This week we focus on some policy that could stifle the potential M&A boom that we’ve been expecting: the FTC’s attempt to block the $28bn Amgen/Horizon acquisition; the first case to look beyond product overlaps to ‘pricing power’. Also – following an open letter from Abcam’s founder to the Board – we weigh in on *part* of the debate: Nasdaq or AIM? Lastly, as promised last week we look at a potential new link between Parkinson’s and Desulfovibrio bacteria (found in water/soil).
Greener grass or higher tides? Whilst we don’t want to comment on company specifics (as we covered Abcam and were avid users of its products in the lab), this week's open letter to Abcam (from Dr Jonathan Milner, Abcam's co-founder) draws our focus on to the debate of whether Nasdaq is still the land of milk and honey. We know we’re biased and that turkeys don’t vote for Christmas, but we continue to think the UK’s heritage in SMid Cap Healthcare (especially those <$2bn) is best served by the ecosystem of advisors, investors, regulations and brokers that exists here. We’ve also highlighted recently how US premiums over UK valuations (once so prevalent) have now narrowed (alluded to in one of our weekly’s here). We also add that UK companies, recently listed on the Nasdaq have struggled (Exscientia, Vaccitech, Orchard, Adaptimmune etc) and that achieving ‘greater analyst coverage’ is much more difficult than many companies are led to believe (as pointed out in Dr. Milner’s letter). Abcam aren’t cross with Dr Milner, they’re just disappointed…
Protection for consumers or patient harm? M&A is again under the spotlight after it was reported that for the first time, the FTC looked beyond product overlaps and instead focused on drug pricing in an attempt to block Amgen’s $28bn acquisition of Horizon. The FTC’s concern is that Amgen may “entrench the monopoly positions” of Horizon’s thyroid and gout therapies, and raise the prices of its own existing drug portfolio. William Pao (Pfizer’s Chief Development Office) has called it “a disaster” and PureTech’s CEO, Daphne Zohar has reminded us of the importance of innovation by pointing to a legacy thought piece: “stifling biopharma mergers would kill the innovation economy that generates new therapies”. This is something we agree with: M&A is an integral component of the Pharma-Biotech innovation cycle. Overly-aggressive policies (regardless of intention - including the recent IRA that was more long-dated in its repercussions), materially harm value-creation and discovery research.
Parkinson’s gut punch. We are fairly outspoken on neurodegenerative conditions, thinking much of the proposed therapies are overly focussed on the ‘misfolded’ protein deposits which strangle neurons (ie prions, amyloid plaques, tau protein, neurofibrillary tangles etc) rather than tackling the underlying cause of the clumps. Now, researchers at University of Helsinki have postulated that strains of bacteria are the likely cause of Parkinson’s disease. The report makes a causal link between the presence of some strains of Desulfovibrio (water bacteria) and aggregation of α-synuclein in intestinal cells, where they travel towards the brain (via the vagus nerve) and ultimately drive Parkinson’s. Interestingly, other strains of the same bacteria (isolated from healthy patients) did not cause protein aggregation in the worm ‘C. elegans’ that was used as a model in this study.
