ANALYZING AND FORECASTING THE FUSION PROTEIN MARKET AND PIPELINE - Fusion Protein Technologies for Biopharmaceuticals: Applications and Challenges - page 35

deals were codevelopment/copromotion deals. Of the seven
deals from these nine that provided financial terms of
the deal, we found that the up-front payment ranged between
$5 million and $125 million, with an average of $50 million,
whereas total milestone payments ranged from $67 million to
$800 million, with an average of $336 million. Over the past
few years, there has been a relatively low level of risk capital
both for public and private markets, given the economic
climate and the fact that even in areas with well-proven
business models (mAbs) private investors have found it tough
to exit and public investors have been faced by years of
negative profitability. As a result, collaborations have become
increasingly important to earlier-stage biotech companies in
supporting cashburn and clinical development.
FP programs have not escaped deal attrition. In our deal
analysis, we count at least three deal terminations over the
past few years, and a further three deal restructurings.
Terminations were mainly due to Big Pharma companies
changing their strategic direction, while restructurings were
mainly due to reorganizations of R&D responsibilities and
marketing rights, or because the FP developer was looking
for less exposure to development costs.
Meanwhile, we have seen some acquisitions of FP devel-
opers (most notably Amgen's $16 billion acquisition of
Immunex to capture Enbrel), but these have been fewer
in number than the collaborations. There are four reasons for
this: first, it can be cheaper (depending on the level of up-
front payments) and easier to form a collaboration than to
acquire a company. Second, there is less risk with collabo-
rations—if it goes wrong, or if data is weak, or even if the
Big Pharma/Big Biotech company has a strategy change and
wants to move out of the area, it is easier for these multi-
national companies to exit the collaboration. Third, FP
developers are likely more incentivized to ensure the FP
generates strong data with a milestone structure in place.
Last, there is a risk of a brain drain if a Big Pharma acquires
an early-stage drug developer, given the change in work
environment.

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DISCLAIMER

The views expressed are the opinions of the individual
authors only and are in no way connected to either WestLB
or Datamonitor. No recommendation or opinion concerning
any equity security is made in this chapter. The authors
received no financial support for this research and declare no
competing financial interests.

ACKNOWLEDGMENT

The authors are grateful to Dr Giordano Pula, University
of Bath, UK, for his helpful comments on earlier drafts.