00:00We were talking at the couple of months ago and basically it was this idea that, OK, health care has
00:05kind of gotten off to this slow start. But you had mentioned, yeah, but the conversations have been really robust.
00:10Is it fair to say that that slow start has now fully picked up steam? Absolutely. I think 2026 is
00:15off to a torrid pace in biotech, both M&A and the equity markets. Thus far this year, there have
00:21been more deals over $1 billion in 2025 combined. So it's exciting. And I think, you know, there are a
00:29couple of reasons for that.
00:30I think one, as we talked about before, you have these large pharmaceutical companies looking at patent cliffs coming up.
00:35And by 2030, I think there's like 300 billion coming off. So there's a need to be aggressive to go
00:40out, find growth. And they're being rewarded for that as well. And then you're also seeing a new class of
00:46buyers come in. These are mid-cap companies that were targets before that have really reached escape velocity and now
00:53are looking around. So there's a whole new universe of buyers out there. And I think that's, you know, really
00:57driving the pace of activity.
00:59Does that mean that activity isn't just happening in large cap, that you are seeing smaller deals lower down on
01:04the food chain also getting achieved?
01:05Because for M&A more broadly, it has kind of been on the upper end of the table where it's
01:08been occurring.
01:09So there's definitely scale transactions happening. There have been four $10 billion deals in the past three or four months,
01:15which is amazing.
01:16But it's really that smaller segment that you mentioned that's happening, where you're seeing these mid-cap companies who are
01:23going on buying a billion, $2 billion companies.
01:26And that has also extended to the private markets. That's a big change. We're seeing a huge number of deals
01:33in private transactions.
01:34So those smaller deals are driving activity in addition to the big deals.
01:39How come it can happen in biotech, but it feels like it can't happen elsewhere, specifically for private equity?
01:44Yes, some exits are starting to happen, but it still feels largely like a sector that's been gummed up, I
01:49guess, say for healthcare and biotech right now.
01:52I think it's a confluence of things. I think, one, it's a growth area.
01:56Biotech, if you look around the world in terms of the blockbuster of drugs, the potential, and it's global.
02:02China is very active. The U.S. is very active. So it's a place where you're seeing investors want to
02:07put capital.
02:08M&A is helping that. And then you've also seen a resurgence in the equity markets generally.
02:13The XBI is up 80 percent this year, right? So you're seeing capital coming back in both into public companies
02:18and also private companies, too.
02:20So it's a really virtuous cycle. You have M&A. People want to invest. You have more IPOs happening.
02:25There are really great receptions on these IPOs. So it's a really, really nice space now.
02:30And I'd also think, you know, a year ago, if we were talking, the sentiment was a little bit negative.
02:34We were worried about the FDA, MFNs, pricing tariffs. And I think those sentiments have largely flipped.
02:41And there's a desire to go out and really do deals. And these buyers, most importantly, are being rewarded for
02:47the transactions by their investors.
02:48Just speaking of the regulatory environment, President Trump, speaking from Turkey moments ago,
02:53was calling out kind of the list of companies that have invested more in the U.S.
02:56And one of them he mentioned was Merck. And I wonder if there is sort of this appetite, at least
03:01support from regulators,
03:02that, yes, deals are getting done, but ones that are very America-centric. Do you see that sort of environment
03:07emerging?
03:09I do. I do. I think, look, the U.S. biotech ecosystem is amazing.
03:14It's great to see these world-class companies like Merck investing back in the U.S.
03:18We have the best talent around the world. We have the best system.
03:21But there's real competition around the world, too. China has amazing innovation.
03:26Assets there are being sought after as well. So I think the bottom line is, I think that's very great
03:31for the patients around the world.
03:33So I think it's great to see in the U.S., but I expect it to happen around globally as
03:37well.
03:38Are cross-border deals also being accepted as widely by this administration, or is there a little bit of reticence?
03:42No, I think the regulatory environment is very hospitable to transactions.
03:46You're seeing a lot of the European companies investing in the U.S. a lot. Japan has been very active.
03:51So I think there is definitely no slowdown from a cross-border perspective.
03:55You mentioned that public markets have been very supportive. And I wonder if on a wider scale for M&A
03:59in general,
04:00we've seen that start to flip, and specifically a lot of volatility around AI-related names.
04:05Obviously, the deal environment has been really robust for AI-type companies.
04:09This stretch that we're going through, what does it take to start to get companies to back off,
04:13to get nerves because of what public markets are doing? And are we anywhere near that?
04:18I think it's going to take some very significant pullback to have that happen,
04:22because I think the momentum for AI, even with this volatility that we're seeing, is so significant.
04:26And everyone is seeing the implications for AI day-to-day, but long-term businesses.
04:31And I think there's just a genuine concern that if you're not investing in AI, you're going to be left
04:36behind.
04:36So will we have some pullbacks and slowdowns here and there? Yes.
04:40But I expect AI to really continue driving a lot of activity in this space.
04:44What about the funding for AI? These stories continue to crop up.
04:47Yes, they can still tap debt markets, but you get someone like an Amazon yesterday, tap the debt market and
04:52get like full reception,
04:54but only 1.6 times oversubscribed, and it's usually something like four times.
04:58Are these companies having a harder time finding the capital that they need, or are capital markets still wide open
05:03for them?
05:04I think capital markets are very good for them.
05:05And this is a place where I think private equity has a huge place to play in terms of hybrid
05:10capital solutions, investing, financing.
05:12We've seen a lot of that with data center deals and other collaborations going on.
05:16So I expect there's going to be lots of capital that is going to be seeking to invest in that.
05:21And you're right, they're very capital intensive, and at some point investors are going to expect to see a return.
05:26But right now, I think companies are being penalized for not investing versus the overspending.
05:31How much does that change what you do?
05:33Because you mentioned something, the way that these deals often take shape, it's not like company A buys company B.
05:38It's that they have a collaboration, they have an agreement, like an acqui-hire kind of thing is occurring.
05:43The type of deals feels very different.
05:46Has that changed a lot with what you're doing and how you're working with these tech companies?
05:49I think so.
05:50I think the acqui-hires are, they've been around different spaces before.
05:54That is a real emerging trend here, because these companies are looking not just at the platform they're buying,
05:59but that talent, and they want to bring them in and then have them sit at the companies and then
06:03build out what's happening.
06:04So those parts of the deal, the people part, I think have become the key parts of the AI deals.
06:11But in terms of cleaning up partnerships, we see that across industries.
06:14The biotech space, a lot of the transactions we're talking about are partnerships that result in deals.
06:19So a partnership or an investment a lot of times is the first step towards a transaction.
06:23Is that new or this has been happening throughout?
06:25No, I think that's been happening for a long time.
06:27That's been a continuing trend, and whenever someone's entering into a partnership, we always expect that that party is probably
06:33the most natural buyer for the asset.
06:35Okay, so we've had a really robust first half of the year, deal-making and specifically biotech.
06:39Does it slow down?
06:41I don't think so.
06:41I don't think so, at least based on sort of what we're seeing, our pipeline.
06:45I don't think it's going to slow down.
06:47I think there is really positive momentum, and like I said, I think the sentiment in the C-suite is
06:53going out and doing transactions, and I think investors expect it.
06:57So I think it's going to continue.
07:00I'm going to ask this with the full knowledge that this didn't occur in the first half of the year,
07:05but geopolitics.
07:06I mean, it's back in the headlines, market volatility, threats from the president.
07:10Again, it obviously didn't hamper deal-making activity in the first half, so I almost feel silly asking this.
07:15But is there a world where it does slow down deal activity?
07:18I never say never, but the activity levels have remained constant, notwithstanding different events happening around the world.
07:26You know, take what's happening in the Middle East and, you know, issues with China.
07:30I think it would take something very significant to really slow down the pace of activity now.
07:35So knock on wood, it won't happen.
07:37But my prediction is a really strong second half of 2026.
07:40Any risk you are worried about what happens in the midterms if Congress flips?
07:44Does that mean a bit of a feedback?
07:44We're always watching that.
07:46I think it's hard to assess sort of the impact of that quite yet.
07:49But obviously, if there is a change in Congress or the Senate, we'll be watching carefully.
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