Biopharma executives make their predictions for the year ahead, from a bold forecast for the return of the megadeal to a plea for the slow, healthy recovery of the industry at large.
The J.P. Morgan Healthcare Conference is the chance for biopharma leaders to get out their crystal balls and try to predict the year ahead.
Mark McKenna, CEO of Mirador Therapeutics, boldly predicted the return of the megamerger. Prior to the Biden administration, these deals were more common. In 2019, Bristol Myers Squibb bought Celgene for $74 billion and AbbVie dished out $63 billion for Allergan. The largest deal in recent memory was Pfizer’s 2023 acquisition of Seagen for $43 billion. For all of 2024, Big Pharma kept their buys of biotechs to $5 billion or less.
“I think there’s going to be a realization that it’s tough to replace lost revenues with these smaller bolt-on transactions,” McKenna told BioSpace. Sure enough, J.P. Morgan kicked off with a nice-size transaction from Johnson & Johnson, which is set to acquire Intra-Cellular for $14.6 billion.
One area where 2024 did see some bigger numbers was in venture captial raises, with last year hailed as the return of the megaround with a large syndicate of investors. John Norris, managing director at HSBC Innovation, said at a panel discussion hosted by DLA Piper on Monday that he believes this trend is going to continue at least for a few more months into 2025. But then in the second half, financings are going to get smaller, and more traditional $10 million to $25 million series As will return with just a few investors.
“Right now, I feel like there’s an undercurrent of, I feel like I just need to deploy. And there is a safety in numbers. It feels good,” Norris said. “I think that that’ll change.”
With fewer members of the investor syndicate, the potential return for an M&A exit can be higher, especially if the company is aiming to sell early in its lifecycle, Norris explained.
At the same time, Norris has heard predictions of consolidation among smaller biotech. He says that’s not an easy transaction to pull off, so instead, he is betting that many companies are going to experience a “quiet demise.”
Paimun (PJ) Amini, senior director of venture investments in agriculture for Leaps by Bayer, noted that around J.P. Morgan he sees about two business development people for every venture capital representative, meaning there are too many companies out there for all of them to be funded. He does see consolidation mergers coming, but what may be different this time is that they don’t ultimately reveal how much the exit paid out.
“There are still deals to be done out there,” Amini said.
He also added that manufacturing costs are going to become even more important to consider early in the drug development process, particularly for complex modalities like T cell therapies. He said companies need to have an “understanding of the cogs of your product.”
Meanwhile Robert Dentice, managing director and co-head of healthcare investment banking at BTIG, foresees crossover investors becoming increasingly engaged in biotech. Dentice does not predict a “dramatic uptick” in M&A, with the overall number of deals likely to hover around the 20 mark like they did in 2024, he forecast. “There’s a lot more motivation on the seller’s side to try and make these deals happen.”
During an interview Monday, Sheila Gujrathi, biotech executive and co-founder of the Biotech Sisterhood, predicted that more deals and financings will flow out of the J.P. Morgan meeting. In deal transaction notes that are revealed via the SEC after a buyout, this meeting is often name dropped as where discussions began. Gujrathi said she thinks that people may wait to see the new administration take over before moving, but the “great deal flow” so far is encouraging.
Fellow Biotech Sisterhood co-founder Julia Owens is optimistic that the biopharma industry is returning after a prolonged downturn. But she said she hopes the industry doesn’t go too crazy and return to the unsustainable highs of the post-pandemic frenzy.
“We really got over our skis as an industry during the bubble that just deflated,” Owens, who currently serves as CEO of a stealth biotech, told BioSpace. “I am optimistic for this year, but I hope we don’t come roaring back, because I’d like to see us in a healthy, gradual way rebuild and not let people just think we’re right back to the roaring days again. I don’t think that’s great for our industry.”
