Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Munch-a-Biotech Today -- Ignore unavailable to you. Want to Upgrade?

To: JOEBT1 who wrote (285)	3/18/1999 3:46:00 PM
From: Biomaven	Read Replies (1) \| Respond to of 3158

Joebt1, You raise a good point of "why buy when you can partner?" Historically, we have of course seen partnering rather than buying as the dominant mode. Why then do I suspect this might now change? Part of the reason is that the rewards of partnering seem to have declined for both parties. Big pharmas that have thin pipelines don't seem to be always able to point to their partnered projects as part of their pipeline, and the street no longer buys partnering biobucks as validation of the biotechs. Secondly, approved products have more value in the hands of the big pharma than in those of small biotechs. As increasing numbers of biotechs have approved products, so they become more desirable prey for the pharma. Thirdly, the capital markets are increasingly tough on the third and some second tiers, meaning they are more willing than in the past to be acquired. For the first time now we also have a respectable number of announced hunters - more than half a dozen, as well as an unknown number of un-announced ones (note that neither GILD or WLA had made any mention of possible acquisitions). I don't view the big pharma as having been particularly inept so far in avoiding acquisitions; it's just that I think they could now do well for themselves by some selective acquisitions instead of partnering. From the biotech viewpoint the issue is whether a couple more acquisitions might produce a feeding frenzy. Not real likely, but I can certainly hope. <G> Peter

To: JOEBT1 who wrote (285)	3/18/1999 5:53:00 PM
From: LLCF	Respond to of 3158

<They form a partnership with milestone payments contingent on success and " acquire" the technology they think most promising. Thus they avoid the negative bottomline burden associated with acquiring the company and get rights to the most promising technologies at "least cost"> Yes we see that Big Pharma has structured their deals to make Wall Street happy... but this doesn't necessarily mean this has been the lowest LONG TERM cost. Only if biotechs could go on forever selling product below cost would this be correct. However, we have seen over the last year, (paradoxically) that it is ALSO Wall Street that has turned off the spigot to these below cost suppliers (Bios) of Big Pharma. We are about to see a huge paradigm shift IMO. <The companies most ripe for acquistion are those that are profitable or close to it--> I agree that is current Wall Street thinking, I would also put forward that I believe that historically the German mentality is not so short sighted (49% of CHIR comes to mind), and current profitablity would be down the list of important items for BAYER... therefor GLIA, for example, may actually be increasing it's value to this type of buyer using your example. I agree that it would definitely be interesting to know what % of a companies "science" is partnered out! Also, going back to the "video tape" and checking market caps... we don't have that many in our value sheet that have the market cap's that these guys "claim" they are looking for: Message 8397161 Of course if we double the mkt. cap for "takeover premium" then we do have some candidates... DAK