WEBVTT - FTC BioPharma M&A Approach Clashes With Sector 0:00:14.080 --> 0:00:17.400 In the following podcast, which was recorded on August thirtieth, 0:00:17.760 --> 0:00:20.240 part of our discussion relates to the legal theory on 0:00:20.239 --> 0:00:23.240 which the Federal Trade Commission based its lawsuit to block 0:00:23.320 --> 0:00:27.560 the merger of Amjen and Horizon. After the episode was recorded, 0:00:27.640 --> 0:00:30.240 the FTC settled with Amgen and cleared the deal to 0:00:30.280 --> 0:00:33.760 close with conditions. But in addition to discussing that matter, 0:00:34.280 --> 0:00:37.400 our podcast touches on many other topics relevant to the 0:00:37.400 --> 0:00:41.080 pharma and biotech industries. So we've gone forward with its 0:00:41.120 --> 0:00:43.680 release and help you enjoy listening. Well. 0:00:43.720 --> 0:00:46.479 Hello and welcome to the Votes and Verdicts podcast hosted 0:00:46.479 --> 0:00:50.240 by Bloomberg Intelligence, the investment research platform of Bloomberg LP. 0:00:51.000 --> 0:00:53.559 In this podcast series, we talk about the intersection of 0:00:53.600 --> 0:00:56.959 business policy and law. My name is Jennifer Ree. I'm 0:00:56.960 --> 0:01:01.160 a senior analyst with Bloomberg Intelligence covering US antitrust litigation 0:01:01.320 --> 0:01:04.880 and policy. Now, our litigation and policy teams really cover 0:01:05.040 --> 0:01:07.680 a very wide variety of topics. I'm the only one 0:01:07.720 --> 0:01:10.640 covering anti trust and so because of that, this is 0:01:10.680 --> 0:01:13.920 the second Boats and Verdicts podcast focused on anti trust issues. 0:01:14.440 --> 0:01:17.640 And in the first episode I had Bill Alsaied as 0:01:17.680 --> 0:01:20.640 my guest and we discuss the more aggressive approach just 0:01:20.760 --> 0:01:24.600 in general of this administration's Federal Trade Commission and the 0:01:24.640 --> 0:01:27.520 Anti Trust Division of the Department of Justice, mostly with 0:01:27.560 --> 0:01:31.319 respect to assessing transactions. And this episode, what we're going 0:01:31.400 --> 0:01:34.320 to do is kind of follow that subject, but take 0:01:34.360 --> 0:01:38.200 a deeper and narrow or dive to focus on transactions 0:01:38.240 --> 0:01:42.280 and just the biotech and pharmaceutical and how the FTC's 0:01:42.319 --> 0:01:45.920 approach to those deals impacts the industry. I guess I 0:01:45.920 --> 0:01:48.559 can kind of call it biopharma to put those two together. 0:01:49.080 --> 0:01:51.280 I'm really excited to be joined by two guests for 0:01:51.320 --> 0:01:54.840 this episode. First, we have Arma Orik, who is perfectly 0:01:54.880 --> 0:01:57.600 suited for this discussion and one of the smartest people 0:01:57.640 --> 0:02:00.720 I know. He's currently a partner at the law from Goodwin, 0:02:00.800 --> 0:02:02.880 where he's co chair of the firm's Anti trust and 0:02:02.920 --> 0:02:07.040 competition practice, and he's advised numerous biotech and pharma companies 0:02:07.520 --> 0:02:11.080 engaged in deals thinking about deals involved in anti trust issues. 0:02:11.720 --> 0:02:14.080 Prior to joining Goodwin, Arman was part of the founding 0:02:14.120 --> 0:02:18.040 team of Biosplice Therapeutics, once known as Samamed, where he 0:02:18.120 --> 0:02:20.239 served as the chief legal officer and a member of 0:02:20.280 --> 0:02:23.360 the board. Now second from right here with me. Within 0:02:23.400 --> 0:02:26.600 Bloomberg Intelligence, we have Mark engels Jerd. He is our 0:02:26.639 --> 0:02:30.399 senior industry analyst for biotech, and prior to joining Bloomberg, 0:02:30.440 --> 0:02:33.240 Mark was the oncology practice lead for in Thought Research. 0:02:33.600 --> 0:02:36.600 He has a degree in cellular and molectical biology as 0:02:36.680 --> 0:02:39.720 well as a doctorate in medicine from the University of California, 0:02:39.880 --> 0:02:41.880 so he really knows what he's talking about in this 0:02:41.960 --> 0:02:46.280 subject area. So before we jump into our anti trust topic, 0:02:46.440 --> 0:02:49.000 I really would be interested for both to hear about 0:02:49.040 --> 0:02:52.080 your career paths because they're both unusual. So arman, why 0:02:52.080 --> 0:02:54.519 don't we start with you? I mean, as we were 0:02:54.520 --> 0:02:56.960 just saying, a long time ago, seems like one hundred 0:02:57.000 --> 0:02:59.760 years ago, we practiced at the same law firm, and 0:02:59.800 --> 0:03:02.200 then you jump sort of the law firm ship, even 0:03:02.240 --> 0:03:04.679 though you were a partner, to go help start a 0:03:04.720 --> 0:03:08.360 biotech firm, which is a really unusual move and risky too. 0:03:08.760 --> 0:03:11.080 So talk to us about what prompted that, what it 0:03:11.160 --> 0:03:13.280 was like to be part of a biotech startup, and 0:03:13.639 --> 0:03:15.239 which of your roles you've liked the most. 0:03:16.720 --> 0:03:19.639 Thanks for having me, Jennifer. This is a great topic 0:03:19.720 --> 0:03:24.600 and I love being part of it, especially with Mark. Yeah, 0:03:24.639 --> 0:03:27.200 so it is an unusual move, and I think it's 0:03:27.440 --> 0:03:30.120 it's going to become relevant in our discussion today about 0:03:30.160 --> 0:03:34.880 anti trust issues. I did leave a law firm as 0:03:34.880 --> 0:03:38.200 an anti trust practitioner, something I had been doing for 0:03:38.240 --> 0:03:43.200 a while at the time, to go explore an oncology startup. 0:03:43.600 --> 0:03:45.040 And when you say I was a member of the 0:03:45.080 --> 0:03:49.160 board and chief legal officer, it sounds so serious. In reality, 0:03:49.200 --> 0:03:53.080 the task included everything from running running to Costco to 0:03:53.080 --> 0:03:57.680 get supplies, all the way down to cleaning cages in 0:03:56.680 --> 0:04:01.880 the in the vibe aium. But that that's the nature 0:04:01.880 --> 0:04:03.960 of a startup. And really the point I'm trying to 0:04:03.960 --> 0:04:07.920 make here is that there's so much uncertainty and then 0:04:08.000 --> 0:04:11.160 so much unknown in life science. Is when you start 0:04:11.160 --> 0:04:14.880 a project and and then there's a lot going on, 0:04:14.960 --> 0:04:18.440 and things change very rapidly as data comes in, whether 0:04:18.480 --> 0:04:22.479 it's a pre clinical data from a Petri dish or 0:04:22.520 --> 0:04:26.480 a or some from rodent studies or whatever, and and 0:04:26.520 --> 0:04:30.960 it's a it's a it's full of surprises, good and bad. Uh, 0:04:31.040 --> 0:04:33.680 And and there's a lot to do. And in that 0:04:33.960 --> 0:04:36.640 you asked me what my favorite roles were, whether it 0:04:36.800 --> 0:04:40.720 ranged from doing actual legal work occasionally all the way 0:04:40.760 --> 0:04:46.160 down to on occasion running the chemistry team or or 0:04:46.600 --> 0:04:50.440 or regulatory and quality and UH and of course dealing 0:04:50.440 --> 0:04:54.839 with intellectual property issues. And it was a fascinating ride. 0:04:54.920 --> 0:04:59.560 And what prompted it was an interest in doing something 0:04:59.640 --> 0:05:02.960 interest thing, especially on the oncology side, at a time 0:05:03.080 --> 0:05:06.400 when it was possibly doable for anybody to jump into 0:05:06.440 --> 0:05:12.800 the industry. The capital Marcus were very, very welcoming to 0:05:12.839 --> 0:05:15.920 a lot of different projects. So it was a once 0:05:15.960 --> 0:05:19.599 in a lifetime opportunity and I will never regret having 0:05:19.600 --> 0:05:21.520 taken it. It's been an amazing ride. 0:05:22.600 --> 0:05:24.920 I mean, you had so much exposure to so many 0:05:24.960 --> 0:05:27.240 parts of the business. It just makes you so well 0:05:27.279 --> 0:05:31.240 suited to be dealing with this topic back in the 0:05:31.279 --> 0:05:34.680 anti trust world now. I mean it's really kind of 0:05:34.680 --> 0:05:39.080 an you kind of have an amazing resume and experience. 0:05:39.200 --> 0:05:41.880 So if I were a biotech firm, I'd want to 0:05:41.920 --> 0:05:42.800 hire you as my lawyer. 0:05:44.440 --> 0:05:46.599 I would like to talk to more before I jump. 0:05:48.600 --> 0:05:51.120 So, Mark, what about you? I mean, like your inequity 0:05:51.160 --> 0:05:54.239 analysis after getting a doctorate in medicine, and that's also 0:05:54.320 --> 0:05:57.120 kind of an unusual jump, So tell us about your career. 0:05:57.360 --> 0:06:00.120 Yeah, so I did not always dream of being a 0:06:00.120 --> 0:06:03.279 biotech equity analyst. In fact, if you had asked me, 0:06:04.320 --> 0:06:08.000 you know, in high school or college what I was 0:06:08.040 --> 0:06:10.359 going to do, I was going to become a surgeon. 0:06:10.400 --> 0:06:15.600 And I started kind of executing on that pathway. Went 0:06:15.640 --> 0:06:19.640 to medical school, matched at my top choice for a 0:06:19.680 --> 0:06:22.359 general surgery residency, and then it was at that point 0:06:22.400 --> 0:06:25.320 I had this sort of epiphany in my call room 0:06:25.360 --> 0:06:28.560 one night where I realized, I love you know, I 0:06:28.800 --> 0:06:31.440 like being in the operating room, but I don't actually 0:06:31.520 --> 0:06:36.839 love it enough to do ten more years of residency 0:06:36.839 --> 0:06:39.760 and fellowship training and then go down this pathway. So 0:06:40.520 --> 0:06:45.920 I pivoted after my surgery internship and did a residency 0:06:45.960 --> 0:06:48.600 in anatomic pathology, which is a little more of a 0:06:49.040 --> 0:06:53.560 kind of behind the scenes consultative specialty. And I finished that, 0:06:53.760 --> 0:06:57.960 but I, you know, I didn't really see myself doing 0:06:58.000 --> 0:07:02.120 that over a multi decade career. So really, at that point, 0:07:02.640 --> 0:07:05.400 you know, after four years of medical school and ultimately 0:07:05.440 --> 0:07:09.760 four years of residency training, I decided to branch out. 0:07:09.840 --> 0:07:14.280 And you know, perhaps at that point, which was an 0:07:14.360 --> 0:07:17.880 undisclosed number of years ago, that was a little bit 0:07:17.960 --> 0:07:23.080 of a atypical decision. I think it's becoming more common 0:07:23.480 --> 0:07:27.960 now for people, certainly people that pursue their PhD or 0:07:28.000 --> 0:07:31.360 even their medical degree to kind of leverage that background 0:07:31.440 --> 0:07:35.680 in a non traditional way. But you know, I always 0:07:36.200 --> 0:07:38.680 so at that point, I became very opportunistic in terms 0:07:38.680 --> 0:07:42.720 of how my career unfolded. I always kept one foot, 0:07:42.760 --> 0:07:47.920 so to speak, in the science kind of biomedical world. 0:07:48.600 --> 0:07:51.440 But I spent some time at an early stage investing 0:07:51.520 --> 0:07:55.880 group that was helping to support drug and device startups. 0:07:55.960 --> 0:07:59.320 I then came to New York, spent some time on 0:07:59.400 --> 0:08:02.160 Wall Street as part of some more traditional cell side 0:08:02.640 --> 0:08:06.960 research shops, had a long run at in Thought, as 0:08:06.960 --> 0:08:09.960 you mentioned, which is a kind of boutique healthcare consultancy, 0:08:10.000 --> 0:08:14.280 and then came to Bloomberg. And you know, from my perspective, 0:08:14.920 --> 0:08:18.640 it's I've never looked back, and because I'm sort of 0:08:18.760 --> 0:08:23.360 charged with keeping up to date with cutting edge drug 0:08:23.400 --> 0:08:26.760 development and biology and science and kind of helping to 0:08:26.800 --> 0:08:32.920 translate that for the investment community and other individuals. So 0:08:33.520 --> 0:08:39.520 you know, it's a lot of fun and and you know, 0:08:40.200 --> 0:08:42.640 I am enjoying it. 0:08:42.960 --> 0:08:45.480 Yeah, it's interesting because it's like me, it's a much 0:08:45.520 --> 0:08:47.720 more of a research job, right than a hands on job, 0:08:47.760 --> 0:08:52.119 and even though way beyond anything that I've ever accomplished 0:08:52.160 --> 0:08:54.520 in my life, it's kind of my jump too, because 0:08:54.559 --> 0:08:57.360 I was, you know, a lawyer representing clients and I 0:08:57.400 --> 0:08:59.760 moved from that to doing the research side of Its 0:09:00.360 --> 0:09:02.640 really really interesting because you have to stay on top 0:09:03.000 --> 0:09:05.199 of all the topics. You get to read about them 0:09:05.200 --> 0:09:07.600 all the time and sort of as an observer, and 0:09:07.640 --> 0:09:09.640 if you're interested in that kind of thing, it can 0:09:09.679 --> 0:09:13.360 be a really great job. But I'm clearly you listening 0:09:13.400 --> 0:09:14.960 to the two of you, I'm clearly talking to two 0:09:15.000 --> 0:09:16.320 people who are a lot smarter than. 0:09:16.200 --> 0:09:17.920 I am, So I'm not sure about that. 0:09:18.320 --> 0:09:20.040 As we go forward in this podcast, I'm going to 0:09:20.120 --> 0:09:23.400 let you guys do most of the talking. But you know, 0:09:23.440 --> 0:09:25.640 the interesting thing is that, well, I hope it's a 0:09:25.679 --> 0:09:27.920 good discussion because we all really think about this in 0:09:27.960 --> 0:09:31.160 a different way. I mean, right now, Armand's really grappling 0:09:31.200 --> 0:09:35.400 with an aggressive and unpredictable FTC with his clients. I mean, 0:09:35.400 --> 0:09:37.720 he has to advise clients and he has to steer clients, 0:09:37.960 --> 0:09:41.400 and you're really thinking about it in terms of how 0:09:41.440 --> 0:09:43.560 does it impact the industry and how do you advise 0:09:43.600 --> 0:09:45.760 the people that read your material, and I'm trying to 0:09:45.800 --> 0:09:48.840 predict things. I'm trying to look at deals like Biser, Siegan, 0:09:49.240 --> 0:09:52.320 Amgen in Horizon or anything else coming and trying to 0:09:52.360 --> 0:09:54.720 predict what's going to happen, mostly more for the merger 0:09:54.800 --> 0:09:57.160 art community, So we all come from a different approach. 0:09:58.240 --> 0:10:00.520 I think it's best to start this by sort of 0:10:00.600 --> 0:10:04.200 laying the groundwork on the way the Federal Trade Comission, 0:10:04.240 --> 0:10:06.280 and I'm sticking with the FTC because it really it's 0:10:06.280 --> 0:10:10.200 the FTC that reviews pharma and biotech deals with the 0:10:10.240 --> 0:10:13.800 way for many years traditionally these kinds of deals were 0:10:13.840 --> 0:10:18.280 reviewed and the reason and how they got cleared. So Arman, 0:10:18.480 --> 0:10:21.200 you know you've done so many deals. Walk us through 0:10:21.320 --> 0:10:23.880 kind of what we think of as the traditional assessment 0:10:23.920 --> 0:10:25.079 for these sorts of deals. 0:10:26.400 --> 0:10:32.360 Well, the traditional assessment, like in any other industry, is 0:10:32.440 --> 0:10:36.000 to look at the overlaps right between the whever the 0:10:36.040 --> 0:10:40.760 buyer company is and the target company and do a 0:10:40.800 --> 0:10:46.240 product by product, technology by technology analysis of how they 0:10:47.000 --> 0:10:50.280 may or may not be competing with each other. Typically, 0:10:50.320 --> 0:10:53.000 you start with commercial products and you go down the 0:10:53.000 --> 0:10:59.319 line and really the exercises to understand whether the transaction 0:10:59.480 --> 0:11:02.520 is going to result in what we anti trust lawyers 0:11:02.559 --> 0:11:08.319 call one of two effects. One of them is coordinated effects, 0:11:08.320 --> 0:11:12.000 meaning with less competitors out there will there be pulling 0:11:12.040 --> 0:11:17.120 off punches, less competitive rigor in the industry. And the 0:11:17.160 --> 0:11:19.600 other effect that the agencies typically look at is what 0:11:19.720 --> 0:11:24.800 is called the unilateral effects, which is whether the target 0:11:25.320 --> 0:11:29.199 and the buyer imposed on each other before the transaction 0:11:29.640 --> 0:11:34.560 a unique competitive constraint, whether they see each other as 0:11:34.600 --> 0:11:38.720 each other's closest competitors in any in any respect, and 0:11:38.800 --> 0:11:44.320 the elimination of that typically is problematic for the agencies. 0:11:45.080 --> 0:11:48.400 And so you do you do a nose count, as 0:11:48.400 --> 0:11:51.120 it were, for the coordinated effects, how many players are there, 0:11:51.120 --> 0:11:53.920 et cetera, et cetera. If we go from five five 0:11:53.960 --> 0:11:56.079 to four players is not going to be a problem 0:11:56.440 --> 0:11:59.960 probably and uh, and it needs to be sorted out 0:12:00.800 --> 0:12:03.880 by the same token. Especially in life sciences, you want 0:12:03.880 --> 0:12:07.800 to look at whether the two companies are each other's 0:12:08.160 --> 0:12:12.319 very close competitors or a small set of competitors, and 0:12:12.440 --> 0:12:14.880 elimination of that is going to be a problem. And 0:12:14.920 --> 0:12:18.520 in twenty nineteen is really the landmark year to look 0:12:18.559 --> 0:12:23.040 at these theories in play. That was IFDC that was 0:12:23.120 --> 0:12:26.600 led by Joe Simons, who was a legendary practitioner in 0:12:26.640 --> 0:12:31.920 the industry, and they looked at at the Allergan did 0:12:32.000 --> 0:12:35.800 a very similar approach there as they did in the 0:12:36.360 --> 0:12:43.320 BMS Celgen BMS celging transaction, both of which in both 0:12:43.360 --> 0:12:48.520 of which they found overlaps that needed to be resolved. 0:12:48.640 --> 0:12:53.320 And these were actual competing assets. In the case of 0:12:53.520 --> 0:12:58.000 BMS and cell Gene, you had, ironically, you had an 0:12:58.040 --> 0:13:07.079 oncology our house acquiring a hematology powerhouse. Yet the overlap 0:13:07.160 --> 0:13:10.760 that they have DC identified happened to be in rheumatology, 0:13:11.400 --> 0:13:18.600 specifically the soriusis drug Tesla. It was pretty ironic. I 0:13:18.600 --> 0:13:22.160 think at the time most practitioners and and and the 0:13:22.200 --> 0:13:24.679 two of us might have had a conversation back then. 0:13:24.720 --> 0:13:26.520 I know I talked to a lot of people about that. 0:13:26.640 --> 0:13:29.199 I was not at a law firm at the time, 0:13:29.559 --> 0:13:33.160 so I was a lot more free and what I 0:13:33.160 --> 0:13:36.680 could say and couldn't say. But it was a surprise 0:13:36.760 --> 0:13:42.480 that they found that overlap problematic. And NBMS had a 0:13:42.520 --> 0:13:48.400 pipeline asset that was very promising in soriasis in phase two, 0:13:49.160 --> 0:13:54.160 and Celgene owned a premo lasso tesla, which was which 0:13:54.320 --> 0:13:57.640 continues to be a relatively successful drug at least commercially 0:13:58.200 --> 0:14:03.120 clinically I don't know, but certainly certainly commercially and UH, 0:14:03.520 --> 0:14:07.760 and the agency was concerned that BMSS incentives UH to 0:14:07.840 --> 0:14:12.840 continue developing Ducra was the name of the drug. I 0:14:12.840 --> 0:14:14.720 don't know, I can't remember the full name of it, 0:14:14.760 --> 0:14:17.400 but UH that there would be a problem there because 0:14:17.679 --> 0:14:23.080 Ducre was the promising next generation asset that was slated 0:14:23.160 --> 0:14:27.280 to compete against a primo last and they forced a divestiture. 0:14:28.480 --> 0:14:31.640 Very similar dynamics in the at V al organ transaction 0:14:32.640 --> 0:14:35.280 where they forced a the vesture of two assets where 0:14:35.320 --> 0:14:41.160 there were overlaps between av Aalergan I believe both for 0:14:41.240 --> 0:14:46.240 both companies those were commercial products. In the contrast is 0:14:46.240 --> 0:14:50.480 helpful as well. Same year, same timeframe, UH, the agency 0:14:50.560 --> 0:14:56.560 was reviewing Roach's acquisition of Spark UH. There were overlaps 0:14:56.600 --> 0:15:00.880 in the pipeline I believe for hemophilia gene therapy for hemophilia, 0:15:02.760 --> 0:15:07.360 and both companies had assets in clinical trials, and the 0:15:07.360 --> 0:15:09.720 agency reviewed that for a long time I believe, up 0:15:09.760 --> 0:15:12.840 to like a year, and finally let it go after 0:15:13.360 --> 0:15:17.480 deciding that determining that there were enough competitors in the 0:15:17.520 --> 0:15:22.960 pipeline to impose the kind of discipline, competitive discipline that 0:15:23.040 --> 0:15:26.520 the agency likes to see. That's the traditional approach. So 0:15:26.560 --> 0:15:30.240 twenty nineteen it's the useful timeframe to go back to 0:15:30.280 --> 0:15:34.680 and look at what typically has been done. Of course, 0:15:35.720 --> 0:15:41.440 all of those investigations came with harsh criticism from other 0:15:41.880 --> 0:15:45.040 certain members of the Commission at the time who wanted 0:15:45.920 --> 0:15:48.480 the staff to do more and for the Commission to 0:15:48.600 --> 0:15:54.320 be more aggressive, and I think we're seeing those voices 0:15:54.400 --> 0:15:56.920 prevail in the current environment. Yeah. 0:15:57.000 --> 0:15:59.760 I mean there were two Democrats on the Commission at 0:15:59.800 --> 0:16:02.560 that time, and they think for both of those matters 0:16:03.000 --> 0:16:09.320 that had the divestitures, they both dissented for various different reasons, 0:16:09.360 --> 0:16:12.600 but they were in the minority, so the deals got 0:16:12.640 --> 0:16:15.480 through with those settlements. I have a nice little chart 0:16:15.520 --> 0:16:17.760 and the article that you wrote that was really helpful 0:16:17.760 --> 0:16:20.560 also Arman about a year ago that walked through the 0:16:20.600 --> 0:16:25.760 Bristol Myers Squib deal and Happy Allergan, which I highly 0:16:25.760 --> 0:16:30.240 recommend to anyone who hasn't read it. Right, So the 0:16:30.320 --> 0:16:33.360 interesting thing there is that, right, and that was great 0:16:33.440 --> 0:16:37.360 because really back when I was practicing, you know, if 0:16:37.400 --> 0:16:39.080 you had a farm a deal that came in front 0:16:39.080 --> 0:16:41.520 of you. It was kind of a no brainer because 0:16:41.560 --> 0:16:44.400 you just expected, well, let's just look, let's see where 0:16:44.400 --> 0:16:46.560 we have the overlaps and then figure out what we 0:16:46.640 --> 0:16:49.560 have to divest, and we'll go from there and we'll 0:16:49.560 --> 0:16:52.800 get it cleared. And so there really weren't concerns. You 0:16:52.880 --> 0:16:55.080 knew it might take a little while, you might have 0:16:55.120 --> 0:16:59.080 to have a consent order, but it was pretty par 0:16:59.200 --> 0:17:02.080 for the course. You could predict what was going to happen. 0:17:02.120 --> 0:17:05.200 You could give some certainty to the clients. So we 0:17:05.320 --> 0:17:09.639 had this foreshadowing of what might come with those descents 0:17:09.720 --> 0:17:15.320 in Bristol, Meyers celgene In at biel Agen too. And 0:17:15.920 --> 0:17:18.919 what has happened now that the Democrats have taken the 0:17:18.960 --> 0:17:22.400 majority at the FTC, so we're going to move into 0:17:22.440 --> 0:17:25.000 kind of the new approach that's happening now is that 0:17:25.440 --> 0:17:29.360 they started really looking closely at pharma deals. And this 0:17:29.480 --> 0:17:34.280 started with the formation of a Multilateral Pharmaceutical Merger Task 0:17:34.320 --> 0:17:37.080 Force that was in twenty twenty one, and then there 0:17:37.119 --> 0:17:41.320 was the workshop in twenty twenty two, which was summarized 0:17:41.359 --> 0:17:43.920 about a year later in June of twenty twenty three, 0:17:43.960 --> 0:17:45.840 and there were a lot of concerns that were raised 0:17:46.359 --> 0:17:49.320 in out that came out of that workshop, concerned that 0:17:49.359 --> 0:17:54.200 pharmaceutical and biotech deals were killer acquisitions, deals that might 0:17:54.280 --> 0:17:58.400 take potential competitors out of the market before they can compete, essentially, 0:17:58.960 --> 0:18:02.640 allegations that they're might be illegal bundling and tying practices 0:18:02.640 --> 0:18:06.240 that and also dampened innovation. And there were a lot 0:18:06.280 --> 0:18:08.320 of suggestions where made how to deal with this, and 0:18:08.400 --> 0:18:11.080 all of them were aimed at basically increasing anti drus 0:18:11.160 --> 0:18:14.280 scrutiny of pharma and biotech deals. And these include things 0:18:14.320 --> 0:18:17.199 like looking at more at innovation effects just rather than 0:18:17.240 --> 0:18:20.399 the drug by drug overlap that Arma just described prior 0:18:20.520 --> 0:18:24.359 bad acts, applying a heightened level of scrutiny, applying a 0:18:24.400 --> 0:18:27.280 presumption of competitive harm to very big deals, and then 0:18:27.320 --> 0:18:29.720 putting the burden on the companies to show that there 0:18:29.760 --> 0:18:33.960 are efficiencies that weigh potential harm, a broader, stricter set 0:18:34.000 --> 0:18:38.600 of remedies. That's kind of an example. And on top 0:18:38.640 --> 0:18:41.399 of all this, the agencies are right now proposing a 0:18:41.480 --> 0:18:44.639 new set of merger guidelines. The kind of the guidelines 0:18:44.680 --> 0:18:46.359 talk through how they're going to look at deals and 0:18:46.359 --> 0:18:48.960 how they're going to iness deals generally, not just pharma, 0:18:49.160 --> 0:18:52.640 all deals, and those guidelines really look like they're intended 0:18:52.680 --> 0:18:56.280 to increase scrutiny, increase deal challenges, and are designed to 0:18:56.280 --> 0:18:58.520 make it easier for the FTC and DJAT to succeed 0:18:58.560 --> 0:19:01.679 in blocking deals. And they'll apply to pharma deals as well. So, 0:19:02.320 --> 0:19:04.639 you know, it remains to be seen what's going to happen, 0:19:04.680 --> 0:19:06.720 what's going to come out of all these initiatives, and 0:19:07.280 --> 0:19:11.080 whether it's really going to impose hurdles or not. But Mark, 0:19:11.200 --> 0:19:13.159 why don't you talk for a few minutes, since we 0:19:13.240 --> 0:19:15.720 see things are changing, we see it's going to get 0:19:15.720 --> 0:19:17.800 more difficult. We're going to talk about amten rise and 0:19:17.880 --> 0:19:20.840 challenge in just a minute. What is the importance of 0:19:21.000 --> 0:19:23.680 M and A in the biotech sector and what might 0:19:23.720 --> 0:19:25.480 it mean for these companies if it gets a lot 0:19:25.560 --> 0:19:28.240 tougher to get even small deals over the line. 0:19:28.440 --> 0:19:31.360 Yeah, for sure. I mean I can't stress this enough. 0:19:31.400 --> 0:19:34.600 I mean it, and you know I focus on biotech 0:19:34.680 --> 0:19:38.159 and pharma. I don't really have that level of detail 0:19:38.200 --> 0:19:43.520 of other sectors or other industries. But for biopharma, m 0:19:43.560 --> 0:19:50.719 and A is absolutely an accepted and expected component of 0:19:50.760 --> 0:19:54.000 the way that ecosystem, if you want to think of 0:19:54.040 --> 0:20:00.080 it that way, functions, and you know, it serves multiple purposes. 0:20:00.240 --> 0:20:06.960 You know, for larger diversified pharma in the case of Amgen, 0:20:07.119 --> 0:20:12.040 you know, large cap biotech companies, it's a critical way. Yes, 0:20:12.119 --> 0:20:16.960 they have their own internal R and D capabilities and successes, 0:20:17.000 --> 0:20:20.560 but it's a critical way of sort of layering on 0:20:20.720 --> 0:20:26.040 additional sources of innovation and top line growth because a 0:20:26.040 --> 0:20:30.639 lot of these companies, especially when they get to a 0:20:30.680 --> 0:20:34.600 certain scale, you know, it's hard to kind of extract 0:20:34.640 --> 0:20:41.000 additional revenue growth. And then of course, you know, the 0:20:41.080 --> 0:20:44.480 reality for the entire industry, which I think is probably 0:20:45.200 --> 0:20:49.600 somewhat different than others, has to do with you know, 0:20:49.640 --> 0:20:54.720 the ticking patent clock and the ticking sort of market 0:20:54.920 --> 0:20:59.920 exclusivity clock. So there's a constant you know, not only 0:21:00.160 --> 0:21:03.640 the science continuing to evolve, but there's a constant need 0:21:03.680 --> 0:21:08.320 to sort of refresh if your Amgen or Pfizer or 0:21:08.400 --> 0:21:16.800 merk your commercial offerings. So buying companies which may have 0:21:17.160 --> 0:21:23.840 marketed products, may have late stage promising, you know, products 0:21:23.840 --> 0:21:31.240 that are perhaps nearing the market. Companies that have technology 0:21:31.520 --> 0:21:38.119 or platform capabilities that the larger company thinks, will you know, 0:21:38.240 --> 0:21:40.600 sort of help them to continue to expand and grow. 0:21:40.960 --> 0:21:46.600 That is absolutely, you know, normal course of business. And 0:21:46.640 --> 0:21:48.119 when you look at it from the other side of 0:21:48.160 --> 0:21:53.560 the table and you start to think about investors in 0:21:54.440 --> 0:21:59.600 private companies that maybe hope to go public or early 0:21:59.680 --> 0:22:05.919 stagg pre revenue sort of smaller in mid cap biotechs, 0:22:06.640 --> 0:22:10.959 it's a very accepted kind of exit strategy, you know, 0:22:11.080 --> 0:22:17.119 for those companies and investors in those companies. So, you know, 0:22:17.160 --> 0:22:22.600 not every company is. If you ask founders of biotech companies, 0:22:22.640 --> 0:22:24.800 they may not always admit that, you know, one of 0:22:24.800 --> 0:22:27.200 the things they're hoping is that, let's say Pfizer will 0:22:27.200 --> 0:22:29.960 buy them one day. But that's certainly you know, that's 0:22:31.320 --> 0:22:34.640 whether it's been committed to paper somewhere. That's a very 0:22:34.960 --> 0:22:38.240 has been I guess I should say historically a very 0:22:38.280 --> 0:22:39.720 real possibility. 0:22:40.200 --> 0:22:42.440 You know, how have you seen that pattern, so let's 0:22:42.480 --> 0:22:44.760 say that pattern has been playing out, and have you 0:22:44.920 --> 0:22:48.959 viewed it as being something that's beneficial for the end 0:22:49.080 --> 0:22:52.400 let's say from consumers that ends up being beneficial when 0:22:52.400 --> 0:22:58.080 it comes to drug development, drug distribution, innovation. How do 0:22:58.119 --> 0:22:58.560 you view that? 0:22:59.200 --> 0:23:04.000 Yeah, I think it's a little nuanced to be fair, 0:23:04.760 --> 0:23:09.960 you know, you can make the case that a keep 0:23:10.000 --> 0:23:13.760 picking on Pfizer or an Engine or a Bristol. Yeah, 0:23:13.800 --> 0:23:20.960 they're they're large. You know, they have resources just strictly 0:23:20.960 --> 0:23:25.159 on a capital basis, they have their own internal R 0:23:25.240 --> 0:23:29.600 and D. And then you know, very importantly, they have 0:23:29.640 --> 0:23:37.320 capabilities when it comes to commercialization payer negotiations, which maybe 0:23:37.400 --> 0:23:39.439 we'll get into a little bit and just kind of 0:23:39.480 --> 0:23:44.800 the the capabilities that are needed to take what might 0:23:44.920 --> 0:23:52.240 actually be biologically or medically effective drug and actually get 0:23:52.320 --> 0:23:55.920 it out into the world to patients. They have those 0:23:55.920 --> 0:23:58.240 capabilities that a smaller company. 0:23:59.520 --> 0:23:59.920 May not have. 0:24:00.880 --> 0:24:07.200 And so yes, it serves other needs from the perspective 0:24:07.240 --> 0:24:12.720 of the large company and the company that's acquired. But 0:24:12.920 --> 0:24:16.560 if I think you can make a case that in 0:24:16.600 --> 0:24:21.960 many instances those assets that were resident at a small 0:24:22.000 --> 0:24:27.840 biotech company maybe are able to be sort of their 0:24:27.880 --> 0:24:31.800 potential could be maximized on a larger platform, I mean, 0:24:31.840 --> 0:24:35.000 I think you can in a more cynical way, you 0:24:35.040 --> 0:24:37.920 can maybe take the other side of that argument and 0:24:37.960 --> 0:24:42.760 say a small company might be more uniquely focused on 0:24:43.080 --> 0:24:48.040 their one product or their one platform, but of course 0:24:48.080 --> 0:24:51.960 you have some of those other expertise and resource constraints 0:24:51.960 --> 0:24:53.000 that they would be dealing with. 0:24:53.200 --> 0:24:55.159 Sure our money, know, you have to have some thoughts 0:24:55.160 --> 0:24:56.480 on this. What do you think. 0:24:58.680 --> 0:25:02.879 Look as a small company, the especially in life sciences, 0:25:05.480 --> 0:25:11.439 your your development strategy typically it's about getting data so 0:25:11.480 --> 0:25:15.320 you can raise money. Right that that that's a that's 0:25:15.359 --> 0:25:17.760 a fact of life in the industry. And uh and 0:25:17.760 --> 0:25:21.280 and that ecosystem of get data to raise money so 0:25:21.320 --> 0:25:24.520 you can go to the next phase or next stages 0:25:24.600 --> 0:25:28.320 whatever it may be, whether it's moving from in vitro 0:25:28.480 --> 0:25:32.840 to in vivo, or from from pre clinical to clinical, 0:25:33.000 --> 0:25:36.080