Attractive M&A options? Analysts break down what's hot right now

2022-10-10

基因疗法疫苗加速审批并购合作

With the number of biopharma acquisitions in 2022 so far falling below recent years, the investment bank SVB Securities on Sunday published a new report on M&A and where there may be some action in the near term.

As far as the acquirers, the report notes that large biopharma companies’ execs have a “broad appetite for M&A and BD,” and companies like Pfizer and Johnson & Johnson are both carrying cash balances of about $33 billion each as of June 30, while other companies like Novartis with $20 billion, and Bristol Myers Squibb with $13 billion, can take the lead.

Others, however, may struggle with lost exclusivities later this decade, and look to offset those losses with up-and-comers.

“Based upon our forecasts, we note low 2021-30 sales growth rates for JNJ (1%), ABBV (1%), AMGN (-1%), GILD (1%), and REGN (0%), with many companies facing key losses of exclusivity mid-late decade,” the SVB Securities report says, adding that companies may be wary of the Federal Trade Commission’s recent pledge to crack down on pharma mergers, which could potentially stop any huge deals:

We expect large-cap biopharma to largely build upon their core therapeutic areas, and we anticipate companies could utilize both M&A and collaborative partnerships to supplement their portfolios. But with M&A, it is difficult to predict individual companies’ future actions because targets need to be willing to sell, and it is a highly competitive market. We note that partnerships can be very successful (e.g., ABBV and GMAB, SAN FP and REGN) and in some cases, these can be precursors to future acquisitions (PFE and Biohaven).

Pfizer’s Covid-19 vaccine partner BioNTech is another company that, while indicating they want to invest internally to develop an immuno-oncology pipeline, “could be a major acquirer” thanks to its “impressive cash reserve.”

As far as attractive acquisition targets, the report points to rare disease companies, which “have historically been a hot spot for M&A,” and SVB Securities said it believes “this trend is poised to continue with both platform- and product-based names approaching key de-risking catalysts.”

For instance, an FDA approval for BioMarin’s hemophilia A gene therapy Roctavian, following a recent EMA thumbs-up, could make it a likely target, especially with the company’s state-of-the-art manufacturing facility, the report says. Analysts also point to Denmark-based Ascendis Pharma, and its platform “that could improve the PK/PD of a plethora of agents,” as well as New Jersey-based Insmed and its “rare pulmonary expertise.”

Sarepta Therapeutics and its DMD exon skipper portfolio “continues to see meaningful sales growth,” and the analysts said they “expect interest in the name to pick up in light of the recent BLA filing for accelerated approval of their DMD micro-dystrophin GTx SRP-9001.” That would be the company’s fourth accelerated approval filing.

By the end of October, Amicus Therapeutics will also see an up-or-down decision from FDA on its AT-GAA, an investigational two-component therapy for the rare Pompe disease, and which SVB Securities thinks will be approved eventually, particularly once a China-based manufacturing facility can be inspected by the FDA.

FDA hits Amicus with delay on 'breakthrough' Pompe drug

Travere Therapeutics is another company that could get bought, the report says, particularly if FDA signs off on sparsentan, a dual endothelin angiotensin receptor antagonist for the treatment of IgA nephropathy, in November. No advisory committee is planned for that indication, although the company said in August that the FDA wasn’t as keen on its other potential accelerated approval indication for sparsentan to treat a form of kidney damage, known as focal segmental glomerulosclerosis.

Travere fails to convince regulators to consider accelerated approval for a rare kidney disease — again

The report also notes that companies like Gossamer Bio, Madrigal Pharmaceuticals, Prometheus Biosciences, DICE Therapeutics and Chinook Therapeutics have important clinical data readouts coming soon that could make them attractive buyouts if the data are positive.

In the targeted oncology space, the report points to Agios Pharmaceuticals, Zentalis Pharmaceuticals, Seagen and Merus as companies with “high potential strategic interest” and broad opportunities in attractive disease areas.

While Merck’s potentially stalled $40 billion buyout of Seagen may or may not be dead, the report notes that acquisition speculation will continue “until investors are satisfied with the company’s revenue-potential” after its mega-blockbuster cancer drug Keytruda loses exclusivity in 2028.

Other hot targets?

Smaller biotechs like Pardes or Enanta, which are working on next-gen Covid antivirals with Phase II data readouts in 2023, “which could be important inflection points.”

Germany-based Affimed, “for their innate cell engagers and three clinical assets by early next year.”

Arcellx, and its autologous BCMA CAR-T, with pivotal trials starting this year in multiple myeloma. “ACLX would be easy to tuck into an existing autologous CAR-T infrastructure, as the company has outsourced manufacturing of CART-ddBCMA, which also has signs of being a relatively easy product to manufacture,” the report says.

Aldeyra Therapeutics, which analysts expect will nab an approval for its submission of reproxalap in dry eye disease.

RAPT Therapeutics and its lead program, an oral CCR4 antagonist, “with pipeline in a product potential in autoimmune diseases.”

Netherlands-based argenx is also seen “as a leader in the autoimmune disease space that could provide significant strategic value to an acquirer looking to bolster their presence in this area.”

Celldex Therapeutics, which is developing barzolvolimab in both chronic spontaneous urticaria and chronic inducible urticaria, which is a type of hives, with its “unique mast cell-depleting mechanism of action and encouraging data to date suggesting a differentiated efficacy profile.”

And while gene editing has garnered a growing following, with major players like CRISPR Therapeutics and Vertex partnering, the report says that in the wider space, “none of these companies is mature enough, in our view, to generate near-term unpartnered revenue and EPS accretion to an acquirer. This makes the gene editing group screen less attractively on these metrics vs traditional revenue/EBITDA-generating rare disease companies in the midst of a product launch/growth stage.”