Ideal timing for an initial outreach to potential buyers/partners was another area of interest to the audience. The buyer may be considering an alternative development plan or even an alternative therapeutic target from what the company has been pursuing, and companies should be open-minded when considering these alternatives. In addition to gaining credibility, a buyer may also be better positioned to help a company work through concerns or rethink the approach on limitations that the company is facing. Companies should not oversell clinical data. He encouraged companies to be upfront about any potential limitations or concerns relating to the company’s development plan, clinical data or other matters as early in the process as possible. Andy cautioned companies to remember that buyers will eventually see all relevant information in the diligence process, and at least for Horizon, there is never a point in the process when they are unwilling to walk away. Transparency is also critical to developing credibility with buyers. Basic homework does not mean that companies need to have detailed assumptions and forecasts available, but it does mean having a clear thesis of how this opportunity will meet buyers’ most basic objectives. For example, if you are going into a market that is going to genericize, be prepared to discuss how reimbursement will work. Andy suggested that it would behoove companies to do the basic homework necessary to answer these questions. At the most basic level, a buyer wants to understand two things: (1) is there an unmet medical need such that the company’s development-stage product will substantially improve the quality of care, and (2) is there sufficient exclusivity to allow commercialization of the product. The panelists dedicated a fair amount of time, often in response to audience questions, discussing common mistakes companies make that can cause them to lose credibility with buyers. In response to buyers’ demands, it is probably unsurprising that there has been a surge of investments (both public and private) in therapies in the oncology and rare disease space. For buyers focused in the rare disease space, Eric noted that gene therapy has become a major modality. Horizon’s business development focus appears to be consistent with the market more generally, as Eric indicated that that there has been a major shift over the past several years away from primary care areas to more specialty care areas – with oncology and rare diseases being the primary focus of recent deal activity. Andy noted that Horizon’s business development group makes it a point to follow rare disease-focused companies. Andy noted that Horizon has a set area of focus, which includes rare diseases generally and a subset of therapeutic areas (i.e., rheumatology, nephrology, ophthalmology and endocrinology) and diseases within those areas. The panel kicked off with a discussion about what types of assets pharmaceutical buyers tend to gravitate toward – both from a general market perspective and from the more specific view of Horizon. Key areas of interest for buyers and investors Please note that the views expressed by Andy and Eric are their own and are not the views of Horizon Therapeutics or Centerview Partners, respectively. Some of the key highlights from their discussion are summarized below. As part of Cooley’s M&A Dealmakers Roundtable series, Andy and Eric provided invaluable insight from a buyer’s and banker’s perspective. On May 27th, Andy Pasternak, Executive Vice President, Chief Strategy Officer at Horizon Therapeutics and Eric Tokat, a partner in the healthcare practice at Centerview Partners joined Cooley M&A co-chair, Barbara Borden for a discussion of the life sciences M&A market, with a focus on business development.
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