Bayer AG is considering doing deals in the range of €1 billion to €5 billion ($1.1 billion to $5.5 billion) as the drugmaker seeks to rebuild its pipeline of new medicines.
Top drugs are losing exclusivity and a promising experimental candidate recently failed. But Bayer’s pharma head, Stefan Oelrich, said Monday that the company has built up a portfolio of earlier-stage assets that show a lot of promise, and he’s also open to licensing deals for existing drugs.
“If we buy new things, there are ways to create some space in terms of capital allocation,” Oelrich said in an interview at the JPMorgan Healthcare Conference in San Francisco. “But before, we need to identify the right opportunity.”
In recent years, Bayer relied heavily on blockbuster medicines Xarelto, a blood thinner, and Eylea, an eye treatment. Now, both of those medicines will lose patent protection in coming years, hurting their sales amid fresh competition.
The stock rose as much as 0.8% Tuesday morning in Frankfurt. The shares lost almost a third of their value last year.
Making matters worse, Bayer had a huge setback in November when it stopped a late-stage trial for much-hyped anti-thrombotic medicine asundexian because of poor efficacy. Bayer had long hoped that the therapy would drive its future growth, projecting last January that it could reach peak sales of more than €5 billion. Now, it’s unclear if asundexian will ever generate revenue.
Bayer’s new CEO, Bill Anderson, has his hands full. He’s conducting a strategic review and plans to announce his findings in early March. He’s considering breaking up the conglomerate model — potentially splitting off either the consumer health business or the crop science arm. Anderson has ruled out a three-way split all at once, however, showing that pharma will continue to be core in Bayer’s future business model.
Anderson is trying to forge a new path for Bayer after the conglomerate spent $63 billion in 2018 on agriculture company Monsanto, a move that angered many investors and brought billions of dollars of legal trouble tied to Monsanto’s products. Bayer’s shares are down more than 60% since that deal closed, wiping out over €50 billion in market value.
Burdened with debt and legal liabilities from the Monsanto deal, Bayer has lacked the finances that some of its pharma peers have had to invest in new medicines to shore up its mid- and late-stage pipeline.
Yet, Bayer is already benefiting from newly launched drugs like prostate cancer medicine Nubeqa and kidney therapy Kerendia. On Monday, it reported positive late-stage trial results for elinzanetant, a non-hormonal therapy for menopause symptoms that Bayer says could exceed $1 billion in annual sales.
Oelrich has also steadily built up a network of cell and gene therapy development through a series of small- and mid-sized deals, mostly in the US. Those efforts are starting to show promise in clinical trials, with Bayer planning to start mid-stage studies in coming months for both a gene therapy and a cell therapy targeting Parkinson’s disease.
Oelrich has said that he hopes Bayer can bring its first cell or gene therapies to market by the end of this decade. Anderson has praised that approach, stressing that the job of pharma executives is to promote promising therapies that probably won’t make it to market for perhaps a decade. That’s exactly what Bayer failed to do in the middle of last decade, yet something that — if some of Bayer’s cell and gene therapies succeed — could put the German company back into the mix of major pharma players in the 2030s.
