Speaker 1: In the following podcast, which was recorded on August thirtieth,
Speaker 1: part of our discussion relates to the legal theory on
Speaker 1: which the Federal Trade Commission based its lawsuit to block
Speaker 1: the merger of Amjen and Horizon. After the episode was recorded,
Speaker 1: the FTC settled with Amgen and cleared the deal to
Speaker 1: close with conditions. But in addition to discussing that matter,
Speaker 1: our podcast touches on many other topics relevant to the
Speaker 1: pharma and biotech industries. So we've gone forward with its
Speaker 1: release and help you enjoy listening. Well.
Speaker 2: Hello and welcome to the Votes and Verdicts podcast hosted
Speaker 2: by Bloomberg Intelligence, the investment research platform of Bloomberg LP.
Speaker 2: In this podcast series, we talk about the intersection of
Speaker 2: business policy and law. My name is Jennifer Ree. I'm
Speaker 2: a senior analyst with Bloomberg Intelligence covering US antitrust litigation
Speaker 2: and policy. Now, our litigation and policy teams really cover
Speaker 2: a very wide variety of topics. I'm the only one
Speaker 2: covering anti trust and so because of that, this is
Speaker 2: the second Boats and Verdicts podcast focused on anti trust issues.
Speaker 2: And in the first episode I had Bill Alsaied as
Speaker 2: my guest and we discuss the more aggressive approach just
Speaker 2: in general of this administration's Federal Trade Commission and the
Speaker 2: Anti Trust Division of the Department of Justice, mostly with
Speaker 2: respect to assessing transactions. And this episode, what we're going
Speaker 2: to do is kind of follow that subject, but take
Speaker 2: a deeper and narrow or dive to focus on transactions
Speaker 2: and just the biotech and pharmaceutical and how the FTC's
Speaker 2: approach to those deals impacts the industry. I guess I
Speaker 2: can kind of call it biopharma to put those two together.
Speaker 2: I'm really excited to be joined by two guests for
Speaker 2: this episode. First, we have Arma Orik, who is perfectly
Speaker 2: suited for this discussion and one of the smartest people
Speaker 2: I know. He's currently a partner at the law from Goodwin,
Speaker 2: where he's co chair of the firm's Anti trust and
Speaker 2: competition practice, and he's advised numerous biotech and pharma companies
Speaker 2: engaged in deals thinking about deals involved in anti trust issues.
Speaker 2: Prior to joining Goodwin, Arman was part of the founding
Speaker 2: team of Biosplice Therapeutics, once known as Samamed, where he
Speaker 2: served as the chief legal officer and a member of
Speaker 2: the board. Now second from right here with me. Within
Speaker 2: Bloomberg Intelligence, we have Mark engels Jerd. He is our
Speaker 2: senior industry analyst for biotech, and prior to joining Bloomberg,
Speaker 2: Mark was the oncology practice lead for in Thought Research.
Speaker 2: He has a degree in cellular and molectical biology as
Speaker 2: well as a doctorate in medicine from the University of California,
Speaker 2: so he really knows what he's talking about in this
Speaker 2: subject area. So before we jump into our anti trust topic,
Speaker 2: I really would be interested for both to hear about
Speaker 2: your career paths because they're both unusual. So arman, why
Speaker 2: don't we start with you? I mean, as we were
Speaker 2: just saying, a long time ago, seems like one hundred
Speaker 2: years ago, we practiced at the same law firm, and
Speaker 2: then you jump sort of the law firm ship, even
Speaker 2: though you were a partner, to go help start a
Speaker 2: biotech firm, which is a really unusual move and risky too.
Speaker 2: So talk to us about what prompted that, what it
Speaker 2: was like to be part of a biotech startup, and
Speaker 2: which of your roles you've liked the most.
Speaker 3: Thanks for having me, Jennifer. This is a great topic
Speaker 3: and I love being part of it, especially with Mark. Yeah,
Speaker 3: so it is an unusual move, and I think it's
Speaker 3: it's going to become relevant in our discussion today about
Speaker 3: anti trust issues. I did leave a law firm as
Speaker 3: an anti trust practitioner, something I had been doing for
Speaker 3: a while at the time, to go explore an oncology startup.
Speaker 3: And when you say I was a member of the
Speaker 3: board and chief legal officer, it sounds so serious. In reality,
Speaker 3: the task included everything from running running to Costco to
Speaker 3: get supplies, all the way down to cleaning cages in
Speaker 3: the in the vibe aium. But that that's the nature
Speaker 3: of a startup. And really the point I'm trying to
Speaker 3: make here is that there's so much uncertainty and then
Speaker 3: so much unknown in life science. Is when you start
Speaker 3: a project and and then there's a lot going on,
Speaker 3: and things change very rapidly as data comes in, whether
Speaker 3: it's a pre clinical data from a Petri dish or
Speaker 3: a or some from rodent studies or whatever, and and
Speaker 3: it's a it's a it's full of surprises, good and bad. Uh,
Speaker 3: And and there's a lot to do. And in that
Speaker 3: you asked me what my favorite roles were, whether it
Speaker 3: ranged from doing actual legal work occasionally all the way
Speaker 3: down to on occasion running the chemistry team or or
Speaker 3: or regulatory and quality and UH and of course dealing
Speaker 3: with intellectual property issues. And it was a fascinating ride.
Speaker 3: And what prompted it was an interest in doing something
Speaker 3: interest thing, especially on the oncology side, at a time
Speaker 3: when it was possibly doable for anybody to jump into
Speaker 3: the industry. The capital Marcus were very, very welcoming to
Speaker 3: a lot of different projects. So it was a once
Speaker 3: in a lifetime opportunity and I will never regret having
Speaker 3: taken it. It's been an amazing ride.
Speaker 2: I mean, you had so much exposure to so many
Speaker 2: parts of the business. It just makes you so well
Speaker 2: suited to be dealing with this topic back in the
Speaker 2: anti trust world now. I mean it's really kind of
Speaker 2: an you kind of have an amazing resume and experience.
Speaker 2: So if I were a biotech firm, I'd want to
Speaker 2: hire you as my lawyer.
Speaker 3: I would like to talk to more before I jump.
Speaker 2: So, Mark, what about you? I mean, like your inequity
Speaker 2: analysis after getting a doctorate in medicine, and that's also
Speaker 2: kind of an unusual jump, So tell us about your career.
Speaker 4: Yeah, so I did not always dream of being a
Speaker 4: biotech equity analyst. In fact, if you had asked me,
Speaker 4: you know, in high school or college what I was
Speaker 4: going to do, I was going to become a surgeon.
Speaker 4: And I started kind of executing on that pathway. Went
Speaker 4: to medical school, matched at my top choice for a
Speaker 4: general surgery residency, and then it was at that point
Speaker 4: I had this sort of epiphany in my call room
Speaker 4: one night where I realized, I love you know, I
Speaker 4: like being in the operating room, but I don't actually
Speaker 4: love it enough to do ten more years of residency
Speaker 4: and fellowship training and then go down this pathway. So
Speaker 4: I pivoted after my surgery internship and did a residency
Speaker 4: in anatomic pathology, which is a little more of a
Speaker 4: kind of behind the scenes consultative specialty. And I finished that,
Speaker 4: but I, you know, I didn't really see myself doing
Speaker 4: that over a multi decade career. So really, at that point,
Speaker 4: you know, after four years of medical school and ultimately
Speaker 4: four years of residency training, I decided to branch out.
Speaker 4: And you know, perhaps at that point, which was an
Speaker 4: undisclosed number of years ago, that was a little bit
Speaker 4: of a atypical decision. I think it's becoming more common
Speaker 4: now for people, certainly people that pursue their PhD or
Speaker 4: even their medical degree to kind of leverage that background
Speaker 4: in a non traditional way. But you know, I always
Speaker 4: so at that point, I became very opportunistic in terms
Speaker 4: of how my career unfolded. I always kept one foot,
Speaker 4: so to speak, in the science kind of biomedical world.
Speaker 4: But I spent some time at an early stage investing
Speaker 4: group that was helping to support drug and device startups.
Speaker 4: I then came to New York, spent some time on
Speaker 4: Wall Street as part of some more traditional cell side
Speaker 4: research shops, had a long run at in Thought, as
Speaker 4: you mentioned, which is a kind of boutique healthcare consultancy,
Speaker 4: and then came to Bloomberg. And you know, from my perspective,
Speaker 4: it's I've never looked back, and because I'm sort of
Speaker 4: charged with keeping up to date with cutting edge drug
Speaker 4: development and biology and science and kind of helping to
Speaker 4: translate that for the investment community and other individuals. So
Speaker 4: you know, it's a lot of fun and and you know,
Speaker 4: I am enjoying it.
Speaker 2: Yeah, it's interesting because it's like me, it's a much
Speaker 2: more of a research job, right than a hands on job,
Speaker 2: and even though way beyond anything that I've ever accomplished
Speaker 2: in my life, it's kind of my jump too, because
Speaker 2: I was, you know, a lawyer representing clients and I
Speaker 2: moved from that to doing the research side of Its
Speaker 2: really really interesting because you have to stay on top
Speaker 2: of all the topics. You get to read about them
Speaker 2: all the time and sort of as an observer, and
Speaker 2: if you're interested in that kind of thing, it can
Speaker 2: be a really great job. But I'm clearly you listening
Speaker 2: to the two of you, I'm clearly talking to two
Speaker 2: people who are a lot smarter than.
Speaker 4: I am, So I'm not sure about that.
Speaker 2: As we go forward in this podcast, I'm going to
Speaker 2: let you guys do most of the talking. But you know,
Speaker 2: the interesting thing is that, well, I hope it's a
Speaker 2: good discussion because we all really think about this in
Speaker 2: a different way. I mean, right now, Armand's really grappling
Speaker 2: with an aggressive and unpredictable FTC with his clients. I mean,
Speaker 2: he has to advise clients and he has to steer clients,
Speaker 2: and you're really thinking about it in terms of how
Speaker 2: does it impact the industry and how do you advise
Speaker 2: the people that read your material, and I'm trying to
Speaker 2: predict things. I'm trying to look at deals like Biser, Siegan,
Speaker 2: Amgen in Horizon or anything else coming and trying to
Speaker 2: predict what's going to happen, mostly more for the merger
Speaker 2: art community, So we all come from a different approach.
Speaker 2: I think it's best to start this by sort of
Speaker 2: laying the groundwork on the way the Federal Trade Comission,
Speaker 2: and I'm sticking with the FTC because it really it's
Speaker 2: the FTC that reviews pharma and biotech deals with the
Speaker 2: way for many years traditionally these kinds of deals were
Speaker 2: reviewed and the reason and how they got cleared. So Arman,
Speaker 2: you know you've done so many deals. Walk us through
Speaker 2: kind of what we think of as the traditional assessment
Speaker 2: for these sorts of deals.
Speaker 3: Well, the traditional assessment, like in any other industry, is
Speaker 3: to look at the overlaps right between the whever the
Speaker 3: buyer company is and the target company and do a
Speaker 3: product by product, technology by technology analysis of how they
Speaker 3: may or may not be competing with each other. Typically,
Speaker 3: you start with commercial products and you go down the
Speaker 3: line and really the exercises to understand whether the transaction
Speaker 3: is going to result in what we anti trust lawyers
Speaker 3: call one of two effects. One of them is coordinated effects,
Speaker 3: meaning with less competitors out there will there be pulling
Speaker 3: off punches, less competitive rigor in the industry. And the
Speaker 3: other effect that the agencies typically look at is what
Speaker 3: is called the unilateral effects, which is whether the target
Speaker 3: and the buyer imposed on each other before the transaction
Speaker 3: a unique competitive constraint, whether they see each other as
Speaker 3: each other's closest competitors in any in any respect, and
Speaker 3: the elimination of that typically is problematic for the agencies.
Speaker 3: And so you do you do a nose count, as
Speaker 3: it were, for the coordinated effects, how many players are there,
Speaker 3: et cetera, et cetera. If we go from five five
Speaker 3: to four players is not going to be a problem
Speaker 3: probably and uh, and it needs to be sorted out
Speaker 3: by the same token. Especially in life sciences, you want
Speaker 3: to look at whether the two companies are each other's
Speaker 3: very close competitors or a small set of competitors, and
Speaker 3: elimination of that is going to be a problem. And
Speaker 3: in twenty nineteen is really the landmark year to look
Speaker 3: at these theories in play. That was IFDC that was
Speaker 3: led by Joe Simons, who was a legendary practitioner in
Speaker 3: the industry, and they looked at at the Allergan did
Speaker 3: a very similar approach there as they did in the
Speaker 3: BMS Celgen BMS celging transaction, both of which in both
Speaker 3: of which they found overlaps that needed to be resolved.
Speaker 3: And these were actual competing assets. In the case of
Speaker 3: BMS and cell Gene, you had, ironically, you had an
Speaker 3: oncology our house acquiring a hematology powerhouse. Yet the overlap
Speaker 3: that they have DC identified happened to be in rheumatology,
Speaker 3: specifically the soriusis drug Tesla. It was pretty ironic. I
Speaker 3: think at the time most practitioners and and and the
Speaker 3: two of us might have had a conversation back then.
Speaker 3: I know I talked to a lot of people about that.
Speaker 3: I was not at a law firm at the time,
Speaker 3: so I was a lot more free and what I
Speaker 3: could say and couldn't say. But it was a surprise
Speaker 3: that they found that overlap problematic. And NBMS had a
Speaker 3: pipeline asset that was very promising in soriasis in phase two,
Speaker 3: and Celgene owned a premo lasso tesla, which was which
Speaker 3: continues to be a relatively successful drug at least commercially
Speaker 3: clinically I don't know, but certainly certainly commercially and UH,
Speaker 3: and the agency was concerned that BMSS incentives UH to
Speaker 3: continue developing Ducra was the name of the drug. I
Speaker 3: don't know, I can't remember the full name of it,
Speaker 3: but UH that there would be a problem there because
Speaker 3: Ducre was the promising next generation asset that was slated
Speaker 3: to compete against a primo last and they forced a divestiture.
Speaker 3: Very similar dynamics in the at V al organ transaction
Speaker 3: where they forced a the vesture of two assets where
Speaker 3: there were overlaps between av Aalergan I believe both for
Speaker 3: both companies those were commercial products. In the contrast is
Speaker 3: helpful as well. Same year, same timeframe, UH, the agency
Speaker 3: was reviewing Roach's acquisition of Spark UH. There were overlaps
Speaker 3: in the pipeline I believe for hemophilia gene therapy for hemophilia,
Speaker 3: and both companies had assets in clinical trials, and the
Speaker 3: agency reviewed that for a long time I believe, up
Speaker 3: to like a year, and finally let it go after
Speaker 3: deciding that determining that there were enough competitors in the
Speaker 3: pipeline to impose the kind of discipline, competitive discipline that
Speaker 3: the agency likes to see. That's the traditional approach. So
Speaker 3: twenty nineteen it's the useful timeframe to go back to
Speaker 3: and look at what typically has been done. Of course,
Speaker 3: all of those investigations came with harsh criticism from other
Speaker 3: certain members of the Commission at the time who wanted
Speaker 3: the staff to do more and for the Commission to
Speaker 3: be more aggressive, and I think we're seeing those voices
Speaker 3: prevail in the current environment. Yeah.
Speaker 2: I mean there were two Democrats on the Commission at
Speaker 2: that time, and they think for both of those matters
Speaker 2: that had the divestitures, they both dissented for various different reasons,
Speaker 2: but they were in the minority, so the deals got
Speaker 2: through with those settlements. I have a nice little chart
Speaker 2: and the article that you wrote that was really helpful
Speaker 2: also Arman about a year ago that walked through the
Speaker 2: Bristol Myers Squib deal and Happy Allergan, which I highly
Speaker 2: recommend to anyone who hasn't read it. Right, So the
Speaker 2: interesting thing there is that, right, and that was great
Speaker 2: because really back when I was practicing, you know, if
Speaker 2: you had a farm a deal that came in front
Speaker 2: of you. It was kind of a no brainer because
Speaker 2: you just expected, well, let's just look, let's see where
Speaker 2: we have the overlaps and then figure out what we
Speaker 2: have to divest, and we'll go from there and we'll
Speaker 2: get it cleared. And so there really weren't concerns. You
Speaker 2: knew it might take a little while, you might have
Speaker 2: to have a consent order, but it was pretty par
Speaker 2: for the course. You could predict what was going to happen.
Speaker 2: You could give some certainty to the clients. So we
Speaker 2: had this foreshadowing of what might come with those descents
Speaker 2: in Bristol, Meyers celgene In at biel Agen too. And
Speaker 2: what has happened now that the Democrats have taken the
Speaker 2: majority at the FTC, so we're going to move into
Speaker 2: kind of the new approach that's happening now is that
Speaker 2: they started really looking closely at pharma deals. And this
Speaker 2: started with the formation of a Multilateral Pharmaceutical Merger Task
Speaker 2: Force that was in twenty twenty one, and then there
Speaker 2: was the workshop in twenty twenty two, which was summarized
Speaker 2: about a year later in June of twenty twenty three,
Speaker 2: and there were a lot of concerns that were raised
Speaker 2: in out that came out of that workshop, concerned that
Speaker 2: pharmaceutical and biotech deals were killer acquisitions, deals that might
Speaker 2: take potential competitors out of the market before they can compete, essentially,
Speaker 2: allegations that they're might be illegal bundling and tying practices
Speaker 2: that and also dampened innovation. And there were a lot
Speaker 2: of suggestions where made how to deal with this, and
Speaker 2: all of them were aimed at basically increasing anti drus
Speaker 2: scrutiny of pharma and biotech deals. And these include things
Speaker 2: like looking at more at innovation effects just rather than
Speaker 2: the drug by drug overlap that Arma just described prior
Speaker 2: bad acts, applying a heightened level of scrutiny, applying a
Speaker 2: presumption of competitive harm to very big deals, and then
Speaker 2: putting the burden on the companies to show that there
Speaker 2: are efficiencies that weigh potential harm, a broader, stricter set
Speaker 2: of remedies. That's kind of an example. And on top
Speaker 2: of all this, the agencies are right now proposing a
Speaker 2: new set of merger guidelines. The kind of the guidelines
Speaker 2: talk through how they're going to look at deals and
Speaker 2: how they're going to iness deals generally, not just pharma,
Speaker 2: all deals, and those guidelines really look like they're intended
Speaker 2: to increase scrutiny, increase deal challenges, and are designed to
Speaker 2: make it easier for the FTC and DJAT to succeed
Speaker 2: in blocking deals. And they'll apply to pharma deals as well. So,
Speaker 2: you know, it remains to be seen what's going to happen,
Speaker 2: what's going to come out of all these initiatives, and
Speaker 2: whether it's really going to impose hurdles or not. But Mark,
Speaker 2: why don't you talk for a few minutes, since we
Speaker 2: see things are changing, we see it's going to get
Speaker 2: more difficult. We're going to talk about amten rise and
Speaker 2: challenge in just a minute. What is the importance of
Speaker 2: M and A in the biotech sector and what might
Speaker 2: it mean for these companies if it gets a lot
Speaker 2: tougher to get even small deals over the line.
Speaker 4: Yeah, for sure. I mean I can't stress this enough.
Speaker 4: I mean it, and you know I focus on biotech
Speaker 4: and pharma. I don't really have that level of detail
Speaker 4: of other sectors or other industries. But for biopharma, m
Speaker 4: and A is absolutely an accepted and expected component of
Speaker 4: the way that ecosystem, if you want to think of
Speaker 4: it that way, functions, and you know, it serves multiple purposes.
Speaker 4: You know, for larger diversified pharma in the case of Amgen,
Speaker 4: you know, large cap biotech companies, it's a critical way. Yes,
Speaker 4: they have their own internal R and D capabilities and successes,
Speaker 4: but it's a critical way of sort of layering on
Speaker 4: additional sources of innovation and top line growth because a
Speaker 4: lot of these companies, especially when they get to a
Speaker 4: certain scale, you know, it's hard to kind of extract
Speaker 4: additional revenue growth. And then of course, you know, the
Speaker 4: reality for the entire industry, which I think is probably
Speaker 4: somewhat different than others, has to do with you know,
Speaker 4: the ticking patent clock and the ticking sort of market
Speaker 4: exclusivity clock. So there's a constant you know, not only
Speaker 4: the science continuing to evolve, but there's a constant need
Speaker 4: to sort of refresh if your Amgen or Pfizer or
Speaker 4: merk your commercial offerings. So buying companies which may have
Speaker 4: marketed products, may have late stage promising, you know, products
Speaker 4: that are perhaps nearing the market. Companies that have technology
Speaker 4: or platform capabilities that the larger company thinks, will you know,
Speaker 4: sort of help them to continue to expand and grow.
Speaker 4: That is absolutely, you know, normal course of business. And
Speaker 4: when you look at it from the other side of
Speaker 4: the table and you start to think about investors in
Speaker 4: private companies that maybe hope to go public or early
Speaker 4: stagg pre revenue sort of smaller in mid cap biotechs,
Speaker 4: it's a very accepted kind of exit strategy, you know,
Speaker 4: for those companies and investors in those companies. So, you know,
Speaker 4: not every company is. If you ask founders of biotech companies,
Speaker 4: they may not always admit that, you know, one of
Speaker 4: the things they're hoping is that, let's say Pfizer will
Speaker 4: buy them one day. But that's certainly you know, that's
Speaker 4: whether it's been committed to paper somewhere. That's a very
Speaker 4: has been I guess I should say historically a very
Speaker 4: real possibility.
Speaker 2: You know, how have you seen that pattern, so let's
Speaker 2: say that pattern has been playing out, and have you
Speaker 2: viewed it as being something that's beneficial for the end
Speaker 2: let's say from consumers that ends up being beneficial when
Speaker 2: it comes to drug development, drug distribution, innovation. How do
Speaker 2: you view that?
Speaker 4: Yeah, I think it's a little nuanced to be fair,
Speaker 4: you know, you can make the case that a keep
Speaker 4: picking on Pfizer or an Engine or a Bristol. Yeah,
Speaker 4: they're they're large. You know, they have resources just strictly
Speaker 4: on a capital basis, they have their own internal R
Speaker 4: and D. And then you know, very importantly, they have
Speaker 4: capabilities when it comes to commercialization payer negotiations, which maybe
Speaker 4: we'll get into a little bit and just kind of
Speaker 4: the the capabilities that are needed to take what might
Speaker 4: actually be biologically or medically effective drug and actually get
Speaker 4: it out into the world to patients. They have those
Speaker 4: capabilities that a smaller company.
Speaker 1: May not have.
Speaker 4: And so yes, it serves other needs from the perspective
Speaker 4: of the large company and the company that's acquired. But
Speaker 4: if I think you can make a case that in
Speaker 4: many instances those assets that were resident at a small
Speaker 4: biotech company maybe are able to be sort of their
Speaker 4: potential could be maximized on a larger platform, I mean,
Speaker 4: I think you can in a more cynical way, you
Speaker 4: can maybe take the other side of that argument and
Speaker 4: say a small company might be more uniquely focused on
Speaker 4: their one product or their one platform, but of course
Speaker 4: you have some of those other expertise and resource constraints
Speaker 4: that they would be dealing with.
Speaker 2: Sure our money, know, you have to have some thoughts
Speaker 2: on this. What do you think.
Speaker 3: Look as a small company, the especially in life sciences,
Speaker 3: your your development strategy typically it's about getting data so
Speaker 3: you can raise money. Right that that that's a that's
Speaker 3: a fact of life in the industry. And uh and
Speaker 3: and that ecosystem of get data to raise money so
Speaker 3: you can go to the next phase or next stages
Speaker 3: whatever it may be, whether it's moving from in vitro
Speaker 3: to in vivo, or from from pre clinical to clinical,
Speaker 3: or face one to face two, whatever, whatever those transition
Speaker 3: points are. Each one comes with larger and larger budget
Speaker 3: requirements and and as you kind of go down the path,
Speaker 3: the capital constraints become a real issue. And it certainly
Speaker 3: once you start talking about mark to your point about commercialization,
Speaker 3: once you start talking about that, that's uh, that's a
Speaker 3: completely different startup idea. Right. The second you get to
Speaker 3: that point, you're no longer being run by the chief
Speaker 3: medical officer of the company. Uh. So that transition from
Speaker 3: the chief scientific officer to the chief medical officer and
Speaker 3: at some point you need to hand it over to
Speaker 3: the key decisions now are being made by the by
Speaker 3: the folks who might might not have pH D after
Speaker 3: their names or or m B after their names. That
Speaker 3: that's a completely different business model. And uh, making that
Speaker 3: transition is really hard. Very few companies successfully do it.
Speaker 3: And and and at the same time there's big pharma
Speaker 3: with with the infrastructure already in place. So there is
Speaker 3: a very strong argument why it's far more efficient for
Speaker 3: for these promising assets to to effectively transition to an
Speaker 3: entity that already has the commercialization machine in place. There
Speaker 3: there are a lot of efficiencies there, without a doubt,
Speaker 3: And and the same is probably true on the regulatory side.
Speaker 3: We all would like to think that we can figure
Speaker 3: out the ft A, but but the mileage that you
Speaker 3: have with them really matters, right And and of course
Speaker 3: larger pharmaceutical companies have a lot more experience dealing with
Speaker 3: reading the tea leaves and having those softer interactions with
Speaker 3: the with the f d A, so from for later
Speaker 3: stage development, there are a lot of efficiencies. The point
Speaker 3: that that really troubled me during the last couple of
Speaker 3: years about all of this was probably the meta within transaction,
Speaker 3: which was which was not in Life of Sciences. But
Speaker 3: this whole notion that Meta is a potential competitor without
Speaker 3: ever having declared so in a different market because it
Speaker 3: can its mere presence is a disciplining force, and that
Speaker 3: potential threat of entry is competition enough for antitrust purposes,
Speaker 3: and therefore its acquisition of within could be problematic. I mean,
Speaker 3: obviously the case got decided against the FDC in that case,
Speaker 3: but if you apply that logic, a lot of these
Speaker 3: big pharma acquiring pipeline transactions start to look really well risky,
Speaker 3: right if the FDC is going to take that approach,
Speaker 3: I sure hope they don't take that approach in this
Speaker 3: industry because the inherent efficiencies are just too many in
Speaker 3: a lot of these transactions.
Speaker 2: Yeah, And you know that's a part of the problem
Speaker 2: because what they need you as an expert witness, I
Speaker 2: guess the drug company is when they up there, because
Speaker 2: those inherent efficiencies are being downplayed now right by the FTC,
Speaker 2: not just in these deals but across the board. And
Speaker 2: you know, there it seems like they're already sort of
Speaker 2: exercising their new approach here and not really thinking about
Speaker 2: everything that the both of you just talked about with
Speaker 2: respect to why m and a kind of has to
Speaker 2: happen for some of these really small companies, and we've
Speaker 2: seen them challenge Amgen and Horizon, and we're going to
Speaker 2: talk about that now because it's a really to me,
Speaker 2: this is a really was a surprise, and it's an
Speaker 2: interesting case because if we go back to what Armand
Speaker 2: started with, where he talked about overlaps vertical relationships, these
Speaker 2: companies have neither. They don't have if you look at
Speaker 2: even pipeline and marketed products, they don't have a horizontal overlap.
Speaker 2: They it doesn't vertically integrate Amgen in any way. But
Speaker 2: yet the FTC has went ahead ensued to try to
Speaker 2: block the deal. Now we've heard in the news lately
Speaker 2: that they've paused a few things to maybe talk about
Speaker 2: settlement doesn't necessarily mean it's going to settle. Hasn't settled yet.
Speaker 2: It's supposed to go to trial on the FTC's motion
Speaker 2: for preliminary injunction on September thirteenth. Armand talk to us
Speaker 2: a little bit about that case. What are the FTC's concerns,
Speaker 2: what is the theory of harm there, and what are
Speaker 2: your thoughts about that theory of harm.
Speaker 3: Okay, so the theory is really hard. It is very rare,
Speaker 3: probably unique, but not so novel. Right, Well, we've seen
Speaker 3: investigations based on a similar theory in the past, and
Speaker 3: we can talk about some past transactions where similar issues
Speaker 3: were explored by the agencies. But in essence, what's happening
Speaker 3: here is Horizon a fantastic company. They have amazing technology
Speaker 3: and they have, in the FDC's viewed, they have two
Speaker 3: assets commercialized in two separate rare diseases, one in gout,
Speaker 3: the other one was I forget which one it was
Speaker 3: exactly yeah, iright, disease, and according to the f d C,
Speaker 3: both have effectively a monopoly position. So this is a
Speaker 3: monopoly position changing hands from Horizon to the buyer and
Speaker 3: this transaction, so why why does that matter? There's already
Speaker 3: a monopoly. According to the f d C, Amgen is
Speaker 3: in a better position to maintain that monopoly and maybe
Speaker 3: leverage that monopoly potentially to other products, maintain the monopoly
Speaker 3: by presumably keeping new competitors for these monopoly assets. I
Speaker 3: call them monopoly. I don't know if that's the case,
Speaker 3: but that's that's effectively. What's what is being alleged, So
Speaker 3: I'll go with that as the worst case scenario for
Speaker 3: the parties and UH and the theory is that Amgen
Speaker 3: is in a better position to keep stiff arm whatever
Speaker 3: competitors for these two products, and that Verizon will not
Speaker 3: be able to do it as effectively as Amgen. So
Speaker 3: it's a monopoly maintenance kind of theory. We we typically
Speaker 3: would call that a conglomerate effect because there is no overlap.
Speaker 3: It's not a referring back to my earlier comments, there
Speaker 3: is no coordinated effects story here. There is no Uni
Speaker 3: ladder effects. The two companies are not competitors. No, there's
Speaker 3: no allegation that there's going to be less competitors in
Speaker 3: the market. So in that sense, it's a conglomerate effect.
Speaker 3: Amgen is just bigger and better at keeping competition at Bay.
Speaker 3: That's the theory. Now we've seen a lot of investigations
Speaker 3: with with such theories. We just haven't seen them actually
Speaker 3: go to go to a courtroom, and for good reason,
Speaker 3: because they typically fail on the facts. You really need
Speaker 3: to have facts line up uniquely to be able to
Speaker 3: allege that and then actually prove it in front of
Speaker 3: an arbiter. A judge or alj what have you, and
Speaker 3: I suspect, look, I haven't seen the record in the case,
Speaker 3: but it's going to be really hard for the FDC
Speaker 3: to prove a case like this.
Speaker 2: Yeah, I agree with that, And I read recently Amgen's
Speaker 2: response to the FTC's motion for preliminary junction, and I
Speaker 2: thought it was actually really strong and well written. Convinced
Speaker 2: me even more that the FTC would have a real
Speaker 2: uphill climb if this ends up going to court. It'll
Speaker 2: be interesting to see whether they settle or not. I
Speaker 2: can't I'm not sure how that will look because Amgen
Speaker 2: has offered a behavioral settlement, in other words, a settlement
Speaker 2: promising to not bundle those two the to horizon drugs
Speaker 2: you just talked about, and the FTC has been pretty
Speaker 2: clear about not wanting to accept that kind of a settlement.
Speaker 2: So I'm not sure what they're talking about right now.
Speaker 2: We know they're having settlement talks, they have said, so
Speaker 2: I don't know if Amgen's going to offer up something
Speaker 2: more than that, But I can't think of anything structural
Speaker 2: that it could offer up. But I would think, at
Speaker 2: least from the FTC's perspective, it might be the sensible
Speaker 2: thing to do, not only because I think they'd have
Speaker 2: a tough time winning, but also because Amgen has also
Speaker 2: made put in as an affirmative defense and put in
Speaker 2: for summary judgment that the FTC structure is unconstitutional, and
Speaker 2: I really doubt the FTC wants to get into that.
Speaker 2: So Mark, but let's just assume we're talking about settling.
Speaker 2: We're talking about they probably we don't think they can
Speaker 2: win in court. But let's just assume, for argument's sake,
Speaker 2: if this went to court on the theory that armand
Speaker 2: just described right, and the FTC did manage to win this.
Speaker 2: Now I say win, I mean, get the preliminary injunction
Speaker 2: go forward before the alj What kind of impact do
Speaker 2: you think that I'll have? Like how how will that
Speaker 2: reverberate amongst.
Speaker 4: That would be a chilling and sort of broad reaching
Speaker 4: scenario to play out. I mean, I think you know,
Speaker 4: for if we think about Amgen specifically for a second,
Speaker 4: I mean, where does that leave them?
Speaker 3: Right?
Speaker 4: I mean, this is a large company, as we've discussed
Speaker 4: that sort of, I think it's fair to say has
Speaker 4: a revenue growth challenge. And that's not a secret. I've
Speaker 4: been writing about that in my research for a couple
Speaker 4: of years. But this is, you know, one of the
Speaker 4: standard ways that a company like Amgen layers on some
Speaker 4: additional revenue growth. So what are they to do then,
Speaker 4: in this sort of scenario where they're not allowed to
Speaker 4: buy a company like Horizon. I mean, Arman just talked
Speaker 4: about the fact that they're buying a couple of of
Speaker 4: monopolies commercial monopolies well from Amgender any other potential acquirers perspective.
Speaker 4: You know, if you take the anti competitive or anti
Speaker 4: trust aspects out of the picture, that's almost exactly what
Speaker 4: they would want to acquire, right. You know, you don't
Speaker 4: want to go out and buy a company that has
Speaker 4: a stable of kind of me too or just incremental
Speaker 4: or you know, bit players in a crowded market necessarily,
Speaker 4: So you know that I'm not sure what amgine would
Speaker 4: do at that point. They would probably have to maybe
Speaker 4: start to think about some a larger number of smaller
Speaker 4: deals that by definition would probably take longer to kind
Speaker 4: of play out in terms of actually translating into revenue.
Speaker 4: And I think you would see much the same sort
Speaker 4: of shift and strategy throughout the industry, and it would
Speaker 4: have significant I think negative or you know, it would
Speaker 4: be a significant sort of headwind for a number of
Speaker 4: sort of emerging smaller biotech companies, which, as we discussed,
Speaker 4: you know, kind of have as a tantalizing part of
Speaker 4: their potential valuation or their potential corporate arc, you know,
Speaker 4: growing into something that is ultimately attractive to suitors. I mean,
Speaker 4: I guess we in this as you're I think suggesting
Speaker 4: unlikely scenario, you know you'd I guess we would have
Speaker 4: to try to figure out how far down the food
Speaker 4: chain sort of this effect would go. I mean, would
Speaker 4: it just be companies like Horizon that already have moultiple
Speaker 4: marketed products or with the FTC sort of make the
Speaker 4: same argument, even if it's a biotech company that just
Speaker 4: has some Phase three, you know, late stage programs. I mean,
Speaker 4: so the farther, you know, the the the more broad
Speaker 4: they were at net would be cast or that shadow
Speaker 4: would sort of fall to earlier and earlier stage biotech companies.
Speaker 4: I mean that would be fairly disastrous I think for
Speaker 4: the for the sector.
Speaker 2: So we have another pending deal visor, Siegen, right which
Speaker 2: they were issued a second request, meaning they got into
Speaker 2: an in depth investigation with the FTC in July, so
Speaker 2: they're kind of at a month into this in depth investigation.
Speaker 2: This was after they gave the FTC a little extra
Speaker 2: time by pulling and refiling their notification of the deal,
Speaker 2: and so I think some people might have gotten a
Speaker 2: little excited when they pulled in refiled, thinking they could
Speaker 2: get it cleared in thirty days, But now they're kind
Speaker 2: of in for the long haul. And I, you know,
Speaker 2: I'm not really sure what I think is going to
Speaker 2: happen in that deal, because before the Amjen Horizon lawsuit,
Speaker 2: when I thought about the FTC bringing some kind of
Speaker 2: a new type of case, a novel case or a
Speaker 2: test case in pharma to try to slow down generally
Speaker 2: just in general pharma consolidation, I kind of thought it
Speaker 2: might be Pheiser Siegen, And now I'm not really so sure.
Speaker 2: Armand if you can talk about it, I know you
Speaker 2: represent clients, but if you can't talk about it, what
Speaker 2: are your thoughts about what you think is going to
Speaker 2: happen there?
Speaker 3: Yeah, that one is a really good question. Jetnif First, So,
Speaker 3: obviously there's been a lot of talking and policy statements
Speaker 3: from agencies across the globe certainly the FDC, but others
Speaker 3: as well, and in quotation marks the troubling state of
Speaker 3: affairs in the pharmaceutical industry, the prevalence of killer acquisitions,
Speaker 3: minimally innovation by leading drug companies, things like that, that
Speaker 3: it's been kind of circulating in the anti trust bar
Speaker 3: for the last couple of years now. As a factual matter,
Speaker 3: I don't necessarily understand where this anst is coming from.
Speaker 3: Obviously there are pharmaceutical companies that have run into problems
Speaker 3: with anti trust law. But but to suggest that there
Speaker 3: is minimal innovation, I think is it's a stretch past.
Speaker 3: I mean, it's been a tremendous source of innovation. It's
Speaker 3: been incredible, the pace with which development has happened, despite
Speaker 3: the regulatory environment, and the and the and and the
Speaker 3: expense and the and thelatory scrutiny that goes with what
Speaker 3: the clinical trial process. Despite that, I see an amazing
Speaker 3: over arching trend, a secular trend in incredible innovation, life
Speaker 3: saving innovation, better quality of life, et cetera, et cetera.
Speaker 3: I could go on and on and how wonderful this
Speaker 3: industry is generally as as a as a general matter
Speaker 3: of course, at the individual level, there are issues, but
Speaker 3: not as it's not necessarily problematic from an overall anti
Speaker 3: trust policy perspective. Now with that background, of course, it
Speaker 3: was a given that this is going to be a
Speaker 3: long protracted investigation. It is the largest transaction since I
Speaker 3: believe that at the Allergan transaction we talked about earlier,
Speaker 3: at forty three billion dollars. This is right in the
Speaker 3: sweet spot of things that the FDC probably should invest
Speaker 3: gate depends based on their track record in the last
Speaker 3: three years. But the lack of any material overlap, especially
Speaker 3: with Pfizer, which has A and Mark would know far
Speaker 3: better than I would relatively targeted on college of portfolio.
Speaker 3: To my recollection, I've done deals on the Indian College
Speaker 3: is spaced across from Pfizer, where I had the pleasure
Speaker 3: of getting somewhat familiar with their portfolio and UH and
Speaker 3: I don't see how this is creating any tangible anti
Speaker 3: trust issue. Putting together an a d C portfolio a
Speaker 3: large one UH into into into the Pfizer platform, I
Speaker 3: don't necessarily see an anti trust issue here unless you
Speaker 3: go into things like those conglomerate effects et cetera, et cetera.
Speaker 3: You know some some more less used theories, but I again,
Speaker 3: on the facts, it's going to be really really hard
Speaker 3: for the agency to uh to to find things to
Speaker 3: complain about here. Uh Aviser doesn't have a bad track
Speaker 3: record in antitrust conduct, which I know the Task Force
Speaker 3: has effectively made a part of our anti trust analysis.
Speaker 3: Now bad actors is now all of a sudden the
Speaker 3: part of the merger analysis. But the visor doesn't really
Speaker 3: suffer from that, neither does Segen. So I would expect
Speaker 3: this to clear and unless there are some facts that
Speaker 3: are not known to the public, right, let let's hope
Speaker 3: that's what happens.
Speaker 2: Yeah, you're your analysis aligns with mine because that's that's
Speaker 2: where I've come out on it too. And you know,
Speaker 2: I was rereading the article that you wrote about a
Speaker 2: year ago and something that jumped down out at me.
Speaker 2: I was actually really surprised. You were talking about the
Speaker 2: Bristol Meyers Script Cell Gene deal and you said the
Speaker 2: FDC investigated whether the transaction would have an impact on
Speaker 2: innovation competition in a broader oncology space, and the staff
Speaker 2: concluded that it was unlikely because the FTC found that
Speaker 2: there were no fewer than seven hundred and eleven companies
Speaker 2: conducting late stage research and development in oncology. Now, I
Speaker 2: know oncology is really.
Speaker 4: Broad, but it's probably eight hundred now, yeah.
Speaker 2: Exactly, And so it would be hard, it would be
Speaker 2: really difficult for me to see how the FTC could
Speaker 2: bring a case based on a theory that actually had
Speaker 2: a good chance in court on this one, right, And
Speaker 2: I know that was a different FTC that came to
Speaker 2: that conclusion for Bristol Myers squip. But still, the facts
Speaker 2: are the facts. So it's an interesting point there, Mark,
Speaker 2: What are you seeing with respect to companies investors with
Speaker 2: respect to this kind of new FTC? Are you seeing concern?
Speaker 2: Are you getting a lot of questions and are you
Speaker 2: at adapting your own analysis in any way?
Speaker 4: Yeah, I think definitely a lot of questions, But I
Speaker 4: I don't know if investors are Maybe they've been reading
Speaker 4: your research on Amgen Horizon, you know, where You've been
Speaker 4: pretty clear that you think it's an uphill battle for
Speaker 4: FTC for example, But I mean it's taken on a
Speaker 4: new level of importance I think for clients of Bloomberg
Speaker 4: and investors, But I don't get the sense that they
Speaker 4: have a sky's falling kind of view. I mean, certainly,
Speaker 4: that negative kind of doomsday scenario that I was just
Speaker 4: walking through, I'm sure is in the back of biopharma investors'
Speaker 4: minds and at the companies. So, you know, I think
Speaker 4: how things unfold with Amgen Horizon will probably and Pfizer Cgen,
Speaker 4: I think will kind of dictate if there really needs
Speaker 4: to be a fundamental shift in how investors think about
Speaker 4: M and A or getting involved in in biotech. I mean,
Speaker 4: you know, I can tell you on the day that
Speaker 4: the Amgen Horizon deal was announced, which I was down
Speaker 4: in New Orleans attending the ASH conference, which is the
Speaker 4: big hematology conference, and I was getting ready to go
Speaker 4: on Bloomberg TV to talk about it, and I was
Speaker 4: getting a lot of inbound investor client questions, but they
Speaker 4: were you know, and maybe it's because even though we've
Speaker 4: been hearing about this new FTC, people are still kind
Speaker 4: of operating in the old mode, which you know, the
Speaker 4: questions were about overlap and possible remedies, you know, the
Speaker 4: things that Armon and you were talking about, kind of
Speaker 4: the pre the twenty nineteen and before mindset. So I
Speaker 4: think investors are still to some extent kind of operating
Speaker 4: in that framework. Maybe that's a bit of optimism or
Speaker 4: a bit of inability to kind of contemplate a new
Speaker 4: harsher reality.
Speaker 2: I think some of that could also be that things
Speaker 2: This new FTC that we're talking about is kind of
Speaker 2: advancing slowly, because I actually made myself a list of
Speaker 2: a lot of deals that were filed, and I probably
Speaker 2: missed some, but I think I got most of them.
Speaker 2: And I looked at from about May of twenty twenty
Speaker 2: two forward because that's when there was a solid democratic
Speaker 2: majority at the FTC with kind of this new approach
Speaker 2: or new mindset. And I have here twelve deals where
Speaker 2: the HSR expired, one that HSR expired fter or a
Speaker 2: pull and refile, one that was investigated but then closed
Speaker 2: without any concessions or remedy, and then just the one
Speaker 2: single lawsuit Amgen Horizon. So it's been kind of up
Speaker 2: until l Amgen Horizon, it would kind of seem like
Speaker 2: business as usual, right. We keep seeing the foreshadowing of
Speaker 2: something different, and that's why I thought it might be
Speaker 2: Advisor Siegen. But because we're waiting for this something different,
Speaker 2: I guess we got it with Amgen horizon, but it
Speaker 2: might be part of why some of the investors are
Speaker 2: just thinking in terms of the old, the traditional analysis
Speaker 2: and kind of status quo armon your advising clients. I mean,
Speaker 2: that's got to be hard right now. I would think
Speaker 2: it would be hard to advise on legal matters. And
Speaker 2: have you changed your approach in the way you're talking
Speaker 2: to clients about these things?
Speaker 3: We certainly have. I mean getting involved early is now
Speaker 3: the key issue. And I say that because it might
Speaker 3: have come across as a constant thing in all of
Speaker 3: my prior comments. Facts really matter, right, I mean, the
Speaker 3: agency is moving in a different kind of theoretical approach,
Speaker 3: but theory can get anybody so far, and the facts
Speaker 3: really matter. And in the in this industry where there
Speaker 3: is so much innovation in different corners of the world
Speaker 3: happening as we speak, getting to know the facts better
Speaker 3: than the next person is really key, and understanding those
Speaker 3: uncertainties on the innovation side, because look, competition and UH
Speaker 3: and oligopoly theory is all about uncertainties and risk and
Speaker 3: how to avoid it, et cetera, et cetera. Right, It's
Speaker 3: that it's that competitive kind of wild animal in the
Speaker 3: in the forest and who's going to eat you kind
Speaker 3: of mentality that that drives anti trust analysis, or should
Speaker 3: drive anti trust analysis. We want that, right, want that
Speaker 3: predator prey kind of mental framework, and this industry is
Speaker 3: full of that. So it's just a matter of lining
Speaker 3: up your facts, uh, to put to put yourself in
Speaker 3: the best position to avoid a second request. That's really
Speaker 3: like the key issue, especially advising companies that are pre
Speaker 3: revenue that that is one of the key issues because
Speaker 3: a second request is not just a second request in
Speaker 3: the sense that you're dealing with an expensive process, but
Speaker 3: it comes with all the other And this is where
Speaker 3: I need to put on my life science's guy hat.
Speaker 3: What do you do during that timeframe? What's going to
Speaker 3: happen to the clinical development? What are what are the
Speaker 3: showers operating covenants going to work?
Speaker 2: Uh?
Speaker 3: What about the material adverse events clauses and the agreements?
Speaker 1: Right?
Speaker 3: What happens if if if you have a serious adverse
Speaker 3: event in one of your clinical trials is not going
Speaker 3: to mean the deal is off? Do you need financing
Speaker 3: during a twelve month FTC investigation? Right? Things like that,
Speaker 3: Getting involved early on and understanding those is really where
Speaker 3: we focus right now. And then we hope for the
Speaker 3: best with the FDC that we avoid the prolonged investigation.
Speaker 3: But really the focus is on helping the clients get
Speaker 3: through the process, not just the second request investigation. I
Speaker 3: think on the facts you develop as much as you can,
Speaker 3: but advising them on how do you deal with the
Speaker 3: rest of the operation and the risks that the buyer
Speaker 3: might walk away for this reason or that reason during
Speaker 3: that process. Those are key issues that we grapple with
Speaker 3: and advise the clients.
Speaker 2: Yeah, so you're looking at it in a much more
Speaker 2: holistic way than I think a standard anti trist lawyer would,
Speaker 2: which you're perfectly suited for that. Having come from sam
Speaker 2: and Meed, I call it Salm and Met because I
Speaker 2: can't remember the new name by the company.
Speaker 3: What was it Biasplice, I think now.
Speaker 2: Biosp former Samamed. When armand started with a Samamed, it
Speaker 2: changed over to Biosplies different places. But yes, okay, So
Speaker 2: just one last question that I'll pose to both of
Speaker 2: you and then we'll kind of wrap up, and that
Speaker 2: is just simply, are you seeing given the threat of
Speaker 2: this aggressive scrutiny, are you seeing slow down like companies
Speaker 2: that might have entered a deal, but have chosen not
Speaker 2: to because they're they're concerned about exactly what you just
Speaker 2: laid out, armand the second request, the aggressive FDC, the
Speaker 2: cost of it, all of those issues. I'll start with Mark,
Speaker 2: Are you seeing talk of less activity?
Speaker 4: Yeah, I mean armand might have more sort of behind
Speaker 4: the scenes insight into this. From my perspective, I don't.
Speaker 4: I can't really point to any either specific instance, I mean,
Speaker 4: whether a company would comment on such a thing or
Speaker 4: not as clear. You know, I think there remains a
Speaker 4: need for large biotech, in large pharma to kind of
Speaker 4: deal with some of their patent cliffs, to put some
Speaker 4: of these large stockpiles of money to use. And then
Speaker 4: of course, you know, we haven't really talked about the
Speaker 4: biotech downturn, but in you know, there's potential value or
Speaker 4: you know, more attractive valuations, at least for some smaller companies.
Speaker 4: But so I think there's still a lot of potential
Speaker 4: for there to be M and A. And actually, if
Speaker 4: you look at the data, I mean we've sort of
Speaker 4: using the terminal as a resource, have been looking at
Speaker 4: biopharma deals maybe that are a billion dollars or greater
Speaker 4: in value, and we're sort of looking at the data
Speaker 4: announcement of the deal and counting as completed deals that
Speaker 4: have been announced but haven't been you know, consummated yet.
Speaker 4: But you know, we're a little over halfway through twenty
Speaker 4: twenty three, and by those metrics, were already at the
Speaker 4: same number of deals as all of last year. And
Speaker 4: we're actually like eighty five billion dollars in deal value
Speaker 4: so far this year versus seventy last year. Now that's
Speaker 4: kind of a low bar because twenty twenty one and
Speaker 4: twenty twenty two were kind of less standout year, certainly
Speaker 4: compared to twenty nineteen. We talked about a vi Allergan
Speaker 4: and Bristol cell Gene. But so you know, I don't
Speaker 4: really see I haven't heard commentary, and I don't really
Speaker 4: see evidence of a of a slowdown. But again, depending
Speaker 4: on how things go with these two more landmark deals
Speaker 4: that we've been discussing, I think that may chart a
Speaker 4: new course from here.
Speaker 2: Sure, what about you, armand do you see any kind
Speaker 2: of chilling effect?
Speaker 3: I think the conventional wisdom based on PERF just anecdotal
Speaker 3: evidence and uh and kind of the rumor mill from
Speaker 3: from some of our investment bank or friends and other
Speaker 3: council boards are a lot more hesitant in looking at deals.
Speaker 3: I think that's the reality, of course on the cell side.
Speaker 3: On on the target side, the options are pretty limited, right.
Speaker 3: The capital markets are still not great. So if you
Speaker 3: need the if you need that, you know, two hundred
Speaker 3: million to go to a phase three development, and then
Speaker 3: you're not going to be able to raise it. You're
Speaker 3: not going to be you're not going to be able
Speaker 3: to do an I p O or you're not going
Speaker 3: to be able to raise the money at the at
Speaker 3: the valuation that you want without giving away the company.
Speaker 3: Your options are limited, right, you need to do M
Speaker 3: and A transactions, So so the numbers are not necessarily
Speaker 3: going down that asked. But I think there's a more
Speaker 3: peer to peer merger of equals then you would otherwise
Speaker 3: see just putting together cash and rationalizing the pipeline of
Speaker 3: two struggling companies. That kind of stuff is happening a
Speaker 3: lot because you can't find a buyer who's gonna take
Speaker 3: the risk on the or you don't want to take
Speaker 3: the risk on the FTC front. And these are not
Speaker 3: necessarily good things. I mean, some of these assets would
Speaker 3: be far better off in the hands of somebody with
Speaker 3: deeper pockets and the expertise. So there's some anecdotal evidence,
Speaker 3: but I agree with Mark that there's still plenty of
Speaker 3: transactions out there and that overall numbers haven't necessarily dipped
Speaker 3: in any meaningful way.
Speaker 2: Well, this has been really really interesting. I think before
Speaker 2: I close up, I just want to give either of
Speaker 2: you an opportunity if you had any other thoughts that
Speaker 2: you weren't able to express any last words, Mark.
Speaker 4: Well, I don't know how profound this is, but I'll
Speaker 4: just point out it doesn't that you know, armand talked
Speaker 4: about Bristol Celgene and the old school remedy of divesting
Speaker 4: o Tesla, which I guess it's irony, but you know
Speaker 4: Amgen bought that right and they and that really, again
Speaker 4: putting my equity analyst hat on, that was an incredibly
Speaker 4: strategically positive move for Amgen because you know, that was
Speaker 4: a marketed product, continues to do reasonably well and really
Speaker 4: kind of served as a patch for Amgen's revenue over
Speaker 4: the past few years. So, you know, I don't know
Speaker 4: what I conclude from that other than the old way
Speaker 4: of having even potentially very large deals go through with
Speaker 4: certain remedies seem to work.
Speaker 3: A mine. Yeah, look, they I'm sure we can do
Speaker 3: a retrospective on a lot of deals and reach very
Speaker 3: similar conclusions. Overall, nobody at the FDC during the Joe
Speaker 3: Simon's years I have any reason to be embarrassed by
Speaker 3: anything they've done. They did a fantastic job and they
Speaker 3: probably cleared the right deals and investigated the right ones,
Speaker 3: so that that was all good. And yeah, there's some
Speaker 3: wisdom and doing things the way they've been done for
Speaker 3: for a long time, there's a there were a lot
Speaker 3: of benefits and and I'm not suggesting that the current
Speaker 3: FDC is necessarily doing something completely different. They're not right.
Speaker 3: I mean, we went through a lot of bass transactions
Speaker 3: where a lot for for many transactions is business as
Speaker 3: usual and and for the benefit of patients and and
Speaker 3: all of us, let's hope it continues that way.
Speaker 2: Yeah, I guess the moral of that story is that
Speaker 2: if it's not broken, don't fix it.
Speaker 3: Right.
Speaker 2: Well, you guys were really great and it was so interesting,
Speaker 2: so thank you so much for joining me on this.
Speaker 2: This has been a lot of fun because it carried
Speaker 2: out further out of antitrust and out of sort of
Speaker 2: just the legal arena into the business area and that
Speaker 2: was great. So that's it for us. Thank you everyone
Speaker 2: for listening to the Votes and Verdicts podcast of Bloomberg Intelligence.
Speaker 2: Please feel free to reach out to Mark or to
Speaker 2: me on the Bloomberg terminal if you'd like with any
Speaker 2: questions or any comments. And everybody have a great day.