In what has been touted as the biggest and best biotech licensing deal in history, Bristol-Myers Squibb (BMS) and Nektar Therapeutics (Nektar) recently agreed to terms of a Global Development & Commercialisation Collaboration, to work on Nektar’s lead oncology program, the CD122-biased agonist, NKTR-214. NKTR-214 is going to be used in combination therapies with BMS’s flagship OPDIVO ® (nivolumab) antibody melanoma treatment. Excitingly, the combination (perhaps also with YERVOY ® (ipilimumab) will be assessed against more than 20 indications across nine tumours. In sum, BMS flagship products inhibit important molecules PD-1/L1. Although these drugs show incredible results in some cancer patients, a substantial percentage are not responsive. It is believed that Nektar’s NKTR-214 co-treatment will increase the responsiveness of BMS’s existing flagship therapeutics, thus significantly increasing their sales of these antibody therapies. This is an incredibly exciting prospect for BMS. BMS will pay Nektar US$1 billion in cash upfront, with the rest being BMS purchasing shares in Nektar and future milestone payments. All though the cash injection will be valuable to Nektar’s development plan, it’s an interesting outcome, after rumours earlier this month suggesting that Nektar were looking at full takeover options. When you take a closer look at the numbers, external reports advocating this deal as perhaps being the best biotech deal in history are perhaps misguided. A couple of years ago, Nektar’s total valuation was little more than US$2 billion, but the rapid and exponential growth of the company (without ever having any products particularly close to market) simply made any potential complete sale/takeover of the company become completely unattainable. Within two years, it’s market cap had increased to around $15 billion. This puts BMS’s current $3.6 billion total package valuation into perspective, granting them exclusivity to the technology (at least in respect of their dual PD-1 inhibition segment) for significantly less than could otherwise have been achieved. In saying that, many biotech companies are eventually bought out by large pharma even after doing “mega-licensing deals”. For example, Juno Therapeutics Inc was very recently acquired by Cellgene Corp after previously doing a significant licensing agreement. Pharmacyclics Inc was also recently acquired by AbbVie Inc after Johnson & Johnson had licensed half of the company’s lead medicine. However, none of these deals happened overnight – so only time will tell how Nektar played their cards on this one.