Transformational deals that shaped the industry in 2014

November 11, 2014 ctheodoropulos

Led by moderator David Stubbs, the Managing Director for Inverness Advisors, the goal for this BIO-Europe® panel was to provide insights for transformational deals of the past year.

The session was led off by a truly transformational deal that saw the USD 14.2 billion divestiture by Merck of its consumer healthcare business to Bayer HealthCare in May, 2014. The deal makes Bayer the second-biggest over-the-counter drugs maker behind Johnson & Johnson.

Transformational Deals Panel, BIO-Europe 2014

Transformational Deals Panel, BIO-Europe 2014

“For Merck the deal helped focus and narrow the core business of looking for novel therapeutics and to double down on our commitment to innovative R&D,” according to Iain Dukes, the Senior VP for Business Development and Licensing at Merck. That deal was coupled with a co-development and co-commercialization deal with Bayer for early stage cardiovascular therapeutics where the companies will equally share costs and profits from the soluble guanylate cyclase (sGC) pathway modulators.

A second deal Duke highlighted was another that Merck was involved in: their acquisition of Idenix Pharmaceuticals that gives Merck access to a potent and safe nucleotide hepatitis C candidates.

For AstraZeneca a large-scale and truly transformative deal came to fruition this year when, according to Shaun Grady, VP for Business Development Operations, his company rose from being the junior partner in a peer-peer partnership with Bristol-Myers Squibb (BMS) to emerge as the full owner of a diabetes franchise developed over seven years.

There are probably four or five deals rolled into this one, each a case study in itself, said Grady.

“We partnered with Bristol-Myers Squibb in 2007 to co-develop and co-promote on a risk-share, cost-share basis BMS’s diabetes products. It has become something of a template for such partnerships and was a very successful partnership,” said Grady.

In 2013 he said the partners decided to extend the portfolio with the USD 7 billion joint acquisition of diabetes specialist Amylin to bring that company’s products into the franchise.

“The story didn’t end there,” he added, “because relatively soon after that BMS took the decision to focus more sharply on its oncology pipeline at the very same moment that AstraZeneca decided diabetes was going to be a core strategic focus area. Earlier this year we completed the totality of a buyout of BMS’s interests in the partnership.”

Adam Keeney, the Global Head for External Innovation Operations Strategy, Science Policy and External Innovation for Sanofi offered his views on the deal with Alnylam, saying it is “certainly interesting from a scientific standpoint for the products included and the fact that it is in the RNAi space, which has been for some time an exploratory technology but that for the first time is showing very interesting clinical data.

“The deal is also of interest for BIO-Europe participants for its structure, actually three or four deals rolled into one,” he explained, including an option on new products coming through the pipeline and a significant equity investment.

“A transformative deal is any deal that brings in a transformative product,” said James Sabry, the Senior VP and Global Head of Partnering for Genentech as he warmed up to presenting the company’s acquisition of San Diego-based Seragon.

James Sabry, the Senior VP and Global Head of Partnering for Genentech

James Sabry, Senior VP and Global Head of Partnering for Genentech

“It was a rich deal where we paid USD 725 million upfront for a Phase I asset,” he acknowledged. “It gave them cash, but more importantly, what sold the deal for Seragon, and what we were most proud of, was putting together a clinical development plan that was transformative.”

Business development executives and biotech tend to focus on the cash and the liquidity components of a deal, he said, “but there is a third component, which is asking what the pharma company is going to do with your asset. That is becoming essential, and I would argue that it is the most important thing for biotechs to scrutinize heavily.”



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