Investment Banking Spotlight: Jazz Pharmaceuticals to Acquire GW Pharmaceuticals
Jazz Pharmaceuticals recently announced that it will acquire Cannabis-based drugmaker GW Pharma for $7.2 billion to bolster its neuroscience portfolio and add the blockbuster cannabidiol medicine, Epidiolex. We think the deal is relevant for the space moving forward. Here’s why.
From emerging, small-cap biotech to public company powerhouse, Jazz has built an impressive portfolio, encompassing urgent needs in oncology, hematology, and sleep. Their pipeline is robust at every stage and unique from the classic biotech trajectory that develops a pipeline based on specific biologic pathways. Instead, Jazz built its portfolio by looking for clinical needs and finding pharmaceutical solutions to meet them—an approach we still believe leads to the latter stages of sustainable growth and success in our biopharma sector.
Even though their model does not fit the classic receptor hypothesis of pharmaceutical development, GW set their strategy and harnessed the potential.
However, given Cannabinoids work with a pleiotropic response, they pose simultaneously myriad manufacturing and regulatory challenges along the way to success.
In the past, Back Bay’s strategy consulting group has extensively supported GW Pharmaceuticals in various strategic and analytic capacities. Our strategy and deal teams note with admiration that GW is tackling an area fraught with potential difficulty and enormous upside.
As the maker of the first drug derived from the cannabis plant, Sativex for pain and multiple sclerosis (MS), with the highly touted follow-on, Epidiolex to treat rare forms of epilepsy (See our white paper: A Rare-Disease Approach to Seizure Treatment). Their unique cannabinoid product platform addresses a broad range of diseases, preparing them to ride out the next M&A boom, including:
Deep commitment to the underlying science behind cannabinoid drug development
Aggregated crop growth and harvesting
Isolation and refinement of efficacious substances
Differentiated development
Regulatory discipline
Increasing clinical knowledge of their class of drugs and the physiological responses to them through myriad company and investigator-led trials.
Taken together, GW has led the way in the clinical application of cannabinoid products and produced a robust portfolio addressing critical, underserved areas of disease and continuing to progress development in these promising areas.
What this means for future biotech M&A
This deal surprised many, but we were delighted to see the framework of good deal-making persevere:
Developed a unique platform
Articulated target company vision with strong execution
Focused on areas of high unmet need.
The addition of GW’s portfolio creates more depth for Jazz within neuroscience with the potential to expand in both epilepsy and spasticity while providing earlier stage opportunities in large, neuro-psych indications across a broad class of cannabinoid compounds. We are following this with great interest.
While Back Bay’s investment banking team frequently shepherds biotech acquisitions based on product refinement and platform potential, the Jazz-GW deal represents a subtle shift away from the classic platforms of drug discovery and development toward a reverse-engineered approach to active, diversified, albeit not yet fully defined mechanisms that can be refined to address global health needs.
Congratulations to our friends at GW Pharmaceuticals and to Jazz Pharmaceuticals on this significant step forward.
Connect with our investment banking team to learn more.