After a multi-year expansion of company formation and in biopharma valuations, 2018 was a year of heightened market volatility. As interest rate worries, international trade disputes, and regulatory reimbursement uncertainty have increased, biopharma stock indexes have seen significant corrections. With historically high valuations experiencing sudden dips, M&A deal-making seems to have reignited with notable, multi-billion dollar deals in early 2019.
A distinguished panel of deal-makers gathered on the third day of the 2019 BIO International Convention to discuss how these market forces will likely affect biotech and pharmaceutical deals in the future, drawing upon two recent reports: Syneos Health Dealmakers' Intentions Study and the BIO One-on-One Partnering Forecast.
Moderated by Neel Patel of Syneos Health Consulting, the panelists included:
- John Bishai, Managing Director, Healthcare Investment Banking at Wells Fargo
- Constantine Chinoporos, Chief Business Officer at Boston Pharmaceuticals
- Jullian Jones, Senior Director, Oncology Business Development at Eli Lilly and Company
- Vikas Kabra, Head, Transaction Excellence at Roche
- Dr. Sophie Kornowski, Senior Partner at Gurnet Point Capital
- Mayukh Sukhatme, President at Roivant Pharma
Syneos’s study found continued bullish sentiment among both buyers and sellers for dealmaking activity in 2019 compared to 2018, with the vast majority expecting as many or more deals this year. Buyers were consistently more bullish than sellers in expecting deal volume to increase.
Oncology and rare diseases have dominated the M&A landscape, accounting for 90% of all M&A volume last year. However, hepatic diseases (such as NASH), genome editing technologies, digital therapeutics, and stem cell therapies have all emerged as hot areas for licensing in 2019.
The panelists were largely in agreement – with plenty of caveats -- that we are presently in a Golden Age of biopharma dealmaking. Roivant’s Sukhatme agreed, noting that we have never had more capital deployed across more different types of technologies. What will keep the momentum going, he said, will be translating that capital into approvals, strong data, and great launches.
Eli Lilly’s Jones argued that, particularly for oncology, a better understanding of the causes and mechanisms of the disease, and genomic profiling of tissue samples, will lead to growth in the industry.
Boston Pharamceuticals’ Chinoporos had some words of caution: with drug pricing being one of the few shared priorities between the White House and congressional Democrats, the industry could be a potential target in the near future. He also noted that the metrics of technical success haven’t changed much in the past decade. While Phase 3 approvals have risen, he argued that could be a function of a greater focus on rare diseases, where smaller patient populations can lead to higher Phase 3 success rates.
There’s no question, however, that access to capital today is much easier than it was a decade ago, with companies often being funded at the $30-50 million level, providing quite a runway to advance their programs. However, the panelists cautioned everyone not to get too comfortable: that the good times will eventually end, requiring companies to be more disciplined and to do more with fewer resources.
Syneos’s Patel offered some closing words of advice: “Don’t get drunk at the punch bowl!”