M&A madness

Pharma and biotech companies went on spending spree this summer

Amy Swinderman
Despite lingering uncertainty over the implementation of theAffordable Care Act and the continued after-effects of the patent cliff, thepharmaceutical and biotechnology sectors saw huge deal activity in July andearly August, with several multibillion- and multimillion-dollar mergers andacquisitions (M&As), and scores of smaller deals whose financial value wasnot released.
 
The deals spanned all sectors of pharma, biotech andlife-science research, from global pharmas adding promising candidates to theirpipelines to tool providers expanding their capabilities—and everything inbetween. Disease areas and customer needs also ran the gamut, from themarket-leading field of oncology to the expanding world of bioinformatics, anddeals crossed borders in key geographic territories around the world.
 
 
According to Thomson Reuters Recap, the first half of theyear saw 1,234 life-science deals, with 152 disclosed M&As and 78 assetpurchases. Chris Dokomajilar, a Recap manager and senior biopharma dealsanalyst, says the current M&A surge began in the fourth quarter of 2012 andhas continued throughout the first half of this year "because there are a lotof companies worth buying."
 
 
Despite several deals topping the billion-dollar mark thissummer, "the dollars were not there," Dokomajilar says. "We're eagerly waitingfor those big M&A deals that we used to see in 2009 and 2010."
 
 
The month's largest and most talked-about deal was U.S.over-the-counter drugmaker Perrigo Co.'s purchase of Irish pharma Elan Corp.for $8.6 billion. Perrigo will move from its headquarters in Allegan, Mich., toDublin, Ireland, where the corporate income-tax rate is 12.5 percent. Notably,the deal gives Perrigo royalties on the multiple sclerosis drug Tysabri, whichElan discovered and sold to Biogen Idec Inc. in February. The acquisition is apeaceful ending for Elan, which fended off three lower bids from U.S.investment firm Royalty Pharma amid injunctions and court hearings beforeputting itself up for sale in June.
 
 
Lagging behind Perrigo with a cool $1.6-billion totalpurchase price was antibiotics developer Cubist Pharmaceuticals Inc., whichacquired San Diego-based Trius Therapeutics Inc. for about $707 million incash, as well as Jersey City, N.J.-based Optimer Pharmaceuticals Inc. for $535million in cash. Cubist CEO Michael Bonney said the acquisitions will help thecompany attain its goal of $2 billion in revenue by 2017.
 
 
"Each of these acquisitions is significant and valuable inits own right," Bonney told analysts in July. "The stars just happened to alignin such a way we can do both."
Hovering just at the $1-billion mark was Johnson &Johnson, which completed its acquisition of Aragon Pharmaceuticals Inc. inmid-August. The deal gave Aragon $650 million in cash up front, with thepotential for an additional $350 million in future milestone payments. Aragon'slead drug candidate is a second-generation androgen receptor signalinginhibitor being developed for the treatment of castration-resistant prostatecancer.
 
As part of its ongoing efforts to spin off itsover-the-counter medicines unit, Pharmstandard, Russia's largest pharma,acquired Singapore-based pharma ingredient supplier Bever Pharmaceutical for$630 million. Pharmstandard said the deal will allow it to secure a long-term,fixed-cost supply of critical ingredients for two of its flagshipover-the-counter brands, the anti-viral drug Arbidol and the anti-anxiety drugAphobazolum.

Europe's largest biotech, Actelion, said it will acquireCeptaris, a privately held U.S.-based specialty pharma focused on rare form ofnon-Hodgkin's lymphoma, for $250 million—but the deal is contingent on the U.S.Food and Drug Administration's approval of Ceptaris' Valchlor, a topical drugto treat cancer.
 
 
And French pharma Ipsen also got into the action with itsacquisition of U.K.-based biotech Syntaxin for $207 million. Syntaxin specializesin botulinum toxin engineering, which can be used to block muscle spasms andtremors, and has a pipeline of potential treatments for pain and cancer.According to analysts, this isn't the usual bolt-on deal with a bigger companysnapping up an experimental therapy; Syntaxin's co-founders, Drs. Keith Fosterand John Chaddock, will join Ipsen to build a botulinum toxin biology platformfor new drug development covering a variety of fields.
 
Squeaking in just under the $100-million mark was Illumina,which spent a reported $96 million to acquire Advanced Liquid Logic (ALL), aleading provider of liquid handling solutions. ALL, which is now a wholly ownedsubsidiary of Illumina, has developed a proprietary "digital microfluidics"technology based on electrowetting that precisely manipulates small dropletswithin a sealed disposable cartridge to perform complex laboratory protocols. Accordingto Illumina, this technology will enable the company to deliver the simplestand most efficient sample-to-answer next-generation sequencing workflow.
 
 
The contract research market also got into the action.Quintiles acquired, for an undisclosed amount, Novella Clinical, a Quintilesneighbor in Research Triangle Park, N.C., that focuses on the oncology, medicaldevices and diagnostics sectors. Quintiles, which said the deal would help itstay ahead of the diverse and evolving needs of its global customer base, alsosaid it expects a boost for its small biopharma capabilities.
 
Crown Bioscience, a global drug discovery and developmentservice company, acquired the shares of Preclinical Oncology Services Limited(PRECOS), a preclinical research and development service provider with aspecific focus on oncology, also for an undisclosed sum. Crown Bioscience saidthat as a result of the acquisition, it is now the world's only contractresearch organization that offers such a comprehensive range of services.
 
 
Players in the tool and instrumentation market also foundmates. Waters Corp. acquired Nonlinear Dynamics Ltd., a proteomics andmetabolomics analysis software company based in Newcastle upon Tyne, UnitedKingdom. Nonlinear Dynamics is best known for its Progenesis software, whichoffers researchers unique ways to analyze and visualize the raw proteomic data.Waters and Nonlinear Dynamics previously collaborated on the development ofWaters' TransOmics Informatics, a scalable solution for proteomics,metabolomics and lipidomics analysis that Waters says has seen excellent marketacceptance since it was first introduced at the American Society of MassSpectrometry Conference in 2012.
 
 
And Beckman Coulter—which itself was acquired by Danaher in2011—acquired the flow cytometry business assets of life-science technologycompany ReaMetrix of Bangalore, India. The transaction provides the companywith temperature-stable, single-dose, multicolor antibodies targeting the HIVmonitoring and clinical research markets. ReaMetrix's reagents claim tosimplify the sample preparation process and provide highly standardized reagentcombinations to cytometry laboratories around the globe. They are also amongthe first dry temperature-stable flow cytometry reagents CE-marked for in-vitro diagnostic use in Europe; theyare not currently available or cleared for use in the United States.

Amy Swinderman

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