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.

Jude Samulski, Marianne De Backer

Bay­er buys a biotech ‘race horse’ with a $4B deal — $2B in cash — aimed at go­ing big in­to gene ther­a­py

In the latest sign that Big Pharma wants a leading place in the push to develop a new generation of cell and gene therapies, Bayer is stepping up today with a $2 billion cash deal to buy out one of the fast-moving pioneers in the field, while adding up to $2 billion more in milestones if the new pharma subsidiary can deliver the goods.

As part of a continuing series of deals engineered by Bayer BD chief Marianne De Backer, the pharma player has snapped up Asklepios, more commonly referred to in more casual fashion as AskBio. And they are paying top dollar for a Research Triangle Park-based company that raised $225 million a little more than a year ago to back the brainchild of Jude Samulski, the gene therapy pioneer out of the University of North Carolina Gene Therapy Center.

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Patrick Soon-Shiong at the JP Morgan Healthcare Conference, Jan. 13, 2020 (David Paul Morris/Bloomberg via Getty Images)

Af­ter falling be­hind the lead­ers, dissed by some ex­perts, biotech show­man Patrick Soon-Sh­iong fi­nal­ly gets his Covid-19 vac­cine ready for a tri­al. But can it live up to the hype?

In January, when dozens of scientists rushed to start making a vaccine for the then-novel coronavirus, they were joined by an unlikely compatriot: Patrick Soon-Shiong, the billionaire doctor most famous for making big, controversial promises on cancer research.

Soon-Shiong had spent the last 4 years on his “Cancer Moonshot,” but part of his project meant buying a small Seattle biotech that specialized in making common-cold vectors, called adenoviruses, to train the immune system. The billionaire had been using those vectors for oncology, but the company had also developed vaccine candidates for H1N1, Lassa fever and other viruses. When the outbreak began, he pivoted.

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Cedric Francois, Apellis CEO (Optum via YouTube)

UP­DAT­ED: So­bi bets $250M cash, about $1B in mile­stones for rights to a C3 ther­a­py be­ing pushed through 5 piv­otal tri­als

A couple years after licensing Novimmune’s emapalumab and turning around a quick FDA OK, Stockholm-based Sobi is betting up to $1.2 billion for rights to another rare disease drug.

The company is shelling out $250 million upfront and adding up to $915 million in milestones for rights to develop and commercialize Apellis Pharmaceuticals’ drug pegcetacoplan outside the US. Together, the companies will see the systemic C3 therapy through five registrational trials in hematology, nephrology and neurology.

Kevin Conroy (Exact Sciences)

UP­DAT­ED: A month af­ter Il­lu­mi­na's big Grail buy­out, Ex­act Sci­ences scoops up liq­uid biop­sy ri­val Thrive for a rel­a­tive bar­gain

Illumina is going to have a lot of work to do to prove Grail was worth those $8 billion.

Today, Exact Sciences announced that it will acquire Thrive, Grail’s chief rival among the early cancer detection startups, for a sizeable but relatively moderate $2.15 billion. The yawning gap in part reflects the vast differences in capital that have been invested to date in each company.  But both have gone toe-to-toe over the last year and a half, with Grail having published data in over 50 cancers but Thrive recently beating them to a key test for liquid biopsy companies.

Christian Rommel (via Roche)

Bay­er fol­lows R&D deal spree by raid­ing Roche's can­cer group for its new re­search chief

The day after Bayer signed off on a $4 billion deal designed to put the company among the leaders in gene therapy development, the pharma giant has recruited a new chief for its R&D division. And they opted for an expert in the cancer field.

Christian Rommel, Roche’s head of discovery and early-stage oncology development, has been tapped to take over the job. Joerg Moeller, who got the top research post after early and late-stage development roles were combined 2 years ago, is hitting the exit “to pursue other career opportunities.”

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Once re­ject­ed, Kala's dry eye drug now gains en­try to a field where No­var­tis is groom­ing its own block­buster

When the FDA slapped a rejection on Kala Pharma’s dry eye drug last August, the biotech’s execs promised investors that a third Phase III study — they had already started at that point — would reverse their fortune.

Today they made good on that promise, clinching an approval for Eysuvis, an ocular corticosteroid being positioned as a first-line, short term treatment of dry eye disease.

Boasting a technology invented by Bob Langer out of MIT, Eysuvis is a corticosteroid, loteprednol etabonate, delivered by mucus-penetrating particles. It promises to enhance penetration into target tissue on the ocular surface, achieving an effect quicker than systemic corticosteroids and stronger than over-the-counter eye drops.

Albert Bourla, AP

UP­DAT­ED: Where's the Pfiz­er ef­fi­ca­cy read­out? CEO Bourla says 'soon,' but you're go­ing to have to wait for it

Pfizer CEO Albert Bourla had promised repeatedly that the pharma giant would know if its leading Covid-19 vaccine is effective by the end of this month — now just a few days away.

Instead, the company reported early Tuesday that it has yet to conduct any interim efficacy analyses. And it won’t now until sometime next month.

The news was included in a slide for their Q3 report.

In the morning Q3 call with analysts, Bourla says that they expect efficacy data “soon,” but noted that they wouldn’t be able to say anything until all the administrative work was done on the interim, which would take about a week. And he added that Pfizer isn’t going to say anything else about that hot topic until they have the data in hand.

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UP­DAT­ED: The dis­rup­tors at EQRx have their eyes on the PD-(L)1 mar­ket — tee­ing up $150M cash to grab 2 back­bone ther­a­pies from Chi­na

EQRx is paying top dollar to bring a pair of PD-(L)1 drugs into its portfolio of fast-follow therapies, offering $150 million upfront in what could shape up to be a $1.3 billion alliance with China’s CStone.

As early as 2017 Celgene had bet on a made-in-China PD-1 via its pact with BeiGene, quickly followed by Arcus as the second checkpoint wave was looming; more recently Eli Lilly imported longtime partner Innovent’s PD-1 in a $1 billion deal. All are diving into a space now dominated by Merck’s Keytruda franchise, where six other players are trying to catch up by carving out their own niches — and more are on their way to tap into the various I/O pairings anchored by a PD-(L)1. But none so far has quite shared EQRx’s explicit mission to disrupt the multibillion-dollar market by offering a lower cost option.

Charles Baum, Mirati CEO

UP­DAT­ED: Mi­rati plots a march to the FDA for its KRAS G12C drug, breath­ing down Am­gen’s neck with bet­ter da­ta

Mirati Therapeutics $MRTX took another closely-watched step toward a now clearly defined goal to file for an approval for its KRAS G12C cancer drug adagrasib (MRTX849), scoring a higher response rate than the last readout from the class-leading rival at Amgen but still leaving open a raft of important questions about its future.

Following a snapshot of the first handful of responses, where the drug scored a tumor response in 3 of 5 patients with non-small cell lung cancer, the response rate has now slid to 45% among a pooled group of 51 early-stage and Phase II patients, 43% — 6 of 14 — when looking solely at the Phase I/Ib. Those 14 patients had a median treatment duration of 8.2 months, with half still on therapy and 5 of 6 responders still in response.

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