ADC transaction price quadrupled in 4 years: the more big pharmaceutical companies are, the more hilarious Biotech is

After Daiichi Sankyo detonated the market, ADC instantly became Jerusalem in the hearts of pharmaceutical companies, and pilgrims came one after another

Since the beginning of this year, large multinational pharmaceutical companies including Johnson & Johnson, GlaxoSmithKline, Merck & Co.

Judging from the transaction price, the pilgrims are sincere:

According to the statistics of Qi Tak Pharmaceutical, from 2017 to 2021, the down payment of ADC drug transactions has increased by 2.

The ADC market is destined to continue to surge

In June of this year, there were market rumors that Merck would buy seagen for $40 billion

Merck has not been able to do so, but GlaxoSmithKline took the lead in "reserving a name":

Not long ago, it bought Mersana's preclinical HER 2 ADC with a down payment of $100 million and a milestone of $1.

At the beginning of the year, many Bigpharma said that they would wait for the fish to die

/ 01 /

It used to have a market value of less than 300 million,

This year's down payment has taken 140 million

For Mersana, the happiness came a bit suddenly

Because the clinical data of the core pipeline was extremely collapsed, its market value fell from US$3 billion all the way to US$268 million in February this year, successfully cutting the knee

First, in February of this year, Johnson & Johnson reached a cooperation with Mersana with a down payment of $40 million, and will use the latter's technology platform to develop ADC drugs

Half a year later, GlaxoSmithKline is even more generous:

On August 9, GlaxoSmithKline won Mersana's preclinical HER 2 ADC drug with a $100 million down payment and up to $1.

After all, this year Mersana has made a fortune with an income of US$140 million from royalties alone

Maybe understandable

This also leads to its potential for better effects

More importantly, the HER2 epitope targeted by XMT-2056 is different from both Trastuzumab and Pertuzumab

For HER-2 ADC, the future DS-8201 is a hurdle that cannot be overcome

But in any case, XMT-2056 only has preclinical data, no matter how good it is, it is only a concept
.
The iron-clad GlaxoSmithKline and the rich Mersana company are just a microcosm of the ADC boom
.

/ 02 /

4 times in 4 years,

Rising ADC prices

With the success of the blockbuster ADC drug DS-8201 in 2019, it has attracted a large number of pharmaceutical companies to enter the market
.
In the past two years, the number and amount of transactions surrounding ADCs have skyrocketed at a speed visible to the naked eye
.

According to the statistics of Qi Tak Medicine, the number of global ADC drug transactions in 2017 was 9, which will increase to 28 in 2021
.
Compared with the quantity, the price can better see the rising popularity of the ADC market:

In terms of down payment, it averaged $380 million in 2017 and has grown to $945 million in 2021
.

The increase in total transaction volume was even more exaggerated
.
In 2017, the total transaction value of ADC drugs was only 2.
195 billion US dollars; but by 2021, the total transaction value has risen to 8.
442 billion US dollars
.
It is not difficult to find that the market's expectations for ADC drugs are getting higher and higher
.

The ADC space is destined to record more deals
.
Although the winter is still cold this year, the enthusiasm for ADC drug transactions has not diminished
.
In China alone, 7 transactions have occurred so far
.

Take the fiery Claudin18.
2 target as an example, there are 3 products going to sea one after another
.

First, in May, Lixin Pharma’s Claudin18.
2 ADC was successfully authorized to Turning Point in the United States, with a $25 million down payment + milestone payments totaling over $1 billion
.

Then, at the end of July, the two Claudin 18.
2 ADCs of Kelun Pharmaceuticals and CSPC were successively authorized to Merck, a large pharmaceutical company, and Elevation Oncology, a US pharmaceutical company
.

The former got a contract with a down payment of 35 million US dollars and a milestone payment of up to 900 million US dollars; while the latter signed an agreement with a milestone payment of 27 million US dollars + a maximum of more than 1 billion US dollars
.

In less than a year, the same target, 3 products, and a total transaction value of nearly 3 billion US dollars, which is enough to see the fiery ADC market
.
Perhaps, the surge in ADC trading may have just begun
.

/ 03 /

The big pharmaceutical factory that runs into the field,

Also avoid getting nothing

The reason is not difficult to understand.
The KPI pressure of big pharmaceutical companies is too great
.

The performance of most multinational pharmaceutical companies is only supported by a few blockbuster drugs
.
The existence of the patent cliff determines that the performance of pharmaceutical companies is prone to a cliff-like decline
.

The solution to the problem is to find new blockbuster drugs as growth engines
.
However, following the "anti-Moore's Law" characteristics of the innovative drug industry, it is destined to be difficult to concentrate on research and development
.

In order to complete the performance KPI, "buy, buy, buy" is the simplest and crudest strategy for big pharmaceutical companies to expand their pipelines
.

That's why, under this wave of ADCs, big pharmaceutical companies such as Bristol-Myers Squibb, Johnson & Johnson, and GlaxoSmithKline have waved their banknotes to enter the game
.
For ADC, the train to get rich, pharmaceutical companies are running on the train for fear of being left behind
.

On one side are big pharmaceutical companies with plenty of cash queuing up to buy an ADC ticket, and on the other side are the scarce small pharmaceutical companies with innovative ADCs
.
Under the shortage of supply, small pharmaceutical companies holding ADCs have more room for bargaining; even if prices increase, large pharmaceutical companies may still be willing to pay
.

But obviously, for big pharmaceutical companies, spending money is a good time to avoid future crematoriums
.

After the introduction of CSPC's Claudin18.
2 ADC, Elevation's stock plunged 12.
77%
.
The explanation of some analysts in the United States is that the ADC introduced by Elevation is too homogenous and not much to watch
.

In any case, ADC drugs are hot again, the success rate of research and development and the prospect of commercialization are all issues that must be considered
.