Table 2.
Estimated multiples and returns for investment in drug development Biopharma companies
| Investment multiple (x) | Annual return (%) | |||||
|---|---|---|---|---|---|---|
| Value | 95% CIa | p value | Value (%) | 95% CIa | p value | |
| FDA orphan designation status | ||||||
| Orphan | 7.2x | (5.6–9.0) | < 0.001 | 46 | (37–56) | < 0.001 |
| Non-orphan | 2.1x | (1.6–2.6) | 12 | (8–16) | ||
| Number of indications | ||||||
| Multi-indication | 2.9x | (2.3–3.7) | < 0.001 | 21 | (15–29) | < 0.001 |
| Single-indication | 1.7x | (1.3–2.2) | 11 | (7–14) | ||
| Molecule type | ||||||
| Biologic OR gene/cell therapy | 1.8x | (1.4–2.2) | < 0.001 | 16% | (11–21) | < 0.001 |
| Small-molecule | 3.6x | (2.8–4.5) | 19 | (15–25) | ||
| Disease area | ||||||
| Oncology | 4.3x | (3.5–5.4) | < 0.001 | 26 | (21–33) | < 0.001 |
| CNS | 2.6x | (2.0–3.2) | < 0.001 | 17 | (13–22) | < 0.001 |
| Otherb | 1.5x | (1.2–1.9) | 8 | (4–11) | ||
| Overall | 2.6x | (2.0–3.3) | 15 | (11–19) | ||
Multiples and annual returns were estimated assuming an investment horizon from Pre-Clinic until FDA approval. Valuation data from our sample of 311 Biopharma acquisitions (2005–2020) were inflation adjusted to 2020 values and combined with previously published success rates and development periods to calculate multiples and returns [11, 16].
FDA US Food and Drug Administration, CNS Central nervous system
a95% confidence intervals were calculated based on empirical 2.5th and 97.5th percentiles from the conducted sensitivity analysis
bThe disease category other includes immunology, infectious disease, cardiovascular, dermatology, internal medicine, and ophthalmology