“Un-shelfing shelved assets to boost deal activity”
Haan, Floor de
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The first quarter of 2022 has shown an unfavorable stock market environment for companies active in the life science and health sector. The Kempen Life Science & Health (LS&H) sector team of the investment banking department saw this reflected in a decreased deal activity. This, consequently, meant that the sector team was not measuring up the amount of deals they partook in the first quarter of the year prior. The stock market and all activities surrounding it are known for its endless opportunities and entrepreneurial environment. This means there is always room for business development and ways to be creative and work around external factors. The problem at hand was decreased deal activity and the goal was to increase deal activity. LS&H sector team is active in different types of deals, one of them being the sale and acquisition of assets. For life science companies these assets often come in the form of drugs. Many companies have drugs that they are no longer developing/ testing, otherwise known as shelved assets. If a company has shelved assets which it no longer plans to develop further, then they might be interested in selling said asset. This is where the LS&H team can step in and facilitate the process by reaching out to companies and inquire whether they are interested in selling or acquiring shelved assets from/ to another company. This thesis explores the idea of facilitating deals as a possible form of business development. This was done by creating a theoretical framework of background information such as information on the life science stock market, the ‘normal’ drug developing process, the drug repurposing/ reviving process, and approaches for drug repurposing. This is followed by a quantitative and qualitative research where both the current and historic shelved asset landscape is represented. The quantitative research is in the form of a database that was created, where all currently shelved assets of life science companies were logged and analyzed. Shelved assets were admitted to the list based on a set of criteria and analyzed to gain insight in current trends and patterns. The qualitative research was a search into previous cases where a shelved asset played a central role. Examples of deals where the sale of a shelved asset led to a successful drug are described in this thesis to give some context to the possibilities and potential they hold. The key take aways from the theoretical background were that the life science stock market and thus deal activity were down in the first quarter of 2022, as is mentioned at the beginning of this text as well. Furthermore, ‘normal’ drug development and clinical testing is extremely expensive and time consuming. For this reason, it might be interesting for companies to look into shelved asset drugs that has already been developed and been through some clinical trials. This shelved asset can be used for the intended disease it was developed for, in this case it will be referred to as reviving a shelved asset, or it can be tested in another disease, this will be referred to as repurposing a shelved asset. There are a few different approaches that can be taken to figure out which disease the repurposed drug might be effective in. The approaches can be divided into two types: computational approaches (data driven) and experimental approaches (research driven). In conclusion, the combination of current and historical data shows that shelved assets are very prevalent and deals concerning shelved assets can be very successful. The main point of interest is however whether this approach could facilitate deals. After analyzing all the data, it seems that pro-actively proposing shelved assets as deal opportunities could benefit deal activity.