Reata's $450 Million Up-Front Haul Sets A Record But Remains An Outlier
In late September, Reata Pharmaceuticals Inc. dealt its Phase IIb chronic kidney disease candidate bardoxolone to Abbott Laboratories Inc., and the $450 million down payment easily dwarfs those on other deals around development-stage drug candidates, going back as far as the eye can see.
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Medicare’s bundling policy for drugs and services in dialysis has turned on the pricing pressure in kidney disease. The cost containment policies have negatively impacted sales of some drugs and put a spotlight on growing costs in chronic kidney disease and end-stage renal disease. Nonetheless, there is plenty of opportunity for new drugs that can address the area’s unmet medical need, especially if they can help to reduce broader health care spending. That will require demonstrating value to payors and providers, however, particularly for drugs that treat secondary conditions associated with kidney disease.
After a long period when only the bravest, well-funded biotechs attempted to build a commercial organization, more companies than ever are taking the go-it-alone plunge. Campbell Alliance thinks we may look back on the commercializing classes of 2011–2012 for key lessons on what drives success, which companies created value and how, and when market challenges prove too much for a new organization.
Though clinical proof-of-concept has long been the goal of fledgling biotechs hoping to land a deep-pocketed partner or acquirer, data suggest reaching this inflection point may no longer provide an optimal risk-reward balance. Biotechs would be wise to partner earlier.