Immuno-Oncology Deals: Why Are They So Hot?

The recent flurry of partnering deals for Immuno-Oncology (IO) technologies surpasses the deal activity for any other technology at any other time in biotech history. In the past two years, there have been 31 development stage IO deals with up-front values greater than $10M. Of those deals, 19 are either preclinical or discovery stage, signifying confidence in the science and excitement in the potential for IO.

Table 1: Immuno-Oncology Deals Since 2015 (Source: Globaldata)


Beyond the impressive number of IO deals, the deal terms have far exceeded the amounts being paid for deals in other therapeutic areas at similar stages of development. What’s perhaps even more impressive is that , despite most of the IO deals being for early-stage, pre-proof of concept technologies, the average up-front fees are ~$150M and the total potential deal values are close to $1B.

This tremendous deal activity in IO begs the question: why is the environment for IO deal-making so hot right now? Based on Locust Walk’ recent and ongoing experience in the IO deal space, we offer three reasons:

  1. Important scientific advances via numerous different approaches
  2. Significant expectations for commercial sales
  3. Large number of potential buyers with a strategic interest in IO

Scientific Advances

Traditional cancer treatments involve radiation, surgery and/or chemotherapy. Each of those approaches attack cancer cells with either brute external forces or systemic poisons that have serious side effects and cause damage to both normal and cancerous tissues. Immuno-Oncology, on the other hand, takes advantage of the hyper-specificity and ultra-effectiveness of our immune systems to target and destroy cancer. Cancer is difficult for our bodies to deal with innately because of mutations it develops to suppress the immune system or pass as healthy cells. The IO mechanism of action has been clinically validated by the first four commercially approved checkpoint inhibitors, which all demonstrated impressive Overall Survival benefits in difficult to treat cancer populations as shown in Table 2:

Table 2: Approved IO Therapy Pivotal Approval Primary End-Points1


The clinical success of these checkpoint inhibitors has inspired companies and investors to fund research in IO technologies that could be used as monotherapies or combined with checkpoint inhibitors to further improve clinical outcomes. There is tremendous scientific promise in modalities such as CAR-T, neo-antigens, bi-specific antibodies, vaccines, small molecules and gene therapies that could represent step-function improvements to the already impressive results of the first-generation checkpoint inhibitors. The scientific advances, promising clinical results and numerous approaches to IO drug development provide the backdrop for innovation in the active IO deal environment.

Commercial Sales Expectations

The impressive clinical results of the approved checkpoint inhibitors have led to very bullish industry projections for the revenue potential of IO therapies. As shown below, the four approved IO therapies are projected to combine for > $20B in revenue by 2022.

Table 3: Approved IO Therapy Sales Projections2


This tremendous commercial potential creates a profit motive that greatly influences deal activity and deal terms. While it is always difficult to value the commercial potential for early-stage, pre-clinical therapeutics, the IO deal volume and deal values show that the oncology drug development companies have very bullish revenue assumptions to justify the prices that are being paid to access novel IO approaches. In fact, Locust Walk has participated in IO deal negotiations in which the buyer and seller have agreed that the baseline revenue projection for an IO technology in pre-clinical development should be well over $1B in sales.

Numerous Buyers

The scientific advances, clinical success and commercial potential of IO have influenced numerous large and specialty Pharma and Biotech companies to enter into IO deals. In fact, as shown in Table 1, there have been 18 different buyers / licensors of IO technologies in the past two years. At Locust Walk, we have participated in many IO deal processes that have been highly competitive because so many companies are interested and active in expanding their IO presence. This competition drives deal values, which attracts further investment and innovation, creating a virtuous cycle of scientific advances, clinical improvements and commercial success.

Our recent IO experience has given Locust Walk unique insight into what aspects of IO certain buyers are interested in and who the key decision makers are at the IO deal-making companies. If your company is interested in IO deal-making and you would like to discuss Locust Walk’s recent experience in the IO space, please contact


1 All approval data comes from each drug’s prescribing information.

2 IMS 2015 historical data and projections to 2022.

Locust__0007_Josh_Hamermesh_EX Written by Josh Hamermesh