Pharma and investors focus on, & our current views on recent transactions, including CRNX & ATAI
Biopharma M&A activity is once again becoming a central theme for investors, with dealmaking on pace to eclipse $240 billion in 2026 and patent-cliff pressure emerging as the dominant driver. Through 2030, large-cap pharma must address roughly $230 billion in revenue that is exposed to patent expirations…the market’s third acquisition of at least $10 billion in the past month alone underscores just how aggressively that gap is being addressed. Against this backdrop, the potential for added value from late-stage and commercial biotechs remains firmly intact, as these companies have long been viewed as the primary supply of the innovation large, and even mid-cap, pharma that can no longer generate organically at the scale required.
That dynamic has been clearly demonstrated in this year’s dealmaking. Deal activity in 2026 has skewed heavily toward late-stage and commercial assets, with more than half of this year’s acquisitions involving assets in phase 2/3 or later, and average proceeds increasing as assets move closer to market. Fourteen public M&A deals closed at an average size of roughly $5 billion and an average premium of 43%, while 16 private acquisitions have been completed at an average size of just below $1 billion. By therapeutic area, oncology and I&I stand out as the most heavily targeted and richly valued categories, alongside notable interest in neuroscience and rare disease – areas where large-cap pharma sees the clearest path to offsetting upcoming revenue losses.
This targeting isn’t happening in a vacuum – broadly, investor sentiment, and regulatory tone are reinforcing M&A tailwinds. Investors are increasingly rewarding biotech companies that can demonstrate “real business” characteristics (e.g., rigorously generated and meaningful clinical data, sustainable revenue growth, operating leverage, path to profitability), a shift that is helping late-stage and newly commercial companies command premium valuations, both in the public markets and in takeout scenarios. Additionally, a more stable, and perhaps constructive tone from the FDA has further renewed hopes that the momentum will continue with less regulatory friction.
One notable transaction that recently caught our eye due to deep interactions which Gilmartin cultivates within San Diego, and the recent addition of ex-sellside analyst Charles C Duncan, PhD, who covered the stock for several years, was the Crinetics Pharmaceuticals (Nasdaq: CRNX) acquisition. The acquisition by midcap pharma Vertex Pharmaceutics was announced earlier this month, is notable for its strategic underpinnings, and nicely illustrates these current market dynamics.
Crinetics priced its IPO in 2018 at $17 per share as a Phase 2 ready company and, through a series of clinical wins, an FDA approval, and a successful early commercial launch paired with a differentiated rare-endocrinology-focused emerging late-stage clinical pipeline, became an acquisition target for Vertex. The acquisition bid was announced on July 6, 2026, for $85 per share in cash – a $10 billion equity value and a 102% premium to the prior closing price, representing Vertex’s largest acquisition to date. Over the life of the investment, the CRNX shares delivered a 392% total return since its 2018 IPO, materially outperforming both the S&P 500 and the XBI biotech index over the same period. The acquisition is a concrete example of the value-creation opportunity that excellent clinical development execution with differentiated therapeutic candidates, combined with acquirers’ patent-cliff-driven appetite, can create for investors willing to hold through the clinical-to-commercial transition.
Another transaction that grabbed our attention was Eli Lilly’s announced (07/16) acquisition of AtaiBeckley (Nasdaq: ATAI) for $2.8B. Atai’s path to acquisition looks quite different from Crinetics’ steady ascent but is arguably just as instructive. The company, then known as Atai Life Sciences, went public in 2021 as a hub & spoke-style biotech pursuing a broad portfolio of psychedelic-inspired mental health therapeutics. This strategy demanded investors and covering analysts (including Charles’) patience with repeat trips to the capital markets through the inevitable mix of encouraging and disappointing readouts that come with pioneering a novel treatment category, notably in psychiatry.
Rather than one continuous story of execution, Atai’s value-creation arc turned upon its late-2025 consolidation with Beckley Psytech, concentrating the pipeline around a single, more advanced late-stage asset for treatment resistant depression. It was this narrower, more commercially credible asset that ultimately drew large-cap pharma’s attention, in addition to a second candidate, both of which may prove to be a notable evolution in psychedelic-enabled treatment for TRD/MDD than currently envisioned by COMPASS Pathways (Nasdaq: CMPS) COMP-360 psilocybin-based candidate, which leads the field. Lilly’s agreement to acquire the renamed AtaiBeckley reflects the same patent-cliff-driven appetite for differentiated, de-risked assets and reinforces the broader themes driving this year’s dealmaking.
Overall, 2026 has been marked by a sustained and broad-based M&A cycle, characterized by an elevated pace of large transactions, healthy premiums, and consistent acquirer interest across multiple therapeutic areas. This activity has continued to concentrate on later-stage and commercial assets, reflecting large-cap pharma’s ongoing preference for de-risked, near market-ready assets. Investor returns from M&A activity continue to recycle back into companies who meet this profile providing ample opportunity for fundraising based on supportive clinical data and operational execution.
These trends are positive and are contributing to improved year-on-year biotech benchmark outperformance and improved fund flows into specialist investment vehicles. However, we ask whether this is a sustainable renaissance for the sector that will continue unabated in the near horizon? Or does it reflect a shorter-term cycle that, like other bull markets in biotech, become diluted with increased supply of lower quality stories?
In our studied view, the lessons learned post the COVID-19 bubble for IPO activity will stick, this time, at least for the next 6-12 months and quality supply may not out-pace demand. That said, continued M&A could provide a big assist for funding continued innovation as “wins” yield recycled capital. Post an upcoming survey to glean community-wide perspectives, we’ll be back to you on these and other questions with Gilmartin Biotech Thoughts that Count.
Gilmartin Group works closely with biotechnology companies to best position themselves in this evolving landscape to build institutional investor relationships and communicate complex clinical and regulatory narratives with precision and credibility. To learn more about how we partner with clients, reach out at [email protected].
Authored by Stephen Jasper (Managing Director) and team, as well as Charles C Duncan, PhD (Managing Director & Head, Biotech Strategy & Development)
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