Strong Signs that Confidence Is Returning to the Biotech Capital Markets
As 2011 came to a close, there were several indications that the biotech sector could see a meaningful up-tick in both capital markets and M&A activity. Several companies acted nimbly to take advantage of windows of opportunity to complete sizable equity raises, ending the year with strengthened balance sheets and enhanced strategic positions.
Idenix Pharmaceuticals raised over $70 million to fund its drug development effort in HCV, which includes lead drug candidate IDX184. Ariad Pharmaceuticals raised over $250 million in mid-December to prepare for the commercial launch of its lead compound, ponatinib, in the U.S. and Europe, and, if approved, to sell, market, and distribute ponatinib in these and other markets, allowing Ariad to retain the potentially substantial commercial value of ponatinib.
Financing momentum continued into 2012, as Amarin completed a $150 million Notes deal in early January.
Last year’s biotech M&A activity was punctuated by Gilead’s late November bid of approximately $11 billion for Pharmasset, a clinical-stage pharmaceutical company focused on the development of oral therapeutics for the treatment of HCV. Gilead’s offer represented nearly a 100% premium to Pharmasset’s stock price prior to the announcement of the deal and fueled speculation over which other HCV developers could be in the crosshairs of large biotech and pharma companies vying for a slice of the massive HCV therapeutic market opportunity.
Earlier that fall, Roche acquired Anadys Pharmaceuticals, another HCV drug developer, for approximately $230 million, translating to a premium of about 250%. The string of deals in the HCV space continued, as Bristol-Myers Squibb announced its intention to acquire Inhibitex for approximately $2.5 billion, during the first week of January.