Deal-making Gets Hot Again
Deal-making woke up in Q3 06 after taking a breather in Q2 06. In fact, during the quarter, partnering activity was the major driver of financing activity in what was a generally lackluster quarter for raising capital.
Headlining the over 30 deals was GlaxoSmithKline’s(www.gsk.com) strategic alliance with ChemoCentryx (www.chemocentryx.com)to discover, develop, and market medicines targeting four chemokine and chemoattractant receptors for the treatment of a variety of inflammatory disorders, including Traficet-EN in late-stage development for inflammatory bowel disease. ChemoCentryx received an upfront payment of $63.5 million. In addition, the company will receive research funding and will be eligible to earn milestone payments up to, potentially, $1.5 billion, assuming successful development and commercialization of the products under development.
After a brief lull, mergers and acquisition activity picked up in October. Eli Lilly(www.lilly.com) said it was acquiring Icos(www.icos.com) for $2.1 billion, a move that gives the company full ownership of the erectile-dysfunction drug Cialis. Merck & Co. enhanced its interest in RNAi technologies with its $1.1-billion acquisition of Sirna Therapeutics.
Pharma acquiring biotechs has been the norm; now biotechs themselves are getting into the act. Millenium Pharmaceuticals(www.mlmn.com) lost out in its offer to acquire Canadian-based AnorMED;Genzyme(www.genzyme.com) won the bidding war with a price of $580 million. Amgen completed its acquisition of Avidia(www.avidia.com), paying $290 million for the privately held company developing a new type of treatment called Avimer proteins. The transaction provides Amgen with Avidia’s lead product candidate, an inhibitor of interleukin 6 for the treatment of inflammation and autoimmune diseases.
Amgen’s increase in share price in October was enough to edge it back over Genentech for the ongoing title to be the world’s largest biotech company by market cap. For several months, Genentech had held off Amgen. By the end of October, however, Amgen’s market cap was $88.1 billion, with Genentech’s standing at $87.3 billion.
It was another billion-dollar quarter for biotech venture capital. Although the $1.1 billion raised was 18% down from the previous Q2 06 period, the total raised in 2006 so far is already close to that raised in all of 2005.
Leading the over 40 venture capital deals in the third quarter was Esprit Pharma(www.espritpharma.com), which completed a Series B round, raising $90,790,000. Amicus Therapeutics(www.amicustherapeutics.com) closed a $60-million Series D financing. Zogenix(www.zogenix.com) also raised $60 million in a Series A round. Proceeds from the financing were used to fund the acquisition of the Intraject technology assets from Aradigm(www.aradigm.com).