Valuing Early-Stage Pharma Deals

The emphasis within the pharmaceutical industry right now is on capital efficiency. That's led a number of firms - and their venture backers - to make what a few years ago would have been a heretical decision: eschewing drug development in favor of cutting platform-related deals. And how have such deals been valued? An analysis by START-UP of average deal value from 2007 to 2010 for platform, preclinical and Phase I assets shows pharmaceutical licensers are approaching alliances with a "budget" mindset, with average deal values declining across all stages of drug development.