How could you make a Bris­tol-My­ers takeover work with­out shred­ding a $5B R&D di­vi­sion?

Carl Ic­ahn

When Carl Ic­ahn bought in­to Al­ler­gan last May, the com­bat­ive ac­tivist in­vestor im­me­di­ate­ly put out a state­ment that put him square­ly in the Brent Saun­ders fan club. Al­ler­gan $AGN CEO Saun­ders had made mon­ey for Ic­ahn be­fore, when the ac­tivist helped bring him in­to For­est Labs as he was push­ing that com­pa­ny to make some big changes. And Ic­ahn felt that he would con­tin­ue to make mon­ey at Al­ler­gan.

The un­writ­ten mes­sage: Ic­ahn wasn’t set­ting up an­oth­er Big Squeeze, push­ing Al­ler­gan in­to an M&A deal Saun­ders wasn’t look­ing for.

But when Ic­ahn stepped up for a bite of Bris­tol-My­ers Squibb’s $BMY eq­ui­ty, ac­cord­ing to a re­port in the Wall Street Jour­nal, the im­me­di­ate as­sump­tion was that he was an­gling for one of his clas­sic in­vest­ment gam­bits, prepar­ing to push a stressed bio­phar­ma com­pa­ny to­ward an M&A deal.

And Saun­ders didn’t ex­act­ly try to douse that thought.

Brent Saun­ders, CEO Al­ler­gan

“Carl is a very smart, thought­ful in­vestor. I have to be­lieve that he looks at Bris­tol-My­ers and the in­dus­try and he’s say­ing, ‘Great com­pa­ny, great pipeline and an in­dus­try that should po­ten­tial­ly con­sol­i­date.’ So that’s a for­mu­la that Carl tends to like,” Saun­ders told Bloomberg. And he al­so told the news ser­vice that every­body is prob­a­bly look­ing at Bris­tol-My­ers now, even if it’s just for a few min­utes of wist­ful think­ing.

Bris­tol-My­ers has had a steady drum­beat of bad news that has ham­mered away at its stock price and rep­u­ta­tion as a leader in the check­point field. As ex­pec­ta­tions on Op­di­vo have shrunk against Mer­ck’s bull­ish ad­vances with Keytru­da, Bris­tol’s mar­ket cap has suf­fered bad­ly. So what would have been all but un­think­able a year ago is now the one thing that is on every big play­er’s mind.

What fol­lows is a short list of big out­fits that would have the cash to pull off a pre­mi­um deal for a com­pa­ny with a mar­ket cap of $92 bil­lion. And you’ll find Pfiz­er at the top of just about every­one’s list.

Pfiz­er CEO Ian Read is the on­ly Big Phar­ma chief to show a re­al in­ter­est in a megamerg­er — though his play for As­traZeneca and Al­ler­gan was based on a tax in­ver­sion. Trump’s prospec­tive tax re­form plans, though, may per­suade Read that the time is ripe to go af­ter a com­pa­ny like Bris­tol-My­ers. And while Pfiz­er paid a record $850 mil­lion to part­ner with Mer­ck KGaA on a check­point, the phar­ma gi­ant wouldn’t mind vault­ing in­to a lead­er­ship role.

You can ex­pect plen­ty of lay­offs and tur­moil if any­thing like that goes ahead. Pfiz­er spent close to $8 bil­lion on R&D last year, com­pared to Bris­tol-My­ers’ $5 bil­lion. A tie-up would leave Pfiz­er look­ing to chop bil­lions of dol­lars in re­search spend­ing. But Bris­tol-My­ers R&D has been laud­ed over the years, with a rep that’s much bet­ter than Pfiz­er’s. So who’s to say where the ax might fall.

Read is one of the few Big Phar­ma CEOs who be­lieve that a megamerg­er can work, so long as you carve out all the du­pli­ca­tions.

“If you be­lieve you can re­or­ga­nize your re­search in­to pro­duc­tive small­er units, there is a log­ic to con­sol­i­da­tion of the in­dus­try by tak­ing out du­plica­tive ex­pens­es,” Read told re­porters re­cent­ly.

The prospect of any takeover would like­ly get Bris­tol-My­ers’ best and bright­est in the R&D op­er­a­tion pol­ish­ing up re­sumes and hunt­ing down job leads.

“You would have to think that the BMS sci­en­tists re­al­ized that they’ll be on the chop­ping block should this oc­cur,” John LaMat­ti­na, the for­mer R&D chief at Pfiz­er, tells me. “CVs are un­doubt­ed­ly be­ing up­dat­ed. Chances are that the sci­en­tists are spec­u­lat­ing more about a po­ten­tial ac­qui­si­tion than new sci­en­tif­ic pub­li­ca­tions.”

No­var­tis — an­oth­er mar­ket leader in R&D — al­so has cash and in­vest­ments it can con­vert to pay­ing off a deal like that. It al­so goes for high ef­fi­cien­cy, with no stone left un­turned in search for syn­er­gy. And Gilead has rou­tine­ly been list­ed as the Big Biotech in most need of a dra­mat­ic makeover. Gilead would be the one com­pa­ny most like­ly look­ing to keep much of the re­search group that Bris­tol has built. They all make the Bloomberg list.

Saun­ders may be think­ing about a Bris­tol-My­ers takeover, but com­ing up with that kind of cash af­ter com­mit­ting to a batch of bolt-ons would be no sim­ple mat­ter.

Norbert Bischofberger. Kronos

Backed by some of the biggest names in biotech, Nor­bert Bischof­berg­er gets his megaround for plat­form tech out of MIT

A little over a year ago when I reported on Norbert Bischofberger’s jump from the CSO job at giant Gilead to a tiny upstart called Kronos, I noted that with his connections in biotech finance, that $18 million launch round he was starting off with could just as easily have been $100 million or more.

With his first anniversary now behind him, Bischofberger has that mega-round in the bank.

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Francesco De Rubertis

Medicxi is rolling out its biggest fund ever to back Eu­rope's top 'sci­en­tists with strange ideas'

Francesco De Rubertis built Medicxi to be the kind of biotech venture player he would have liked to have known back when he was a full time scientist.

“When I was a scientist 20 years ago I would have loved Medicxi,’ the co-founder tells me. It’s the kind of place run by and for investigators, what the Medicxi partner calls “scientists with strange ideas — a platform for the drug hunter and scientific entrepreneur. That’s what I wanted when I was a scientist.”

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Af­ter a decade, Vi­iV CSO John Pot­tage says it's time to step down — and he's hand­ing the job to long­time col­league Kim Smith

ViiV Healthcare has always been something unique in the global drug industry.

Owned by GlaxoSmithKline and Pfizer — with GSK in the lead as majority owner — it was created 10 years ago in a time of deep turmoil for the field as something independent of the pharma giants, but with access to lots of infrastructural support on demand. While R&D at the mother ship inside GSK was souring, a razor-focused ViiV provided a rare bright spot, challenging Gilead on a lucrative front in delivering new combinations that require fewer therapies with a more easily tolerated regimen.

They kept a massive number of people alive who would otherwise have been facing a death sentence. And they made money.

And throughout, John Pottage has been the chief scientific and chief medical officer.

Until now.

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On a glob­al romp, Boehringer BD team picks up its third R&D al­liance for Ju­ly — this time fo­cused on IPF with $50M up­front

Boehringer Ingelheim’s BD team is on a global deal spree. The German pharma company just wrapped its third deal in 3 weeks, going back to Korea for its latest pipeline pact — this time focused on idiopathic pulmonary fibrosis.

They’re handing over $50 million to get their hands on BBT-877, an ATX inhibitor from Korea’s Bridge Biotherapeutics that was on display at a science conference in Dallas recently. There’s not a whole lot of data to evaluate the prospects here.

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Novotech CRO Ex­pands Chi­na Team as Biotech De­mand for Clin­i­cal Tri­als In­creas­es up to 79%

An increase in demand of up to 79% for clinical trials in China has prompted Novotech the Asia-Pacific CRO to rapidly expand the China team, appointing expert local clinical executives to their Shanghai and Hong Kong offices. The company is planning to expand their team by 30% over the next quarter.

Novotech China has seen considerable demand recently which is borne out by research from GlobalData:
A global migration of clinical research is occurring from high-income countries to low and middle-income countries with emerging economies. Over the period 2017 to 2018, for example, the number of clinical trial sites opened by biotech companies in Asia-Pacific increased by 35% compared to 8% in the rest of the world, with growth as high as 79% in China.
Novotech CEO Dr John Moller said China offers the largest population in the world, rapid economic growth, and an increasing willingness by government to invest in research and development.
Novotech’s 23 years of experience working in the region means we are the ideal CRO partner for USA biotechs wanting to tap the research expertise and opportunities that China offers.
There are over 22,000 active investigators in Greater China, with about 5,000 investigators with experience on at least 3 studies (source GlobalData).

Servi­er scoots out of an­oth­er col­lab­o­ra­tion with Macro­Gen­ics, writ­ing off their $40M

Servier is walking out on a partnership with MacroGenics $MGNX — for the second time.

After the market closed on Wednesday MacroGenics put out word that Servier is severing a deal — inked close to 7 years ago — to collaborate on the development of flotetuzumab and other Dual-Affinity Re-Targeting (DART) drugs in its pipeline.

MacroGenics CEO Scott Koenig shrugged off the departure of Servier, which paid $20 million to kick off the alliance and $20 million to option flotetuzumab — putting a heavily back-ended $1 billion-plus in additional biobuck money on the table for the anti-CD123/CD3 bispecific and its companion therapies.

Den­mark's Gen­mab hits the jack­pot with $500M+ US IPO as small­er biotechs rake in a com­bined $147M

Danish drugmaker Genmab A/S is off to the races with perhaps one of the biggest biotech public listings in decades, having reaped over $500 million on the Nasdaq, as it positions itself as a bonafide player in antibody-based cancer therapies.

The company, which has long served as J&J’s $JNJ key partner on the blockbuster multiple myeloma therapy Darzalex, has asserted it has been looking to launch its own proprietary product — one it owns at least half of — by 2025.

FDA over­rides ad­comm opin­ions a fifth of the time, study finds — but why?

For drugmakers, FDA advisory panels are often an apprehended barometer of regulators’ final decisions. While the experts’ endorsement or criticism often translate directly to final outcomes, the FDA sometimes stun observers by diverging from recommendations.

A new paper out of Milbank Quarterly put a number on that trend by analyzing 376 voting meetings and subsequent actions from 2008 through 2015, confirming the general impression that regulators tend to agree with the adcomms most of the time — with discordances in only 22% of the cases.

UP­DAT­ED: With loom­ing ‘apoc­a­lypse of drug re­sis­tance,’ Mer­ck’s com­bi­na­tion an­tibi­ot­ic scores FDA ap­proval on two fronts

Merck — one of the last large biopharmaceuticals companies in the beleaguered field of antibiotic drug development — on Wednesday said the FDA had sanctioned the approval of its combination antibacterial for the treatment of complicated urinary tract and intra-abdominal infections.

To curb the rise of drug-resistant bacteria and maintain the efficacy of the therapy, Recarbrio (and other antibacterials) — the drug must be used to treat or prevent infections that are proven or strongly suspected to be caused by susceptible gram-negative bacteria, Merck $MRK said.

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