The latest Biopharmaceutical Deals report analyzes emerging market trends and their implications

Clarivate and Bioworld recently released their Biopharmaceutical Deals Report. The report covers emerging market trends in pharma, with detailed analysis of key deals and an eye on the implications for the rest of 2022, including a look at RNA technologies, cell and gene therapies, artificial intelligence, CRISPR and oncology-related deals.

In this interview, DocWire News He spoke with Matthew Arnold, Principal Analyst, Clarivate and Karen Carey, Senior Analyst, BioWorld, who talked about the report in great depth.

DocWire news: Can you give us some professional background about yourselves?

Karen Curry: surely. I’ve worked at BioWorld since 1999. I started out as a writer, became the database editor, and eventually the analyst, chief staff analyst. And we track all the data on financing and deals and basically take all of that, and use analytics to come up with different trends and things that we’re seeing in the biopharmaceutical industry. So I have been doing this business for at least 10 years. And yes. I am happy to be here.

Matt Arnold: And I’m Matt Arnold. I’m an analyst and content person at Clarivate. In my past life, I myself was a reporter and covered the pharmaceutical industry for many years. So I’ve been in and around pharma and biotechnology for about 20 years. And a lot of what I do at Clarivate is take the insights from our therapy domain experts and our data analysts who have this incredible depth of experience and try to aggregate it across the different verticals that we have and make it useful for our clients.

Talk to us about the BioPharma Deals Report and its importance.

Karen Curry: Well, I can only tell you from the end of BioWorld. We collect stories each quarter that highlight both finance and deals. And this data that we’ve collected is then shared with Clarivate and developed into the Biopharmaceutical Transactions Report. Much of the transaction information also comes from Cortellis, but it’s our writing team that digs deep into each and every one of these transactions. And then I don’t know if he died, do you have anything to add to that?

Matt Arnold: yes. And I can talk to some of the most important findings if that helps. And I think there’s been a lot of alarming coverage about the bubble bursting due to biotechnology and panic in the markets and I think our message is really, given this data, don’t panic. What we’ve really seen in 2020 and 2021 is that investors had to put their money somewhere, and healthcare has always been seen as a safe bet. It is a counter-cyclical industry. It is a place for capital to flee to in an uncertain market environment. And there are clearly some factors that have been favorable to healthcare companies in a global pandemic as well. So you had a lot of generalists piling in and walking out when they had other places to put their money.

And we see IPOs going down. Mergers and acquisitions are in a significant decline in the first half of the year year on year. Biotech companies are reluctant to sell when they are undervalued. Pharmas may have been a little hesitant to take acquisitions in a time of economic uncertainty. But while deal making is down in volume, it’s still really strong. In fact, the total value of dealmaking went up in the first half because we had a huge number of billion-dollar deals. And we’re talking about Sanofi and IGM, 6.2 billion I think, for some of the IGM antibody agonists in oncology and immunology. Another Sanofi Exscientia for $5.3 billion. This deal includes AI, BMS, and Evotec for its proteolytic technology.

And I think what you’re seeing here is that Pharmas are keen to renew their pipeline with access to what are the technologies of the future? What technologies will power the next wave of miracle drugs? And we’re talking about things like protein degradation, cell and gene therapies, AI and machine learning, RNA therapies, and those kind of gWiz technologies that are going to be the future of medicine or at least kind of the future of medicine in the medium term. And so the capital environment is tougher for biotech, but if you have one of those technologies, pharma companies are very eager to get to it and they’ll be more targeted I think where they are, but there’s capital there.

According to the report, 2021 was the highest total financing and deal value over the past five years. Can you talk about some of those deals, about the trends for 2022.

Well, with the report we’re really focused on 2022. So the only thing I would say is 2020 and 2021, they were years away because of the pandemic. Funds, for example, in 2020 amounted to 134.5 billion dollars, and in 2021 they amounted to 118 billion. Those were the first two years in the history of biopharmaceuticals and they were actually a lot ahead. The third highest year, for example, was 2015 at $68.4 billion and that’s only about half of 2020. So now we turn and look at this year. During the second quarter, the industry raised $26.5 billion. This is actually only 37% of the amount raised in the first half of 2021. It is 41% of what was raised in 2020. The amount of funding is also down with 503 transactions during the first six months of 2022. That’s only 56% of what took place. See him at this point in 2021.

So I think Matt mentioned a few things that explain why this is happening. Some might say a patch is underway. Investors, many of whom are public investors, have been very excited over each of the past two years. Veteran investors in biopharmaceuticals, perhaps, will pull out until the general markets improve. Last week, the Nasdaq Biotech Index fell 23% for the year. So you can understand the reluctance if investors are losing money from companies they invested in in any of the last two years. I want to mention the IPOs in the first half of 2022. They raised $3.4 billion through 21 debuts. This compares to 13.5 billion through 76 deals a year ago. So we’re going down on those. Follows down the road. But one thing is for sure, there is a lot of venture capital money out there for private companies. So, the private venture capital rounds through the end of the second quarter were behind 2020 and 2021. So, yeah, those were the best years, but these funding runs were ahead of all the other years on record.

So in the first half of 2022, 11.8 billion in venture capital money. The highlight of the VC rounds in the first half of this year was science innovation. They raised 300 million for Sarah Therapeutics. 300 million Series C Kriya Therapeutics. 270 million series c. So the venture capital is very strong. We’re also seeing this happen in Europe. Denmark IO Biotech. 148 million Series B in April. So are Asia and Singapore. RVAC Pharmaceuticals, based in Singapore. They had a Series B for 140m in April. So in general, strategic investors are all still willing to invest in promising opportunities in the life sciences. If you talk about deals on the other hand, this has been the strongest year for deals. When I say deals, I’m talking about licensing, joint ventures and collaborations. I’ll get to M&A’s in a minute. Compared to all the recent years, this year has been really strong. In the first half we had 834 deals worth $94 billion. The volume is actually down compared to last year, but the value is up. So there are fewer deals, but it’s worth more.

We also have, as Matt also mentioned, a record number of $1 billion plus deals, what we call mega deals. Sanofi and Bristol-Myers Squibb are two very active companies in this area. Sanofi made a deal with IGM, $6.6 billion. They also have an AI ML deal with Exscientia, which Matt mentioned. One with Adagene for monoclonal and bispecific antibodies. That was worth 2.5 billion. Bristol-Myers had self-medication deals with Ematics and sensory and protein degradation deals with Evotec. These are all worth more than three billion dollars. So a lot of these trades are worth a lot because they involve transformative techniques that can be applied in many different directions for many different indicators. And for some, the potential is therapeutic. Therefore it is highly valued because of its potential.

Can you talk to us about recent M&A trends?

Just to say, now if we look at M&A, that’s a whole different story than deals. In the first half of 2022, it was just $24.4 billion, down from $31.7 billion during the same time frame of 2021. In 2020, that number was close to $120 billion, but that includes the $63 billion acquisition of AbbVie. So we’ve seen a significant decline this year, but even if you look at the pre-pandemic years, we’re down. Volume is down to just 51 completed in the first half of 2022. This compares to 76 last year and 71 in 2020. None of this year’s or last year’s M&A came close to making BioWorld’s top 20 list for acquisitions on biotechnology developers. The threshold for that now is 9.7 billion and the highest this year in the first half was Pfizer’s $6.2 billion purchase of Arena.

So it’s hard to say when this might change, and when M&A will rebound. A lot of people predicted that they would rebound this year, but in the biopharmaceutical industry it hasn’t really happened. Although I will say that the third quarter was looking a lot better. We had in the third quarter just completed CSI’s acquisition of Vifor for 11.7 billion. Bristol-Myers’ acquisition of Turning Point for $4.1 billion. and the purchase of GSKs Affinivax for $3.3 billion. And also at the beginning of the fourth quarter, Pfizer just completed its acquisition of Biohaven for $11.6 billion. So M&A looks a lot better than it did in the first half.

Overall, what does this report mean for the healthcare industry?

Obviously, something important to all parties is that Pharmas is still looking at these key technologies to rejuvenate their pipeline, gaining entry into selling gene therapies, CRISPR technologies, AI and machine learning, and RNA therapeutics. These are do or die for pharma as they seek to build their pipelines going forward. And so what we’ve seen is not a collapse of investment, it’s a return to the pre-pandemic base. And there is real resilience in this sector because there is tremendous value in these critical technologies that develop these technologies. It presents significant challenges for Number One Pharmas in that many of them are competing to acquire or stake in these assets and be the ones to commercialize these technologies in the next decade or two. That means they need to be able to identify strong prospects, which can be as much of a task as finding the needle in a haystack kind of a task for these very early stage, hard-to-value assets.

By the way, an important trend that we’re seeing is pharma is investing early. And I think that speaks to the competitive nature of these technologies and these assets. So you’re seeing a little bit of the nutrition craze, but the big pharma is really about these technology platforms and these modalities of major importance. And so for them, identifying assets, identifying companies with interests, assessing market size and potential value of assets, doing some kind of due diligence, deciding where to invest not just in terms of portfolio management or therapeutic area, but also geographically.

One of the interesting things we found in this report is that we mapped where the biotech activity groups are based on the origin of the research publications. It’s one of the types of data we collect that’s based on clinical trials. And we found that you really have four huge groups. Massachusetts and the Bay Area of ​​the United States, mainland China and the United Kingdom. The UK is growing really fast and is becoming a rival to US groups in many ways. And I think the other side of that is biotech, they really need to understand how to do evidence generation in a way that makes their assets visible to large pharma and makes them visible and appreciated.

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