Recent Financings Boost Biotech M&A Returns

A recent influx of venture capital does appear to place start-ups in an optimal position to negotiate better terms and receive a higher payment.

In the last five years, the average up-front return on investment in private biotech acquisitions has declined from 4x in 2006 to under 2x thus far in 2010, thanks primarily to the rise in earn-out-heavy dealmaking. ( See "Pharma: Serious About Change?" IN VIVO , October 2010 Also see "Pharma: Serious About Change? " - In Vivo, 1 October, 2010. and "Biotech Backers Are Learning to Live with Exit-by-Earn-out," START-UP , March 2010 Also see "Biotech Backers Are Learning to Live with Exit-by-Earn-out " - Scrip, 1 March, 2010..) While there have been a few outliers – Direvo Biotech AG and CoGenesys snatched 8x and 7x returns, respectively, when they were purchased by Bayer HealthCare LLC and Teva Pharmaceutical Industries Ltd. – more deals have trended like Wyeth's (now part of Pfizer Inc.) buy of Thiakis, which had raised $120 million in venture capital, only to be acquired for $30 million up front. [See Deal][See Deal][See Deal]

At a time when bigger pharmaceutical players have the dealmaking leverage, what steps – if any – can privately held...

Read the full article – start your free trial today!

Join thousands of industry professionals who rely on Scrip for daily insights

  • Start your 7-day free trial
  • Explore trusted news, analysis, and insights
  • Access comprehensive global coverage
  • Enjoy instant access – no credit card required

More from Strategy

Bayer’s Elinzanetant Is Latest Drug Hit By FDA Review Delays

 
• By 

Comes Days After PDUFA Pushback For GSK's Blenrep.

Dr Reddy’s On Semaglutide Prospects, Capacity And There’s An IP Hearing To Watch

 

Dr Reddy’s CEO discusses the growth opportunity for semaglutide, including production capacity and ‘crazy’ demand indications, and a potential 20-plus product GLP-1 portfolio. All eyes are also on an upcoming hearing in India pertaining to Novo Nordisk’s semaglutide patent in the country.

Bristol Appoints AstraZeneca’s Massacesi As Next CMO

 

Chief Medical Officer Samit Hirawat will step down to pursue new career opportunities, the company said.

Deal Watch: Novartis Hopes To Ace Inflammatory Disease With Matchpoint Tie-Up

 

Plus deals involving Lilly/Gate Bioscience, Concentra/iTeos, Nicox/Kowa, Ajax/Schrodinger, I-Mab/Bridge Health, Otsuka/Cantargia, JCR/Acumen and more.

More from Business

Quick Listen: Scrip’s Five Must-Know Things

 
• By 

In this week's episode: Sanofi’s Vicebio buy; Sarepta halts US Elevidys shipments; Novartis warning over Europe; US CRL for Genentech’s Columvi; and an interview with Novavax.

Bristol Appoints AstraZeneca’s Massacesi As Next CMO

 

Chief Medical Officer Samit Hirawat will step down to pursue new career opportunities, the company said.

Boehringer Ingelheim Expects Two Key Approvals In Second Half Of 2025

 

The privately held German pharma firm is hoping to bring a new generation of pulmonary fibrosis and cancer drugs to market but their commercial success is not yet a certainty.