Healthcare and Life Sciences Deal and Funding Review of 2023

Healthcare and life sciences deal and funding review

The start of a new year in healthcare and life sciences business development and finance brings its annual J.P. Morgan Healthcare Conference and renewed optimism for a strong year for deals. 2023 did not end on strong numbers, however. R&D partnership activity continued a downward trend except for a record-setting deal between Daiichi Sankyo and Merck & Co. in October. This sent upfront and deal value totals higher despite an otherwise down year for licensing. M&A activities for the year within biopharma, platform, medtech, and diagnostics had a consistent and upward trend, highlighted by Q4 2023, boasting 77 transactions totaling $68.7 billion, primarily in cash. Venture funding in global healthcare and life sciences saw 1,078 funding rounds in 2023, generating $37.1 billion. IPO attempted a return through Q3, though Q4 2023 experienced a decrease in both IPOs and the total amount raised. This review covers deal and funding trends across healthcare and life sciences, and the next few articles will cover biopharma R&D partnerships, M&A, venture, and IPOs in more depth.

A Closer Look at R&D Partnerships Shaping Healthcare

A Closer Look at RD Partnerships Shaping Healthcare

Our data on R&D Partnerships offers comprehensive insight into collaborative efforts and investment trends over the past three years for this review and as far back as 2008 in the DealForma database. In 2023, theQ4 stood out with the highest number of deals for the year at 160, a total deal value of $73 billion, and $8.2 billion in upfront cash and equity driven by the single largest licensing deal for a single asset in history – Daiichi Sankyo’s deal with Merck & Co. announced in October 2023 with $4 billion up front and up to $22 billion in total deal value with milestones. 2023 closed with $181.7 billion in total announce deal value with$13 billion in upfront cash and equity across 626 deals. Prior year activity in 2022 saw 703 R&D partnerships with a total announced value of $172.5 billion and involving $10.9 billion in upfront cash and equity.

Spotlight on 2023’s Leading R&D Partnerships

We spotlight three major R&D partnerships below, which stood out in deal value:

In October 2023, Daiichi Sankyo granted Merck & Co. exclusive, worldwide rights to co-develop and co-commercialize 3 antibody-drug conjugates (ADCs) for solid tumor treatment. Merck is responsible for 75% of the initial $2 billion R&D costs. Daiichi Sankyo received $4 billion up front and is eligible for up to $16.5 billion in development and sale milestones, plus a 50% profit split.

In December 2023, SystImmune granted Bristol Myers Squibb exclusive, worldwide rights to develop and commercialize BL-B01D1, a lung and breast cancer treatment SystImmune will receive $800 million up front, near-term payments of up to $500 million, and potential milestone payments reaching $7.1 billion, plus tiered royalties outside the U.S. and Mainland China.

In July 2023, Pfizer’s partnered with Flagship Pioneering with an exclusive worldwide option to license 10 undisclosed single-asset therapies. Both companies contributed $50 million upfront, and Flagship could earn up to $700 million in development and commercial milestones per program (up to 10) for a total potential deal value of over $7 billion.

M&A Trends Reshaping The Life Sciences Landscape

MA Trends Reshaping The Life Sciences Landscape

M&A activity in biopharma, platforms, medtech, and diagnostics has been down in the last three years. Q4 2023 saw 77 M&A deals amounting to $68.7 billion, of which $65.4 billion was in cash without contingencies. Full-year 2023 closed with 254 M&A deals and $209.8 billion in total announced value Comparatively, 2022 concluded with 285 M&A deals worth $143.6 billion.

Highlighting Key M&A Deals in 2023

In March 2023, Pfizer’s acquisition of Seagen, which completed in December, was the year’s largest deal with Seagen stakeholders receiving $229 per share in cash, totaling $43 billion. This provided Pfizer access to Seagen’s diverse cancer portfolio and advanced technologies.

In December 2023, Bristol Myers Squibb announced it is acquiring Karuna Therapeutics for $14.0 billion in cash. This positions BMS to strengthen its presence in psychiatric and neurological treatments.

In April 2023 Merck’s acquisition of Prometheus Biosciences, which completed in June, was valued at $10.8 billion and included promising assets targeting immune-mediated diseases.

Exploring Ventures That Shaped Future of Healthcare in 2003

Exploring Ventures That Shaped Future of Healthcare in 2003

In 2023, 1,078 venture funding rounds and extensions completed generating $37.08 billion of investment into biopharma, platforms, medtech, and diagnostics companies. Venture activity continued to track downward as investors await better opportunities and timing to deploy otherwise record amounts of funds.

Key Ventures & Investments

In May, ElevateBio’s Series D financing secured an impressive $401 million, empowering the advancement of its multifaceted technology platforms, such as Life Edit gene editing and induced pluripotent stem cells (iPSCs). Notably, Novo Nordisk’s involvement in a multi-target collaboration with ElevateBio’s subsidiary added substantial value, with potential milestones reaching up to $335 million for each of the seven programs.

In January, Monogram Health, a leader in value-based specialty in-home care services, secured $375 million to enhance its innovative in-home kidney and polychronic care delivery model and develop technology-driven clinical services.

In September, Nephron Pharmaceuticals Corporation successfully raised $350 million, led by BlackRock Capital Investment, bolstering its mission to address critical drug shortages for hospitals by developing generic inhalation solutions. These deals exemplify a strategic focus on advancing innovative technologies, expanding healthcare delivery models, and addressing critical pharmaceutical needs.

Pivotal Role Of IPOs

Pivotal Role Of IPOs

Global healthcare and life sciences IPO activity has been down since the peak in 2021. Any rebound in 2023 stalled in Q4, which saw only 3 IPOs raising $900 million. Q3 2023 stood out with 8 IPOs raising $1.3 billion for a mix of small and large-scale public offerings.

Impactful IPO Activities

In January, Kenvue, a Johnson & Johnson subsidiary, set the tone with its upsized IPO for the consumer products spin-out priced at $22.00 per share, totaling 172,812,560 shares and reaching a remarkable valuation of approximately $41 billion, making it the largest valued U.S. IPO since November 2021.

In April, ACELYRIN, INC., a late-stage clinical biopharmaceutical company, successfully priced its upsized IPO at $18.00 per share, offering 30,000,000 shares and anticipated gross proceeds of $540.0 million.

In July, WuXi XDC, a biopharmaceutical services company, completed its IPO issuing 178,446,000 shares at HK$20.60 per share and expected to raise HK$4,071 million in gross proceeds, showcasing the company’s streamlined capabilities in significantly reducing the antibody-drug conjugate (ADC) development timeline.

All of this by stage, disease indication, modality, target…

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