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  • Jonathan Poyer

News From the JP Morgan Healthcare Conference - M&A Action & Forecasts





Monday at the JP Morgan Healthcare conference delivered three $1 billion+ bolt on M&A transactions, seemingly indicating deal count will be trending higher in 2023.


Nevertheless, the S&P select biotech index closed down 2.25% as none of the targets were in popular buyside takeout baskets that subsequently sold off after appreciating into the conference. Likewise, none of the deals reached the threshold of blockbuster status ($10-25 billion+).



Chiesi Farmaceutici S.p.A. (certified B Corp) agreed to acquire Amryt Pharma Plc (AMYT) for $14.50 upfront cash or $1.25 billion representing a ~107% premium to the prior close, plus a $2.50 contingent value right (CVR) for up to an additional ~$225 million in payments based on pipeline progress. The deal is a smaller scale version of Amgen's (AMGN) acquisition of Horizon Therapeutics (HZNP) from last December as it expands Chiesi's commercial rare disease offerings.


Commercial rare disease portfolio expansion also motivated Ipsen SA's (IPN) acquisition of Albireo Pharma (ALBO). The $42.00 per share price in cash or $952 million upfront corresponded to an 84% premium to the prior close. The deal also included a CVR of $10 per share (~$225 million) upon FDA approval of lead drug Bylvay in biliary atresia by Dec 31 2027. Departing from the trend of purchasing commercial assets, AstraZeneca PLC (AZN) agreed to buy CinCor Pharma (CINC) for $1.3 billion upfront or $26 per share representing a >100% premium to the prior close. The deal also included a $10 per share CVR for an additional $500 million based on a regulatory submission for the lead asset, baxdrostat. CINC had been trading at a negative enterprise value (EV = market capitalization net of cash and debt) following mixed results in a mid stage clinical trial last November. The upfront deal price was essentially the same value that CINC was trading at before the mixed data release and well below the 2022 high of ~$43 per share. Earnings announcements, preannouncements and forward guidance leading into and at the JP Morgan Healthcare conference continued to validate the robustness of the business model selling novel therapeutics in the current economic environment. Walgreens Boots Alliance (WBA) set the stage by reporting comparable US retail pharmacy RX excluding vaccines grew 2.1% vs a year ago and 2.2% Q on Q. A number of SMID+ cap companies provided numbers ahead of consensus including Argenx SE (ARGX), Aurinia Pharmaceuticals (AUPH), Collegium Pharmaceuticals (COLL), Revance Therapeutics (RVNC) and 2seventy bio (TSVT). Many others were generally in-line including BioCryst Pharmaceuticals (BCRX), Exelixis (EXEL) and Ultragenyx (RARE). The few that came in below analyst estimates are generally still projecting growth for 2023+ including Insmed (INSM), Ironwood Pharmaceuticals (IRWD) and Pacira Biosciences (PCRX). Investors will be closely watching the launch of Eisai (4523 JT) and Biogen's (BIIB) newly approved Alzheimer's therapy Leqembi (lecanemab-irmb). Annual pricing for Leqembi was set at $26,500, well below that of previously launched Aduhelm, but sales will likely be modest until CMS reimbursement is in place around year end. Fundamental data updates continued to move stocks. Viridian Therapeutics (VRDN) reached an all time high on additional favorable updated data from their thyroid eye disease (TED) program. Arrowhead Pharmaceuticals (ARWR) traded off ~20% as data from a phase 2 trial in patients with Alpha-1 Antitrypsin Deficiency-Associated Liver Disease (AATD-LD) failed to impress. Likewise, Graphite Bio (GRPH) fell >50% to a negative EV on news the first patient in their phase I CEDAR trial developed prolonged pancytopenia, a severe adverse event. Fate Therapeutics (FATE) also cratered >50% to a negative EV on announcing an end to a collaboration with Johnson & Johnson / Janssen (JNJ), discontinuation of several pipeline programs and a reduction in force (RIF) of ~60%. These drastic changes extended the cash runway to 3 years from the previous ~1 year and focuses substantially all of the company's remaining resources on what management believes are the most differentiated product opportunities. FATE was a former high flyer and is now down >95% from the March 2021 peak of ~$10 billion market cap. It seems capital efficiency and a high bar for program advancement are coming back into vogue as the era of infinite money printing has come to an end.


Likewise, RIF announcements were also made by Century Therapeutics (IPSC, 25% RIF), Editas Medicine (EDIT, 20% RIF), Elevation Oncology (ELEV, 30% RIF), TCR2 Therapeutics (TCRR, 40% RIF) and Y-Mabs Therapeutics (YMAB, 35% RIF). More extreme measures were taken at Calithera Biosciences (CALA) as the board approved the complete liquidation and dissolution of the company after concluding they were "unable to complete a transaction that would allow us to continue the development of our clinical programs and enhance shareholder value". CALA has an accumulated deficit of ~$500 million, reminding investors of the downside risks inherent in drug discovery and development.

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