Covid pandemic fuels healthcare M&A, with recent deals from Johnson & Johnson, Sanofi, AstraZeneca and former KKR exec Jim Montazee

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The upcoming September issue of Mergers & Acquisitions will analyze the impact of the coronavirus on healthcare M&A, including deals announced this week.

Leveraging high interest in all things healthcare-related during the Covid pandemic, former KKR executive Jim Momtazee has launched Patient Square Capital, a Menlo Park, California-based private equity firm focused on healthcare deals. Momtazee spent 21 years at KKR, where he helped form the firm’s healthcare group in 2001 and led it for more than a decade.

“In an industry as critical, complex, and capital intensive as healthcare, there exists a need for a specialized investment firm with substantial scale that is built for and focused every day on health,” said Momtazee. “Successful healthcare organizations relentlessly focus on the patient. A successful and enduring healthcare investment firm must do the same. Patient Square is the combination of a patient approach to investing and a patient-centered orientation.” Patient Square will invest in technology-enabled services, biopharmaceuticals, medical devices, diagnostics, providers, digital health and consumer health.

Joining Momtazee is Maria Walker, who is serving as partner and CFO. Walker previously spent 17 years at KPMG as senior partner and global lead in its private equity practice.

Private equity investors aren’t the only ones announcing healthcare deals. Strategic buyers are rapidly snatching up targets focused on developers targeting a wide range of diseases, including the coronavirus, but not limited to it.

Johnson & Johnson agreed to buy Momenta Pharmaceuticals Inc. for about $6.5 billion to expand in treatments for autoimmune diseases. The deal involves an all-cash tender offer of $52.50 per Momenta share, J&J said in a statement. J&J expects the transaction to help its Janssen Pharmaceutical unit broaden leadership in immune-mediated diseases. The deal includes full global rights to Momenta’s experimental drug nipocalimab. Momenta received positive news on the drug in June when it hit its main goal in a phase 2 trial as a treatment for myasthenia gravis, an autoimmune neuromuscular disorder.

Sanofi recently announced it is buying biotech company Principia Biopharma Inc., which develops treatments for multiple sclerosis and a range of autoimmune disorders, for $3.4 billion, as the French drugmaker pivots toward innovative therapies to spur growth. The deal shows how drug companies like Sanofi need to keep hunting for new drivers of growth even as they race to find vaccines and therapies to try to defeat Covid-19, as Bloomberg News pointed out.

And AstraZeneca plc is forging ahead to become a global oncology powerhouse, even as it works on a vaccine for the coronavirus pandemic. The U.K. drugmaker paying as much as $6 billion to buy into Daiichi Sankyo Co.’s promising medicine for lung and breast cancer, the drugmakers’ second potential blockbuster oncology deal in two years. The U.K. drugmaker will pay Japan’s Daiichi $1 billion upfront to jointly develop and bring to market a cancer therapy in early clinical tests called DS-1062, the companies said.

For more in-depth analysis of how the coronavirus is affecting healthcare PE and M&A, check back later this month for the September cover story, Race for a Vaccine.

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