Value is returning to biotech. For the first time since late February 2009, the industry's collective market cap has risen
above $400 billion. At that time, Genentech was contributing close to $100 billion of that total. When it was acquired, the
industry's market cap dropped by about 25%. Despite the ensuing tough financial climate, it has taken just two years to recoup
this loss, which is remarkable given that in the interim Big Pharma has been nibbling at the valuation by acquiring large
biotech companies such as Sanofi's acquisition of Genzyme. This deal created a surge of interest and a great deal of speculation
about other blue-chip biotech companies that might be in Big Pharma's crosshairs.
G. Steven Burrill
We didn't have to wait long for this predicted mergers and acquisitions (M&A) activity. Canadian-based Valeant Pharmaceuticals
made a hostile takeover offer for Cephalon in late March 2011. The cash offer of about $5.7 billion was eventually rejected
by Cephalon who believed the offer undervalued the company's key assets and prospects. Just as investors were digesting this
information came the news a few weeks later that Teva Pharmaceuticals and Cephalon had reached a definitive agreement whereby
Teva would acquire Cephalon for $6.8 billion in cash.
It wasn't only deal making that kept investors engaged. Pharmasset's shares have been on a tear, vaulting almost 60% in March
(168% year-to-date), and is now one of biotech's hottest companies, with its shares currently trading at $116. Investors were
encouraged by the company's data from the European Association for the Study of the Liver's annual meeting held in Berlin
late in March 2011. The company reported that its candidate hepatitis C drug PSI-7977, a nucleotide analog polymerase inhibitor,
was effective when added to standard therapy in 98% of patients in a 121-person clinical trial. Pharmasset also announced
that screening had begun in a Phase 2b study of PSI-7977.
Biogen Idec's stock value jumped 33% following their news announcement about positive top-line results from the first of two
pivotal Phase 3 clinical trials designed to evaluate their investigational oral compound BG-12 (dimethyl fumarate) as a monotherapy
in people with relapsing-remitting multiple sclerosis. Results showed that BG-12, administered either twice or three times
a day, met the primary study endpoint. Biogen also reported that it had signed a collaboration with Amunix for next-generation
long-lasting blood factor products.
In the regulatory area, FDA gave the green light to the blockbuster biotech drug Benlysta, the first new lupus medicine to
be approved by the agency in 56 years. Human Genome Sciences (HGS) and GlaxoSmithKline have collaborated on the drug's development
since 2006. San Diego-based Optimer Pharmaceuticals' Dificid (fidaxomicin) tablets for the treatment of Clostridium difficile-associated diarrhea also received approval.