Originally Published as The Niche Podcast
Massive acquisitions in the CRO space, Trodelvy 2x, diagnostic acquisitions, Merck closes COVID vaccine program, Xolair get’s self-injection nod, and tiny robots go for massive SPAC.
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Story References
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Music by Luke Goodson
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Life Science Today is your source for stories, insights, and trends across the life science industry. Expect weekly highlights about new technologies, pharmaceutical mergers and acquisitions, news about the moves of venture capital and private equity, and how the stock market responds to biotech IPOs. Life Science Today also explores trends around clinical research, including the evolving patterns that determine how drugs and therapies are developed and approved. It’s news, with a dash of perspective, focused on the life science industry.
Introduction
Welcome to The Niche Podcast – Your weekly rundown of the biotech, clinical research, and life science industries. I’m your host, Dr. Noah Goodson. This week, massive acquisitions in the CRO space, Trodelvy 2x, diagnostic acquisitions, Merck closes COVID vaccine program, Xolair get’s self-injection nod, and tiny robots go for massive SPAC.
ThermoFisher to Acquire PPD for $17.4B
PPD went public again in February of last year, drawing in $1.62B at $27/share. Now, they’ve almost doubled their $9B valuation, selling the entire company for $47.50/share to ThermoFisher in a $17.4B acquisition. PPD appears to be a really solid company, and we noted in episode 002 of this show that they were outperforming their competition during the early phases of the pandemic. But it’s not just great fundamentals. This new deal so lines up with the trends we’ve been noting on this podcast that it’s absolutely predictable. First, CROs are being bought or combining left and right. Even smaller CROs are getting scooped up under larger brands or into other CROs. This space is just consolidating at an astounding rate while continuing steady net growth. Second, lab-based solutions and supply companies experienced the best sales year of all time in 2020. COVID absolutely inflated the industry beyond all comparisons. Yes, there was tightening in some spaces of the market, but consistent high demand plus billions of dollars in COVID related testing and treatment supplies meant big business. As we pointed out in Episode 030, ThermoFisher specifically saw year over year revenue increases of 36% in Q3 2020, and anticipate a net 25% revenue increase in 2021. For scale, their GAPP diluted EPS increased 74% last year. It’s no wonder they are hard on the lookout for major acquisitions (also noted in episode 030).
The move to acquire PPD, a really solid and reputable CRO, signals a third major trend we have been observing: The coalescence of lab and testing companies with clinical research organizations. This is a two-way street by the way. The kick-start to this industry melding was LabCorp’s acquisition of Covance. But in the last couple of years it’s just going buck-wild. Just this month we’ve seen Charles River Laboratories grab Retrogenix and IQVIA fully acquire Q2 solutions. That doesn’t even count PRA being acquired by ICON.
At $17.4B for one of the larger CROs this deal is definitely a potential industry shaker, even compared to other movers this year. It’s not clear how ThermoFisher plans to incorporate PPD and how tightly knit the mega-corporation will now be. What it means on the ground is the flocking and fighting over experienced talent is likely to continue hard and heavy through this year. I personally predict that you see mid-level and executive level peel offs as company culture changes. With so much movement and so many specific needs in the industry, I’d also predict a flock of new companies addressing specific needs start coming out across the next couple of years. These major corporations can solve a range of problems, but they just can’t meet the complex and diversified needs of an agile market alone. If you’re hoping to start a joint venture in the CRO space, I’d say the next 12 months will present an amazing pool of talent who would join the right team and help craft new, creative, and critical solutions.
In the meantime, I’ll be keeping my ear to the ground for how these mergers shake out for corporate culture. Plus, I’ll pretty much guarantee this isn’t the last big deal in the space for 2021.
The FDA Approves Trodelvy for Metastatic Urothelial Cancer
Last week we spoke about Gilead’s new oncology therapy Trodelvy. Well this week it hit FDA approval number 2 in just a week. This accelerated approval is for another rare form of cancer, Metastatic Urothelial Cancer. It also comes with the caveat that the patient must have tried a PD-1 inhibitor first. Since Trodelvy works through an alternative mechanism (see last week’s episode) it’s not super surprising it got the nod.
After Gilead dropped $22B to scoop up Trodelvy as part of Immunomedic’s portfolio in November of last year, it’s not surprising to see the drug being successful. Will it reach PD-1 inhibitor mega block-buster status? At an approval a week, they have started out strong!
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DiaSorin Acquires Luminex for $1.8B
The Italian based diagnostic testing company DiaSorin has announced the acquisition of Luminex Corporation at $37/share, for a total of $1.8B. Luminex has a suite of proprietary solutions in diagnostics, with specialization in multiplexing. These technologies should be readily incorporated into DiaSorin’s broad range of diagnostic solutions. DiaSorin will make the acquisition using both cash and external financing. The deal should continue their growth trajectory in critical markets using next gen diagnostic solutions.
Merck Shuts Down COVID-19 Vaccine Programs
Merck (MSD outside US) has shut down their COVID-19 vaccine program on two potential candidates. Both presented great safety data in a phase I clinical trial. However, the antibody response was less than desirable. In fact, it was inferior to natural infection. Already far behind other vaccine manufacturers, it’s little surprise that Merck has scrapped the program. Instead, their continuing to look at some potential COVID-19 therapeutics which have shown some promise.
Xolair Approved for Self-Injection
Novartis announced the approval by the FDA of Xolair for self-injection. The therapy has been approved for close to 2 decades for the treatment of some kinds of asthma, idiopathic urticaria, and nasal polyps. Now, patients may keep a syringe and self-inject. The single-dose self-injection approval represents a reasonable and appropriate expansion of at-home care.
Vicarious Surgical Going Public in SPAC
Vicarious Surgical is going public through a SPAC, valuing the company at more than $1B. The financials on this one are a bit complex, so I’ll just focus on the nuts and bolts of what the company has created, which is very cool. Their solution is a high-res 3D camera, integrated to a VR headset and disposable surgical arms that allow the operating surgeon to effective play the video game of being a tiny robotic version of themselves inside of tissue. Requiring only a 15mm incision, the robot can be used for complex but minimally invasive surgical techniques. Their first target is ventral hernias. They hope to have surgeries happening later this year. This ongoing integration of robotics, minimal invasion, and VR will be mega-cool to watch develop over the next few decades.
Closing Credits
Thanks for joining me on The Niche Podcast; your weekly summary of top news in the biotech, clinical trials, and life science industries. You can learn more at thenichepod.com or find us on your favorite podcast app. Like, comment, subscribe, and most of all share with your friends. If you like what you hear, please rate and review, it really helps us. Once again, I’m Dr. Noah Goodson, I’ll see you next week.