they're
In 2012, there may have been fewer late-stage products left
on the market, sending licensees towards Phase 2 compounds,
where deals can be structured flexibly around issues such as
regulatory risk and cost-sharing for further Phase 3
"There's opportunity to buy an asset for a Phase 2 price and
build in contingency payments for Phase 3 activity or product
approval," said Thau.
However, with venture capital increasingly harder to come
by, "Companies are looking to partner earlier," said Michael
O'Donnell, a partner in the life sciences group at MoFo.
"There are more deals looking for dollars," he said.
The fourth quarter registered a slight uptick in the index,
with an average BioMeter value of $26.8 million for that
quarter's announced licensing and collaboration agreements.
In recent years, most deals were done in either the very
early pre-clinical or discovery stage, or in the later approved
Phase 2 deals increased in frequency in 2012, rising to 24
percent of deals in which the development state was reported
from 11 percent of deals in 2011. The value of Phase 2 deals
rose to $37.1 million in 2012, from $17.8 million in 2011.
"The fact that the value of the Phase 2 deals has gone up
suggests that those deals are more competitive, or that the
buyer-seller balance is favoring the seller for Phase 2
compounds," said Thau.
Pre-clinical and discovery deals stayed constant at about
$10 million in 2012, while Phase 3 deals declined to $27 million
from $45 million in 2011.