Trends and Insights: Drugs with Business Deals/Collaborations vs. Expedited Designations

After my previous two posts on the drugs involving with dealmaking and expedited designations out of JPM 2025 Conference, I am going to take a deeper view on how the drugs involved in the deals and collaborations (see full list in my first post) are correlated with expedited programs (see full list in my second post) like accelerated approval, fast track, breakthrough designations, or orphan drug designations.

By comparing the?37 business deals/collaborations?and?32 drugs with 41 expedited designations?(some drugs with multiple designations), I identified several key trends emerge on the dealmaking for new drugs.

1. Focus on High-Need Therapeutic Areas

• Oncology and Rare Diseases Dominate: ~60% of expedited drugs?target oncology (e.g.,?Keytruda,?Tivdak,?Blenrep) or rare diseases (e.g.,?Amvuttra?for hATTR amyloidosis,?ANX005?for Guillain-Barré syndrome). Collaborations often prioritize conditions with?high unmet need, where expedited pathways are more likely (e.g.,?Novartis?partnering for?OAV101 IT?in spinal muscular atrophy).
• Metabolic/Complex Diseases: Drugs like?Rezdiffra?(NASH) and?Vafseo?(CKD anemia) highlight partnerships in chronic, hard-to-treat conditions.

2. Orphan Drug Designations Drive Collaborations

• 14/32 expedited drugs?have?orphan drug status, reflecting partnerships in rare diseases (e.g.,?CB-010?for DLBCL,?PRGN-2012?for recurrent respiratory papillomatosis).
• Why??Smaller markets and high development costs incentivize collaborations to share risks/resources (e.g.,?Lexeo?partnering for?LX2006?in Friedreich’s ataxia cardiomyopathy).

3. Accelerated Approval as a Strategic Goal

• 15/32 drugs?have?accelerated approval, often in oncology (e.g.,?Epkinly?for DLBCL,?Ziihera?for biliary tract cancer).
• Partnerships frequently target?biomarker-driven therapies?(e.g.,?Nuvalent’s?zidesamtinib?for ROS1+ NSCLC) to expedite regulatory success.

4. Acquisitions Target Late-Stage, Expedited Candidates

• M&A Focus: Companies acquire assets with existing expedited pathways: Merck?acquired?Seagen?($43B) for ADCs like?Tivdak?(accelerated approval in cervical cancer). Genmab?acquired?ProfoundBio?for?Rina-S?(Phase III ovarian cancer ADC with orphan potential).

5. Breakthrough/Fast Track Status in Competitive Spaces

• Breakthrough Therapy?(7 drugs) and?Fast Track?(5 drugs) are common in crowded markets (e.g.,?Cytokinetics’?aficamten?for hypertrophic cardiomyopathy).
• These designations help differentiate partnered drugs (e.g.,?Madrigal’s?Rezdiffra?in NASH, a first-in-class therapy).

6. Regional Collaborations for Global Expansion

• Partnerships often aim to leverage?local expertise?for expedited approvals: Arcturus?partnered with?CSL?and?Meiji Group?to commercialize COVID/flu vaccines in Japan. Zymeworks?partnered with?Jazz Pharmaceuticals?to expand?Ziihera?(HER2+ biliary cancer) into global markets.

7. Biotech-Pharma Alliances for Innovation

• Smaller biotechs (e.g.,?Avidity Biosciences,?Recursion) partner with pharma giants to advance?novel platforms?(RNA therapies, AI-driven drug discovery). Example:?Recursion’s merger with?Exscientia?to scale AI-driven oncology/rare disease pipelines.

When I cross-examine those dealmaking against each expedited designation per clinical stage, it makes a lot sense to me both in regulatory affairs and business development aspects as shown in table below. Moving later to the clinical stage, naturally it comes with more data, more value, bigger chance of winning expedited designations/approval, higher valuation in business dealmaking, which is evidently to see from the "end heavy" table.

The mega/large cap deals often involve higher dollar values and more advanced-stage assets (or platforms), whereas the rest of the companies are generally engaging in early-stage, riskier transactions. Drugs that reach Phase II/III and secure an expedited designation often have robust clinical data that supports both safety and efficacy. This regulatory “stamp of approval” (in a non-approval sense) serves as a signal to potential partners and acquirers that the asset has a fast-tracked development pathway and a promising market outlook. For example, when a late-stage oncology candidate receives a Breakthrough Therapy designation, it can trigger accelerated development timelines and make the asset more attractive for licensing or acquisition deals.

For early-stage (Phase I or early Phase II) programs, mid/small/micro caps obtaining an expedited designation can be a critical milestone. Even at these earlier stages, the promise of a faster regulatory review can reduce the overall development timeline. This is particularly appealing in high-need areas like oncology or rare diseases. Early designations can therefore serve as a de-risking tool, making it easier for small and mid cap companies to attract partnerships or out-license their candidates to larger players.

Key Takeaways

1. Balanced Risk Across Stages: Mega and Large Caps: Leverage both early innovation (e.g., novel platforms, preclinical candidates) and assets that are already generating late-stage clinical data or even nearing market approval. Their dual strategy helps maintain a robust, diversified pipeline. Mid Caps: Often serve as a bridge between early-stage innovation and late-stage commercialization, focusing on assets that are transitioning from proof-of-concept to regulatory submission. Their collaborations are designed to de-risk programs and attract external validation. Small and Micro Caps: Typically lean toward higher-risk, early-stage assets, or in the case of biosimilars and market access deals, lower-risk opportunities. Partnerships for these companies provide the necessary capital, expertise, and market reach to advance their assets into later clinical stages.
2. Strategic Collaborations as Accelerators: Across all company sizes, partnerships—whether for co-development, licensing, or manufacturing scale-up—are being used to accelerate the clinical development timeline. For instance, collaborations with established companies (e.g., AbbVie, Pfizer, Biogen) not only bring in funding but also enhance clinical trial design, regulatory strategy, and global market access.
3. Emerging Modalities and Precision Therapies: Many deals focus on cutting-edge technologies such as bispecific antibodies, ADCs, siRNA, mRNA vaccines, and CAR?T therapies. These modalities often start in early clinical phases but have the potential to quickly move to later stages given strong preliminary data and regulatory incentives in areas like oncology and rare diseases.
4. Regional and Market Considerations: Some deals specifically mention regulatory or commercialization strategies in key regions (e.g., Europe/Japan for BridgeBio’s Attruby, Japan for GSK’s and Arcturus’s partnerships). These geographic nuances highlight that clinical development is increasingly global, and strategic partnerships are being tailored to meet regional regulatory and market demands.

Overall, as a contrarian investor, I always believe investing in certain biotech and pharma companies is not a typical a growth hype story like chasing NVidia but a value investment (my conviction on Eli Lilly is a different but sweet story though as I think it is both growth and value choice for many years already only in stealth mod in the past). This year's landscape painted by these deals is one of dynamic interplay between early innovation and late-stage commercialization. Unlike pre-COVID hyper frenzy deals, nowadays I see a more healthy and back-to-earth kind of trend that both pharma and biotech intend to recognize and do what they can do the best to boost their operational and synergistic efficiency. Mega and Large Cap companies are reinforcing their pipelines with a mix of mature candidates and taking full advantage of their commercialization capability to sell newly approved drugs and bring cash flow for the stockholders amid patent cliffs; while Mid, Small, and Micro Cap companies are leveraging partnerships to mitigate clinical risks and accelerate the progression of their innovative therapies. This multi-staged, diversified approach not only sustains current product lines but also fuels long-term growth through next-generation modalities.