Summary:
BPIQ monitors M&A of smid-cap biopharmas
There has been an uptick in biopharma M&A since May 2022
Q2 2023 is off with a bang with GSK acquiring BLU for $2B and MRK acquiring RXDX for $10.8B
The first quarter of 2023 has more M&A activity than any quarter in the previous two years!
These deals and prior biopharma M&A reveal key characteristics of biopharma acquisition targets
See our BPIQ forum post to learn these attributes today (free signup).
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Latest M&A News: 4/18/23
The multi-billion dollar deals continue in Q2 with GSK acquiring BLU for $2B (a 103% premium). Like the MRK deal announced a few days ago, the value of the deal lies primarily in a single asset. For BLU, it's BLU-5937, is P2X3 antagonist. BLU-5937 appears to be a best-in-class asset for treating chronic cough, especially since it appears to have relatively low taste disturbances, a side-effect that has plagued other P2X3 antagonists. BLU-5937 is in phase 3 trials for this disorder, which appears to affect ~6 million people in the U.S., and for which there is no approved therapy. Congrats to BLU shareholders, including our affiliated analyst company, Amp, who hold BLU in all 4 Amp accounts.
4/16/23
After a strong first quarter, the second quarter is starting with a bang, as RXDX announces that MRK is acquiring it for $10.8B ($200.share)! This is about a 75% increase over Friday's RXDX closing price of $114.15 ($5.4B MC) (See RXDX press release Here). RXDX has a pipeline mainly consisting of PRA023, an anti-TLA (tumor necrosis factor (TNF)-like ligand 1A (TL1A) monoclonal Ab (See BPIQ RXDX company page). PRA023 is a pipeline-in-a-product asset. PRA023 is entering Phase 3 in Crohn's disease and ulcerative colitis, and is in Ph2 in Systemic sclerosis. It's data updates for PRA023 in UC and Crohn's in December 2022 skyrocketed the value of RXDX (See PR here).
3/30/23
Report at end of Q1 2023
At BPIQ we monitor mergers and acquisitions (M&A) involving smid-cap biopharma*. While there were not many M&As in 2021 or the first quarter of 2022, M&A activity in the biotech sector has heated up since May 2022. Biotech stocks have been struggling since early 2021, but since mid-June the biotech sector is making a comeback. This has been driven by an increase in smid-cap biopharma M&A since May 2022. See our post on what drives XBI HERE.
As the first quarter of 2023 comes to an end, we have seen the greatest activity for mergers and acquisitions in the last two years. While Q4 2022 there were 15 M&As, there were 18 announced in Q1 2023.
The largest acquisition announced in Q1 '23 was that PFE will acquire SGEN for $43B!
In Q1 '23 there were 13 acquisitions announced and 5 mergers announced. 13 M&As have been completed, including the $1.7B acquisitions of MYOV by Sumitovant. February ended on a high when SGEN and PFE announced they are in discussion for a possible acquisition. Then on March 13, PFE announced they will acquire SGEN for $43B! This is big news especially after the fallout of the possible acquisition of SGEN by MRK announced in 2022.
We are very excited about this impressive activity in the first quarter of the new year, and hope the rest of the year continues at this pace!
Table 1 summarizes the number of smid-cap biopharma acquisitions per quarter since Q1 2021, along with a breakdown of companies by the price of acquisition and the size of the acquirer. There is a clear uptick in the number of smid-cap biopharma M&A announcements starting in Q2 2022, especially compared to Q2 2021 and Q1 2022. As of March 30, 2023, there have been 18 M&As announced in Q1 2023 and 13 completed. Also see Figure 1 for a graph of total acquisitions per quarter since Q1 2022 and acquisitions over $1B.
Table 1. Smid-cap biopharmas acquired by quarter (updated March 1, 2023)
Figure 1. Total acquisitions per quarter and acquisitions over $1B
If we focus on acquisitions with values greater than $1B, there were 3 smid-cap biopharma acquisitions in Q2 2022 by our count, 3 in Q3 2022, 3 in Q4 2022, and 4 in Q1 2023! While there was an uptick in acquisitions throughout 2022, the increase appears to be driven by smaller deals. Maybe this isn't surprising since the valuations of most smid-cap biopharma companies have been severely reduced over the past 1.5 years. In 2023 there have already been 4 acquisitions >$1B announced, so it will be interesting to see how acquisition size compares for the rest of the year! In Q1 the majority of the acquisitions have been larger than in previous quarters, with 1/2 of the acquisitions over $500M.
Key Target Attributes
Of course for biopharma investors, it's all about predicting and investing in the next company to be acquired for a high premium. We analyzed biopharma acquisitions over the past few years and identified 3 key attributes: Sign up for our free email newsletter and learn about the 3 key attributes, and some of the companies that have them.
Get access to our more detailed quarterly biopharm M&A report, including key M&A target attributes - CLICK HERE and sign up for a free account.
Concluding Remarks
In summary, the recent increase in biopharma M&A activity has helped to rejuvenate this sector. Biopharma companies with at least one approved clinical asset that was approved in the last 3 years, is a good starting point for identifying companies that are worthy of deeper analysis for possible addition to your portfolio. In our deepest versions of this article for paid subscribers, we not only provide a list of all the companies in our database with a commercial product approved in the last 3 years, we reveal several other characteristics of good M&A targets, and discuss whether current biopharma valuations are in a good range for M&A. Sign up Now and get instant access to this insightful article.
This article is NOT legal, investment or tax advice. Please do your own diligence before making any investment decisions.
Article history:
Originally posted 8/9/22
Updated 9/21/22
Last updated 4/16/23 (end of Q1 posted 3/30/23)
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