Big Pharma Outbids Public Investors: Step-Ups in Biopharma Exits

Lately, it seems the only private biopharma investors with much to cheer about are those whose concerns have been targeted for acquisition by Big Pharma: Merck & Co. Inc. paid $480 million in May to acquire GlycoFi Inc. and Abmaxis Inc. at an average of 10 times what private investors had paid in [See Deal][See Deal], while, in April, Pfizer Inc. paid a similar multiple to acquire Rinat Neuroscience Corp. : $500 million, for a firm that had raised $57.5 million in its history. [See Deal]While multiples of acquired biotechs have been significantly higher than those of biotechs exiting via IPO, average valuations haven’t been. In Exhibit 1 below, we compared average valuations and multiples of private biopharma exits by type of exit:

those that exited via Big Pharma acquisition over the past three years; those that exited via IPO over the past...