Last year saw a drop in the number and value of deals performed in the biotech and pharma sector compared to previous years. Despite this, deals involving companies focussed around bioinformatics and computational biology made a strong showing. Below is a non-exhaustive selection of deals from last year that we think buck the trend.
Takeda pays $4B upfront to Nimbus for autoimmune drug
An amazing standout deal in December 2022 was Takeda paying Nimbus Therapeutics $4 billion upfront for rights to their experimental auto-immune drug (NDI-034858, a TYK2 inhibitor). Takeda may pay a further $2 billion should the drug sell well. The drug presented positive results in a Phase 2b clinical trial and is expected to enter Phase 3 this year.
Nimbus uses computational chemistry to do structure-based drug discovery in order to develop small molecule medicines. This deal is one of the highest value deals for an unapproved drug ever, especially in view of the large initial payment (see also this interesting interview with the CEO of Nimbus, discussing the unusual financial structure of the company).
Sanofi pens billions in long term deals with AI drug discovery companies
In 2022, Sanofi handed over $150 million upfront and has penned in over $10 billion in milestone payments with 4 AI drug discovery companies: Insilico, Exscientia, Atomwise, and Adagene. These deals show how Big Pharma is increasingly looking to AI start-ups to help discover both biologics and small molecule drugs. The collaboration with Exscientia is particularly interesting, as the companies have worked together since 2016. These deals follow on from an equity deal with AI start-up Owkin in 2021.
Insilico Medicine uses AI to analyse omics data to identify novel protein targets, perform de novo drug design and predict clinical trial success rate. Exscientia uses AI, optimisation strategies, and a design-test-learn strategy to identify novel drug molecules for a target. Atomwise uses AI technology inspired from image recognition to discover small molecule hits for “undruggable” targets. Adagene combines AI and molecular dynamics modelling to identify candidate antibodies. Owkin uses AI to analyse real world evidence to design lower risk, faster clinical trials.
Amgen and Generate sign $1.9B deal
While relatively small fry compared to Amgen’s $28 billion dollar acquisition of Horizon Therapeutics in December, Amgen showed back in January that it also values AI drug discovery with a new collaboration deal with Generate Biomedicines. Generate Biomedicines has developed a computational platform to generate new proteins (e.g. antibodies, enzymes and stealth proteins) with desired functions. Amgen made an initial payment of $370 million and may make potential milestones payments of up $1.9 billion. This should support Amgen’s own AI programs and help to develop drugs more quickly.
J&J acquires Abiomed for $16.6B to expand its medical device arm
There isn’t just money in the software side of the biotech sector. Johnson & Johnson acquired heart pump maker Abiomed for $16.6B for a significant premium over their share price in November. This medtech transaction was one of the largest medtech transactions of the year.
Microsoft acquisition of Nuance approved by competition authorities
After buying Nuance in April 2021 for $19.7 B in cash, there was initially concerns in the UK and in the EU from the competition authority about a reduction in competition. However, these were eventually dismissed and the deal given the all-clear. Microsoft closed the deal in March 2022. Nuance provides speech recognition and conversational AI software solutions tailored to specific fields including healthcare. This deal is expected to bolster Microsoft’s push into the healthcare space.
Microsoft is obviously a massive name but clearly it is not above spending big money to fight the likes of Google on the AI front. In previous years it invested huge amounts of money to use OpenAI’s ChatGPT, and is now reportedly working to integrate these lines into its products.
Looking ahead
This trend of increase spending on AI and tech in the biotech and pharma space shows no sign of slowing down in 2023. In Bayer’s statement this January, on its acquisition of AI radiology company Blackford, it said that the AI radiology field had sales worth over $400 million in 2021 and expects this to increase to $1.36 billion by 2026. Furthermore, AI was a hot topic at the recent JP Morgan’s Healthcare Conference in San Francisco.
Increasingly, companies seem to be leaning on AI to allow researchers to supplement their intuition. Drug discovery required the “gut feeling” of the medicinal chemists doing the research. But now, with AI engines, computers can learn to reproduce these “gut feelings” at scale and potentially without the same human biases and limitations.
It remains to be seen what part of the pharma and life sciences sector will benefit from the next AI breakthrough. Perhaps AI-driven surgery to allow surgery robots to drive themselves?
This blog was originally written by George Lucas.
Disclaimer:
This information is simplified and the content is opinion-based and intended for informational purposes only. It must not be taken as legal, investment, financial, or other advice.
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