Replies to post #235388 on Biotech Values

[DewDiligence]

Re: Buyouts of biotech partners /fungibility

Buyouts of biotech partners happen less often than some investors probably think. Until today, the table in the post I’m replying to had not been updated in more than two years.

The reason (IMO) that some investors overestimate the likelihood of partner buyouts is the common belief that a company who owes royalties and milestone payments to a partner can “save” by acquiring the partner and thereby nullifying the royalties and milestone payments. But this notion is misguided insofar as the acquiring company is essentially paying the same royalties and milestone payments, but is simply paying them to itself. I.e. the company receiving the royalties and milestone payments is not more valuable to its licensor than it is to another prospective buyer (unless there are operating synergies, which is a separate issue).

For instance, several posters have claimed over the years that ENTA should be worth more to ABBV than to another buyer, but this simply isn’t true.

[DewDiligence]

Buyouts of Biotech Partners

[Added NVO-EMIS (corrected).]

This is a subset of the “Recent Biotech Buyouts” table that resides
in the introductory section of the Biotech Values board under the
Compilations heading. This table is not intended to be exhaustive.

Table entries are in descending order of buyout premium.

 
 Acquired                       Winning   iHub           
 Company  Buyer  Premium  Date  Bidder  Reference 
 GNLB     GSK     465%   10/08          #msg-33209281 
 MEMY     Roche   319%   11/08          #msg-33787598 
 KDS.AS   SNY     272%   11/20          #msg-159250085 
 COLY     PFE     167%   11/07          #msg-24600805 
 ICGN     PFE     150%    7/11          #msg-65365128 
 SGXP     LLY     119%    7/08          #msg-30547648 
 ENCY     PFE     118%    2/08          #msg-26978155 
 HGSI     GSK      99%    7/12          #msg-77532608 
 Speedel  NVS      94%    7/08          #msg-30588524 
 MEDX     BMY      90%    7/09          #msg-39801273 
 ZGEN     BMY      84%    9/10          #msg-54152162 
 TIG      Takeda   80%    1/18          #msg-137517859 
 FACT     BIIB‡    64%    3/10  ABT     #msg-47606240 
 MAPP     AGN      60%    1/13          #msg-83696395 
 CRXL     JNJ      58%   12/10          #msg-57504349 
 TNOX     DNA      50%   11/06          #msg-14673162 
 ICOS     LLY      25%   12/06          #msg-15623908 
 ABGX     AMGN     54%   12/05          #msg-8876857 
 IMCL     BMY‡     51%   10/08  LLY     #msg-32662830 
 SGP      MRK      34%    3/09          #msg-36140327 
 MITI     AMGN     33%    1/12          #msg-71341339 
 FMI      Roche    29%    6/18          #msg-141630144 
 MZOR     MDT      16%    9/18          #msg-143696059 
 EMIS     NVO      14%   11/20          #msg-159336565 

‡Spurned offer; premium and date are for winning bidder.