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Infinity Reverse Merges Into Discovery Partners

This article was originally published in Start Up

Executive Summary

Through a reverse merger with Discovery Partners, oncology discovery and development play Infinity Pharmaceuticals will access the public market and Discovery's roughly $70-75 million cash. That the deal won't secure Infinity the kind of market capitalization that the firm's top-notch pedigree and previous private valuations pointed toward merely reflects the market's healthy skepticism for early-stage assets. It also suggests that even for companies as promising as Infinity, reverse mergers are increasingly the smoothest-and in some cases the most lucrative-path to the Nasdaq.

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Infinity/Purdue: The Challenge of Reprising Roche/Genentech

Infinity's "Big Brother" deal with the privately held affiliates Purdue and Mundipharma comes closest of any recent deal to replicating the structure of the Genentech/Roche relationship -- swapping the majority of a biotech's pipeline to a well-heeled partner in return for independence from the capital markets and enough commercial upside to deliver a long-term return for investors. But the idiosyncrasies of the Purdue/Mundipharma ownership and structure, and the recent stormy history that opened minds to the possibility of such a deal, show why further iterations of the model will remain a rarity.

Infinity/Purdue: The Challenge of Reprising Roche/Genentech

Infinity's "Big Brother" deal with the privately held affiliates Purdue and Mundipharma comes closest of any recent deal to replicating the structure of the Genentech/Roche relationship -- swapping the majority of a biotech's pipeline to a well-heeled partner in return for independence from the capital markets and enough commercial upside to deliver a long-term return for investors. But the idiosyncrasies of the Purdue/Mundipharma ownership and structure, and the recent stormy history that opened minds to the possibility of such a deal, show why further iterations of the model will remain a rarity.

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Reverse mergers are an increasingly common fundraising strategy for biotech. But do they pay off?

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