The year 2019 started out strong with the announcement of Bristol Myers Squibb acquisition of Celgene for about $74 billion. In size, this deal undoubtedly trumps the deals struck in 2018 but, importantly, signals that oncology deals are still among the highest valued deals in the biotech and pharma industry. However, before delving further into the possible deal trends that could be expected in 2019, let us look back and honor some of the major acquisition and partnership deals that companies landed in 2018.

Among the biggest acquisition deals that were identified in 2018 (see Table 1), Takeda’s acquisition of Shire had the highest deal value and represents one of the largest overseas acquisition deals in Japanese history. This massive deal of $56 billion for a large asset portfolio, including rare disease therapeutics, indicates that the undersaturated rare disease therapeutics market is of high value due to regulatory incentives and high drug prices. Supporting this conclusion is the huge acquisition deal of $11.6 billion where Sanofi acquired Bioverativ to expand its portfolio of rare blood disorders. Apart from therapeutics, other high valued acquisition deals during the year involved consumer healthcare products, cell and/or gene therapies and assets in oncology.

 

In terms of partnership deals, the total value of the largest deals identified were in the billion range (see Table 2), where a strategic global collaboration deal between Eisai and MSD for marketed oncology product, Lenvima, yielded a potential total deal value of $5.76 billion, with a hefty upfront payment of $300 million. This was, however, not the deal with the highest upfront payment, as this title was snatched by Nektar Therapeutics. In February 2018, the company landed a partnership deal with Bristol Myers Squibb for an upfront payment of $1.85 billion for NKTR-214, a phase 3 CD122-biased agonist. The runner up for largest upfront payment was Swedish Orphan Biovitrum AB (SOBI), that acquired the U.S. rights to Synagis for an upfront payment of $1.5 billion from AstraZeneca. Other high valued partnership deals involved RNA interference therapeutics, cell and/or gene therapies and candidates/targets developed in oncology, neurodegenerative diseases, cardiovascular and metabolic diseases.

In 2019, an increase in high value deals and a huge spotlight on the growing Chinese market is not that farfetched.

At this point it is mere speculation, but there are certainly signals indicating upcoming high deal activity within biotech and pharma during 2019. Triggers in favor include the promise that U.S. President Trump’s tax reform will allow many bigger U.S. headquartered pharma companies to free up cash and spend it on deal-making, the completion of major announced deals and other driving factors that push companies to replenish their pipeline and fence off competition. Looking further afar, China is likely to become a key player within the pharma industry during 2019 with its reformed priority review and approval process allowing domestic drug developers to compete with well-established multination counterparts, says data and analytics company GlobalData.

Focusing only within  therapeutics, five areas stand out as particularly active in deal making; oncology, rare diseases, neurology/neurodegenerative, metabolic and cardiovascular diseases. Looking back at the trends of 2018 and previous years, we could in 2019 expect to see more deals in the rare disease space as there has been a steady increase in approvals of therapeutics in this area.

Oncology looks to be an continuous hot field where a high number of oncology deals could turn into reality since a lot of companies are still looking for the next oncology blockbuster or assets that could complement, or be combined with, their star oncology assets. Based on the recent approvals of CAR-T therapies, we could expect to see an increase of deals in cell and/or gene therapies oncology as well. This is also true for other therapeutic areas, especially those concerning rare genetic diseases or regenerative medicine.

A final area that should not be underestimated is autoimmune and inflammatory diseases. Following the arrival of next generation therapies and patent expiration of major products, it is certainly expected that deals in this space could increase in the prominent future.

Table 1. Top 10 M&A deals in 2018 in pharma and biotech

Acquired

(Acquirer)

Deal value Assets involved Date (Announced or completed)
Shire

(Takeda)

$56* billion Includes a portfolio of assets developed for rare disease Dec 5, 2018
Novartis Consumer Healthcare (GSK) $13 billion Consumer healthcare products including Sensodyne, Panadol, Voltaren and Nicotinell Mar 27, 2018
Bioverativ (Sanofi) $11.6 billion Assets in rare blood disorders including Eloctate and Alprolix Jan 22, 2018
Juno Therapeutics (Celgene Corp) $9 billion CAR-T and TRC therapies Jan 22, 2018
AveXis (Novartis) $8.7 billion Gene therapy platform and AVXS-101 in Spinal Muscular Atrophy Apr 9, 2018
Tesaro (GlaxoSmith Kline) $5.1 billion Includes major marketed products such as Zejula (niraparib), an oral poly ADP ribose polymerase (PARP) inhibitor currently approved for use in ovarian cancer Dec 3, 2018
Ablynx (Sanofi) $4.47 billion Nanobody technology and assets Jan 29, 2018
BTG (Boston Scientific) $4.2 billion Products in minimally-invasive procedures targeting cancer and vascular diseases and acute care pharmaceuticals. Nov 20, 2018
Merck (P&G) $3.9 billion Consumer Health Business of Merck (including brands such as Vicks, Metamucil, Pepto-Bismol, Crest and Oral-B) Apr 19, 2018

Table 2. Top 10 partnership deals 2018 in pharma and biotech

Licensee

(Licensor)

Deal value (deal breakdown) Asset of interest; latest development stage at deal signing; indication  Date
Eisai and MSD $5.76 billion ($300 million upfront, $650 million for option rights, $450 million in reimbursement in R&D, $385 million in clinical and regulatory milestones, and $ 3.97 billion in milestone payments) LENVIMA® (lenvatinib mesylate); marketed for thyroid cancer; phase 3 in renal cell carcinoma (RCC) Mar 7, 2018
Affimed and Genentech $5 billion ($96 million upfront and $5 billion in milestone payments and royalties on sale) NK cell engager-based immunotherapeutics to treat multiple cancer targets; research and discovery Aug 27, 2018
Dicerna Pharmaceuticals and Eli Lilly $3.7 billion ($100 million upfront, $100 million in equity stake, $350 million milestone payment for each developed drug) and mid-single to low-double digit royalties. RNA interference (gene silencing) technology; more than 10 experimental drugs to treat pain, neuro-degenerative diseases and cardio-metabolic disorders; research and discovery Oct 29, 2018
Arrowhead (Janssen) $3.7 billion ($175 million upfront, $75 million in equity stake, $1.6 billion in milestone for the HBV license and   $1.9 billion in option and milestone payments for 3 additional targets. ARO-HBV program; AROHBV1001, phase 1/2; and 3 additional RNA interferences therapeutics against new targets, preclinical, Chronic hepatitis B virus infection Oct 4, 2018
Nektar Therapeutics (Bristol Myers Squibb) $3.6 billion ($1.85 billion upfront and $1.78 billion in milestones) NKTR-214 (CD122-biased agonist), phase 3, several cancer indications Feb 14, 2018
Sangamo Therapeutics and (Kite, a Gilead Sciences Company) $3 billion ($150 million upfront and up to $3.01 billion in milestone payments) Zinc finger nuclease (ZFN) technology platform for the development of next-gen ex vivo cell therapies; research and discovery; oncology Feb 22, 2018
Immatics Biotechnologies GmbH and Genmab $2.8 billion ($54 million upfront and up to $550 million in milestone payments per candidate) Immatics’ XPRESIDENT®targets and T-cell receptor (TCR) capabilities; 3 targets and option to license 2 additional targets; research and discovery phase multiple cancer immunotherapies Jul 12, 2018
AstraZeneca and SOBI $2.3 billion ($1.5 billion upfront, $815 million in milestone payments)

 

U.S. rights to Synagis  (palivizumasb); marketed; prevention of serious lower respiratory tract infection (LRTI) caused by respiratory syncytial virus (RSV) Nov 13, 2018
Prothena and Celgene $2.2 billion ($100 million upfront, $50 million in equity investment and $2.1 billion in milestone and option payments) and royalties on net sales 3 proteins implicated in the pathogenesis of several neurodegenerative diseases, including tau, TDP-43 and an undisclosed target; research and discovery; Alzheimer’s disease, progressive supra nuclear palsy, frontotemporal dementia and ALS Mar 20, 2018
Wave Life Science and Takeda $2.2 billion ($110 million upfront, $60 million in purchase of shares, $60

million to fund research and $2 billion in milestone payments if 6 early development programs advance)

Several programs in neurological disorders (oligonucleotides): WVE-120101 and WVE-120102, phase 1b/2a;

Huntington’s disease and 4 preclinical within CNS; WVE-3972-01, ALS and FTD, research and preclinical; program targeting the ATXN3 gene for the treatment of SCA3, research and discovery

Feb 20, 2018