Industry news, page-1421

While on the topic of valuations / buyouts again, have spent a fair bit of time going through older transactions of all types of drugs.

Still very clear that buyout deals are done on revenue projections rather than % to the average price of the stock.

A few things seem to affect the multiple, all though I'm sure there's a very complicated model used by the giants. (Not in any particular order of importance)

1. TAM/Incidence
2. Novel drug or me too
3. Competition
4. Commercial exclusivity
5. Marketability
6. Revenue potential (Higher revenue dilutes R&D and marketing costs at scale)
7. Phase 1/2/3 - time to approval
8. Topline results from trial - Results if me too drug need to be impressive, just need to be effective if Novel


Someone on the other thread mentioned valuations between $40-$80b would require being revenue producing of $10b per year.
I find companies that are producing far less are getting acquired for big bucks.


We have all heard of Gilead's acquisition of Immunomedics to pick up Trodelvy, at the time Immunomedics was in Phase 3 and not generating revenue. And still got bought out on analysts peak sales revenue of $1.5B peak sales... with the hope of $2.5B.
Prior to revenue, Phase 3, Not an ounce of marketing or sales.
$21B USD.

Remember potential peak sales of triangle report are north of $8B USD at the upper end.





Revenue Producing
2014 Activas lobbed a $70B offer for Allergen who in 2014 made just 4.6B (If margin was 50% then that's a 30P/E)




Then in 2019 AbbVie bought Allergen for $63B against a $16b revenue but the portfolio had all ready laid a few years of golden eggs and commercial exclusivity meaning the offer was a much lower premium.





CSL deal in 2021 - $17B AUD in 2021, sales in later 2022 for the 2 drugs = $3.1b AUD
Works out to be 5.5x sales the year after (note: not estimated on peak)

H2 2022



Another smaller deal, $1.9B on estimated peak sales of $630m in 2031. Bought at P3. Works out to be 3x peak sales. for 3500 incidence in the USA each year, small rare market and still a $3B buyout prior to revenue.





Buyout = 3.85x to 5.75x estimated peak sales prior to revenue




Research and Development Spending to Bring a Single Cancer Drug to Market and Revenues After Approval - PMC (nih.gov)