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iStock, siraanamwong Pharma is definitely interested in making more deals. But what biotechs will come under the magnifying glass? BioSpace takes a look at companies that analysts see as near-term targets for buyouts. Where one deal occurs, others follow. That’s the theme emerging as analysts parse potential M&A targets with the biopharma deal environment heating up. With a strong return to M&A in the first half, most experts agree we’re going to see plenty more deals to come. Despite the flood of recent deals, Big Pharmas are still facing tough patent expiries and appear to have a lot of cash to spend, H.C. Wainright wrote in a June 29 note. Buyers are especially seeking companies with assets in MASH, rare disease, immunology, oncology and central nervous system (CNS) disorders, following on other deals in these disease areas. ezstandalone.cmd.push(function () { ezstandalone.showAds(129); }); Wainright flagged Beam Therapeutics, Immunocore and psychedelics drug developer AtaiBekley as potential targets at the time. The latter, of course, went on to be acquired by Eli Lilly for $3.8 billion a few weeks later. Below, BioSpace takes a look at biotechs that analysts see as potential targets for M&A, from sleep disorder biotech Alkermes to CAR T icon Legend Biotech. Psychedelics Lilly’s AtaiBeckley buy validates space as Big Pharma takes note of psychedelics Eli Lilly’s proposed acquisition of AtaiBeckley is “the clearest strategic validation to date” of psychedelics as an emerging pharmaceutical category, according to H.C. Wainwright. The analyst cautioned, however, that the transaction should not be seen as “supporting a uniform re-rating of every psychedelic developer.” July 20, 2026 · 3 min read · Heather McKenzie Read more Alkermes Thanks to Eli Lilly’s $6.3 billion acquisition of Centessa Pharmaceuticals in March, Alkermes is looking like a strong next bet in the sleep market, according to a July 19 note from Stifel. Centessa’s lead asset was cleminorexton, an oral orexin receptor 2 (OX2R) agonist being trialed for narcolepsy types 1 and 2 as well as idiopathic hypersomnia (IH). Orexin is a key neuropeptide that regulates the sleep-wake cycle; drugs that activate the pathway could help address excessive daytime sleepiness as well as improve attention, cognition and fatigue. The orexin class has pipeline-in-a-product potential that is drawing significant M&A interest, Leerink said in a July 19 note covering other activity in the space. Alkermes is one of the companies on the forefront of the orexin class. The company is expecting a Phase 2 readout for its lead asset, alixorexton, in IH in the fourth quarter. Experts told Stifel that IH could be the next big thing in the insomnia market behind narcolepsy. Layoffs Spurred by deep cuts and M&A activity, H1 layoffs could oust 14,000+ in biopharma Takeda’s cuts will go the deepest, affecting over 4,700 employees. Layoffs tied to M&A activity include BioNTech letting go of around 800 people at CureVac. July 16, 2026 · 6 min read · Angela Gabriel Read more A win in these studies could also suggest a future for the drug class in non-sleep indications like attention deficit hyperactivity disorder (ADHD), the firm wrote. “There’s reasons for optimism that this could show real proof-of-concept and increase excitement for the orexin class beyond sleep,” Stifel said. In this vein, Alkermes is also developing the orexin ALKS 7290, with Phase 1b data from 50 patients with ADHD expected in the fourth quarter. A Phase 2 will likely follow in 2027 with 300 adults. After all was said and done, the Centessa deal amounted to a value of just under $8 billion. Alkermes’ current market cap slightly tops that, at $9 billion, according to Stifel. The company has four approved medicines in the neuro space already, Lybalvi, Aristada, Vivitrol and Lumryz. “Alkermes offers an opportunity to participate in the new/exciting OX2R class, but with a meaningful floor value that offers downside protection,” Stifel wrote. Dyne Therapeutics If you ask analysts, Alnylam Pharmaceuticals needs to make an acquisition. The RNAi specialist cut $200 million off its full-year guidance when reporting second quarter earnings last week, losing $10.8 billion in market cap in the process as investors reeled. Oppenheimer believes that neuromuscular disease biotech Dyne Therapeutics could be a natural fit, according to a July 16 note. The company is awaiting a January 2027 decision from the FDA on the approval of exon skipper zeleciment rostudirsen (z-rostudirsen) for Duchenne muscular dystrophy, with a confirmatory Phase 3 trial underway. If approved, the therapy could tap into a $700 million market opportunity, according to Jefferies. The biotech’s pro risen as competitors like Avidity Biosciences have produced positive data, according to Oppenheimer. Avidity was bought by Novartis last year for $14.6 billion, showing that Big Pharma is willing to spend big cash for neuromuscular disease assets . Dyne recently received the FDA’s go ahead to advance the siRNA therapy DYNE-302 into human trials for facioscapulohumeral muscular dystrophy (FSHD). Avidity’s RNA therapy delpacibart braxlosiran (del-bax) provided early validation for Novartis’ gambit with positive biomarker data in FSHD that was released in June 2026. Both therapies target the DUX4 gene. Mergers & acquisitions ‘Unlikely’ AstraZeneca-BMS mega-merger would be largest pharma deal ever If AstraZeneca and Bristol Myers Squibb were to successfully become one company, analysts say it could reset the current deal environment, which has picked up greatly in the first half of the year. August 3, 2026 · 3 min read · Annalee Armstrong Read more FSHD could be even bigger than DMD. Jefferies predicts the market to be worth about $3 billion, according to a July 30 note. With competitors set to read out trials in the indication in the second half, Jefferies sees this as a key period to “help frame DYN’s differentiation.” “DYN is becoming an attractive platform play,” the firm wrote. First Tracks Biotherapeutics Another company to benefit from deals elsewhere is First Tracks Biotherapeutics, a clinical-stage immunology biotech that is firmly entrenched in a pharma hot spot. Argenyx helped buoy First Tracks with the $2.2 billion takeout of rival Forte Biosciences earlier this month. Argenyx specifically highlighted the early performance of Forte’s CD122 therapy FB102 in vitiligo and celiac disease. But First Tracks has something better, according to Leerink Partners. The biotech’s CD122 candidate ANB033 binds to a different isotope than FB102 does and has shown better potency in animal testing. First Tracks’ asset also offers subcutaneous administration, whereas FB102 is delivered via IV infusion. Forte is also singularly focused on FB102, whereas First Tracks has a small pipeline beyond CD122. It includes ANB101 for inflammatory diseases and rosnilimab, which has shown positive Phase 2 results in rheumatoid arthritis, according to Leerink. “We view IL-15/CD122 antagonism is emerging as a new immunology & inflammation (I&I) class which has the potential to address several diseases with significant unmet need, implying ‘pipeline in a product’ potential,” the firm wrote in a July 27 note. Mergers & acquisitions Biopharma strikes 50+ M&As deals in H1, led by Lilly’s $25B spend The total of 52 mergers and acquisitions for the first half of 2026 reflects what analysts, industry watchers and executives are saying over and over: M&A is back. July 1, 2026 · 1 min read · Annalee Armstrong Read more Legend Biotech With Big Pharmas snapping up biotechs in the CAR T space—see Sail Biomedicines below or Gilead Sciences’ $7.8 billion buy of Arcellx —analysts see Legend Biotech as having one of the strongest pipelines in the space. Last month, Legend revealed a readout for the in vivo CAR T therapy LB2501 in non-Hodgkin lymphoma that Oppenheimer analysts called “best case scenario.” The therapy showed a clean safety pro efficacy that “stacked up well” to other modalities currently at use in the disease, the analysts wrote in a June 2 note. Oppenheimer noted that Kelonia Therapeutics was acquired by Eli Lilly for $7 billion just four months after presenting similarly exciting data last year. “Positive in vivo CART data strengthens chances of LEGN acquisition in our view,” Oppenheimer wrote. “LEGN is perhaps (one of) the most advanced-stage in vivo CART companies that is currently available for acquisition/partnership.” Legend is already well known for Carvykti, which it markets with Johnson & Johnson for two types of multiple myeloma. The therapy booked $597 million in sales for the first quarter of the year, a 62% increase over the same period a year before, according to Legend’s first quarter earnings report . Mergers & acquisitions BIO 2026: Forget dual track—biopharma deals are more complex than ever Dual and even triple or quadruple track processes have come roaring back in 2026 thanks to a glut of M&A that has refilled investors’ wallets. Big Pharma is being put on notice that time is critical if they want to acquire. June 25, 2026 · 5 min read · Annalee Armstrong Read more Others acquired in the space include earlier-stage biotechs Capstan Therapeutics (AbbVie) for $2.1 billion and Orbital Therapeutics (Bristol Myers Squibb) for $1.5 billion. Legend is going through some growing pains at the moment. CEO Ying Huang stepped down last week to be replaced on an interim basis by Alan Bash, who currently leads the company’s Carvykti business unit. Oppenheimer said that Huang has deep experience in the space but investors have nevertheless been dissatisfied. “We believe the new CEO, and their interactions/board alignment, will be critical to turning the story around ahead of Anito-cel market entry in December and potential M&A discussions,” the firm said on July 27. Sail Biomedicines We know that Johnson & Johnson wants to buy Sail Biomedicines. The healthcare giant secured the right to acquire the Flagship Pioneering biotech for $2.58 billion down the line as part of a larger immunology research partnership that was revealed last week . The research portion of the deal involved $785 million in initial payments, including a $465 million equity investment. But the big question is when. Leerink Partners pointed out on July 29 that the deal could happen soon, since J&J’s press release noted that the agreement could dilute its shares this year or early next. In the meantime, the new partners will work on Sail’s lead program SAIL-0839, an in vivo CAR T cell therapy that targets CD4+ and CD8+. Sail emerged in October 2023 when Flagship folded two of its entities —Laronde and Senda Biosciences— into one company to work on programmable medicines. .responsive-container { display: flex; flex-wrap: wrap; border: 1px solid #ededed; font-family: Helvetica, Arial, Sans-Serif; padding: 20px 20px 10px 20px; } .column-left { flex: 1; max-width: 45%; padding: 20px 20px 10px 20px; } .column-right { flex: 2; padding: 20px 20px 10px 20px; } @media (max-width: 768px) { .column-left, .column-right { max-width: 100%; flex: 100%; padding: 10px 0; } } Subscribe to BioPharm Executive! Market insights, trending business and policy stories for biopharma leaders hbspt.forms.create({ region: "na1", portalId: "4413123", formId: "7c139b3c-ff0b-44e0-bffe-f449801dca59", onFormSubmitted: function($form, data) { window.dataLayer = window.dataLayer || []; window.dataLayer.push({ 'event': 'GTMevent', 'event_name': 'newsletter_sign_up' }); } });

iStock, Vladimir Vinogradov The biopharma industry would do well to re-embrace the 505(b)(2) path, which allows sponsors to draw on previous findings around an existing drug even as they propose modifications to it. In a capital environment defined by caution, skepticism and heightened demand for controlled risk, FDA’s 505(b)(2) pathway stands as one of the few remaining regulatory levers capable of accelerating innovation with some level of capital protection. Designed to enable sponsors to leverage existing efficacy and safety data for approved drugs while introducing meaningful modifications, the pathway can reduce development timelines for new therapies by several years and cut costs by tens to hundreds of millions of dollars relative to a 505(b)(1) New Drug Application. A few recent 505(b)(2) success stories illustrate how the pathway can translate into meaningful commercial outcomes when paired with clear differentiation. Pacira BioSciences’ Exparel is a long-acting liposomal formulation of the local anesthetic bupivacaine, indicated for postsurgical analgesia. By extending duration of action in a well-understood class, it enabled opioid-sparing protocols and became a cornerstone in perioperative pain management with strong hospital adoption. Xywav, by Jazz Pharmaceuticals, is a reformulated oxybate therapy for narcolepsy and idiopathic hypersomnia with approximately 92% less sodium than its predecessor; this clinically meaningful safety improvement drove rapid patient conversion and sustained franchise growth. And Axsome Therapeutics’ Auvelity combines two established agents into a novel NMDA-modulating antidepressant for major depressive disorder, delivering faster onset and differentiated efficacy compared to either drug by itself. Across these cases, success stems from the same principle: reformulating or recombining validated drugs within established classes to deliver tangible clinical or economic advantages that resonate with prescribers, patients and payers. ezstandalone.cmd.push(function () { ezstandalone.showAds(129); }); Yet despite its track record of success and its contribution to the majority of NDAs in recent years ( approximately 57% in 2024 ), we have observed in our consulting work at InnoDev that the 505(b)(2) pathway seems to have been re-assessed by the industry, sometimes dismissed as a shortcut at best with little upside, or other times underappreciated as an indicator that a drug is not novel. Investors have historically viewed 505(b)(2) assets with cautious optimism. On paper, the economics are striking: Published analyses suggest that repurposed medicines can reach the market with average development costs of roughly U$300 million —compared with $2–3 billion for a novel molecular entity—while also benefiting from substantially lower development risk because human safety data already exist. That relatively low risk comes with a few trade-offs. Short exclusivity windows, generic vulnerability and regulatory uncertainty stemming from the current regulatory and political environment at FDA, and from relying on public data from prior FDA reviews, which might be incomplete and mask gaps or post‑marketing safety issues that emerge during review. Because bridging needs vary widely based on how a product differs from its reference, the scope of required studies may turn out to be more significant than expected and constrain long-term upside. The investor calculus is thus nuanced: 505(b)(2)s are compelling for near-term monetization or niche markets, but are rarely the foundation for enduring franchises unless coupled with proprietary technology or platform innovation. As advisors in this space working at InnoDev Partners, we experience the same conundrum observed in the industry: should we continue to lean on the pathway as a way to bring meaningful therapies to market in areas of unmet need, or should we discourage inventors and founders from pursuing development programs aimed at the 505(b)(2) pathway in favor of drugs seen as more innovative? As laid out below, we believe that in the right circumstances, the 505(b)(2) pathway remains a useful tool to push forward innovation. A hybrid route with strategic advantages A 505(b)(2) filing occupies a unique middle ground between the “stand-alone” 505(b)(1) New Drug Application and the generic 505(j) Abbreviated NDA, leveraging prior FDA findings of safety and efficacy from a listed drug while allowing meaningful product modification. This hybrid approach makes it possible to bring improved formulations, new delivery systems or new indications to patients faster and at a fraction of the traditional cost. The regulatory advantage is significant. By referencing existing data, sponsors reduce the need for large, costly Phase 3 trials and shorten timelines, sometimes by several years. The outcome is not merely a faster path to approval but a materially lower cost of development, often reducing outlay from over a billion dollars to under $50 million. For early-stage biopharma, that delta can mean the difference between failure, and staying solvent and achieving market entry. Operational efficiency and program agility From an operational perspective, the 505(b)(2) model transforms the very architecture of drug development. Instead of building a program from the ground up, teams design efficient bridging strategies that focus on regulatory justification and data alignment. Program management becomes a discipline of integration: synchronizing chemistry, manufacturing and controls readiness, regulatory engagement and clinical pharmacology to ensure that every reference to existing data is scientifically defensible. This streamlined model encourages faster decision-making and tighter cross-functional coordination. Compared with the long, risk-laden timelines of a new chemical entity, 505(b)(2) development can move with startup-like agility while still meeting FDA rigor. Commercial promise—and its caveats Commercially, 505(b)(2) programs offer a rare alignment of regulatory speed, clinical logic and economic efficiency. For investors, they represent tangible, near-term value inflection points: earlier proof of concept, faster time to revenue and often lower biological risk. Indeed, when executed correctly—with strong differentiation and clear payer logic—the pathway can yield some of the most capital-efficient successes in biopharma. Yet the same factors that make the model appealing also invite scrutiny. Market exclusivity, typically three to five years after approval of a 505(b)(2) application, is limited compared to the 12-year protection of drugs approved under standalone NDAs. Relying on known active ingredients weakens the intellectual-property moat, making differentiation essential. Products that fail to deliver meaningful clinical or economic advantages risk being seen as incremental and priced accordingly. In saturated markets, even a modestly improved therapy can be commercially overlooked if the value story is not compellingly built for prescribers, payers and patients. When to choose the 505(b)(2) route The 505(b)(2) framework is not a regulatory loophole, but an instrument of purposeful innovation. When used well—to advance patient access, reduce costs of care or modernize delivery—it embodies the very spirit of pragmatic innovation the healthcare system needs. But sponsors must resist the temptation to treat it as a shortcut to market. The FDA has grown more demanding, requiring robust bridging data and meaningful differentiation. The sponsor of a 505(b)(2) application needs to carefully consider the strategy, and factors such as: what data are available, and are those data sufficient for the regulatory agency to bridge to the new application? Is the return on investment sufficient for the estimated time and costs of development? Those who invest early in clinical, regulatory and market access clarity will find the pathway not just viable, but transformative. As the biopharma ecosystem faces escalating capital scarcity and payer pressure, the industry would do well to re-embrace the 505(b)(2) path, not as a second-tier route, but as a strategy to deliver smarter innovation faster. For founders, investors and regulators alike, that shift in mindset could redefine how value, risk and speed are balanced in the next wave of therapeutic advancement.