Biotech Values

[DewDiligence]

Ascendis Pharma Is on the Block

http://blogs.wsj.com/deals/2010/06/23/big-pharma-goes-shopping-in-denmark-ascendis-pharma-is-on-the-block/

›June 23, 2010, 10:31 AM ET
By Dana Cimilluca

In the ongoing quest to replenish their pipelines, some big drug companies have set their sights on Denmark. Ascendis Pharma, an early-stage Danish biotech, is up for sale, according to a person familiar with the matter. The auction has drawn interest from a handful of health-care heavyweights such as Sanofi-Aventis and Amgen.

Lazard is running the sales process for closely held Ascendis. Indicative bids ranging from roughly $350 million to $450 million have been received, with binding offers likely due by the end of July. There is, as always, no guarantee a sale will take place, and it is possible the company could be sold in pieces, too.

Ascendis, which is owned by three European venture-capital firms, was founded in 2007. It is developing a six-product portfolio, including treatments focused on delivering drugs for growth hormone deficiency and diabetes. The company is based in Copenhagen and has operations in Heidelberg, Germany, and Short Hills, N.J. Ascendis’s technology is aimed at enabling patients to inject insulin and human growth hormone on a weekly rather than daily basis–a long-sought target for drug developers. Part of Ascendis’ allure is its ability to help a larger rival go to market more quickly than it may otherwise be able to. The company, which doesn’t yet have any revenue, may be in a position to beginning rolling out its products in 2013.

Biotech products are attractive to drug makers because they command higher prices and sales are increasing at a faster rate than for conventional prescription drugs. Big drug makers also need to find new medicines whose sales can make up for the tens of billions of dollars in revenue lost as their top-selling drugs face generic competition.

The possible deal serves as yet another reminder of two realities of the current deal environment: in spite of the downturn, health care remains relatively fertile ground, with smaller deals such as Grifols-Talecris still doable, even if the megamergers hoped for in the wake of Pfizer/Wyeth and Merck/Schering-Plough are still little more than bankers’ pipe dreams.‹