The industry got off on the right foot with a generally upbeat mood pervading the annual JPMorgan Healthcare Conference in San Francisco in early January, reflecting the fact that many biotech and pharma CEOs in attendance felt that 2011 would be a good year for their companies.
There was also a general consensus at the meeting that biotech mergers and acquisitions activity would increase significantly as a result of larger biotechnology and Big Pharma companies looking to bolster their product pipelines and catalyze growth. We certainly didn't have to wait too long to see this scenario begin to unfold. In late January, Amgen announced that it would pay $1 billion to acquire BioVex, a privately held biotechnology company based in Woburn, Massachusetts, with additional operations in Abingdon, United Kingdom. The transaction provides Amgen with BioVex's lead product candidate, OncoVEXGM-CSF, an investigational oncolytic vaccine currently in phase III clinical development as a treatment for metastatic melanoma. A phase III multinational study in head and neck cancer is also ongoing.Biotech's second largest company by market cap, Gilead Sciences, also announced an acquisition, saying that it will pay $375 million cash to acquire privately-held Calistoga Pharmaceuticals, a company focused on cancer and inflammatory diseases. Factoring in potential milestones, the total deal could be worth around $600 million. Commenting on the rationale for the deal, Gilead said that it serves to further broaden their pipeline and expertise in the areas of oncology and inflammation.
In February, sanofi-aventis and Genzyme finally reached an agreement approximately seven months after sanofi made its initial offer of $69 per share to acquire Genzyme. In the end, sanofi agreed to pay $74 per share in cash, and give each Genzyme shareholder one contingent value right for each share they own, which will entitle them to additional cash payments tied to specified milestones related to Genzyme's Lemtrada, Cerezyme, and Fabrazyme drugs, according to the released terms of the deal. The final closing of this deal caused a surge of investor interest in the sector and fueled speculation about other "blue-chip" biotech companies that could be in the crosshairs of Big Pharma companies.
Not only are we seeing the impact that the field of personalized medicine is having on drug development, but also that it is part of a wider discussion on how these evolving technologies will have a direct impact on helping to bring healthcare costs under control. To drive healthcare costs down, we need to focus on encouraging wellness rather than simply treating sickness. Interestingly enough, personalized medicine is moving to a "participatory" phase as people become much more involved in decisions about their own healthcare. Driving this trend is the fact that healthcare is being impacted by the convergence of information technology, wireless technology, and the proliferation of mobile devices. WiFi-enabled devices are allowing patients to connect with their physicians remotely. Smartphones are becoming personal healthcare assistants capable of collecting and transmitting vital body signs for analysis and subsequent results. This "digital health" world is just evolving and will bring about a radical change in how medicine is practiced in the next decade.
BIOTECH INITIAL PUBLIC OFFERINGS (IP0S)
Several biotech companies made their US market debut in February. With the exception of renewable fuels and chemical developer Gevo, all other biotech companies had to significantly lower their pricing expectations to get IPO deals done. The average aftermarket performance of the biotech IPOs at the end of February was 8.6 %.
* Biotech 2011–Life Sciences: Looking Back to See Ahead is G. Steven Burrill's 25th annual publication on the state of the biotechnology industry. This special anniversary edition examines how the industry has developed into the global enterprise it is today. It describes what companies will need to do in order to remain competitive in a world being reshaped by technology, globalization and emerging markets. In addition, it provides comprehensive analysis on the global industry's performance in 2010. Details: http://www.burrillandco.com/resources/.
G. Steven Burrill is chief executive officer at Burrill & Company, San Francisco, CA, 415.591.5400, [email protected]