Device/Diagnostics Quarterly Deal-Making Statistics, Q4 2017
A look at the financing, M&A and alliance activity in October–December 2017
Device fundraising during the fourth quarter totaled $2.6 billion, making it the strongest quarter of the year. Q4 M&A activity reached $3.9 billion, higher than Q3's $3.4 billion, but still one of the lowest quarters of the year. Both fourth quarter diagnostics financings and M&As hit an all-year low of $622 million, and $2.8 million, respectively.
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The conventional wisdom in the medtech industry is to pursue the “razor-razor blade” business model, as each placement of capital equipment generates a lucrative annuity of recurring revenues from disposables. The corollary to this conventional wisdom is that so-called “big iron” is to be avoided as, in sharp contrast, it suffers from greater early cash requirements and longer sales cycles that create difficulties forecasting quarterly revenues, and provides no annuities. But that view is no longer the only one that counts, Health Advances CEO Mark Speers argues.
Three $1bn+ alliances were penned in September. Topping the list was a potential $3.25bn deal between Adaptimmune Therapeutics and Roche's Genentech for the development and commercialization of allogeneic T-cell therapies in multiple oncology indications. Adaptimmune will be responsible for developing clinical candidates using its induced pluripotent stem cell-derived allogeneic platform to produce T-cells. Genentech will be responsible for the input TCRs and subsequent clinical development and commercialization. Adaptimmune has the right to opt in to a 50/50 US profit/cost share on off-the-shelf products.
Two $2bn+ alliances were penned in August. Topping the list was a multi-target deal between Shape Therapeutics and Roche that could exceed $3bn. Through the partnership, ShapeTX will apply its proprietary RNA editing platform RNAfix and potentially leverage its AAVid technology platform for next-generation tissue-specific adeno-associated viruses for the development of gene therapy for certain targets in the areas of Alzheimer’s disease, Parkinson’s disease, and rare diseases. Roche is responsible for the development and worldwide commercialization of any potential products resulting from the collaboration. In the top August M&A by deal value, Sanofi entered into a definitive agreement to acquire all outstanding shares of public messenger RNA therapeutics company Translate Bio for $38.00 per share in cash (a 20% premium to Translate's 10-day pre-announcement market average), which represents a total equity value of approximately $3.2bn. Founded in 2011, Translate Bio is developing a new class of medicines to treat diseases caused by protein or gene dysfunction, or to prevent infectious diseases by generating protective immunity. The company is primarily focused on applying its technology to treat pulmonary diseases with a lead pulmonary candidate being evaluated as an inhaled treatment for cystic fibrosis in a Phase I/II clinical trial. Its MRT platform may be applied to various classes of treatments, such as therapeutic antibodies or vaccines in areas such as oncology. Financing reached $4.4bn in biopharma, $1.5bn in device, and $256m in diagnostics.