For the past decade, immuno-oncology (IO) therapies like PD-1/L1 inhibitors have defined oncology portfolio strategy, generating billions in revenue and securing leadership in first-line settings across multiple tumor types. Meanwhile, targeted therapies (TTs) have remained a steady, precision-driven alternative, delivering strong results for biomarker-defined populations like BRAF-mutant melanoma and EGFR-mutant NSCLC. But as IOs approach market saturation and TTs remain confined to niche populations, a fundamental question arises:
Should biopharma companies continue prioritizing IOs, or is it time to shift toward TTs and next-generation approaches like antibody-drug conjugates (ADCs), radiopharma, and cytokine-based IO?
The answer is far from clear.
Pfizer’s $1 billion write-down on Seagen’s ADC portfolio underscores the risks of overvaluing next-generation therapies, despite their scientific promise (1). While ADCs were positioned as the next major breakthrough, Pfizer’s experience highlights the challenge of translating scientific differentiation into scalable commercial success. ADCs, in theory, bridge the gap between TTs and IOs—offering a precision-driven approach with broad applicability across multiple cancer types. However, their commercial execution remains complex, as they often compete in crowded indications where first-mover advantage, pricing pressure, and clinical differentiation dictate success. Unlike IOs, which have expanded through label additions and durable market positioning, ADCs remain more vulnerable to competitive displacement and reimbursement challenges.
Meanwhile, IO therapies continue expanding into new indications at a pace unmatched by TTs, reinforcing their advantage in market scalability. Yet, as biomarker testing advances, TT-based regimens are becoming increasingly attractive, enabling higher precision, optimized patient selection, and the potential to challenge IOs in certain tumor types. This shift raises a fundamental strategic question: Should investment favor IOs for broad-scale market reach, or should companies lean into TTs for high-value, biomarker-defined markets?
Even more striking, Gilead’s decision to abandon its anti-BCMA CAR-T program (KITE-585) after taking an $820 million impairment charge reflects the inherent risk of developing high-cost, high-science therapies in competitive markets (2). CAR-T therapies, while transformative in hematologic malignancies, face commercial scalability challenges, including complex manufacturing, reimbursement hurdles, and limited applicability to solid tumors. Despite their breakthrough potential, these therapies remain constrained by operational and market barriers, making them high-risk bets compared to the more durable revenue models of IOs.
And it’s not just ADCs and CAR-T therapies under scrutiny. Sanofi recently reevaluated its $2.5 billion bet on an IL-2-based IO approach (SAR444245) after disappointing mid-phase clinical results leading to them booking a $1.6 billion impairment (3). The IL-2 pathway has long been viewed as a promising mechanism to enhance IO efficacy, yet clinical execution has proven difficult. This case highlights a broader challenge for oncology investors: How should companies balance investment in incremental improvements to IO (such as next-generation cytokine therapies) versus entirely new modalities like tumor metabolism inhibitors or radiopharmaceuticals?
The View from the Crow’s Nest
As competition intensifies and investment decisions grow more complex, biopharma leaders must determine how to balance scalable, revenue-sustaining assets with high-risk, high-reward innovation. The investment landscape has changed, and recent high-profile missteps highlight how difficult it is to convert scientific breakthroughs into durable commercial success.
Some companies will continue indexing to IOs, leveraging their scalability and indication expansion model to sustain revenue. Others will double down on precision-driven TTs, capitalizing on biomarker-driven advances in patient selection. And for some, the next play is selective bets on ADCs, radiopharma, and cytokine-based IO—despite uncertain commercial execution and increased investor scrutiny. But is the future as clear-cut as these options suggest?
Are next-generation modalities truly the next frontier, or are they high-risk, commercially unproven bets?
Does the scalability advantage of IOs still outweigh the precision-driven benefits of TTs?
Should biopharma prioritize revenue durability (IOs) over potential scientific breakthroughs (next-gen assets)?
As these questions shape the future of oncology investment, one thing is clear: companies that fail to reassess their strategy risk stagnation, misallocated R&D budgets, and falling behind in the next wave of oncology innovation. In an upcoming deep dive, we’ll introduce a structured framework for oncology portfolio optimization—one that addresses how IOs, TTs, and next-gen therapies fit into a financially and strategically sound investment approach.
If you are interested in learning more, get in touch at strategy@spinnakerLS.com.
Spinnaker offers true partnership and comprehensive guidance to help leaders navigate the complexities of the Life Sciences industry and chart a path to success. From early-stage market assessment through commercial execution and ongoing lifecycle management, we deliver tailored solutions to ensure optimized practicable results.
Sources:
Taylor, N.P. “Pfizer axes B7-H4 ADC, triggering $1B impairment charge as blockbuster vision evaporates.” Fierce Biotech. Published February 20, 2023. https://www.fiercebiotech.com/biotech/pfizer-takes-12b-hit-after-assessing-prospects-seagen-adcs.
Taylor, P. “Gilead drops anti-BCMA CAR-T from Kite, takes $820M charge.” Fierce Biotech. Published March 1, 2023. https://www.fiercebiotech.com/biotech/gilead-drops-anti-bcma-car-t-from-kite-takes-820m-charge.
Taylor, N.P. “In wake of bempeg blowup, Sanofi rethinks $2.5B bet on IL-2 after midphase efficacy falls short.” Fierce Biotech. Published March 10, 2023. https://www.fiercebiotech.com/biotech/wake-bempeg-blowup-sanofi-rethinks-25b-bet-il-2-after-midphase-efficacy-falls-short.