Immuno-Oncology: Unicorns, China And The Perfect Storm
There is a unique phenomenon being realized in immuno-oncology deal-making compared with other segments in the life sciences sector – an apparent uncoupling between risk and return on invested capital, as early assets provide similar liquidity to more mature assets.
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Merck and Bristol-Myers Squibb's market-dominating checkpoint inhibitors are competing to find the next combination therapy to treat more cancer patients, in more types of cancers. Recent failures and new regulatory pressure, however, may have a cooling effect, even as researchers come full circle with PD-l/PD-L1 and CTL-4 combinations. The race is also on to pull new combinations from emerging cell therapy and precision oncology drug candidates.
The approval of first-generation checkpoint inhibitors, Merck’s Keytruda and Bristol-Myers Squibb’s Opdivo in the second half of 2014, catalyzed a wave of deal-making, not only around other checkpoint inhibitors, but also for molecules and technologies that could offer synergistic benefits when used in combination with these drugs.
Life sciences mergers and acquisitions are typically based on perceived future value rather than objective financial parameters, but the cognitive biases inherent in subjective assessments can derail deals. Executives need to take emotion out of the equation and rely on relevant data to craft successful transactions.