Big Partnerships Give Biotechs A Boost To Richer Exits
This article was originally published in Start Up
Biotechs in recent years are more likely to fetch a higher acquisition price – practically the only way for investors to exit these days – if the company has previously signed a major alliance. But the partners aren't necessarily the ones buying.
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With M&A exits on the minds of venture investors and management alike, the idea that a strategic alliance on an important project or platform application might dilute downstream acquisition value is a serious consideration for biotech firms. Yet an analysis of private biotech acquisitions from January 2005 through early September 2008 suggests that those firms that strike a strategic alliance prior to acquisition actually do much better, exit-wise, for their backers.
Sangamo licensed Biogen zinc finger protein transcription factor candidates in an alliance worth over $2bn. Exercising an option it gained in 2017, Takeda bought celiac disease-focused PvP Biologics for up to $330m in earn-outs. A strong showing of IPOs prompted biopharma financing to increase from last month.
Derived from Strategic Transactions, Informa’s premium source for tracking life sciences deal activity, the Dealmaking column is a survey of recent health care transactions listed by relevant industry segment – In Vitro Diagnostics, Medical Devices, and Pharmaceuticals – and then categorized by type – Acquisition, Alliance, or Financing. This month’s column covers deals announced February 2020.