Partnerships between drugmakers and biotechs get scuttled all the time. In the past month, Pfizer scrapped a deal with Rigel Pharmaceuticals for an asthma med, while AstraZeneca walked away from an option to license a compound being developed by Targacept for treating schizophrenia. But why do these arrangements fall apart? And at what stage of development?
Between 1977 and the third quarter of 2010, 29 percent of the parternerships pertaining to specific compounds ended in Phase II, while 35 percent were dealt a fatal blow in Phase III, according to an analysis by Deloitte Recap that was provided to BioWorld. Meanwhile, 7 percent of partnerships dissolved after a marketing application had been filed for the drug.
Sometimes, partnerships ended because regulators rejected a med and more clinical trials were needed. The most common reason offered, though, was shifting priorities, although 38 percent of deals in that category may be misleading. "It's sometimes the terminating party being nice," Chris Dokomajilar, senior biotech analyst at Deloitte Recap, tells BioWorld. "It might be for an underlying reason, but they're not disclosing it." And 33 percent ended because of a lack of efficacy or safety.
Meanwhile, 7 percent were traced to a lack of diligence on the part of the party in charge of ushering the drug through development, BioWorld writes. Many contracts require companies to use a "commercially reasonable best effort" to advance a compound, but such vague language can increase the likelihood of cancelled partnerships. Dokomajilar contends setting specific diligence milestones – such as completing a particular phase by a certain time – is a better approach.
Another 7 percent of the terminations were due to M&A activity. While occasionally a biotech may reclaim a med because its partner was acquired, Dokomajilar says more often the biotech gets acquired, causing the pharma to back out. However, of 474 deals in the Recap database that were ended, 55 percent are still alive. And 42 percent of those have been repartnered. In other words, a drug that was tossed has nearly a 1-in-4 chance of finding a new home.
Finally, 15 percent of terminations fall into an "other" category, which mostly covers buyouts of the agreement and lack of progress, BioWorld concludes.
fail pic thx to griffithchris on flickr
1 Comment
The partnerships are spun from business development early on and once the process starts, other pricing pressures of drugs in the market, commercial viability start to infringe on the original reason why it made sense. These are years in progress.