RE:EY sees bolt-ons in the single to double digit billions now This scenario is active and in play .... so with future ONCY annual earnings of potentilly US$8.5 per share these future potential earnings equates to a company acquisition valuation of >US$ 8.0 Billion.
Easy peezy. And now that ONCY has 2 potential Phase 3 cancer indications to offer up the potential for a higher valuation is now on the table especially when a company such as Immunomedics was acquired for US$21 Billion and doesn't have the Platform Technology that ONCY's pelareorep can provide. Noteable - (9/21/2022 6:33:58 PM)
EY sees bolt-ons in the single to double digit billions now
“Bullish” Biopharma M&A Market Predicted for Closing Months of 2022
Subin Baral, EY’s Global Life Sciences Deals Leader, discusses what’s driving mergers and acquisitions with GEN Edge
August 2022 - Subin Baral, a partner at Ernst & Young LLP and EY Global Life Sciences Deals Leader, discussed current and projected short-term trends for biopharma M&A with GEN Edge. Subin Baral: We’ve seen some of the recent deals that Pfizer’s done, most recently its deal with Biohaven, and the deal GSK did to acquire Sierra Oncology. You are seeing a lot of deals coming back, with the biotechs having the opportunity to partner with the big biopharma companies, or be acquired by them. GEN Edge: Pfizer-Biohaven was an $11.6 billion deal, and GSK-Sierra, $1.9 billion. What values can we expect to see for future M&A deals?
Baral: You never say never to megadeals, such as the $20-30-plus billion deals. But a lot of these bolt-ons, in the single- to double-digit billions, are in play in our view, if you look at macroeconomic trends and the headwinds with geopolitical issues. I know there’s a lot of noise around that. But the industry fundamentals are very strong.
GEN Edge: What are those fundamentals?
Baral: When we say the fundamentals are strong, if you look at the business drivers for the biopharma companies, there are four things. 1) the available firepower. 2) the revenue gap. 3) the R&D pipeline. And 4), the patent cliff that companies are facing. If you look at these elements, we feel pretty confident that dealmaking is the way to bridge those gaps.
If you think about it, the big pharma companies are increasingly getting faced with LoE [loss of exclusivity] pressures that are looming between 2024 and 2026. We all know that the industry is going to grow but that there is not enough in their pipeline to be able to bridge the growth gap due to the revenue loss from the patent cliff.
Then, add to the fact that there is now a much more normalized level of valuation. Then also add that these large pharmaceutical companies are sitting on a record firepower, so they have cash to do deals. These are fundamentals that we think are going to be very important, and indicative that this M&A market is going to be bullish in the second half of the year.
Obviously, the focus is on the quality of assets. And frankly, if you look at what the stock market downturn did for biotech, it really cut out a lot of the companies that were in the fringes. They probably shouldn’t have been out there to start with. So you’re now in a group with a lot of quality assets. We also feel that it would be much more competitive for a lot of the quality biotech companies.
GEN Edge: How much firepower do biotech and pharmas have for M&A deals now?
Baral: $1.2 trillion is the firepower available for the biopharmas to do deals.
GEN Edge: What types of drug development or technologies are most likely to stoke M&A activity in the second half?
Baral: Those areas haven’t changed. I know we’ve talked a lot around antibody therapies, cell and gene therapy. Oncology has continued to be a big area, and you’ve seen that by the number of deals that that took place in the second quarter. Obviously for Pfizer, CNS drug development is coming back for them. Other companies are looking at that focus area.
One thing that this Biohaven deal seems to suggest is that companies are looking at some of their focus TA [therapeutic areas], and how do we look at growing some of these focus TAs?
GEN Edge: What if any narrowing is there in the types of collaboration that are more likely to go forward and maybe less likely?
Baral: I think in general that collaboration is here to stay. But how do you turn these collaborations into meaningful M&A opportunities? That is where the big questions are. And the collaborations that we’ve seen be successful are the ones where the larger companies have gone in and have good relationships, with an inside track to the quality of the data and the quality of management that are in place.
So, general structures [of collaborations] are not necessarily changing from what we see. But I think a lot of focus on the types of the data and the management that they’re dealing with is what is being seen as critical success factors.
GEN Edge: Meaning more collaborations that potentially could lead to an M&A?
Baral: Exactly.
GEN Edge: How will increasing M&A affect premiums for future deals? How might those change with more companies getting bought?
Baral: If you look at the types of assets that are getting the high premiums, they are the quality assets. So, I think the focus is now on the quality of these assets that are being acquired.
The seller will have to be much more ready with the value story, with the management profile, the strategic alignment that they could share with the buyer. There’s a lot more onus on the seller to showcase that they’re ready for the next step in the journey. So that will drive the premiums, and the good quality assets will command the premiums that that they deserve.
GEN Edge: Does that necessarily mean that later-stage candidates will need to be in the clinic longer?
Baral: If you look at a lot of the larger pharma companies, their policy had been that they look at Phase II and beyond for assets, generally. Now the challenge is becoming for them, how do I get into these assets earlier and earlier, because of the quality of these assets, and tap into them as early as I can?
This is where collaborations and partnerships really come into play. So, you see why companies are focused on collaborations. Some of these minority stakes and so forth are not just going away, because the need to access this innovation early in the process is even more acute. So, assets do not necessarily have to stay in the labs longer, but perhaps they stay in the labs longer to generate quality data, in collaboration with the larger players.
GEN Edge: How much does this push companies to narrower pipelines, maybe focusing on one or two areas rather than more?
Baral: That is probably more important now. I think you probably want to focus on your key areas and be really good at those two one or two, whatever those are, than having much broader trials or fields that that may or may not be explored.
At the end of the day, buyers are only interested in the areas that are much more mature, much more robust from a data perspective, management perspective and so forth. While other areas might still have a value in the very long term, [is] being focused on key areas is where the opportunities are for the companies.
https://www.genengnews.com/financing/bullish-biopharma-ma-market-predicted-for-closing-months-of-2022/
Noteable - (9/21/2022 6:33:58 PM)
EY sees bolt-ons in the single to double digit billions now
“Bullish” Biopharma M&A Market Predicted for Closing Months of 2022
Subin Baral, EY’s Global Life Sciences Deals Leader, discusses what’s driving mergers and acquisitions with GEN Edge
August 2022 - Subin Baral, a partner at Ernst & Young LLP and EY Global Life Sciences Deals Leader, discussed current and projected short-term trends for biopharma M&A with GEN Edge. Subin Baral: We’ve seen some of the recent deals that Pfizer’s done, most recently its deal with Biohaven, and the deal GSK did to acquire Sierra Oncology. You are seeing a lot of deals coming back, with the biotechs having the opportunity to partner with the big biopharma companies, or be acquired by them. GEN Edge: Pfizer-Biohaven was an $11.6 billion deal, and GSK-Sierra, $1.9 billion. What values can we expect to see for future M&A deals?
Baral: You never say never to megadeals, such as the $20-30-plus billion deals. But a lot of these bolt-ons, in the single- to double-digit billions, are in play in our view, if you look at macroeconomic trends and the headwinds with geopolitical issues. I know there’s a lot of noise around that. But the industry fundamentals are very strong.
GEN Edge: What are those fundamentals?
Baral: When we say the fundamentals are strong, if you look at the business drivers for the biopharma companies, there are four things. 1) the available firepower. 2) the revenue gap. 3) the R&D pipeline. And 4), the patent cliff that companies are facing. If you look at these elements, we feel pretty confident that dealmaking is the way to bridge those gaps.
If you think about it, the big pharma companies are increasingly getting faced with LoE [loss of exclusivity] pressures that are looming between 2024 and 2026. We all know that the industry is going to grow but that there is not enough in their pipeline to be able to bridge the growth gap due to the revenue loss from the patent cliff.
Then, add to the fact that there is now a much more normalized level of valuation. Then also add that these large pharmaceutical companies are sitting on a record firepower, so they have cash to do deals. These are fundamentals that we think are going to be very important, and indicative that this M&A market is going to be bullish in the second half of the year.
Obviously, the focus is on the quality of assets. And frankly, if you look at what the stock market downturn did for biotech, it really cut out a lot of the companies that were in the fringes. They probably shouldn’t have been out there to start with. So you’re now in a group with a lot of quality assets. We also feel that it would be much more competitive for a lot of the quality biotech companies.
GEN Edge: How much firepower do biotech and pharmas have for M&A deals now?
Baral: $1.2 trillion is the firepower available for the biopharmas to do deals.
GEN Edge: What types of drug development or technologies are most likely to stoke M&A activity in the second half?
Baral: Those areas haven’t changed. I know we’ve talked a lot around antibody therapies, cell and gene therapy. Oncology has continued to be a big area, and you’ve seen that by the number of deals that that took place in the second quarter. Obviously for Pfizer, CNS drug development is coming back for them. Other companies are looking at that focus area.
One thing that this Biohaven deal seems to suggest is that companies are looking at some of their focus TA [therapeutic areas], and how do we look at growing some of these focus TAs?
GEN Edge: What if any narrowing is there in the types of collaboration that are more likely to go forward and maybe less likely?
Baral: I think in general that collaboration is here to stay. But how do you turn these collaborations into meaningful M&A opportunities? That is where the big questions are. And the collaborations that we’ve seen be successful are the ones where the larger companies have gone in and have good relationships, with an inside track to the quality of the data and the quality of management that are in place.
So, general structures [of collaborations] are not necessarily changing from what we see. But I think a lot of focus on the types of the data and the management that they’re dealing with is what is being seen as critical success factors.
GEN Edge: Meaning more collaborations that potentially could lead to an M&A?
Baral: Exactly.
GEN Edge: How will increasing M&A affect premiums for future deals? How might those change with more companies getting bought?
Baral: If you look at the types of assets that are getting the high premiums, they are the quality assets. So, I think the focus is now on the quality of these assets that are being acquired.
The seller will have to be much more ready with the value story, with the management profile, the strategic alignment that they could share with the buyer. There’s a lot more onus on the seller to showcase that they’re ready for the next step in the journey. So that will drive the premiums, and the good quality assets will command the premiums that that they deserve.
GEN Edge: Does that necessarily mean that later-stage candidates will need to be in the clinic longer?
Baral: If you look at a lot of the larger pharma companies, their policy had been that they look at Phase II and beyond for assets, generally. Now the challenge is becoming for them, how do I get into these assets earlier and earlier, because of the quality of these assets, and tap into them as early as I can?
This is where collaborations and partnerships really come into play. So, you see why companies are focused on collaborations. Some of these minority stakes and so forth are not just going away, because the need to access this innovation early in the process is even more acute. So, assets do not necessarily have to stay in the labs longer, but perhaps they stay in the labs longer to generate quality data, in collaboration with the larger players.
GEN Edge: How much does this push companies to narrower pipelines, maybe focusing on one or two areas rather than more?
Baral: That is probably more important now. I think you probably want to focus on your key areas and be really good at those two one or two, whatever those are, than having much broader trials or fields that that may or may not be explored.
At the end of the day, buyers are only interested in the areas that are much more mature, much more robust from a data perspective, management perspective and so forth. While other areas might still have a value in the very long term, [is] being focused on key areas is where the opportunities are for the companies.
https://www.genengnews.com/financing/bullish-biopharma-ma-market-predicted-for-closing-months-of-2022/