Oncology remains the top therapeutic area for pharmaceutical deal makers. But even as pharmas seek these deals, industry changes will force them to look to license compounds at earlier stages in clinical development.

Those projections come from the annual Dealmakers’ Intention Survey conducted by Campbell Alliance, a Raleigh-based pharma industry consulting firm. Campbell presented the findings at a Council for Entrepreneurial Development Biotech Forum held last week in Research Triangle Park.

Campbell Alliance has conducted the annual survey since 2008 to gauge dealmaking trends. For this year’s survey, Campbell received 126 responses from senior decision makers from a range of life science companies from around the world.

Cardiovascular deals to pick up

Pharmaceutical licensing activity will hold steady or grow in 2011, according to survey responses. But the therapeutic mix is shifting. 2010 deals were heavily weighted toward oncology and central nervous system therapies, said Jonathon Fendelman, a practice executive at Campbell Alliance. Oncology still remains the top area for expected deals at 20 percent but that figure is down from 24 percent in last year’s survey. Central nervous system treatments are second at 12 percent, down from 15 percent in the previous year’s survey. At 8 percent, cardiovascular treatments are picking up more interest, up from 4 percent of expected deals in 2010.

Campbell Alliance attributes the changes to growing competition in the top therapeutic areas, which forces companies to look at other areas. Besides cardiovascular, respondents are showing more interest in metabolics and dermatology. Fendelman said even within specific therapeutic areas, pharmas are looking to license compounds that have some distinguishing component, such as its mechanism of action. Differentiation can help a drug stand out in the increasingly competitive landscape.

But while the appetite for deals remains healthy as pharmas look to replenish drug pipelines, many biotech companies who would out-license their products are seeking to retain more control. Some who seek a pharma partner for the pharma’s global capabilities still expect to retain U.S. rights. Campbell Alliance’s report said that the result is an increase in Europe-only or Europe and rest of the world deals. More than 40 such deals were completed in 2009 and 2010. Campbell Alliance found that more than 25 percent of those deals were for compounds that had not yet finished phase 2 clinical trials.

Deals may get more expensive

One example is Seattle Genetics (Nasdaq:SGEN), which reached a December 2009 deal to license its cancer treatment to Takeda oncology company Millennium. At the time, the compound was still in phase 2 clinical trials. Seattle Genetics received $60 million up front and retained commercialization rights for the United States and Canada.

“If you have a really good molecule, you want to stay in the driver’s seat,” Fendelman said.

The trend of biotechs seeking to commercialize drugs on their own suggests that deals will get more expensive for large pharmaceutical companies. Development stage companies that still have U.S. commercialization rights remain attractive acquisition targets for a price. Large pharmas may find that they’ll need to pay more to an out-licensing partner to capture U.S. rights.

This changing dealmaking landscape means large pharmas will have some hard choices of their own, Campbell concludes. They can do more deals earlier and in turn develop new products themselves, a strategy that gives them a greater share of the risk. The report says enthusiasm for early-stage deals suggests many companies are already pursuing this option.

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