Biopharma M&A Volume, Value Bounced Back Significantly
In Q4

Biopharma M&A Volume, Value Bounced Back Significantly In Q4

Acquisition activity in the biopharmaceutical sector saw a strong uptick in deal value and an exponential increase in total deal value during the fourth quarter, according to data from Evaluate.

Merger and acquisition activity in Q4 2023 flipped the script after a sluggish third quarter, with 10 transactions valued at $1bn or more and two valued above $10bn, according to data recorded by Evaluate. A total of 39 biopharma M&A deals during the quarter with an aggregate value of nearly $59bn accounted for a more than 60% increase in deal volume, while aggregate value rose more than four-fold from quarter to quarter.

The increase in deal volume from 24 to 39 put the industry’s M&A pace back on track as the sector had posted at least 30 M&A deals per quarter dating back to Q2 2021, according to Evaluate. The Q4 aggregate deal volume was in line with the 35 reported in Q1 and the 36 in Q2.

Full-year deal volume increased from 2022 (126 M&A transactions) to 2023 (135).

In terms of full-year aggregate value, the strong fourth quarter pushed the 2023 M&A total to $153.4bn, the highest since before the COVID-19 pandemic. The industry made $239.2bn worth of acquisitions in 2019, which fell off sharply to $131bn in 2020 and hovered just above $90bn in both 2021 and 2022.

All told, 2023’s deals posted an average value of $848m, although the average declines to $613m when factoring out the Pfizer/Seagen transaction, the year’s sole

mega-merger. As always, valuation is challenging to assess, because many deal announcements do not provide detailed figures – only 21 of Q4’s 39 included publicly disclosed valuations – and some of the reported valuation information includes milestone payments and sales royalties that may never be realised.

For the quarter, the aggregate value of M&A activity was $58.86bn, up exponentially from the $13.08bn seen in Q3. The Q4 number also doubled the healthy $29bn in aggregate value realised during the second quarter.

2023 M&A Activity Finished With A Bang

M&A activity picked up as Q4 went on, as December brought 14 transactions, including the largest of the quarter, Bristol Myers Squibb Company’s pre-Christmas splurge of $14bn for Karuna Therapeutics, Inc.. The pharma’s move to expand its neuroscience portfolio, driven by Karuna’s M1/M4 receptor agonist KarXT (xanomeline-trospium), which is under US Food and Drug Administration review for schizophrenia, was the year’s second-largest M&A play, trailing only Pfizer Inc.’s $43bn buyout of Seagen Inc. in March. BMS then closed out the year on 26 December with a $4.1bn bid for the radiopharmaceutical firm RayzeBio, Inc..

Three of 2023’s biggest M&A transactions and two of its $10bn-plus deals occurred toward the end of the year. AbbVie Inc. was quite busy late in the year, paying $10.1bn to acquire ImmunoGen, Inc. and $8.7bn just a week later to pick up Cerevel Therapeutics Holdings, Inc.

With its purchase of ImmunoGen on 30 November, AbbVie is investing in the cancer antibodydrug conjugate space – a focus of significant dealmaking in 2023 overall – despite its previous disappointment with Stemcentrx, Inc. and failed lung cancer ADC Rova-T. Despite that setback, the firm has four cancer ADCs in clinical development; the ImmunoGen takeout will add Elahere (mirvetuximab soravtansine), the first ADC approved to treat ovarian cancer, to its portfolio.

Fourth Quarter M&A

These are the five largest M&A deals of Q4 2023 by upfront dollar value.

Together, the BMS/Karuna deal and the AbbVie/ImmunoGen transaction comprise the two $10bn-plus deals inked during Q4 and half of four such deals for all of 2023. Merck & Co., Inc.’s $10.8bn acquisition of Prometheus Biosciences, Inc in April and Pfizer/Seagen are the others.

AbbVie is seeking to build out its neuroscience portfolio with the 6 December Cerevel deal, which at $8.7bn is the year’s fifth-largest. Emraclidine, a positive allosteric modulator of the muscarinic M4 receptor now in Phase II for schizophrenia, drove the deal, but AbbVie sees the drug as offering potential in numerous neuropsychiatric indications. In addition, AbbVie also gained clinical candidates for Parkinson’s disease, depression, epilepsy and panic disorder.

Larger Companies Deploying Their Capital

M&A activity during Q4 saw several of the industry’s larger players dipping into their capital reserves to add pipeline assets and in some cases commercial products as patent expirations for top-selling drugs loom during the remainder of the decade. Some of the activity also might have been driven by concerns about how Medicare drug price negotiations under 2022’s Inflation Reduction Act might impact current product portfolios.

More than one-third of the quarter’s M&A takeouts (15/39) were executed by eight larger companies, with AbbVie and BMS leading the way with three buyouts each. AstraZeneca PLC Eli Lilly and Company and Roche Holding AG each made two acquisitions during the quarter, while Merck, Boehringer Ingelheim GmbH and Gilead Sciences, Inc. tallied one buyout apiece.

In addition to its larger acquisitions in December, AbbVie also bought Parkinson’s diseasefocused Mitokinin, Inc. for $655m in October. Alongside its takeouts of Karuna

and RayzeBio, BMS anted up $4.8bn for Mirati Therapeutics, Inc. in October, which brought it a hedge against the coming patent expiry for Opdivo (nivolumab) in the lung cancer drug Krazati (adagrasib).

AstraZeneca also made two sizeable deals in December, with the buyout of cancer and autoimmune cell therapy specialist Gracell Biotechnologies Co. Ltd. for $1.2bn on 26 December. That deal bracketed AstraZeneca’s buyout of Icosavax, Inc. on 12 December for $858m up front, which brought in IVX-A12, a potential first-in- class, Phase III-ready, combination protein virus-like particle vaccine that targets both respiratory syncytial virus and human metapneumovirus.

Lilly made its acquisitions early in the fourth quarter, paying $1.4bn on 3 October for POINT Biopharma Global Inc. and then acquiring Mablink Bioscience at undisclosed terms on 18 October. Both were cancer-focused deals, with Point bringing Lilly investigational radiopharmaceuticals that could help in the treatment of prostate and gastrointestinal cancers, while Mablink offers its linker technology for ADC development.

Meanwhile, Roche committed more than $10bn in a pair of Q4 acquisitions. The Swiss pharma paid $7.1bn up front to Roivant Sciences Ltd. in a deal announced on 23 October and closed on 14 December to acquire Televant and its investigational antibodies for inflammatory bowel disease, and then added to its R&D capabilities in metabolic disease by paying $2.75bn up front on 4 December for Carmot Therapeutics Inc.