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The Life Sciences M&A Landscape: Collaboration Between Startups and Industry Majors

Feb 19, 2018

For venture capitalists, life sciences has been an attractive and fruitful sector for many years. With tax breaks for corporations and other factors that incentivize investment, such as a more accommodating regulatory environment, 2018 is expected to be a particularly active year. In fact there have been $11 billion in biotech M&A bids in the first few days alone, led by Celgene Corporation announcing its intention to acquire Impact Biomedicines and Novo Nordisk announcing its intention to acquire Belgium-based biopharma company Ablynx.

The startup boom also benefits from large companies in life sciences that had scaled down their own research and development budgets in favor of identifying promising acquisitions with de-risked investments, either to diversify portfolios or expand their presence in a core sector -- as some examples demonstrate:

  • Cerecor Inc., a biopharmaceutical company specializing in neurological drugs, recently acquired TRx Pharmaceuticals, in order to push into pediatric health care (TRx subsidiary Zylera specializes in established pediatric supplements already being prescribed by doctors).
  • Last year, AzurRX, a company that specializes in therapies for gastrointestinal diseases, entered into a collaboration agreement to license established transition-state chemistry from TransChem, Inc. The company expects this deal to make AzurRX a significant player in the development of non-systemic therapies for gastrointestinal and infectious diseases.
  • In another deal dating to 2016, Centrexion Therapeutics acquired three promising, non-habit-forming chronic-pain-treatment drug candidates from Boehringer Ingelheim, drawing from a narrow therapeutic category to strengthen its existing pipeline.

This fast-paced environment creates significant opportunity for entrepreneurs, especially those at the intersection of technology and life sciences. Entrepreneurs would be wise to take advantage of the developmental resources and collaborative opportunities to build the value of their businesses. And, prospective buyers should conduct extensive due diligence to ensure that the technology they’re buying is a good fit with their business, appropriately valued and the most promising solution to a vital life sciences need. 

To learn about the deal-making environment, how buyers and sellers can maximize value, and industry growth, check out the full article in VC-List.

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John Pennett

John Pennett is the Partner-in-Charge of the National Technology and Life Sciences Group and works closely with our IPO clients and their circle of legal and underwriting advisors to take an IPO from concept to close.

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