From The Editor | June 13, 2022

Build A Great Company, Not An Acquisition Target


By Louis Garguilo, Chief Editor, Outsourced Pharma


The biotech end game:

Notable success along the development/clinical path likely results in you or your lead asset being acquired by a larger organization. (If so, congratulations are in order: You gain the commercialization power to get your drug to waiting patients.

The biotech paradox:

Not planning for such acquisition brings a higher probability of it transpiring.

The path that leads a biopharma organization to early and then sustained success is beset with business decisions, operating strategies, funding opportunities, correct hiring, understanding core capabilities and assets, etc.

Navigating through all that requires a focus on building a rock-solid organization and culture, with one eye on current needs and the other on your operating future.

But why not plan to get acquired? Can’t a bigger-fish acquisition be in mind at the same time? What about setting out some specific markers to help present yourself as that worthy target?

Steven Kelly
Steven Kelly, CEO, Carisma, says that’s not really a good idea. You believe you don’t become that worthy target with acquisition as an operating goal.

“My philosophy is if you build a great company, you may certainly get bought, but the focus all along the development path should be on that great company, great product and great clinical outcomes for patients – and on what your own commercial success would look like.”

Kelly, a veteran CEO who we spoke with in earlier editorials, does fully agree it is difficult for a small, successful company to remain independent over time.

“However, if you approach this saying, ‘I'm going to build my organization to be bought, it's different from building a great organization focused on ultimate success,” he says.

“That’s why our approach is always to build that company, deliver those clinical results for patients, consider how to deliver that extended survival over cancer. If we do that, we’ll end up becoming an appropriate acquisition target, but we get there without that end-game aspiration.”

And might not get there with it.


In earlier discussion with Kelly, we described some aspects that make up a great company, including a “staged approach” to building internal capabilities and capacity, and combining that with the strategic utilization of external partners.

Besides those external service providers, there are other partnerships to help set you on a viable path to ultimate commercialization – those that could potentially bring you closer to an acquisition, without focusing on one.

At Carisma, Kelly has scored partnerships with name-brand equity investors, some who could themselves become potential suitors, such as AbbVie and Merck.

More recently, the company announced a collaboration agreement with Moderna to discover, develop, and commercialize in vivo engineered chimeric antigen receptor monocyte (CAR-M) therapeutics, Carisma’s leading technology. (Its first clinical candidate is CT-0508, targeting HER2-positive solid tumors.)

Moreover, as we covered in detail in part one, Kelly and company have entered a newsworthy CDMO-supply-agreement and partnership with Novartis.

“We are building this network of partnerships that provide an insight, maybe an insider's look, into what we're doing,” explains Kelly. “If that translates to an acquisition, it will most likely provide a great return for shareholders and patients. And we would certainly explore that,” he explains.

“But that is not the ‘end game’ as we are discussing here. It is the best strategy to continue to strengthen us as a viable business, and to help build that great organization.”

Build On That Conviction

There is this caveat:

No CEO, board, or group of investors can sit by without seriously challenging an emerging biopharma’s decision to build out internally now, at higher risk and expense, if indeed that acquisition potential looms large.

And when there are so many proven outsourcing options today.

I ask Kelly if, as he indicated earlier, it isn’t challenging to make his case for building up internal capabilities and capacities, particularly for clinical-material production, or even more large-scale commercial manufacture.

Challenging it may be, he says, but they are the right decisions to make in many cases. With the requisite internal capabilities in-house, there’s one less doubt, one less question that gets asked by any appropriate suitor:

Have you proven conclusively you know how to and can actually produce this product at market-necessary scale?

In fact, that may be the million-dollar acquisition question.

For example,” Kelly says he has spoken to a large pharma with interest in Carisma’s technology, specifically because it’s well differentiated and unique.  

On cue, the first questions they asked of Carisma were:

‘How do you make this product?

How do you ensure that you can scale up and continue to make this product?

If the drug or therapy (and process) is indeed novel and/or groundbreaking, then by definition there may not yet be a demonstrative trove of production knowhow – either internally or at participating CDMO partners.

 “But because of our strategy to build that great company, we could already demonstrate our plan to address those questions,” Kelly says. “While I have to be clear to say further discussions did not materialize that time, the point is everyone's going to be asking those questions. You must have a good plan for how you could supply the market. That's top-of-mind for any potential acquirer.”

And should always stay top-of-mind for any drug sponsor – no matter the mix of practical internal experience with external supply-chain partners.

Because when you are not thinking about getting acquired, but treading the optimal path to commercialization, you are thinking like a potential acquirer.