Analysts predict a booming year for mergers and acquisitions, powered by obesity drug sales and pressure from upcoming patent expirations.
Hand passing off bag of money over financial background/Taylor Tieden for BioSpace
This year has seen a boom in biopharma mergers and acquisitions, with six acquisitions over a billion dollars so far. In light of the massive revenues pharma companies are generating in the obesity space and the pressure many companies are under from looming loss of exclusivity (LOE) on top drugs, analysts don’t see it slowing down anytime soon.
“We have a lot of pressure from LOE, which essentially kind of forces us to go out and buy new assets,” said Christiana Bardon, co-managing partner at MPM BioImpact.
Analysts predict there will be more than $40 billion in annual revenue at risk due to pharma LOE over the next five years, affecting key drugs owned by almost all of the big players, she said. In addition to that, in Bardon’s view several biotechs have achieved a level of success needed to graduate from startups to the prime time category, meaning they have the financial heft to begin making acquisitions of their own.
The Graduates:
Vertex Pharmaceuticals
From a cash flow perspective, Vertex is very capable of buying other companies, estimated to be worth over $114 billion and having upward of $10 billion in cash, Bardon said.
Indeed, on May 20 Vertex completed a $4.9 billion acquisition of Alpine, adding to the 10 other deals the company closed in 2023 that fit its corporate and R&D strategy, a spokesperson for the company told BioSpace. The acquisition includes Alpine’s lead asset, povetacicept, a dual antagonist of the BAFF and APRIL cytokines used to treat autoimmune and inflammatory diseases.
“We’re particularly excited about the Alpine transaction because we believe strongly that Vertex’s capabilities will accelerate povetacicept’s development and bring this potential best-in-class medicine to patients faster, while adding important protein engineering and immunotherapy expertise to Vertex’s toolbox,” the spokesperson said in an email.
Regeneron Pharmaceuticals
Regeneron is now a $109 billion company, in a similar league to Vertex, but with even more cash: $17 billion, and only $2.7 billion of debt, Bardon said.
“If you look at that market cap, even relative to basically all of the other pharmas, they are now bigger than Bristol-Myers Squibb and GSK,” Bardon said. Those companies have market caps of $83.6 billion and $93.6 billion respectively.
“We are interested in select collaborations or acquisitions that complement our existing portfolio,” Nouhad Husseini, senior vice president of business development and corporate strategy at Regeneron, told BioSpace in an email. “We look for companies and collaborators who can enhance or expand upon Regeneron’s extensive in-house capabilities, strengthening our collective ability to address serious diseases.”
The company’s most recent acquisition, of 2seventy Bio, was completed April 1, giving Regeneron all of 2seventy’s oncology and autoimmune preclinical and clinical-stage cell therapy pipelines. In 2023, Regeneron also acquired Decibel Therapeutics, strengthening the company’s gene therapy programs.
“Investing in innovation remains our top capital allocation priority,” Christopher Fenimore, senior vice president of finance and chief financial officer of Regeneron, said in a Q1 earnings press release.
Specialty:
Biogen
At $33 billion, Biogen is a smaller company, Bardon said, “but they obviously generate a lot of cash flow.” Their strategy is more targeted than that of larger competitors, primarily focused on neurology, she said. But recent acquisitions might indicate the company is branching out of that specialty.
Expanding from neurology into immunology, the company announced its most recent acquisition of HI-Bio for $1.15 billion on May 22. HI-Bio’s lead asset is felzartamab, an investigational anti-CD38 monoclonal antibody entering Phase III studies for both primary membranous nephropathy and antibody-mediated rejection in kidney transplant recipients.
“We believe this late-stage asset … is a strategic addition to the Biogen portfolio as we continue to augment our pipeline and build on our expertise in immunology,” said Biogen head of development Priya Singhal in a statement.
To Watch:
Moderna
Moderna is sitting on a sizable amount of cash generated from the COVID-19 vaccine, Bardon said. It’s a $55 billion company with over $8 billion in hand.
“There’s a little bit more insecurity around that because of the volatility associated with the COVID vaccine,” she said. “I think they would love to diversify their business . . . especially in areas pertaining to new mRNA technologies.”
Cancer vaccines could be a logical area to expand in, since the company is already finding success with its experimental mRNA vaccine in patients with high-risk melanoma.
Mollie Barnes is a freelance science writer. Reach her at mollie@100yearsco.com. Follow her on Threads and Instagram @shejustlikedtogo or LinkedIn. See more of her work at molliebarnes.contently.com.
Correction (June 12): This story was updated to state that Vertex is a $114 billion company, not that it has that much revenue. BioSpace regrets the error.
