Pharmaceutical acquisitions highlight the promise, risk of new drug development

As we hit the middle of the year, large-scale pharmaceutical acquisitions are well underway. Patterns we have looked into in previous entries continue including the availability of huge amounts of money and giant pharmaceutical companies shoring up their leadership by acquiring attractive start ups. In this piece, we highlight a few.

In February, Novartis NVS announced its plan to acquire MorphoSys MOR , a German-based biopharma company with an oncology focus. The cost is put at $2.9 billion. Oncology is attractive as is the German location, suggesting a strong presence across the euro zone.

Over the last year, the company stock has quadrupled thanks to promising outcomes in its product portfolio. Pelabresib is in Phase 3 trials to treat myelofibrosis and thrombocythemia. Breakthroughs related to specific, rare diseases are very attractive.

MorphoSys also offers Ianalumab, a Phase 3 aspirant that deals with clinical trials for Sjögren’s disease, lupus nephritis and other autoimmune diseases. These areas continue to draw attention from big pharma. Tulmimetostat, which is not yet at Phase 3, deals with solid tumors and lymphomas.

Also on their shelf is Felzartamab, an antibody directed against CD38 for renal autoimmune diseases and relapsed/refractory multiple myeloma. Overall, MorphoSys offers strong potential to the Novartis lineup, which is best known for dealing with cancer, heart disease and inflammatory conditions.

Giant premiums seize the day

Giant Gilead Sciences GILD recently finished the acquisition of CymaBay, a deal that came in at $4.3 billion. The California-based target company specializes in liver diseases. Phase 3 went well for seladelpar, the first delpar developed for the treatment of primary biliary cholangitis (PCB), a chronic, progressive condition that causes inflammation and, eventually, the destruction of bile ducts.

The cost of the transaction shows that there is plenty of money around for acquisitions. This deal included a premium of more than 25%. The transaction was financed by cash on hand, an increasingly common big pharma pattern in the post-COVID era.

According to PubMed, “approximately 383,000 people die from liver cancer every year in China, which accounts for 51% of the deaths from liver cancer worldwide.”  China’s sheer size is significant. The country is working hard to stimulate research, create vaccines and develop drugs related to liver disease. Gilead’s acquisition shows the truly international nature of today’s pharmaceutical industry.

Donanemab on hold

Recently, in a show of caution, the Food and Drug Administration (FDA) held off approval of Eli Lilly’s planned Alzheimer’s drug, donanemab. The drug has achieved clear benefits. The FDA plan is to require the medication to be reviewed by an expert panel. The key issues appear to be safety and effectiveness.

As everyone in the pharmaceutical industry knows, side effects can be overwhelming. In this case, while the side effects have apparently been mild, they include brain swelling and bleeding.

These are curious times. On one hand, pharmaceutical companies develop medications for complex brain diseases. On the other end of the spectrum, brains are being abused mightily.

Football is the most popular American sport. According to the National Football League (NFL), in 2023, there were 219 brain concussions in pre-season and regular season games combined, down from 275 in 2015. Many occurred in practice. As with football and the enjoyment millions derive from it, the donanemab results show that significant benefits may occur alongside significant risks.

Read more: What health care tells you about emerging markets