Biotech Values

[DewDiligence]

Jerini Hires Bank to Explore Sale

http://www.reuters.com/article/marketsNews/idINL034256920080603

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Tue Jun 3, 2008 12:21pm EDT
By Ben Hirschler and Mathieu Robbins

LONDON, June 3 (Reuters) - German biotech company Jerini (JI4G.DE) has hired Credit Suisse to explore strategic options, including a possible sale of the company, two sources familiar with the situation told Reuters on Tuesday.

Officials at Jerini and Credit Suisse declined to comment.

The move by Berlin-based Jerini to sound out buyers follows a spate of biotechnology deals on both sides of the Atlantic, in which large pharmaceutical companies have paid big premiums to secure promising assets in clinical development.

Shares in the group closed 18.7 percent higher at 2.60 euros following the news, valuing the business at around 136 million euros ($212 million).

Jerini's leading product is a drug called Icatibant, which was last month recommended for marketing approval by the European Medicines Agency but rejected by the U.S. Food and Drug Administration.

Icatibant is designed to treat acute attacks of hereditary angioedema (HAE), a rare disorder characterised by acute attacks of painful swelling in the hands, feet, face, larynx, and abdomen.

Jerini's share price was roiled in the wake of the mixed news from regulators, with some investors also concerned that the group may need additional funding to pay for the launch of Icatibant in Europe.

However, a third person familiar with the matter said there had been substantial interest in Jerini from German and U.S. companies following the European green light.

Icatibant is likely to go on sale in the third quarter and could generate annual revenues of more than $125 million a year by 2014 in Europe alone, according to a note published by Credit Suisse biotech analysts earlier on Tuesday.

It represents a niche product in a highly specialised sector of the market. Such drugs can command high prices, though the very limited number of patients suffering from HAE -- some 10,000 in the United States and Europe -- may mean Jerini appeals to a mid-sized rather than a large player, another source said.

U.S. drugmaker Abbott Laboratories (ABT) already has a stake of around 6 percent in Jerini [this comes from Kos Pharma, acquired by ABT, having once been Jerini’s development partner in HAE] alongside its two top shareholders, the venture capital groups HealthCap and TVM on 16.4 and 14.6 percent, respectively, according the company's website.

International consultancy Ernst & Young predicted recently that the convergence of the biotech and pharma industries would continue unabated in 2008, and leading drugmakers are continuing their shopping spree.

In the most recent big pharma-to-biotech deal, Bristol-Myers Squibb Co (BMY) agreed last week to buy cancer firm Kosan Biosciences Inc (KOSN) for $235 million -- a premium of 233 percent, though still below Kosan's year-ago share price peak.

Jerini was founded in 1992 by Chief Executive Jens Schneider-Mergener from a research group at what is now the joint medical faculty of the Humboldt Universitaet zu Berlin and the Freie Universitaet.

It went public in November 2005 and has a staff of 166.
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