Theratechnologies Inc T.TH

More deals today: Oncology biotech takeover multiples

[Wino115]

Hopefully for a future view on THTX. Deals heating up given the 12 month valuation swoon.  New deals announced this week.  Here's some comments and the average multiples for oncology takeovers over the last 5 years.  Way to early to even think this way given no POC yet, but worth tucking that muiltiple in the back of your mind should we see even a modest degree of success with Sort1 platform and future revenues being captured in many cancer types.  The ADC Peer deals, led by possible SeaGen deal, would be most comparable for Sort1+, so let see if EXEL, CTMX or MGNX are taken over in the future.  Recall, bispecifics are a very complicated form of ADCs where they attempt to fool the resistance mechanism in the tumor so more chemo gets to work. The actual mechanism of action is very complicated  (a second procedure that must happen for it all to work) compared to something like the existing ADCs or TH1902 approach. 

From analyst:

"Key Takeaways: We believe a number of data points starts to suggest accelerating M&A in SMid cap oncology with a) today’s acquisition of F-star Therapeutics by invoX Pharma (subsidiary of Sino Biopharma, not covered), b) Galapagos (GLPG.AS, covered by Emily Field) acquisition of cell therapy companies (CellPoint and AboundBio) and c) two reports last week of M&A interest in Mereo (M&A: Potential Acquisition Mereo; Positive for Oncology Space & Read-through to TIGIT peer RCUS, 06/17/22) and Seagen (M&A Take 2: Potential Acquisition of Seagen; Positive for Oncology Space & Read-through to Commercial-stage and ADC peers: EXEL, CTMX, MGNX, 6/17/22). Today, invoX Pharma (subsidiary of Sino Biopharma, not covered) announced the acquisition of F-star Therapeutics for $161mn in cash (~79% premium) – see Figure 1 below for our analysis of M&A.

We have three takes: 1) Positive for biotech tape – we’ve already seen a number of oncology-related acquisitions in 2Q: We have already seen a potential uptick in oncology related M&A with three acquisitions in 2Q – a) Glaxo/Sierra Oncology Deal – Positive for Oncology Space, and Read-through to Heme Space and Late-Stage Assets, 4/13/22; b) Regeneron/Checkmate Deal – Encouraging Immune Stimulating Deal, Positive for Oncology Space, 4/19/22; and c) Bristol/TPTX: M&A - Positive for Oncology Space, and Positive Read-through to Targeted/Driver Mutation Stocks; KURA, SNDX, BPMC, 6/3/22,

 2) Potential positive read-through to bispecific peers; CytomX (CTMX, OW-rated), MacroGenics (MGNX, OW-rated), and Xencor (XNCR, UW-rated), and 3) A positive for 2H stock selections based upon catalysts/pullback and cash runways – Our Screen of Catalysts & Cash Runway During a Difficult Biotech Tape; Positive On IOVA, KURA, and RCUS, 06/22/22."

Last 5 years oncology M&A Deal mulitiples on revenues:


Averages:  
Transaction Value - $6,530mil
Multiple on 5 Yr Revs - 9.0x
Premium to Mkt Price - 102%

Medians:
Transaction Value - $1,993
Multipel on 5 yr Revs - 6.4x
Premium to Mkt Price - 79%