While Big Pharmas embarked on a frenzy of acquisitions over recent weeks, Roche’s CEO has explained to Fierce Biotech why the Swiss drugmaker is happy to sit this round out.
M&A reached a fever pitch in March, with the final 12 days of the month resulting in seven acquisitions with a combined headline value of $29 billion. In fact the final day of March not only saw Eli Lilly offer $6.3 billion upfront for sleep-focused Centessa Pharmaceuticals, but also Biogen agreeing to pay $5.6 billion for Apellis Pharmaceuticals and its approved drugs Syfovre and Empaveli.
That’s not to say that Roche has been too timid to buy companies in the recent past. The company made a major obesity play by buying Carmot Therapeutics for $2.7 billion at the end of 2023, and paid $3.5 billion last year for 89bio and its phase-3-stage fatty liver disease candidate.
When asked by Fierce why Roche hadn’t joined in the latest spending spree, CEO Thomas Schinecker explained that one factor is the company’s wariness of getting into debt.
“We have done a number of deals over the last couple of years, and basically with the money that we earned, we more than could finance all the deals directly,” Schinecker told Fierce on a first-quarter earnings call with journalists Thursday morning.
“So we kind of spent everything and reinvested that,” he added. “In a moment where the interest rates are as high as they are, I think it’s also very prudent not to take up that much additional debt.”
Another factor is the fact that—unlike many of its peers—Novartis doesn’t feel the pressure of approaching patent cliffs, the CEO said.
“There are companies that definitely have significant patent cliffs ahead, and they are in a much more urgent situation to do significant deals,” he noted. “If we look at the outlook and the fact that we have almost 19 medicines that could launch by the end of the decade, we don’t see a situation where we’ll ever be in a declining situation, so we can continue our growth momentum in the future.”
Those potential launches include obesity assets like enicepatide, a GLP-1/GIP receptor from the Carmot acquisition, and the Zealand-partnered long-acting amylin analog petrelintide. There’s also the multiple sclerosis therapy fenebrutinib, which will be filed with regulators this year, and the breast cancer drug giredestrant, which has already been sent to the FDA.
The final reason for staying clear of the acquisition stampede is down to value for money, according to Schinecker.
“For us, it’s also very important that we don’t overpay,” the CEO told Fierce. “We want to make sure that we’re very disciplined and … we’ve always been very good at picking up interesting molecules, but at acceptable prices.”
When it comes to the drugs already sitting in Roche’s pipeline, the company revealed this morning that it stopped evaluating englumafusp as a potential treatment for patients with diffuse large B-cell lymphoma. Data from a phase 1b/2 trial suggested that the CD19 and 4-1BB-targeting fusion protein “did not meet our criteria to become a transformative medicine for patients replacing the current and future standard of care,” the pharma told Fierce this morning.
Further back in development, the company also stopped work on an anti-leukocyte trafficking antibody dubbed RG6377 due to tolerability issues related to the skin and joints. Roche had been aiming the asset at inflammatory bowel disease.
Another drug thrown on the scrapheap was alogabat. Roche had been evaluating the drug as a potential treatment for Angelman syndrome, but told Fierce a phase 1 study had suggested the drug was “not able to even partially normalize the EEG beta-band power and fully address the GABAA receptor-related pathophysiology” of patients with this rare neurogenetic disorder.
