Darwin's Our Take: The uptick in Big Pharma M&A activity continues

An analysis by McKinsey & Co. found “renewed optimism and a sharper strategic outlook for dealmaking in the life sciences industry” this year, the management consulting firm wrote in an article in mid-February.

“Leaders’ confidence in M&A is returning,” the company said, noting that “strong balance sheets and increasing urgency to augment pipelines” were the driving forces behind the change.

McKinsey’s analysis appears to be on target, given that a substantial number of billion-dollar-plus acquisitions have already been announced this year. These are among the latest:

Eli Lilly announced the largest acquisition agreement of the lot with its plans to acquire Centessa Pharmaceuticals, a U.K.-based company developing orexin receptor 2 agonists, for $6.3 billion up front. Lilly could also pay approximately $1.5 billion more in milestone payments.

By acquiring Centessa, Lilly will strengthen its neuroscience portfolio. Centessa’s lead investigational candidate, cleminorexton, is a once-daily oral therapy in Phase IIa development as a treatment for the two main types of narcolepsy and idiopathic hypersomnia.  

Other Big Pharma companies are also developing orexin agonists for sleep disorders. Takeda’s oveporexton, for example, is under review by the FDA for narcolepsy. Alkermes’ alixorexton is set to enter Phase III clinical trials for the same conditions as cleminorexton. Eisai is preparing to initiate a Phase II study of E2086 in narcolepsy.  

Centessa’s pipeline includes two more orexin agonists: ORX142, which is in early clinical development for neurological and neurodegenerative disorders, and ORX489, which is in preclinical development for neuropsychiatric disorders.

The definitive agreement between Lilly and Centessa calls for Lilly to pay $38 in cash for each share of Centessa stock. Centessa shareholders could also receive as much as an additional $9 per share via a contingent value right (CVR), depending on the progress of Centessa’s drugs.

Both companies’ boards have approved the transaction. If Centessa shareholders and regulatory officials also approve it and other customary closing conditions are met, Lilly and Centessa expect to finalize the acquisition in the third quarter.

Separately, Lilly entered into an AI-driven drug discovery collaboration with Insilico Medicine, an international biotech with headquarters in Cambridge, Mass. Along with an upfront payment of $115 million, the agreement includes potential milestone payments that could bring the total value of the deal to approximately $2.75 billion.

The agreement builds on two earlier transactions between Lilly and Insilico — an AI software licensing deal signed three years ago and a $100 million AI-based research and development partnership established in November.

Insilico’s therapeutic pipeline consists of about two dozen investigational therapies being developed for a range of health conditions, including fibrosis, oncology, immunology, pain, and obesity and metabolic disorders.  

With this latest agreement, Lilly gains an exclusive worldwide license to develop and commercialize select preclinical therapies in Insilico’s portfolio for certain indications. The two companies will also collaborate on multiple R&D programs focused on targets of Lilly’s choice.

Biogen also entered into a multibillion-dollar agreement, agreeing to acquire Waltham, Mass.-based Apellis Pharmaceuticals for $5.6 billion in cash.

Apellis has two FDA-approved immune system-regulating products, Syfovre (pegcetacoplan injection), a treatment for geographic atrophy (an advanced form of dry age-related macular degeneration), and Empaveli (pegcetacoplan), indicated for two rare diseases that affect the kidneys and for paroxysmal nocturnal hemoglobinuria, a rare blood disorder. Together, the two products generated sales of $689 million last year, according to the news release.

Several preclinical candidates round out Apellis’ portfolio, including RNA therapies being evaluated for undisclosed neurological conditions.

The acquisition will bolster Biogen’s foray into the area of nephrology, which began when the biotech acquired Human Immunology Biosciences in 2024 for $1.15 billion. Biogen’s most advanced candidate from the HI-Bio acquisition is felzartamab, an investigational therapy in Phase III clinical trials for three kidney diseases.

If the acquisition is completed, Apellis shareholders will receive $41 per share in cash plus a CVR worth up to another $4 per share if global net sales of Syfovre reach certain thresholds within the next several years.  

The boards of both companies approved the acquisition, which is subject to the usual closing conditions, including regulatory approvals. The deal is expected to close in the second quarter.

Merck’s new R&D collaboration with Alameda, Calif.-based Infinimmune could be worth as much as $838 million in upfront and milestone payments to the startup, which has a “human-first” antibody discovery platform called Anthrobody.

According to the announcement, the platform “enables the screening of millions of single memory B cells across hundreds of potential targets.”

Wyatt McDonnell, Infinimmune’s co-founder and CEO, said, “By discovering antibodies directly from human immune systems and combining that biology with advanced AI-driven engineering, we can uncover therapeutic opportunities that traditional discovery approaches may not access. This collaboration allows us to scale our human-first discovery engine and accelerate the development of differentiated biologics.”

The agreement gives Merck the exclusive right to develop and commercialize antibody candidates the collaboration yields. The companies did not disclose how much Merck would pay Infinimmune up front.

Otsuka Pharmaceuticals struck a deal to acquire Transcend Therapeutics, a neuroscience-focused company based in New York City, for $700 million up front and as much as an additional $525 million if certain sales milestones are achieved.

Transcend’s lead asset, a non-hallucinogenic MDMA analog referred to as TSND-201, is an investigational neuroplastogen in clinical development as a rapid-acting and durable treatment for post-traumatic stress disorder and other central nervous system indications.

Favorable results from a Phase II clinical trial of TSND-201 in patients with PTSD were published in February in JAMA Psychiatry, Otsuka noted in a news release. Recruitment for a Phase III trial is underway.

If the usual closing conditions are fulfilled, Otsuka anticipates completing the acquisition in the current quarter.

Novartis announced an acquisition as well — one that could bring the Swiss pharma a successor to Xolair (omalizumab), the blockbuster anti-inflammatory biologic Novartis and Roche’s Genentech co-market for allergic asthma, food allergies, chronic hives, and chronic rhinosinusitis with nasal polyps.

Excellergy, a biotech headquartered in Palo Alto, Calif., that just officially launched in 2025, announced that Novartis has agreed to acquire the company in a deal worth up to $2 billion in upfront and milestone payments.

The acquisition will give Novartis access to Excellergy’s portfolio of effector cell response inhibitors, including Exl-111, which targets immunoglobulin E, or IgE.  Excellergy just began evaluating Exl-111 in humans in February.

If customary closing conditions are satisfied, Novartis expects to finalize the transaction in the second half of this year.

Recordati is considering an acquisition offer that would take the 100-year-old, Milan-based drug company private.

CVC Capital Partners, a private equity and investment advisory firm with headquarters in Luxembourg, owns a 51.8% controlling stake in Recordati. The firm has offered 52 euros, or approximately $60, per share for the remaining stake. That amounts to about $12.6 billion.

Recordati said in a press release that it had not yet reviewed the offer “within its corporate bodies,” and noted that CVC Capital’s indication of interest is “non-binding and subject to multiple conditions.”

HCR # 203: Integrated Pediatric Care, with Danish Quereshi

Pediatric care is one of the most fragmented and underfunded corners of the American health system. Parents are left as de facto care coordinators, specialists work in silos, and children with complex needs fall through the cracks. What would it look like to actually fix that? Danish Qureshi, Founder and CEO, Zarminali Pediatrics, joins John to discuss the personal experience that sparked a new model for pediatric care, and what it takes to build an integrated multi-specialty practice designed around children and families. Watch here or listen on your favorite podcast platform.

What else you need to know

Eli Lilly’s orforglipron, an oral GLP-1 receptor agonist, received FDA approval as a treatment for weight loss and maintenance in adults with a weight-related comorbidity in addition to obesity or overweight. The drug, to be marketed as Foundayo, is a once-daily tablet that can be taken any time of day, with or without food or water. The initial dose of 0.8 mg can be gradually titrated to a dose as high as 17.2 mg, according to the company’s press release.

Lilly began accepting prescriptions immediately and said it would start shipping Foundayo on April 6, with broad availability through retail pharmacies and telehealth providers soon to follow. The cost of the starting dose for patients using LillyDirect could be as low as $25 per month for those with commercial insurance and $149 per month for those who self-pay. Lilly has set the list price for higher doses of Foundayo at $649 per month, Fierce Pharma reported.

The approval of Foundayo comes about three months after Novo Nordisk’s oral version of Wegovy (semaglutide) received FDA approval. While Novo Nordisk offers both injectable and oral formulations of Wegovy, Lilly’s Zepbound (tirzepatide), the predominant rival to Wegovy up until now, is available only in injectable formulations and targets a different GLP-1 than Foundayo does. Because oral Wegovy is a peptide, it should be taken in the morning 30 minutes before eating or drinking. Foundayo, a small molecule drug, has no such restrictions.

William Blair analysts said this advantage could “blunt” the strong demand for oral Wegovy since it was launched early this year. However, the analysts believe injectable weight-loss drugs will likely retain an estimated 80% share of the U.S. market “due to the high potency of injectables coupled with” a higher body mass index in the U.S. population. The efficacy of Foundayo and oral Wegovy has not been evaluated comparatively in a head-to-head clinical trial.  

Meanwhile, Novo Nordisk launched a Wegovy subscription program for eligible self-pay patients who enroll in the program through select telehealth providers. Currently, patients can enroll in the program through Ro, WeightWatchers, and LifeMD. Hims & Hers, Sesame, and other providers will follow soon, according to the announcement. Novo Nordisk said patients will be able to save as much as $600 per year on the Wegovy pill and up to $1,200 on injectable Wegovy with a 12-month subscription. Other options are 3-month and 6-month subscriptions.

In separate news, the FDA approved Novo Nordisk’s Awiqli (insulin icodec-abae) for adults with type 2 diabetes, making it the first once-weekly basal insulin to be approved in the U.S.; other basal insulins are injected daily. Like other types of insulin, Awiqli is indicated as an adjunct to diet and exercise to improve glycemic control. Novo Nordisk said Awiqli would be available “in the coming months.”  

Almost half of U.S. hospital markets were controlled by one or two health systems in 2024, a report by KFF indicates. The analysis, which was based on RAND Hospital Data and survey data from the American Hospital Association, used metropolitan statistical areas (MSAs) as a proxy for hospital markets. Results showed that one or two health systems controlled the entire market for inpatient hospital care in 47% of MSAs. Further, in 83% of MSAs, one or two health systems controlled more than 75% of the market. A single health system controlled at least half the market in 76% of MSAs and at least a quarter of the market in 98% of MSAs.

Based on thresholds used in current antitrust guidelines, 97% of MSAs had highly concentrated markets for inpatient hospital care, according to the report. Between 2015 and 2024, 80% of MSAs either experienced an increase in hospital market concentration or were controlled by a single hospital or health system during the entire period. While consolidation may allow providers to operate more efficiently and help struggling providers stay open in underserved areas, it often reduces competition, the authors of the report noted.

A total of 131 hospitals in 16 states are suing the Department of Health and Human Services over a rule HHS issued in 2023, which they say underpays disproportionate share hospitals. The plaintiffs claim HHS tried in the 2023 rule to readopt a policy change originally set forth in a final rule issued in 2004. The policy attempted to retroactively change how HHS calculated patients with Medicare Advantage plans into the DSH payment formula. Although the 2004 rule was eventually vacated, HHS proposed a similar rule in 2013, leading to additional legal challenges. Plaintiffs in the current case want the court to reject the 2023 rule and require that HHS recalculate their DSH payments using pre-2004 methodology.  

What we’re reading

Changes in Clinician Time Expenditure and Visit Quality With Adoption of Artificial Intelligence-Powered Scribes. JAMA, 4.1.26 and Ambient AI Scribes and the Quintuple Aim: What Is Counted — and What Matters. JAMA, 4.1.26 (subscription or registration required)

A Payer Solution to Improve Access to Quality Behavioral Health Care. NEJM Catalyst, 3.18.26 (abstract available, subscription required for full article)