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Posts Tagged ‘M&A Brokers FINRA Guidance Investment Platforms for Private Placements Investment Platforms for Private Funds Crowdfunding’

Near Term Investment Outlook for 2023: A Perspective from Advisors Potentially Affecting M&A Landscape

Curator: Stephen J. Williams, Ph.D.

The following is an adaptation from various reports and the forseen changes in forecast for different sectors as well as the general investment landscape for the near future (2022-2023). Of course projections may change given changes in undewrlying fundamentals.

Many financial advisors and professionals feel the U.S. is in a late-cycle for its economy, with a significant slowing of corporate earnings in the midst of higher than usual inflation {although inflation estimates are being halved from its current 8-10% for next year}.    Consensus investment strategies deemed favorable include US (not international) equities with high quality assest and away from cyclicals.  This represents the near end of a business cycle.  As growth returns and interest rates increase we may seen the entrance into a new business cycle, although this may not happen until later 2023.  In general, it is advised investors move out of cyclicals as the economy continues to slow and into large and mid cap US equities.

This change in landscape may be very favorable to the overall Health Care and Information Technology sectors.  In health care, Life Sciences Tools and Services as well as Medical Devices are expected to outperform.  In IT, IT Services, software and Networking are favored sectors while communication services like Publishing Services are considered to be Neutral to Unfavorable.

What does this mean for Life Sciences and Health Related small companies looking for an Exit or M&A strategies?

With higher interest rates, credit markets may continue to deteriote and companies may have to look toward Global Macro to find any funding through cash or credit markets.  Equity Hedge strategies may be neutral to unfavorable with Event Driven opportunities like distressed deals  unfavorable but most analysts do consider Merger Arbitrage as Event Driven strategy to be favorable.  A competitive and narrow merger and acquisition environment is expected to last through 2023.

A general consensus for a neutroal environment is seen for most Private Equity, although a more favorable environment for small and mid cap buyouts may exist.  Recent short term weakness in the IT sector has led to diminished exit valuations however this may be a good entry point for Growth Equity and Venture Capital.  Private Debt strategies look unfavorable due to potential US recessions and potential underwriting issues.  Therefore Favored Private Capital strategies include Private Equity for Small and Mid Cap Buyouts and Growth Equity and Venture Capital.

Sources:

https://www.wellsfargo.com/investment-institute/2022-midyear-outlook/

Deals to pick up in second half of 2022

All of the stars are aligned for there to be a flurry of deals activity across all areas of the sector despite the slow start to the year so far. Many large pharma players are flush with cash (particularly those that have COVID-19 treatments in their arsenal), biotech valuations have been normalizing after years of a boom market and the 2025 patent cliff is rapidly approaching, all making for a strong deal environment.

Given the broader labor changes, supply shortages and constantly changing supply chain strategies and operations, the focus on quality can be challenging to sustain. Yet the downside can have massive impacts on businesses, including the potential inability to manufacture products.

The long litany of macroeconomic and regulatory headwinds has CEOs looking for transactions that are easily integrated and will get cash off their balance sheet as inflationary pressures mount. 


Pharmaceutical & life sciences deals outlook

Increased scrutiny from the US Federal Trade Commission (FTC) around larger deals could mean that 2022 will be a year of bolt-on transactions in the $5 to $15 billion range as pharma companies take multiple shots on goal in order to make up for revenues lost to generic competition in the remainder of the decade. However, don’t rule out the potential for larger deals ⁠— consolidation is good for the health ecosystem and drives broader efficiency.

Expect to see big pharma picking up earlier stage companies to try and fill the pipeline gaps that are likely to start in 2024. While market conditions suggest bargain prices for biotech are possible, recent transactions indicate that pharma companies are still paying significantly above current trading prices (ranging from approximately 50 to 100% of current trading), but below the peak valuations of recent memory.

In the first few months of the year, semi-annualized deal value was down 58% from the same period last year, with companies investing just $61.7 billion so far. Only 137 deals were announced during that time, compared to 204 in the year-prior period.

Talk of drug pricing regulations continues in Washington as Congress bats around a pared down version of the Build Back Better plan. Expect some of that tension to ease in the fall if a new Congress takes on a different agenda.

Other areas of the sector like medical devices face similar headwinds from regulators, and continue to deal with a greater impact from semiconductor shortages. Even though semi-annualized deal value in the medical device space is down 85% from the same period the prior year, expect these companies to remain focused on M&A as the subsector searches for alternative forms of revenue ⁠— particularly from new consumer-centric technologies.

Macroeconomic headwinds and geopolitical tensions have created volatility in spending at CDMOs and CROs, limiting their willingness to deploy capital as the uncertainty persists. 

Source: https://www.pwc.com/us/en/industries/health-industries/library/pharma-life-sciences-deals-outlook.html

From the JP MorgAN Healthcare Conference

Deals Or No Deals, J.P. Morgan Sets The Tone For 2022

Collaborations, Not M&A, Dominate

  • 12 Jan 2022
·         OPINION
  • Mandy Jackson

Mandy Jackson@ScripMandy Mandy.Jackson@informausa.com

Executive Summary

No big buyouts were revealed during the annual J.P. Morgan Healthcare Conference for a third year in a row. Big pharma firms are in acquisition mode, but execs stress desire for easy integrations and scientific alliances. 

Biopharmaceutical industry players – and reporters – eagerly await merger and acquisition announcements going into the annual J.P. Morgan Healthcare Conference, hoping to scrutinize which big pharma is buying which other company for signs of what the deal-making environment will be like in the coming year. And in 2022, for the third year in a row, the meeting started with no big M&A deals.

Instead, Pfizer Inc.Novartis AGAmgen, Inc.Bristol Myers Squibb Company and others announced collaboration agreements. (Also see “Deal Watch: Bristol, Pfizer Lead Off J.P. Morgan Week With Two Deals Apiece” – Scrip, 11 Jan, 2022.)

They and their peers insisted during J.P. Morgan presentations and Q&A sessions as well as in interviews with Scrip that they do intend to invest in business development in 2022, but with a primary focus on smaller bolt-on acquisitions as well as licensing deals and collaboration agreements. Bolt-on deals have been the focus for the past few years. (Also see “The Pandemic Hurt, But EY Expects More Biopharma Deal-Making In 2021” – Scrip, 11 Jan, 2021.)

Amgen CEO Bradway On Deals: Good (Smaller) Opportunities Are Vast

By Mandy Jackson11 Jan 2022

Amgen is enthusiastic about deals of all sizes, including a new Arrakis collaboration, and is interested in large transactions like its Otezla buy – but Bradway said right-priced opportunities are fewer and farther between. 

Read the full article here 

While investors and others are clamoring for potential buyers to execute large transactions, Amgen CEO Robert Bradway made the astute – and as he pointed out, obvious – observation that there simply are more small, early-stage ventures to partner with than there are large, later-stage companies to acquire. Bradway also noted that while Amgen would like to buy another growing commercial-stage product like Otezla (apremilast), not only are few available but there are few assets at a price that still leaves value on the table for both companies’ investors.

Source: https://scrip.pharmaintelligence.informa.com/SC145698/Deals-Or-No-Deals-JP-Morgan-Sets-The-Tone-For-2022

Other Related Articles on Life Sciences Investing Published in this Open Access Scientific Journal Include the Following:

Podcast Episodes by THE EUROPEAN VC
Tweets and Retweets by @pharma_BI and @AVIVA1950 for #NEVS at 2019 New England Venture Summit, December 4, 2019 at the Hilton in Boston, Dedham, MA, hosted by youngStartUp #NEVS
Leaders in Pharmaceutical Business Intelligence & youngStartup Ventures: Venture Summit Virtual Connect West, March 16th -18th 2021 featuring a dedicated Lifesciences / Healthcare Track  
Leader Profile: Family Offices – Impact Investing and Philanthropy – Health and the Life Sciences
37th Annual J.P. Morgan HEALTHCARE CONFERENCE: News at #JPM2019 for Jan. 10, 2019: Deals and Announcements
Real Time Coverage of BIO International Convention, June 3-6, 2019 Philadelphia Convention Center; Philadelphia PA

and  other related articles https://pharmaceuticalintelligence.com/page/3/?s=Life+Science+Investing

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Pfizer buys out Array BioPharma for $11.4 Billion to beef up its oncology offerings

Reporter: Stephen J. Williams, PhD

As reported in FiercePharma.com:

by Angus Liu |

Three years after purchasing Medivation for $14.3 billion, Pfizer is back with another hefty M&A deal. And once again, it’s betting on oncology.

In the first big M&A deal under new CEO Albert Bourla, Pfizer has agreed to buy oncology specialist Array BioPharma for a total value of about $11.4 billion, the two companies unveiled Monday. The $48-per-share offer represents a premium of about 62% to Array stock’s closing price on Friday.

With the acquisition, Pfizer will beef up its oncology offerings with two marketed drugs, MEK inhibitor Mektovi and BRAF inhibitor Braftovi, which are approved as a combo treatment for melanoma and recently turned up positive results in colon cancer.

The buy will enhance the Pfizer innovative drug business’ “long-term growth trajectory,” Bourla said in a Monday statement, dubbing Mektovi-Braftovi “a potentially industry-leading franchise for colorectal cancer.”

RELATED: Array’s ‘extremely compelling’ new colon cancer data spark blockbuster talk

In a recent interim analysis of a trial in BRAF-mutant metastatic colorectal cancer, the pair, used in tandem with Eli Lilly and Merck KGaA’s Erbitux, produced a benefit in 26% of patients, versus the 2% that chemotherapy helped. The combo also showed it could reduce the risk of death by 48%. SVB Leerink analysts at that time called the data “extremely compelling.”

Right now, one in every three new patients with mutated metastatic melanoma is getting the combo, despite its third-to-market behind combos from Roche and Novartis, Andy Schmeltz, Pfizer’s oncology global president, said during an investor briefing on Monday.

It is being studied in more than 30 clinical studies across several solid tumor indications. Moving forward, Pfizer believes the combo could potentially be used in the adjuvant setting to prevent tumor recurrence after surgery, Pfizer’s chief scientific officer, Mikael Dolsten, said on the call. The company is also keen to know how it could be paired up with Pfizer’s own investigational PD-1, he said, as the combo is already in studies with other PD-1/L1s.

But as Pfizer execs have previously said, the company’s current business development strategy no longer centers on adding revenues “now or soon,” but rather on strengthening Pfizer’s pipeline with earlier-stage assets. And Array can help there, too.

“We are very excited by Array’s impressive track record of successfully discovering and developing innovative small-molecules and targeted cancer therapies,” Dolsten said in a statement.

On top of Mektovi and Braftovi, Array has a long list of out-licensed drugs that could generate big royalties over time. For example, Vitrakvi, the first drug to get an initial FDA approval in tumors with a particular molecular feature regardless of their location, was initially licensed to Loxo Oncology—which was itself snapped up by Eli Lilly for $8 billion—but was taken over by pipeline-hungry Bayer. There are other drugs licensed to the likes of AstraZeneca, Roche, Celgene, Ono Pharmaceutical and Seattle Genetics, among others.

Those drugs are also a manifestation of Array’s strong research capabilities. To keep those Array scientists doing what they do best, Pfizer is keeping a 100-person team in Colorado as a standalone research unit alongside Pfizer’s existing hubs, Schmeltz said.

Pfizer is counting on Array to augment its leadership in breast cancer, an area championed by Ibrance, and prostate cancer, the pharma giant markets Astellas-partnered Xtandi. For 2018, revenues from the Pfizer oncology portfolio jumped to $7.20 billion—up from $6.06 billion in 2017—mainly thanks to those two drugs.

Source: https://www.fiercepharma.com/pharma/pfizer-never-say-never-m-a-buys-oncology-innovator-array-for-11-4b

 

About Array BioPharma

Array markets BRAFTOVI® (encorafenib) capsules in combination with MEKTOVI® (binimetinib)  tablets for the treatment of patients with unresectable or metastatic melanoma with a BRAFV600E or BRAFV600K  mutation in the United States and with partners in other major worldwide markets.* Array’s lead clinical programs, encorafenib and binimetinib, are being investigated in over 30 clinical trials across a number of solid tumor indications, including a Phase 3 trial in BRAF-mutant metastatic colorectal cancer. Array’s pipeline includes several additional programs being advanced by Array or current license-holders, including the following programs currently in registration trials: selumetinib (partnered with AstraZeneca), LOXO-292 (partnered with Eli Lilly), ipatasertib (partnered with Genentech), tucatinib (partnered with Seattle Genetics) and ARRY-797. Vitrakvi® (larotrectinib, partnered with Bayer AG) is approved in the United States and Ganovo® (danoprevir, partnered with Roche) is approved in China.

 

Other Articles of Note of Pfizer Merger and Acquisition deals on this Open Access Journal Include:

From Thalidomide to Revlimid: Celgene to Bristol Myers to possibly Pfizer; A Curation of Deals, Discovery and the State of Pharma

Pfizer Near Allergan Buyout Deal But Will Fed Allow It?

Pfizer offers legal guarantees over AstraZeneca bid

Re-Creation of the Big Pharma Model via Transformational Deals for Accelerating Innovations: Licensing vs In-house inventions

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On Investment Platforms for Private Funds and Investment Platforms for Private Placements – SEC Update

Reporter: Aviva Lev-Ari, PhD, RN

 

SEC Update

In the last few years, we have seen a number of important developments in the securities laws related to finders and broker-dealer registration requirements. Below we provide an overview of the broker-dealer registration requirement as it relates to finders who assist in matching issuers with investors or buyers and the latest developments in this area.

Overview

The distinction between being classified as a finder and a broker-dealer can have significant consequences. An unregistered broker-dealer may face sanctions from the Securities and Exchange Commission (SEC), and it may be unable to enforce payment for its services. In addition, transactions involving an unregistered broker-dealer may create a right of rescission in favor of the investors, allowing the investors the right to require the issuer to return the money invested. One example of the consequences of an unregistered broker-dealer occurred in the Ranieri Partners SEC enforcement action. In that action the SEC brought charges against a private-equity firm, its managing director, and a consultant because of the consultant’s failure to register as a broker-dealer. The SEC’s order found that the private equity firm paid transaction-based fees to a consultant, who was not registered as a broker-dealer, for soliciting investors for private fund investments.1

The federal securities laws do not specifically define the term “finder” or outline what finders can do. Instead, finders must avoid being deemed a broker or dealer under the federal securities laws unless they register as such with the SEC and the Financial Industry Regulatory Authority (FINRA). A broker is defined as “any person engaged in the business of effecting transactions in securities for the accounts of others.”2 A dealer is defined as a person that is “engaged in the business of buying and selling securities … for such person’s own account,” but excludes a person that buys and sells securities for its own account, but not as part of a regular business.3Because the broker definition is the one that finders have the most trouble with, this discussion is focused on what activities may cause a finder to fall within the definition of a broker required to register with the SEC and FINRA.

  • M&A Brokers
  • FINRA Guidance
  • Investment Platforms for Private Placements
  • Investment Platforms for Private Funds
  • Crowdfunding
  • Potential Regulatory Action
Conclusion

A determination of whether an intermediary is acting as a finder or an unregistered broker-dealer is a very fact-specific analysis and can often be very complex. Unfortunately for unwary entrepreneurs, company executives, and equity fund sponsors, frequently a third party assisting with capital-raising will be acting as a broker-dealer, not a finder, and therefore should not be engaged unless properly registered. It is likely that we will see further clarification or new rules from regulators in the future; regardless, it is important to always carefully consider the involvement of finders or broker-dealers in any capital-raising endeavor.

If you have any questions regarding the use of finders, or capital raising in general, please contact the Venable lawyer with whom you work, one of the authors of this article, or a member of our Corporate Finance and Securities Group.

SOURCE
https://www.venable.com/finders-and-unregistered-broker-dealers-12-04-2015/?utm_source=Mondaq&utm_medium=syndication&utm_campaign=View-Original

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