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HBM M&A · PDF fileHBM Pharma/Biotech M&A Report 2017 ... transactions. Also, the results...
12
February 2018 1 About the HBM Pharma/Biotech M&A Report The HBM Pharma/Biotech M&A Report covers all completed trade sales of US and European biotechnology and pharma companies with a therapeutic focus (Rx incl. generics as well as OTC). For 2014-2017, additional data for asset deals and transactions outside of US and Europe is provided. The report does not cover nutritional supplements, diagnostics, medical technology, digital health, life sciences tools, CROs, pharma manufacturing and services. Reverse mergers or minority investments are not included. Acquisitions that were structured as mergers for tax or other reasons are included. Upfront transaction value is defined in this report as the upfront consideration in cash and/or shares. By contrast, the total transaction value also includes contingent (“biodollar”) payments linked to reaching certain milestones. Additional data such as invested capital, exit multiples, stage of lead product etc. were collected from various sources. Please note that such data may be based on estimates and may not have been available for all transactions. Further information about the HBM Pharma/Biotech M&A Report including a list of all transactions can be found under http://www.hbmpartners.com/reports. The use of data and charts is permitted with reference to “HBM Partners Pharma/Biotech M&A Report”. The authors of the report welcome any feedback or corrections: Dr Ulrich Geilinger, [email protected] , Dr Chandra Leo, [email protected] and Dr Emil Bujak, [email protected] HBM Pharma/Biotech M&A Report 2017 Analysis of Biopharma M&A in 2017 (and previous years) Key Findings Worldwide biopharma M&A volume of completed deals (including contingent payments and asset deals) in 2017 dropped to $72.6 billion (as compared to $149 billion in 2016 and $230 billion in 2015). In 2017, only two deals topped $10 billion: The $30 billion acquisition of Swiss Actelion by Johnson & Johnson was by far the largest deal in 2017 (and the largest European biopharma M&A deal since the Sanofi Aventis merger in 2004). The second largest transaction was Gilead’s $11.2 billion purchase of US Kite Pharma, followed by the $6.4 billion buyout of German Stada by Bain Capital/Cinven and the $5.2 billion purchase of US-based Ariad Pharma by Takeda. The largest private deal in 2017 was the sale of 34-year-old US vaccine company Protein Sciences to Sanofi for $650 million upfront plus a further $100 million of contingent payments. US transaction volume was down to $30 billion (company and asset sales). Only 5 significant* public takeovers were reported, the lowest number seen in many years. The number of 14 significant private transactions was in-line with previous years. The $30 billion Actelion deal drove up transaction volume from European M&As to $40 billion. However, the number of transactions was quite low with only 7 trade sales generating upfront proceeds of $100 million or more. As in 2015 and 2016, M&A transaction volume outside of the US and Europe in 2017 was modest with a transaction volume of only $2.1 billion. Return multiples to VC investors from M&A stayed at high levels in 2017, but average multiples were lower than in the record year of 2016. * transactions with upfront proceeds of at least $100 million.
Transcript of HBM M&A · PDF fileHBM Pharma/Biotech M&A Report 2017 ... transactions. Also, the results...
February 2018
1
About the HBM Pharma/Biotech M&A Report
The HBM Pharma/Biotech M&A Report covers all completed trade sales of US and European biotechnology and pharma companies with a therapeutic focus (Rx incl. generics as well as OTC). For 2014-2017, additional data for asset deals and transactions outside of US and Europe is provided.
The report does not cover nutritional supplements, diagnostics, medical technology, digital health, life sciences tools, CROs, pharma manufacturing and services. Reverse mergers or minority investments are not included. Acquisitions that were structured as mergers for tax or other reasons are included.
Upfront transaction value is defined in this report as the upfront consideration in cash and/or shares. By contrast, the total transaction value also includes contingent (“biodollar”) payments linked to reaching certain milestones.
Additional data such as invested capital, exit multiples, stage of lead product etc. were collected from various sources. Please note that such data may be based on estimates and may not have been available for all transactions.
Further information about the HBM Pharma/Biotech M&A Report including a list of all transactions can be found under http://www.hbmpartners.com/reports. The use of data and charts is permitted with reference to “HBM Partners Pharma/Biotech M&A Report”.
The authors of the report welcome any feedback or corrections:
Dr Ulrich Geilinger, [email protected] , Dr Chandra Leo, [email protected] and Dr Emil Bujak, [email protected]
HBM Pharma/Biotech M&A Report 2017 Analysis of Biopharma M&A in 2017 (and previous years)
Key Findings
Worldwide biopharma M&A volume of completed deals (including contingent payments
and asset deals) in 2017 dropped to $72.6 billion (as compared to $149 billion in 2016
and $230 billion in 2015).
In 2017, only two deals topped $10 billion: The $30 billion acquisition of Swiss Actelion
by Johnson & Johnson was by far the largest deal in 2017 (and the largest European
biopharma M&A deal since the Sanofi Aventis merger in 2004). The second largest
transaction was Gilead’s $11.2 billion purchase of US Kite Pharma, followed by the
$6.4 billion buyout of German Stada by Bain Capital/Cinven and the $5.2 billion
purchase of US-based Ariad Pharma by Takeda. The largest private deal in 2017 was the
sale of 34-year-old US vaccine company Protein Sciences to Sanofi for $650 million
upfront plus a further $100 million of contingent payments.
US transaction volume was down to $30 billion (company and asset sales). Only 5
significant* public takeovers were reported, the lowest number seen in many years. The
number of 14 significant private transactions was in-line with previous years.
The $30 billion Actelion deal drove up transaction volume from European M&As to
$40 billion. However, the number of transactions was quite low with only 7 trade sales
generating upfront proceeds of $100 million or more.
As in 2015 and 2016, M&A transaction volume outside of the US and Europe in 2017
was modest with a transaction volume of only $2.1 billion.
Return multiples to VC investors from M&A stayed at high levels in 2017, but average
multiples were lower than in the record year of 2016.
* transactions with upfront proceeds of at least $100 million.
HBM Pharma/Biotech M&A Report 2017
2
Worldwide Biopharma M&A Transaction Volume 2014-2017
Worldwide Biopharma M&A Transaction Volume 2014 -2017
Completed transactions, including asset deals, transaction volume including contingent payments. Europe includes Israel.
Worldwide biopharma M&A volume of completed deals (including contingent payments and
asset deals) in 2017 dropped to $72.6 billion (as compared to $149 billion in 2016 and
$230 billion in 2015). In 2017 only two deals topped $10 billion: The $30 billion acquisition of
Swiss Actelion by Johnson & Johnson and Gilead’s $11.2 billion purchase of US Kite Pharma.
US deal volume was down to $30 billion (company and asset sales) while the $30 billion Actelion
deal drove up transaction volume from European1 M&As to $40 billion.
As in 2016, M&A transaction volume outside of the US and Europe in 2017 was quite low
($2.1 billion). Deal volumes in the years 2014 and 2015 were a bit higher.
2017 was certainly a quiet year for biopharma M&A at a time when new drugs approvals were
strong and stock performance of pharma and biotech was quite good. Maybe high valuations made
public biopharma companies less attractive take-over targets and private companies took
advantage of the open IPO window instead of selling out. One other reason frequently cited is that
US buyers waited for the proposed US tax reform to happen (which includes the tax-efficient
repatriation of overseas profit back to the US). The announcement of major deals right at the start
of 2018 certainly indicate that in 2018 M&A in the pharma sector might increase again.
Interestingly, biopharma M&A transaction volume was also weak outside of the US and Europe
even though countries like China and other economies showed robust growth in the pharma and
healthcare sectors.
Please see next page for list of the larger biopharma M&A transactions in 2017 (including asset
transactions and major transactions announced, but not completed yet before year end).
1 Including Israel.
3Source: HBM Pharma/Biotech M&A Report
15.3 18.3 14.439.6
34.92.9
49.8 1.0
72.2
195.6
77.6
26.8
17.2
7.6
3.7
3.1
11.9
5.8
3.4
2.1
151.6
230.3
148.9
72.6
0
50
100
150
200
2014 2015 2016 2017
Up
fro
nt
Tran
sact
ion
Vo
lum
e ($
bill
ion
)
ROW companies/assets* sold
Assets* of US companies sold
US companies sold
Assets* of EU companies sold
European companies sold
Total Worldwide Biopharma M&A Transaction Volume 2014-2017
Worldwide total biopharma M&A
transaction volume (including contingent
payments) of completed deals,
including sale of assets, subsidiaries,
divisions etc.
* assets, subsidiaries, divisions,
business/product segments
Worldwide biopharma M&A transaction volume (completed transactions)
HBM Pharma/Biotech M&A Report 2017
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Table: Largest Completed and Announced Biopharma M&A Transactions in 2017
Notes: Transactions ranked by upfront value Regions and countries (columns 1 and 3): In case of whole companies sold = location of headquarter; in case of asset/division deals = country of business (if available) * = Announced transaction, not completed yet at year end 2017 “Asset/Div.” = Sale of assets, divisions and subsidiaries “Market” = Approved or marketed drugs | “NDA” – NDA filed | “1”, “2” and “3” = Phase 1 2 3, stage of lead product
Target Company/BusinessPublic/
Private
VC/PE-
Backed
Premium
Buyer
Upfront
Deal Value
($m)
Overall
Deal Value
($m)
Phase/Stage
of Lead
Product
VC Invest-
ment ($m)Therapeutic Area(s)
EuropeActelion Pharmaceuticals Ltd /
SwitzerlandPublic 23% Johnson & Johnson / US 30'000 30'000 Market PAH, cardiovascular
US Kite Pharma Inc / US Public 29% Gilead Sciences Inc / US 11'900 11'900 NDA Caner immunotherapies
Europe Stada / Germany Public 60% Bain Capital / Cinven / UK 6'400 6'400 Market Generics
US Ariad Pharmaceuticals Inc / US Public 75% Takeda / Japan 5'200 5'200 Market Cancer
US * Akorn / US Public 47% Fresenius / Germany 4'750 4'750 Market Specialty generics
US * Ignyta / US Public 74% Roche / Switzerland 1'700 1'700 2 Cancer
US * Sucampo / US Public 20% Mallinckrodt / UK 1'200 1'200 3 Genetic orphan diseases
Europe NeuroDerm / Israel Public 17%Mitsubishi Tanabe Pharma /
Japan1'100 1'100 3 Parkinsons
US Upsher-Smith (subsidiary Acova) / US Asset/Div. Sawai Pharmaceuticals / Japan 1'050 1'050 Market Generics
US CoLucid Pharmaceuticals Inc / US Public 33% Eli Lilly / US 960 960 3 Migraine
Asia iNova / Australia Asset/Div.Carlyle / Pacific Equity Partners
/ Australia930 930 Market Generics, OTC
US Dendreon (subsidiary Valeant) / US Asset/Div. Sanpower Group / China 820 820 Market Cancer
US Protein Sciences / US Private VC Sanofi / France 650 750 Market Vaccines
Asia Claris Injectables (subs. Claris) / India Asset/Div. Baxter / US 625 625 Market Generics
US SciClone / US/China Public 11% Investor group / China 605 605 Market Specialty pharma China
US Merrimack Pharmaceuticals / US Asset/Div. Ipsen / France 575 1'025 Market Cancer
AsiaUnichem Laboratories (generics
business) / IndiaAsset/Div. Torrent Pharmaceuticals / India 556 556 Market Generics
Europe Ogeda / Belgium Private VC Astellas / Japan 530 850 2 42 Women's health
US True North Therapeutics Inc / US Private VC Bioverativ Therapeutics / US 400 825 1 140 Genetic orphan diseases
Europe * NMS Group / Italy Private SARI / China 362 362 n.a. Oncology, others
US Altor BioScience Corp / US Private VC NantCell / US 360 1'080 2 123 Cancer, inflammation
AsiaWuhan Zhong Yuan Rui De Biological
(sub Humanwell) / ChinaAsset/Div. CSL / Australia 352 352 Market Plasma-derived therapies
ROW Mettrum Health / Canada Public 42% Canopy Growth / Canada 320 320 Market Medical marijuana
US IFM Therapeutics / US Private VC Bristol-Myers Squibb / US 300 1'310 Preclinical 30 Cancer
US Delinia / US Private VC Celgene / US 300 475 Preclinical 35 Autoimmune, cancer
US Aptuit / US Private PE Evotec / Germany 300 300 n.a. Drug discovery
US *The Medicines (infectious disease
business) / USAsset/Div. Melinta Therapeutics / US 270 320 Market Anti-infectives
ROW Merus Labs International / Canada Public 63% Norgine / Netherlands 250 250 Market Various generics
US Mitobridge / US Private VC Astellas / Japan 225 450 1 45 Genetic orphan, duchenne
Europe Quantum / UK Public 18% Clinigen / UK 190 190 MarketEthical access to unlicensed
medicines
US Obagi Medical (subs. Valeant) / US Asset/Div.
Haitong International Zhonghua
Finance Acquisition Fund I /
China
190 190 Market Cosmetics, dermatology
AsiaTanabe Seiyaku Hanbai (generics
business) / JapanAsset/Div. Nipro / Japan 180 180 Market Generics
US Sentynl Therapeutics / US Private Cadila Healthcare / India 171 171 Market Pain
US Vtesse / US Private VC Sucampo / US 170 200 3 42 Genetic orphan diseases
EuropeMerck KGaA Biosimilar Businesss /
GermanyAsset/Div. Fresenius / Germany 167 703 Clinical Biosimilars
Europe Weifa / Norway Public 10% Karo Pharma / Sweden 162 162 Market Generics, OTC in Norway
EuropeIntrathecal Therapy (subs. Mallinckrodt) /
UKAsset/Div. Piramal / India 161 203 Market Severe spasticity
Asia Ambest Pharma / China Private Sihuan Pharmceutical / China 160 160 Market TCM
US Cell Design / US Private VC Gilead / US 157 567 Preclinical 35 Cancer
US Dimension Therapeutics / US Public 358% Ultragenyx / US 151 151 2 Gene therapy
US River Vision Development / US Private VC Horizon Pharma / Ireland 145 145 2 33 Thyroid eye disease, orphan
Europe Generis Pharmaceutica / Portugal Private PE Aurobindo / India 143 143 Market Generics,
Europe Rigontec / Germany Private VC Merck & Co. / US 140 552 2 33Immuno-oncology, drug
discovery RNA
ROW Grupo Pharmaceutico Somar / Mexico Asset/Div. Advent International / US 124 124 Martke Generics, specialty pharma
US Apicore US (subs. Medicure) / US Asset/Div. Undisclosed pharma company / 105 105 Market Cardiovascular
US Neurovance / US Private VC Otsuka / Japan 100 250 2 32Attention-deficit hyperactivity
disorder
ROW Litha Healthcare / South Africa Private Acino Pharma / Switzerland 100 100 Market Generics
HBM Pharma/Biotech M&A Report 2017
4
Sale of US and European Biopharma Companies (completed deals)
Please note that the M&A transaction data presented in the next pages only relate to the sale of (entire) US and
European biopharma companies with a therapeutic focus. Asset deals, the sale of divisions or subsidiaries, M&A
transactions outside of the US and Europe, and transactions announced (but not completed in 2017) are not
included. For the purpose of this analysis, Israel is included under Europe.
US and European Biopharma Company Trade Sales (Upfront Deal Values)
Completed trade sales of public and private US and European biopharma companies, not including asset deals or purchase of divisions
The number of US and European biopharma company trade sales sold in 2017 was lower than in
previous years. Upfront transaction volume was up for European transactions and down for US
transactions. Quite remarkable was the low deal volume from US transactions. As mentioned
previously, the pending US tax reform might have played a role here.
US and European Biopharma Trade Sales by Upfront Transaction Size
Completed trade sales of public and private US and European biopharma companies, not including asset deals or purchase of divisions
4Source: HBM Pharma/Biotech M&A Report
US & European Biopharma Company Trade Sales*
3.7 8.6 8.020.8 11.1
22.2 15.3 18.3 14.439.6
49.6
171.9
62.348.4
39.230.5
72.2
195.6
77.6 26.811153.3
180.5
70.3 69.2
50.2 52.7
87.5
214.0
92.0
66.4
66 63
74
6471 70 70
98
87
57
0
50
100
150
200
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Upfront Transaction Volume ($ billion)
Number of company
trade sales US & Europe
Completed
European
company
trade sales
Completed
US company
trade sales
Trade sales of public & private US & European biopharma companies (completed transactions)
* not including sale of assets,
subsidiaries, divisions etc.
5Source: HBM Pharma/Biotech M&A Report
2 4 2 1 3 2
10
20
62
22
2 4 18
9
5
7
3
11 6 116
4
11
9
8
9
14
15
13
24
23
11
19
17
26
31
18
0
10
20
30
40
50
60
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
# o
f Tr
ansa
ctio
ns
<$100m
$100m - $499m
$500m-$999m
>=$1 billion
US & European Biopharma Trade Sales by Upfront Transaction Size
European Transactions
US Transactions
Trade sales of public & private US & European biopharma companies (completed transactions)
HBM Pharma/Biotech M&A Report 2017
5
The chart on the previous page shows that the number of transactions in 2017 was down in most
size segments with the exception of US deals between $100 million to $500 million upfront which
include the sale of 11 venture-backed biopharma companies in that size bracket.
Two European companies (Actelion and Stada) plus Israeli1 NeuroDerm were sold for over
$1 billion, while the US only saw 2 such deals (Kite and Ariad).
Premiums Paid for Public US and European Biopharma Companies
Premium = increase of stock price on the day of deal announcement. Only deals with an upfront consideration
of at least $100 million are included in this analysis. Given the high degree of variation in premiums paid, the
average numbers should be interpreted with caution.
Premiums Paid for US and European Public Biopharma Companies
Completed trade sales of public US and European biopharma companies with an upfront consideration of at least $100 million. Non-
weighted average premiums.
Premiums paid in 2017 for public US and European biopharma companies dropped to an
average of 31%. One should note that average premiums paid for US companies during 2016
and 2017 would be over 100% if one includes the sale of Tobira in 2016 (premium paid 500%)
and the sale of Dimension Therapeutics in 2017 (358%). Both deals were done at very high
premiums at a time when the stocks of these two companies were quite depressed.
Premiums paid in the US were generally higher than in Europe.
Clinical-stage companies generally received much higher premiums than companies with
approved or marketed products (see table below):
Average Premiums Paid for Public Biopharma Companies Acquired 2013-2017 (for at Least
$100 Million Upfront) by Stage of Lead Product
Phase 2 Phase 3 NDA Filed Approved/
Marketed
Total*
# of public companies sold 8 12 5 45 70
Average premium paid 175% 58% 40% 34% 56%
1 For the purpose of this analysis, Israel is included under Europe.
7Source: HBM Pharma/Biotech M&A Report
62%
36%
47%
77%
57%
29%
60%
36%
71%
37%
69%
31%
57%
28%
36%
46%
25%27%
31%
64%
26%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Ave
rag
eP
rem
ium
Pai
dfo
rP
ub
lic T
akeo
vers
US deals
US & European deals
European deals
Average Premiums Paid for Public BioPharma Companies
US and European public
takeovers with upfront
consideration of at least
$100 million
Trade sales of public US & European biopharma companies (completed transactions)
Excluding sale of Tobira to
Allergan in 2016 (500%
premium) and sale of Dimension
to Ultragenyx in 2017 (358%
premium).
HBM Pharma/Biotech M&A Report 2017
6
Trade Sales of Private US & European Biopharma Companies
Trade Sales of Private US & European Biopharma Companies
Completed trade sales of private US and European biopharma companies, not including asset deals or purchases of divisions. “Other
private companies” are companies not majority-owned by venture or private equity investors.
The number of private US and European biopharma companies sold and the deal volume they
generated were quite low in 2017 as compared to previous years. And, the bulk of the
transaction volume in private deals was generated by the 22 (mostly US) venture-backed
companies that were sold in 2017 ($3.8 billion upfront, $8.6 billion potential total value).
Only two private-equity-backed pharma companies found a buyer in 2017: German Evotec paid
$300 million for US Aptuit, a drug discovery and services company financed by US buyout fund
Welsh Carson. Portuguese Generis Farmaceutica was purchased by Indian pharma Aurobindo
for $143 million. This manufacturer and supplier of pharmaceutical products has been bought
in 2009 by Magnum Capital. For both transactions there are no return estimates available.
The 19 other private (i.e. not VC- or PE-backed) pharma companies sold generated only a
modest transaction volume of $590 million. One should note that deal terms were only available
in about 50% of these private transactions.
8Source: HBM Pharma/Biotech M&A Report
Trade Sales of Private Biopharma Companies
2.3 1.8 2.3 4.0 2.8 3.4 5.17.4
9.8
3.80.61.7
14.6
10.4 10.310.5
18.2
2.2
0.47.4
6.8
2.1
0.9 1.5
5.0
3.7
1.3
0.62.6
9.810.8
20.7
14.015.2
20.5
29.3
13.3
4.8
36 38
54
42
58
5254
79
70
44
0
5
10
15
20
25
30
35
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Up
fro
nt
Tran
sact
ion
Val
ue
($ b
illio
n)
Other private co's
PE-backed co's
VC-backed co'sNumber or private
companies sold
Trade sales of private US & European biopharma companies (completed transactions)
HBM Pharma/Biotech M&A Report 2017
7
Trade Sales of VC-Backed US and European Biopharma Companies
Trade Sales of Private VC-Backed US and European Biopharma Companies
Completed trade sales of private VC-backed US and European biopharma companies.
Trade sales of the 22 venture-backed biopharma companies generated upfront proceeds of
$3.8 billion (and $8.6 billion in total deal volume including contingent payments). While these
numbers are substantially lower than in 2016 and 2015, they are similar than to the years before
2015.
Trade Sales of Private VC-Backed US Biopharma Companies
Completed trade sales of private VC-backed US biopharma companies.
As the chart above shows, 2017 was a pretty good exit year for US VCs with a good number of
significant transactions. In Europe (chart on next page), there were only 2 noteworthy deals: the
sale of women’s health company Ogeda to Astellas for $530 million upfront (plus $320 million in
milestones) and the acquisition of immuno-oncology company Rigontec by Merck & Co. for
$140 million upfront (plus another $400 million biodollar value).
9Source: HBM Pharma/Biotech M&A Report
Trade Sales of VC-Backed Private Biopharma Companies
2.3 1.8 2.34.0
2.8 3.45.1
7.4 9.8
3.83.5
4.7
4.7
6.77.4
6.8
8.4
20.1
20.9
8.6
24
18
2827
28
2325
3635
22
0
5
10
15
20
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Tran
sact
ion
Val
ue
($ b
illio
n)
Upfront transaction value
Total transaction value
Number of VC-backed
companies sold
Trade sales of private VC-backed US & European biopharma companies
Trade sales of private VC-backed US &
European biopharma companies
Stemcentrx sale to AbbVie
for $5.8bn upfront plus $4bn pot. payments
Acerta sale to AstraZeneca
for $2.5bn upfront plus $4.5bn pot. payments
10Source: HBM Pharma/Biotech M&A Report
Trade Sales of VC-Backed Private Biopharma Companies
1.6 1.11.9
3.6
2.1 2.4
4.53.5
8.1
3.12.6
3.14.0
6.16.6
4.8
7.2
8.7
16.8
7.2
15
10
19
17
23
14
17
2021
18
0
5
10
15
20
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Tran
sact
ion
Val
ue
($ b
illio
n)
Upfront transaction value
Total transaction value
Number of US VC-backed
companies sold
Trade sales of private VC-backed US biopharma companies
Trade sales of private VC-backed US &
European biopharma companies
Stemcentrx sale to AbbVie
for $5.8bn upfront plus $4bn pot. payments
HBM Pharma/Biotech M&A Report 2017
8
Trade Sales of Private VC-Backed European Biopharma Companies
Completed trade sales of private VC-backed European biopharma companies.
Trade Sales of VC-Backed Oncology Companies
Trade Sales of VC-Backed Oncology Companies – Upfront Transaction Volumes
Completed trade sales of private VC-backed US and European biopharma companies.
2016 was clearly the” year of oncology companies” with the sale of such companies generating 80%
of overall proceeds. In 2017, that value dropped to just $1 billion as there were a good number of
significant deals in anti-infectives and other therapeutic areas. The oncology sector certainly
remained hot in 2017 and some oncology companies probably preferred the IPO route where
valuations were and are high.
11Source: HBM Pharma/Biotech M&A Report
Trade Sales of European VC-Backed Private Biopharma Companies
0.8 0.7 0.3 0.4 0.6 1.0 0.5
3.9
1.60.70.9
1.60.7 0.5 0.7
1.91.2
11.4
4.1
1.4
98
910
5
98
16
14
4
0
5
10
15
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Tran
sact
ion
Val
ue
($ b
illio
n)
Upfront transaction value
Total transaction value
Number of European
VC-backed companies sold
Trade sales of private VC-backed European biopharma companies
Trade sales of private VC-backed
US biopharma companies
Acerta sale to AstraZeneca
for $2.5bn upfront plus $4bn pot. payments
13Source: HBM Pharma/Biotech M&A Report
0.9 0.4
2.1
0.61.5 1.4
3.6
7.9
1.0
0.9 1.8
1.9
2.2
1.9
3.7
3.8
1.9
2.81.82.3
4.0
2.83.4
5.1
7.4
9.8
3.8
0
2
4
6
8
10
2009 2010 2011 2012 2013 2014 2015 2016 2017
Up
fro
nt
Tran
sact
ion
Vo
lum
e ($
bill
ion
)
Other therapeutic areas
Oncology
Upfront Proceeds from Sale of VC-Backed Oncology Companies
Trade sales of private VC-backed US & European biopharma companies
Trade sales of private VC-backed US &
European biopharma companies
Only for transactions where
respective information was available.
HBM Pharma/Biotech M&A Report 2017
9
Average Investment Amounts and Transaction Values
Trade Sales of VC-Backed Companies – Av. Investment Amounts & Transaction Values
Completed trade sales of private VC-backed US and European biopharma companies. Only for deals where respective information was
available.
Average1 upfront and average total deal values in 2017 from VC-backed company exits dropped
from the record levels reached in 2016. One should not that median deal values are significantly
lower than average deal values. Average investment amounts - until an exit could be achieved -
remained quite stable.
1 Non-weighted averages
12Source: HBM Pharma/Biotech M&A Report
175
313
203
317 320
376420
692722
477
116 119 103
192
126
190
267 266
348
210
44 58 48 66 56 53 47 49 58 470
100
200
300
400
500
600
700
800
900
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Ave
rag
e V
alu
es ($
mill
ion
)
Average Total Transaction Value
Average Upfront Transaction Value
Average Invested Capital
Average Investment / Average Upfront and Total Deal Values
Trade sales of private VC-backed US &
European biopharma companies
Only for transactions where
respective information was available.
Trade sales of private VC-backed US & European biopharma companies
Noteworthy Venture Exits in 2017
In September 2017, IFM Therapeutics was sold to BMS for $300 million upfront plus potential milestone payments of up to $1 billion. IFM, founded only in 2015, developed therapies that modulate novel targets in the innate immune system to treat cancer, autoimmunity and inflammatory disorders. At the time of the sale, the company was still pre-clinical and investors Atlas, Abingworth and Novartis Venture Fund got a great return on their estimated $30 million investment.
In May 2017, Belgian women's health company Ogeda was sold to Astellas for $530 million upfront plus contingent payments of up to $320 million. The company's lead drug fezolinetant, a selective NK3 receptor antagonist, reported positive data Phase 2a data earlier in the year for non-hormonal treatment of menopause-related vasomotor symptoms ("MR-VMS"). Investors such as Versalius, Capricorn or BNP are estimated to have generated a 10x multiple or more on the roughly $40 million that went into the company.
US Delinia, founded in 2015, was financed in 2016 by Atlas Venture and Paris-based Sofinnova Partners. The company developed novel therapeutics for autoimmune diseases with a focus on regulatory T cells (Tregs). Celgene bought the company for $300 million upfront plus $175 million in contigent payments. A great deal for Atlas (again) and Sofinnova.
Other good exits of VC-backed biopharma companies in 2017 (with an upfront return of at least 3x) were: CellDesign (sold to Gilead), Rigontec (sold to Merck & Co.), MitoBridge (sold to Astellas), Calimmune (sold to CSL), Neurovance (sold to Otsuka), Vtesse (sold to Sucampo), River Vision (sold to Horizon),
HBM Pharma/Biotech M&A Report 2017
10
Contingent Payments
Trade Sales of VC-Backed Companies – Contingent Payments
Completed trade sales of private VC-backed US and European biopharma companies. Only for deals where respective information was
available.
As mentioned in our last year’s report, contingent payments (as percentage of total deal values)
have increased substantially since 2009 (see chart above). The sum of contingent payments in 2017
and the two years before were close to 50% of total deal values, i.e. the potential future payments
to sellers are not much less than the upfront considerations.
It should be noted that, according to a recent study by SRS Acquiom1 about 40% of the milestones
for such contingent payments are usually reached, i.e. sellers can - on average- expect further
payments corresponding to roughly 20% of the upfront proceeds.
Investor Returns from the Sale of VC-Backed Biopharma Companies
We have approximated the return multiples for venture investors from biopharma trade sales using the ratio of
upfront (and total) proceeds divided by invested capital. To calculate the average multiples in a given year, we
have divided the sum of exit values (upfront or including contingent payments) by aggregate VC investments.
These averages, weighted by deal size, provide – in our view – a good indicator of the overall exit performance
in a given year. Non-weighted averages (included in the chart below as well) were generally a bit higher and
medians generally a bit lower.
The valuations paid by investors in private biopharma companies are generally higher than the invested capital
(as some of the fully-diluted equity belongs to founders, management etc.). Therefore, the multiples shown here
are about 20-25% higher than the actual investor returns.
1 https://www.srsacquiom.com/resources/2017-srs-acquiom-life-sciences-ma-study/
14Source: HBM Pharma/Biotech M&A Report
Contingent „Biodollar“ Payments as % of Total Deal Value
6
0
4 3 3 3 3 4 42
2
2
26
3 24 2 1 4
1
6
4
3
5 8 59
8 7
14%
62%
33%31%
37%39% 39%
48% 47%43%
0
5
10
15
20
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
# o
f Tr
ansa
ctio
ns
Over 50% contingent payments
Up to 50% contingent payments
No contingent payments
Average
contingent
payments in %
total deal value
(not weighted by
deal size)
Trade sales of VC-Backed US
and European companies
with total upfront
consideration of at least
$100 million
Trade sales of private VC-backed US & European biopharma companies
Trade sales of private VC-backed US &
European biopharma companies
Only for transactions where
respective information was available.
HBM Pharma/Biotech M&A Report 2017
11
Trade Sales of VC-Backed Companies – Investment Multiples
Completed trade sales of private VC-backed US and European biopharma companies. Only for deals where respective information was
available.
Investment multiples (non-weighted and weighted) have shown a significant upward trend
since 2010. However, 2017 returns were clearly below the record 2016 numbers.
The upfront multiples achieved in 2017 from European exits were better in 2017 than from US
deals. However, there were just two significant exits (Ogeda 12.5x and Rigontec 4.3x) and, thus,
the 2017 number is not really representative.
Trade Sales of VC-Backed Companies – Investment Multiples US vs. Europe
Completed trade sales of private VC-backed US and European biopharma companies. Only for deals where respective information was
available.
17Source: HBM Pharma/Biotech M&A Report
Average Investment Multiples On Upfront and Total Deal Value
3.8x
5.1x
3.9x4.5x
6.4x7.1x
9.4x
13.1x
14.8x
11.3x
2.5x 1.9x 1.8x
2.7x2.3x
3.6x
5.7x4.9x
6.7x
4.5x
2.9x
1.9x
3.0x3.6x
5.0x4.2x
6.5x
7.3x
6.4x
4.3x
0
5
10
15
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Rat
io /
Mu
ltip
leWeighted-average investment multiple (on totaltransaction value)
Weighted-average investment multiple (onupfront transaction value)
(Non-Weighted) average investment multiple (onupfront transaction value)
Trade sales of private VC-backed US & European biopharma companies
Actual investor multiples
approx. 20%-25% lower!
Trade sales of private VC-backed US &
European biopharma companies
Only for transactions where
respective information was available.
16Source: HBM Pharma/Biotech M&A Report
Average Investment Multiples On Upfront Deal Value – US vs. Europe
2.0x 2.0x 2.0x
3.2x
2.7x
3.4x
6.6x
6.0x
7.3x
3.9x
3.4x
1.9x
1.2x 1.2x1.5x
4.2x
2.6x
4.3x
3.7x
8.9x
0
1
2
3
4
5
6
7
8
9
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Rat
io /
Mu
ltip
le
US - Weighted-average investment multiples (on upfront)
Europe - Weighted-average investment multiples (on upfront)
Trade sales of private VC-backed US & European biopharma companies
Actual investor multiples
approx. 20%-25% lower!
Trade sales of private VC-backed US &
European biopharma companies
Only for transactions where
respective information was available.
HBM Pharma/Biotech M&A Report 2017
12
Our return data also indicate that in recent years early exits (i.e. at early stages of clinical
development and when less money has been invested) generated higher multiples (see chart
below).
Trade Sales of VC-Backed Companies – Investment Multiples by Stage of Lead Product
Completed trade sales of private US and European VC-backed biopharma companies. Stage of lead product at time of company sale. Investment multiples non-weighted.
Zug, 24 February 2018
The authors of the report welcome any feedback or corrections:
Dr. Ulrich Geilinger, [email protected] , Dr. Chandra Leo, [email protected]
and Dr Emil Bujak, [email protected]
17Source: HBM Pharma/Biotech M&A Report
Average Multiples by Stage
8.7x
5.8x5.4x
4.6x5.0x
4.7x
5.4x
4.7x 4.7x4.2x
4.6x
3.9x
2.5x
3.7x 3.9x 3.7x3.3x 3.2x
0
1
2
3
4
5
6
7
8
9
Pre-clinical Phase I Phase II Phase III NDA Approved
No
n-W
eig
hte
dIn
vest
men
t Mu
ltip
les
2013-2017
All (2008-2017)
2008-2012
Trade sales of private VC-backed US & European biopharma companies
Actual investor multiples
approx. 20%-25% lower!
Trade sales of private VC-backed US &
European biopharma companies
Only for transactions where
respective information was available.
About HBM Partners
HBM Partners is among the global leaders in healthcare-focused investing with over $1.5 billion in assets under management. HBM focuses on development stage, growth and buy-out financings of private and public biopharma, medical device and diagnostics companies. Investments in private companies usually range between $10 million to $50 million.
HBM Partners advises HBM Healthcare Investments AG, HBM BioCapital as well as specialized public equity funds. HBM Partners has been an active contributor to value creation in its portfolio companies, generating over 50 trade sales and IPOs since its inception in 2001.
HBM Partners AG, CH-6300 Zug, Switzerland, www.hbmpartners.com, phone +41 43 888 71 71
