Biotechs on the Brink Choose Last-Minute Deals, Not Liquidation

Biotech dealmaking in the fall of 2002 was a study in crisis management. As cash-starved biotechs scrambled to avoid liquidation, they signed deals that kept them alive but hardly offered much hope for upside. The question they raise: when is it in shareholders' best interests to simply call it quits? "If you have to do Hail Mary passes at the last minute, you're risk of failure is high," explains Donald Hawthorne, CEO of BioTransplant Inc. which is itself trying to avoid a hasty, last-minute deal.

But Hail Mary passes are an almost genetic necessity in a business built far more on faith than business reality. And companies are confirmed in their faith by stories like...