InnovationRx: The Pharma M&A Horizon

InnovationRx is your weekly digest of healthcare news. To get it in your inbox, subscribe here . Biopharma takes over San Francisco this week at JPM.

This year’s J. P. Morgan Healthcare conference kicked off with a bang thanks to three major acquisition announcements: Merck’s acquisition of Harpoon Therapeutics for $680 million, Johnson & Johnson’s $2 billion acquisition of Ambrx , and GSK’s acquisition of Aiolos Bio for a potential total payout of $1.

4 billion. It’s a sign of cautious optimism that a lot of attendees who talked to Forbes seemed to share. (Also helping the general mood: it wasn’t constantly raining like it was last year.

) More M&A activity by pharmaceutical companies is probably on the horizon, too, according to an analysis from EY which found that M&A spend by pharma companies was up 34% in 2023 compared to 2022. Interestingly enough, the analysis found that this spend was up even though the total volume of deals was down. The report also suggests that the trend of bigger deals will continue in 2024.

Big pharma aside, there’s still some questions about whether private equity deal-making will rebound in 2024. It likely depends on if the Fed cuts interest rates, though the general consensus from attendees we spoke with is that is probably going to happen. Expect some bigger moves from private equity in the back half of 2024 if that’s the case, according to PitchBook’s Rebecca Springer .

Another major topic of discussion this year was artificial intelligence (Nvidia’s session was jam packed) and its usefulness in accelerating drug discovery . Across the board, attendees we talked to said that the improvements in AI models across healthcare have truly seen a drastic improvement over the past couple of years, though one potential bottleneck for drug discovery and other applications is a lack of good, structured datasets for newer AI models to be trained on. One interesting application for generative AI comes from Teva .

According to its CEO Richard Francis , the company has been developing generative AI tools to improve its sales forecasting, enabling the company to optimize its supply chain, inventory management and other aspects of the business. “If we can optimize our inventory levels, from a cash point of view, that’s huge,” he said. Another application attendees were excited to talk about was the power of generative AI to reduce pain points in the delivery of care, particularly in helping doctors in their interactions with patients.

At a panel hosted by BCG, Microsoft healthcare CTO John Doyle highlighted his company’s effort in this regard and said: “We want to give people one less screen, not one more screen. ” Feds Tout Record 20. 3 Million Obamacare Sign-Ups, But Medicaid Losses Loom Large Health and Human Services Secretary Xavier Becerra at a Senate hearing.

The highest number of Americans ever signed up for Obamacare health insurance plans starting in 2024, but the program’s record could be undermined by the millions of low-income Americans who have lost Medicaid coverage in recent months due to bureaucratic snafus. U. S.

Health Secretary Xavier Becerra told Forbes there’s an “interplay,” as some people losing Medicaid coverage are now getting it on the Affordable Care Act marketplace. Americans can select health insurance plans during the annual open enrollment period, which runs from November 1 to January 16. Read more here.

JPM News Roundup Generative AI: Nvidia said its healthcare customers are consuming over a billion dollars of GPU computing units each year. This week the company announced BioNeMo, which offers foundation models for drug discovery. Deepcell, a Stanford spinout, also announced a research collaboration with Nvidia around using advanced computer vision for cell-based imaging discoveries.

Medical Imaging: Butterfly Network said it received FDA clearance for the third version of its handheld ultrasound technology. Sequencing: Element Biosciences said it has generated $25 million in revenue in 2023 from its benchtop sequencer, claiming it can perform a million reads for under $1. Gene Therapy: The FDA approved two gene therapies for the treatment of sickle cell disease in December, but Bluebird Bio’s Lyfgenia comes with a higher price tag and a safety warning around potential cancer risk.

This week the company said there are 35 qualified treatment centers receiving referrals for Lyfgenia. It has signed “outcomes-based agreements” with national health insurers, but discussions are ongoing and no deals are signed yet with Medicaid agencies. Pipeline & Deal Updates Open Source: Health AI startup Nabla is abandoning OpenAI for open source.

The Paris-based startup has raised $24 million at a $180 million valuation to shift its automated doctor note-taking software towards the open source AI models championed by Meta AI chief Yann Lecun, one of its investors. Drug Discovery: VantAI amended its agreement with Blueprint Medicines to use AI for induced proximity drug discovery, which involves bringing molecules in closer contact to create a reaction. VantAI will be eligible for up to $1.

25 billion in payments, contingent on hitting certain milestones. Cancer: 3T Biosciences, whose founders were on the Forbes 30 Under 30 Healthcare list in 2018, have entered into a second agreement with Boehringer Ingelheim to use the startup’s T-cell discovery platform to develop new cancer immunotherapies. 3T will be eligible for up to $538.

5 million in payments contingent on hitting certain milestones. Precision Medicine: Moonwalk Biosciences launched with $57 million in funding led by Alpha Wave Ventures to develop new epigenetic medicines that alter the way genes are expressed within the cell rather than the genetic code itself. Cofounders include former Illumina CTO Alex Aravanis and the Broad Institute’s Feng Zhang.

MDMA Therapy: MAPS Public Benefit Corporation, which is developing MDMA-assisted therapy, is rebranding to Lykos Therapeutics, as it announces $100 million in total funding led by Helena. The move comes with a new board of directors. Recursion Announces New Generative AI Platform To Speed Up Drug Discovery Recursion CEO and cofounder Chris Gibson.

The Utah-based pharmaceutical company has trained a large language model to enable scientists to tap into dozens of machine learning models at once, saving them time during drug development. Read more here. Other Healthcare News Meta says it will restrict certain content for teens on Facebook and Instagram related to self-harm and eating disorders, as the tech giant faces lawsuits from states over child safety.

Walgreens Boots Alliance cut its quarterly dividend by 48 percent to 25 cents per share, as it plans to rebound with investment in specialty pharma. Rite Aid, which has filed for bankruptcy protection, is selling its Elixir pharmacy benefit management company for $575 million. A new study found a liter of bottled water contains hundreds of thousands of nanoplastics , which experts believe may cause health risks.

Ozempic and Wegovy are not linked to an increase in suicidal thoughts, according to research published in Nature Medicine. ChatGPT missed 80 percent of pediatric diagnoses, according to a study in JAMA Pediatrics. Across Forbes How Auditor Deloitte Missed A Nigerian Company’s Massive Fraud How A London-Based VC Quietly Brokered Roman Abramovich’s Startup Investments A Whole New Shoe Game What Else We are Reading Ozempic Rival Fuels Growth of $60 Billion Charity to Challenge Gates Foundation in Size (Bloomberg) Mammography AI Can Cost Patients Extra.

Is It Worth It? (KFF Health News) Nearly 1 in 10 teens globally have used ‘budget Ozempic’ laxatives and other risky weight loss products, per study (STAT).