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

 
• By Heather Slowik

Many biotechs, facing crisis situations in the fall of 2002, opted for deals that kept them alive but hardly offered much hope for upside. But in the coming months, boards may need to be far more realistic about their long-term prospects and consider a full range of options, including liquidation, when assessing a company's future.

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....

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