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Pharmaceutical/Biotechnology Deal Statistics Quarterly, Q4 2008

Executive Summary

Highlights from the Q4 2008 review of pharmaceutical and biotechnology dealmaking: Financing dollar volume was only one-fourth that of Q3 with 57 deals bringing in over $1.09 billion, with no IPOs or FOPOs, but early-stage VC rounds accounting for 41% of this total. M&A dollars also were down: $7.6 billion in Q4--versus the $25.2 billion of the previous quarter--and contributing just 15% to the category's 2008 annual total. Alliances saw the most activity, boasting ten deals with pre-commercialization values greater than $100 million. Five of those were over $275 million, including Bristol-Myers Squibb Inc.'s $850 million tie up with Exelixis Inc., not only the fourth quarter's highest, but the second-largest alliance of the year.

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Infinity/Purdue: The Challenge of Reprising Roche/Genentech

Infinity's "Big Brother" deal with the privately held affiliates Purdue and Mundipharma comes closest of any recent deal to replicating the structure of the Genentech/Roche relationship -- swapping the majority of a biotech's pipeline to a well-heeled partner in return for independence from the capital markets and enough commercial upside to deliver a long-term return for investors. But the idiosyncrasies of the Purdue/Mundipharma ownership and structure, and the recent stormy history that opened minds to the possibility of such a deal, show why further iterations of the model will remain a rarity.

End of an Era for GSK and Exelixis

GlaxoSmithKline in October decided to decline its option to license Exelixis's late-stage XL184 small molecule oncology candidate and four earlier-stage compounds, effectively ending the six-year R&D collaboration between the two firms. The decision ends an early foray into license-and-option agreements by GSK, a company that has been at the forefront of striking option deals over the past several years. Its latest such agreement was announced the same day the Exelixis deal wrapped, as part of an alliance with the Austrian vaccines play Affiris in the area of Alzheimer's disease.

Eli Lilly's Oncology Focus

On October 6, Eli Lilly & Co. became the latest pharmaceutical company to jump on the cancer bandwagon, with its $6.5 billion acquisition of ImClone Systems Inc.The deal gives Lilly the royalty stream to one marketed product-cetuximab (Erbitux), plus five additional clinical stage compounds, many of which are biologics. The problem is many of the candidate drugs face stiff competition--and the pharma has severely depleted its cash holdings to get the deal signed.

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