Biotech dealmaking

Mergers and acquisitions in the pharmaceutical industry were more abundant in the second quarter than during the same period in years’ past, an uptick in activity that could help the sector rebound from a historic downturn.

Between April and June, there were at least 14 biopharma acquisitions worth $50 million or more, a tally roughly two- to three-times larger than what was seen in that stretch in each of the last four years. And if megadeals like AbbVie’s 2019 takeover of Allergan weren’t factored in, this year’s second quarter would outrank the prior four in value, with approximately $23.4 billion spent on buyouts.

Almost half of that sum came from Pfizer’s $11.6 billion purchase of Biohaven Pharmaceuticals, the neuroscience-focused company that sells the migraine medication Nurtec ODT. But three other acquisitions also surpassed the billion-dollar mark, and involved smaller makers of vaccines and cancer drugs getting absorbed by much larger, multinational firms like Bristol Myers Squibb and GlaxoSmithKline.

This uptick comes after a somewhat prolonged dearth of dealmaking. In a January report, financial services firm Ernst & Young found that 2021 was one of the least active years for biopharma M&A in the last decade. At $108 billion, last year’s cumulative deal value was lower than the $128 billion recorded in 2020 and less than half the $261 billion seen in 2019, according to EY.

To some industry followers, the number and size of recent transactions may not be so surprising. Last year, analysts at the investment bank SVB Securities wrote that they expected the pace of biopharma dealmaking to either hold or increase in 2022.

Such predictions have hinged on several factors, with one being the amount of cash many would-be acquirers are sitting on. Pfizer, thanks in part to its coronavirus vaccine, ended the first quarter with $2.5 billion in cash and cash equivalents and another $21.4 billion in short-term investments. Swiss pharmaceutical giant Novartis, meanwhile, just sold off billions of dollars worth of stock in crosstown rival Roche.

Merck, maker of the COVID-19 pill Lagevrio and the blockbuster cancer therapy Keytruda, also had nearly $8.6 billion in cash and cash equivalents by the end of March. Merck may be looking to put that money to work, too, as The Wall Street Journal has reported that the company could acquire Seagen, a Seattle-based cancer drugmaker.

While Seagen’s share price has grown since the buyout talks became public, a broad downturn in the biotech stock market has deflated the valuations of many younger, smaller drug companies. Now, amid concerns that funding may be harder to come by, dozens of biotechs are reorganizing or shedding programs to save cash. In a June report, accounting firm PwC noted that more than 60 have announced layoffs this year, with several ending operations altogether.

Private biotechs are facing a tougher environment too, with venture financing numbers trending downward and little demand for initial public offerings.

But another effect of lower valuations, according to deal experts, could be more M&A. “With capital becoming harder to come by for most biotechs, pharma is in a good position to acquire many of these companies at a discount from their highs of just a couple years ago,” partners at PwC wrote in the report.

Throughout 2019 and 2020, biopharma buyers often paid at least double the market value of the companies they were acquiring. And though premiums have remained in the triple-digits for some deals this year, others like the Pfizer-Biohaven one or GSK’s purchase of Sierra Oncology fell in the range of about 40% to 80%. In some cases, like the buyouts of Radius Health and Epizyme, biotechs have sold themselves for prices at or near all-time lows.

Such deals suggest that while biotech executives “have been slow to accept lower valuations … more companies are willing to explore alternative means of financing as capital becomes harder to come by,” the PwC partners wrote.

If the recent deal spree continues, it may provide a boost to the biotech industry. M&A is one of the main ways investors gauge the health of the sector and their ability to secure returns, so increased activity could reinstill confidence.

Looking ahead, the PwC partners expect dealmaking to continue. They believe large pharmaceutical companies will pursue acquisitions to, among other reasons, bring in new drugs that can help offset the expected losses should some of their key products lose patent protection over the next several years.

“All of the stars are aligned for there to be a flurry of deals activity across all areas of the sector,” the partners wrote.

Editor’s note: This story was published at the beginning of the year, but still offers a look at the top issues affecting dealmaking in 2022. 

Insiders often refer to mergers and acquisitions as the lifeblood of the biotech and pharmaceutical industry. If that's true, then drugmakers may be in poor health following an unusually slow year in 2021. 

Last year, biopharma M&A dipped to one of its lowest levels on record, according to a report released in January by financial services provider EY. At $108 billion, the total value of these deals was only about 40% of what was seen in 2019. EY also estimates that, when looking at all the cash, debt and equity they could use to fund transactions, biopharma buyers deployed just 9% of the nearly $1.2 trillion at their disposal last year.

Still, the pressure to pursue acquisitions is mounting for many would-be buyers. Key patents protecting major products from Merck & Co., Bristol Myers Squibb, Pfizer, Novartis and others are set to expire before the end of the decade. Notably, AbbVie's $63 billion purchase of Allergan back in 2019 was made, in large part, because of the impending threat of generic competition to its blockbuster drug Humira.

Patent protection is only one concern, however. Competition in research areas like oncology, immunology and rare disease is dramatically increasing. At the same time, intense public and congressional scrutiny of drug prices has stifled one of the industry's long-used methods for lifting sales.

"To stay competitive, bigger biopharma companies have no choice but to be aggressive in their pursuit of external innovation," EY's deal experts concluded in their new report. "Simply put, they need to transact if they want to transform their businesses."

Here are five of the top questions facing biopharma dealmakers over the next year:

How much will M&A rebound?

Analysts expect that, following the recent quiet period, M&A engines are ready to start firing again. The team at investment firm SVB Leerink, for example, predicts the number of deals in 2022 will be the same or larger than in 2021, while their overall value will be "significantly higher."

"We don't see this year's preference for small tuck-in deals as a permanent shift in M&A strategy for large biopharmas; rather, it is an anomaly year with several contributing factors," SVB analyst Geoffrey Porges wrote in a December note to clients.

Of course, deals require not only an interested buyer, but also a willing seller.

For the past couple years, smaller biotechs have had a relatively easy time raising money from venture capital backers as well as the public markets, thereby making deals with large pharmaceutical companies less necessary. Yet, biotech stocks took a downward turn in the back end of 2021, stoking fears that some investors may retreat from the sector. If these concerns persist, and the market value for biotechs remains suppressed, it could result in more dealmaking.

"We expect financing options to remain open for attractive technologies, but continued challenges in the public markets could lead to a greater number of smaller companies being willing sellers in 2022," Mizuho Securities analyst Vamil Divan wrote in a recent note to clients.

Are megadeals really on the table?

Further fueling expectations of more and greater M&A is the sheer amount of cash buyers are sitting on.

Pfizer, for one, had forecast at least $65 billion in sales from the coronavirus shot it markets with partner BioNTech across 2021 and 2022. Novartis also just sold off $21 billion worth of stock in Roche, and may free up even more money through the sale or spinoff of its generic drug business.

Across the industry, SVB Leerink has identified more than a dozen large pharmaceutical companies that should have at least $20 billion in cash on hand by the end of this year.

To some, that many deep pockets raises the odds of a megadeal. Porges and his team have argued that it wouldn't be surprising to see one or more tie-ups between big drug companies in the coming months. The last such deal came in late 2020, through AstraZeneca's $39 billion purchase of the rare disease-focused Alexion Pharmaceuticals.

Additionally, several larger drugmakers have recently run into setbacks, lowering their market value and making a deal to acquire them seem less aspirational.

Can brain drugs steal the spotlight?

For the past 20 years or so, many of the world's most powerful drug companies shied away from the brain and central nervous system, or CNS. Setbacks and failed programs were exceedingly common in neuroscience, which led drug developers to believe they didn't have a strong enough grasp of the biology and that money would be better spent on other areas of research.

But some now believe a sea change is underway. Last year saw GlaxoSmithKline mount a return to brain drugs through a deal with Alector, a biotech trying to fight neurodegeneration by harnessing the immune system, worth at least $700 million. Pfizer and Novartis have also inked deals, with acquiring Biohaven Pharmaceuticals, and the latter teaming up with Belgium-based UCB on an experimental pill for Parkinson's disease.

Overall, the number of strategic collaborations focused on neurology was up about 50% in 2021 compared to the year before, according to the investment bank Jefferies. More deals may be on the way, too, given the renewed interest of some big pharmas and the steady crop of neuroscience biotechs that are entering the public markets.

"We predict CNS [and] neuro will remain a more investable space in 2022," wrote Jefferies analyst Andrew Tsai in a Jan. 2 note to clients.

Tsai added that his team thinks Bristol Myers Squibb, Johnson & Johnson, Eli Lilly, Roche, Takeda, AbbVie, Novartis and Biogen appear to be the "most keen" on pursuing neuroscience deals.

How much of an impact will the FTC have?

Notably, the big pharmas that have expressed interest in neuroscience seem to be preferring small- to medium-sized deals in the space — a strategy Tsai suggested may be partially shaped by a desire to avoid scrutiny from the Federal Trade Commission.

As the government body responsible for signing off on corporate mergers, the FTC holds considerable power over the pace of dealmaking. So, last March, when the agency and some of its counterparts abroad said they would be reexamining how biopharma deals are reviewed, alarm bells sounded across the industry.

"This is a pretty clear signal that the lights are no longer green," antitrust attorney David Balto told BioPharma Dive last year, adding that "companies need to be much more cautious about the deals they consider." Balto represented unions and consumer groups that objected to AbbVie's acquisition of Allergan, which was one of the deals the FTC homed in on before deciding to reassess its review process.

Since then, the FTC has gotten a new head in Lina Khan. Khan previously served as counsel to the House Judiciary Committee's Subcommittee on Antitrust, Commercial, and Administrative Law, and as a legal adviser to former FTC Commissioner Rohit Chopra.

Khan's background and her critique of big tech monopolies means it would be "reasonable" to expect deals might take longer to close or receive a greater level of inspection, Jefferies analyst Michael Yee wrote in a client note published shortly after Khan was sworn in on June 15. Even so, Yee and his team argued that "deals should still be fine" overall, upticking in the second half of 2021 and first half of 2022.

Indeed, there were 21 biopharma acquisitions worth $50 million or more in the back end of last year, compared to 14 in the front, according to data compiled by BioPharma Dive. Some of the more sizable deals last year include Merck's $11.5 billion purchase of Acceleron, Pfizer's $6.7 billion acquisition of Arena Pharmaceuticals, and CSL's $11.7 billion bid for Vifor Pharma. Should deals like these keep going through, the perception of greater regulatory scrutiny may ease.

Agios Pharmaceuticals needed money. It was 2010 and Agios, like many other biotechnology startups then, was trying to survive following a global recession.

Venture capital was contracting, leaving emerging companies with fewer financing options. Initial public offerings, a main source of funding, weren’t readily available, especially to biotechs like Agios that hadn’t begun working on a drug.

“Public investors back then didn’t invest in private companies,” said David Schenkein, Agios’ longtime CEO and now a general partner at the venture firm GV. “We knew there would be limited sources of capital.”

But in April of that year, Agios struck a unique deal with Celgene, agreeing to part with stock and rights to what would become two approved cancer drugs. In return, it got a $130 million check, which kept the company alive until public markets warmed to biotech in 2013.

“When there are difficult times, you need to focus on what you need to do to bring your science forward,” Schenkein said.

More than a decade later, emerging biotechs face similarly tough decisions. Fears of a recession remain. A widely followed biotech stock index hit a five-year low in May and, while its value has climbed, remains down by more than a third since last year. There is little demand for biotech IPOs. Private financings, meanwhile, are harder to come by as some investors turn away from biotech.

The result is a realignment, according to half a dozen private biotech investors interviewed by BioPharma Dive. Though venture firms are armed with as much cash as they have had in years, they’ve become selective as they foresee a longer road ahead for the startups they back. Budgets are being closely watched, and companies built more cautiously. Biotechs are being pushed toward the negotiating table earlier, too.

“This is going to separate the great ideas from the bad ideas, the great teams from the bad teams, and the well-run companies from the poorly run companies,” said Stephen Berenson, a managing partner at Flagship Pioneering.

‘Flat is the new up’

The biotech downturn that began last year had two phases: an “appropriate correction” followed by an “overcorrection,” according to Christiana Bardon, co-managing partner of BioImpact Capital and portfolio manager at MPM Capital.

The first phase brought to a close a near-decade long run that birthed hundreds of biotech companies and led many to go public. Biotechs formed, raised money privately and quickly pivoted to IPO at higher and higher values. In 2020 and 2021 — both record years for new biotech offerings — 182 companies raised nearly $30 billion combined, according to data from BioPharma Dive. Nearly two-thirds were in preclinical or early clinical testing at the time of their IPO.

“There was a lack of discipline with regard to valuations,” Bardon said, and “probably excess enthusiasm for the reality of drug development.”

That ended in 2021. Stock prices began to tumble and by year’s end, nearly 90% of newly public biotechs traded below their offering price. The downturn accelerated in 2022 as the impact of Russia’s war in Ukraine hit economies already dealing with rising inflation. Generalist investors, who had helped prop up the biotech sector, looked for safe havens, while IPOs ground to a halt. Dozens of publicly traded companies cut costs to save cash.

“What is happening in 2022 is not related to biotech,” Bardon argued. “We are now overcorrecting due to external factors.”

Though the impact varies, the effects have trickled down to emerging biotechs.

While new companies are still being formed at a similar pace, many are being built in a cost-controlled manner, multiple investors told BioPharma Dive. Venture firms now expect to keep their companies private for longer, as “crossover” backers, which help pull biotechs to the public markets, have retreated. Funds raised now could have lower return rates as a result, some said.

“We used to call large Series B rounds crossover rounds,” said Sean Harper, a founding managing director of Westlake Village BioPartners. “We don’t use that term much anymore.”

Venture financings are trending down as well. While a report this summer from SVB found funding totals in the first half were ahead of last year, those numbers were driven by Series A rounds — chiefly a $3 billion raise for anti-aging startup Altos Labs. Funding declined by a third between the first and second quarter.

Cash raised for companies “likely to IPO” — a proxy for investors’ interest in taking biotechs public — fell by half over the first six months of the year, according to the report.

SVB expects the slowdown to continue through next year. Biotechs raising funds in the meantime will likely need to add new investors to their last round or complete “insider financings” to extend their runway, the report said. In the current climate, that often means they’re selling shares at the same or lower value than they did previously, investors said.

“‘Flat is the new up’ is the joke these days,’” Bardon added.

Platform versus product

The types of companies getting venture backing may also be shifting.

Over the last decade, platform companies — drugmakers built around technology that’s meant to support several medicines — attracted significant interest. Perhaps the most well-known is COVID-19 maker Moderna, which raised billions of dollars privately on the promise of a messenger RNA technology before pricing a record $604 million IPO in 2018.

The idea behind a drug platform is to ensure a company’s fate isn’t tied to the success or failure of a single drug. If a medicine that comes from a platform succeeds, the company is instantly worth more than that one drug. If it fails, that company can fall back on another project.

Yet platform companies are expensive and time-consuming to build. Some have sought IPOs before selecting drug candidates, lengthening the time until they could reach the kind of success that boosts shares.

“They were spending too much money,” said Adam Koppel, a managing director at Bain Capital Life Sciences, of platform-based biotechs. “If you don't create value with a balance sheet in between capital raising efforts, that's called valueless dilution,” he added, “where you didn't create any value, but you diluted the key new investors in your last round.”

Koppel and others described a shift among investors away from technology platforms and toward biotechs that are focused more narrowly on specific products.

A June 20 analysis from biotech consulting and research firm Bay Bridge Bio indicates stock market performance is reversing as well. Among the more than 500 biotechs that went public since 2010, seven of the top 10 underperformers were platform companies, Bay Bridge found.

“The excitement around platforms over the last few years is the exception in biotech, not the rule,” Bay Bridge wrote.

One example of a product-focused biotech getting substantial support came earlier in July, when a group led by Bain put $350 million into Areteia Therapeutics, a biotech that’s testing a once-failed ALS drug as an asthma treatment. The drug works similarly to an approved, injectable biologic and has already been tested in humans. “It derisks things,” Koppel said.

Even Moderna’s founding investor Flagship Pioneering, which is known for building platform biotechs, acknowledges the shift. “The trend is crystal clear,” said Berenson. “It’s another way of expressing a higher degree of risk aversion.”

For investors like Flagship, that means “we need to think about that quite carefully when we’re financing our private companies,” Berenson said. It also means those companies have to lower their expenses, raise more rounds privately and focus on programs that can reach human trials within a few years of a Series A, he said.

“It's not like there aren't investors interested and excited by the prospect of getting in on the ground floor of a new product platform,” he said. “Just not as many.”

“Given the increased cost of capital, everyone is thinking much harder about how they build and how quickly they build,” added Jason Rhodes, a partner with Atlas Venture.

Give and take

Biotech startups are often many years away from earning any revenue, so they have to give up something to raise funds. In financing rounds, they trade stock for cash. In partnering talks, they forfeit rights to their drugs.

Take Agios. The Celgene alliance enabled the company to go public, grow and develop three drugs that are now approved. But it limited Agios’s financial upside. More than a decade later, the company still isn’t profitable and recently sold off its cancer drugs to focus on rare diseases. Shares are worth about as much as they were in 2013.

“I don't believe in the term ‘non-dilutive’ when you're doing a deal with another pharma partner,” former Agios CEO Schenkein said, “because you're giving away commercial rights.”

Biotechs can more easily hold on to those rights when equity financing is easy to come by. That’s harder now. Investors note that partnering talks are starting up earlier, as biotechs are more willing to trade economics for cash and engage in deal negotiations. Schenkein and others already report seeing an increase in such activity. “There are a lot of parallels” between the current environment and the 2007 to 2009 recession, he said.

Perhaps in response, M&A is showing signs of heating up. There were 13 biotech buyouts worth at least $50 million between April and June and and another 12 so far in the third quarter, according to BioPharma Dive data. Some of those deals were for companies like Epizyme and Radius Health that were trading at or near all-time lows, suggesting biotechs are willing to accept lower valuations. A good number of the acquisitions were for privately held drugmakers, led by GSK’s $2.1 billion purchase of vaccine developer Affinivax.

Berenson said there’s stronger interest among big drugmakers to discuss collaborations, too, a process that’s becoming competitive as pharmaceutical companies are “inundated” with calls from smaller biotechs “looking for capital. ”Other biotechs have turned to unusual financing deals instead, a trend that some investors believe will continue.

“Given the difficulty of the market,” said MPM’s Bardon, “a lot of companies may say, ‘yeah, let’s just take the bird in hand.’”

Drugmaker acquisitions of all sizes could receive closer scrutiny in the future if the Federal Trade Commission follows the advice of experts who spoke at a June agency meeting on market concentration and anticompetitive conduct.

The experts, mostly economists and other antitrust regulators, warned that some drugmakers have gained unfair market power due to the breadth of their product portfolios, allowing them to negotiate for preferred or even exclusive status on insurers’ coverage lists and thereby squeeze out competitors.

Taken together with the FTC’s plans to investigate the practices of pharmacy benefit managers, the meeting signals the Biden administration may take a tougher line on monopolistic practices in an effort to spark competition and target drug pricing.

“Pharmaceutical mergers matter because pharmaceuticals matter,” FTC Commissioner Rebecca Kelly Slaughter, who initiated the agency’s broad review more than a year ago, said in a speech to begin the meeting in June. “Access to medicine is already imperiled by untenable costs. When mergers diminish competition in pharmaceutical markets, the result is higher prices.”

Pharma company leaders did not speak at the meeting. But in public comments submitted to the FTC, the Pharmaceutical Research and Manufacturers of America argued the drug industry hasn’t become more concentrated, continues to innovate and is increasing research and development spending.

Any “additional processes and theories of harm will significantly and profoundly impact not just the ability of experienced pharmaceutical companies to partner up with promising science, but it could also fundamentally alter the ecosystem in which science is discovered and developed in the United States,” the group said in its letter.

The meeting covered a wide range of topics, from assessing the pharmaceutical industry’s market power to the effects of mergers and acquisitions on innovation. But its most immediate impact could come from the experts’ examination of how the FTC and other global authorities analyze and address market concentration in major M&A deals.

Regulators have tended to look only at product-level overlaps between buyers and their targets, and resolved them by forcing the merging companies to sell off some products.

For example, Celgene had to sell the psoriasis drug Otezla to Amgen to get the FTC to clear its $74 billion acquisition by Bristol Myers Squibb because of a competing treatment Bristol Myers was developing. Allergan, meanwhile, sold off a digestive drug called brazikumab so regulators would approve its $63 billion takeout by AbbVie.

Even Roche’s buyout of the gene therapy biotech Spark Therapeutics was slowed by FTC concerns the Swiss drugmaker’s hemophilia drug Hemlibra overlapped with an experimental gene therapy Spark was testing.

Experts argued that, to protect innovation, merging companies should be required to divest the product already being marketed. Robin Feldman, a law professor at the University of California San Francisco and director of its Center for Innovation, noted that of 56 pipeline products sold as part of merger settlements with the FTC, only 36 were approved and fewer had any significant sales.

Divesting an experimental drug to a biotech or spinning it out into a separate entity raises the risk of failure, as those companies could be less experienced in R&D manufacturing or marketing, experts noted. “It’s easier for a merged company to continue to develop a pipeline product,” said Arti Rai, a Duke University law professor and director of its Center for Innovation Policy.

Single-product divestitures also fail to take into account drugmakers’ broader business and the market power that can be gained by having a large number of drugs when negotiating with pharmacy benefit managers, or PBMs.

“It really becomes more important to assess the potential increase in market power from the size and the scope of the overall portfolio,” said Patricia Danzon, a professor of healthcare management at the University of Pennsylvania Wharton School. “These are already large firms with large portfolios, and they already have the potential for tying the rebates on their must-have products and access to some drugs in their portfolio to the ‘preferred’ position” in PBMs’ formularies.

Even serial acquisitions of small one-product biotechs, which typically result in less scrutiny from regulators, can result in a drugmaker amassing market power. “If a monopolist buys 100 startups, the chances are that competition has been restrained,” Feldman said.

How to forecasts whether consolidation will impede competition in the future is a harder question, the experts said. Still, Barak Richman, a Duke law and business administration professor, said regulators have been able to make similar predictions with hospital mergers based on economic models that have been accepted by the courts.

Experts and regulators at the meeting also expressed concern about protecting innovation as drugmakers acquire small biotechs. While the value of these drugmakers is boosted by the potential for a buyout or licensing deal, such transactions can become “killer acquisitions” if acquiring companies decide to shelve a biotech’s product because it would jeopardize another medicine they’re developing, too.

Deals can also have knock-on effects for other companies working on the same disease or drug types.

“Protecting innovation will require us to look at both the incentives of the merging firms, as well as the non-merging firms,” said Caroline Holland, an attorney adviser with the FTC. “For example, the incentives of non-merging firms may be relevant if a merger reduces the number of large firms that are the target sales audience for new innovation developed by a pharmaceutical startup.”

“This may affect the availability of capital to those startups,” she added.

Pfizer in August agreed to acquire Global Blood Therapeutics for $5.4 billion, a deal that will hand it a recently approved drug for sickle cell disease, as well as two other experimental medicines for the rare blood condition.

Under terms of the deal, Pfizer will pay $68.50 in cash per Global Blood share. The companies expect the deal, which has been approved by the boards of directors at both drugmakers, to close as early as the fourth quarter, pending the sign off regulators and Global Blood shareholders. 

Global Blood sells Oxbryta, which in 2019 won Food and Drug Administration approval for sickle cell. The OK came less than two weeks after the agency cleared another drug from Novartis for the disease, which results in abnormal “sickled” red blood cells that lead to chronic anemia, acute pain episodes and, over time, organ damage.

Prior to these two drugs and a third, Endari, that was approved in 2017, the primary treatment was hydroxyurea, a decades-old cancer drug that had been repurposed for use in sickle cell patients. Bone marrow transplants can be curative in children, but the procedure has serious side effects and isn’t available for people without a suitable donor.

Biotechnology companies like Global Blood have sought to develop new options and several, such as Bluebird bio and CRISPR Therapeutics, are working on treatments that replace or edit genes. In 2011, Pfizer entered a licensing deal with GlycoMimetics for a potential sickle cell treatment that ultimately failed in a Phase 3 study three years ago.

In addition to Oxbryta, Global Blood is developing two other medicines that are in mid- to late-stage testing for sickle cell, including one in Phase 3 trials that’s designed to reduce the pain crises associated with the disease.

Together, Pfizer predicts peak sales of the drugs could reach past $3 billion globally. Sales of Oxbryta were $195 million in 2021. 

While tens of thousands of people in the U.S. are estimated to have sickle cell, many more have the disease worldwide, particularly in areas of the world where malaria is more common.

In its statement, Pfizer said it plans to “accelerated distribution” of Global Blood’s drugs in places that are most impacted by sickle cell. 

The acquisition of Global Blood is the most recent in a string of biotech buyouts for Pfizer, which has this year has spent $12 billion to acquire Biohaven Pharmaceuticals and ReViral. Last December it spent nearly $7 billion on Arena Pharmaceuticals.

All these moves are meant to expand its portfolio, taking advantage of the revenue windfall from its COVID-19 vaccine and pill, while building out its research pipeline. Pfizer CEO Albert Bourla has set a target of adding $25 billion in revenue by 2030 through acquisitions and other business development deals.

Amgen plans to acquire a fellow Californian biotechnology company, ChemoCentryx, for $3.7 billion in a deal meant to deepen its pool of medicines targeting inflammation and the kidneys.

The companies expect their deal, announced in August, to close sometime between October and December. Its completion would hand Amgen a few experimental medicines in the early stages of human testing, plus a marketed therapy known as Tavneos, which the Food and Drug Administration approved late last year as a supplemental treatment for a group of rare autoimmune diseases.

Together, this group is referred to as ANCA-associated vasculitis because it arises when an “ANCA” antibody attaches to a type of white blood cell called a neutrophil. This interaction then leads the neutrophils to attack small blood vessels, causing inflammation to the vessels and damage to surrounding tissues and organs.

Tavneos is an oral drug meant to block a protein involved in the body’s inflammatory responses. Its approval was based on a late-stage, 331-participant trial, results from which were published in The New England Journal of Medicine. They showed Tavneos hit both of the trial’s main goals, as enough patients treated with the drug experienced disease remission at 26 weeks and sustained remission at 52 weeks.

Specifically, the FDA approved Tavneos in combination with standard therapy for adults with the two most common forms of ANCA-associated vasculitis, both of which are known to affect the kidneys and lungs.

Tavneos is also approved in Europe, Canada and Japan, though it’s commercialized in those regions by other drug firms. In the U.S., first quarter sales of the drug totaled $5.4 million, exceeding expectations of Wall Street analysts.

“Tavneos could be a blockbuster drug with no competition anywhere close and patent protection well into 2030s,” wrote Steven Seedhouse, an analyst at Raymond James, in a May 5 note.

In a statement, Amgen CEO Robert Bradway said that the ChemoCentryx deal offers a “compelling opportunity” to add to its inflammation and nephrology businesses. In the former, it has the blockbuster anti-inflammatory agent Enbrel, the psoriasis and arthritis drug Otezla, and a series of biosimilars referencing lucrative products like Humira and Remicade. In the latter, it sells the anemia medicines Epogen and Aranesp, along with two treatments for a common complication from chronic kidney disease.

During the first three months of this year, Amgen recorded $6.2 billion in revenue, a 6% increase from the same period in 2021. Sales of Enbrel, Otezla and Epogen were down year over year, but were offset by gains from other products like bone density drug Prolia.

Per deal terms, Amgen has offered to acquire ChemoCentryx at $52 per share, reflecting a 116% premium from the roughly $24 shares traded at by market’s close the day before the deal was announced.

Amgen’s premium is on the higher end for recent biopharma deals in which the buyer gets at least one marketed product. For example, Pfizer’s planned $11.6 billion acquisition of Biohaven Pharmaceuticals and its migraine drug Nurtec ODT carries a 79% premium. Lower still is the 19% premium in CSL’s $11.7 billion deal for Vifor Pharma.

Bristol Myers Squibb has bought biotech Turning Point Therapeutics, announcing in June a $4.1 billion deal that gives the pharmaceutical company an experimental drug that targets mutations found in lung cancer and other solid tumors.

The deal valued Turning Point at $76 a share, more than double the $34.16 at which shares closed the day before the deal’s announcement and four times the biotech's $18 initial public offering price in 2019. Yet the buyout price is well below the company's peak of $133 a share in February 2021, which gave it a market value of $6.6 billion.

The company's lead drug, called repotrectinib, has advanced through Phase 2 testing in lung cancer patients whose tumors harbor a mutation called ROS1. Repotrectinib would compete against Roche's Rozlytrek, if approved. Bristol Myers expects to gain Food and Drug Administration clearance in the second half of 2023.

Reduced valuations of many biotech companies have made them more attractive targets for big drugmakers, while shrinking cash holdings have made some biotechs more willing to consider terms they might have rejected a year ago. Turning Point was the 15th biotech company acquisition of 2022 when Bristol Myers revealed the buyout, slightly more than the 13 that had been announced by the same point last year, according to data compiled by BioPharma Dive.

In the case of Turning Point, though, dwindling funds were not a factor, as the company had just over $900 million in cash and marketable securities as of March 31, against $75 million in first quarter losses. Turning Point's cash holdings also help to lower the actual cost of the transaction for Bristol Myers to around $3.2 billion.

The acquisition comes two months after Turning Point announced data from a small study of repotrectinib in patients with non-small lung cancer. In 71 ROS1-positive patients never before treated with a targeted drug, repotrectinib shrank or eliminated tumors in 56, or 79%.

Roche’s Rozlytrek had a similar response rate of 74%, although without trials comparing the two directly it is unclear whether the results are as comparable as they appear.

Bristol Myers, in its announcement, pointed to how long patients on repotrectinib responded to treatment. In Turning Point’s study, 91% of patients who were enrolled for at least six months remained in response, compared with 75% for Rozlytrek. However, just 35 of the 71 patients in the repotrectinib study had reached the six-month milestone, so those data could change with further follow-up.

In making a multibillion-dollar offer, Bristol Myers is betting repotrectinib will outperform Rozlytrek and another drug in its class, Bayer’s Vitrakvi. Roche paid $1.7 billion for Ignyta, which discovered Rozlytrek, while Bayer licensed Vitrakvi for $400 million from the former Loxo Oncology — now part of Eli Lilly — in a deal that included up to $1.6 billion in total payments.

Rozlytrek had sales of 49 million Swiss francs, or $51 million last year, while Bayer didn’t report 2021 sales of Vitrakvi, which can be used broadly in solid tumors with a mutation called NTRK.

Turning Point has four other clinical stage experimental drugs in its pipeline, three of which are targeted therapeutics that would compete with products that are already on the market.