The 10 Most Innovative Life Sciences Deals of 2017
Life Sciences Law Firm Index | Q1 2018
In recent years, Lake Whillans has published extensively on the multifaceted interplay between the legal market and the life sciences industry, specifically identifying the most active and relevant law firms for life science companies. This year, Lake Whillans is flipping the telescope around with the publication of The 10 Most Innovative Life Sciences Deals of 2017. Rather than focusing on the firms involved, this feature highlights those transactions best exemplifying some of the most significant emerging trends in the life sciences and biotech space. Our list includes transactions concerning new market opportunities, contract research organizations, precision medicine, the digital-pharma convergence, and an array of other hot topics in the sector.
The life sciences are among the very few industries where companies insist on industry-specialized advisors. This holds true not only for legal counsel, but for all potential partners who can help protect innovators’ interests at every stage of the product life cycle. Such partners can–in the case of an unforeseen setback or conflict– include litigation financiers. Thus Lake Whillans’ preeminent technical expertise on the litigation finance side is informed by deep industry-specific research and insight. Should an innovative company or entrepreneurial litigator need help with a meritorious claim, Lake Whillans is there to step in.
Looking back at 2017
Despite projections to the contrary, 2017 was not a banner year for life sciences M&A in the United States. European counterparts were far more active due, in part, to uncertainty with the Trump administration–from the impact of tax reform to the ongoing efforts to repeal and replace the Affordable Care Act. The value of U.S. deals fell by 30 percent, according to data from Bloomberg. By contrast, buyers spent $680 billion investing in acquisition targets in Europe last year, a 23 percent increase over 2016. That trend was underscored by Johnson & Johnson’s acquisition of Swiss pharma company Actelion in one of the largest deals of the year.
Still, 2017 marked the arrival of regulator approvals for gene therapy, fueling a growing interest in genetic testing technologies and advancements in cancer immunotherapy treatments. These advancements in cancer therapeutics continue to fuel acquisitions in this sector, as well as heightened interest by companies in entering the precision medicine space. Oncology tends to be the largest drug category, and the advancements some companies have made with CAR-T and other precision medicine treatments made them attractive acquisition targets, exemplified by Kite Pharma, which Gilead Sciences snapped up last year. Similarly, Celgene was attracted to autoimmune startup Delinia. Even non-traditional companies made biotech acquisitions, such as Konica Minolta’s acquisition of Ambry Genetics to build a foundation for a precision medicine business of its own.
The weight management crisis faced by the United States and other countries also manifested in deal activity. For example, Allergan’s play for non-surgical body contouring company Zeltiq Aesthetics underscores the potentially explosive market for noninvasive procedures addressing weight management.
Contract research organizations also continued to be an increasingly hot sector for deals. In 2016, IMS Healthcare’s acquisition of Quintiles was the big story. But CRO deals accelerated last year, with Pamplona Capital Management scooping up PAREXEL for $5.2 billion and lab testing behemoth Lab Corp. acquiring Chiltern for $1.2 billion. Albany Molecular Research was acquired by Carlyle Group and GTCR for $922 million and taken private. CROs INC Research and inVentiv Health merged in a $4.6 billion transaction.
Although there were plenty of deals of all shapes and sizes in 2017, the ones we’ve highlighted here were not determined exclusively by dollar value. Rather, in the expert judgement of the MedCity News editorial team, these deals reflect some of the most significant emerging or growing trends in the life sciences and biotech space. For example, we have included the $100 million Roche acquisition of mySugr. Roche’s play reflects the convergence of pharma with digital health and the interest in providing more consumer-friendly services that engage patients and help pharma companies use data to better understand customers. Although many pharma companies are partners with digital health companies, few have yet actually gone so far as to acquire these businesses.
In no particular order, here is our list of the 10 Most Innovative Life Sciences Deals of 2017:
1. CRO bonanza punctuated by $4.6 billion INC Research and inVentiv Health merger
INC Research, a publicly traded North Carolina-based contract research organization merged with privately held, Boston-based inVentiv Health to create the second largest biopharmaceutical outsourcing provider. The combined company, called Syneos Health, will have more than 22,000 employees across more than 60 countries. Michael Bell, Chief Executive Officer of inVentiv Health, said, “As biopharmaceutical companies of all sizes face increasingly complex challenges to bring products to market, they are seeking comprehensive outsourced solutions across the clinical and commercial spectrum. The new company is purpose-built to address market realities where clinical and commercial must work together, sharing expertise, data and insights, to improve client performance.” The deal will help the combined companies reach two different markets — the small to medium sized biopharma customer base INC Research has built with the big pharma customers of inVentiv Health.
INC Research: Sullivan & Cromwell
inVentiv Health: Weil, Gotshal & Manges
2. Johnson & Johnson acquires Actelion in $30B deal
Johnson & Johnson’s paid $30 billion ($280 per share) in cash to acquire Swiss biotech firm Actelion, mainly known for drugs treating pulmonary arterial hypertension. “The main reason of this deal is to continue to build on the strength of the pulmonary hypertension franchise and the late-stage pipelines of Ponesimod, Cadazolid as well as the agreement to commercialize the ACT 577,” said J&J’s Joaquin Duato. Ponesimod and Cadazolid are drugs being developed to tackle multiple sclerosis and Clostridium difficile-associated diarrhea. ACT-577 is a resistant hypertension drug in Phase II trials. The deal creates a new spin-off company that will work on pipeline products and in which J&J will have a 16 percent equity stake.
J&J: Cravath, Swaine & Moore; Homburger AG
Actelion: Wachtell Lipton Rosen & Katz; Slaughter & May
3. Celgene acquires autoimmune startup Delinia for $775M
As recently as September 2016, Delinia was a fledgling autoimmune startup, launching with just four full-time staff. Last year, Celgene Corporation acquired Delinia for an upfront $300 million and an additional $475 million in milestone-based payments. Instead of suppressing the immune system — the conventional approach — Delinia hopes to restore balance to the immune system by targeting the relationship between effector T-cells and regulatory T-cells (Tregs). Delinia’s lead candidate, DEL106, binds interleukin 2 receptors, helping the immune system police itself. With this approach, DEL106 has the potential to treat a range of autoimmune diseases, including systemic lupus erythematosus, Type 1 diabetes, rheumatoid arthritis and scleroderma.
Delinia: Goodwin Procter; Wilson Sonsini
4. Quest Diagnostics’ Cleveland HeartLab acquisition reflects personalized medicine trend
Quest Diagnostics snapped up Cleveland Clinic spinoff Cleveland HeartLab in an equity deal and formed a strategic collaboration with the health system. The acquisition gives the national clinical lab testing business access to the HeartLab’s proprietary tests identifying biomarkers associated with cardiovascular disease that go well beyond the conventional screening tests for cholesterol. Quest said that it plans to make the Cleveland HeartLab a center of excellence for cardiometabolic disorders. “Despite a mountain of research showing traditional cholesterol testing can miss heart disease, many patients are still in the dark about their true risk,” said Jake Orville, Cleveland HeartLab CEO, said in a statement. “With investment and focus from a leader like Quest, and access to the science of Cleveland Clinic, Cleveland HeartLab will be well positioned to accelerate diagnostic innovations that shed light on risk of heart disease for the individual patient.”
Quest Diagnostics: Bass Berry Sims; O’Melveny & Myers; Baker Donelson
Cleveland HeartLab: Jones Day
5. Konica Minolta enters precision medicine with $1B Ambry Genetics deal
Precision medicine is hot and Konica Minolta grabbed a piece of the action. Its Healthcare Americas arm paid $1 billion to acquire Ambry Genetics. Konica views the deal as a “stepping stone” marking its debut as a player in the precision medicine space and plans to bring Ambry’s products to Japan and then to Europe. Shoei Yamana, Konica Minolta CEO said that the deal marks the first in a series of initiatives to build Konica’s precision medicine profile. “ [W]e will have the most comprehensive set of diagnostic technologies for mapping an individual’s genetic and biochemical makeup, as well as the capabilities to translate that knowledge into information the medical community can use to discover, prevent, and cost-effectively treat diseases.”
Konica Minolta: Baker McKenzie
Ambry: Jones Day
6. Lilly drops $960M to acquire CoLucid and its late-stage migraine drug
Eli Lilly acquired CoLucid Pharmaceuticals for $46.50 per share in an all-cash transaction. That’s around $960 million for a one-trick pony, in the best possible sense of the word. CoLucid was built around lasmiditan, a migraine drug first discovered by Lilly and then out-licensed to CoLucid in 2005. Lasmiditan acts on 5HT1F receptors in the brain through a novel pathway that bypasses many of the problems associated with standard migraine drugs. If all goes according to plan, Lilly could file for FDA approval of lasmiditan as early as this year. “Lasmiditan is a novel, first-in-class molecule that could represent the first significant innovation for the acute treatment of migraine in more than 20 years,” said Lilly CEO David Ricks.
Lilly: Weil Gotshal
CoLucid: Faegre Baker Daniels
7. Roche acquires leading mobile diabetes platform mySugr
At $100 million, Roche’s acquisition of mySugr, an Austrian digital diabetes management business is far from the biggest financial transaction in this list. But it represents a milestone for pharma’s interest in using digital health tools as an extension of its medication. The goal here is to engage patients and help them understand their and track their conditions. mySugr’s application deploys “a diabetes monster” avatar to alert users when they make poor food choices based on their glucose levels. It also lets users print or email their log to their physician so they can check out their health between appointments. Additionally, the app calculates insulin doses via a Bolus calculator.
mySugr: Milbank Tweed
8. Gilead acquires Kite Pharma to build its business in CAR-T oncology treatments
Gilead Sciences’ acquisition of Kite Pharmaceuticals marks its largest acquisition to date and will help it to move beyond its strong performing hepatitis and HIV drugs and diversify its product offerings. Two months after the acquisition, Kite’s Yescarta chimeric antigen receptor T cell therapy received FDA approval as the first such drug for treating adult patients with relapsed or refractory large B-cell lymphoma and the second CAR-T treatment to be approved by the FDA. For some, the deal recalled Gilead’s last major deal six years ago to acquire Pharmasset which established the drug developer’s hepatitis business. Yescarta adds a whole new layer of complex medications to Gilead with a narrower patient population but also a gateway to a new generation of cancer treatment therapies.
Kite Pharma: Sullivan & Cromwell; Cooley
9. Allergan acquires body sculptor Zeltiq for a cool $2.5B
Dublin, Ireland-based Allergan made a substantial move into the aesthetic devices market in acquiring non-surgical body contouring company Zeltiq Aesthetics for $2.48 billion. Allergan, the owner of the Botox brand, said body contouring would become the third pillar of its global aesthetic portfolio. The company states that the global market for body contouring has reached $4 billion. Zeltiq has developed the FDA-approved CoolSculpting system, which eliminates fat cells through a targeted cooling technology applied outside the skin. By doing so, it can “selectively reduce stubborn fat bulges that may not respond to diet or exercise,” without the need for anesthesia, needles or surgery.
Allergan: Debevoise & Plimpton
10. PerkinElmer scoops up German diagnostics company for $1.3B
PerkinElmer acquired Euroimmun Medical Laboratory Diagnostics AG, a Lübeck, Germany-based diagnostics company with a focus on allergies, autoimmune, and infectious diseases. Diagnostics represent a small fraction of PerkinElmer’s capabilities, which span analytical instruments, consumables, drug discovery, and more. The deal aims to solidify PerkinElmer’s foothold in those fields, while also helping the company expand its presence in China and other emerging markets. Euroimmun operated in more than 130 companies, with approximately 45 percent of its revenue coming from China. A further 30 percent is derived from Europe, the Middle East, and Africa.
PerkinElmer: Hogan Lovells, McDermott Will; WilmerHale
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