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Biotech / Medical : Munch-a-Biotech Today
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To: nigel bates who wrote (1850)5/2/2005 11:49:03 PM
From: John Metcalf  Read Replies (2) of 3158
 
Nigel, I don't remember a bidding war for a biotech company. OTOH, I've only been here eleven years....

There are some structural reasons for this. A developmental stage company is not valued on earnings, nor cash flow -- valuation is subjective and requires due diligence. Therefore, a hostile acquirer has little chance of determining value. In-licenses, royalty arrangements, and cross-licenses are usually available for a price, so acquisition is not necessary. It is generally accepted that a hostile acquirer will not be able to keep the assets of the acquiree in the form of scientists who will stay after a hostile acquisition. Scientists' options vest on acquisition, so they cash out and move on.

Nor do I remember a bidding war for a product stage biotech. Senior biotechies, what am I forgetting? Did any biotech ever go on the block and attract competing bids?
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