According to an analysis conducted by BioWorld of the 2020 financial reports filed by public biopharmaceutical companies with market caps greater than $1 billion, and excluding big pharma companies, the amount that was invested in research and development (R&D) during the year increased by 23% compared to the same period last year. The 100 companies that were included in the analysis collectively invested a total of $44 billion in R&D compared to almost $35 billion invested in 2019. Biopharma companies conducting research on therapies and vaccines to treat COVID-19 were a significant contributing factor to the jump in R&D expenses.

The top 20 companies, ranked by the total amount of R&D spending incurred during the year, invested a combined $30 billion, or 69%, of the group’s total R&D expenses. (See Top 20 biopharmaceutical companies by R&D spending in 2020, below.)

COVID-19 research

In the race to bring a safe an effective COVID-19 vaccine to the market, several companies made substantial investments into R&D. Novavax Inc., of Gaithersburg, Md., for example, reported its expenses were $401.2 million in the fourth quarter of 2020, bringing its total spending to $747 million, a 556% increase over the previous year. That was primarily due, the company said, to increased development activities relating to its NVX-CoV2373 COVID-19 vaccine, in a pivotal phase III study in the U.S. and Mexico.

In February, the company began a rolling review process for authorization of the vaccine with several regulatory agencies, including the EMA, the FDA, the U.K. Medicines and Healthcare products Regulatory Agency, and Health Canada.

Cambridge, Mass.-based Moderna Inc. reported that its R&D expenses were $759 million for the fourth quarter of 2020 compared to $118 million for the fourth quarter of 2019. That brought expenses to $1.37 billion for the year, compared to $496 million in 2019. The 163% hike in spending in 2020 was largely attributable to clinical development of its mRNA-1273 COVID-19 vaccine and prelaunch inventory buildup prior to the emergency use authorization from the FDA.

The company raised the lower end of its global manufacturing plan for 2021 from 600 million doses of mRNA-1273 to 700 million doses and said it will make the necessary capital investments to increase the capacity up to an expected 1.4 billion doses in 2022. In terms of revenues from the sale of its vaccine, the company gave guidance that it has already signed advance purchase agreements for scheduled delivery in 2021 that will total $18.4 billion.

Leading spenders

In terms of spending, Foster City-based Gilead Sciences Inc. ranked first with $5 billion in recorded R&D expenses, a year-over-year increase of 24%. The $1 billion extra in expenditure was mainly related to higher clinical trial expenses for Veklury (remdesivir) as a treatment for COVID-19, the company explained. The drug secured an FDA approval for a COVID-19 treatment in 2020. Beginning in the second quarter of 2020, Gilead noted its acquired in-process research and development (IPR&D) expenses were reported separately from its R&D expenses.

Last year, Gilead’s acquired IPR&D expenses amounted to $5.9 billion and were primarily related to its acquisition of Forty Seven Inc. for approximately $4.7 billion, which brought in-house an investigational drug candidate, magrolimab, currently in phase II/III studies for a number of hematological cancers, including myelodysplastic syndrome, acute myeloid leukemia, non-Hodgkin lymphoma and solid tumors.

The expenses also included several deals such as a $2 billion partnership to co-develop and commercialize Arcus Biosciences Inc.’s cancer programs, and one to acquire a 49.9% equity interest in Pionyr Immunotherapeutics Inc. for $1.74 billion. Although not yet appearing in its acquired IPR&D expenses, apart from some accelerated stock-based compensation, the company’s acquisition, in October and potentially the fifth biggest biotech M&A ever, involved Immunomedics Inc. for approximately $20.6 billion. The transaction gained Trodelvy (sacituzumab govitecan-hziy), a Trop-2-directed antibody-drug conjugate, which was granted accelerated approval by the FDA for the treatment of adult patients with metastatic triple-negative breast cancer.

Cambridge, Mass.-based Biogen Inc. recorded an increase of $1.7 billion (75%), in research and development expenses that the company said was primarily due to $1.89 billion in charges recognized in connection with up-front payments associated with collaborations signed with three biotech companies: Sangamo Therapeutics Inc., Denali Therapeutics Inc. and Sage Therapeutics Inc.

In April, Biogen signed a collaboration and license agreement with Brisbane, Calif.-based Sangamo to develop ST-501 for tauopathies, including Alzheimer’s disease, ST-502 for synucleinopathies, including Parkinson’s disease, a third neuromuscular disease target, and up to nine additional neurological disease targets to be identified and selected over a five-year period. The company purchased $225 million of Sangamo common stock.

Biogen committed more than $1 billion in cash and equity in Denali for rights to co-develop and co-commercialize a potential therapy for Parkinson's disease (PD) and options to secure up to four more neurodegenerative disease programs from its new partner. Inhibition of leucine-rich repeat kinase 2 (LRRK2), the target of the pair's lead investigational PD candidate, DNL-151, is the heart of one approach they're pursuing. Other efforts in the collaboration could leverage Denali's blood-brain barrier-crossing Transport Vehicle technology. Under terms of the deal, Biogen paid Denali $560 million up front.

A deal between Biogen and Sage involved the latter’s zuranolone (also known as SAGE-217) for major depressive disorder, postpartum depression and other psychiatric disorders, as well as SAGE-324 for essential tremor and neurological disorders. Sage received an up-front payment of $875 million and a $650 million equity investment.