top of page
  • Jonathan Poyer

M&A Activity to Fill Up Franchise Drug Pipelines




The S&P select biotech index started the week testing the top end of its trading range as another M&A deal hit the tape.



Novatris (NVS) announced an agreement to acquire Chinook Therapeutics (KDNY) for $3.2 billion upfront plus $300 million as contingent value right payments. The $40 upfront cash price represented a ~67% premium to the prior close. The deal continues the recent deal trend for mid-stage clinical companies with potential first or best in class therapies that still need to complete pivotal registration trials.



Pharmas' willingness to take on clinical and regulatory risk bodes well for clinical stage companies with differentiated assets targeting large markets. In contrast, subscale commercial opportunities or minimally differentiated assets will continue to face headwinds.



Paratek Pharmaceuticals (PRTK) agreed to be acquired by a couple of financial investors for a modest ~$125 million upfront, assumption of ~$260 million in debt and contingent value right payments for ~$50 million. PRTK's guided for core sales of approved sole asset Nuzyra of $125-135 million for 2023, making the upfront only ~1x current revenue.



The regulatory environment remains constructive with an FDA panel's voting unanimously in favor of the overall benefit-risk assessment for Biogen's (BIIB) LEQEMBI to treat Alzheimer's Disease. Approval and reimbursement expansion are expected on the July 6 PDUFA.



Investors were reminded the critical importance of trial design and patient management when Novocure (NVCR) lost ~$4 billion in market cap upon announcing 'positive' results from the phase 3 LUNAR trial in patients with non small cell lung cancer (NSCLC). The trial met the pre-specified primary endpoint, but nearly 66% of the patients in the trial failed to get the current standard of care PD1 therapy before enrolling. This called into question the relevance of the data with NVCR's Ttfields combination, especially since several analysts pointed out potential imbalances between the treatment arms.



Merck (MRK) took the gloves off in the fight to protect leading oncology drug Keytruda and diabetes medicine Januvia from pending price controls embedded in the so called 'Inflation Reduction Act' IRA. MRK filed a lawsuit against several government entities administering the law claiming it violates the constitution.



Additional IRA lawsuits are expected and further highlight the acute need for pharma to replenish pipelines as leading franchises may be lost sooner than expected.

14 views0 comments
bottom of page