If you have an ACS member number, please enter it here so we can link this account to your membership. (optional)

ACS values your privacy. By submitting your information, you are gaining access to C&EN and subscribing to our weekly newsletter. We use the information you provide to make your reading experience better, and we will never sell your data to third party members.


Mergers & Acquisitions

Deals at J.P. Morgan health-care meeting signal busy M&A year

Lilly’s $8 billion purchase of Loxo Oncology is one of several announced at San Francisco event

by Lisa M. Jarvis
January 10, 2019 | A version of this story appeared in Volume 97, Issue 2


An aerial photo of San Francisco.
Credit: Shutterstock
The J.P. Morgan Healthcare Conference brought biotech executives to San Francisco.

The J.P. Morgan Healthcare Conference, the annual thermometer for the health of the life sciences industry, indicates that 2019 could be an active year for deal making. The conference kicked off with several big acquisitions, all focused on strengthening big pharma’s position in the competitive—and lucrative—cancer drug market.

The structure of Vitrakvi.

On the opening day of the meeting, attendees woke up to news that Eli Lilly and Company had offered $8 billion for Loxo Oncology. Loxo gives Lilly a pipeline of small molecules that address specific genetic drivers of cancer. They include the recently approved Vitrakvi, a TRK fusion inhibitor, which in November 2018 became the first small molecule to score US Food and Drug Administration approval for use based on the genetic profiles of people with cancer, rather than the location of their tumors.

In addition to winning this so-called tissue-agnostic approval, Vitrakvi is notable for its swift path to market; it went from first clinical trial to market in just 3½ years.

With the deal, Lilly also gets several compounds well on their way to the market, including a RET inhibitor that could get the FDA’s stamp next year, a BTK inhibitor in Phase I/II studies, and a second-generation TRK fusion inhibitor meant to address tumors that acquire resistance to Vitrakvi.

The Loxo deal is the third large oncology acquisition in recent weeks. In December, GlaxoSmithKline agreed to pay $5.1 billion for Tesaro, giving it access to the PARP inhibitor Zejula, which received FDA approval in mid-2017 to treat ovarian cancer.

And in the run-up to the J.P. Morgan conference, Bristol-Myers Squibb took the industry by surprise by unveiling the $74 billion acquisition of Celgene. The megamerger is squarely focused on creating a leader in cancer therapeutics by joining BMS’s solid tumor–focused portfolio with Celgene’s blood cancer and cell-therapy drugs.

That cluster of deals has industry watchers predicting that this will be a busy year for M&A, particularly in oncology. “We expected 2019 to be a very strong year, and it’s already started to play out that way,” says Glenn Hunzinger, pharmaceutical and life sciences deals leader at the consulting firm PwC.

The activity has everyone watching who will be next to be acquired. “We believe the resurgence in M&A is likely to benefit other late development-stage and early commercial-stage companies,” Leerink, stock analyst Andrew Berens said in a note to investors. Oncology companies that could be targets include Blueprint Medicines, Clovis Oncology, and Agios Pharmaceuticals, he wrote.

Industry observers concede that deal making in 2018 also started out strong before slowing significantly. But a year ago, price tags on desirable assets were high. “The capital market was a little frothy,”Hunzinger says. Many biotech companies were valued in the $15 billion–$20 billion range, and “nobody wanted to take on that risk.” Now, many have come down to the more accessible $5 billion–$10 billion range.

Moreover, companies are shedding parts of their businesses, like consumer products or animal health, to focus on drug development in a few core disease areas. “It’s all about consolidating within a therapeutic area,” says Ambar Boodhoo, Americas life sciences transactions leader at the advisory firm EY. Case in point, he says, is BMS’s proposed acquisition of Celgene, which will give the combined company an 18% share of the oncology market.


Several smaller deals, announced in the lead-up to the meeting, reinforce that notion. In its first foray into cellular therapies, Genentech agreed to pay Adaptive Biotechnologies $300 million to develop T-cell therapies that target a patient’s neoantigens, which are proteins made by tumors but not normal cells.

And Sanofi made a $91.5 million equity investment in BioNTech as part of a messenger RNA–focused collaboration. The partners will develop a cancer immunotherapy made up of mRNAs encoding for cytokines. It will be injected into tumors with the goal of provoking the immune system to spot and attack them.


This article has been sent to the following recipient:

Chemistry matters. Join us to get the news you need.