Biotechs continue to increase their annual R&D expenditures

Print 12 December 2014
Peter Winter, BioWorld

The ongoing bullish period for the biotechnology industry has endured for the past two years and still shows no signs of slowing down. Over this period, public biotech companies have taken advantage of their skyrocketing share prices to carry out a significant number of follow-on financings.

According to BioWorld Snapshots there have been 121 such transactions so far this year, generating close to $16 billion, which is 76 percent greater than the amount raised from follow-on financings last year, even though the number of deals has been virtually the same.

Typifying the enthusiasm shown by investors toward biotech offerings, Receptos Inc. took advantage of a flurry of promising data for its lead immune disease candidate, RPC1063, including a late-October stock surge on positive ulcerative colitis data, to rake in a whopping $414 million from a public offering. (SeeBioWorld Today, Nov. 20, 2014.)

Overall, it's been a very good period for the San Diego-based firm. Late last month, investors pushed shares up 28 percent on the back of top-line data showing that oral sphingosine 1-phosphate 1 receptor small-molecule immunomodulator RPC1063 met its primary and secondary endpoints in ulcerative colitis in the phase II TOUCHSTONE trial.

With successful financings, biotechnology companies have plenty of cash in the bank to help fuel their product development programs. And it is not only from public offerings that biotechs are generating cash.

Back at the beginning of September, for example, Cambridge, Mass.-Infinity Pharmaceuticals Inc. signed a lucrative deal with Abbvie Inc., which provides it with $275 million up front and the potential for $530 million more if milestones are met with duvelisib, also known as IPI-145, already in phase III trials as a blood cancer monotherapy and ripening for combination use. (See BioWorld Today, Sept. 20, 2014.)

The global strategic collaboration with Abbvie will develop and commercialize duvelisib, an oral inhibitor of phosphoinositide-3-kinase (PI3K)-delta and PI3K-gamma, in oncology.

At Sept. 30, Infinity had total cash, cash equivalents and available-for-sale securities of $379.5 million.

Overall, it will, therefore, come as no surprise that R&D spending in the sector has jumped substantially this year. According to their latest 10-Q filings, the top biotech public companies with a market cap greater than $500 million (totaling 114 at the end of November) have collectively invested approximately $15.8 billion in R&D over the first three quarters of 2014. That amount is 20 percent higher than those same companies spent in the same period last year.

The industry's blue-chip biotech companies have all increased their research investments (See Table, below). Alexion Pharmaceuticals Inc., for example, has upped its R&D spending by more than 66 percent for the first three quarters of 2014, compared to the same period last year. The company has a deep product portfolio targeting rare and ultra-rare diseases in several therapeutic areas, including hematology, nephrology, transplant, neurology, metabolic disorders and inflammatory disorders.

The increase in R&D spending should return dividends in terms of new product approvals in the not-too-distant future and productivity this year is already up over last year. At last count the FDA had approved 35 new molecular entities and new therapeutic biological products so far this year, including the accelerated approval – more than five months ahead of its May 19, 2015, PDUFA date – of Amgen Inc.'s blinatumomab to treat patients with relapsed or refractory Philadelphia chromosome-negative precursor B-cell acute lymphoblastic leukemia, or B-cell ALL, a rare form of ALL. (See BioWorld Today, Dec 4, 2014.)

Approval of the drug, branded Blincyto, provides a good return on investment for the company's $1.16 billion acquisition of Rockville, Md.-based Micromet Inc., which developed the bispecific CD19-directed CD3 T-cell engager, or BiTE, antibody platform that produced blinatumomab.

Amgen is biotech's leader in R&D spending, with more than $3 billion invested so far this year, an 8 percent increase over the three-quarter period in 2013.

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