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The JPMorgan Health Care Conference — the definitive launchpad for industry dealmaking — kicks off today, Axios' Claire Rychlewski writes.

Why it matters: As interest rates stabilize and the funding market for biotech rebounds, there will be plenty of white space in pharma to consolidate, dealmakers say. 

Driving the news: Already today, there are a trio of oncology deal announcements: Johnson & Johnson's $2 billion bid for Ambrx Biopharma, Merck's $680 million deal for Harpoon Therapeutics, and Novartis' proposed $250 million buyout of Calypso Biotech.

These follow Bristol Myers Squibb and AstraZeneca announcing separate billion-dollar deals in the last weeks of 2023.

The pending patent cliff and pricing pressures have dealmakers on alert after CVS-owned PBM Caremark announced plans to direct patients to biosimilars of AbbVie's blockbuster drug Humira.

State of play: Industry eyes are on Immunovant, an autoimmune drug developer whose early antibody treatment data beat expectations last fall.

"We think Immunovant might get acquired," Cowen analyst Yaron Werber says. "People are expecting an announcement at JPMorgan."

Werber also cited Celldex Therapeutics as a likely target. Its inflammatory skin disease drug that's been successful against at least one approved treatment is entering Phase 3 trials.

Other names on Werber's acquisition shortlist include oncology pharma Legend (a Johnson & Johnson partner) as well as metabolic pharma CymaBay Therapeutics and precision oncology company PMV Pharmaceuticals.

Zoom out: Alongside oncology and immunology, Arda Ural, EY Americas market leader of health sciences and wellness, says central nervous system therapeutics, metabolic diseases, endocrine and immunomodulators are increasingly attractive,

Muscle mass therapy biotechs are also of interest to Big Pharma, with Regeneron and Roche expressing interest, Jefferies analyst Michael Yee wrote in a recent note.

Yee adds that Eli Lilly's pending Phase 2b data for its muscle mass therapy could provide further fuel to the sector.

The intrigue: Although the FTC's challenge of Amgen's $28 billion proposed acquisition of Horizon Therapeutics was short-lived, regulators likely don't have much appetite for mega-mergers.

Analysts expect Big Pharma will likely focus on acquiring companies with late-stage, de-risked assets.

Yes, but: Late-stage clinical assets are far more expensive, meaning a bigger loss should the drug not succeed, Werber says.

"What large buyers should do is almost like a basketball analogy," Werber says. "When you shoot a free throw — to be good, you need to hit 85, 88%."

The same strategy applies to pharma, he argues. Strategics paying up for a late-stage, de-risked asset (a three-pointer, in this analogy) have more on the line should those drugs fail in final clinical trials.

"They need to go earlier stage, buy assets, and take more clinical risk," he says. "It's OK if only three out of 10 work out because if the assets are really good, the financial rewards way outweigh massively overpaying for a big company."

What we're watching: Focused on anti-competitive actions, the FTC has aimed at licensing deals alongside mergers.

In December, the regulator threatened to block Sanofi's licensing deal with biotech Maze Therapeutics, leading Sanofi to terminate the agreement.

"That's going to have an impact for sure," Werber says. "They're trying to flex their muscles."

Biopharma M&A ripens as JPM launches

1 big thing: Biopharma M&A ripens as JPM launches

Illustration of a hundred dollar bill with Benjamin Franklin dressed as a doctor and holding a prescription pill bottle.

Imbed Biosciences, a wound repair medical device company, has secured $10 million in new funding, the company tells Claire exclusively.

Why it's the BFD: Wound management has a significant economic impact on health care, with surgical site infections accounting for $3.3 billion a year in hospital costs.

Details: The convertible debt financing was led by Japanese conglomerate Niterra through its CVC fund jointly operated with Pegasus Tech Investors.

Imbed has at least one additional wound care product awaiting FDA review this year, co-founder Ankit Agarwal tells Axios.

How it works: Madison, Wisconsin-based Imbed's FDA-cleared flagship product is a multi-layer sheet made of polymeric film laden with bioactive molecules (ionic and metallic silver), designed to fight infection and buildup of biofilm.

Its newest product, which is awaiting FDA approval, includes local anesthetic lidocaine as well as metallic silver to manage pain.

The company recently inked a group purchasing organization (GPO) contract with HCA, significantly expanding its commercial reach, CFO Elizabeth Taylor says.

"We're about to sign another large GPO contract in the first quarter that would add many, many more hospital opportunities for us," Taylor says.

By the numbers: Imbed booked $4 million in revenue in 2022 and finished last year with $14.4 million, Taylor says.

She expects $25 million to $30 million in sales this year, which doesn't account for any new products.

Imbed has raised nearly $30 million to date.

What's next: "We are wed to some sort of corporate financing" in the next year to secure large commercial scale, Taylor says.

Medical device strategics with robust distribution channels could be attractive, as could institutional investors, Taylor says.

Of note: Imbed's technology was a logical extension of Niterra's mission to enable home health, says Dirk Schapeler, president of Niterra Ventures Company.

Since expanding its focus from automotive products in April 2023, Niterra has been investing in companies designed to manage diseases remotely.

"Some of those diseases we're working on, they involve wound care," Schapeler says. "Therefore, we have been investing into very differentiated technologies in wound care."

State of play: Imbed competes with Organogenesis (Nasdaq: ORGO), 3M-owned Acelity and ConvaTec (OTCMKTS: CNVVF), per Agarwal.

Imbed is also trying to claim market share from publicly traded med device giants Smith & Nephew and Johnson & Johnson, according to Agarwal.

Meanwhile, there's a cadre of virtual-first wound care players that have snapped up funding in recent years.

Schapeler says Imbed's product will likely be integrated into existing Niterra virtual care platforms.

2. The BFD: Imbed Biosciences unwraps $10M convertible financing

Illustration of a dollar bill made into a bandaid

Want more health tech deals? Check out the Axios Pro Deals Tracker.

• Heranova Lifesciences, a Boston-based developer of noninvasive endometriosis tests, raised $13.5m in seed funding from insiders Pivotal bioVenture Partners China, Sinovation Ventures, Emerging Technology Partners and Triwise Capital. https://axios.link/47qrvs8 

• QuantHealth, an Israeli clinical trial design startup, received additional funding from Accenture Ventures and others in its Series A round, bringing the round's total to $17m. https://quanthealth.ai/

• Credo, a Denver-based developer of tools for medical record retrieval and analysis, raised $5.25m in seed funding led by FCA Venture Partners with participation from insiders Hannah Grey VC, FirstMile Ventures and SpringTime Ventures. https://axios.link/41RAx0b

• Health In Her Hue, an NYC-based digital health platform aimed at reducing racial health disparities for Black women and women of color, raised $3m in seed funding led by Seae Ventures and joined by Johnson & Johnson Impact Ventures, Morgan Stanley Inclusive Ventures Lab, Genius Guild, HBCU Founders Fund and Stanford Impact Fund. https://healthinherhue.com/

• WellBe, a Chicago-based home value-based Medicare Advantage, raised an undisclosed amount from CVS Health Ventures. https://www.wellbe.com/ 

• OrbiMed invested in Nanotronics, a New York-based industrial AI company focused on quality control and precision manufacturing for health care and biotech. www.nanotronics.co

• GE HealthCare (Nasdaq: GEHC) agreed to acquire MIM Software, a Cleveland-based provider of medical imaging tools for radiation oncology, molecular radiotherapy, diagnostic imaging, and urology at imaging centers, hospitals, clinics, and research organizations. 

• Thurston Group-backed ARC Health acquired Mindsoother Therapy Center, a Livingston, N.J.-based provider of comprehensive behavioral health care services. https://www.mindsoother.com/

3. Deals o' the day

• Susan Tousi, former chief commercial officer at Illumina, became CEO of Delfi Diagnostics. https://axios.link/41P1NN5 

• Jeff Jonas, and Al Robichaud, former CEO and CSO of Sage Therapeutics, respectively, joined Cure Ventures as partners. www.curevc.com

• Philip Boyd, former managing director of health care investment banking at Guggenheim Partners, joined Leerink Partners as senior managing director of health care services and tech. https://www.leerink.com/

• Dierk Beyer, former managing director at Cowen Europe AG, and Tobias Levedag, former partner at Cowen Inc., joined Raymond James' Germany offices as managing directors in the firm's health care investment banking practice. https://axios.link/48swTN0

• Ray Bassi, former VP of sales at DermTech, joined PatientFi as SVP of sales. https://axios.link/3tC8zJp 

• Rodolphe Louvet was promoted to principal at Stanley Capital Partners. www.stanley-capital.com

• Srinivas Velamoor was promoted from EVP to president and COO at NextGen Healthcare and James Hammerschmidt was promoted to CFO. https://www.nextgen.com/

4. It's Personnel

🚫 ChatGPT bombs test on diagnosing kids' medical cases — ArsTechnica

🧠 Cerebral to pay $500,000+ in restitution to consumers for burdensome cancellation tactics — AG of NY

⚕️Amazon Health launches new initiative to address chronic conditions — Forbes

5. Your daily dose

Illustration of a repeating pill bottle pattern with one rolled up newspaper.

Happy Monday, Health Tech readers, and happy JPM week to all who celebrate. 

🌉 Situational awareness: Erin may pop into some receptions in SF related to the conference. Say hello!

🎥 In time for awards season, Claire finally caught Martin Scorsese's "Killers of the Flower Moon," which was equal parts devastating and beautiful. 

✅ Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece. Please ask your colleagues, friends, and family to sign up.

January 08, 2024

1 big thing: Biopharma M&A ripens as JPM launches