On December 8th in Tokyo, Locust Walk hosted the 2nd annual “Locust Walk Japan Deal of the Year Award” event. We founded this event, which is co-sponsored by Clarivate Analytics (formerly Thomson Reuters), to celebrate the deals consummated throughout the year by Japanese pharma (as well as provide a good reason to bring Japanese business development executives together for a fun night of food, wine and award-giving). The winners – selected via online voting by business development executives in pharmaceutical companies across Japan – were as follows:

• The Top M&A of 2016 Award went to Astellas Pharma for their acquisition of Ganymed Pharmaceuticals AG (Germany), a biotechnology company focusing on the development of antibodies against cancer.  Astellas paid EUR 422 million (US$460 million) to acquire 100% of the equity in Ganymed.
• The Top In-Licensing Deal of 2016 Award went to Mitsubishi Tanabe Pharma for the exclusive license for Japan from Kolon Life Science (Korea) to Invossa®, the world’s first cell-mediated gene therapy for the treatment of a long-acting growth hormone for the treatment of degenerative osteoarthritis. Mitsubishi Tanabe made an upfront payment of approximately US$24 million, and will make additional payments of up to approximately US$410 million upon achievement of certain development, regulatory and commercial milestones.
• The Top Out-Licensing Deal of 2016 Award went to Nitto Denko who surprised many with their out-license to Bristol-Myers Squibb (US) of exclusive rights to ND-L02-s0201, a small interfering RNA (siRNA) molecule targeting heat shock protein 47 in Phase 1b development for the treatment of nonalcoholic steatohepatitis (NASH), for a whopping US$100 million upfront payment. In addition, Nitto Denko expects to earn roughly 100 billion yen (US$936 million) from the development-related part of the deal. This was a massive out-license transaction for a relatively unknown company in the pharmaceutical space in Japan.

We congratulate our 2016 winners, and look forward to what promises to be a very active year of deal making in Japan in 2017.  There are several trends in Japan which we at Locust Walk are closely following, and believe the following three trends could have significant influence on Japan deals in 2017:

1. Mid-size Japan pharma will become increasingly active in in-licensing assets for the Japan market:  Although the large Japanese pharmaceutical companies will no doubt continue to execute global in-licensing deals and M&A, we expect to see smaller, mid-size Japan pharmaceutical firms increase their appetite for Japan-only or Asia regional deals.  One example is ASKA Pharmaceutical, a mid-size pharmaceutical company who just last month acquired Japan rights to TesoRx’s oral testosterone product, THG-1001.  Locust Walk advised TesoRx on this deal, the details of which can be viewed here
2. Out-licensing deals from Japanese companies will continue to surprise: The above out-license of Nitto Denko’s novel asset for NASH to BMS for $100M upfront took many in the industry by surprise. We believe there are several exciting assets in Japanese companies, including biopharma, that are under the radar of the majority of western companies, a number of which will be partnered in 2017.
3. Creative deal making will become increasingly prevalent in Japan: At Locust Walk, we are currentlyinvolved in negotiations between several of our western clients and Japanese companies that involve an initial option payment followed by license exercise after achievement of an agreed-upon milestone. Expect to see an increasing amount of creative deal making in Japan in 2017.

At Locust Walk, we are pleased to assist our clients with the Japan partnering of assets, including market research, out-reach, negotiations, and – of course – the final deal close.  Please contact us if you would like to discuss how we can support your company: steve@locustwalk.com

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 Written by Steve Engen

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