Morrison & Foerster's BioMeter Index Shows Reemergence of Late-Stage Deals

Morrison & Foerster returns with its Q3 edition of BioMeter, which reveals a big jump in the number of deals and average payments for Phase 3 and approved products — the strongest numbers MoFo has seen since it created the BioMeter Index.

BioMeter reports seven Phase 3 transactions with an average up-front payment of $83.3 million, and five approved-product transactions with an average value of $86.7 million for the third quarter. The robust performance reflects “selective pipeline filling,” as pharma companies switch from the focus on early-stage assets to pursuing products ready or almost ready for commercialization.

To view this latest issue of BioMeter visit: http://www.mofo.com/~/media/Files/Newsletter/2014/10/141023BioMeter.pdf

In Q3 the average BioMeter Index value for all transactions was $45.4 million, an increase over Q3 2013 as well as over Q2 2014 if the second quarter’s two blockbuster deals ($1 billion Merck/Bayer and $710 million Celgene/Nogra) are excluded. Meanwhile, after an exceptionally high-value Q2, pre-clinical/discovery-stage transactions returned to more characteristic territory ($10.9 million average across four transactions). Phase 1 and 2 values in Q3 were weak—this despite the same number of Phase 2 deals as in Q2, a period in which their average value ($33.1 million) was more than 250% higher than in Q3.

The firm developed the BioMeter Index to measure the health of the biotech industry by averaging up-front payments in licensing, collaboration, and development agreements between biotech firms and companies that pay for commercialization rights. Up-front payments are not only the most concrete reflection of the value of a development-stage asset, but are also an increasingly necessary source of capital for companies to sustain development efforts.

MoFo Palo Alto- and Washington-based partner Stephen Thau is editor in chief of BioMeter and available to discuss its findings as well as the state of trends and developments across the biotech industry. In addition, Mr. Thau will be moderating a panel on innovative financing and deal structures at the BioNetwork conference October 28. The panel will include Morrison & Foerster partner Van Ellis, David Collier, M.D., Chief Executive Officer of Velocity Pharmaceutical Development, Sakae Asanuma , President and CEO of Astellas Venture Management, and Philip Gutry , Principal at MPM Capital. The panel will explore the recent trends in big pharma partnering, examine option-based M&A deals, and discuss innovative deal types and new ways to structure equity investments.

Let us know if you’d like to check in with Mr. Thau on the latest BioMeter stats or other news involving licensing deals among life sciences companies.

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