{"id":31833,"date":"2025-04-21T12:24:00","date_gmt":"2025-04-21T16:24:00","guid":{"rendered":"https:\/\/www.drugpatentwatch.com\/blog\/?p=31833"},"modified":"2026-10-08T09:22:33","modified_gmt":"2026-10-08T13:22:33","slug":"licensing-agreements-in-the-pharmaceutical-sector","status":"publish","type":"post","link":"https:\/\/www.drugpatentwatch.com\/blog\/licensing-agreements-in-the-pharmaceutical-sector\/","title":{"rendered":"Pharma Licensing Deals: The Headline Number Is Mostly Contingent"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

Pfizer agreed in May 2025 to pay 3SBio $1.25 billion upfront for SSGJ-707. The same release named up to $4.8 billion in milestones. [1] The upfront is 20.7% of the $6.05 billion headline. That figure is our calculation, not a reported number.<\/p>\n\n\n\n

BMS and BioNTech signed a larger deal a month later. BMS pays $1.5 billion upfront and $2 billion in non-contingent anniversary payments through 2028, plus up to $7.6 billion in milestones. [2] The headline is $11.1 billion. The guaranteed part is $3.5 billion, or 31.5%.<\/p>\n\n\n\n

Summit paid Akeso $500 million upfront in 2022 against a $5.0 billion headline. [3] That is 10.0%. Novartis paid BeiGene $650 million upfront in 2021 against about $2.2 billion in named payments. [4] That is 29.5%. Both deals show the same pattern. The number in the headline is mostly a conditional promise.<\/p>\n\n\n\n

The Short Answer: What a Pharma Licensing Deal Pays and What It Does Not<\/strong><\/h2>\n\n\n\n

A pharma licensing deal pays cash at signing, cash on defined events, and royalties on sales. In the four deals we reviewed, upfront cash was 10.0% to 29.5% of the headline value (analysis). The rest depends on trial results, approvals, and sales. Royalties also end when the licensed patent ends, under U.S. law. [21]<\/p>\n\n\n\n

The Five Findings That Matter<\/strong><\/h2>\n\n\n\n
    \n
  1. Upfront payments were 10.0% to 29.5% of headline value across four documented licenses signed from 2021 to 2025 (analysis of [1], [2], [3], [4]).<\/li>\n\n\n\n
  2. BMS and BioNTech fixed 31.5% of the $11.1 billion headline as non-contingent cash: $1.5 billion upfront plus $2 billion in anniversary payments (analysis of [2]).<\/li>\n\n\n\n
  3. Three PD-1\/PD-L1 plus VEGF bispecific licenses carry a combined headline of $22.15 billion. Their upfronts total $3.25 billion, or 14.7% (analysis of [1], [2], [3]).<\/li>\n\n\n\n
  4. If we risk-adjust the Pfizer-3SBio milestones with BIO phase data, expected value is about $1.98 billion, or 32.7% of the headline (illustrative analysis, undiscounted).<\/li>\n\n\n\n
  5. Novartis returned tislelizumab rights to BeiGene about 32 months after signing. BeiGene regained global rights with no royalty due to Novartis (analysis of [4], [15], [25]).<\/li>\n\n\n\n
  6. A royalty tied only to a patent cannot run past that patent. A hypothetical 15% royalty on $2.0 billion in annual sales loses $1.2 billion in nominal royalties over four post-expiry years (scenario analysis).<\/li>\n<\/ol>\n\n\n\n

    Methodology and Definitions: How We Built the Numbers<\/strong><\/h2>\n\n\n\n

    What Data Did We Analyze?<\/strong><\/h3>\n\n\n\n

    We used company press releases and SEC filings for four deals: Pfizer-3SBio (May 2025), BMS-BioNTech (June 2025), Summit-Akeso (December 2022), and Novartis-BeiGene (January 2021). [1][2][3][4] We selected deals with disclosed upfront and milestone figures from the parties themselves. We did not use deals where only press estimates exist.<\/p>\n\n\n\n

    How Did We Calculate the Derived Figures?<\/strong><\/h3>\n\n\n\n

    Headline value is upfront plus any non-contingent payments plus the maximum stated milestones. Upfront share is upfront divided by headline value. Guaranteed share adds non-contingent payments to the numerator. Equity components and undisclosed royalty rates are excluded. For the risk-adjusted scenarios, we used BIO phase-transition rates. [6][7]<\/p>\n\n\n\n

    Definitions Used in This Article<\/strong><\/h3>\n\n\n\n

    What Is a Biobuck?<\/strong><\/h4>\n\n\n\n

    A biobuck is a milestone payment counted in a headline deal value. The licensee pays it only if a defined event occurs. This is industry shorthand, not a legal term.<\/p>\n\n\n\n

    What Is a Non-Contingent Payment?<\/strong><\/h4>\n\n\n\n

    A non-contingent payment is due on a fixed date whatever the trial outcome. BMS owes BioNTech $2 billion of these through 2028. [2]<\/p>\n\n\n\n

    What Are All Commercially Significant Rights?<\/strong><\/h4>\n\n\n\n

    This is an FTC term. It means exclusive rights to a patent that allow only the recipient to use it in a therapeutic area or specific indication. [30]<\/p>\n\n\n\n

    What Are the Limits of This Analysis?<\/strong><\/h3>\n\n\n\n

    Four deals are not a market sample. Milestone schedules are mostly undisclosed. BIO rates are cross-indication averages. BIO reports lower LOA for oncology overall (5.3% from Phase I) and higher for immuno-oncology (12.4%). [16] Our scenarios show scale, not deal value.<\/p>\n\n\n\n

    Why Are Pharma Companies Licensing More Assets?<\/strong><\/h2>\n\n\n\n

    What Is the Patent Clock Behind the Demand?<\/strong><\/h3>\n\n\n\n

    Merck reported $31.68 billion in 2025 Keytruda and Keytruda Qlex sales. [12] Its compound patent expires in December 2028 and a method patent in May 2029. [12] Phase I to approval takes about 10.5 years on average. [16] A company with a 2028 gap cannot start Phase I now and close it. Licensing a later-stage asset is the only route that fits the clock (analysis).<\/p>\n\n\n\n

    How Big Is China’s Share of Licensing Deals?<\/strong><\/h3>\n\n\n\n
    \n

    “38% of large pharma licensing deals were originating from Chinese partners”
    Source: PharmExec, June 9, 2026. [8]<\/p>\n<\/blockquote>\n\n\n\n

    The same report says Chinese deals were 30% of industry upfront payments. [8] It also says the average upfront for a China-sourced deal rose from $52 million in 2022 to $172 million in early 2026. [8]<\/p>\n\n\n\n

    Why Do the China Deal Figures Disagree?<\/strong><\/h4>\n\n\n\n
    Source<\/th>Metric<\/th>Value<\/th><\/tr><\/thead>
    PharmExec [8]<\/td>Share of large-pharma licensing deals from Chinese partners<\/td>38%<\/td><\/tr>
    Jefferies, via BioWorld [10]<\/td>China share of global out-licensing deals, H1 2025<\/td>32%<\/td><\/tr>
    Pharmcube, via KrASIA [11]<\/td>China out-licensing value, 2025<\/td>$135.7 billion<\/td><\/tr>
    SS&C Intralinks [9]<\/td>China-related transaction value, 2025<\/td>$138.8 billion of $275.1 billion global<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    The sources count different things. One measures deal share, one measures value. One covers large pharma, one covers all buyers. One covers half a year. Check each definition before you quote a number (analysis). SS&C also reports that license-in deals fell from 142 in 2021 to 45 in 2025, while outbound licensing reached 158 deals. [9]<\/p>\n\n\n\n

    How Is a Pharma Licensing Deal Structured?<\/strong><\/h2>\n\n\n\n

    The Certainty Ladder: An Original Five-Layer Framework<\/strong><\/h3>\n\n\n\n

    This is our own framework, not an industry standard. It ranks payment layers by how certain they are.<\/p>\n\n\n\n

    Layer<\/th>Payment type<\/th>Certainty<\/th>Example<\/th><\/tr><\/thead>
    1<\/td>Upfront cash<\/td>Paid at closing<\/td>$1.25 billion, Pfizer to 3SBio [1]<\/td><\/tr>
    2<\/td>Non-contingent deferred cash<\/td>Fixed dates<\/td>$2 billion through 2028, BMS to BioNTech [2]<\/td><\/tr>
    3<\/td>Development and regulatory milestones<\/td>Depends on trials and approvals<\/td>Up to $1.3 billion, Novartis to BeiGene [4]<\/td><\/tr>
    4<\/td>Sales milestones<\/td>Depends on revenue<\/td>$250 million, Novartis to BeiGene [4]<\/td><\/tr>
    5<\/td>Royalties<\/td>Depends on sales and patent term<\/td>High-teens to high-twenties tiers [4]<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    How Do Upfronts, Milestones, and Royalties Differ in Practice?<\/strong><\/h3>\n\n\n\n

    Pfizer’s deal has an upfront, milestones, and tiered double-digit royalties. [1] BioNTech expects to recognize its $3.5 billion of upfront and non-contingent cash as revenue over the BNT327 development phase. [5] It expects most milestones on approvals and during commercialization. [5]<\/p>\n\n\n\n

    Royalty Deal or 50\/50 Co-Development: Which Structure Fits?<\/strong><\/h3>\n\n\n\n

    BMS and BioNTech chose co-development and co-commercialization with a 50\/50 profit and loss split. [2] Both parties keep the right to develop BNT327 in further indications independently. [2]<\/p>\n\n\n\n

    Payment Mechanics: Cash Versus Equity<\/strong><\/h4>\n\n\n\n

    Akeso converted about $25.1 million of Summit’s first $300 million installment into 10 million Summit shares. [13] Summit paid the other $274.9 million in cash and owed a $200 million second installment due March 5, 2023. [13]<\/p>\n\n\n\n

    Territory Splits<\/strong><\/h4>\n\n\n\n

    Summit received rights in the United States, Canada, Europe, and Japan. [13] Pfizer received worldwide rights outside China. [1]<\/p>\n\n\n\n

    Pfizer-3SBio vs. BMS-BioNTech vs. Summit-Akeso: Three PD-(L)1 x VEGF Deals Compared<\/strong><\/h2>\n\n\n\n
    Deal<\/th>Asset<\/th>Upfront<\/th>Other fixed<\/th>Max milestones<\/th>Headline (calc.)<\/th>Upfront share (calc.)<\/th>Source<\/th><\/tr><\/thead>
    Pfizer \/ 3SBio, May 2025<\/td>SSGJ-707 (PD-1 x VEGF)<\/td>$1.25B<\/td>None disclosed<\/td>$4.8B<\/td>$6.05B<\/td>20.7%<\/td>[1]<\/td><\/tr>
    BMS \/ BioNTech, June 2025<\/td>BNT327 (PD-L1 x VEGF-A)<\/td>$1.5B<\/td>$2.0B anniversary<\/td>$7.6B<\/td>$11.1B<\/td>13.5% (31.5% incl. fixed)<\/td>[2]<\/td><\/tr>
    Summit \/ Akeso, Dec 2022<\/td>Ivonescimab (PD-1 x VEGF)<\/td>$0.5B<\/td>None disclosed<\/td>$4.5B<\/td>$5.0B<\/td>10.0%<\/td>[3]<\/td><\/tr>
    Novartis \/ BeiGene, Jan 2021<\/td>Tislelizumab (anti-PD-1)<\/td>$0.65B<\/td>None disclosed<\/td>$1.55B<\/td>$2.2B<\/td>29.5%<\/td>[4]<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    What Does the Cluster Show?<\/strong><\/h3>\n\n\n\n

    The first three deals total $22.15 billion in headline value. Upfronts total $3.25 billion, or 14.7%. Adding BMS’s anniversary payments raises fixed cash to $5.25 billion, or 23.7% (analysis). These deals target one mechanism class. Merck’s Keytruda is a PD-1 inhibitor and faces a 2028 patent date. [12] We do not claim any buyer’s motive.<\/p>\n\n\n\n

    Where Does Ivonescimab Stand Now?<\/strong><\/h3>\n\n\n\n

    FDA accepted Summit’s BLA for ivonescimab in EGFR-mutated non-squamous NSCLC after TKI therapy. The PDUFA goal date is November 14, 2026. [32] That date is a regulatory goal, not an approval. Verify status before you rely on it.<\/p>\n\n\n\n

    How Do You Value a Pharma Licensing Deal? rNPV and the Headline Haircut<\/strong><\/h2>\n\n\n\n

    What Probability of Success Should a Model Use?<\/strong><\/h3>\n\n\n\n

    BIO analyzed 12,728 phase transitions across 9,704 programs for 2011 to 2020. [6] Overall likelihood of approval from Phase I was 7.9%. [6] Biologics reached 9.1% and new molecular entities 5.7%. [6]<\/p>\n\n\n\n

    Phase transition rates were 52.0% for Phase I to II, 28.9% for Phase II to III, and 57.8% for Phase III to submission. [7] Dividing 7.9% by the product of these three rates gives an implied submission-to-approval step of about 91% (analysis). That gives LOA of 52.6% from Phase III start and 15.2% from Phase II start (analysis).<\/p>\n\n\n\n

    Headline Haircut: Illustrative Expected Cash<\/strong><\/h3>\n\n\n\n

    Assumptions: all milestones are paid at approval. Discount rate is 10%. Pfizer-3SBio starts at Phase II and approval is five years out. BMS-BioNTech starts at Phase III and approval is four years out. Non-contingent cash is not discounted. Real schedules differ, so treat this as scale only.<\/p>\n\n\n\n

    Deal<\/th>LOA used<\/th>Expected milestones (undiscounted)<\/th>Fixed cash<\/th>Expected total<\/th>% of headline<\/th>Discounted total \/ %<\/th><\/tr><\/thead>
    Pfizer \/ 3SBio<\/td>15.2%<\/td>$0.73B<\/td>$1.25B<\/td>$1.98B<\/td>32.7%<\/td>$1.70B \/ 28.1%<\/td><\/tr>
    BMS \/ BioNTech<\/td>52.6%<\/td>$4.00B<\/td>$3.5B<\/td>$7.50B<\/td>67.6%<\/td>$6.23B \/ 56.1%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    Why Pfizer-3SBio Shrinks More<\/strong><\/h4>\n\n\n\n

    The asset was earlier. 3SBio planned its first Phase 3 study in China for 2025. [14] More of the headline sits behind a lower probability.<\/p>\n\n\n\n

    Why BMS-BioNTech Shrinks Less<\/strong><\/h4>\n\n\n\n

    BNT327 was already in global Phase 3 trials, and BMS owed $3.5 billion on fixed terms. [2]<\/p>\n\n\n\n

    Do Courts Use Probability-Weighted Value?<\/strong><\/h3>\n\n\n\n

    Yes, in damages. In a 2024 Delaware case, the court weighted each missed milestone by its probability of success and discounted it to the time of breach. [17]<\/p>\n\n\n\n

    How Does the IRA Change the Royalty Base?<\/strong><\/h3>\n\n\n\n

    Small molecules become eligible for Medicare negotiation seven years after approval. Biologics become eligible after 11. Negotiated prices take effect at least nine and 13 years after approval. [19] KFF reports an executive order directing HHS to work with Congress to delay small-molecule selection. [20] Check current law before you model. A lower price lowers the royalty base (analysis).<\/p>\n\n\n\n

    What Is the Right Royalty Rate for a Pharma License?<\/strong><\/h2>\n\n\n\n

    Royalty Ranges by Development Stage<\/strong><\/h3>\n\n\n\n
    Stage<\/th>Published range<\/th>Source<\/th><\/tr><\/thead>
    Pre-clinical<\/td>0-5%<\/td>[18]<\/td><\/tr>
    Phase I<\/td>5-10%<\/td>[18]<\/td><\/tr>
    Phase II<\/td>8-15%<\/td>[18]<\/td><\/tr>
    Phase III<\/td>10-20%<\/td>[18]<\/td><\/tr>
    Launched product<\/td>20%+<\/td>[18]<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    The table comes from a 2015 journal article. Use it as a floor for comparison, not as a current benchmark. [18]<\/p>\n\n\n\n

    What Tiers Did Novartis Agree to Pay BeiGene?<\/strong><\/h3>\n\n\n\n

    Tiered royalties ranged from the high-teens to the high-twenties of annual net sales, with customary reductions. [4] That range sits above the 2015 Phase III band for an asset already approved in China at signing. Pfizer’s agreement states only tiered double-digit royalties. [1]<\/p>\n\n\n\n

    What Happens to Royalties When the Patent Expires?<\/strong><\/h2>\n\n\n\n

    What Did Kimble v. Marvel Decide?<\/strong><\/h3>\n\n\n\n

    The Supreme Court decided Kimble v. Marvel on June 22, 2015. It declined to overrule Brulotte v. Thys Co., 379 U.S. 29 (1964). A contract can charge royalties only for use of the invention before the patent term ends. [21] Marvel had agreed to pay a lump sum and a 3% royalty. [21]<\/p>\n\n\n\n

    The Court said parties may defer payments for pre-expiration use. They may also tie royalties to non-patent rights or use non-royalty arrangements. [21]<\/p>\n\n\n\n

    Scenario: What a 12-Year Royalty Term Costs When the Patent Ends in Year 8<\/strong><\/h3>\n\n\n\n

    Assume $2.0 billion in annual net sales and a 15% royalty. That is $300 million a year. If the term is 12 years from launch and the last licensed patent expires in year 8, four years of royalties are at risk. That is $1.2 billion nominal. This is a hypothetical, not a real deal.<\/p>\n\n\n\n

    Drafting Options That Fit the Rule<\/strong><\/h4>\n\n\n\n

    Counsel can tie a lower post-expiry rate to licensed know-how or other non-patent rights, since the Court left such ties open. [21] Counsel should confirm the structure against the facts.<\/p>\n\n\n\n

    Who Owns the Patent You Are Licensing? Chain of Title and Bayh-Dole<\/strong><\/h2>\n\n\n\n

    What Did Stanford v. Roche Teach Licensees?<\/strong><\/h3>\n\n\n\n

    An inventor signed “agree to assign” language with Stanford. He later signed “do hereby assign” language with Cetus. Roche then acquired Cetus’s PCR assets. [22] The Supreme Court held on June 6, 2011 that the Bayh-Dole Act does not automatically vest title in a federal contractor. [22] The lesson is practical. Assignment wording in inventor agreements decides who can license (analysis).<\/p>\n\n\n\n

    Diligence Checklist: Verify Before You Sign<\/strong><\/h3>\n\n\n\n
    Check<\/th>Where to verify<\/th><\/tr><\/thead>
    Assignment wording from every inventor<\/td>USPTO assignment records, inventor agreements<\/td><\/tr>
    Federal funding and Bayh-Dole status<\/td>Grant records, university disclosures<\/td><\/tr>
    Listed patents and expiry dates<\/td>FDA Orange Book or Purple Book<\/td><\/tr>
    Challenges and litigation<\/td>PTAB records, court dockets<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    DrugPatentWatch indexes Orange Book listings, Paragraph IV filings, and litigation records in one place. A team can use it to build the expiry timeline fast, then confirm each date in the FDA, USPTO, or court record. See also our guides on how to check whether a drug patent has been licensed<\/a> and rNPV valuation<\/a>.<\/p>\n\n\n\n

    Can a Licensee Challenge the Licensed Patent? MedImmune v. Genentech<\/strong><\/h2>\n\n\n\n

    What Did the Court Hold?<\/strong><\/h3>\n\n\n\n

    In 2007 the Supreme Court held 8-1 that a licensee who keeps paying royalties can still seek a declaratory judgment of invalidity. [23] MedImmune did not have to breach or end its license for Synagis. [23]<\/p>\n\n\n\n

    What Does It Mean for Royalty Terms?<\/strong><\/h3>\n\n\n\n

    Under a typical license, the royalty duty continues until a court declares the patent invalid. [24] The Court left open whether a patentee may treat the filing as an anticipatory breach. [24] Licensors should address challenge rights and termination triggers in the contract (analysis).<\/p>\n\n\n\n

    How Do Pharma Licensing Deals End? Four Exits<\/strong><\/h2>\n\n\n\n

    An Original Taxonomy of License Exits<\/strong><\/h3>\n\n\n\n
    Exit<\/th>Trigger<\/th>Documented example<\/th><\/tr><\/thead>
    1. Portfolio or data walk-away<\/td>Licensee ends the deal<\/td>Novartis-BeiGene, 2023 [4][25]<\/td><\/tr>
    2. Effort breach<\/td>Court finds too little effort<\/td>Delaware, 2024 [27][28]<\/td><\/tr>
    3. Licensor insolvency<\/td>Bankruptcy rejection<\/td>Section 365(n) [29]<\/td><\/tr>
    4. Patent challenge<\/td>Invalidity ruling<\/td>MedImmune [23]<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    Case Study: Novartis and BeiGene<\/strong><\/h3>\n\n\n\n

    Novartis paid $650 million upfront for tislelizumab in January 2021. [4][15] It could earn up to $1.3 billion in regulatory and $250 million in sales milestones. [4] On September 17, 2023, the parties mutually ended the license. BeiGene regained global rights with no royalty due. [25] That is about 32 months after signing (analysis).<\/p>\n\n\n\n

    The ociperlimab deal ended in July 2023. [15] Novartis had paid $300 million upfront. A further $600 million or $700 million was payable only on option exercise. [4] Reporting tied the end to poor results from other TIGIT programs. [26]<\/p>\n\n\n\n

    What Did the 2024 Delaware Efforts Cases Decide?<\/strong><\/h3>\n\n\n\n

    Two Chancery decisions found buyers breached commercially reasonable efforts duties. [17] The court awarded about $130 million in the Alexion-Syntimmune case. [27] J&J was held liable for more than $1 billion to Auris Health shareholders. [28] Both cases arose from acquisition earn-outs, not licenses. The efforts clause does the same job in a license: it ties value to the buyer’s work (analysis). Alexion’s duty ran seven years and used a similarly-situated-company benchmark. [17]<\/p>\n\n\n\n

    What Protects a Licensee if the Licensor Goes Bankrupt?<\/strong><\/h3>\n\n\n\n

    Section 365(n) stops a licensor from cutting off licensee rights by rejecting the license. The licensee may keep its rights as they existed before bankruptcy, for the contract term. [29] The protection does not make the licensee whole. It can also halt the licensor’s duty to maintain the IP, and an unrecorded license can be exposed under Section 544. [29]<\/p>\n\n\n\n

    When Does an Exclusive License Need an HSR Filing?<\/strong><\/h2>\n\n\n\n

    The “All Commercially Significant Rights” Test<\/strong><\/h3>\n\n\n\n

    An exclusive pharma patent license that transfers all commercially significant rights is a potential asset acquisition. The FTC rule applies even when the licensor keeps limited manufacturing rights or co-rights. [30]<\/p>\n\n\n\n

    What Is the 2026 Threshold?<\/strong><\/h3>\n\n\n\n

    The size-of-transaction threshold is $133.9 million for deals closing on or after February 17, 2026. [31] The new HSR form requirements took effect February 10, 2025. [31] Counsel must decide how contingent payments count.<\/p>\n\n\n\n

    Patent and Contract Timeline: 1964 to 2026<\/strong><\/h2>\n\n\n\n
    Date<\/th>Event<\/th>Source<\/th><\/tr><\/thead>
    1964<\/td>Brulotte v. Thys bars post-expiry patent royalties<\/td>[21]<\/td><\/tr>
    2007<\/td>MedImmune v. Genentech: licensee may challenge without breach<\/td>[23]<\/td><\/tr>
    2011-06-06<\/td>Stanford v. Roche decided<\/td>[22]<\/td><\/tr>
    2013<\/td>FTC codifies pharma license HSR rule<\/td>[30]<\/td><\/tr>
    2015-06-22<\/td>Kimble v. Marvel keeps Brulotte<\/td>[21]<\/td><\/tr>
    2019<\/td>Mission Product v. Tempnology: rejection is breach, not rescission<\/td>[29]<\/td><\/tr>
    2022-12<\/td>Summit-Akeso signed<\/td>[3]<\/td><\/tr>
    2023-09-17<\/td>Novartis-BeiGene tislelizumab license ends<\/td>[25]<\/td><\/tr>
    2024-09-04\/05<\/td>Delaware efforts rulings<\/td>[28]<\/td><\/tr>
    2025-05-19<\/td>Pfizer-3SBio announced<\/td>[1]<\/td><\/tr>
    2026-02-17<\/td>HSR threshold rises to $133.9M<\/td>[31]<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    What This Means for Licensors, Licensees, and Generic Entrants<\/strong><\/h2>\n\n\n\n

    What This Means for Licensors<\/strong><\/h3>\n\n\n\n

    Price the guaranteed layers, not the headline. Push for non-contingent payments, as BioNTech did. [2] Set royalty terms to patent expiry or tie them to separate rights. [21]<\/p>\n\n\n\n

    What This Means for Licensees<\/strong><\/h3>\n\n\n\n

    Model expected cash, not maximum cash. Verify title and expiry first. Plan for the licensee’s own exit rights and effort duties. [17]<\/p>\n\n\n\n

    What This Means for Generic and Biosimilar Developers<\/strong><\/h3>\n\n\n\n

    A license is a map of a rival’s commitments. Royalty-bearing patents and Orange Book or Purple Book dates show when exclusivity is expected to end (analysis). Merck’s Keytruda compound and method patents run to December 2028 and May 2029. [12]<\/p>\n\n\n\n

    What Happens Next<\/strong><\/h2>\n\n\n\n

    Three items to watch. First, the FDA decision on ivonescimab, goal date November 14, 2026. [32] Second, whether more license-out deals from China keep upfronts near $172 million. [8] Third, whether Congress changes the small-molecule IRA timeline. [20] These are open events, not forecasts.<\/p>\n\n\n\n

    Key Takeaways<\/strong><\/h2>\n\n\n\n
      \n
    • Upfronts were 10.0% to 29.5% of headline value in four documented deals (analysis).<\/li>\n\n\n\n
    • BMS-BioNTech fixed $3.5 billion of an $11.1 billion headline. [2]<\/li>\n\n\n\n
    • A risk-adjusted Pfizer-3SBio headline is about one-third of $6.05 billion (illustrative).<\/li>\n\n\n\n
    • BIO puts Phase I to approval at 7.9%. [6]<\/li>\n\n\n\n
    • Royalties cannot run past the patent for use of the invention. [21]<\/li>\n\n\n\n
    • A licensee can challenge the patent without breaching. [23]<\/li>\n\n\n\n
    • Exclusive pharma licenses can need HSR filings above $133.9 million. [31]<\/li>\n\n\n\n
    • Novartis returned tislelizumab rights about 32 months after signing (analysis of [4][25]).<\/li>\n<\/ul>\n\n\n\n

      FAQ<\/strong><\/h2>\n\n\n\n

      What Is a Biobuck in a Pharma Licensing Deal?<\/strong><\/h3>\n\n\n\n

      It is a contingent milestone counted in the headline. BioNTech expects most BNT327 milestones on approvals and during commercialization. [5]<\/p>\n\n\n\n

      Why Do Published China Licensing Totals Disagree?<\/strong><\/h3>\n\n\n\n

      The sources measure share or value, large pharma or all buyers, and half-year or full-year. [8][9][10]<\/p>\n\n\n\n

      Can a Licensor Charge Royalties After the Patent Expires?<\/strong><\/h3>\n\n\n\n

      Not for post-expiry use of the invention. Deferred payments for earlier use and non-patent ties remain open. [21]<\/p>\n\n\n\n

      Must a Licensee Stop Paying to Challenge the Patent?<\/strong><\/h3>\n\n\n\n

      No. The Court held 8-1 that a licensee need not breach. [23]<\/p>\n\n\n\n

      Does an Exclusive Pharma License Need an HSR Filing?<\/strong><\/h3>\n\n\n\n

      It can, if it transfers all commercially significant rights and exceeds $133.9 million. [30][31]<\/p>\n\n\n\n

      What Happens if the Licensor Files for Bankruptcy?<\/strong><\/h3>\n\n\n\n

      The licensee can elect to keep its rights under Section 365(n), subject to limits. [29]<\/p>\n\n\n\n

      How Long Does Development Take Before Royalties Start?<\/strong><\/h3>\n\n\n\n

      The BIO average from Phase I to approval is 10.5 years, as reproduced in secondary reporting. [16]<\/p>\n\n\n\n

      Does the IRA Change Royalty Value?<\/strong><\/h3>\n\n\n\n

      It can. Negotiated prices apply about nine years after small-molecule approval and 13 years after biologic approval. [19]<\/p>\n\n\n\n

      What Does Commercially Reasonable Efforts Mean in Court?<\/strong><\/h3>\n\n\n\n

      In the 2024 Alexion case, it meant efforts typical of a similarly situated company on a similar product. [17]<\/p>\n\n\n\n

      How Can a Team Verify Patent Expiry Before Signing?<\/strong><\/h3>\n\n\n\n

      Pull the Orange Book or Purple Book entry, the patent, and the docket. DrugPatentWatch speeds the first pass. The primary record decides.<\/p>\n\n\n\n

      References<\/strong><\/h2>\n\n\n\n
        \n
      1. Pfizer Inc. (2025, May 19). Pfizer enters into exclusive licensing agreement with 3SBio<\/em>. https:\/\/www.pfizer.com\/news\/press-release\/press-release-detail\/pfizer-enters-exclusive-licensing-agreement-3sbio<\/li>\n\n\n\n
      2. BioNTech SE. (2025, June). BioNTech and Bristol Myers Squibb announce global strategic partnership for BNT327<\/em> (Form 8-K, Exhibit 99.1). U.S. Securities and Exchange Commission. https:\/\/www.sec.gov\/Archives\/edgar\/data\/1776985\/000177698525000039\/0001776985-25-000039.txt<\/li>\n\n\n\n
      3. Summit Therapeutics Inc. (2022, December 6). Summit Therapeutics partners with Akeso Inc. in deal for up to $5 billion<\/em> (Exhibit 99.1). U.S. Securities and Exchange Commission. https:\/\/www.sec.gov\/Archives\/edgar\/data\/1599298\/000159929822000136\/a2022_prx1208xivonescimaba.htm<\/li>\n\n\n\n
      4. BeiGene, Ltd. (2024). Form 10-K for fiscal year 2023<\/em>. U.S. Securities and Exchange Commission. https:\/\/www.sec.gov\/Archives\/edgar\/data\/1651308\/000165130824000014\/bgne-20231231.htm<\/li>\n\n\n\n
      5. BioNTech SE. (2025, August). BioNTech announces second quarter 2025 financial results<\/em>. https:\/\/www.biontech.com\/au\/en\/home\/mediaroom\/news\/press-releases\/2025\/08\/biontech-announces-second-quarter-2025-financial-results-and.html<\/li>\n\n\n\n
      6. CPHI Online. (2023, February 7). Clinical development success rates and contributing factors 2011-2020<\/em> (BIO, Informa Pharma Intelligence, and QLS). https:\/\/www.cphi-online.com\/whitepaper\/clinical-development-success-rates-and-contributing-factors-2011-2020-download-the-report\/<\/li>\n\n\n\n
      7. AhaSignals. (2026, August 19). Clinical trial probability of success: Base rates, evidence and false precision<\/em> (reproducing BIO 2011-2020 transition rates). https:\/\/ahasignals.com\/biotech-expectations\/clinical-trial-probability-of-success\/<\/li>\n\n\n\n
      8. Pharmaceutical Executive. (2026, June 9). Deepening ties: Why China is becoming big pharma’s most essential R&D partner<\/em>. https:\/\/www.pharmexec.com\/view\/deepening-ties-why-china-becoming-big-pharma-most-essential-rd-partner<\/li>\n\n\n\n
      9. SS&C Intralinks. (n.d.). China’s pharma sector is redrawing the global deal map<\/em>. https:\/\/www.intralinks.com\/resources\/blog\/chinas-pharma-sector-redrawing-global-deal-map<\/li>\n\n\n\n
      10. BioWorld. (2025, July 22). For big pharma, China is a shopper’s dream<\/em>. https:\/\/www.bioworld.com\/articles\/topic\/214?page=32<\/li>\n\n\n\n
      11. KrASIA. (2026). Global drugmakers eye more China biotech deals after record year<\/em>. https:\/\/kr-asia.com\/global-drugmakers-eye-more-china-biotech-deals-after-record-year<\/li>\n\n\n\n
      12. Precision Medicine Online. (2026). Merck pushes back on oncology slowdown concerns in Q4 and full-year 2025 call<\/em>. https:\/\/www.precisionmedicineonline.com\/node\/46201<\/li>\n\n\n\n
      13. Summit Therapeutics Inc. (2023, January 20). Summit Therapeutics closes deal with Akeso Inc.<\/em> Business Wire. https:\/\/www.businesswire.com\/news\/home\/20230120005080\/en\/Summit-Therapeutics-Closes-Deal-with-Akeso-Inc.-to-In-License-Breakthrough-Innovative-Bispecific-Antibody\/<\/li>\n\n\n\n
      14. IPP Bureau. (2025, May 21). Pfizer inks $1.25 billion cancer antibody licensing deal with China’s 3SBio<\/em>. Indian Pharma Post. https:\/\/www.indianpharmapost.com\/news\/lite\/pfizer-inks-125-billion-cancer-antibody-licensing-deal-with-chinas-3sbio-17180<\/li>\n\n\n\n
      15. BeiGene, Ltd. (2023). Form 10-Q for the quarter ended June 30, 2023<\/em>. U.S. Securities and Exchange Commission. https:\/\/www.sec.gov\/Archives\/edgar\/data\/1651308\/000165130823000127\/bgne-20230630.htm<\/li>\n\n\n\n
      16. China Healthcare. (2021, May 8). Clinical trial success rates 2011-2020<\/em> (summarizing BIO key findings). https:\/\/www.cn-healthcare.com\/articlewm\/20210508\/content-1217774.html<\/li>\n\n\n\n
      17. Quinn Emanuel Urquhart & Sullivan. (2026, January). Life sciences update: Commercially reasonable efforts in earnout cases<\/em>. https:\/\/www.quinnemanuel.com\/the-firm\/publications\/life-sciences-update-january-2026<\/li>\n\n\n\n
      18. Valuations using royalty data in the life sciences area: Focused on anticancer and cardiovascular therapies. (2015). Journal of Open Innovation: Technology, Market, and Complexity<\/em>. https:\/\/jopeninnovation.springeropen.com\/articles\/10.1186\/s40852-015-0025-5\/tables\/14<\/li>\n\n\n\n
      19. Akin Gump Strauss Hauer & Feld. (n.d.). The impact of the Inflation Reduction Act of 2022 on pharmaceutical innovation, patent litigation and market entry<\/em>. https:\/\/www.akingump.com\/en\/news-insights\/the-impact-of-the-inflation-reduction-act-of-2022-on-pharmaceutical-innovation-patent-litigation-and-market-entry.html<\/li>\n\n\n\n
      20. KFF. (n.d.). The effect of delaying the selection of small molecule drugs for Medicare drug price negotiation<\/em>. https:\/\/www.kff.org\/medicare\/the-effect-of-delaying-the-selection-of-small-molecule-drugs-for-medicare-drug-price-negotiation\/<\/li>\n\n\n\n
      21. Kimble v. Marvel Entertainment, LLC<\/em>, 576 U.S. 446 (2015). Legal Information Institute, Cornell Law School. https:\/\/www.law.cornell.edu\/supremecourt\/text\/13-720<\/li>\n\n\n\n
      22. Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc.<\/em>, 563 U.S. 776 (2011). Legal Information Institute, Cornell Law School. https:\/\/www.law.cornell.edu\/supremecourt\/text\/09-1159.ZS.html<\/li>\n\n\n\n
      23. Wiggin and Dana LLP. (2007, February 1). Supreme Court rules that a licensed patent may be challenged without breaching the license. BioInsights<\/em>, Issue 9. https:\/\/www.wiggin.com\/?p=25647<\/li>\n\n\n\n
      24. Mondaq. (2007). Another change in US patent law: US Supreme Court rules that patent licensees may seek declaratory judgments without first breaching the license<\/em>. https:\/\/webiis05.mondaq.com\/unitedstates\/patent\/45940\/another-change-in-us-patent-law-us-supreme-court-rules-that-patent-licensees-may-seek-declaratory-judgments-in-patent-license-cases-without-first-breaching-the-license<\/li>\n\n\n\n
      25. BeiGene, Ltd. (2023, September 17). Form 8-K: Termination of a material definitive agreement<\/em>. U.S. Securities and Exchange Commission. https:\/\/www.sec.gov\/Archives\/edgar\/data\/1651308\/000165130823000137\/bgne-20230917.htm<\/li>\n\n\n\n
      26. MedCity News. (2023, September). BeiGene, Novartis drug alliance ends; it’s their second terminated deal this year<\/em>. https:\/\/medcitynews.com\/2023\/09\/beigene-novartis-drug-alliance-ends-its-their-second-terminated-deal-this-year\/<\/li>\n\n\n\n
      27. Hughes Hubbard & Reed LLP. (n.d.). Earnouts: Recent Delaware cases highlight important drafting considerations<\/em>. https:\/\/www.hugheshubbard.com\/news-insights\/insights\/earnouts-recent-delaware-cases-highlight-important-drafting-considerations<\/li>\n\n\n\n
      28. Goodwin Procter LLP. (2024, September 12). Life sciences licensing and M&A update<\/em>. https:\/\/goodwinlaw.com\/en\/insights\/publications\/2024\/09\/alerts-lifesciences-ma-life-sciences-licensing-and-ma-update<\/li>\n\n\n\n
      29. Farella Braun + Martel LLP. (n.d.). Three steps licensees can take to protect their IP rights in bankruptcy<\/em>. https:\/\/www.fbm.com\/intellectual-property\/publications\/three-steps-licensees-can-take-to-protect-their-ip-rights-in-bankruptcy\/<\/li>\n\n\n\n
      30. Torys LLP. (2013, November). FTC makes changes to HSR rules to reach more pharmaceutical licenses<\/em>. https:\/\/www.torys.com\/insights\/publications\/2013\/11\/ftc-makes-changes-to-hsr-rules-to-reach-more-pharmaceutical-licenses<\/li>\n\n\n\n
      31. Covington & Burling LLP. (2026, January). FTC announces 2026 update of jurisdictional and fee thresholds for HSR premerger notification filings<\/em>. https:\/\/www.cov.com\/news-and-insights\/insights\/2026\/01\/ftc-announces-2026-update-of-jurisdictional-and-fee-thresholds-for-hsr-premerger-notification-filings<\/li>\n\n\n\n
      32. Summit Therapeutics Inc. (2026, February 23). Summit Therapeutics reports financial results and operational progress for the fourth quarter and year ended December 31, 2025<\/em>. Business Wire. https:\/\/www.businesswire.com\/news\/home\/20260223856924\/en<\/li>\n<\/ol>\n\n\n\n

        <\/p>\n","protected":false},"excerpt":{"rendered":"

        Pfizer agreed in May 2025 to pay 3SBio $1.25 billion upfront for SSGJ-707. The same release named up to $4.8 […]<\/p>\n","protected":false},"author":1,"featured_media":39805,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[10],"tags":[],"class_list":["post-31833","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insights"],"modified_by":"DrugPatentWatch","_links":{"self":[{"href":"https:\/\/www.drugpatentwatch.com\/blog\/wp-json\/wp\/v2\/posts\/31833","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.drugpatentwatch.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.drugpatentwatch.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.drugpatentwatch.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.drugpatentwatch.com\/blog\/wp-json\/wp\/v2\/comments?post=31833"}],"version-history":[{"count":0,"href":"https:\/\/www.drugpatentwatch.com\/blog\/wp-json\/wp\/v2\/posts\/31833\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.drugpatentwatch.com\/blog\/wp-json\/wp\/v2\/media\/39805"}],"wp:attachment":[{"href":"https:\/\/www.drugpatentwatch.com\/blog\/wp-json\/wp\/v2\/media?parent=31833"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.drugpatentwatch.com\/blog\/wp-json\/wp\/v2\/categories?post=31833"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.drugpatentwatch.com\/blog\/wp-json\/wp\/v2\/tags?post=31833"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}