Biotech M&A is rip­ping along now as IPOs surge and ven­ture cash flows. Who's the next big tar­get?

Over the course of the first three days of this week we’ve been treat­ed to two biotech buy­outs to­tal­ing $9.6 bil­lion — by it­self more than all the buy­out cash Eval­u­atePhar­ma ac­count­ed for dur­ing all of Q2 last year. And af­ter Q1 racked up close to $47 bil­lion in M&A work, there’s plen­ty of an­tic­i­pa­tion that more deals lie ahead in what could be a very busy 2018.

At the top of the to-buy list right now is Shire $SH­PG, which Take­da put in­to play with its move to flag a like­ly up­com­ing of­fer. That would be worth more than $50 bil­lion by it­self. Take­da’s in­ter­est came out of left field, but the com­pa­ny has been re­struc­tur­ing for the past two years, shed­ding R&D jobs and reeval­u­at­ing the pipeline.

Flem­ming Orn­skov

Since news of Take­da’s in­ter­est sur­faced, the re­views of Shire’s Flem­ming Orn­skov on the num­bers have been bru­tal. And if Take­da can’t fin­ish the deal, some­one else may well come along and do it. 

We still haven’t heard about any­thing big from Bio­gen $BI­IB, which most an­a­lysts would tell you needs to do some­thing im­pres­sive on the M&A front that would help spread the con­sid­er­able risk it faces on Alzheimer’s and some dis­tant cat­a­lysts for in­vestors to pon­der. And there’s been word that Cel­gene $CELG is back at it, hunt­ing new buy­outs af­ter scoop­ing up Juno in the first quar­ter, look­ing for an­oth­er deal that would help ease the con­cerns that have been grow­ing about its wob­bly per­for­mance of late.

Agios $AGIO has been one pos­si­ble tar­get men­tioned, but Cel­gene likes to roam far and wide in hunt­ing buy­out tar­gets.

This is one year when you might ex­pect the un­ex­pect­ed. No­var­tis set the tone for sur­pris­ing strate­gies with its $8.7 bil­lion deal to buy AveX­is $AVXS and its late-stage gene ther­a­py for SMA. (An­oth­er rea­son why Bio­gen, with its SMA ther­a­py Spin­raza now fac­ing an even big­ger threat, has to pull the trig­ger on some­thing im­pres­sive.) No­var­tis CEO Vas Narasimhan in­tends to make the phar­ma gi­ant a big leader in the cell and gene ther­a­py field, and he’s cut him­self free of the usu­al $2 bil­lion to $5 bil­lion bolt-on ac­qui­si­tions that had lim­it­ed their ear­li­er ac­tiv­i­ty.

You can al­so nev­er for­get Pfiz­er in these dis­cus­sions, the last of the big play­ers which still has an ap­petite for mega-merg­ers, even though they of­fer a ques­tion­able path to earn­ings growth. GSK’s new CEO Em­ma Walm­s­ley has done one con­sumer deal, and now you can ex­pect her to turn to the re­search side for new pacts. And what about Eli Lil­ly, where the new R&D chief has made it clear he’d like to do some pipeline build­ing?

M&A charts are usu­al­ly dom­i­nat­ed by sin­gle deals, as you can see in Eval­u­ate’s chart be­low. But this year the fo­cus is on a slate of multi­bil­lion-dol­lar deals more in the small to mid-range are­na. That trend will keep every­one look­ing for the next deal. And the next. And the next. 

It’s a sell­er’s mar­ket right now, with mon­ey pump­ing in­to the in­dus­try from every di­rec­tion. How long this can last is any­one’s guess.

John Chiminski, Catalent CEO - File Photo

'It's a growth play': Catal­ent ac­quires Bris­tol-My­er­s' Eu­ro­pean launch pad, ex­pand­ing glob­al CD­MO ops

Catalent is staying on the growth track.

Just two months after committing $1.2 billion to pick up Paragon and take a deep dive into the sizzling hot gene therapy manufacturing sector, the CDMO is bouncing right back with a deal to buy out Bristol-Myers’ central launchpad for new therapies in Europe, acquiring a complex in Anagni, Italy, southwest of Rome, that will significantly expand its capacity on the continent.

There are no terms being offered, but this is no small deal. The Anagni campus employs some 700 staffers, and Catalent is planning to go right in — once the deal closes late this year — with a blueprint to build up the operations further as they expand on oral solid, biologics, and sterile product manufacturing and packaging.

This is an uncommon deal, Catalent CEO John Chiminski tells me. But it offers a shortcut for rapid growth that cuts years out of developing a green fields project. That’s time Catalent doesn’t have as the industry undergoes unprecedented expansion around the world.

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UP­DAT­ED: Chica­go biotech ar­gues blue­bird, Third Rock 'killed' its ri­val, pi­o­neer­ing tha­lassemia gene ther­a­py in law­suit

Blue­bird bio $BLUE chief Nick Leschly court­ed con­tro­ver­sy last week when he re­vealed the com­pa­ny’s be­ta tha­lassemia treat­ment will car­ry a jaw-drop­ping $1.8 mil­lion price tag over a 5-year pe­ri­od in Eu­rope — mak­ing it the plan­et’s sec­ond most ex­pen­sive ther­a­py be­hind No­var­tis’ $NVS fresh­ly ap­proved spinal mus­cu­lar at­ro­phy ther­a­py, Zol­gens­ma, at $2.1 mil­lion. A Chica­go biotech, mean­while, has been fum­ing at the side­lines. In a law­suit filed ear­li­er this month, Er­rant Gene Ther­a­peu­tics al­leged that blue­bird and ven­ture cap­i­tal group Third Rock un­law­ful­ly prised a vi­ral vec­tor, de­vel­oped in part­ner­ship with the Memo­r­i­al Sloan Ket­ter­ing Can­cer Cen­ter (MSK), from its grasp, and thwart­ed the de­vel­op­ment of its sem­i­nal gene ther­a­py.

The top 10 block­buster drugs in the late-stage pipeline — Eval­u­ate adds 6 new ther­a­pies to heavy-hit­ter list

Vertex comes in for a substantial amount of criticism for its no-holds-barred tactical approach toward wresting the price it wants for its commercial drugs in Europe. But the flip side of that coin is a highly admired R&D and commercial operation that regularly wins kudos from analysts for their ability to engineer greater cash flow from the breakthrough drugs they create.

Both aspects needed for success in this business are on display in the program backing Vertex’s triple for cystic fibrosis. VX-659/VX-445 + Tezacaftor + Ivacaftor — it’s been whittled down to 445 now — was singled out by Evaluate Pharma as the late-stage therapy most likely to win the crown for drug sales in 5 years, with a projected peak revenue forecast of $4.3 billion.

The latest annual list, which you can see here in their latest world preview, includes a roster of some of the most closely watched development programs in biopharma. And Evaluate has added 6 must-watch experimental drugs to the top 10 as drugs fail or go on to a first approval. With apologies to the list maker, I revamped this to rank the top 10 by projected 2024 sales, instead of Evaluate's net present value rankings.

It's how we roll at Endpoints News.

Here is a quick summary of the rest of the top 10:

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In­vestor day prep at Mer­ck in­cludes a new strat­e­gy to pick up the pace on M&A — re­port

Mer­ck’s re­cent deals to buy up two bolt-on biotechs — Ti­los and Pelo­ton — weren’t an aber­ra­tion. In­stead, both ac­qui­si­tions mark a new strat­e­gy to beef up its dom­i­nant can­cer drug op­er­a­tions cen­tered on Keytru­da while look­ing to ad­dress grow­ing con­cerns that too many of its eggs are in the one I/O bas­ket for their PD-1 pro­gram. And Mer­ck is go­ing af­ter more small- and mid-sized buy­outs to calm those fears.

Arc­turus ex­pands col­lab­o­ra­tion, adding $30M cash; Ku­ra shoots for $100M raise

→  Rare dis­ease play­er Ul­tragenyx $RARE is ex­pand­ing its al­liance with Arc­turus $ARCT, pay­ing $24 mil­lion for eq­ui­ty and an­oth­er $6 mil­lion in an up­front as the two part­ners ex­pand their col­lab­o­ra­tion to in­clude up to 12 tar­gets. “This ex­pand­ed col­lab­o­ra­tion fur­ther so­lid­i­fies our mR­NA plat­form by adding ad­di­tion­al tar­gets and ex­pand­ing our abil­i­ty to po­ten­tial­ly treat more dis­eases,” said Emil Kakkis, the CEO at Ul­tragenyx. “We are pleased with the progress of our on­go­ing col­lab­o­ra­tion. Our most ad­vanced mR­NA pro­gram, UX053 for the treat­ment of Glyco­gen Stor­age Dis­ease Type III, is ex­pect­ed to move in­to the clin­ic next year, and we look for­ward to fur­ther build­ing up­on the ini­tial suc­cess of this part­ner­ship.”

Neil Woodford. Woodford Investment Management via YouTube

Wood­ford braces po­lit­i­cal storm as UK fi­nan­cial reg­u­la­tors scru­ti­nize fund sus­pen­sion

The shock of Neil Wood­ford’s de­ci­sion to block with­drawals for his flag­ship fund is still rip­pling through the rest of his port­fo­lio — and be­yond. Un­der po­lit­i­cal pres­sure, UK fi­nan­cial reg­u­la­tors are now tak­ing a hard look while in­vestors con­tin­ue to flee.

In a re­sponse let­ter to an MP, the Fi­nan­cial Con­duct Au­thor­i­ty re­vealed that it’s opened an in­ves­ti­ga­tion in­to the sus­pen­sion fol­low­ing months of en­gage­ment with Link Fund So­lu­tions, which tech­ni­cal­ly del­e­gat­ed Wood­ford’s firm to man­age its funds.

Gilead baits new al­liance with $45M up­front, div­ing in­to the busy pro­tein degra­da­tion field

Gilead is jump­ing on board the pro­tein degra­da­tion band­wag­on. And they’re turn­ing to a low-pro­file Third Rock start­up for the ex­per­tise. But if you were look­ing for a trans­for­ma­tion­al deal to kick up fresh en­thu­si­asm for Gilead, you’ll have to re­main pa­tient.

This one will have a long way to go be­fore they get in­to the clin­ic.

The big biotech said Wednes­day morn­ing that it is pay­ing $45 mil­lion up­front and re­serv­ing a whop­ping $2.3 bil­lion in biotech bucks if San Fran­cis­co-based Nurix can point the way to new can­cer ther­a­pies, as well as drugs for oth­er, un­spec­i­fied dis­eases.

A new num­ber 1 drug? Keytru­da tapped to top the 10 biggest block­busters on the world stage by 2024

Analysts may be fretting about Keytruda’s longterm prospects as a host of rival therapies elbow their way to the market. But the folks at Evaluate Pharma are confident that last year’s $7 billion earner is headed for glory, tapping it to beat out the current #1 therapy Humira as AbbVie watches that franchise swoon over the next 5 years.

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Dave Barrett, Brian Chee, Amir Nashat, Amy Schulman. Polaris

Bob Langer's first port of call — Po­laris Part­ners — maps $400M for ninth fund

Health and tech ven­ture group Po­laris Part­ners, which counts Alec­tor, Al­ny­lam and Ed­i­tas Med­i­cine as part of its port­fo­lio, is set­ting up its ninth fund, rough­ly two years af­ter it closed Po­laris VI­II with $435 mil­lion in the bank, sur­pass­ing its tar­get by $35 mil­lion.

The Boston-based firm, in an SEC fil­ing, said it in­tends to raise $400 mil­lion for the fund. Po­laris — which rou­tine­ly backs com­pa­nies mold­ed out of the work done in the lab of pro­lif­ic sci­en­tist Bob Langer of MIT  — typ­i­cal­ly in­vests ear­ly, and sticks around till com­pa­nies are in the green. Like its peers at Flag­ship and Third Rock, Po­laris is all about cham­pi­oning the lo­cal biotech scene with a steady flow of start­up cash.