Our Terms & Conditions | Our Privacy Policy
Solvonis Therapeutics PLC (LSE:SVNS) chairman Dennis Purcell talked with Proactive about the increasing mergers and acquisitions (M&A) activity in the neuroscience sector. He highlighted how large pharmaceutical companies are shifting their focus to neurological disorders, investing billions in biotech firms working on conditions like schizophrenia, depression, and addiction.
Purcell pointed to major deals, such as Pfizer’s $14 billion acquisition of Karuna for its schizophrenia treatment and Eli Lilly’s $9 billion purchase of Intra-Cellular Therapies. He emphasized that pharmaceutical companies are now prioritizing “de-risked assets” with clear proof of concept before making acquisitions.
Discussing broader trends, Purcell noted that the biotech sector has seen a significant increase in companies over the past decade, rising from 2,000 to 6,000. He believes industry consolidation—whether through big pharma acquisitions or biotech-to-biotech mergers—will drive efficiency and attract more venture capital.
Stephen Gunnion: Dennis, very good to speak with you again. Could we start by chatting about what’s driving the recent surge in mergers and acquisitions (M&A) in the neuroscience sector in North America?
Dennis Purcell: Good to see you as well, Stephen. We’ve seen a significant shift in life sciences over the last few years. Historically, the industry has been focused on rare diseases and precision oncology—targeting smaller, highly specific patient populations. However, this has meant that we’ve moved away from tackling diseases that affect large portions of the population.
We saw during the COVID era how powerful biotechnology and life sciences can be on a global scale, particularly with the rapid vaccine development. But one area that has been largely underserved in biotech for the past couple of decades is neuroscience.
What we’re seeing now is that large pharmaceutical companies are increasingly willing to invest heavily in therapies for conditions that have traditionally been difficult to treat, such as depression and addiction. As a result, we’re witnessing a surge in acquisitions in the neuroscience space—possibly even more than in other life sciences sectors.
This increase in M&A is also driving more venture capital investment. For VCs to see a return, they typically need an acquisition or an initial public offering (IPO) as an exit strategy. The more M&A activity we see, the more venture capital will flow into the sector. In fact, we’ve already observed a rise in startup companies focusing on neuroscience, in addition to big pharma’s increasing interest. I believe we’re entering a new era where more prevalent, widespread diseases are being prioritized, and neuroscience is at the forefront of that shift.
Stephen Gunnion: Dennis, could you provide some specific examples of M&A activity where large pharmaceutical companies are targeting smaller biotech firms?
Dennis Purcell: Certainly. Towards the end of last year, Pfizer had a schizophrenia drug approved. A few months before that, they acquired a small biotech company called Karuna for $14 billion. What makes this particularly interesting is that this approval marked the first new schizophrenia drug in over 70 years. So, Pfizer’s acquisition of Karuna was a strategic move to gain entry into the neuroscience space.
Another major deal happened recently at the J.P. Morgan Healthcare Conference, where Eli Lilly announced its acquisition of Intra-Cellular Therapies, a company focused on treatments for major depressive disorder. That deal was worth $9 billion, and their lead drug, Lumateperone, is now part of Lilly’s portfolio.
Beyond outright acquisitions, we’re also seeing some creative deal structures. For instance, this week, AbbVie made an option deal for some of the assets of Gilgamesh Pharmaceuticals, a private company working in the psychiatric treatment space. This kind of arrangement allows big pharma to secure rights to promising treatments without committing to a full acquisition upfront.
These recent deals illustrate that major pharmaceutical companies are either acquiring smaller biotechs outright or entering licensing and option agreements. Over the past six months, there’s been a noticeable increase in this kind of activity.
Stephen Gunnion: You mentioned that big pharma is particularly interested in “de-risked assets.” Could you explain what that means?
Dennis Purcell: Of course. In M&A and investment, “de-risked assets” refer to biotech companies that have already demonstrated proof of concept—meaning they have clinical data showing that their drug or treatment works in humans.
Big pharmaceutical companies are increasingly reluctant to invest in very early-stage research or preclinical programs. Instead, they are focusing on biotech companies that have already passed key development milestones, such as demonstrating efficacy in Phase 2 trials.
This trend is not limited to neuroscience—it’s happening across the entire biotech sector. The more a biotech company can prove its technology is viable, the more likely it is to attract interest from big pharma. As a result, many biotech firms are working harder to “de-risk” their assets before seeking buyers or partnerships.
This shift has also affected public markets. Neuroscience, in particular, has been a tough sell for public investors over the last decade, primarily because there were more attractive opportunities in areas like rare diseases and precision oncology. However, as neuroscience advances and more de-risked assets emerge, we expect public markets to show greater interest in the space.
Stephen Gunnion: Are there any other significant developments in neuroscience that stand out to you?
Dennis Purcell: Yes, one of the biggest developments recently is the potential for new treatments for Huntington’s disease. This is a devastating condition, and for decades, there have been no approved therapies. However, right now, there are three compounds on the verge of potential approval for Huntington’s. That’s a major breakthrough, and it offers real hope to patients and families affected by the disease.
Beyond Huntington’s, we’re also seeing smaller biotech companies making progress in areas like addiction treatment. Some of the clinical data coming out of these programs is quite promising.
I’m also optimistic about the future of the psychedelic-based treatment space. Last year, there was a setback for Lykos Therapeutics, but that was more related to trial design than the efficacy of the compound itself. In 2025, we’re going to see several key clinical trial readouts for psychedelics, including treatments involving ketamine and psilocybin. There’s a lot of interest in how these compounds could help with mental health disorders, so I expect this to be an active area of research and investment this year.
Stephen Gunnion: So, in your view, is this consolidation of the biotech market a healthy development?
Dennis Purcell: Yes, absolutely. Over the past decade, the number of biotech companies has tripled, from around 2,000 to 6,000. But drug development is extremely expensive, and in today’s environment—where funding is tighter—we need to make sure resources are being used efficiently.
Consolidation helps by reducing duplication of effort. The more mass a company has, the more “shots on goal” it gets in terms of bringing a drug to market. I expect to see continued consolidation, not just through big pharma acquisitions but also through biotech-to-biotech mergers, where two smaller companies join forces to create a larger, more sustainable business.
This trend is particularly important given the challenges of fundraising over the past few years. Investors appreciate rational business decisions, and consolidation can provide cost savings in areas like administration and overhead.
A great example of where consolidation is needed is gene therapy. Right now, there are about 5,000 gene therapy clinical trials happening, which makes it incredibly difficult for investors to determine where to put their money. The biotech companies that can tell a clear story and demonstrate proof of concept will be the ones that attract the most investment. That’s something I believe we’ll see more of in 2025.
Stephen Gunnion: Dennis, thanks as always for your insights. It’s been great speaking with you.
Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.
Aggregated From –
Comments are closed.