While many Big Pharma companies continued to whittle away at their multibillion-dollar R&D operations over the past year, laying off thousands of researchers, a group of midcap biotechs is helping to pick up the slack, according to a new report from GlobalData. And some big spenders like Regeneron and Alnylam led the way, helping drive up the group’s total research spending by $2 billion, or 26%, to $9.7 billion.
Regeneron, which has enjoyed some big advances in the clinic, led the pack of 35 midcap companies reviewed in the study with a $1.3 billion research budget, up from the $860 million spent the year before. GlobalData senior analyst Adam Dion pointed to a pair of pricey clinical programs at the biotech: dupilumab, a promising anti-inflammatory now in Phase III, and REGN-1033, the company’s antibody to myostatin (GDF8), now in stealthy midstage studies for musculoskeletal disorders.
“Regeneron’s R&D expenses also grew due to the fees for the regulatory submissions and marketing approvals for Eylea, which GlobalData forecasts to be the top-selling eye drug by 2016,” says Dion in a statement. “However, Regeneron’s overall R&D cost burden was partly offset by the conclusion of the Phase III trials of Eylea in wet age-related macular degeneration and macular edema following central retinal vein occlusion.”
Vertex came in number two on the list, even though its R&D spending slid a bit. But at a time of record-high biotech stock prices and a ready supply of cash, top spenders like Alnylam and Jazz jumped into the ongoing M&A spree.
“Jazz’s 518% spike in R&D spend was the result of a $197 million surge of in-process R&D (IPR&D) expenses, due to the asset purchases of Aerial BioPharma and Sigma-Tau Pharmaceuticals,” says Dion. “These purchases gave Jazz the rights to two promising drugs, namely JZP-110 for potentially treating aspects of narcolepsy and sleep apnea, and defibrotide, to prevent severe hepatic veno-occlusive disease in bone marrow transplant patients. Meanwhile, Alnylam’s R&D expenses soared by 266% to $411 million in 2014, up from $112.3 million during 2013. This increase in R&D spend resulted primarily from a $221 million IPR&D charge in connection with Alnylam’s acquisition of Sirna Therapeutics’ RNAi assets from Merck.”
The growth of midcap biotech R&D spending comes at a time when the industry is enjoying both an IPO boom and a big surge in venture cash, which combined to pump billions of dollars into small and midsized companies. But GlobalData’s figures can also be used to highlight the dominance of Big Pharma in R&D. FierceBiotech has tracked annual research spending at the top 10 companies at a collective $70 billion a year for several years now, with leaders like Novartis and Roche each spending more than these 35 companies combined. Analysts estimate that the drug research field accounts for about $140 billion in spending per year, which helps put these new numbers in perspective.
Among big outfits like GlaxoSmithKline, AstraZeneca and Amgen, the focus has been very much on downsizing R&D and refocusing. So the biotech boom came at a particularly fortuitous time.
By John Carroll