Biopharma M&A and Strategic Collaboration Insights (Q3'23)

• 2023 Biopharma M&A started off very strong with the $42.8B acquisition of Seagen and several notable $1B+ acquisitions including Prometheus Biosciences, IVERIC bio, Chinook Therapeutics, Provention Bio, Inversago, and Reata Pharmaceuticals
  • Additionally, there has been considerable acquisitions of assets in YTD’23, including Bausch + Lomb’s purchase of Novartis’ XIRDA for $2.5B, Amphastar Pharmaceuticals’ acquisition of Baqsimi for $1.1B, and Alexion’s acquisition of Pfizer’s gene therapy (AAV) programs for $1.0B (all amounts include milestones)
  • At a high level, Q3’23 activity contracted from a very strong Q2’23 in terms of total TV and volume – Nonetheless, a very positive and notable quarter for M&A:
  • If the Pfizer / Seagen deal is excluded from Q1’23, Q3’23 had 22% more total TV and only one less deal than Q1’23 at 13
  • Share price premiums for publicly traded targets in Q3’23 shrunk significantly: ~82% vs. ~122% in Q2’23 – EV multiples remained relatively flat around 2.0x
  • Commercial and clinical stage companies make up the vast majority of YTD’23 M&A activity (~64% and ~31% of total TV) – Biologics (ADCs and mAbs) continue to be a favorite among acquirers, while there is still significant interest in small molecule M&A despite the IRA legislation
• Q3’23 Strategic collaboration activity was virtually identical to Q1’23 and Q2’23 in terms of volume; however, total deal value continued to rise, particularity in the form of milestone payments despite the continuing challenges in the equity market
• Collaboration deals for CV & Metabolic companies spiked during Q3’23 largely due to the Roche / Alnylam ($3.1B) and Novo Nordisk / Valo Health ($2.8B)
• Small molecules, ADCs, and especially cell & gene therapy focused companies remain the hottest targets for partnerships on a treatment modality basis
• Interest in Discovery / Platform companies continued in Q3’23, particularly in AI Discovery ($5.5B in Q3’23 alone)

• Excess cash reserves at Big Pharma and large biotech and the need for top line growth
• Steep and fast-approaching patent cliff for Big Pharma
• Mega-blockbusters set to lose exclusivity over the next six years represent the biggest threat to commercial drug sales in decades
• Three drugs facing near-term loss of exclusivity have generated $50.2B in combined LTM global revenues alone: Merck’s Keytruda ($22.9B), AbbVie’s Humira ($18.7B), and Bristol Meyer’s Opdivo ($8.6B)
• A challenging IPO market underpinned by low biotech valuations
• Profound clinical data and positive newsflow
• Declining COVID-19 vaccine revenue

• Ambiguous macroeconomic outlook coupled with rising costs / inflation concerns
• Increased FTC scrutiny (e.g. FTC issued Opinion and Order for Amgen / Horizon and Illumina / Grail)
• Fragile supply chains and escalating costs of talent / human capital
• Decreasing risk appetite to take on early-stage programs whose funding requirements will eat into profits
• Bottom line P&L impacts from the new drug price negotiation legislation beginning in 2026 signed in to law through the IRA

Please reach out to Michael Margolis, R.Ph. (MichaelA.Margolis@opco.com), Daniel Parisotto, Ph.D (Daniel.Parisotto@opco.com), or Robert Lewis (Robert.Lewis@opco.com) directly to request a copy.