M&A in biotechnology has surpassed IPO and become the first choice

The window of the biotechnology companies IPO is still open, and the 2013-2014 rating is relatively stable, so the eyes of the biotechnology industry are still focusing on this value node. For example, companies such as Intarcia and Juno have come to the end of the pre-listed mezzanine financing round. , may become the highlight of the new year. IPO has attracted countless eyeballs, but when we discuss the exit of biotechnology venture capital, we often ignore the important role of M&A, and in the current market, corporate mergers and acquisitions occur more frequently.

This year's excellent examples of venture capital support in the field of biotechnology, which are based on corporate mergers and acquisitions, are numerous:

Alios Pharma was acquired by Johnson & Johnson for $1.75 billion and created 18-20 times returns for five venture capital firms, including SROne, Roche Ventures, Novartis Ventures and Novo Ventures.

Seragon was sold to Genentech with an advance payment of US$725 million and a further US$1 billion in installment payments to the venture capitalists Column, Aisling, Venbio, and other very lucrative returns through this transaction and the Johnson & Johnson acquisition last year. Aragon's mergers and acquisitions, Column's funds as a whole have doubled.

In 2011, Arteaus Corporation acquired a CGRP-specific antibody project dedicated to the treatment of migraine from Lily for US$18 million. When the project reached clinical phase II according to the acquisition agreement, Lilly The drug will be repurchased. Eventually, Lilly will re-acquire the project for US$57.1 million (before tax) this year. In this process, venture capitalists Altas Venture and OrbiMed have received huge returns on their investment, and Lilly has achieved drug outsourcing risk outsourcing. . Teva is not willing to acquire Labrys Biologics with a prepayment of 200 million U.S. dollars, and has obtained the LBR-101 migraine treatment drug project, and will pay 625 million U.S. dollars in the later stages of research and development, while venbio, Canaan, InterWest and Sofinnova In the early stage of the investment, only 31 million U.S. dollars were invested.

Compared with listed companies such as Agios, Ultragenyx, Receptos, Epizyme, and Bluebird, which successfully obtained risk-based cash through IPO, the above example of exit through mergers and acquisitions is not inferior, but it is too early to deny the immense attraction of IPOs. Who can completely determine that in these successful IPOs companies will not develop another Gilead?

It is foreseeable that listed companies will surely become the follow-up hotspots for major news follow-ups, and it will also facilitate us to further study their performance. However, the merged companies can only wither out of sight if their product pipelines succeed in the future. Well, because people talk about Sovaldi's success, little mention of Pharmasset. Similarly, when people are shocked by Merck's Keytruda, nobody remembers Organon Biosciences. The way of M&A obliterates the social cognition of the original company, and even the withdrawal mode of M&A appears to be irrelevant in people's minds. However, in the field of biotechnology, what are the relative effects of IPO and M&A? Existing monitoring data may be able to explore some ambiguous answers.

Correlation Ventures (CV) counts companies or projects whose market capitalization is greater than or equal to more than US$250 million (large-scale investment) in the six months after the IPO. In recent years, the proportion of VC-backed companies or projects that have exited by mergers and acquisitions has continued to increase. , the proportion remained at more than half in the period of 2006-2013