Pharmaceutical M&A Activity Increased 17% in First Half of 2020

September 02, 2020 - The COVID-19 pandemic has substantially shaped the pharmaceutical and biopharmaceutical industry over the first half of 2020, and while some of the activity was predictable, other trends have surprised experts, according to an Evaluate report. 

One major surprise this year was how the venture sector seemingly disregarded the pandemic, researchers said. Start-ups in the drug development sector were given $9.7 billion in the first half of the year, potentially setting 2020 records.

Additionally, pharmaceutical merger and acquisition activity skyrocketed as well.

Specifically, merger and acquisition activity increased 17 percent since January, with Gilead’s $4.9 billion deal on Forty Seven deemed the biggest takeover in the pharmaceutical industry, researchers said.

Venture-backed firms have also attracted various buyers over the past few years. 

Two of the biggest transactions in 2020 were over venture capital-backed companies, including the Novo Nordisk acquiring Corvidia and Gilead’s acquiring  Pionyr. 

“Both involved contingent payments or options, suggesting that venture firms are being flexible with terms while valuations are so high, in order to keep the deal wheels turning,” researchers said. 

Sana Biotechnology and Lyell Immunopharma are two companies with valuations over $1 billion, which shows great promise for merger and acquisition activity for the rest of the year and into 2021.

According to researchers, a move onto the public markets are more likely than an acquisition. 

Over the first half of 2020, the pharmaceutical industry has witnessed substantial success in producing effective treatments, with many pharmaceutical companies launching their own potential COVID-19 vaccines and antivirals in order to reduce the side effects of the virus. 

Five COVID-19 vaccines have generated clinical data so far, with Moderna’s mRNA-1273 vaccine and BioNtTech/Pfizer’s antibody, BNT162, leading the way. 

And while Gilead has been the most successful company producing an antiviral and achieving emergency use approvals for its antiviral, remdesivir, Eli Lilly and Company and Regeneron lead the way in antibody development, researchers found.

As part of Trump’s Operation Warp Speed project, Regeneron’s two-antibody “cocktail” treatment is now in a Phase III study, whileLilly’s antibody, LY-CoV555, is currently being tested in a Phase II trial evaluating 400 mild to moderate COVID-19 patients.

Abbott and Roche were also granted emergency use for their COVID-19 tests and antibody treatments.

Although Astrazeneca’s AZD1222 showed early promise, the first clinical data published in the Lancet found that AZD1222 didn’t reach its full potential. Similarly, Roche’s rheumatoid arthritis drug, Actemra, and Sanofi’s Kevzara, had no real benefit against COVID-19 in severely ill patients who required ventilators. 

During the COVID-19 pandemic, pharmaceutical company Novavax has been granted the most US government funding during the pandemic.

Specifically, the company’s performing stock of 2020 was confirmed when it was singled out for a $1.6 billion award in early July, just over the funding granted to Astrazeneca/Oxford University two months earlier.

The company will use the $1.6 billion to fund a 30,000 subject Phase III trial starting in the fall, build out manufacturing the and supply the US government with 100 million vaccine doses by late 2020, researchers said.

Novavax also received $388 million from the Coalition for Epidemic Preparedness Innovations. 

The biopharma sector’s key role in fighting COVID-19, however, did not prevent declines in March, researchers noted.

Specifically, Merck & Co and Pfizer saw 15 percent and 17 percent declines, respectively, in the first half of the year. These declines were largely based on concerns about replacing existing franchises.

But Moderna added $14 billion in market cap in the second quarter, as its share price more than doubled. And Regeneron’s valuation grew by $16 billion over the second quarter, with a market cap of $66 billion in early July. 

Vertex is also doing well, but for non-pandemic reasons. The group’s shares increased 33 percent this year and the company’s market cap is $75 billion. 

“With coronavirus capturing investors’ attention, and stock markets seemingly in good health, swathes of the biopharma sector are heading into the second half in a strong position. There are always clouds on the horizon, of course, the pandemic being the most ominous one right now,” researchers concluded.