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Morrison Foerster´s BioMeter Index shows first quarter decline in biotech deals

Law firm Morrison & Foerster continues to keep tabs on valuations in the life sciences space with its BioMeter Index, tracking up-front licensing payments for biotech assets– including drugs and treatments under development.

The firm just issued its latest BioMeter findings, showing a flat first quarter for valuations and a decline in dealmaking activity from a year ago.

As the editors of the MoFo BioMeter newsletter note, “a small number of large deals dominate an otherwise quiet quarter.”

The BioMeter Index measures the health of the life sciences sector by averaging up-front licensing, development and collaboration payments across the industry, including payments for Phase 1, 2 and 3 programs. The new issue can be viewed here:

MoFo BioMeter reports that the average value for all biotech licensing transactions in the first quarter was an impressive $60 million – a sizable jump over 2012’s Q1.  However, much of that stems from two outsized deals – the BMS/Reckitt transaction involving multiple over-the-counter products in Latin America, and the AstraZeneca/Moderna transaction involving the use of mRNA technology.

Absent those two payments and the BioMeter value for the first quarter is only $16.3 million per transaction, which is a slight decline from Q1 in 2012. Areas with the greatest change in Q1 valuations came in Phase 2 and Phase 3 transactions. The value for Phase 2 deals fell sharply in to $7.4 million, compared to nearly $40 million in the same period in 2012.

A key part of the MoFo BioMeter story for first quarter is the small number of reported deals. Only 16 transactions were identified reporting up-front payments – down by almost 50 percent from the same quarter last year, and the lowest number in any quarter from Morrison & Foerster’s analysis back to 2006.

MoFo BioMeter is edited by Stephen Thau, a MoFo life sciences partner in Palo Alto, Calif. He notes that the effects of industry consolidation and tightening R&D budgets at many drug companies are coming home to roost. Mr. Thau represents life sciences, medical device and other technology companies in transactional matters. Here is a link to his Morrison & Foerster bio:

MoFo BioMeter is researched and written by Morrison & Foerster attorneys from a range of practice areas, including Life Sciences, Technology Transactions, Emerging Companies and Corporate out of the firm’s offices in the U.S., Europe, Japan, and China. Globally, MoFo’s life sciences clients include more than 600 companies and research institutions and the venture capital and investment firms that finance them.

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