Are Late-Stage Deals Driving Up the Cost of Preclinical Deals?

With patent expirations looming, and Big Pharma pipelines unable to fill the gap, competition for late-stage licensing opportunities continues to drive late stage-deal valuations ever higher. But is this activity effectively pricing some licensors out of range, sending them instead to earlier-stage deals, and driving up prices there accordingly? In the chart below, we've broken out average values of preclinical deals versus late-stage deals (Phase II and III) over the past five years. As late stage values have shot up to the $90+ million range on average since 2000, the average preclinical values since then have risen steadily, from $23 million to $44 million, while deal activity has remained relatively constant (78 preclinical deals in 2000, 82 in 2001, and 74 so far in 2002).