Replies to post #64552 on Biotech Values

[caravon]

No, it will not be a case.

In any R&DD organization, there are less than 20% of capable people and 80% of just "warm bodies." Consequently, making good offers to the 20% best, "keeping" offers to the next 40-50%, and getting rid off ~30% least productive people makes a lot of sense.

Finally, motivated individuals to start their own businesses will do it regardless of Genentech staying independent or being consumed by Roche.

Based on my own experience, in situations like DNA/Roche, companies can make "too good to reject" offers (30-50% raises together with up to 1-3 years annual pay signing up bonuses).

[DewDiligence]

Re: Economic rationale for Roche-DNA merger

>DNA/Roche – I don't see the financial benefit per se.<

The economic benefits are threefold:

1. Elimination of duplicate costs. For instance, if DNA becomes a wholly-owned subsidiary of Roche, it no longer needs its own staff for investor relations, Sarbox compliance, and several other functions.

2. Geographic consolidation. If the merger goes through, Roche will close its Palo Alto office and relocate the staff to DNA’s S. San Francisco campus.

3. The merger obviates the need for Roche to pay market value for the ex-US rights to DNA’s drugs beginning in 2015, when Roche’s existing opt-in arrangement expires. The current arrangement, whereby Roche gets the ex-US rights to every DNA drug at a below-market rate, has been the main source of Roche’s profitability during the past decade.


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