This article is a sample from the DealForma Annual Deal Trends Report provided to database subscribers. Data for this analysis was compiled using the DealForma biopharma deals database. We applied initial filters for mergers and acquisitions, therapeutic areas, asset stages at M&A, and deal payment terms. From there, we exported the data to Excel and used pivot tables and charts to do the rest. All data are based on publicly disclosed figures. We invite you to answer interesting questions on biopharma business development and licensing using our data and carefully curated profiles on deals, pipelines, companies, funding, and business executives by visiting dealforma.com to schedule your personalized demo.
Life sciences M&A was closely watched in 2019, especially after starting off the year with Bristol-Myers Squibb’s $74 billion buyout of Celgene. Industry watchers were not disappointed as the year closed with 229 announced deals valued at $241 billion, capping one of the best years for life sciences M&A activity over the past 12 years. A second megadeal, AbbVie’s $63 billion takeout of Allergan in June, bolstered the numbers, but it was Big Pharma’s continued drive to acquire biotech innovation that drove real excitement in the space.
This was evidenced very early in the year as Roche announced it would pay $4.3 billion for Spark Therapeutics, making a strong foray into gene therapies, and Eli Lilly bought Loxo Oncology for $8 billion.
We looked at DealForma’s extensive database to see how 2019 shaped up in more detail. The total M&A deal value of biopharma therapeutics and platforms, diagnostics, and medtech companies rose 36 percent over 2018 while deal volume dropped 19 percent from the previous year. Most of the value was in cash and equity upfront with only 6 percent contingent on milestones.
Average upfront cash and equity of 2019 M&A deals at $2.3 billion was almost double the average upfront cash and equity of 2018 M&A deals at $1.3 billion. This is due in large part to the two megadeals, whereas median upfront cash and equity rose 22 percent in 2019 to $180 million and was bolstered by a spate of mid-size high value deals in the fourth quarter of 2019.
Indeed, at the start of the fourth quarter of 2019, biotech was in the doldrums, but was lifted by a spate of deals that emphasized biotech’s promising new technologies and came at premiums often exceeding 100 percent:
|Acquirer||Target||Technology||Stage at Acquisition||Total Deal Value ($M)||1-Day Share Price Premium (%)|
|Sanofi||Synthorx||Cell therapy / Immunotherapy||Phase I||2500||172%|
|UCB||Ra Pharmaceuticals||Small molecule / Autoimmune||Phase III||2100||112%|
|Astellas||Audentes Therapeutics||Gene therapy||Phase I||3000||110%|
|Merck||ArQule||Small molecule / Cancer||Phase III||2700||107%|
|Novartis||The Medicines Company||RNA therapies||Phase III||9700||85%|
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Specifically for Biotech, Pharma, Device, and Diagnostics
Private Biopharma M&A
Of the 25 deals valued at $1 billion and above, only three were for private biotech companies: Merck’s acquisition of Peloton Therapeutics, a mid-stage developer of small molecules targeting renal cancer for $1.05 billion in upfront cash and another $1.15 billion dependent on the achievement of specific milestones; Roche’s acquisition of Promedior, a mid-stage developer of small molecule pulmonary therapies, for $1 billion in upfront cash and up to $390 million in potential milestones; and Ipsen’s acquisition of rare disease play Clementia Pharmaceuticals for $1.04 billion in upfront cash and another $263 million in potential milestones.
But private biopharmaceutical companies continue to make up about 30 percent of all M&A transactions, on par with contract development, manufacturing, and services companies.
In 2019, 64 private biotech companies were acquired for a total deal value of $14.4 billion, $5.8 billion upfront and $8.6 billion in contingent payments, an almost 22 percent drop from the 82 private biotech acquisitions in 2018. Still it should be noted that median M&A upfront for these companies rose 48 percent to $62 million from $42 million in 2018.
Small and Mid-Cap Biopharma M&A
Mid Cap biotech companies continue to account for only a handful of deals, and while the number of small cap biotech targets has grown, the total deal value of small and mid-cap biopharma M&A dropped 63 percent to $42.7 billion in 2019 compared to $113.9 billion in 2018. Again the median upfront cash rose 62 percent to $985 million in 2019 compared to $607 million in 2018.
Biopharma M&A in 2020?
How does this bode for M&A activity in 2020? Though the biotech industry’s original members lost Celgene in 2019, the remaining class of Big Biotechs — Amgen, Biogen, Gilead Sciences, along with Regeneron and Vertex — have weathered the ups and downs of drug development and remain strong. And there is a rising class of mid- to large-cap companies that could be takeover targets: Alnylam, Sarepta, BioMarin, to name a few. Positive data from trials of emerging gene therapies, RNAi therapies, and cell therapies bode well for a strong year for the industry as years of research are bearing fruit with the advent of medicines that have the potential to improve patients’ lives and cure disease.
Marie Daghlian is a freelance writer and editor who reports on the business of biotechnology and healthcare technologies and on rare diseases for Global Gene’s Rare Daily. She also covers the industry for Big4Bio, a daily newsletter focused on the four major biotech centers in the United States.
More Research by DealForma
The top deal upfront for Nov 2022 was the POINT – Lantheus exclusive, worldwide ex-Asia license to co-develop and commercialize POINT’s PNT2002, a PSMA-targeted 177 Lu-based radiopharmaceutical therapy, and PNT2003, a somatostatin receptor (SSTR) targeted radioligand therapy by combining POINT’s radioligand development expertise with Lantheus’ commercial expertise in PSMA PET and radiopharmaceuticals for the treatment of metastatic castration-resistant prostate cancer (mCRPC) and gastroenteropancreatic neuroendocrine tumors (GEP-NETs). Additionally, POINT will be responsible for the funding, development, and manufacturing of PNT2002 and PNT2003 while Lantheus will be responsible for NDA approval and development and commercial expenses. POINT will receive $250M (for PNT2002)and $10M (for PNT2003) up front and is eligible for up to $281M and $34.5M in development milestones and up to $1.28B and $275M in commercial milestones, plus 20% and 15% royalties for PNT2002 and PNT2003, respectively.
The top deal upfront for Oct 2022 was the MacroGenics research partnership with Gilead with an option to license MGD024. MacroGenics signed a research partnership with Gilead to develop MGD024, a bispecific antibody, and two additional bispecific therapies using MacroGenics’ DART platform with an exclusive, worldwide option to license MGD024 for the treatment of certain blood cancers, including acute myeloid leukemia (AML) and myelodysplastic syndromes (MDS). MacroGenics will be responsible for Phase I clinical trials of MGD024 as a monotherapy and combination therapy for multiple indications. Gilead may exercise its option at predetermined decision points. MacroGenics will receive $60M in cash up front and is eligible for up to $1.7B in development, regulatory, and commercial milestones, and undusclosed option exercise fees, plus tiered, double-digit royalties for MGD024 and a flat royalty for two other therapies.
The top deal upfront for Sep 2022 was the SpringWorks expanded clinical collaboration with GSK for Nirogacestat in combination with GSK’s Blenrep. SpringWorks granted GSK non-exclusive rights to develop and commericalize Nirogacetat,an oral gamma-secretase inhibitor, in combination with GSK’s Blenrep, an antibody-drug conjugate targeting B-cell maturation antigen for the treatment of multiple myeloma. SpringWorks will receive a $75M equity investment in shares of common stock at a premium to the 30-day volume-weighted average share price on Sept 2, 2022, and is eligible to receive up to $550M in development and commercial milestones.
The top deal upfront for Aug 2022 was the Sanofi development and commercialization deal with Innovent for SAR408701 and SAR444245. Sanofi granted Innovent exclusive rights to develop and commercialize its SAR408701 (tusamitamab ravtansine) for the treatment of non-small cell lung cancer (NSCLC) and gastric cancer in China. Additionally, Sanofi and Innovent will co-develop SAR444245 for the treatment of multiple cancer drugs. Sanofi will invest EUR300M (approx. $306.6M) in Innovent up front at HK$42.42 (approx. $5.40) per share in Innovent common stock. Sanofi is eligible for EUR80M (approx. $81.7M) in development milestones plus royalties for SAR408701, while Innovent is eligible to receive EUR60M (approx. $61.3M) in development milestones and royalties for SAR444245.
The top deal upfront for July 2022 was the Orion co-development and co-commercialization deal with MSD for ODM-208. Orion granted MSD rights to co-develop and co-commercialize ODM-208 for the treatment of metastatic castration-resistant prostate cancer. Orion and MSD have an option to convert the co-development and co-commercialization agreement into a global exclusive license to MSD. Upon exercising the option, MSD will retain the responsibility for all accrued and future development and commercialization expenses associated with the program. Orion will receive $290M up front, including $221M recognized as income, and approximately $60.3M reserved to cover Orion’s share of ODM-208 future development cost. Orion is eligible for undisclosed development and commercialization milestones, plus double-digit tiered royalties.
June 2022 Top Biopharma Deal: Sanofi – Regeneron Pharmaceuticals for Cancer/Inflammation drug Libayo
The top deal upfront for June 2022 was the Sanofi development and commercialization deal with Regeneron for Libtayo (Amended Agreement). Sanofi granted Regeneron exclusive, worldwide rights to develop and commercialize Libtayo for the treatment of cancer. Regeneron and Sanofi signed a license agreement in 2015 to develop Libtayo. Sanofi will receive $900M up front and is eligible to receive up to a $100M milestone upon the first approval by either the FDA or EMA for Libtayo in combination with chemotherapy for first-line treatment of certain patients with NSCLC and up to $100M as a sales milestone in the next two years, plus 11% royalties.
May 2022 Top Biopharma Deal: Dragonfly Therapeutics – Gilead Sciences NK cell engager for cancer/inflammation
The top deal upfront for May 2022 was the Dragonfly Therapeutics development and commercialization deal with Gilead Sciences for solid tumors. Gilead has an exclusive, worldwide option to develop and commercialize additional NK cell engager programs by using its Tri-specific NK Engager (TriNKET) platform after the completion of certain preclinical activities. Dragonfly will receive $300M up front and is eligible to receive undisclosed opt-in payments and development, regulatory, and commercial milestones, plus up to 20% royalties.
April 2022 Top Biopharma Deal: Harbour BioMed – AstraZeneca Bispecific Antibody for Cancer Treatment
The top deal upfront for April 2022 was the Harbour BioMed development and commercialization deal with AstraZeneca for solid tumors. AstraZeneca will be responsible for all costs for development and commercialization. HBM will receive $25M up front and is eligible for up to $325M in development, regulatory, and commercial milestones, plus undisclosed tiered royalties.
March 2022 Top Biopharma Deal: IGM Biosciences – Sanofi IgM Antibody Platform for Cancer and Immunology/Inflammation
The top deal upfront for March 2022 was the IGM development and commercialization deal with Sanofi for cancer, immunology, and inflammation. IGM will receive $150M up front and is eligible to receive up to $6.015B in regulatory and commercial milestones, which includes $940M for each of 3 cancer targets and $1.065B for each of 3 immunology/inflammation targets. Additionally, Sanofi has expressed an interest in purchasing up to $100M of IGM non-voting common stock in a public financing.
The top deal upfront for February 2022 was the Heidelberg development and commercialization partnership with Huadong for HDP-101, HDP-103, and options for HDP-102 (CD37-ATAC) and HDP-104. Heidelberg will receive $20M up front and is eligible for up to $449M in milestones with additional $461M in option payments upon exercise. Additionally, Huadong will invest EUR 105M (35%) in Heidelberg, with an initial commitment of EUR 80M by purchasing 12,408,649 shares at EUR 6.44 per share.
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