Athersys Adds to Surge of Biotechs Filing for Bankruptcy, Sells to Healios

By Kate Goodwin
Jan. 9, 2024

Continuing the surge of biotech bankruptcies, Athersys filed for Chapter 11 on January 5, according to an SEC filing.

All assets of the regenerative medicine and cell therapy company are being divested to its research partner, Healio, to the tune of $2 million in the form of a credit bid.

The bankruptcy filing was not a surprise. After reporting disappointing results from its MultiStem pivotal trial in October 2023, the company said it was exploring options but, if unable to obtain adequate financing, would have to file for protection under bankruptcy laws to “conduct an orderly wind down of operations.” Athersys ended the third quarter of 2023 with only $1 million in cash, despite cost reduction efforts which included layoffs earlier in the year. Even a $10.4 million raise from investors and licensing partners in November was not enough to stave off Chapter 11.

Healios will now take the reins on Athersys’ MultiStem program, which has been in development since 1994. The off-the-shelf therapy developed from adult stem cells was being studied in ischemic stroke—a program which was already partnered with Healios—traumatic injury and acute respiratory distress syndrome. The treatment was attractive as a stem cell option because it could be given to patients without prior immune suppression or tissue matching.

Last year was a particularly tough one for biotech, presenting a record high number of bankruptcies, BioSpace found, with 41 biotech and pharma companies filing for bankruptcy. By comparison, 20 companies filed in 2022 and only nine in 2021.

Experts identified the primary drivers for the surge as the post-COVID-19 economy, a shift toward data-driven financing activity, rising inflation rates and the rapid rate of innovation leading to increased competition in the space.

“It’s a terrible market to get financing,” Ira Leiderman, managing director of the healthcare practice at Cassel Salpeter & Co., told BioSpace previously. “Companies are not getting financed, and they have no choice but to break the glass and push the bankruptcy button.”

Kate Goodwin is a freelance life science writer based in Des Moines, Iowa. She can be reached at kate.goodwin@biospace.com and on LinkedIn.   

 

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Bird Enters into Comprehensive Restructuring Support Agreement with First- and Second-Lien Lenders to Strengthen Financial Position

NEWS PROVIDED BY
Bird Global, Inc.
20 Dec, 2023

Bird has sufficient liquidity to meet financial obligations to city partners, vendors, suppliers, and employees during and after the restructuring process, and will operate as usual Agreement has unanimous support of first- and second-lien lenders Apollo Global Management and second-lien lenders to provide $25 million in DIP financing

MIAMI, Dec. 20, 2023 /PRNewswire/ — Bird Global, Inc. (OTCQX: BRDS), (“Bird” or the “Company”) a leader in environmentally friendly electric transportation, today announced its entry into a financial restructuring process aimed at strengthening its balance sheet and better positioning the company for longterm, sustainable growth. Bird will operate as usual during this process, maintaining the same service for its riders and upholding its commitments to partner cities, fleet managers, and employees.

“This announcement represents a significant milestone in Bird’s transformation, which began with the appointment of new leadership early this year,” said Bird Interim CEO Michael Washinushi. “We are making progress toward profitability and aim to accelerate that progress by rightsizing our capital structure through this restructuring. We remain focused on our mission to make cities more livable by using micromobility to reduce car usage, traffic, and carbon emissions.”

During and after the restructuring process, Mr. Washinushi will continue as Interim CEO, supported by Board Chair John Bitove, President Stewart Lyons, and CFO Joseph Prodan. Last week, Harvey L. Tepner joined the Board of Directors as an Independent Director, and Philip Evershed resigned from the Board of Directors.

The Company’s first- and second-lien lenders have also entered into a comprehensive restructuring support agreement (the “RSA”). To implement the RSA, and access $25 million in new debtor-in-possession financing from MidCap Financial, a division of Apollo Global Management, and the company’s existing second-lien lenders, Bird has commenced a voluntary Chapter 11 bankruptcy proceeding in the U.S. Bankruptcy Court for the Southern District of Florida. The Company will use the court-supervised process to facilitate a sale of its assets, and has entered into a “stalking horse” agreement with the Company’s existing lenders, which effectively sets a floor for Bird’s value. The bid is subject to higher and better offers, and is aimed at maximizing value for all stakeholders. Bird expects to complete the sale process in the next 90-120 days.

Bird Canada and Bird Europe (dba as “Bird Rides Europe B.V.”) are not part of the filing and also continue to operate as normal. Since its inception, Bird riders have traveled over 300 million miles globally, offsetting an estimated 90 million pounds of carbon emissions from avoided car trips, and playing a pivotal role in hundreds of cities’ sustainability goals while making alternative transportation convenient, efficient, and fun.

Bird has filed with the Court a series of customary “First Day Motions” to facilitate a smooth transition into bankruptcy. These filings provide for payment of wages and benefits to employees, and make other provisions to enable Bird to continue operating as usual. Bird expects the Court to approve these requests in short order, which are expected to minimize the impact of the restructuring process on its city partners, riders, employees and other key stakeholders.

Additional information related to the proceedings is available at http://dm.epiq11.com/case/birdglobal/info. Stakeholders with questions may contact the Company’s Claims Agent, Epiq, at bird@epiqglobal.com.

BergerSingerman LLP is serving as legal counsel, Cassel Salpeter & Co. is serving as investment banker, Teneo Capital LLC is serving as financial and restructuring advisor, and Epiq Corporate Restructuring, LLC is serving as claims and noticing agent to the Company.

About Bird

Bird, the largest micromobility operator in North America, is an electric vehicle company dedicated to bringing affordable, environmentally friendly transportation solutions such as e-scooters and e-bikes to communities across the world. Bird and Spin’s cleaner, affordable, and on-demand mobility solutions are available in 350 cities, primarily across Canada, the United States, Europe, the Middle East, and Australia. We take a collaborative, community-first approach to micromobility. Bird and Spin partner closely with the cities in which they operate to provide a reliable and affordable transportation option for people who live and work there.

For more information on Bird, visit www.bird.co and for more information on Spin, visit www.spin.app.

Forward-looking Statements

Certain statements in this press release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements other than statements of historical fact contained in this press release including, but not limited to, the anticipated impact on the operation of Bird’s business as a result of the restructuring process, Bird’s business strategy and plans, the anticipated timing of the transactions contemplated by the RSA, Bird’s expectations regarding the bankruptcy proceedings and outcome and timing of related motions filed with the Court. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the negatives of these terms or variations of them or similar terminology. Such forwardlooking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Bird and its management, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to risks and uncertainties related to, among other things: the bankruptcy process, the ability of Bird and its subsidiaries to obtain approval from the Bankruptcy Court with respect to motions or other requests made to the Bankruptcy Court throughout the course of the Chapter 11 cases; the ability of Bird and its subsidiaries to consummate a sale and plan within the Company’s currently expected timeline or at all; the effects of the Chapter 11 cases, including increased professional costs, on the liquidity, results of operations and businesses of Bird and its subsidiaries; the ability of Bird and its subsidiaries to operate their respective businesses during the pendency of the Chapter 11 cases; the consummation of the transactions contemplated by the restructuring support agreement (“RSA”), including the ability of the parties to negotiate definitive agreements with respect to the matters covered by the term sheets included in the RSA; the occurrence of events that may give rise to a right of any of the parties to terminate the RSA, and the ability of the parties thereto to satisfy the other conditions of the RSA, including satisfying the milestones specified in the RSA; the ability to maintain relationships with Bird’s suppliers, customers, employees and other third parties as a result of, and following the Company’s emergence upon completion of, the Chapter 11 cases, as well as perceptions of the Company’s increased performance and credit risks associated with its constrained liquidity position and capital structure, which reflects a recently increased risk of additional bankruptcy or insolvency proceedings; the possibility that Bird may be unable to achieve its business and strategic goals even if the RSA and sale is successfully consummated; Bird’s ability to generate sufficient cash to reduce its indebtedness and its potential need and ability to incur further indebtedness; developing, funding and executing Bird’s business plan and ability to continue as a going concern; Bird’s capital structure upon completion of the Chapter 11 cases; the comparability of Bird’s postemergence financial results to its historical results and the projections disclosed in connection with the transactions contemplated by the RSA; and attraction and retention of key personnel in light of the Chapter 11 cases. Other factors may also cause Bird’s actual results to differ materially from those expressed or implied in the forward-looking statements and such factors are discussed in Bird’s filings with the U.S. Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and subsequent reports filed by Bird with the SEC. Copies of Bird’s filings with the SEC may be obtained at the “SEC Filings” section of Bird’s website at www.bird.co or on the SEC’s website at www.sec.gov.

 

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Patriot Transportation and United Petroleum Transports to Combine

Wednesday, 1 November  2023

Combined Company to Capitalize on Significant Growth in 5G,

Targeting Opportunities in mmWave and Multi-Edge Computing

 

Patriot Transportation Shareholders to Receive $16.26 per Share in Cash

JACKSONVILLE, FL / ACCESSWIRE / November 1, 2023 / Patriot Transportation Holding, Inc. (NASDAQ:PATI) (“Patriot” or the “Company”), today announced an agreement under which United Petroleum Transports, Inc. (“UPT”) will acquire all of the outstanding shares of Patriot common stock for $16.26 per share in cash. The transaction values Patriot Transportation at approximately $65.9 million, including assumed cash and debt.

The combination advances UPT’s and Patriot’s shared vision to become a top five bulk tank carrier by revenue with combined revenues in excess of $200 million and to become the premier tank truck company in the southern United States. Upon completion of the transaction, the combined company will have over 1,000 drivers servicing markets from Arizona to Florida covering 11 states with over 30 terminals. The companies have strong market brands and operate with a similar culture focused on safety and quality customer service. To capitalize on its strong brand and reputation, UPT will continue to operate Patriot’s business through Patriot’s subsidiary, Florida Rock & Tank Lines, Inc. (“Florida Rock”). UPT will utilize the combined company strength, the high–quality employees and large regional and national customer base to strategically grow the business.

Florida Rock serves the southeastern United States as a premier bulk tank carrier specializing in hauling primarily petroleum–related products and other liquid and dry bulk commodities. One of the largest regional tank truck carriers in North America, Florida Rock operates in Florida, Georgia, Alabama, and Tennessee with 17 terminals and six satellite locations.

“Patriot is the perfect match for UPT’s strategic intention to expand our network to the southeastern United States,” said Greg Price, Executive Chairman of UPT. We are pleased to welcome one of the leading bulk and tank trucking providers to UPT’s family. Together we will enhance our shared value proposition and invest in exciting growth opportunities providing transportation solutions for new and existing customers.”

Tom Baker, Patriot’s Chairman of the Board said, “We have operated this business for many years, and we appreciate that the quality of the
organization is being recognized by UPT. We appreciate the support of our shareholders and believe this transaction rewards them for their unwavering
support.”

“We are thrilled to partner with a company like UPT that appreciates Patriot’s proud history and is closely aligned with our mission and culture which is focused on safety, our customers and our employees. I believe the combined strength of the management teams will allow us to execute a strategic plan for growth beyond our current footprint. I appreciate UPT’s executive leadership recognizing our strong brand and quality employees and look forward to working side by side with their management team. I am also thankful to Patriot’s Board of Directors, shareholders and the Baker family for their support over the many years here at Patriot,” said Rob Sandlin, President and CEO of Patriot.

Transaction Details

The transaction, which has been unanimously approved by Patriot’s Board of Directors, is subject to the satisfaction of other customary closing conditions, including the approval of Patriot’s shareholders. Shareholders owning 26.6% of the voting power of Patriot’s common stock have agreed to vote in favor of the merger, subject to customary exceptions. Upon completion of the transaction, which the parties expect will occur by early 2024, Patriot will become a private company and delist from the NASDAQ Global Select Market. UPT has obtained a customary financing commitment from an established lending institution pursuant to which the lender will provide financing that, together with other available sources, is expected to be sufficient to fund the merger consideration and other obligations under the merger agreement.

The definitive merger agreement includes a 30–day “go–shop” period that will expire on December 1, 2023, which permits Patriot and its representatives to actively solicit and consider alternative acquisition proposals. There can be no assurance that this process will result in a superior proposal, and the Company does not intend to disclose developments with respect to the go–shop process unless and until it determines such disclosure is appropriate or is otherwise required.

Advisors

Cassel Salpeter & Co., LLC is serving as financial advisor and Foley & Lardner LLP is serving as legal counsel for Patriot.

Stephens Inc. is serving as financial advisor and Scudder Law Firm, P.C., L.L.O. is acting as legal counsel for UPT.

About Patriot Transportation Holding, Inc.

Patriot conducts business through its wholly owned subsidiary, Florida Rock. The Company transports petroleum and other liquids and dry bulk commodities. A large portion of the Company’s business consists of hauling liquid petroleum products (mostly gas and diesel fuel) from large scale fuel storage facilities to the customers’ retail outlets (e.g., convenience stores, truck stops and fuel depots) where it off–loads the product into its customers’ fuel storage tanks for ultimate sale to the retail consumer. The Company also hauls dry bulk commodities such as cement, lime and various industrial powder products, water and liquid chemicals. The Company currently operates 19 terminals in addition to numerous truck domicile locations throughout the Southeast. With one of the most modern tank fleets available in the industry, the Company is composed of more than 300 tractors and 400 trailers.

About United Petroleum Transports, Inc.

Founded in 1966, United Petroleum Transports is the largest carrier of motor fuels, aviation fuels and chemicals in the Southwest, with Customer Service Centers in Alabama, Arizona, Georgia, Kansas, New Mexico, Oklahoma and Texas. Headquartered in Oklahoma City, UPT is a leader in the tank truck industry, with a professional driver base of more than 650 professional drivers who safely and dependably serve UPT customers across the USA and Canada.

Additional Information About the Merger and Where to Find It

This communication is being made in respect of the proposed merger involving Patriot and UPT. A meeting of the shareholders of Patriot will be announced to seek shareholder approval in connection with the proposed merger. Patriot will file with the Securities and Exchange Commission (“SEC”) a proxy statement and other relevant documents in connection with the proposed merger. The definitive proxy statement will be sent or given to the shareholders of Patriot and will contain important information about the proposed merger and related matters. INVESTORS AND SHAREHOLDERS OF PATRIOT TRANSPORTATION HOLDING, INC. SHOULD READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PATRIOT TRANSPORTATION HOLDING, INC., UNITED PETROLEUM TRANSPORTS, INC., AND THE MERGER. Investors may obtain a free copy of these materials (when they are available) and other documents filed by Patriot with the SEC at the SEC’s website at www.sec.gov, at Patriot’s website at www.patriottrans.com or by sending a written request to the Patriot’s Secretary at 200 W. Forsyth Street, 7th Floor, Jacksonville, FL 32202.

Participants in the Solicitation

Patriot and its directors, executive officers and certain other members of management and employees may be deemed to be participants in soliciting proxies from its shareholders in connection with the merger. Information regarding the persons who may, under the rules of the SEC, be considered to be participants in the solicitation of Patriot’s shareholders in connection with the merger will be set forth in Patriot’s definitive proxy statement for its shareholder meeting. Additional information regarding these individuals and any direct or indirect interests they may have in the merger will be set forth in the definitive proxy statement when it is filed with the SEC in connection with the merger. Information relating to the foregoing can also be found in Patriot’s definitive proxy statement for its 2023 Annual Meeting of Shareholders (the “Annual Meeting Proxy Statement“), which was filed with the SEC on December 9, 2022. To the extent that holdings of Patriot’s securities have changed since the amounts set forth in the Annual Meeting Proxy Statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC.

Forward Looking Statements

This announcement contains “forward–looking statements,” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, including statements relating to the completion of the merger.

These forward–looking statements are generally denoted by the use of words such as “anticipate,” “believe,” “expect,” “intend,” “aim,” “target,” “plan,” “continue,” “estimate,” “project,” “may,” “will,” “should,” and similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward–looking. These statements reflect management’s current beliefs and are based on information currently available to management. Forward–looking statements are based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to known and unknown risks and uncertainties and other factors that could cause actual results to differ materially from historical results or those anticipated. These factors include, but are not limited to: (a) the satisfaction of the conditions precedent to the consummation of the merger, including, without limitation, the timely receipt of shareholder approval; (b) uncertainties as to the timing of the merger and the possibility that the merger may not be completed, including uncertainties regarding UPT’s ability to finance the merger; (c) unanticipated difficulties or expenditures relating to the merger; (d) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement, including, in circumstances which would require Patriot to pay a termination fee; (e) legal proceedings, judgments or settlements, including those that may be instituted against Patriot, Patriot’s Board of Directors, Patriot’s executive officers and others following the announcement of the merger; (f) disruptions of current plans and operations caused by the announcement and pendency of the merger; (g) risks related to disruption of management’s attention from Patriot’s ongoing business operations due to the merger; (h) potential difficulties in employee retention due to the announcement and pendency of the merger; (i) the response of customers, suppliers, drivers and regulators to the announcement and pendency of the merger; (j) disruptions in the execution of plans, strategies, goals and objectives of management for future operations caused by the merger; (k) changes in accounting standards or tax rates, laws or regulations; (l) economic, market, business or geopolitical conditions (including resulting from the COVID–19 pandemic, inflation, the conflict in Ukraine and related sanctions, or the conflict in the Middle East) or competition, or changes in such conditions, negatively affecting Patriot’s business, operations and financial performance; (m) risks that the price of Patriot’s common stock may decline significantly if the merger is not completed; (n) the possibility that Patriot could, following the merger, engage in operational or other changes that could result in meaningful appreciation in its value; and (o) the possibility that Patriot could, at a later date, engage in unspecified transactions, including restructuring efforts, special dividends or the sale of some or all of Patriot’s assets to one or more as yet unknown purchasers, which could conceivably produce a higher aggregate value than that available to Patriot’s shareholders in the merger. Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will occur or if any occur, what effect they will have on Patriot’s results of operations or financial condition.

If the proposed merger is consummated, Patriot’s shareholders will cease to have any equity interest in Patriot and will have no right to participate in its earnings and future growth. Other factors that could impact Patriot’s forward–looking statements are identified and described in more detail in Patriot’s Annual Report on Form 10–K for the year ended September 30, 2022 as well as Patriot’s subsequent filings and quarterly reports and is available online at www.sec.gov. Readers are cautioned not to place undue reliance on Patriot’s projections and other forward–looking statements, which speak only as of the date thereof. Except as required by applicable law, Patriot undertakes no obligation to update any forward–looking statement, or to make any other forward–looking statements, whether as a result of new information, future events or otherwise.

Contact:
Matt McNulty
Chief Financial Officer
904/858–9100

SOURCE: Patriot Transportation Holding, Inc.

 

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Biotech Bankruptcies Skyrocket

By Ana Mulero
Oct. 11, 2023

Bankruptcy among biotechs is on the rise, with a spike in the number of cases in the past couple of years, highlighting struggles to secure financing and recover financially.

This year has seen a record high 28 biotech bankruptcies so far, SEC filings show. And more will come by year’s end, according to James Cassel, chairman and co-founder of Miami-based investment banking firm Cassel Salpeter & Co., which helps companies through bankruptcy processes. The most recent filing came from Infinity Pharmaceuticals on Sept. 28. The company entered a merger agreement with MEI Pharma in February to advance three clinical oncology candidates, only to have the agreement fail in July, which resulted in Infinity laying off 78% of its workforce and declaring bankruptcy.

Last year saw a total of 20 biotech bankruptcy cases, compared with 2021’s total of nine, which was consistent with historical trends.

Experts who spoke with BioSpace identified some fundamental drivers of the recent uptick, including the economy post-COVID-19, a shift toward data-driven financing activity and inflation rates, among others.

Cody Powers, a partner and principal for portfolio and pipeline at management consulting services company ZS Associates, pointed to the rapid rate of innovation and evolution as another factor. There are thousands of companies in today’s biotech space. In addition to facing so much competition, companies have to develop new technology to address increasingly difficult problems. For example, many problems in cancer are harder to solve than those addressed in the past, and the same goes for an autoimmune disease, among other conditions, Powers told BioSpace. Overall, he explained, biotechs are having to fund more types of programs to get the same number of approvals “compared to what we’re used to.”

To keep the same number of approvals coming, companies “need more dice rolls to get the same number of successes,” Powers said. And each of those
dice rolls requires funding.

Cassel emphasized the impact of interest rates. “As interest rates have risen, the ability to raise capital for biotech companies has become more difficult,” leading to more companies filing for bankruptcy and selling their assets over a lack of liquidity and available capital, Cassel said.

The most recent biotech bankruptcy for which Cassel was retained is that of Athenex, now pending in the Southern District of Texas. Athenex declared\ bankruptcy in May. Other cases include Aceragen, Avadel Specialty Pharmaceuticals, NephroGenex, Sancilio Pharmaceuticals and Statera Biopharma.

The bankruptcy protection allows companies to raise the cash needed to pay off creditors, while generally fending off enforcement action and suspending the statute of limitations to collect.

The trend is new for the biotech world. “Biotech is not a world where people are used to thinking about bankruptcy,” Powers said. This is because “bankruptcy means you can’t pay your debtors, and biotech is not majority debt-financed. Most of biotech is equity financed.” But since the start of COVID-19, companies have been more apt to take on debt, he noted.

“We’ve really never had something like this, but we’re probably going to two years of a consistent downward trend for biotech,” Powers said.

Funds Dry Up

The number of biotech bankruptcies ticked up to 13 in 2020, an increase from the two preceding years, which Powers called “a little surprising.” But his interpretation is that companies were forced to halt clinical trials because of the pandemic, and if they hadn’t raised enough money to see them through this lull and were on the hook for fixed costs, they struggled.

“When the money started to dry up off the back half of 2021, everything started to fall apart,” he added. “By the time 2022 rolled around, even in the first quarter, that’s when the layoff tracker started to tick up, and that was kind of a leading indicator of companies running out of money.”

But “it’s a terrible market to get financing,” Ira Leiderman, managing director of the healthcare practice at Cassel Salpeter & Co., added. “Companies are not getting financed, and they have no choice but to break the glass and push the bankruptcy button.”

Mert Zorlular, president and chief financial officer at Er-Kim, a regional pharmaceutical partner in Europe, has some insight on the situation since Er-Kim monitors the space for opportunities to secure deals with biotechs that can provide assurance of staying afloat.

“As [some] companies cannot viably provide financing through the regular models, we arrive at a situation in which we have numerous companies with many assets with a lot of potential, but no way to finance operations until these assets are commercial,” Zorlular said. “In such an event, the company either winds down operations, sells for scraps, or files for bankruptcy.”

In this situation, some companies resist selling themselves, seeing this as an admission of defeat, Leiderman said. Instead, they may wind up in bankruptcy.

The way Powers sees it, there are two overarching drivers in the scarcity of funds: an outbreak of economic malaise, and increased pragmatism among
biotech investors.

“Investors are much more hard-wired to what is actually generating value as opposed to what just looks innovative,” he said. “By extension, there are a number of parts of biotech that have been disproportionately punished.” He pointed to cell and gene therapies as some examples.

Bankruptcy is “a tool that was not necessarily in management’s and boards’ toolboxes in the biotech industry” before as much as it is now, Leiderman noted. It is a tool, as bankruptcy can allow the company to survive.

But Cassel argued that most companies in the biotech space are using bankruptcy to sell their assets and wind down rather than as a bid for survival. “They need money. They need the capital infusion to finish what they’re doing, so, as a result, what they’re doing is finding new homes for their assets,” Cassel said.

Powers said, “the mentality now is much more cash preservation and survival,” pointing to this year’s many layoffs as evidence. “Everybody is basically trying to give themselves the maximum possible runway in any kind of downside scenario to make bankruptcy the most remote possibility.”

Planning for Every Scenario

Every biotech has a plan to raise money, but they also need a plan to be acquired or merge, Leiderman said. In terms of winding down, if the company has an ongoing trial, he stressed the importance of stopping it in a way that the data are of value to sell.

Leiderman’s biggest recommendation is, “It’s the planning; not the plan.” Powers urged that companies “don’t think like 12 months cash. Think like 36 months . . . or more in cash to stay around as long as possible.”

Despite the current trend, Leiderman and Cassel remain hopeful for the future of biotech financing, in part due to the time and cost savings associated with the use of artificial intelligence in drug discovery and development.

To stay out of bankruptcy, Zorlular recommended that companies avoid conventional business models. “The biotech industry as we know it today never had to operate under a high inflation/high yields kind of environment,” he said. “Companies need creative ways to survive these challenging times.”

Ana Mulero is a freelance writer based in Puerto Rico. She can be reached at anacmulero@outlook.com and @anitamulero on X.

 

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QEP Completes Sale of United Kingdom Business

Source: Q.E.P. Co., Inc.
October 10, 2023

BOCA RATON, Fla., Oct. 10, 2023 (GLOBE NEWSWIRE) — Q.E.P. CO., INC. (OTCQX: QEPC) (the “Company” or “QEP”) today announced that, on October 4, 2023, it completed the sale of its business in the United Kingdom (the “UK Business”) by selling all of the outstanding shares of Q.E.P. Co. U.K. Limited to QEP UK Holdings Limited led by Paul Boyce, in a transaction valued at approximately £12 million.

As a result of this transaction, the UK Business is now owned by the Boyce Family Group. Paul Boyce has been a member of QEP’s management team for the past 14 years, having most recently served as its CEO of International Operations and a member of its Board of Directors. As part of this transaction, Mr. Boyce has resigned from his Board of Directors position as of the closing date.

Executive Chairman of QEP, Lewis Gould, stated, “The completion of this sale marks another milestone for QEP as we re-align our global footprint to efficiently implement our strategic plan of focusing on our core brands and products to drive long-term stockholder value. We are grateful to Paul for his many contributions to QEP and will continue to work closely with him and his team in supporting our common goal of growing our core brands and products on a global basis in our respective territories.”

As part of its consideration in approving the transaction, QEP’s Board of Directors appointed a Special Committee of independent and disinterested directors, to consider and recommend the transaction for approval by the Board of Directors. In recommending the transaction to the Board of Directors for approval, the Special Committee considered the financial advice from its financial advisor, Cassel Salpeter & Co. LLC, a third party investment banking firm.

About QEP

Founded in 1979, Q.E.P. Co., Inc. is a leading designer, manufacturer and distributor of a broad range of best-in-class flooring installation solutions for commercial and home improvement projects worldwide. QEP offers a comprehensive line of specialty installation tools, adhesives, and underlayment. QEP sells its products throughout the world to home improvement retail centers and professional specialty distribution outlets under brand names including QEP®, LASH®, ROBERTS®, Capitol®, Premix-Marbletite® (PMM), Brutus®, Homelux®, PRCI®, and Tomecanic®.

QEP is headquartered in Boca Raton, Florida with offices in Canada, Europe, Asia, Australia and New Zealand. Please visit our website at www.qepcorporate.com.
Forward-Looking Statements All statements contained in this press release, other than statements of historical facts, may constitute forward-looking statements within the meaning of the federal securities laws. These statements can be identified by words such as “expects,” “plans,” “projects,” “will,” “may,” “anticipates,”
“believes,” “should,” “intends,” “estimates,” and other words of similar meaning. Forward-looking statements include, but are not limited to, statements regarding the Company’s business following the sale. Any forward-looking statements contained herein are based on current expectations and beliefs, and are subject to a number of risks and uncertainties, including those listed in the Company’s annual report, as such risk factors may be amended, supplemented or superseded from time to time by other reports and disclosures made by the Company. Forward-looking statements may also be adversely affected by general market factors, competitive product development, product availability, federal and state regulations and legislation, manufacturing issues that may arise, patent positions and litigation, among other factors. The forward-looking statements contained in this press release speak only as of the date the statements were made, and the Company does not undertake any obligation to update forward-looking statements, except as required by law.

CONTACT:
Q.E.P. Co., Inc.
Enos Brown
Executive Vice President and
Chief Financial Officer
561-994-5550

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Dry Powder Reserves Point to Insatiable Buyout Demand

While uninvested assets in private markets have reached record levels, the capital is waiting to be deployed in a more favorable market.

By Britt Erica Tunick
Fall 2023

Following paltry M&A deal volume in 2022, deal activity declined even further in the first quarter of 2023 as companies held out for a more attractive deal environment with higher valuations. Meanwhile, the increasing cost of capital, combined with rising interest rates, macro uncertainty, the geopolitical environment and inflationary concerns, has made PE firms more cautious. As a result, the global private capital industry was sitting on $3.7 trillion of dry powder as of June 2023, $1.1 trillion of which is allocated for buyouts, according to Bain & Co.

“When you’re in an environment like this, there’s a lot of volatility and people aren’t sure what’s going to happen next. So, a lot of PE firms are sitting on their hands right now,” says Brian McGee, a managing partner at Boca Raton, Florida-based PE firm New Water Capital.

Behind the Curtain

The high levels of dry powder and declining deal volume don’t mean that the market is entirely at a standstill. Investors are very selective about doing deals. “The environment we are seeing is ‘barbelled.’ We see really highquality, class A deals getting done, and we see the lower end of the market where deals need a lot more TLC. What we are not seeing is the middle tier,” says Marc Chase, a partner and private equity leader at Baker Tilly. “The good businesses are nervous about the market and if they don’t see a favorable multiple environment for their company, their just going to wait it out.”

Chris Wright, managing director and head of private markets at Crescent Capital Group, notes there are still opportunities in add-ons, too. “You have a lot of small transactions where companies are buying other companies. These are add-on acquisitions and platform investments that are held by private equity, and not all of those are getting recorded on league tables,” he says. One problem Wright thinks is keeping M&A at bay is the valuation mismatch. “Equity markets continue to be elevated at the same time that cost of capital has gone up, yet sellers expect good prices while buyers want discounts,” he says.

LP Perception

Nonetheless, LPs are not putting pressure on PE firms to deploy capital. “Many LPs deployed significantly into private markets, and the distribution in their own portfolios has dried up, given that lack of exits. … If the capital calls aren’t coming, that’s actually convenient for some LPs,” says Jared Barlow, a partner at Greenwich, Connecticut-based Kline Hill Partners, which focuses on investments in the secondary market. The mindset of both GPs and LPs is that if there is no rush, deploy with prudence.”

And with expenditures and investments outpacing fundraising, industry professionals say that the amount of dry powder has already begun contracting. Added to that is the fact that fundraising in the current environment is extremely difficult for PE firms. Between the downturn in equity over the past couple of years, unweighted portfolios and a lack of returns from PE investments, there is a general dearth of liquidity within the LP community at the moment. In fact, as investors are repositioning their portfolios, there has been a wave of secondary trades among LPs.

James Cassel, CEO and co-founder of Miami-based investment banking firm Cassel Salpeter & Co., agrees that most investors would be content to give PE firms another year or two to recognize the value of their investments. But he believes there are likely to be many cases where the current market conditions make that difficult or impossible for PE firms. “A lot of PE firms that did deals a few years ago stress-tested their companies for interest rates going up a 100 or 200 basis points. But I’m not sure they stress-tested for a 500-point increase,” says Cassel. “The concern comes in if they still own the portfolio company and are gong to continue to own it, but the debt comes due and they’re going to have to refinance at a higher price.”

The Private Credit Opportunity

One area where the PE community is seeing a pop in activity is private credit. As small and midsize banks have backed away from lending following the recent bank collapses, industry experts predict that direct lending will continue to pick up speed. According to Moody’s, private lending to PE-owned middle-market companies is one of the quickest growing areas, with roughly $1.3 trillion in assets under management, $350 billion of which is dry powder. “We’ve seen a lot of demand growing for junior debt in both new investment, as well as support for existing investments,” says Crescent Capital Group’s Wright. “Part of that big opportunity is the highly leveraged transactions that were put together in 2021 and 2022 that now need some help – including through the issuance of preferred equity and partial PIK securities,” he says. Adds Baker Tilly’s Chase: “The current interest rate environment and the turmoil in the banking sector have created an opportunity for alternative debt funds, and I imagine that will continue for the remainder of this year.”

Despite the market calamity, several well-known private debt managers have recently raised large funds. They include HPS, which closed its Core Senior Lending Fund II in May; and Neuberger Berman, which collected $8.1 billion for its Private Debt Fund VI last September.

Looking Ahead

Many PE firms are bracing for an uptick of M&A activity in the third and fourth quarters of this year. Regardless of whether economic conditions improve, the expectation is that PE firms will have to finally start exiting some positions in the coming months. “Even setting aside the capital markets and the LBO and loan markets, the hold time on everyone’s portfolio companies is increasing to a point where there’s going to have to be some more selling happening,” says Jennifer Smith, a partner at Bain & Co.’s PE practice. In the meantime, she says that PE firms need to focus on where they can add value to their portfolio companies to make them more appealing when those exit opportunities finally do arise. “As dry powder comes down and deal markets pick up, you’re going to see a little bit more of a buyer’s market where it’s going to be more competitive,” says Smith.

“A lot of PE firms that did deals a few years ago stress-tested their companies for interest rates going up a 100 or 200 basis points. But I’m not sure they stress-tested for a 500-point increase.”
JAMES CASSEL
CEO and Co-founder, Cassel Salpeter & Co.

Anthony Arnold, a partner at Barnes & Thornburg, says there has recently been a noticeable jump in activity levels. “We are seeing the beginning of a shift from a wait-and-see approach to an actual deployment of capital,” he says. “In just the last two weeks, our middle-market clients issued as many letters of intent as they did from January to the end of May.”

As PE firms begin to pick the sectors and companies they believe will present the most promising exit opportunities, industry experts say firms should be aware there could be a bit of traffic when people finally do step off the sidelines.

“Now is the time that firms should be evaluating and creating their teams in anticipation of when the market is going to turn,” says Baker Tilly’s Chase.

BRITT ERICA TUNICK is an award-winning journalist with extensive experience writing about the financial industry and alternative investing.

 

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Why Biopharma Companies Buy Stock in One Another

By Ana Mulero
Sept. 13, 2023

On June 27, Gilead Sciences purchased nearly 3 million shares of AlloVir stock, costing more than $10 million. The very next day, Gilead purchased just over 1 million shares of Arcus Biosciences for nearly $20 million.

This practice of biopharma companies buying stock from one another used to be rather typical, Ira Leiderman, a managing director of healthcare at Cassel Salpeter & Co., told BioSpace, but times have changed. So, Gilead’s move “is a good example [of the phenomenon], but I don’t think you’ll find many deals like this,” he said.

Commonly referred to as equity investments or cross-holdings, these transactions are made for various reasons. For example, they enable businesses to form strategic alliances, drawing on one another’s knowledge and resources to address challenging problems in drug development.

“Cross-ownership can allow companies to expand their product portfolios, gain access to new technologies and enter different markets more effectively,” Adam Garcia, CEO of the Stock Dork, told BioSpace. Stock purchases can also reinforce relationships that have already been forged.

Indeed, Gilead has been a longtime financial supporter of AlloVir, which went public in 2020, and AlloVir’s CEO, Diana Brainard, was head of the virology therapeutic area at Gilead for a decade. Similarly, Gilead was already working with Arcus on discovering and developing cancer immunotherapies and combination therapies. By purchasing stocks in these companies, Gilead is effectively funneling money into its existing partnerships.

Equity investments can also help diversify and mitigate risks. “By holding shares in multiple biopharma companies, a company can spread its investments across different therapeutic areas and business models,” Garcia added. “This diversification can help cushion the impact of failures in specific drug development programs and maintain a more stable financial position.”

In addition, stock purchases can lead to silent takeovers, where a company gradually accumulates a significant stake in another, often without publicly acknowledging that it has acquired a majority share. By doing so, a company can avoid a traditional public takeover bid, which often involves negotiations and regulatory approvals. Silent takeovers cut through the red tape of the public takeover bid but still effectively shift leadership, strategic direction and overall control of the acquired company, impacting the overall market.

Leiderman and his colleague Margery Fischbein, another managing director of healthcare at Cassel Salpeter, told BioSpace that silent takeovers aren’t happening in biopharma today, however, and that Gilead’s actions of buying stock in a partner are actually not at all common in the current economic environment. And there are several reasons for that, they said. For one, many companies in the biopharma industry are still trying to return to business as usual following the disruptions caused by the COVID-19 pandemic, making them less appealing to investors, including other biopharma firms, Fischbein said.

At the same time, companies that may have at one time considered buying biopharma stock are themselves short on funding. “The most precious resource to a biotech is cash, and it’s tough times out there,” Leiderman said. Rather than buying up stock in other companies, then, some biopharmas are looking to sell stocks to come up with much-needed capital.

“That’s why a lot of companies [biotechs] want to go public because they believe it would be easier for them to raise additional capital,” he said.

At this point, only financially secure firms such as Gilead are in a position to purchase stock in other companies, Leiderman added. “Gilead has a larger bank account than God.”

Fischbein said that the situation comes down to “haves and have-nots,” and in today’s environment, there are more “have-nots,” including in terms of balance sheets, cash and stock prices.

But for those biotechs able to secure financial backing from a pharma firm like Gilead, it could potentially give the company the leg up that it needs, Fischbein said. “It really adds credibility. If somebody like Gilead, GSK, or Novartis is backing the company by taking a significant stake, it’s a real mark of quality and possible likelihood of success.”

Ana Mulero is a freelance writer based in Puerto Rico. She can be reached at anacmulero@outlook.com and @anitamulero on Twitter.

 

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Dealflow Continues to Drop, But Some are Optimistic for a Bounceback This Fall

By Demitri Diakantonis
September 4,  2023

Middle market M&A continued to stall in August, as it has all year, according to data from Refinitiv. But experts say we may be hitting bottom and activity could pick up by the fourth quarter.

There were 42 middle-market deals worth about $14.2 billion in August. By comparison, there were 89 deals worth approximately $28.1 billion in August 2022. The Refinitiv data is based on North American deals valued between $100 million and $1 billion.

The technology and healthcare sectors continue to carry the load with 109 and 96 deals announced so far this year, respectively. Another sector that is picking up in deal activity is energy which has 50 deals announced so far this year. One notable energy deal in August was Earthstone Energy‘s $1 billion acquisition of Novo Oil & Gas Holdings.

While the dealmaking community has been crying in their beers for some time now, one banker sees a bright road ahead. “I believe that M&A will pick up for the last four months of the year as it has already started to,” says Cassel Salpeter & Co. Chairman and co-founder James Cassel. “With interest rates beginning to stabilize, and the sentiment that they are not going to go down quickly, companies that have been waiting to go to market are reconsidering their strategy and considering going to market presently and not waiting.”

With this new reality, Cassel says, high valuations will be reset, and private equity’s need to deploy capital will push deals forward.

In league table tallies, JP Morgan, Goldman Sachs and Bank of America hold the top three spots respectively in market share so far this year. Out of those three, Goldman has advised on the most deals with 28.

A notable performance in 2023 has been Evercore Partners which has jumped from 11th place last year to eighth place this year, while seeing its market share increase from 2.7 to 3.6 percent. The firm helped advise on Crestwood Equity Partners‘ $7.1 billion sale to Energy Transfer LP last month. With a stabilized economy, Cassel is optimistic. “There is still substantial money sitting on the sidelines, with strategic acquirers and PE firms looking to deploy capital and buy good companies,” he says.

See the full list of August’s biggest middle-market deals here.

DEAL FLOW

 

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IRA Creates Unintended Complications for Biologics

By Ana Mulero
Aug. 09, 2023

The Inflation Reduction Act might seem like good news for biological products, but when compared to how the market has historically been, it’s not,
experts told BioSpace.

The main goal of the August 2022 legislation was to lower the prices of prescription drugs. But it ended up being much more complicated than that, and how its components are rolled out through 2026 will have ramifications across research and development.

Biologics are spared from price controls under the IRA for 13 years following approval. The grace period for small molecules, by contrast, is only nine years. A shift toward more biologics is expected as a result.

Jayson Slotnik, a partner at Health Policy Strategies, told BioSpace that investment dollars are already disproportionately shifting to larger molecule biologics because of the four extra years of protection. But whether that’s good or bad, he said, depends on who you ask.

“To me, it’s bad because large molecule drugs like that have a hard time crossing the blood-brain barrier, and that makes it very complicated to treat mental health diseases,” Slotnik said. “So, that’s one unintended consequence” of the IRA.

Another is that ten years from now, there may be more large molecules, and “it will actually be more expensive for the healthcare system,” Slotnik added.

Biologics, particularly cell and gene therapies, are known to be very costly because of manufacturing issues that have yet to be addressed. On July 27, Roche announced it is discontinuing the development of the mid–stage gene therapy candidate RG6358, or SPK–8016, for hemophilia A treatment as the Swiss pharma is preparing for the potential effects of the IRA.

‘When I speak with leaders across our industry, there’s a common theme: Today’s government price–setting policies are going to have ramifications on
the medicines that are available decades down the line,” PhRMA CEO Stephen Ubl said, noting that Roche’s decision adds to the list.

In August 2022, the Congressional Budget Office reported that the IRA will lead to an increase in prices of new drugs to compensate for the inflation–rebate provisions following the exclusivity period, which would increase costs.

But while prices may go up for patients and healthcare providers, returns on the investments of the biopharma companies that developed the treatments may go down. A recent study conducted by consulting firm Vital Transformation found that biologics will see a reduction in revenue of $4.9 billion per therapy.

“This is going to have huge unintended impacts,” Duane Schulthess, the firm’s CEO, told BioSpace.

The Scale of the Problem

Schulthess said that when the firm was running those numbers and began seeing those impacts, “we were like, ‘Holy cow, this is way worse than we thought.’” He added that he and his colleagues have been invited to speak on behalf of clients in Congress regarding the IRA, and that lawmakers have had similar reactions to the data they’ve presented.

The biopharma industry is understandably not pleased with this potential drop in return on investment. Merck filed a lawsuit against the Biden Administration on the same day Vital Transformation released the IRA study, he noted, followed by Bristol Myers Squibb and the Pharmaceutical Research and Manufacturers of America (PhRMA). Even the U.S. Chamber of Commerce is suing over the IRA.

These lawsuits focus primarily on the price negotiation component of the IRA, and biologics’ larger retail price tags make them a larger target for cost containment under the IRA, Ira Leiderman, managing director of healthcare at Cassel Salpeter & Co., told BioSpace.

According to L.E.K. Consulting Managing Director Alex Guth, the reduction in revenue will be driven by the expectation that for leading biologics, the Centers for Medicare and Medicaid Services (CMS) is going to impose pricing restrictions before biosimilars would have otherwise driven costs down. The IRA “does have the potential to negatively affect pricing or to bring down biological pricing after 13 years if biosimilars have not entered yet,” he told BioSpace.

Leiderman noted that the drop in ROI will have knock-on effects for drug development. “With decreased revenue, there will be fewer dollars to spend on research and development, so research planning will need to be refocused,” he said. “Research budgets will be laser-focused on programs that have a higher likelihood of success. We will see fewer ‘blue-sky’ research projects that, in many cases, do not lead to products.”

In addition, corporate basic research that has added significant overall knowledge of diseases over the past several decades will decrease and mostly be relegated to academia, Leiderman said. “We will probably see less corporate-sponsored research in academic institutions, who will have to rely more on government and private foundation grants than ever before to sustain their research budgets.”

Guth identified some strategies for developers of biologics to brace for the potential impacts of the IRA. “First, they need to have a clear understanding of a timeline for potential negotiation of their own portfolio products and overall exposure risks to negotiation,” he said.

“The second is they need to be gathering the data to support negotiating with CMS at the time of negotiation.”

Ana Mulero is a freelance writer based in Puerto Rico. She can be reached at anacmulero@outlook.com and @anitamulero on Twitter.

 

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Humira Biosimilars and Others Face Uncertain Future Under IRA

By Ana Mulero
July 19, 2023

The recent flood of Humira biosimilars to enter the market highlights the uncertainty that surrounds generic competition for biologics following the introduction of the Inflation Reduction Act.

On July 1 and 3, seven biosimilars entered the U.S. market to challenge Humira, joining Amgen’s Amjevita (adalimumab–atto), which hit the market in January. This flood of generic competition adds insult to injury to AbbVie’s blockbuster arthritis drug, which was penalized under the Inflation Reduction Act (IRA) for its price hike, affecting price and hence competition.

L.E.K. Consulting Managing Director Alex Guth told BioSpace that the competition from biosimilars “has a substantial negative impact on net pricing potential for existing biologics, including Humira.” Penalties and price negotiations imposed by the IRA burden biologics even further, he added.

The legislation was signed into law in August 2022, and the Centers for Medicare and Medicaid Services (CMS) has already penalized 70 drugs and biologics so far. In June, the federal government flagged 43 drugs, including Humira, whose prices have risen faster than the rate of inflation and are thus required to pay a penalty in the form of a rebate to Medicare under the Medicare Prescription Drug Inflation Rebate Program portion of the IRA.

The rebate will be the difference between what the price increase would have been if the manufacturer had stuck with the inflation rate for its increase andthe actual increase of the drug or biologic. For Humira, that amounts to a reduction of 19.72% from what its prices would have otherwise been.

The Biden administration said it intends to invoice these manufacturers by the fall of 2025. Meanwhile, beginning in April, the 20% coinsurance that consumers are charged began to be calculated based on a price increase commensurate with the inflation rate. Until September 30, 2023, Medicare patients may see coinsurance amounts for these drugs reduced by $1 to $449 versus what they would have received before the IRA.

The price penalty combined with the entry of biosimilars adds pressure to price competition.

Humira biosimilar developers have adopted different pricing strategies. Amgen and Biocon Biologics have said they would sell their products at two prices, with the first at a small discount relative to Humira’s new adjusted price of about $7,299 for two subcutaneous kits, or about $84,000 for a year’s supply and the second at an even steeper discount. Biocon said its second price would be 85% lower than Humira’s—about $12,500 each year.

Humira is likely a cautionary tale, experts say. CMS will issue a new list of drugs and biologics that will be subject to rebates based on the rate of inflation on a quarterly basis, and which ones are subjected to rebates could change each quarter as the rate of inflation changes. This volatility is expected to perpetuate uncertainty in the biosimilars market.

In addition, the drug price negotiation portion of the IRA further complicates the issue without a clear answer as to whether the legislation will encourage or discourage the development of biosimilar drugs.

Overview of Humira Biosimilars

The first Humira biosimilar to enter the market was Amgen’s Amjevita (adalimumab–atto) in January. Earlier this month, seven more joined the competition: Fresenius Kabi’s Idacio (adalimumab–aacf), Biocon Biologics Ltd’s Hulio (adalimumab–fkjp), Boehringer Ingelheim’s Cyltezo (adalimumab–adbm), Organon & Co. and Samsung Bioepis Co., Ltd.’s’ Hadlima (adalimumab–bwwd), Sandoz’s Hyrimoz (adalimumab–adaz), Celltrion USA’s Yuflyma (adalimumab–aaty) and Coherus BioSciences, Inc.’s Yusimry (adalimumab–aqvh).

The only Humira biosimilar that has received interchangeability designation, which allows pharmacists to substitute a biosimilar at the point of dispensing without prior authorization from the prescriber, Cyltezo.

How Will Price Negotiation Affect Biosimilars?

The industry trade lobbying group Pharmaceutical Research and Manufacturers of America (PhRMA) issued a report in June that examines these issues. PhRMA, along with Merck, BMS and others, has sued the U.S. government, challenging the constitutionality of the IRA’s drug price negotiation program.

“Under the IRA, biosimilar manufacturers are not able to predict, with any accuracy, which biologics will be subject to price setting, creating significant uncertainty regarding whether there will be an opportunity to recoup the investments required to develop a biosimilar competitor,” according to PhRMA’s report.

Guth said that this component of the IRA could have positive implications for biologics developers. That’s because biologics, which will be subject to price negotiation after 13 years of market exclusivity, are excluded from pricing negotiation if they already face biosimilar competition or will in the next two years.

This “may create an environment in which originators are more amenable to biosimilar entry than previously because it provides some level of protection from near–term negotiation,” Guth said. But, the IRA can also disincentivize biosimilar development, he added—if negotiation brings down pricing prior to biosimilar entry. This would limit the potential incentive to develop biosimilars, Guth said.

Margery Fischbein, managing director of healthcare at Cassel Salpeter & Co., agreed that this could happen. “An unintended consequence of the IRA is that generic and biosimilar manufacturers may be disincentivized to enter the market given their pricing advantages relative to Medicare negotiated brand name drugs may no longer be attractive,” Fischbein told BioSpace.

Guth said what the industry should be watching is the specific products CMS will identify for negotiation and the beginning of the price negotiation meetings between CMS and the manufacturers of those products. CMS will announce the first ten drugs selected for negotiation under Medicare Part B by September 1.

“The uncertainty for biosimilars generated by the IRA—both in terms of rebates and price negotiation—has not been fully anticipated by the lawmakers,” Guth said.

Ana Mulero is a freelance writer based in Puerto Rico. She can be reached at anacmulero@outlook.com and @anitamulero on Twitter.

 

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