At Bayer, a groupwide restructuring is being rolled out as a top priority. But, to Juergen Eckhardt, M.D., who leads both the investment arm Leaps by Bayer and the pharma business development team, the ongoing overhaul won’t disrupt the German company’s dealmaking appetite.
“We are firing on all cylinders to focus on our core mission, which is sourcing new, innovative compounds and replenishing our pipeline,” Eckhardt said of the BD team during an interview on the sidelines of the BIO International Convention 2024 in June.
Eckhardt, who has been leading Leaps by Bayer since its formation in 2016, took on the dual role heading up pharma BD in September 2023. He views the two roles as complementary to each other.
Leaps was created for Bayer to invest in potential breakthrough technologies at the early stage on both the healthcare and agricultural sides. Eckhardt considers them long-term investments that are made not just to maximize the financial return on the investments themselves but to help unleash the potential of scientific breakthroughs.
Once a platform matures enough to have produced discernible individual assets, that’s when the pharma BD team could come in, as was the case with BlueRock Therapeutics, a cell therapy specialist that Bayer first invested in and then bought out in 2019, Eckhardt noted.
For these platform biotechs like BlueRock, Bayer has kept them at arms-length as standalone subsidiaries following the acquisition. Such a model, while offering the biotech autonomy and flexibility, also leaves behind potential duplicate functions. And Bayer is aiming to reduce redundancies as part of a major reorganization. In the first half of 2024, the company laid off about 3,400 people across the entire group.
However, Eckhardt said this arms-length business structure is here to stay.
“The idea was really to keep that innovation powerhouse when we acquired it, to keep that intact,” Eckhardt said.
“We are not driven by realizing cost synergies,” he continued. “If you start to focus on cost synergies, I think that’s the beginning of the end of these satellites. You have to be comfortable to allow for some redundancies.”
After spending the first few months more “inward-focused” to implement the new operating model championed by CEO Bill Anderson, Eckhardt has been back on a busy dealmaking track for some time now.
In June, Bayer announced a strategic collaboration with Samsung to work on a study about sleep disturbances related to menopause. In March, Bayer shelled out $310 million in upfront and near-term payments to obtain European rights to BridgeBio’s close-to-market transthyretin amyloid cardiomyopathy drug acoramidis.
The BridgeBio deal appears to be an outlier for Bayer, which has historically been heavy on early-stage and platform pacts. And that pattern may continue.
“I’ve seen people try to get through patent cliffs by purchasing phase 3 assets, and that’s an expensive game with a lot of risk, and the industry track record on these sorts of deals is poor,” Anderson said during an investor event in March.
“The bulk of our activities will be in sort of replenishing the early-stage pipeline,” Eckhardt said, pointing to Anderson’s comment. “But we will be opportunistic.”
Eckhardt noted that building a stronger commercial presence in the U.S. is an objective that’s being factored into Bayer’s M&A decisions.
Although Eckhardt said he didn’t feel any internal pressure to specifically scout for late-stage assets, that topic has been on investors’ minds for some time given the patent cliff and competitive pressure for Bayer’s top-selling meds Xarelto and Eylea, plus a relatively thin internal late-stage pipeline.
That situation looks truer for Bayer’s oncology department—its last new molecular launch was five years ago for prostate cancer drug Nubeqa. While Bayer is advancing Nubeqa in additional treatment settings, it currently has no phase 2 or phase 3 programs for new cancer drug candidates. Last year, Bayer penned a radioconjugate deal with Bicycle Therapeutics, but that was a discovery partnership.
“Oncology is one of our key focus areas; we’re also constantly out there in the market, checking what would be a good fit for us,” Eckhardt said during the June interview. “But there is nothing imminently to be announced in that field.”
Even on radiotherapy, which Bayer has a history in and has lately attracted renewed interest among Big Pharma companies, Eckhardt said Bayer didn’t see “an urge to do something big” and that there was “nothing specifically on the shopping list.”
Oncology is one of six focus areas for Bayer and Eckhardt’s BD team. Among the six, Bayer doesn’t have internal research capabilities in ophthalmology or women’s health despite its big commercial presence there. So, in those two areas, Bayer will likely be leaning toward later-stage transactions that “can quickly be slotted into our commercial infrastructure,” rather than early-stage deals, Eckhardt said.
Besides those fields and cardiovascular disease, Bayer is going after neurodegenerative diseases, particularly through cell and gene therapies at its subsidiaries BlueRock and AskBio. In immunology, the work is primarily about leveraging the chemical proteomics platform at Bayer’s Vividion Therapeutics unit.
Eckhardt also raised the example of Eylea. Before its partnership with Regeneron on the VEGF inhibitor, Bayer had no presence in ophthalmology.
The fact that those deals on Eylea, AskBio, BlueRock and Vividion opened new therapeutic frontiers suggests that the company is not shut off from new opportunities.
“This is the thing between top-down strategy and bottom-up opportunity,” Eckhardt said.
For now, external projects that fall beyond those six areas will normally be weeded out fast, but Bayer remains open-minded, he added.
One thing Eckhardt expects will be different for Bayer’s biopharma M&A moves under his leadership is fewer activities around platform deals because the platform acquisitions of BlueRock, AskBio, Vividion and Noria/PSMA Therapeutics in recent years have positioned Bayer well, he said.
“I think we feel very good about our platform technologies that we now have in house through these acquisitions,” Eckhardt said. “So I wouldn’t expect that you would buy another four platform technology partners in the next four years.”