Replies to post #84477 on Biotech Values

[DewDiligence]

Pull Up Your Bootstraps

[This overview of the biotech arena is from Wednesday’s Boston Globe. Despite the comments to the contrary in this article, buyouts of biotech companies remain a force, as evidenced by the ever-growing size of the table in #msg-42148007. Although many of the buyouts in this table came at depressed prices and were the results of failure, several of the deals in the table were lucrative and were predicated on innovative technology. In other words, it’s dangerous to over-generalize on this subject.]

http://www.boston.com/business/healthcare/articles/2009/10/07/mass_biotech_firms_urged_to_remain_independent/

›By Robert Weisman
October 7, 2009

That was the message delivered to biotechnology start-ups at the 11th annual MassBio Investors Forum yesterday. At a time when major drugmakers are consolidating and may be less willing to buy fledgling companies, biotechs have to make it on their own and bring drugs to market themselves.

Industry leaders warned that the old model of forming a biotech company, shepherding a drug through development and years of clinical trials, and then selling the company to a pharmaceutical buyer may be played out.

Success will now require a survival mentality and a focus on remaining independent, said Barry Greene, president of Cambridge biotech Alnylam Pharmaceuticals Inc.

“Cultures that depend on survival are absolutely critical for this industry to succeed,’’ Greene said. “If you don’t want to [stay independent], you’re not a company. You’re a project.’’

Biotech leaders said it could take seven to 10 years to bring new drugs into commercial use in the future, compared with the five- to six-year time horizon of the past, mostly because of scarcer financing and a longer government approval process.

James J. O’Mara, vice president of business development at another Cambridge biotech, Ironwood Pharmaceuticals Inc., said more start-ups are willing to invest in technology without the expectation they will be snapped up for a premium. If the technology doesn’t lead to a product, they must be ready to shut down and cut their losses, he said. “People are being much more explicit about the company they’re building, and I think that’s a good thing,’’ O’Mara said.

During a panel on building a sustainable biotech business model, moderator Ted Torphy, chief scientific officer and head of external research for Johnson & Johnson Pharmaceuticals, told the audience at the Sheraton Boston Hotel that drug companies continue to look to biotechs for research and development.

“As an industry, we’re spending more and more for less and less productivity,’’ Torphy conceded. “Unless this changes, large pharmaceutical companies may be doing better by their shareholders if they invest in oil rather than investing in drug discovery.’’ [Johnson & Johnson Petroleum Corp? Nah—that sounds silly :- )]

But that doesn’t mean they are as eager to make acquisitions as they’ve been in the past, Torphy said, noting that big pharmaceutical companies have been moving aggressively to pare costs by streamlining research and striking partnerships with biotechs. “We want products, we don’t want companies,’’ he said.

Not everyone agreed the old business model is broken.

Alan Crane, former chief executive of Momenta Pharmaceuticals in Cambridge who is now general partner at Polaris Venture Partners in Waltham, said biotechs that focus on developing “breakthrough technology’’ rather than finding new ways to use old technology will get funding despite the retrenchment at pharmaceutical companies. [Crane is one of the quasi-independent directors on MNTA’s BoD (#msg-42166392).]

“There’s a lot of reason for long-term optimism,’’ Crane said, citing the aging of the population and growth in global markets.

The most successful companies will be innovators, said Katrine Bosley, chief executive of Avila Therapeutics in Waltham.

“One way you know that you’re innovating is if everybody thinks you’re crazy,” [LOL], Bosley said. “If you’re not getting that kind of reaction on a regular basis, then you’re not being innovative enough.’’

But in the near future, biotechs will operate in an environment of funding scarcity and will need to adjust their goals - and their “burn rates,’’ the speed at which they run through venture capital - said Noubar Afeyan, managing partner and chief executive of Flagship Ventures in Cambridge.

He defended venture capital firms’ practice of investing in more mature companies, which has come under criticism from cash-starved entrepreneurs. “If we pour a lot of money into the early stage, we’re going to have a lot of orphan companies.’’‹

[genisi]

GPRO to acquire Prodesse Inc, a privately held provider of clinical tests for influenza and other infectious diseases for approximately $60M in cash.

http://www.reuters.com/article/marketsNews/idCNN0631723520091006?rpc=44

[genisi]

Onyx to acquire private biotech Proteolix Inc for $276M

http://www.reuters.com/article/governmentFilingsNews/idUSN1212525920091012

[DewDiligence]

Recent Biotech Buyouts

[Added OXGN-VXGN deal (4% discount).]

 
 Acquired         Premium    Deal         iHub  
 Company  Buyer   to Market  Value  Date  Reference  
 GNLB     GSK       465%     $57M  10/08  #msg-33209281 
 MEMY     Roche     319%     $50M  11/08  #msg-33787598 
 KOSN     BMY       233%     $190M  5/08  #msg-29647147 
 MGRM     LH        171%     $155M  6/09  #msg-38960958 
 COLY     PFE       167%     $165M 11/07  #msg-24600805 
 NTMD     Deerfield 158%‡‡‡  $36M   1/09  #msg-35132470 
 EYE      ABT       149%   **$2.8B  1/09  #msg-34762429 
 IOMI     Intercell 147%     $190M  5/08  #msg-29232165 
 BTRX     Stiefel   136%     $150M  6/08  #msg-30201906 
 Tepnel   GPRO      126%     $132M  1/09  #msg-35221710 
 SGXP     LLY       119%     $64M   7/08  #msg-30547648 
 ENCY     PFE       118%     $350M  2/08  #msg-26978155 
 TRCA     Ipsen     104%     $660M  6/08  #msg-29795183  
 CRY.to   MDT        97%     $380M  9/08  #msg-32421462 
 Speedel  NVS        94%     $880M  7/08  #msg-30588524 
 MNT      JNJ        92%     $1.1B 11/08  #msg-33879830 
 MEDX     BMY        90%     $2.1B  7/09  #msg-39801273 
 SIRT     GSK        85%     $620M  4/08  #msg-28705020  
 CVTX     GILD     *‡76%     $1.4B  3/09  #msg-36225695 
 IDEV     ENDP     *†74%   *†$370M  1/09  #msg-34592416 
 LEVP     VPHM     ††73%   ††$510M  7/08  #msg-30704409 
 TARG     MDCO    ***72%     $42M   1/09  #msg-34774402 
 Ventana  Roche      72%     $3.4B  1/08  #msg-30912677 
 Jerini   Shire     *71%     $520M  7/08  #msg-30452872 
 AAH.AX   CEPH       69%     $207M  2/09  #msg-35956544 
 Acambis  SNY        64%     $550M  7/08  #msg-30990498 
 SCRX     Shionogi   61%     $1.4B  9/08  #msg-31859174 
 IDMI     Takeda     55%     $75M   5/09  #msg-37898204 
 ALO      KG       ‡†54%     $1.6B 11/08  #msg-33763449 
 MEDI     AZN      ‡‡53%     $15.2B 4/07  #msg-19020387 
 MLNM     Takeda     53%     $8.8B  4/08  #msg-28365383 
 PCOP     LGND    ***52%     $75M   9/08  #msg-32404474 
 CLZR     ELOS       51%     $65M   9/09  #msg-41293512 
 OMRI     JNJ      ‡*51%     $465M 11/08  #msg-33762745 
 IMCL     LLY     †††51%     $6.5B 10/08  #msg-32662830 
 CRGN     CLDX       50%     $40M   5/09  #msg-38262967 
 PHRM     CELG       46%     $2.9B 11/07  #msg-24645394      
 BRL      TEVA       42%   **$9.0B  7/08  #msg-30792830 
 TRMS     Arigene    40%     $81M  10/09  #msg-42147995 
 MOGN     Eisai      39%     $3.9B 12/07  #msg-25163775  
 SGP      MRK        34%     $41B   3/09  #msg-36140327 
 CGPI     Galderma   30%     $420M  2/08  #msg-28286522 
 WYE      PFE        29%     $68B   1/09  #msg-35077617 
 APPX     Fresenius †29%     $940M  7/08  #msg-30498388 
 SEPR     Dainippon  28%     $2.6B  9/09  #msg-41143301 
 Zentiva  SNY      ‡‡26%     $2.6B  9/08  #msg-32327005 
 NOVN     Hisamitsu  22%     $428M  7/09  #msg-39515681 
 CGRB     JNJ        16%     $970M  5/09  #msg-38039851 
 DNA      Roche      16%   †*$46.8B 3/09  #msg-36224175 
 ARI.to   Roche     ‡15%     $190M  7/08  #msg-30904056 
 CEGE     BPAX        6%     $38M   6/09  #msg-39163410 
 VXGN     OXGN       (4%)    $33M  10/09  #msg-42578130  
 AVGN     MNOV     †‡(7%)    $38M   8/09  #msg-40769841 
 PGLA     Avexa       ®         ®  12/08  #msg-34341452 
 NUVO     ARCA        ®         ®   9/08  #msg-32420015 
 NOVC     Transcept   ®         ®   9/08  #msg-31869987 
 ANSV     Arcion      ®         ®   8/09  #msg-40467526 
 VSGN     IPC*††      ®         ®   8/09  #msg-40603745 
  
 ®Reverse merger with private or non-US company.  
  
 ‡Number is misleading inasmuch as Arius announced in 
 May 2008 that it was pursued by an unnamed suitor. 
  
 ‡‡Premium relative to commencement of bidding. 
  
 ‡‡‡To be liquidated by Deerfield following failed merger with 
 Archemix; premium relative to 11/18/08 date of Archemix deal. 
  
 ‡†Based on closing price 8/21/08, the day 
 before KG announced initial buyout offer. 
  
 ‡*Based on 11/20/08 close. 
  
 †Premium reaches 63% if earn-out met. 
  
 ††Premium and deal value based on 0.45/sh of contingent payments. 
  
 †††Premium relative to 7/30/08 close, the 
 day before BMY announced first buyout offer. 
  
 †*Price for 44% of DNA not already owned. 
  
 †‡7% discount to market price excludes contingent payments. 
  
 *199% premium to volume-weighted 
 price during preceding 3 months. 
  
 **Deal value includes assumption of debt. 
  
 ***Premium and deal value exclude contingent payouts. 
  
 *‡Premium relative to 1/26/09, the day 
 before Astellas announced $16/sh offer. 
  
 *†Premium includes estimated value of contingent 
 payouts, but listed deal value excludes them. 
  
 *††IntelliPharmaCeutics.