Pharma Investment Roundup – 9/7/21

This week in pharmaceutical investments, AstraZeneca forges ahead in the recent biotech boom by buying Alexion, demonstrating its eagerness to expand its current pipeline through smaller, specialised companies, potentially altering market competition in the UK. Elsewhere, GSK’s CEO is under fire by active investor Elliott Management for maladministration of the company, as her alleged ‘poor leadership’ is contributing to a drop in share prices.

Alexion acquisition by AstraZeneca cleared by EC

AstraZeneca’s proposition for acquiring Alexion Pharmaceuticals has recently been cleared by the European Commission for approximately $39 billion. Initially announced in December 2020, the acquisition has been cleared by regulatory authorities in the US, Japan and others globally – clearance in the UK however remains pending. 

The proposal comes from AstraZeneca’s desire to establish a specialist rare disease pipeline, which, if the acquisition reaches completion, will gain the name ‘Alexion, AstraZeneca Rare Disease’ with headquarters in Boston, US. The two companies will work to advance Alexion’s pipeline of 11 molecules across more than 20 clinical programs, many in rare diseases.

The combination of the two companies could lead to shifts in AstraZeneca’s presence in the market of immunology and precision medicine, supported by Alexion’s immunology expertise in addition to AstraZeneca’s growing immunology and rare disease pipeline. 

If this reaches completion, the acquisition could rival other big pharma companies in these therapeutic areas, specifically in R&D, and potentially reduce competition in Britain or other markets. 

Elliott pushes for Resignation of GSK CEO Emma Walmsley 

Four days ago, active investor Elliot Management detailed its plan for GSK with regards to new management, inferring that current CEO Emma Walmsley should resign from her position. The open letter calls for Walmsley to quit on the basis of poor mismanagement which has led to the underperformance in the company, reflected in the share prices which infer “the true value of its promising medicines”.

Some of the demands by Elliot include: “pays no profit and revenue-related bonuses unless management meets its 2026 targets of 5% profit growth and over 10% turnover growth. Bonuses should also be considered for medicines hitting certain research and development milestones”. 

Despite the urging from Elliot for Walmsley to step down, a number of investors including Royal London and Jupiter Asset are backing the CEO. In addition to her current responsibilities, “Walmsley is planning to split GSK’s consumer business from its pharmaceuticals and vaccines arm, with her running the latter as chief executive”.

The uncertainty around leadership for the big pharma will no doubt lead to fluctuations in the share price which could impact the company’s growth. During an investor day held on 23 June, GSK said it is “aiming to deliver sales growth of more than 5% and adjusted operating profit growth of more than 10% over the next five-year period”.

Parexel Snapped Up By Private Equity Firms in $8.5 Billion Deal

Global clinical research organisation (CRO) and biopharmaceutical company Parexel has been sold again, four years after going private. The CRO organisation has been sold for $8.5 billion to EQT AB and Goldman Sachs Group Inc’s investment arm, Asset Management. 

No doubt the investment by Swedish private equity group EQT has been driven by the success of CROs like Parexel who have accelerated at a fast pace since the COVID-19 pandemic began, pushing the industry towards decentralised clinical trials and digital health. In December 2020, Parexel was named “Best Contract Research Organization” by an independent panel for Informa Pharma Intelligence, according to a press release by the company. 

In an article by FierceBiotech, Parexel CEO Jamie Macdonald quoted that the past 18 months has seen “Parexel continue its strong growth trajectory delivering on its patients-first focus and accelerating new therapies to patients in need around the world”. 

This strategic investment by EQT is a smart move by the investment organisation, which will take advantage of the increasing number of pharma companies opting to outsource their drug development activities to CROs in order to focus on discovery and commercialisation. The demand for CROs and their services continues to increase, as seen this year by a number of investments including Thermo Fisher who snapped up PPD in a $17.4 billion deal.

EQT is a global investment organisation with more than EUR 67 billion in assets under management across 26 active funds, spanning Europe, Asia-Pacific and the Americas.

UK Biotechs Booming As Industry Rakes In Over £1 billion In Q2 Financing

More than £1 billion in venture capital funding has contributed to the huge boom in the UK biotech and life sciences industry in 2021. Approximately 13 deals worth over £20 million were confirmed, including four over £100 million including artificial intelligence (AI) specialist Exscientia for £158 million. 

Exscientia’s AI platform – Centaur Chemist – has become the centre of attention, as an increasing number of pharma companies are seeking AI technologies to accelerate drug development timelines. 

This was reinforced by a recent survey in an industry article which found that 50% of US/European respondents felt that AI could help bring new drugs to market more rapidly and securely, demonstrating the technological shift in drug development. It is worth noting however, that 49% also said their company has no overarching strategy for AI which infers a level of uncertainty of AI applications within the industry. 

Another significant investment spike came from Centessa – an organisation created from a merger of ten biotechs earlier this year. This merger became a new financing model launched by Medicxi, a life-science investment firm.

Centessa announced plans back in April for a $100 million US IPO within the space of a few weeks after launching, already with $250 million in private backing. The merger has seen Centessa Pharmaceuticals already invest in 16 drugs within their pipeline, including six in oncology alone.

According to Centessa’s site, the launch of this new biotech aims to “improve R&D productivity by scaling the asset-centric model with a deconstructed R&D environment that prioritizes data driven decision making led by subject matter experts”.

Charlotte Di Salvo, Lead Medical Writer
Proventa International