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Under the covers Europe heats up - partnerships and deals

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While everyone’s focus has been on falling investor sentiment in the global markets and specifically the lack of financial market support for smaller plays, the European biotech industry has been moving quietly forward. The world of biotech and pharma is not necessarily built on the present, but the future, and deals create the foundation for longer term growth. This bodes well for long term investors in the sector. In the last nine months, behind the veil of public market drought, Europe has agreed deals and partnerships for a stronger future.

In the year to September 30, Continental Europe has seen about 435 deals, including M&A and partnerships, a gain of 28% on the number of deals in 2021 (Source: BioCentury, BCIQ). As in previous years, the common view is that deal numbers will continue to grow in the last quarter this year. So far, 2022 is on a par with 2019 and only 17% behind 2020 and 10% under the 2018 deals count to the fourth quarter.

Certainly, expectations from venture capital investors support this view. Andera Partners closed its BioDiscovery 6 fund at EUR 456 million in early October. This new fund will follow a similar strategy to previous BioDiscovery funds both geographically and by company type: two-thirds of the money will go into therapeutics and one third into medtech throughout European and North American companies. Andera is also investing across a wide range of indications and different stages of development. The firm recently noted that although 2022 has to date been relatively quiet on VC rounds compared to previous years, the Paris/Munich-based investor is expecting to see a strong 4Q for private company funding activity.

Similarly, other VC’s, such as TVM Life Science, which closed a US$478 million fund during the COVID-19 period in October 2020, have commented that the euphoria, which saw many non-industry investors putting large sums into the biotech and medtech funds during the pandemic, has flattened into a consolidation phase. A perfectly normal market cycle. While generalist investors are returning to supposedly less risky assets and sectors, for specialists like TVM the declining company valuations and smaller financing rounds mean better conditions to invest and include projects that were previously too pricy. In the meantime, interest in acquisitions among pharma strategists is expected to increase.

In the first three quarters of this year there have been very few big pharma international M&A or partnership headlines, all the same the European biotech and pharma sector has been busy. Examples such as MorphoSys (NASDAQ:MOR; Xetra:MOR) highlight the activity that has been percolating. In June the company closed a $1 billion valued deal by out licensing rights for CD38-blocking antibody felzartamab and anti-C5AR1 antibody MOR210 to US-based Human Immunology Biosciences, affectionately known as HIBio. The German biotech received $15 million up front and a 15% stake in the start-up and is eligible for more than $1 billion in milestones plus double-digit royalties. MOR also gained equity earn-in provisions and standard investment rights, plus board representation.

A similar deal was struck by Heidelberg Pharma (Xetra:WL6), which partnered with Huadong Medicine Co. Ltd, granting the China-based company rights in Asia on two antibody targeted amanitin conjugates (ATAC). Huadong received ex-Japan rights on prostate cancer program HDP-103, targeting PSMA and addressing a huge Asian market, and also to HDP-101, which targets BCMA to treat multiple myeloma and became Heidelberg Pharma’s first clinical program earlier in the year. Both compounds are ADCs with the toxin amanitin and are part of Heidelberg Pharma’s ATAC platform. Furthermore, Huadong gained options to a non-Hodgkin Lymphoma program HDP-102 targeting CD37 and research compound HDP-104 in an undisclosed indication. Heidelberg Pharma received $20 million up front and is eligible for $910 million in milestones, plus royalties. As part of the agreement, Huadong has acquired a 35% stake in Heidelberg Pharma gained through a rights issue and share transfer from long-term investor, Germany-based family investment firm dievini Hopp.

Business development and visibility are top priorities for Austria-based Marinomed Biotech (VSE:MARI), which has expanded its network of partners and the reach of its Carragelose products in important markets worldwide: in South Korea with Hanmi Pharmaceutical, in Australia with Aspen Pharmacare Australia and in the US with Procter & Gamble. Furthermore, Marinomed has also been successful with its new Solv4U business, an offering for Biopharma to take advantage of the Marinosolv technology for the solubilization of active pharmaceutical ingredients.

Besides the bigger public players, European private companies have created news. Outside of the global oncology space, German-based anti-infectives specialist AiCuris partnered with Hybridize Therapeutics, gaining exclusive rights to develop and commercialize the Netherlands company’s BK virus targeting RNA antisense oligonucleotide (ASO) program for the prevention of renal transplant patients from developing BKV-associated nephropathy. Hybridize received an upfront payment and stands to earn milestone payments of up to €100 million ($114.3 million) and is eligible for tiered royalties on net sales. The companies will work together on preclinical development of the ASO up to the start of clinic trials, expected to within two years.

The deal storm cometh

Another sign of the times to come for Europe is underlined by the growth of services companies, especially from international players such as London-based Element Materials Technology.

The future is certainly set for more deals in Continental Europe as Element is on the lookout for partnerships and potential M&A deals. The global leader in testing, inspection, and certification (TIC) services is looking to further build out its European presence to develop its position as a top global TIC company. Since 2021, the company has acquired seven businesses to build out its integrated laboratory service offerings. Element’s plans in Europe involve increasing its already profitable business in life sciences and connected technologies TIC services.

One further bolt from the European M&A score card was the acquisition of high-performance cell line development and viral vector manufacturing technologies specialist CEVEC Pharmaceuticals. In early October, the German company was acquired by Cytiva Bioscience Holding, a global life sciences leader for the delivery of transformative medicines. Today, the merging companies plan to build up CEVEC’s viral vector manufacturing and cell line development platforms to ensure cell and gene therapy production processes meet the life sciences industry’s demand for volume and consistent quality of viral vectors. With its proprietary cell lines for the stable and scalable production of vectors based on Adeno-Associated Virus and Adenovirus, CEVEC covers two of the most widely used vectors for delivering therapeutic genes to target cells and tissues.

In the world of cell and gene therapies, Rentschler Biopharma, the German-based global CDMO, announced that its subsidiary Rentschler ATMP, based in Stevenage, UK, Europe’s largest gene and cell therapy cluster, is already providing services to biotech and pharma clients. The scientific team with 30+ years’ experience in cGMP and C&GT is providing AAV and lentiviral production with a particular focus on chemistry, manufacturing, and controls (CMC) and works on how to make gene therapies more economically feasible. Within this offering Rentschler ATMP has fully equipped laboratory space for development of robust, scalable and optimized manufacturing processes and quality control. This includes dedicated viral vector manufacturing capacity at 200L bioreactor scale, upstream/downstream processes and scale-up for seamless cGMP manufacturing.

In the US, Rentschler Biophama’s Milford, MA, site has started a massive buildout to double commercial cGMP capacity, in response to demand from clients worldwide.

The recently passed FDA Modernization Act of 2021 brought a significant boost for Human 3D biology screening models in drug discovery. The amendment allows drug developers to use animal free model systems to show efficacy and safety before moving on to clinical trials. In October Austria-based and Boehringer Ingelheim entered a collaboration to investigate human heart organoids for the development of new treatments for cardiac patients. Furthermore, announced a collaboration with US-based Molecular Devices to develop and commercialize an integrated, end-to-end high-throughput human cardiac organoid screening platform, aiming to increase clinical trial success rates, reduce costs and accelerate timelines in drug development.

Remaining in Austria and drug discovery, QUANTRO Therapeutics and Boehringer Ingelheim agreed on a three-year collaboration, option and license agreement for the identification and development of inhibitors for up to three cancer-associated transcription factors. The collaboration will employ QUANTRO’s proprietary drug discovery platform based on time-resolved transcriptomics to identify and develop drug candidates interfering with key transcriptional programs in cancer. In addition to industry-standard payments QUANTRO also receives research and development support.

Near term news from clinical pipelines and potential for further deal flow

Switzerland-based Spexis (SIX:SPEX), which is focused on rare diseases and oncology, is seeking partners for its programs. Its most advanced clinical candidate is ColiFin®, an inhaled therapeutic for cystic fibrosis, which is already approved and marketed in Europe and which the company plans to test in a global pivotal Phase III trial in 2023. In addition, Spexis has a proprietary macrocyclic technology platform to discover therapeutic candidates for difficult-to-drug structures and is looking to partner this platform, pre-clinical leads or further clinical candidates derived from the platform.

Adrenomed, the private vascular integrity company, will be seeking partners following the development of a precision medicine solution targeting vascular dysfunction, a previously unaddressed pathophysiological mechanism in septic shock. After successful Phase II clinical results with Adrecizumab, the company plans to kick off pivotal clinical trials to treat sepsis and septic shock in Europe and the USA.

Atriva Therapeutics, specializing in host-targeting antiviral therapies with a focus on pandemic preparedness, is also on the lookout for partners, as they are ramping up for a Phase IIb clinical trial to treat patients suffering from severe influenza, COVID-19, and respiratory syncytial virus (RSV) in the PanTher study. The planned study is a logical next step following the latest positive results of Atriva’s Proof of Concept / Phase IIa study RESPIRE.

Although the current year has suffered from the global malaise in most areas, some European companies were able to close interesting deals or prepare their pipeline for the future. It is clear that 2023 will be more optimistic for our industry.

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