Biotechnology: Dealmaking interest for SMid-cap biotech continues in 2Q

Research evidence excerpt

Biotechnology: Dealmaking interest for SMid-cap biotech continues in 2Q

deal value continues the BofAS

amy.qian3@bofa.com

trend of pharma looking for de-risked and bolt-on acquisitions which can be quickly

incorporated in order to plug near-term patent cliffs. So far in 2026, 14 deals with

$61bn in upfront deal value have been announced, with 9/14 for targets whose lead Abbreviations

assets were under regulatory review by FDA or already approved. 3/6 companies BD: business development

acquired in 2Q were in the rare disease space, while the broader 2026 trend is towards BIIB: Biogen

oncology and I&I in 2026 (9 acquisitions). In our coverage, KALV (No Rating, rare disease, FDA: Food and Drug Administration

I&I) was acquired by Chiesi for $1.9bn in cash and NBIX acquired Soleno (rare disease) KALV: KalVista Pharmaceuticals

for $2.9bn in cash. We believe the follow-through of deal-making activity can give LOE: loss of exclusivity

investors more confidence in buyouts as exit opportunities as pharma continues to cite M&A: mergers and acquisitions

their strong balance sheets and appetite for business development. We also note the Mgmt: management

pullback in valuations for non-large-cap commercial stage biotech companies could NBIX: Neurocrine Biosciences

entice further strategic interest. YTD: year-to-date

Macro factors drive selloff despite strong fundamentals

Revenue generating companies in our coverage are down 4% YTD as a basket,

underperforming SPX and XBI (Exhibit 2). In our view, the fundamentals continue to look

attractive for our Buy rated names, and we attribute the relative weakness vs XBI more

to recent macro overhangs than on financial performance. As seen in 2Q where 5/6

acquisitions were for commercial-stage companies, we continue to think the drawdown