< PreviousM&A ROUND-UP 10 Pharma Business International www.pbiforum.net Rounding off a quiet year © stock.adobe.com/ zhenya Rounding off a quiet year While 2022 has been a quieter year for M&A, significant deals continue to be made. 10-13.qxp_Layout 1 08/12/2022 11:09 Page 1Pharma Business International 11 www.pbiforum.net M&A ROUND-UP 2022 has been a relatively subdued year for M&A in the pharmaceutical industry, with little of note particularly in big ticket deals - despite the impending patent cliff and record Big Pharma cash reserves. Indeed one of the largest acquisitions (at time of writing) came in the middle of the year with Pfizer’s $11.6bn swoop for Biohaven Pharmaceuticals, the maker of migraine therapy NURTEC ODT (rimegepant). Reports point to rising costs and the uncertain global economy as potential reasons for calmer activity, while a turn to partnering is also being seen. That doesn’t mean however that significant deals aren’t being done. Pharma Business International details some of the acquisitions you may have missed since our last issue. Merck — Imago BioSciences Merck, known as MSD outside the United States and Canada, and Imago BioSciences have entered into a definitive agreement under which Merck, through a subsidiary, will acquire Imago for $36.00 per share in cash for an approximate total equity value of $1.35bn. Imago is a clinical stage biopharmaceutical company developing new medicines for the treatment of myeloproliferative neoplasms (MPNs) and other bone marrow diseases. Imago’s lead candidate bomedemstat (IMG-7289), an investigational orally available lysine-specific demethylase 1 (LSD1) inhibitor, is currently being evaluated in multiple Phase 2 clinical trials for the treatment of essential thrombocythemia (ET), myelofibrosis (MF), and polycythemia vera (PV), in addition to other indications. “We continue to invest in our pipeline with a focus on applying our unique capabilities to unlock the value of breakthrough science for the patients we serve,” said Robert M. Davis, president and Chief Executive Officer, Merck. “This acquisition of Imago augments our pipeline and strengthens our presence in the growing field of hematology.” The transaction is expected to close in the first quarter of 2023. AstraZeneca — Neogene Therapeutics AstraZeneca, meanwhile, has agreed to acquire Neogene Therapeutics, a global clinical-stage biotechnology company pioneering the discovery, development and manufacturing of next-generation T-cell receptor therapies (TCR-Ts) that offer a novel cell therapy approach for targeting cancer. AstraZeneca will acquire all outstanding equity of 12 Á 10-13.qxp_Layout 1 08/12/2022 11:09 Page 212 Pharma Business International www.pbiforum.net Neogene for a total consideration of up to $320m, on a cash and debt free basis. This will include an initial payment of $200m on deal closing, and a further up to $120m in both contingent milestones- based and non-contingent consideration. TCR-Ts are emerging as a promising therapeutic modality in cancer treatment. Most current cell therapy approaches in oncology focus on modifying the immune system’s T cells to recognise proteins expressed on the surface of cancer cells. In contrast, TCR-Ts can recognise intracellular targets, including cancer- specific mutations, thereby potentially unlocking targets previously inaccessible using cell therapies. Neogene will operate as a wholly owned subsidiary of AstraZeneca. The transaction is expected to close in the first quarter of 2023. Biocon Biologics — Viatris’ global biosimilars business Furthermore, Biocon Biologics, a subsidiary of Biocon, recently completed its acquisition of the global biosimilars business of its partner Viatris. The $3bn deal saw Biocon Biologics make an upfront cash payment of $2bn to Viatris and issue Compulsorily Convertible Preference Shares (CCPS) in the company valued at $1bn, equivalent to an equity stake of at least 12.9% on a fully diluted basis. With the closing of the deal, Biocon Biologics has full ownership of its collaboration assets, bTrastuzumab, bPegfilgrastim, bBevacizumab, bGlargine, bAspart, bPertuzumab and bGlargine 300U, as well as Viatris’ rights for the in-licensed immunology products of bAdalimumab and bEtanercept. Biocon Biologics has also acquired Viatris’ rights for bAflibercept, which is used to treat several ophthalmology conditions. Viatris has been the ‘first to file’ bAflibercept in the U.S. Kiran Mazumdar-Shaw, executive chairperson, Biocon Biologics, said: “The completion of the acquisition of Viatris’ global biosimilars business is an historic inflection point in Biocon Biologics’ journey of becoming a world leading, fully integrated biosimilars enterprise, committed to serve patients’ needs for affordable access to essential biomedicines. It will fast-track our direct entry into several advanced and emerging markets. This acquisition builds on our decade-long partnership and will enable us to realize our vision of addressing global health inequities.” Lilly — Akouos Eli Lilly and Company has announced a definitive agreement to acquire Akouos, a precision genetic medicine company that is developing a portfolio of first-in- class adeno-associated viral gene therapies for the treatment of inner ear conditions, including sensorineural hearing loss. Under the terms of the transaction, Lilly will acquire all of the outstanding 10-13.qxp_Layout 1 08/12/2022 11:09 Page 3Pharma Business International 13 www.pbiforum.net M&A ROUND-UP shares of Akouos for $12.50 per share in cash payable at closing, plus one non- tradeable contingent value right (CVR) of up to $3.00 per share for a total consideration of up to $15.50 per share in cash (an aggregate of up to approximately $610m). The deal has been approved by the boards of directors of both companies. Akouos has integrated expertise across otology, inner ear drug delivery, and gene therapy with the goal of addressing the needs of people living with disabling hearing loss worldwide. Akouos’ lead product candidate, AK-OTOF, is a gene therapy for the treatment of hearing loss due to mutations in the otoferlin gene (OTOF). Additional pipeline programs span across multiple inner ear conditions, and include AK-CLRN1 for Usher Type 3A, an autosomal recessive disorder characterized by progressive loss of both hearing and vision; GJB2 (which encodes connexin 26) for a common form of monogenic deafness and hearing loss; and AK-antiVEGF for the treatment of vestibular schwannoma. AbbVie — DJS Antibodies Moreover, AbbVie has acquired DJS Antibodies, a privately-held UK-based biotechnology company dedicated to discovering and developing antibody medicines that target difficult-to-drug disease-causing proteins, such as G protein-coupled receptors (GPCRs). DJS’s lead program is DJS-002, a potential first-in-class lysophosphatidic acid (LPA) receptor 1 (LPAR1) antagonist antibody currently in investigational preclinical studies for the treatment of Idiopathic Pulmonary Fibrosis (IPF) and other fibrotic diseases. IPF is an aggressive, high mortality disease caused by fibrotic scarring in the lungs and remains an area of high unmet medical need. Under the terms of the agreement, AbbVie will pay DJS shareholders approximately $255m in cash at closing for the acquisition of DJS. DJS shareholders remain eligible for potential additional payments upon the achievement of certain development milestones related to the success of the DJS-002 program. “We are excited to bring the innovative science behind DJS-002 and the talented team at DJS to AbbVie,” said Jonathon Sedgwick, Ph.D., vice president and global head of discovery research, AbbVie. “This acquisition will deliver new capabilities to enhance our current antibody research activities, an opportunity to strengthen our immunology portfolio, and provide a strong foothold for expanded research efforts in the dynamic bioscience hub in Oxford, UK.” Viatris — Oyster Point Pharma & Famy Life Sciences Finally, global healthcare company Viatris has announced that it intends to create an ophthalmology franchise by acquiring Oyster Point Pharma and Famy Life Sciences. Under the terms of a definitive agreement, Viatris has agreed to acquire Oyster Point for $11 per share in cash upfront through a tender offer. In addition, each Oyster Point stockholder will receive one non-tradeable contingent value right, representing up to an additional $2 per share contingent upon Oyster Point’s achieving certain metrics based on full year 2022 performance. Viatris is aiming to close the acquisition of Oyster Point in Q1 2023, subject to customary closing conditions, including receipt of regulatory approval, and tender acceptance of more than 50% of Oyster Point shares. Concurrently, the company also expects to acquire Famy Life Sciences, which has a complementary ophthalmology portfolio. The company anticipates these acquisitions have the potential to add at least $1bn in sales by 2028. As a result of the expected strong top-line growth, the company anticipates it will also add at least $500m in adjusted EBITDA by 2028. Together, the two acquisitions have an aggregate purchase price of approximately $700- $750m which Viatris expects to fund with cash on hand. © stock.adobe.com/leowolfert 10-13.qxp_Layout 1 08/12/2022 11:09 Page 4END OF YEAR SUCCESS STORIES 14 Pharma Business International www.pbiforum.net I t goes without saying that 2022 has been a difficult year – in fact, we can almost expect that in 2030 the industry will look back and unanimously agree that the 2020’s were some of the hardest times in medicine. We had the pandemic in 2021 stretching the industry thin, a huge shift in public perception and trust in pharmaceuticals thanks to online misinformation that has lasted through 2022, and now we’re looking at resurgences of new variants of COVID toward the end of the year. As bad as all that sounds – and is – it’s worth remembering that the worth of a company should be considered in how they adapt to times of crisis, for it’s easy to do well in fair weather but the true mettle of a person or business is in how they handle the harder times. There is no doubt the COVID-19 pandemic had a profound impact on the industry and shaped us going into 2022. This has been both a negative and a positive, for while it tested and strained many, it also led to optimisations and leaner business practices as companies were able to test themselves in harsh conditions, and many adapted to survive in it and thus to thrive outside of it. At the end of 2021 the global pharmaceutical industry was said to be worth $1.4 trillion. It is expected to reach 2022 The year has been a challenging one for sure, but as we look back on 2022 we see it’s also been a time for growth – and that 2023 may continue the same trend. Looking back on 14-17.qxp_Layout 1 08/12/2022 11:09 Page 1Pharma Business International 15 www.pbiforum.net END OF YEAR SUCCESS STORIES a staggering $2.4 trillion by the end of 2029, so there is obviously growth ahead, but that has not come without its fair share of challenges. Moving on from COVID-19, the year has been marked as one with a large number of originated drugs and a strong R&D pipeline of new IP to market. The focus is on moving back to business as usual, and away from pandemic responses and vaccines. In terms of the biggest innovators this year was Novartis, with 129 originated drugs, followed closely by Roche with 120 and Pfizer with 101. Bristol-Myers Squibb, AstraZeneca, Sanofi and Johnson & Johnson followed close behind with between 80 – 100 originated drugs in the year. It’s worth noting that the top ten have had a somewhat stagnant origination score compared to previous years, but then 2022 is not an average year, and a lot of this can be attributed to a rather quiet mergers and acquisitions showing, amongst the top ten anyway. Whilst Novartis and Pfizer were hardly silent in the acquisitions front, they were not the largest nor memorable, especially not compared to other, more recent, acquisitions of theirs. What might come as a surprise is to 16 Á © stock.adobe.com/motorolka 14-17.qxp_Layout 1 08/12/2022 11:09 Page 2END OF YEAR SUCCESS STORIES 16 Pharma Business International www.pbiforum.net hear that the market has grown as well. There are over 5,400 companies involved in pharma R&D as of the writing of this article, up from 5,100 in 2021. This represents an increase of just over 6%, which is not insignificant given spiralling inflation and the fact we’re in a post- pandemic economy. Similarly, the number of newly identified companies this year comes in at a little over 1,000, which is a far more impressive figure, as it means that 19% of all companies developing drugs in 2022 are start-ups that emerged in the last 12 months. Of course, many of these smaller companies are destined to be gobbled up by the pharma giants, as has become standard procedure by now. Despite this, it still shows that while 2022 has by no means been an easy year, it has still been one of many opportunities, and the sector continues to grow. In terms of market share of companies, the USA remains at the top with over 46% of all pharma R&D companies, while the EU, China, India and the Asian region are all building their own sizeable share of the market. Looking ahead to 2023, a strong focus for many will be on cooperation between pharmaceutical companies and governments, and how those will shape up. Contentious elections in the US have led to tensions and the rise of a right wing that have, in many cases, taken an aggressive stance toward pharma for perceived sleights against freedom, free will and free speech – much of this imagined. With the cost of living also rising in many countries, pushing overall health and quality of life down, it’s likely that the demand for pharmaceuticals will rise, but so too might the list of those unable to afford them, and this inevitably brings the predatory market that is counterfeit drugs. The future, then, might be more about winning back the trust of the people, fighting misinformation, and making sure everyone is aware of the changes in the market. © stock.adobe.com/Oleksandr 14-17.qxp_Layout 1 08/12/2022 11:09 Page 3Pharma Business International 17 www.pbiforum.net END OF YEAR SUCCESS STORIES © stock.adobe.com/benjaminnolte 14-17.qxp_Layout 1 08/12/2022 11:09 Page 4FINANCE AND INVESTMENT 18 Pharma Business International www.pbiforum.net Reckless investments and a cautious future Reckless inv estments and a cautious future 18-21.qxp_Layout 1 08/12/2022 11:10 Page 1Pharma Business International 19 www.pbiforum.net FINANCE AND INVESTMENT © stock.adobe.com/Sakchai I nvestment and finance have been a cagey subject of late due to the uncertain and volatile nature of the current global economy. The pandemic, the war in Ukraine, and now a recession and soaring inflation across the world, have left investors uncharacteristically cautious, and this has influenced investment behaviour. However, it may well be that this caution will cost them money in the long run. Last year was an unusual one in many regards, called by some the “year of records” and 2021 showed an incredible number of start- ups and a host of mergers and acquisitions that some might have even called reckless. The pharma market was booming and investors were keen to get involved, especially after the huge attention the market received off the back of COVID vaccinations. However, this led to a trend that many failed to recognise might well be a one off situation. The sudden rise of IPOs, SPACs and M&As is not common for the pharma industry, or at least not to the degree they appeared in 2021, and they have indeed dropped a little in 2022. 2021 was a record year when it came to many parts of the pharma industry, and this led some investors to have unrealistic expectations. With 2022 being more on par with normal, and thus disappointing many, we may be looking at a cautious outlook for 2023. 20 Á 18-21.qxp_Layout 1 08/12/2022 11:10 Page 2Next >