However, the bigger story -- and one that has been unfolding for the past two years, is the amount the industry has generated through partnering. The $20 billion raised is an all time record amount for partnering in biotech's 30+-year history, surpassing the then record setting $17 billion total in 2005.
"Partnering deals set a new mark in biotech's comparatively short history and is a continuing testimony that big pharma's enthusiasm for doing deals with biotechs is not slowing down," said Burrill. Financings garnered in partnering deals during Q4 2006 were up a whopping 74% compared with Q3 06 and the amount raised fell just short of the record-setting $7.7 billion that was recorded in the comparable Q4 05 period.
Grabbing the deal making headlines in the quarter was GlaxoSmithKline, signing a deal, worth potentially $2.1 billion, with Genmab A/S to co-develop and commercialize HuMax- CD20 (ofatumumab), a fully human monoclonal antibody in late stage development for CD20 positive B-cell chronic lymphocytic leukemia and follicular non-Hodgkin's lymphoma and in Phase II for rheumatoid arthritis. Epix Pharmaceuticals also signed a lucrative worldwide multi-target strategic collaboration with GlaxoSmithKline to discover, develop and market novel medicines targeting four G-protein coupled receptors for the treatment of a variety of diseases, including Epix's 5-HT4 partial agonist program, PRX-03140, in early-stage clinical development for the treatment of Alzheimer's disease. Epix will receive total initial payments of $35 million and be eligible to earn potential milestones of up to $1.2 billion.
Roche was also active...Halozyme Therapeutics, Inc. and Roche entered into an agreement to apply Halozyme's Enhanze drug delivery technology based on recombinant human hyaluronidase (rHuPH20) to Roche's biological therapeutic compounds. InterMune, Inc. closed an exclusive license agreement with Roche for the worldwide development and commercialization of InterMune's hepatitis C virus (HCV) protease inhibitor program. InterMune received an upfront payment of $60 million and Roche will fund 67% of the development costs associated with ITMN-191, InterMune's lead HCV protease inhibitor drug candidate. Assuming the successful development and commercialization of ITMN-191 in the US and other countries, InterMune could receive up to $470 million in milestones.
...And So Were M&As
Multi-billion dollar acquisitions were the order of the day for big pharma and large cap biotechs during the final quarter of the year. This was biotech's second active year in a row in terms of buyouts, as large biotechnology and pharmaceutical companies went beyond licensing agreements to fill out development and product pipelines.
"We haven't seen this many deals in any year between pharma/ biotech and biotech/biotech in the industry's history," noted Burrill. "The huge premiums that big pharma is willing to pay for biotech innovation reflects their pipeline problems. Compared to the daunting $1.2 -- $1.8 billion that is needed to bring a new drug to market and the long 10-15 years development cycle, paying big premiums, even for drugs that are not even in the clinic, is both a cheap and efficient way of reducing development costs and shortening commercialization timelines for the pharma acquirers," said Burrill."
Abbott broadened its portfolio of products for lipid management with a $3.7 billion acquisition of specialty pharmaceutical company Kos Pharmaceuticals. Gilead Sciences Inc. bought Myogen for $2.5 billion and Genentech, Inc. acquired Tanox Inc., a biotechnology company specializing in the discovery and development of biotherapeutics based on monoclonal antibody technology, for approximately $919 million. The companies have been working together in collaboration with Novartis since 1996 to develop and commercialize Xolair(R), an anti-IgE monoclonal antibody approved by the FDA in 2003 as a treatment for patients with moderate-to-severe allergic asthma. The deal also helped Genentech improve its pipeline in the areas of asthma, HIV, and age-related macular degeneration.
Illumina, Inc., was also in deal-making mood mode picking up gene sequencing platform company Solexa, Inc. in a stock-for-stock merger valued at around $600 million.
"The M&A trends, that have been hot in 2005 and 2006 in biotech land, will not slow down with pharma still desperate to access pipeline and innovation, " commented Burrill. "Both big pharma and big biotech will be competing for companies with advanced product pipelines, as well as important land grabs of technology such as the $1.1B acquisition of Sirna by Merck announced in November."There will also be no slow down in partnering deals and a significant portion of the $20 billion that we project that will be raised in 2007 will be directed at gaining access to technology at an earlier stage in its development as companies strengthen their product indication franchises."
Selected M&A transactions announced during Q4 06:
Acquirer Acquired Value ($M)
Abbott Kos Pharmaceuticals 3700
Eli Lilly Icos 3200
Gilead Myogen 2500
Merck Sirna Therapeutics 1100
Genentech Tanox 919
Illumina Solexa 660
Genzyme AnorMED 584
[The "big picture" of "Pharma" going for "tech>to>pharma" by acquisition, shows the Merck/Sirna deal of $1.1 Billion only in the "middle range" - and as shown by the newsclip below, even the doubling of value over six months may not be enough for shareholders, with sixfold increases in a year reported in fine genome analysis, methylation tools. - comment on the 5th of January, 2007 by A. J. Pellionisz]
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