Bristol-Myers Squibb Co.'s purchase of Amira Pharmaceuticals Inc. for $325 million up front and another $150 million in downstream milestones shows that prior licensing deals and multiple programs in a pipeline don't necessarily curb a start-up's acquisition potential, provided investors are thinking smartly about deal structures that create separate value streams for the various products in the portfolio. [See Deal] Cash-constrained drugmakers, after all, are increasingly uncomfortable shelling out money for products that aren't top priorities based on the therapeutic profiles of the individual assets and/or the potential to compete with preexisting internal programs. The default deal structure in such situations would be a licensing deal, allowing the larger acquirer access to the program it wants without taking on the additional risk – and cost – associated with other assets.
But that scenario doesn't easily provide venture backers with what they need most – the ability to show limited partners a return on investment – unless the company was essentially structured as a single asset from the get-go. And many firms like Amira, which was founded in 2005 and has raised $28 million over its lifetime, were created before the two overlapping but similarly themed trends of asset financing and limited liability corporations made it easier to link a licensing deal to an actual exit. ( See " PanGenetics' NGF Antibody Sale Illustrates Index's Asset-Focused Strategy," START-UP , December 2009 Also see "PanGenetics' NGF Antibody Sale Illustrates Index's Asset-Focused Strategy" - Scrip, 1 December, 2009