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Deal Watch December 2015

The month’s deals see a number of collaboration and licensing deals for technology platforms and new molecule discovery

December Deal Watch

December saw the release of reports by two of the top accountancy and consulting groups, PWC and Deloitte. PWC's report Top Health Industry Issues of 2016 - Thriving in the New Health Economy describes, among many other interesting points, that 2016 will be a year when merger mania will continue. Certainly 2015 has been interesting from an M&A perspective, not just in terms of company acquisitions but also asset swaps as seen this month with Boehringer Ingelheim and Sanofi exchanging animal health for consumer health. As the enterprise value of Sanofi's animal business, Merial, was estimated at €11.4bn versus €6.7bn for Boehringer's consumer health business, Boehringer is required to pay €4.7bn ($5.1bn) to Sanofi.

Also during the month AstraZeneca announced the acquisition of 55% for $4bn of Acerta which has a BTK inhibitor in phase III for blood cancer. AstraZeneca has an option to buy the remaining 45%. This deal reflects AstraZeneca's intensive deal making activity to bolster its pipeline following the failed bid by Pfizer to acquire the company. The fashion for big pharma to rationalise their portfolios has continued with BMS's decision to sell its HIV franchise to GSK for nearly $1.5bn and Takeda's decision to sell its respiratory business to AstraZeneca for $575m.

Deloitte and GlobalData's report Measuring the return from pharmaceutical innovation 2015 - transforming R&D returns in uncertain times describes the return on R&D as being 4.2% in 2015 compared to 10.1% five years ago due to the growing imbalance between declining forecast peak sales and increasing asset development costs. Interestingly the smaller big pharma companies such as Gilead, Celgene and Biogen are projected to achieve higher returns on R&D than the larger companies which incur higher costs to develop their assets. Also companies with a consistent therapeutic focus achieve better returns. Gilead has a consistent therapeutic focus historically with hepatitis C and HIV treatments but its licensing deals are also in other therapy areas such as oncology and, this month inflammatory disease, following the licensing deal with Galapagos for over $2bn. It will be interesting to see if Gilead retains its higher return on R&D following its move away from the traditional therapy areas.

A key feature of this month's deals is the number of collaboration and licensing deals for technology platforms and to discover new molecules. Most of the deals are between big pharma and biotech companies, mostly based in the US. There are eight deals with a combined value of over $4bn if all the programmes are successful. Even if they are not, Christmas has come early for many of the biotech companies involved.

Finally, it should be noted that it is not only big pharma that buys and sells assets. Alliance Pharma in the UK, a company that has built its business mainly by product acquisitions and licensing deals, has announced the acquisition of 27 dermatology products with sales of £43.3m for £127.5m excluding inventory, representing a sales multiple of nearly three and an EBITDA multiple of 14. The latter is a high multiple but Alliance expects to make £5m of cost savings in 2016. This December report is a brief overview of the themes and deals this month. 

Licensor / Acquisition target
Licensee / Acquirer
Deal type
Product /technology
Headline $m
Sanofi / Boehringer Ingelheim
Boehringer Ingelheim / Sanofi
Asset swap
Sanofi swaps animal health business for Boehringer's consumer health.  Boehringer pays $5bn difference in enterprise values
5,123
Acerta (NL)
AstraZeneca
Acquisition - company
AZ buys 55% of Acerta for $4bn with option to buy remainder.  Acerta has phase III BTK inhibitor for blood cancer
4,000
Galapagos (NL)
Gilead
Collaboration. licence
JAK1-selective inhibitor, filgotinib in phase II for RA and Crohn's disease 
2,075
BMS (HIV business)
GSK (ViiV)
Acquisition - asset
Acquisition of HIV product pipeline from BMS incl. fostemsavir in Phase 3 development
1,455
BioAtla (US)
Pfizer
Cross licence
Antibody technology platforms to discover immuno-oncology targets
1,000
Halozyme (US)
Lilly
Collaboration, licence
Five programmes ($160m each) to develop compounds using improved subcutaneous injection platform technology
825
Takeda (Respiratory)
AstraZeneca
Acquisition - asset
AZ buys Takeda global respiratory business including PDE 4 inhibitor rofumilast marketed for COPD
575
Crealta
Horizon
Acquisition - company
Krystexxa marketed for treatment of chronic refractory gout
510
SQZ Biotech (US)
Roche
Collaboration, licence
B cell engineering platform to discover oncology targets 
500
ZymeWorks (CA)
GSK
Collaboration, licence
Antibody technology platforms to discover immuno-oncology targets
440
Pieris (US)
Roche
Collaboration, licence
Bispecific Anticalin-based protein therapeutics platform to discover immuno-oncology targets
409
Kyorin (JP)
BMS
Collaboration, licence
Discovery, development and commercialisation of FPR 2 agonists for undisclosed indication
405
Aveo (US)
EUSA
Collaboration, licence*
Pre-registration tivozanib for renal cell carcinoma
397
Akebia (US)
Mitsubishi
Collaboration, licence
Vadadustat for treatment of anaemia in chronic kidney disease
350
CRISPR Therapeutics (CH)
Bayer Lifescience
Joint venture
Combining gene editing technology and protein engineering to discover treatments for blood disorders, blindness, congenital heart disease
335
Xoma (US)
Novo Nordisk
Collaboration, licence
Development and commercialisation of allosteric monoclonal antibodies that up-regulate the insulin receptor
295
Akeso (China)
Merck & Co
Collaboration, licence
AK-107, an immune checkpoint blocking antibody for immuno-oncology
200
Sinclair IS (UK)
Alliance
Acquisition - asset
Marketed dermatology range of products (Nov 2015)
200
Bavarian Nordic (DK)
Janssen
Collaboration, licence
Vaccine platform technology for development of treatment for cancers induced by HPV
180
Open Monoclonal Technology (OMT)
Ligand
Acquisition - company
Transgenic animal platforms for generation of therapeutic antibodies
178

*Europe, Latin America and South Africa

11th January 2016

11th January 2016

From: Sales

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