Life Sciences Dealmaking 2015

Laura Vitez and Vinay Singh

11 January 2016

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Vinay Singh: Prior to

joining the Thomson
Reuters team, Mr.
Singh worked as an
investment banker at
Burrill & Company
helping to close over
$250M in public equity
financings and M&As
for life sciences
companies

Laura Vitez: Ms. Vitez

has over 25 years of
experience in the life
sciences industry. She
has held lead or
advisory roles at
multiple small biotechs,
a mid-sized pharma
company, and two
consulting firms,
bringing in over $2
billion in deal dollars.

THOMSON REUTERS
This report contains general information only and is based on the experiences and research of
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that may affect your business, you should consult a qualified professional advisor. Thomson
Reuters, its affiliates, and related entities shall not be responsible for any loss sustained by any
person who relies on this report.

Contents
Mergers and acquisitions (M&A)
Volumes
Valuations
Hostile attempts
Friendly options

Licenses and joint ventures (JV)

Initial Public Offerings (IPOs)
Licensing trends
License/IPO case study

Contact information
5

Mergers and Acquisitions

10 Years of M&A: Volume

Volume of announced life sciences industry-wide M&A events by year

500
450

468

Announced M&A transactions

400

Average 320 events / year

350
300
250
200
150
100
50
0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

NOTE: $$ throughout presentation are USD. All dollars are nominal values (not adjusted for inflation).

M&A 2015: Volume by therapeutic arena

Diversified

2% each

3%

Cancer

3%

Infectious Disease
Neurology
Endocrine/Metabolic
Autoimmune/Inflammatory
Cardiovascular
Dermatologic
Ophthalmology
Genitourinary/Sexual Function
Hematologic
Gastrointestinal
Pulmonary/Respiratory

1% each

3%
3%
AI/Inflam
6%

Diversified
38%

Endo/Met
7%
Neuro
7%
Infect
9%

Cancer
15%

Other/Miscellaneous
NOTE: Excludes deals for non-therapeutic assets, and
therapeutic asset deals for unknown therapeutic arenas.

M&A 2015: Therapeutic arenas cf. 2014

Cancer
Infectious disease
Neurology
Endo/Metabolic
Autoimmune/Inflam
Ophthalmology

2015

Dermatology
Cardiovascular

2014

Hematologic
Genitourinary
Pulmonary/Respiratory

NOTE: Excludes deals for non-therapeutic

assets, and therapeutic asset deals for
unknown or diverse therapeutic arenas.

Gastrointestinal
Other
0

5
10
15
Number of announced M&A events for companies with therapeutic assets

20
9

M&A 2015: Breakdown by stage cf. history

Percent distribution of lead product stages for therapeutic product company M&As
2015
2015
(n(n=89)
= 89)

Disc/Preclinical
n = 20

Phase II
n = 18

2014
2014
(n=71)
(n = 71)

Disc/Preclinical
n = 16

Phase II
n = 16

5 year
5 yearaverage
average
9%
2009
-13
2009-13 Disc/PC
(n(n=425)
= 425)
0%

10%

Approved
n = 28
Approved
n = 21
54%
Approved

23%
Phase II
20%

Early Stage

30%

40%

50%

60%

Phase I

Phase II

80%

90%

100%

Late Stage Products

Clinical Stage Products

Discovery / Preclinical

70%

Phase III

Registratoin

Approved

NOTE: Stage of deal is the most advanced development stage entered by the lead asset on
the sellside of the transaction. For example, a deal for a company whose lead compound has
completed Phase I but not yet begun Phase II is classified as a Phase I event.

10

10 Years of M&A: Aggregate announced dollars

Volume of announced life sciences industry-wide M&A events by year

$600

Announced M&A dollars (US billion)

$500

$515

$400

$300

Average $182B / year

$200

$100

$0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

NOTE: All dollars are USD and are nominal values (i.e. are not adjusted for inflation).

11

10 years of M&A: Aggregate dollars by tier

Annual aggregate M&A dollars by tier

Aggregate announced M&A dollars ($billion)

$550

$515

$500

Total deal size:

$450

> $100B

$400

$10-$100B

$350

$5-10B
$1-5B

$300
$250
$200
$150

$288

< $1B
$175
$135

$166

$114

$140
$105

$100

$113
$71

$50
$0
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

NOTE: All dollars are USD and are nominal values (i.e. are not adjusted for inflation).

12

10 years of M&A: $10+ billion pharma deals

Pfizer/Allergan,
$160 billion

$70.0

PFE/Wyeth

$60.0

Actavis/Allergan

Total deal size ($B)

$50.0
Roche/Genentech

$40.0

Merck/S Plough
Teva/Allergan generics

Novartis/Alcon

$30.0

Shire/Baxalta
$20.0

Actavis/Forest

Bayer/Schering AG

Sanofi/Genzyme

J&J/PFE consumer
$10.0

J&J/Synthes

MerMedImmuneerono

Takeda/Nycomed

S Plough/Organon

Gilead/Pharmasset

AZ/MedImmune

$0.0
20062006

2007
2007

20082008

20092009

2010
2010

2011
2011

2012
2012

Abbvie/Pharmacyclics

PFE/Hospira
Novartis/GSK Onc
Merck KGaA/S Aldrich
Bayer/Merck
Valeant/Salix
2013
2013

2014
2014

2015
2015

20

Year
13

M&A 2015: Pfizer/Allergan reverse merger

SOURCE: NYT DealBook, http://www.nytimes.com/pages/business/dealbook/index.html

14

The Pfizer family tree

Pfizer
WarnerLambert
2000 ($90B)

Pharmacia
2002 ($60B)

Esperion
2003 ($1.3B)

Vicuron
2005 ($1.9B)

Wyeth
2009 ($68B)

King
2010 ($3.6B)

Merger
1950s

Kabi merger
early 90s

AH Robins
1989 ($3.2B)

Jones Phar
2000 ($2.4B)

Parke-Davis
1970s

Procardia
1990 ($2.4B)

American
Cyanamid
1994 ($9.6B)

Alpharma
2008 ($1.6B)

AHP merger
1999

Upjohn
1995 ($7B)

Genetics Institute
1996 ($1.3B)

Agouron

Monsanto/
Searle, 1999
($27.3B)

1999 ($2.1B)

Hospira
2015 ($17B)

Pfizer acquisitions with < $1B or undisclosed total deal size:

Active Adria Alacer Alanex Angiomedics Angiosyn Apollon Bioren BioRexis
Coley Corvita CovX Embrex Encysive Erbamont Excaliard Ferrosa FoldRx
Gene/Networks Genetics Institute Geoffrey Manner Haptogen Icagen Idun
ImmunoPharmaceutics InnoPharma Lab Teuto Leibinger Medco Meridian
Meridica NextWave PowderMed Praxis Redvax Rinat Sensus Serene Sugen
Synbiotics Talaria Thiakis Vesta Vetnex

15

Pfizer value history

$350

Accumulated
total spent on
acquisitions*
($B)

$ US billion (not adjusted for inflation)

$300
$250
$200

Market
capitalization
at year end
($B)

$150
$100
$50
Est.

Annual net
sales ($B)

$0

NOTES:
All dollars are nominal values (i.e. are not adjusted for inflation)
*Acquisition totals exclude milestone payments and stock-for-stock mergers
**2015 data exclude pending acquisition of Allergan

16

M&A 2015: Top three tiers in 2015, $5B and up

Pfizer/Allergan

$160,000

$10B and up

Anthem/CIGNA

Rx: generics / approved

$40,500

Aetna/Humana

$37,000

Shire/Baxalta

16 deals over multiple market segments:

4 rare disease (3 by Shire)
3 generics/specialty pharma
3 health benefits (insurance)
2 Pfizer
2 cancer
1 ulcerative colitis/multiple sclerosis
1 consumer/animal health swap

Health benefits

$32,000 Rx: rare diseases (hematology) / approved

AbbVie/Pharmacyclics

$21,000

Pfizer/Hospira

$17,000

Valeant/Salix

Rx: cancer / approved

Rx: injectables, biosimilars / approved

$11,100 Rx: GI disorders / approved

Alexion/Synageva

$8,400 Rx: rare diseases / BLA filed

Endo/Par
$5 to $10B

Health benefits

$54,000

Teva/Allergan generics

The 13 therapeutics are all late:

10 approved
1 BLA filed
2 Phase III

$8,050 Rx: generics / approved

Celgene/Receptos

$7,200 Rx: ulcerative colitis and multiple sclerosis / Phase III

AstraZeneca/Acerta

$7,000 Rx: cancer / Phase III

Centene/HealthNet

$6,800 Health benefits

Shire/Dyax

$6,500 Rx: rare diseases (HAE) / approved

Shire/NPS

$5,200 Rx: rare diseases (HPT) / approved

BI/Merial

$5,168 Swap of Sanofis animal health biz Merial for BIs consumer health biz + $5.2B cash
$0

$20,000

$40,000

Rx: diversified/ approved

$60,000

$80,000

$100,000

Total deal value ($M)

$120,000

$140,000

$160,000

$180,000

NOTE:
Gray denotes pending transactions.
...... Orange deals have closed.

17

M&A 2015:
Not all deals are friendly and successful ...

18

M&A 2015:
Unsolicited bids and alternative outcomes
Instead ...

Bidder

Target

Date

Bid ($B)

Horizon

Depomed

July 2015

$3.0

Horizon bought Hyperion ($1.1B)

and Crealta ($510M)

Depomed bought 3 pain drugs

from Janssen ($1.05B)

Teva

Mylan

April 2015

$40.1

Teva bought Allergans generics business

($40.5B); also Auspex, ($3.5B), Rimsa
($2.3B), Immuneering, and Gecko

Mylan bid on Perrigo ...

Mylan

Perrigo

April 2015

$28.9

Mylan bought Famy Care's

female health biz ($800M)

Perrigo bought Patheon,

Naturwohl, OTCs from GSK,
and a Crohns Rx from AZ

Endo

Salix

March 2015

$11.2

Endo bought Par ($8.05B)

Valeant bought Salix ($11.1B)

AbbVie

Shire

June 2014

$46.0

Valeant

Allergan

April 2014

$45.5

Pfizer

AstraZeneca

May 2014

$119.0

Shire bought Dyax ($6.5B), NPS ($5.2B),

Foresight ($300M), with a pending
AbbVie bought Pharmacyclics ($21B)
acquisition of Baxalta ($32B)
Actavis bought Allergan in 2014 ($66B)
Valeant bought Salix ($11.1B), Sprout
and this year bought Kythera ($2.1B),
($1B), Amoun ($800M), Dendreon
Naurex ($560M), Oculeve ($125M),
($495M), Synergetics ($192),Unilens,
Auden Mckenzie ($458M), AqueSys
Marathon, Commonwealth BioTech
($300M), with a pending
(US/Can), Mycorrhizal
reverse merger with Pfizer ($160B)
Pfizer has a reverse merger pending
AZ bought ZS Pharma ($2.7B),
with Allergan ($160B), plus bought
Acerta ($700M), and the branded
Hospira ($17B) and Redvax
respiratory biz from Allergan ($700M)
19

M&A 2015: Successfully triggered options

Meritage

Quanticel

Annovation

Shire
(post-ViroPharma acquisition)

Celgene

The Medicines Company

3 yrs 3 mo

3 yrs 5 mo

2 yrs 5 mo

$7.5M

CON participation in Series A with

Versant + $45M over 3.5 years

Medicines Co participated in
$8.75M Series A with Atlas

ViroPharma provided $12.5M in

milestones for Phase II work

Celgene got early access to

technology, team, molecules

Medicines Co had "significant

influence, but not control"

Technology:

Novel form of budesonide for

eosinophilic esophagitis,
from UCSD

Single-cell genomic analysis and

drug discovery platform,
from Stanford

Next-generation anesthetic,
from Mass Gen

Stage when
optioned:

Phase II

Discovery

Preclinical

Acquisition
trigger:

Receipt of data from a final Phase II

study and agreement with FDA on
acceptable Phase III endpoint
(Update: Phase III began Mar 2015)

3.5 years (extendable)

(Update: multiple INDs
expected in 2016)

Completion of Phase II POC

(Update: Phase III began
In Nov 2015)

Acquisition
upfront:

$70M

$100M

$28.4M

Acquisition
contingencies:

$175M

$385M

$26.3M milestones +
low single digit royalties

Acquired by:
Time from option
to exercise:
Option
upfront:
Option term
collaboration:

20

10 years of M&A: Acquisition options by status

Number of options to acquire by option status and year
2015

2014

17
2

Year option announced

2013

15

2012

2011

2010

2009

2008

2007

2006

1
0

Terminated

Acquired

Open

10

12

14

16

18

20

Number of option deals

21

Licensing and Joint Ventures

Biotech markets take a turn

23

Initial Public Offering (IPO) market shows

signs of teetering
Number of Therapeutic IPOs and Aggregate Total Raised By Quarter
30

2012

2013

90%

$3.0

2015

2014

Insider Participation in IPOs

80.0%

$2.5

$2.5

20

$2.0

$2.0

$2.0

$1.8
$1.5

15
28

$1.4
$1.3

$1.1$1.1

10

$1.0 21

15 14 $0.7
5

21

$1.0

$0.8

15

14
12

$0.6
10

4
$0.3 2 2
6
$0.2
$0.2
$0.1
4

60%

57.4%

56.7%

50%
43%
40%

30%
26%

$0.5
20%

10

73.7%

70%

Insider Participation

25

77%
Total Amount Raised (USD B)

Total Therapeutic IPOs on US Exchanges

80%

26%

23%
19%

$0.0

10%

12%
7%

0%
2012
Volume

Amount Raised (USD B)

NOTE: $2B of the $2.5B funding in Q1 2013 was from one IPO Zoetis

2013

2014

2015

Median
% of IPO's w/ 25% or more Insider Participation
24

Post IPO Performance (Issue Price vs. Price 12/31/15)

But IPO market is not closed

150%

Post IPO performance

wasnt great in 2015

100%

Overall 61% of 2015s

Biotech IPOs finished at
or below their issue price

50%

And nearly 20% of 2015s

IPO class lost 50% or more
of its value

0%

(50%)

(100%)
Dec 2014

Feb 2015

Apr 2015

May 2015

Jul 2015

Sep 2015

Oct 2015

Dec 2015

BUTDespite the
downturn in the markets
in mid-September, 12
Biotech IPOs still got out
with favorable valuations
and more than half have
performed very well,
including Aclaris
Therapeutics which
finished the year up 134%

Date of IPO
25

Licenses and joint ventures (JVs) by quarter

Number of Disclosed Licenses/JVs and Aggregate Total Disclosed Deal Value By Quarter
2013

2014

2015
274

250

$24.4

# Licenses and JVs

246
217

200

198

150
137

159

181
128

100

151

$12.9 $13.1

$8.2

$11.0

$4.7

$3.8

$3.2

$10

$8.0
$6.4

$5.2

$20

$15

$14.8

170

$10.7

$6.2

$5.7

171

119
$8.1

218

$25

207

191

182

50

$30

$5

Aggregate Disclosed Deal Value ($B)

2012

300

$0

0
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015

# Licenses/JVs

Aggregate Disclosed Value ($B)

NOTES: This analysis includes all announced licenses and JVs for products or technologies.
Licenses for intellectual property and/or data only are excluded. All dollars are USD.

26

Top ten 2015 licensing transactions by

announced total size
Primary
Rx Area

Licensee

Licensor

Total Size
(US $ M)

Upfront
(US $M)

Sanofi

Hanmi

$4,266

$445

AstraZeneca

Ionis
(fka Isis)

$4,090

$65

Discovery and development of antisense therapies for

cardiovascular, metabolic and renal diseases

Discovery

Diversified

Vertex

CRISPR

$2,625

$75

Vertex and CRISPR to use CRISPR-Cas9 gene editing

technology to discover and develop new treatment for
genetic diseases

Discovery

Diversified

Gilead

Galapagos

$2,075

$300

Gilead Sciences to develop and commercialize Galapagos'

filgotinib against rheumatoid arthritis

Phase II

AI/Inflam

Pfizer

Heptares

$1,890

undisclosed

Heptares and Pfizer to develop novel drugs targeting GPCR

against multiple therapeutic indications

Discovery

Diversified

BMS

Five Prime

$1,740

$350

BMS to develop and commercialize Five Prime's CSF1R

antibody program, including FPA-008 for immunology and
oncology

Phase I

Diversified

Sanofi

Lexicon

$1,730

$300

Sanofi to develop and commercialize Lexicon's sotagliflozin

against diabetes, with an option to license

Phase III

Endo/Meta

Amgen

Xencor

$1,702

$45

Amgen to develop and commercialize Xencor's bispecific

cancer immunotherapy and inflammation programs

Preclinical

Diversified

Sanofi

Regeneron

$1,665

$640

PD-1 inhibitor and other new immuno-oncology antibodies,

with an option

Phase I

Cancer

10

Ultragenyx

Arcturus

$1,570

$10

Arcturus and Ultragenyx to discover and develop mRNA

therapeutics using UNA Oligomer chemistry and LUNAR
nanoparticle delivery platform

Discovery

Diversified

Subject

Stage*

Sanofi to develop Hanmi's Portfolio (specifically 3 assets) of

Reformulation Endo/Meta
long-acting diabetes treatment

*Stage: Recap classifies clinical development program deals by the highest stage entered by the lead asset at the time of
deal signature. E.g., an asset that has completed Phase II but not yet begun Phase III is classified as a Phase II transaction.

27

Top 20 2015 licenses with upfronts > $50M

Licensee

Licensor

Upfront
($M)

Sanofi

Regeneron

Celgene

Equity
($M)

Stage

Rx Area

$640

Phase I

Cancer

MedImmune / AZ

$450

Phase III

Cancer

Sanofi

Hanmi

$445

Reformulation

Endo/Meta

Bristol-Myers Squibb

Five Prime

$350

Phase I

Diversified

Astellas

Immunomic

$300

Discovery

AI/Inflam

Gilead

Galapagos

$300

Phase II

AI/Inflam

Sanofi

Lexicon

$300

Phase III

Endo/Meta

MedImmune / AZ

Innate

$250

Phase II

Cancer

Allergan

Merck

$250

Phase II

Neurology

Novartis

Aduro

$200

$25

Preclinical

Cancer

Celgene

Juno

$150

$850

Phase II

Diversified

Celgene

Nurix

$150

Discovery

Diversified

Merck KGaA

Intrexon

$115

Discovery

Cancer

Celgene

Lycera

$105

Phase I

Cancer

Janssen

Hanmi

$105

Phase I

Endo/Meta

Bayer

Ionis (fka ISIS)

$100

Phase II

Cardiovascular

DiaVax

City of Hope

$100

Phase I

Viral Infect

Bayer

Ionis (fka ISIS)

$100

Phase II

Hematologic

Merck

NGM

$94

Preclinical

Endo/Meta

Vertex

Parion

$80

Phase II

Pulm/Resp

$425

$106

28

Trend in upfront license payments

Upfront payments in licensing transactions by year, 2010-2015

$60
$50
Upfront payment ($M)

AVERAGE upfront payments

$40
MEDIAN upfront payments
$30
2010-2015 in aggregate

$20

Number reporting upfront

$10
$0

508

Average upfront

$33 M

Median upfront

$10 M

2010
2011
2012
2013
2014
2015
(n(n== 106)
83) (n(n == 121)
121) (n=131)
106) (n
(n== 104)
104) (n
(n== 94)
94) (n
(n =
= 83)
(n=136)
Year license announced
NOTE: Analysis includes upfront cash payments only. Equity
investments and near-term milestones are excluded.

29

Trend in license deal upfront payments by stage

Phase III/Reg
n= 93

Phase II
n = 134

Phase I
Disc/Preclin

n = 63

2010
2011
2012
2013
2014
2015

2010
2011
2012
2013
2014
2015

n = 242

2010
2011
2012
2013
2014
2015

$120
$110
$100
$90
$80
$70
$60
$50
$40
$30
$20
$10
$0

2010
2011
2012
2013
2014
2015

Average reported upfront payment ($M)

Average and median announced upfront payments by year and stage of lead asset, 2010-2015

Year
Average reported upfront ($M)

Median reported upfront ($M)

30

Trend in number of licensing/JV transactions

by therapeutic area
Share of number of pharmaceutical
licenses by therapeutic area, 2015

Diversified

Other
16%
CV/Hema
3%
AI/Inflam
7%
Endo/Meta
8%

Percent change in number of pharmaceutical

licenses by therapeutic area, 2010 to 2015

Cancer
Cancer
35%

2015

n = 777

Diversified
Neurology
10%
11%
Infection
10%
NOTES: Charts includes licenses and JVs for which a therapeutic area is applicable
and disclosed. Other includes dermatology, chromosomal abnormalities,
gastrointestinal disease, genitourinary/sexual function, pulmonary/respiratory,
ophthalmic, nutritional supplements, cosmetics, animal health.

15 in 2010 vs. 74 in 2015

250%

Endo/Meta

91%

AI/Inflam

63%

393%
78 in 2010 vs. 273 in 2015

34 in 2010 vs. 65 in 2015

35 in 2010 vs. 57 in 2015

Infection

56% 48 in 2010 to 75 in 2015

Neurology

38% 60 in 2010 vs. 83 in 2015

CV/Hema

19% 21 in 2010 vs. 25 in 2015

0%

100%

200%

300%

400%

500%

Baseline: 2010
Comparator: 2015
31

Most active dealmakers of 2015 by number of

announced in-licenses
Number of announced in-licenses by company

30
Number of in-licenses announced in 2015

26

Undisclosed or nonpharmaceutical asset

54% of the in-licenses announced

by these top dealmakers were for
discovery/preclinical stage assets.

26

25

Approved

20
15

Clinical
16

14

Discovery/Lead/Preclinical

13
11

10

10

10

8
6

5
0

748 companies
announced inlicenses/JVs in 2015
52 companies
announced
3 or more

NOTE: Chart includes in-licensing activity of majority and wholly-owned subsidiaries.

32

Riding the wave: High-value strategic deal amid a

series of large financing events
October 2013:
Spark is spun out of CHOP with $50M investment
May 2014:
Spark raises $72.8M Series B led by Sofinnova Ventures, with leading institutional
investors T. Rowe Price and Brookside
December 2014:
Spark announces pre-clinical licensing deal with Pfizer for SPK-FIX for hemophilia
B, valued at up to $280M
January 30, 2015:
Spark files IPO (NASDAQ: ONCE) and shares nearly double amid excitement for
gene therapy
December 2015:
Investor group that participated in Sparks mezzanine Series B leads a successful
$141M follow-on
33

More sophisticated landscape enables Spark

to ride through volatility
Post IPO Performance (Issue Price vs. Price 12/31/15)

150%

Drivers of Success
100%

Founded on
astounding science

Spark
Therapeutics

Leveraging strong
capital markets

50%

Leveraging sellers
market

0%

(50%)

Validation from
strategic partners

(100%)

Post-IPO
performance
fantastic

Dec 2014

Feb 2015

Apr 2015

May 2015

Jul 2015

Sep 2015

Oct 2015

Dec 2015

Date of IPO
34

Contact Information

The Thomson Reuters Recap of 2015

Dealmaking
Landscape
2014
Dealmakers
ReportReport
Available from sales, the report includes:
Life Sciences Dealmaking 2015
presentation slides
Twenty deal snapshots
2015s top licensing deals
2015s top M&A events
BioWorld Today reprints on top
2015 licensing and M&A
transactions
Spreadsheet with complete set of
all life science transactions
announced in 2015. Details include
buyer/seller, therapeutic arena,
stage at selling, total deal size,
upfront payment, territory, etc.
Contact your Thomson Reuters
account representative for details.
36

Laura J. Vitez
Principal Business Analyst
Thomson Reuters Recap
laura.vitez@thomsonreuters.com
Vinay Singh
Senior Deals Analyst
Thomson Reuters Recap
vinay.singh01@thomsonreuters.com

www.thomsonreuters.com

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