NEWS & ANALYSIS

From THe aNalyST’S CouCH Biopharma dealmaking in 2020

Patricia Giglio and Amanda Micklus hemul75/iStock/ Credit: Getty Images Plus

The COVID-19 pandemic was the story of the second half of the year, with dollar figures big pharma companies, Johnson & Johnson 2020. In the biopharma world, researchers in Q3 and Q4 of $43 billion and $74 billion and Sanofi, respectively. Immunology made met the challenge and quickly acted to pool (Fig. 1a). The notably larger values in the up 15% of the transaction volume among all resources, share data and work towards a second half of the year were not necessarily billion-dollar​ M&As in 2020, but nearly half common effort of developing therapeutics from the volume increasing by the same (43%) of the value (Supplementary Fig. 1a,b). and vaccines. On the business development degree, but due to multiple mega-mergers.​ Gilead’s quest to become an oncology front, COVID-19 was the focus of multiple In fact, all but one of the top 10 M&As powerhouse continued through 2020, deals and also affected the way companies of 2020 by value were disclosed in Q3 including two major takeovers: Forty Seven did deals in general, from conducting due or Q4 (Table 1). for $4.9 billion, focused on targeting the diligence, to becoming more adept The biggest deal of the year, and almost CD47 pathway, and Immunomedics for at hosting meetings and negotiating twice the size of the next largest M&A, $21 billion, which included the marketed virtually. announced just before 2020 ended, saw TROP2-targeted​ antibody–drug conjugate Total merger and acquisition (M&A) AstraZeneca buy rare disease player Alexion Trodelvy (sacituzumab govitecan) for breast volume reached 166 transactions in 2020, Pharmaceuticals for $39 billion. Known cancer. Oncology drove 30% of 2020’s with an aggregate value of US$131 billion, for its work in complement inhibition billion-dollar​ M&As, and 29% of the value. according to Informa’s Biomedtracker. and the antibody Soliris (eculizumab), The biopharma industry’s key role in Deals included those in the biopharma Alexion brings expertise in immunology, addressing the COVID-19 pandemic was industry, as well as consumer and over- ​ an area that AstraZeneca wants to build up. evident in M&A activity. There were at least the-counter​ (OTC) companies, drug delivery Earlier in 2020, Alexion itself did a major 14 acquisitions of companies either focused technologies, contract research, manufactur­ deal, spending $1.4 billion on Portola on developing treatments or vaccines for ing and clinical trial services, but excluded Pharmaceuticals and its factor Xa inhibitor COVID-19, or companies with a COVID-19 devices, diagnostics, research tools, animal reversal agent Andexxa (recombinant asset in their pipeline. Merck & Co. acquired health and insurance. coagulation factor Xa). two such companies, Themis Bioscience Probably owing to the pandemic, Expanding into immunology was a theme and OncoImmune (Supplementary Table 1). M&A activity was slower in the first half of of the big M&As of 2020, as 3 of the top Themis has been working with Institut the year, indicated starkly by the quarterly 10 deals featured such assets. In addition Pasteur and the University of Pittsburgh’s dollar totals in Q1 and Q2 of $6–7 billion. to Alexion, Momenta Pharmaceuticals and Center for Vaccine Research on a COVID-19 But both volume and value saw an uptick in Principia Biopharma were both acquired by vaccine, while OncoImmune is testing a a b c 60 80 400 60 14% 74 70 350 32% 50 51 50 2% 3% 60 300 46 44 3% 40 41 40 50 250 3% 43 4% 30 40 200 30 6% 30 150

M&A deal volume 20 20 9% 20 deal volume Partnership 100 24%

10 Disclosed deal value (US$ billions) 10 10 50 Disclosed deal value (US$ billions) 7 6 Oncology Ophthalmology 24 39 50 53 217 258 317 361 0 0 0 0 Infectious diseases Cardiovascular Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Neurology and Endocrine psychiatry Metabolic M&A deal volume Partnership deal volume Autoimmune/ Respiratory Disclosed deal value Disclosed deal value immunology Other

Fig. 1 | Biopharma dealmaking in 2020. a | Mergers and acquisitions partnerships by therapeutic area. Deals involving more than one therapy (M&As). The chart includes full-​company acquisitions and purchases of area may be counted multiple times, if applicable. The ‘other’ category majority stakes. The total M&A deal volume includes deals that did not have includes allergy, dermatology, ear, nose and throat/dental, gastroenterology, a disclosed value. b | Partnerships. The total partnership deal volume haematology, obstetrics/gynaecology, orthopaedics, renal, rheumatology, includes deals that did not have a disclosed value. c | Breakdown of urology and unspecified. Source: Biomedtracker; Informa.

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Table 1 | Top 10 mergers and acquisitions of 2020 plus double-digit​ sales royalties, and has some opt-in​ rights for joint development and Month Acquirer Target Target focus Deal value (US$ millions) commercialization. As in past years, oncology-related​ December AstraZeneca Alexion Immunology 39,000 transactions represented the lion’s share of September Gilead Immunomedics Oncology 21,000 partnerships, making up 32% (Fig. 1c). Deal activity in the infectious disease space came October MyoKardia Cardiovascular 13,071 in second, accounting for 24% of the total August Johnson & Johnson Momenta Immunology 6,500 deal volume. COVID-19 transactions made March Gilead Forty Seven Oncology 4,900 up 80% of that category and contributed $4.1 billion to the infectious disease total October Bayer Asklepios 4,000 BioPharmaceutical of $7.2 billion. The top infectious disease deal in 2020 was an exclusive license August Sanofi Principia Immunology 3,850 and collaboration agreement between November Merck & Co. VelosBio Oncology 2,750 Mesoblast and Novartis for the development, August Nestlé Aimmune Allergy 2,600 manufacture and commercialization of Mesoblast’s mesenchymal stromal cell August Blackstone Group Takeda Consumer Consumer health 2,300 product remestemcel-L,​ with an initial Healthcare focus on the development of the agent Source: Biomedtracker; Informa. for acute respiratory distress syndrome (ARDS), including that associated with recombinant fusion protein in phase III for prominently in the deal structures of COVID-19. Novartis will make a $50 million COVID-19 patients who require oxygen. the top-valued​ alliances, indicating that upfront payment including $25 million Partnering among biopharma companies minimizing financial risk is still a priority. in equity. Mesoblast may receive a total increased steadily over the year, showing Developmental, regulatory and/or of $505 million pending achievement of the industry remains focused on accessing commercialization milestones accounted pre-​commercialization milestones for ARDS innovative technologies and expanding for more than 76% of the total values for this indications. It could also get additional, markets through collaborations despite group, while up-front​ payments made up post-commercialization​ payments of up to the pandemic. Following the same upward only 13%. Equity stakes as part of upfront $750 million based on achieving certain sales quarterly trajectory as M&As, 1,153 partner­ consideration and shared R&D expenditures milestones and tiered double-digit​ royalties ships occurred in 2020 (valued together also remain significant components of on product sales. at $183 billion) (Fig. 1b). Fifty-three​ deals these partnerships. Initially, COVID-19 deals were evenly reached the billion-dollar-​ plus​ mark, In the largest alliance of the year by value, distributed among therapeutics and distributed evenly between H1 and H2. Merck KGaA and Artios Pharma penned a vaccines, but by Q2, transactions focused The top 10 partnerships of 2020 (Table 2) 3-year​ strategic research collaboration worth on treatments outnumbered those aimed had a combined value of more than nearly $7 billion to discover and develop at preventing the virus. The total number $42 billion, representing close to 25% of the multiple precision oncology drugs. Merck of COVID-19 partnerships peaked in Q2 annual total. Most were big pharma tie-ups​ KGaA paid $30 million in upfront and and started to decline thereafter, possibly that occurred in Q2 just as the pandemic took near-​term payments, and, if the company a sign that there was waning interest and hold on a global scale. Oncology-focused​ chooses to exercise its options, it will pay demand for deals as the first wave of deals made up seven of the transactions double-digit​ fees. Artios could also see up to countermeasures were reading out positively in the group. Milestone payments figured $860 million in total milestones per target (Supplementary Fig. 2). Neurology and psychiatry (9%), autoimmune/immunology (6%) and Table 2 | Top 10 biopharma partnerships of 2020 by total potential deal value ophthalmology (4%) rounded out the top five therapy areas by deal volume, aside Month Company Partner Therapeutic Deal value focus (US$ millions) from the ’other’ category, which combines lower-​volume therapy areas. December Artios Pharma Merck KGaA Oncology 6,910 COVID-19 is likely to still be a key factor July Daiichi Sankyo AstraZeneca Oncology 6,000 in 2021, but given the dealmaking activity in September Seattle Genetics Merck & Co. Oncology 4,200 2020, it is clear that biopharma companies are still motivated to work together, build March Silence Therapeutics AstraZeneca Multiple areas 4,080 pipelines and advance science.

April Fate Therapeutics Oncology 3,916 Patricia Giglio and Amanda Micklus ✉ June Genmab AbbVie Oncology 3,900 Informa, New York, NY, USA. June Alteogen Undisclosed Undisclosed 3,881 ✉e-mail:​ [email protected] https://doi.org/10.1038/d41573-021-00015-9 November Sage Therapeutics Neurology 3,125 Competing interests May Repare Therapeutics Bristol Myers Squibb Oncology 3,065 The authors declare no competing interests. June IDEAYA Biosciences GlaxoSmithKline Oncology 3,030 Supplementary information Supplementary information is available for this paper at Source: Biomedtracker; Informa. https://doi.org/10.1038/d41573-021-00015-9.

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