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Deal Capsule - Transactions in Pharmaceuticals April 2017

Deal Capsule-Transactions in Pharmaceuticals April 2017

Big pharma players continue to acquire biotechs, particularly in the oncology area. Venture Capital is also increasing investments in biotech assets.

Thomas Hillek

Head of Life Sciences and Chemicals

KPMG in Germany


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US and China remain the most active countries. Japanese companies were more active and participated in some large deals.

KPMG’s Deal Thermometer indicates that the environment for M&A activity will remain moderately strong in pharmaceuticals.

Deal focus areas

The value of the top 10 completed deals in Q1 2017 increased 36% compared to the previous year with one transaction surpassing the $10 billion mark. Pharmaceutical firms focused on biotech targets to replenish their pipelines. US and China remain the most active countries.

A third of Q1 pharmaceutical transactions are in the biotech sector helping pharma to replenish pipelines. Oncology continues to be the top therapeutic area of interest. In 2017, three of the five biggest growing drugs are likely to be cancer treatments. By 2020, more than 225 medicines are estimated to be introduced with one-third focused on treating cancer. Risk sharing via contingency payments facilitated deals in Q1 2017.


Takeda Pharmaceutical Company Ltd. completed the $5.2 billion all-cash acquisition of ARIAD Pharmaceuticals Inc., expanding its oncology business by adding two precision medicines – Iclusig and Brigatinib. Iclusig is expected to bolster Takeda’s position in hematology in the US. Brigatinib, a lung cancer drug under investigation, has the potential to generate peak annual sales of more than $1 billion. In 2017, Takeda faces the patent expiry of Velcade, which accounted for 24% of its US sales in 2016.

Sumitomo Dainippon Pharma Co., Ltd. acquired Tolero Pharmaceuticals Inc. for $0.8 billion. Tolero has several preclinical and late-stage assets in oncology and hematology. The deal will help Sumitomo refresh its pipeline as its main pillar, the atypical anti-psychotic LATUDA, loses exclusivity in 2019.

Ipsen S.A. plans to acquire oncology assets from Merrimack Pharmaceuticals Inc. for $1 billion to strengthen its global leadership in specialty oncology. Ipsen is interested in Merrimack’s key product, ONIVYDE, a treatment for metastatic pancreatic cancer, the third leading cause of cancer related deaths.

Celgene Corp. plans to acquire Delinia Inc. for $0.8 billion, a biotech developing novel therapeutics for the treatment of autoimmune diseases and cancer. With the deal, Celgene accesses Delinia’s lead preclinical stage regulatory T cells (Treg) therapy, DEL106. The majority of the purchase price is contingent upon certain milestones being met.

China’s Sanpower Group Co., Ltd. announced the acquisition of Dendreon Pharmaceuticals Inc., an affiliate of Valeant Pharmaceuticals International Inc. for $0.8 billion. Sanpower takes over Dendreon’s first and only commercial product, Provenge, a vaccine for prostate cancer treatment. Dendreon was previously bought by Valeant out of bankruptcy in 2015 for approximately $0.4 million. Valeant will use the proceeds to pay down debt.

Biotech collaborations in immune-oncology

Bristol-Myers Squibb (BMS) announced an expansion of its collaboration with CytomX Therapeutics Inc. The collaboration was initially established in 2014 to focus on the discovery, development and commercialization of novel therapies against multiple immuno-oncology targets using CytomX’s proprietary Probody Platform therapeutics for the treatment of cancer. BMS has contributed approximately $350 million to date and plans to extend this to at least $200 million in upfront payments as well as research funding.

Biotech start-up secures $1 billion VC investment

GRAIL Inc. managed to raise over $0.9 billion through the first close of its Series B financing led by ARCH Venture Partners. Investors include Johnson & Johnson, BMS, Celgene Corp., as well as Inc. In its previous Series A funding, GRAIL had already secured $100 million.

GRAIL aims to detect cancer at an early, still curable stage, through a simplified blood screening procedure. GRAIL combines leading approaches in computer and data sciences with population-scale clinical trials and ultra-broad and ultradeep sequencing. From deep research to driving changes in patient behavior, the opportunities for smart use of data science and analytics in the life sciences industry are almost limitless.

Biotech deals outside oncology

By acquiring LifeCell Corp. for $2.9 billion, Allergan PLC enters the field of regenerative medicine, supporting its aesthetic and plastic surgery business. LifeCell’s key assets include dermal matrix products used in breast reconstruction and abdominal wall repair.

Johnson & Johnson (J&J) announced the $30 billion tender offer for the shares of Actelion Ltd., a leader in the field of pulmonary arterial hypertension. This will help to replenish its portfolio following patent expirations.

Financial investors

Following a competitive bidding process among PE investors for STADA, a generics and OTC player, the Executive Board and Supervisory Board decided to support Bain Capital LP and Cinven Partners LLP’s offer with a value of € 66 per share, including dividend. This equates to an enterprise value of around € 5.3 billion. STADA achieved an Adjusted EBITDA of around € 0.4 billion on Adjusted Group Sales of approximately € 2.2 billion in 2016.

Capital index

All pharma indices have rebounded after a decline at the beginning of Q1 2017. The Bloomberg Asia Pacific Pharma Index saw the biggest growth by 8.4%, including Takeda with a 6.9% gain. The Bloomberg Europe 500 Pharma Index grew by 6.7%, whereas the S&P 500 Pharma Index increased by 4.9%.

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