The U.S. House Committee on Ways and Means recently held a field hearing in Salt Lake City, UT: “Access to Health Care in America: Unleashing Medical Innovation and Economic Prosperity.” While discussing the many challenges and unique market dynamics that shape life sciences innovation, witnesses – including Kelvyn Cullimore, CEO of PULSE partner BioUtah – emphasized the unique role that mergers and acquisitions (M&A) play in allowing companies of all sizes to advance new treatments and cures to patients.
Key takeaways from the hearing are highlighted below:
M&A is critical to allowing life sciences companies to leverage complementary resources and expertise to bring new medicines to patients more efficiently.
Life sciences companies face unique headwinds and market pressures as they work to bring new treatments and cures to market. Often, companies cannot singlehandedly manage the considerable costs and scientific complexity of research and development, or the complex regulatory environment and logistical challenges of manufacturing and distributing treatments at scale.
Witnesses asserted that M&A is critical to allowing companies to combine the necessary resources, infrastructure and expertise to navigate these pressures, and ultimately develop and deliver new therapies to patients.
“…M&A plays a critical role in bringing new therapies to market. That process is like a relay race, where M&A allows companies to ‘pass the baton’ and leverage complementary expertise, which would otherwise be too costly or duplicative.”
– Kelvyn Cullimore, CEO, BioUtah
M&A has an important “multiplier effect,” helping to spur continuous investment in future treatments and cures and contributing to economic growth in Utah and across the country.
Citing for example the acquisition of Utah-based Tolero Pharmaceuticals by Sumitomo Pharma, Cullimore described the critical role that M&A plays in allowing investors in early-stage life sciences companies to recoup their initial investments and continuously support future breakthroughs.
Beyond connecting Tolero’s promising cancer treatment with the global resources and infrastructure needed to bring it to patients, the company’s acquisition also allowed David Bearss, the company’s founder and lifelong researcher and entrepreneur, to repurpose his initial investment to start Halia Therapeutics – his sixth life sciences company. Halia has continued Bearss’ long history of innovation and is now on the forefront of companies pursuing new approaches to treat inflammatory and neurological conditions, such as Alzheimer’s and Parkinson’s disease.
“Tolero, founded in Lehi, Utah, developed a technology to address solid tumor cancers. The technology was acquired by Sumitomo Pharma, a large pharmaceutical developer, which enabled the product to be further developed and commercialized. An important side benefit is that the principals of Tolero were able to utilize the proceeds from the sale to seed and incubate many other new companies. The multiplier effect of M&A activity should not be overlooked.”
– Kelvyn Cullimore, CEO, BioUtah
The FTC and DOJ’s recent shift toward more aggressive merger enforcement threatens to chill pro-innovation M&A intended to bring new medicines to patients.
The FTC and DOJ’s recent approach to M&A disregards decades of balanced and bipartisan competition policies in favor of aggressive attempts to broadly deter more mergers, including the many pro-innovation deals on which the U.S. life sciences ecosystem depends.
The Agencies’ 2023 Merger Guidelines and proposed changes to the Hart-Scott-Rodino premerger notification rule ignore the unique market realities in the life sciences industry, and risk upsetting an already high-pressure innovation ecosystem, preventing promising therapies from ever advancing beyond the lab.
“Most new drugs are developed by small companies, but they aren’t marketed by small companies. Typically, the company is bought – or the drug is bought – by a large company. That M&A activity is critical to then getting the medication to patients. And some of the steps by the FTC, in particular, against mergers and acquisitions is really actually going to inhibit R&D and the ability for us to deliver new drugs to patients.”
– Frank Wantanabe, President and CEO, Arcutis Biotherapeutics
It is critical that policymakers recognize the unique importance of M&A and avoid placing an undue burden on companies working to bring new therapies to patients. Therefore, as witnesses emphasized throughout the hearing, policymakers at the FTC and DOJ must return to a balanced and bipartisan approach to life sciences MA& enforcement.