Dealmaking across biopharma is shifting dramatically as the SEC rolls out new regulations to ease burdens on newly public companies and antitrust review is replaced by drug pricing as the policy concern du jour.
It doesn’t exactly roll off the tongue: Make IPOs Great Again, MIPOGA? Several panelists at the BIO International Convention took a shot at pronouncing the new acronym coined by SEC Chairman Paul Atkins. But while the acronym is difficult, the initiative should ease antitrust review of biotech IPO transactions.
Rolled out on May 19, MIOGA is a pair of rulemakings that ease disclosure requirements and speed the process of filing for a registered offering.
Sam Zucker, a partner at Goodwin’s Life Sciences group, said the rules essentially make it easier to become a public company. This doesn’t exactly impact the IPO process, but rather the company’s first year on the market, with provisions extending for its first five years.
That period is make-or-break for companies. In biotech, much attention is paid to how the stock performs in the aftermath of the stock beginning to trade. Anything that eases that period is welcome.
The new initiative “perhaps makes IPOs more attractive to companies that are otherwise hesitant to embrace the transaction costs of being a public company,” Zucker said.
But that is actually a rarity in biotech, he quipped. Many companies are eager to cross over to the public markets even before the clinical data would suggest they are ready. “We haven’t seen a lot of that self-restraint,” Zucker said.
The SEC is also considering making changes to the so-called “gun-jumping rules,” which limit what a company can say about their intentions to go public. While they aim to make the public markets more fair, Zucker said the rules are “kind of a minefield for companies.” Reforms could come later this year.
“This general approach towards simplifying rules is something that … issuers view it as making it easier to get through the SEC,” Zucker continued.
Impacting IPO reviews, however, is a staffing shortage at the SEC, he noted. While the process may be easier, sometimes it can take longer for the paperwork to come back.
“The crispness of the story” has been a major issue that Doreen Levine, a partner at EY’s Financial Accounting and Advisory Services group, has had to work through with biotechs filing for IPOs. She cautioned companies against “throw[ing] everything under the kitchen sink” into SEC disclosures to ensure the comment period goes smoothly. The agency has been clear about what should and shouldn’t be included in terms of company performance disclosures.
The FTC too
IPOs are not the only type of dealmaking that appear to have an easier regulatory path under the current administration. Mergers and acquisitions are also benefitting from a more hands-off Federal Trade Commission, according to Casarine Chong, general counsel for R&D and business development at CSL.
That was evident in Monday’s announcement that AbbVie would buy Apogee Therapeutics for $10.9 billion, according to Chong. She remembered when AbbVie bought Allergan for $63 billion and the FTC required the divestiture of one of their IL-23 assets, since both companies had them.
That deal, announced in June 2019, took almost a full year to complete as the FTC intervened on the grounds that AbbVie would seize a monopoly with the two assets in hand. Brazikumab was being developed by Allergan as part of a licensing agreement. AstraZeneca took it back and ultimately discontinued the program in 2023.
AbbVie’s IL-23 inhibitor became Skyrizi, which has emerged as a key pillar of the company’s post-Humira plan.
Bristol Myers Squibb also faced a tough time closing the massive $74 billion acquisition of Celgene in 2019.
“For the last several years, a lot of talk was around closing certainty and the antitrust landscape, and how fraught it had become,” Chong said. “I think the recently announced AbbVie deal shows that maybe that’s less of a risk now.”
Apogee’s zumilokibart—also an IL-23 blocker—is at the heart of AbbVie’s latest transaction.
“Apparently they feel very comfortable in announcing the acquisition today, and it’s not a multi-asset acquisition,” Chong said. “Essentially, they are making that deal for the IL-23. They must sense that the antitrust landscape is such that that risk is really no longer a driver in terms of deal certainty.”
While antitrust review is apparently no longer a concern, policy or regulatory risk has not fully abated. Chong said now biotech and pharma dealmakers alike are contending with the unknowns and potential risks of the Most Favored Nation drug pricing policy.
