Episode summary
Lilly Strikes $3.8 Billion Deal for Psychedelic Drugmaker | Bloomberg Intelligence
Bloomberg Intelligence
· · 17 min · Hosts: Paul Sweeney, Scarlet Fu · Guests: Sam Fazeli, Matt Henriksson, Mandeep Singh
Summary
Eli Lilly’s agreement to buy AtaiBeckley for up to $3.8 billion highlighted renewed drugmaker interest in psychedelics, with the guest saying the deal includes $2.8 billion upfront and $1 billion in contingent value rights tied to phase three and regulatory milestones. He argued the science is attracting attention because of the potential to treat depression, PTSD and other resistant mood disorders, and pointed to a wider group of public names in the space.
The guest also said Merck’s new oral cholesterol drug Lipfendra works through a different PCSK9 mechanism and that $3,800 a year is not especially expensive in a market where many therapies cost far more. Abbott’s second-quarter results eased investor fears around nutrition and CGM growth, and the analyst said the company’s diagnostics business, including Exact Sciences and its cancer-testing franchise, is becoming a more important driver.
On semiconductors, TSMC raised its full-year guidance and capex, but the analyst argued it is still being conservative about expanding supply, which leaves revenue on the table and may help Intel. He also said Uber’s deal for Delivery Hero is about consolidation and diversification as autonomous driving remains a long-term threat.
Key takeaways
- The guest said Lilly’s AtaiBeckley deal is $2.8 billion upfront plus $1 billion in contingent value rights tied to development and regulatory milestones.
- He argued psychedelics are gaining traction because of potential benefits in treatment-resistant depression, major depressive disorder and anxiety.
- The analyst said Abbott’s CGM business is still a roughly $10 billion revenue run rate and that nutrition is recovering after pricing changes.
- Mandeep Singh said TSMC raised full-year guidance and capex but is still conservative on supply, which he thinks leaves revenue on the table.
- He said Uber’s Delivery Hero deal helps diversify the company globally as autonomous rides remain a future risk.
Notable quotes
“we've got $2.8 billion upfront cash and a billion dollars in contingent value rights”
“that's a $10 billion revenue run rate for the company”
“the playbook with all marketplaces is consolidation”
How the episode opens
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Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's talk about what's going on in the healthcare space and pharmaceuticals in particular. a big deal here uh by Eli Liy.
It's made a lot of acquisitions, Paul. I feel like we're always talking about Eli Liy making another purchase. Uh Sam Fiselli is our Bloomberg Intelligence Director of Research covering healthcare, defense, industrials, and autos.
He is our drug boss. That's what we like to call him. And he actually has a jacket that says that.
And uh Sam joins us right now from London. Sam, I don't know if you were cheering for England, but if so, um our condolences to you. Um, I wanted to um start with this Eli Liy purchase uh buying a Tide Beckley for up to $3.8 billion.
That that valuation strikes me as interesting. Why for up to $3.8 billion? Are there incentives along the way here?
Absolutely right. So when you look at the numbers, we've got $2.8 billion upfront cash and a billion dollars in contingent value rights. So that's CVRs uh tied to the lead assets which are in two forms.
one in interasal, the other one is in under the tongue buckle. Uh getting through uh phase three and also getting um EA approval because these are psychedelics. They're they're drugs that are quite fashionable these days in terms of development because of the profound effects that we're seeing on treatment rel uh uh resistant depression on major depressive disorder uh generalized anxiety disorder that sort of thing.
So there's a a resurgence of interest in these psychedelics which are synthetic.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- psychedelic drug deals
- biotech regulatory approvals
- pharma earnings guidance
- semiconductor capex outlook
- m&a in mobility and food delivery
Companies and tickers mentioned
- LLY
- MRK
- ABT
- TSM
- UBER
- Eli Lilly & Co.
- AtaiBeckley Inc.
- Merck & Co.
- Abbott Laboratories
- Taiwan Semiconductor Manufacturing Co.
- Uber Technologies Inc.
- Delivery Hero SE
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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