Biotech Dealmaking Heats Up as Private Capital Charges Back In

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A wave of multibillion dollar buyouts has swept the beaten-down biotech sector in recent months, marking a potential turning point for an industry hammered throughout 2022 – 2023.

With valuations of public companies still depressed, flush private investors have stepped up acquisitions of promising drug developers to bolster pipelines for the long-term. And in a bullish sign for the strategic direction of the space, therapeutics targeting high unmet needs and novel modalities remain key areas of focus amid dealmaking.

As macro gloom recedes, the renewed embrace of biotech M&A highlights a pivot back toward the innovation-driven spending required to sustain growth post-pandemic.

BMS Kicks Off Buying Spree With $13.2B Turning Point Deal

Bristol Myers Squibb fired the starting gun on big-ticket biopharma deals in October, announcing a $5.8 billion purchase of Mirati Therapeutics (MRTX). The buyout delivered a 122% premium in order to land Mirati’s promising portfolio of precision cancer medicines.

Market observers viewed the unsolicited, $58 per share bid as a credible benchmark of intrinsic value vigilantly researched by a strategic acquirer. Immediately in the deal aftermath, similar development-stage oncology names rallied sharply as traders priced in new takeout probabilities.

In fact, suitors moved swiftly to capitalize on improved biotech sentiment, with Horizon Therapeutics agreeing to a $26.4 billion around the same time. The transaction marked 2023’s largest healthcare buyout, further reinforcing peak valuations remain attainable for commercial-stage rare disease names.

Scaling Up to Compete in Gene Therapy

Gene therapy remains one especially alluring area for dealmaking despite lofty price tags. These ultra-rare disease medicines come with cure potential that commands premium sales and reimbursement pricing power.

Recognizing the imperative to bulk up gene therapy capabilities, Pfizer ponied up $5.4 billion to reinforce its genetic medicines pipeline through the acquisition of French outfit Vivet Therapeutics. The move added Vivet’s promising gene therapy for Wilson disease, along with manufacturing strengths across multiple delivery mechanisms.

And gene editing pioneer Sangamo Therapeutics is selling off its cell therapy assets to Sanofi for $700 million as it refocuses efforts around in vivo gene insertion. The deal hands Sanofi disruptive cell therapy technology utilizing precisely engineered zinc fingers to correct disease-causing mutations.

Analysts say more buyouts centered on next-gen platforms are likely on the horizon as drug developers vie for leadership in areas forecast to reshape therapeutic spaces.

Take a look at more biotechnology companies by looking at Noble Capital Markets’ Senior Research Analyst Robert LeBoyer’s coverage universe.

Private Capital Eagerly Steps in to Back Innovation

Beyond M&A from strategic acquirers, private equity firms have swooped in to capitalize on depressed biotech valuations. The robust dry powder levels built up during the boom years leave private investors eager to allocate while achieving advantageous cost bases.

Among notable deals, Angel Pond Capital teamed up with life science investor OrbiMed to take gene therapy biotech Generate Biomedicines private for $478 million. The transaction represented a 130% premium to ensure locking up Generate’s base editing technologies believed to be capable of correcting over 75% of known point mutations.

In cybersecurity and enterprise software, sponsor-led take privates had utterly dominated deal flow in 2022. But order books are now once again filling up with biotech buyouts from special purpose acquisition vehicles, highlighting a normalization in deal dynamics after last year’s freeze-out from rate-sensitive private market valuations.

Market Recovery Taking Shape

The fresh upswing in biotech M&A follows a wave of dip buying from some the world’s largest asset managers in shares of industry leaders like Vertex Pharmaceuticals and Regeneron Pharmaceuticals. Warren Buffett’s Berkshire Hathaway has been particularly aggressive stepping in to purchase stakes in key biopharma bluechips.

Meanwhile, the fund-raising backdrop continues improving for earlier stage biotechs as well after deal activity all but shuttered for much of 2023. Multiple debt offerings and venture rounds have successfully priced in recent months, ensuring the all-important continuity of innovation cycling.

With fundamentals stabilizing and access to capital normalizing, the environment for biopharma dealmaking has markedly improved. Expect the momentum to carry through 2024 as drug developers position through M&A for the next, post-pandemic leg higher while private capital readily supports compelling technologies at discounted prices. The long-term health of the biotech ecosystem depends on transactions advancing today’s high-potential assets, and the industry appears to have emerged from its lull ready to strike the necessary deals.


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