Life Sciences M&A is picking back up, with biotech and pharma deals leading the way. After dropping in 2021 and 2022, the sector is showing signs of life.
According to industry analysts, “Immunology and oncology are two key therapeutic areas that have seen significant scientific breakthroughs in recent periods and have drawn interest from big pharma and biotech.” This has held true recently: just last week Morphimmune, which develops targeted oncology therapeutics, announced it was being acquired by Immunome (Nasdaq: IMNM) for $125 million, and Tourmaline Bio, Inc., which developing antibodies for immune disorders, announced it acquisition by Talaris Therapeutics, Inc. (Nasdaq: TALS) for $210 million.
M&A Activity for Biopharma Therapeutics and Platform Companies
While cheap capital, massive investments, and high demand for covid treatments propelled biotech in 2020 and into 2021, times have changed. Like the rest of the market, biotech and other life sciences companies have faced headwinds from a variety of directions:
- The Federal Reserve’s aggressive interest rate increases
- Tight labor markets
- Threats of heighten regulatory scrutiny
The life sciences industry faced particular challenges as well. The FDA began exercising increased scrutiny of accelerated approvals in 2022, requiring that companies begin trial sooner in the cycle. Further, the Inflation Reduction Act of 2022, which “mandates a series of changes over the next six years that will dramatically affect drug pricing . . . . Among its most far-reaching measures is the authorization for the Centers for Medicare & Medicaid Services (CMS) to negotiate prices for certain high-costs drugs.”
Biotech IPOs plummeted in 2022
Analysts predict better times ahead. Not only have “price gaps between buyers and sellers have begun to narrow,” according to PwC, “[i]mproving conditions such as higher procedure volumes, easing supply chain challenges and new technologies coming to market are likely to support increased M&A activity.”
According to Matterhorn’s comprehensive M&A database, which harnesses AI to track current and historical deals, Morphimmune is advised by Cooley LLP, while Immunome is advised by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Tourmaline is also advised by Cooley LLP while Talaris is advised by Goodwin Procter LLP.