Newsletter December 2020

December 2020
for Europe & Germany
News Europe
Poland-based Scanmed Group acquired by Abris Capital Partners
Polish acute clinics and primary care operator Scanmed has been acquired by private equity investor Abris for EUR 76m from the South African hospital group Life Healthcare.
Scanmed – with 32 facilities in 20 cities nationwide – is one of the largest private entities operating in the healthcare system in Poland and the second largest private cardiac care provider.

News Germany
Formycon reveals positive results from pre-clinical studies for COVID-19 drug
Early December the German biotechnology Group Formycon revealed the first positive results for its COVID-19 drug which is targeting to creating a treatment option for infected COVID-19 patients. These results will be validated in a clinical trial in 2021.
Following the announcement, the share price increased by more than 80% in the subsequent days resulting in a market cap of more than EUR 650m.
Ardian complements shareholder base of French medical diagnostic group Inovie to support growth
Groupe Inovie is the leading independent medical diagnostic provider in France with 19 facilities in South / Central France.
The Ardian investment is intended to accelerate external growth and diversification of the Group.
Following the transaction financial investors (i.e. Ardian, GIC, APG and Mubadala) are estimated to own 63% of Inovie while the remaining 37% are held by the Group management and biologists
US pharmaceutical giant acquires German biotech company MYR for more than EUR 1bn
Gilead Sciences agreed to acquire MYR from its current shareholders (founders, VC investors such as High-Tech Gründerfond and Maxwell Biotech Ventures) for EUR 1.15bn plus additional EUR 300m in case of FDA approval.
Founded in 2010 and headquartered in Bad Homburg, MYR is a biotech company engaged in development and commercialization of therapeutics for the treatment of chronic hepatitis B and D virus infections.

H2 Equity Partners to acquire Pan-European ophthalmology group Optegra from Eight Roads Ventures
The UK-based Optegra, which operates 23 eye hospitals (i.e. offering cataract surgeries and AMD treatments) in the UK, Czech Republic and Poland, has been acquired by Dutch PE firm H2 Equity Partners.
Optegra, previously owned by Eight Roads Ventures since 2008, is expected to continue its growth strategy backed by the new shareholder.
CompuGroup Medical (CGM) strengthens its US business with the acquisition of eMDs
The listed German medical software company CompuGroup continues its growth strategy by acquiring 100% of the US-based healthcare IT provider eMDs from Marlin Equity Partners for an EV of USD 240m. 
This deal, which is the second largest acquisition in Group history, perfectly complements CGM’s geographical presence and product portfolio in order to offer comprehensive solutions for doctors’ practices.
Carlyle Group acquires UK senior housing developer Beechcroft from the British PE Alchemy Partners
Beechcroft Development is a project developer for high-end luxury for-sale retirement facilities in prime locations in the UK.
For more than 35 years the Group offers a fully integrated platform covering the entire development value chain including site sourcing, design and planning, construction, and sales.
The investment of Carlyle’s Europe Realty fund is in line with its investment strategy of focusing on properties underpinned by demographic trends.
French Domidep acquired Römergarten Residenzen in a trade sale 
The PE-backed (I-Squared Capital) French nursing care operator is continuing its internationalization strategy (following market entry to Belgium) by acquiring the Römergarten Group (20 facilities) as a platform to enter the German market. 
ACXIT Capital acted as the exclusive financial advisor to the shareholders of Römergarten Group. Following the sale of Medical Senioren Park to Quadriga Capital, this transaction represents the second deal of ACXIT Capital Partners in the nursing care market in Germany in 2020. 
Sources: Company Information, Reuters, Mergermarket, ACXIT Capital Research
COVID-19 – The Race to Cure
After the severe acute respiratory syndrome SARS-CoV-2 was officially declared a pandemic in March 2020, the world is now 9 months later suffering from its second wave, which is causing further severe damage to the economy. So far, the virus has infected about 73 million people and caused more than 1.6 million deaths globally, whilst having infected about 1.4 million people in Germany with a total amount of deaths of almost 24 thousand, equaling a mortality rate of 1.5%.

However, the announcement of the development of several effective vaccines has raised hopes that vaccinations will offer a way out of the pandemic and thus, bring us back to normality. These ground-breaking developments reflect the incredible scientific achievements resulting from the concerted efforts of the global scientific community to address the COVID 19 pandemic. Researchers have been able to characterize a new disease within a short period of time, develop diagnoses, establish treatment protocols, and prove the effectiveness of drugs and vaccines in clinical trials.

Although the newly developed vaccines are not a miracle solution to directly combat and stop the pandemic, they represent an important step in the right direction. However, it is not yet possible to predict by when the effect of a broader vaccination of populations will lead to a control of the pandemic or even to an end of it. There are still many questions to be answered regarding the distribution, long term efficacy and safeguarding of vaccines. The development of new therapeutics might have an additional and important impact on the pandemic situation.

The development of vaccines
Approximately 140 registered COVID-19 vaccine studies were initiated worldwide during the pandemic, with some of them showing very promising results in late-stage studies.

The probably most promising results came from the partnership between BioNTech and Pfizer and from the US company Moderna. Both mRNA vaccines showed an efficacy rate of approximately 95% in their Phase 3 study. BioNTech/Pfizer expect to produce up to 50m vaccine doses in 2020 and up to 1.35bn doses by the end of 2021 globally, whilst Moderna hopes to produce about 20m this year and up to 1bn doses in 2021. The FDA has issued already an emergency use authorization for the BioNTech/Pfizer product for distribution in the U.S., so did the UK Health authority. In both countries vaccination has already started. It is expected that the EMA (European Medical Agency) will approve the vaccine for use in the EU prior to Christmas. Furthermore, AstraZeneca and Oxford University recently succeeded in developing an inoculation with high efficacy, which ranges from 62% to 90%, with an average efficacy rate of 70%, which, however, depends on its dosage.
It is interesting to note that Pfizer/BioNTech and Moderna are planning to sell their vaccines at market prices, AstraZeneca plans to distribute its vaccine at cost during the pandemic.

It is expected that the main developed economies (e.g. Germany, UK, US) will have started a more widespread distribution of vaccines by beginning of 2021 and is likely to achieve immunity by the end of the year. Obviously, this achievement depends heavily on the efficacy of vaccines and Covid-19 copy charge, the implementation of mass manufacturing of vaccines and individuals’ acceptance to a vaccine.

The development of therapeutics
Besides the development of vaccines, and with an increasing awareness in the public, researchers around the world are searching for a treatment to help those who have already been infected by the virus. Although the development of vaccines is in its final stages, the development of drugs is somewhat behind. Even if a COVID-19 vaccine seems more important at this stage as it could stop the spread of the virus, drugs come into play once an infection has occurred. According to ClinicalTrials, there are over 1,200 registered drug studies related to COVID-19 across the globe, some of which have already received emergency approvals.
To mount an immediate response to the health crisis, many existing drugs originally developed for use in other indications, such as respiratory diseases, are now being tested for use in COVID-19. These include antiviral drugs and immune modulators that were previously approved for the treatment of other disease conditions. These drugs have a regulatory record and established safety profiles which help expedite the development process. The novel targeted therapies, including monoclonal antibodies and convalescent plasma therapy, are mainly targeting the SARS-CoV-2 viral entry step, as antibodies that will neutralize the virus. Some of these products may prove to be helpful in preventing the spread of the virus in the body, thereby accelerating recovery after infection, or providing a means of prophylaxis. Still, the SARS-CoV-2 virus remains novel and many aspects of transmission, infection, and treatment are yet to be unraveled.

The current strategies under development mainly target ACE2 and S protein interaction for viral entry. Other potential therapeutic targets may include the sugar moieties as additional receptors on the host cells, mediation of viral entry processes by accessory proteins, secondary infection to organs outside the respiratory system, and the dynamic immune response to the infection. 

Up to now, hospitals have treated their patients with already known and proven drugs that are used for the treatment of other viral infections, but whose effectiveness on SARS-CoV-2 remains questionable, such as the use of Remdesivir. This drug has not been proven to have any significant effect on the survival chances of COVID-19 patients, which consequently led the WHO to recommend against this treatment. Furthermore, according to a WHO study, other COVID-19 drugs used, such as hydroxychloroquine, lopinavir and interferon, appear to have little impact on hospital mortality as well.

Researchers recently explored new promising therapies for COVID-19 treatments that have been considered “encouraging” in initial laboratory tests. An inhibitor that binds to an important virus enzyme and paralyzes it, created by Pfizer, is believed to be promising for the medium term. Among the frontrunners in the search for an effective treatment is the COVID R&D Alliance, which brings together 20 of the most experienced and accomplished leaders in therapeutic drug research and development, including the likes of Bayer, Pfizer, J&J, Novartis, etc. This powerful group has already identified promising inhibitors in cooperation with a university. 
While significant progress has been made, both from a prophylactic and therapeutic standpoint, there are still some uncertainties. To date, no long-term studies have been conducted. The duration of the immune effect of approved vaccines can still not be finally determined. Furthermore, the question arises whether the virus will develop into an endemic disease, as reinfection is a salient feature of many respiratory viruses.

Another matter requiring clarification concerns the distribution and storage of the vaccine. Distributing the vaccine, e.g. the vaccine made by Pfizer & BioNTech, will represent an immense logistical challenge, due to the ultra-cold temperature of up to minus 70°C needed for storage and limited infrastructure in place.

In our opinion, vaccines play an important role in the containment of the pandemic, however, therapeutics will still be needed to follow a holistic approach. As for the race for therapeutic solutions, companies with approved drugs in similar disease areas who follow a “repurposing strategy” with their product appear to be the frontrunners, given significant abbreviations of the regulatory approval process.

In conclusion, it is fair to say that the fight against the pandemic requires both, vaccines and therapeutics. The continuation of a concerted effort of the scientific community in conjunction with the biotech/pharma industry should be a strong basis for success.
European Healthcare Companies Outperform EURO STOXX 50
Healthcare Indices vs EURO STOXX 50
Source: S&P Capital IQ as per 14.12.2020
About us

ACXIT Capital Partners is a leading international corporate finance and financial advisory firm for mid-market clients and entrepreneurs in Europe and beyond. As an independent, privately owned firm, we maintain offices and representations in Frankfurt, Berlin, Munich, Zurich, Hong Kong and New York as well as strong alliances in Great Britain, France and India. Our clients are corporations, family-owned businesses, entrepreneurs, financial sponsors and family offices.

Our Services

Since 1998, we offer our clients comprehensive corporate finance advisory services including M&A and capital markets advisory as well as restructuring, debt and strategic advisory. To date, we have completed more than 450 transactions with a total deal/financing volume of approx. EUR 20bn. While our home market is in the German speaking region, most clients are international and transactions cross-border.

Our Industries

Our advisory expertise is founded on an in-depth understanding of the key industries served by the company. Our core industries are healthcare and digitalization/technology. Our strong track record in our core sectors is complemented by prominent transactions for industrial, real estate and financial investors.
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