Sleepless in Seattle

Over the last few months I’ve been lucky to spend a little time working in Seattle; great coffee, great views (mountains and sea), friendly people and a thriving and fascinating biotech sector. As an outsider,  I’ve noticed some interesting parallels between the local biotech scene and that which is prevalent across the UK and Europe.

In essence, both groups have great research bases, numerous biotech companies (from start-up to public  listed companies), funding infrastructure with sizeable local VCs, and entrepreneurial spirit in spades. And within both groups, people also lament the lack of local biotech company champions that could be built into world-beating stand alone companies.

As companies get built up, and develop late stage or marketed pipeline products, the temptation for acquirers becomes too great and the local companies get bought out. Examples from Seattle include: Immunex (acquired by Amgen for $16 billion in 2002); Icos (acquired by Eli Lilly for $2.3 billion in 2007); and Corixa (acquired by GSK for $300 million in 2005). Examples from Europe and UK include: Serono (acquired by Merck KGaA for $13.5 billion); Celltech (acquired by UCB for $2.7 billion in 2004); Cambridge Antibody Technology (acquired by AstraZeneca for $1 billion in 2006); and Acambis (acquisition agreed by Sanofi-Aventis for $550 million, July 2008). And as we all know, even the hunters get hunted – Chiron (US) acquired PowderJect (UK) for $888 million in 2003, then the outstanding shares of Chiron already not owned by Novartis were acquired by the same for $5.4 billion in 2006.

So, while these are just a few examples, they do support a biotech business model which is sustainable, palatable to a broader investor audience and a reason to celebrate. Biotech should do what it does best; mitigate risk by finding and developing early stage R&D products into the clinic, then hand on late stage development and marketing to big biotech/ pharma partners. Whether this happens through licensing deals or M&A doesn’t really matter – the important bit is to demonstrate a return.

Meanwhile, when companies are sold, resources are recycled back into earlier stage projects – people, R&D expertise and investment dollars. These are success stories.

And finally, what does the sleepless bit in the title refer to – a plot for another romantic comedy? No, just a case of lingering jet-lag!


(For related post, see “Is consolidation the way forward?”)


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