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R&D return on pharma investment picks up for the first time in six years

In 2020, projected returns on investment in research and development (R&D) for a combined cohort of 15 global pharmaceutical companies was 2.5 per cent, 0.9 percentage points higher than in 2019. This is the first sign of a reversal in the declining trend seen over the past seven years, according to research by Deloitte’s Centre for Health Solutions.

The range in performance between the top performing and bottom performing companies has narrowed, however, with all but one company having an internal rate of return (IRR) below the industry weighted average cost of capital. (The weighted average cost of capital is acknowledged by most industries as the most common discounted cash flow method to derive enterprise value.)

In 2020, the cohort saw an increase in average forecast peak sales per pipeline asset (the amount of money a drug is expected to generate annually) to $421 million, from $357 million in 2019. However, the average cost to develop an asset (bring a drug to market) increased once more to $2,442 million, up $51 million compared to 2019 and a $1,115 million increase since 2013.

The increase in costs per asset is due mainly to a fall in the overall number of assets in late stage pipelines (the final stage of R&D before a drug is launched to market) which decreased from 213 in 2019 to 207 in 2020. Between 1 May 2019 and 30 April 2020, the cohort had a total of 53 assets approved, an increase from 39 in 2019.

Deloitte also commissioned analysis measuring the impact of the COVID-19 pandemic on clinical trials to investigate the likely impact on future year returns. The analysis revealed that between March and November 2020, the pandemic affected an estimated 1,210 trials across the industry. The vast majority of these (66 per cent) had delayed starts or completions; and eight per cent were terminated (permanently stopped) or withdrawn (stopped before enrolling any patients).

Colin Terry, Consulting Partner for European Life Sciences R&D at Deloitte, commented: “We are finally seeing seeds of change in the projected R&D productivity given recent progress of some novel trial designs and improvements in efficiency through the digitalisation of drug discovery and development. However, adoption continues to be experimental and not at scale across the industry, although accelerated by the COVID-19 pandemic across all stakeholders and regulators. The ‘need for speed’ has become all-encompassing alongside the realisation that development cycle times need to be reduced and new ways of working embraced to finally see the industry break the trends of the last decade.”

Neil Lesser, Principal, US Life Sciences R&D Leader at Deloitte added: “While the uptick in performance is encouraging, sustaining it will require companies to continue investing in approaches that led to this positive direction. These include expanding investments in digital technologies and data science approaches, as well as increasing the use of transformative development models. The industry’s response to the COVID-19 pandemic proved that biopharma innovation can be speeded up through creative approaches to drug development – only time will tell if this progress becomes a permanent legacy.”

Eversheds Sutherland advises Noble Systems on merger

Eversheds Sutherland is pleased to announce that it represented client Noble Systems, a global leader in omnichannel contact centre technology solutions, in a merger with enterprise contact solutions provider Aspect Software, a portfolio company of Vector Capital. The companies will form Alvaria™, a new global company delivering optimised customer experience and workforce engagement software and cloud services technology solutions.

Abry Partners, a Boston-based private equity firm, spearheaded the merger and is now the majority owner of the combined company. Vector Capital, owner of Aspect, will continue as minority equity holder. The total value of the combined transaction is over $1 billion.

Corporate Partner Michael J. Voynich led the Eversheds Sutherland team, which included Partners Michael A. Hepburn, Mark D. Herlach, M. Hill Jeffries, Wes Sheumaker, Jeremy D. Spier, Counsel Jessica A. Rissmiller, Rebecca A. Gelfand, and Associates Amy Chen, Caitlyn G. Naylor, Ellen Roberts, and Laura A. Taylor.

About Eversheds Sutherland’s Corporate Practice

With more than 700 attorneys worldwide, Eversheds Sutherland’s global mergers and acquisitions team provides pragmatic advice and comprehensive support that enables clients to evaluate, structure and complete transactions across a broad spectrum of industries.

The team combines decades of experience with in-depth knowledge of local and cross-border practices. Wherever the transaction is led from, we provide a seamless and integrated worldwide service.

Our attorneys are well versed in the unique requirements of mergers, tender offers, stock and asset acquisitions, corporate restructurings, spin-offs, recapitalisations and other deal structures. We negotiate and establish alliances, joint ventures and other partnering relationships. In addition, we develop innovative approaches to implement other tailored commercial relationships.

Our global M&A team advises clients across a broad range of sectors including financial services, insurance, payment systems, technology, communications, energy, industrials, consumer products, professional services, health care and eCommerce. We understand regulatory frameworks and the impact on transactions of the key issues that affect your business. This in-depth sector knowledge allows us to add real value to the M&A process.

Duane Morris Named a South Florida Top Workplace

Duane Morris LLP has been named a 2021 Top Workplace in South Florida by the South Florida Sun Sentinel. The Top Workplaces list is based on an employee survey administered by Energage. The firm’s Boca Raton and Miami offices participated in the survey.

Duane Morris is ranked in the Top Small Workplaces category. For more information, visit the Top Workplaces website.

About Duane Morris

Duane Morris LLP provides innovative solutions to today’s multifaceted legal and business challenges through the collegial and collaborative culture of its more than 800 attorneys in offices across the United States and internationally. The firm represents a broad array of clients, spanning all major practices and industries.

Baker McKenzie Continues to Grow California Transactional Practice

Global law firm Baker McKenzie announced today that Aarthi Belani has joined the Transactional practice as a partner in the Firm’s Palo Alto office, bringing experience advising technology and life sciences companies on M&A and venture capital transactions. Aarthi joins the Firm from Jones Day, where she was a partner.

Aarthi represents strategic acquirers, especially in cross-border deals, emerging growth technology companies, venture capital funds, and corporate venture capital. She has also represented the sell-side and advised on digital health, financial services, and impact investment deals. Recent major transactions she has worked on include representing Uniphore Technologies in its Series D fundraising, acquisitions for Five9, a provider of cloud contact-centre solutions, AbbVie in its acquisition of Mavupharma, SAP in its $8 billion acquisition of Qualtrics, and Oclaro in its $1.8 billion sale to Lumentum.

Previously, Aarthi was on the in-house strategy M&A legal team at Credit Suisse in New York, where she was also a member of the Sustainability Network, a Credit Suisse OneBank (cross-divisional) initiative to develop impact investment products. She started her legal career at Cleary Gottlieb Steen & Hamilton in New York, where she worked on complex strategic M&A, especially cross-border M&A. In 2018, she was recognised as a “40 Under 40” honouree by the Silicon Valley Business Journal.

“The addition of Aarthi to our California Transactional Team demonstrates our commitment to building a destination practice for technology M&A. Aarthi is well-known as a trusted business adviser to leading Silicon Valley companies and is sought after for her deal-making advice, particularly for cross-border transactions,” said Leif King, head of Baker McKenzie’s California Transactional practice.

“Aarthi is another excellent addition to our growing California team, bringing outstanding credentials and advising on transformative deals in Silicon Valley. Since Leif King joined us in 2019, we’ve added 11 market-leading transactional lawyers, and we are delighted to add Aarthi to the team,” said Colin Murray, Baker McKenzie’s North America chief executive officer. “Not only is Aarthi a star M&A practitioner, she also brings a commitment to furthering diversity and inclusion efforts in the industry — which is core to our Firm’s strategy and a key objective for us in North America.”

She is a mentor for the Unreasonable Group (a program for entrepreneurs) and a Leadership Committee member of How Women Lead, which is part of the campaign to increase the representation of women on corporate boards.

Our California M&A team has advised on some of the largest and most complex transactions in Silicon Valley, helping clients seize opportunities, mitigate risk, make judgment calls and achieve their goals. With locally trained lawyers around the globe, we serve as a “one-stop shop” for acquisitions, providing a consistent approach and quality, supported by in-depth local knowledge and a global perspective.

“I’m excited to join the Baker McKenzie team. I look forward to working with my new colleagues as we build something enduring here,” Aarthi said.

Aarthi received her LL.M. and J.D. from New York University and her B.A. from Stanford University.

Kirkland Counsels Extraction Oil & Gas in $2.6 Billion Merger of Equals

Kirkland & Ellis counselled Extraction Oil & Gas, Inc. (Nasdaq: XOG) on its all-stock merger of equals with Bonanza Creek Energy, Inc. (NYSE: BCEI). The combined company, to be named Civitas Resources, Inc., will be the largest pure-play energy producer in Colorado’s Denver-Julesburg Basin, with an aggregate enterprise value of approximately $2.6 billion.

The Kirkland team was led by corporate partners Doug Bacon and Alex Rose and associates Camille Walker and Brittany Scheier; capital markets partners Julian Seiguer and Bryan Flannery; asset partners Anthony Speier and Chris Heasley and associate Alia Heintz; and tax partner Mark Dundon and associates Joe Tobias and Courtney Loyack.

Read Extraction’s press release here

Eversheds Sutherland advises Cox Communications on acquisition

Eversheds Sutherland is pleased to announce that it represented client Cox Communications, the largest private telecom company in America, in entering into a definitive agreement to acquire Charlotte-based Segra, one of the largest privately held fibre infrastructure providers in the United States.

Under the terms, Cox will acquire Segra’s commercial services segment, which is a leading super-regional, fibre-based provider serving commercial enterprise and carrier customers in nine states in the Mid-Atlantic and Southeast. The company’s dense metropolitan fibre network provides enhanced technology solutions and a commitment to a superior customer experience.

As part of the transaction, EQT Infrastructure will retain ownership of Segra’s fiber-to-the-premise (FTTP) residential and small- to medium-sized business segment in Virginia and North Carolina and accelerate the plan to expand broadband services to neighbourhoods and markets throughout their regions. The transaction is subject to customary regulatory approvals and closing conditions.

Corporate Partners David S. Phillips and Matthew Block led the Eversheds Sutherland team, which included Partners Michael A. Hepburn, M. Hill Jeffries, Taylor Kiessig, Meredith O’Leary, Jeremy D. Spier, Kristina Kopf Thomas, Counsel Aaron Moody, Staff Attorney Bonnie R. Burke, and Associates Robert R. Christoffel, Kristin W. Cleare, Jazmen B. Howard, Caitlin G. Naylor, Mary Kate Nicholson, William D. Ponder, Alexander F. L. Sand, and Laura A. Taylor.

About Eversheds Sutherland’s Corporate Practice

With more than 700 attorneys worldwide, Eversheds Sutherland’s global mergers and acquisitions team provides pragmatic advice and comprehensive support that enables clients to evaluate, structure and complete transactions across a broad spectrum of industries.

The team combines decades of experience with in-depth knowledge of local and cross-border practices. Wherever the transaction is led from, we provide a seamless and integrated worldwide service.

Our attorneys are well versed in the unique requirements of mergers, tender offers, stock and asset acquisitions, corporate restructurings, spin-offs, recapitalisations and other deal structures. We negotiate and establish alliances, joint ventures and other partnering relationships. In addition, we develop innovative approaches to implement other tailored commercial relationships.

Our global M&A team advises clients across a broad range of sectors including financial services, insurance, payment systems, technology, communications, energy, industrials, consumer products, professional services, health care and eCommerce. We understand regulatory frameworks and the impact on transactions of the key issues that affect your business. This in-depth sector knowledge allows us to add real value to the M&A process.