Immuno-Oncology: Unicorns, China And The Perfect Storm

Published in In Vivo, October 2018

Authors: Dr. Swarna Mehrotra, Dr. Oded Ben-Joseph and Dr. Ellen Baron


There is a unique phenomenon being realized in immuno-oncology deal-making compared with other segments in the life sciences sector – an apparent uncoupling between risk and return on invested capital, as early assets provide similar liquidity to more mature assets. Unicorn transactions have emerged in the IO sector, as well as never seen before partnerships, financing deals that regularly hit above $200 million, and multibillion-dollar acquisitions and IPO valuations. The market is optimizing multiple paths to liquidity at all stages of development and experiencing a shortening in time to exit, which is further propelling investor appetite.

So what? As IO drugs demonstrate robust clinical potential and early movers reap market rewards, the segment continues to attract significant interest from the investor community as well as pharma and biotech players, triggering highly competitive behavior and intense transactional activity.  IO may be the perfect storm for venture returns. It represents a radical change from traditional cytotoxic drugs, the capital markets are booming, and traditionally slow regulators have catalyzed meaningful new product approvals based on unprecedented clinical data. This is driving VCs flush with cash to engorge new IO market entrants with capital to hit value-inflecting milestones. Coupled with large players jumping at early M&As, biotech companies are enjoying a high probability to exit early.

The question that remains: are we in the midst of a transformational inflection point in scientific progress leading to meaningful improvements in clinical outcomes or are we witnessing irrational exuberance by investors and strategic players leading to unduly escalated asset values? Time will tell.


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