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The Burrill ReportTHIRD QUARTER STATISTICSMid-Cap Biotechs Attract Big Pharma CashGSK snaps up Human Genome Sciences and AstraZeneca partners with AmylinBY MARIE DAGHLIANThird Quarter ReviewQ3 Financing by type: globalQ3 Financing by type: U.S.Third Quarter 2012 Financings by TypeGLOBAL4%78%10%5%1%2%U.S.1%81%10%5%1%2%2012 U.S. Venture FinancingsBy CategoryThe third quarter of 2012 saw GlaxoSmithKline acquireits long-time partner Human Genome Sciences, endinga three-month battle between the two companies.GlaxoSmithKline succeeded by raising its all cash offerto $14.25 per share from the $13.00 per share offer it hadmade in April 2012. A premium of 99 percent to HGS’s closingprice on April 18 before GSK’s initial offer was madepublic. The deal values HGS at approximately $3.6 billionon an equity basis, or about $3 billion net of cash and debt.GSK gained complete ownership of Benlysta, albiglutide,and darapladib, all of which were the subject of an existingpartnership between GSK and HGS. GSK expects to achieveat least $200 million in cost synergies to be fully realizedby 2015, and expects the transaction to be accretive to coreearnings beginning in 2013.Benlysta, the first new treatment for lupus in more than50 years, won U.S. regulatory approval in the spring of 2011amid a lot of hope and expectation. At the time, analystsexpected peak sales of more than $2 billion a year. But ithas had disappointing sales due to a poor roll-out and pushback in Europe over its high cost. Both the German and theUK health systems refused to reimburse for the drug.The final agreement between the two partners put to resta hostile back-and-forth. GSK made repeated attempts to acquireHGS after its initial $2.6 billion buyout offer. The boardof directors at HGS promptly rebuffed the offer believing itto be too low and even claimed to have other suitors, such asCelgene. The maneuvers included GSK attempting to buyHGS stock directly from investors and a “poison pill” strategyemployed by HGS that would liquidate all of its assetsand make acquiring its stock nearly impossible.In the end, however, a sweetened pot of $400 million andthe lack of other legitimate buyers (likely due to GSK alreadyowning licensing rights to all of HGS’s drugs) wasenough for HGS to accept to GSK’s bid.Interestingly, after the GSK bid was accepted by HGS, itwas reported that the company had rebuffed a $7 billionbuyout offer from Amgen in 2010. The high bid was probablydue to expectations of blockbuster status for Benlystabefore its approval.Human Genome’s shares had been languishing in thewake of weak Benlysta sales until the GSK offer becamepublic. The same was true for Amylin, another mid-capbiotech that gained the interest of Big Pharma after it shedits diabetes alliance with Eli Lilly in late 2011 and gainedapproval of Bydureon, its once-weeklydiabetes drug, in January 2012. Shares ofAmylin languished at $10 for a long timeuntil it was leaked that Bristol-MyersSquibb had made a private offer to buythe company in February for $22 a share.Bristol-Myers eventually sweetened itsVCoffer and snapped up Amylin for $31 aIPO share at the end of June in a complicatedPIPE deal that involved a partnering agreementFollow on between Amylin and AstraZeneca. In Julywhen the sale was completed, AstraZenecapaid Amylin $3.4 billion to becomeDebtOther eq. an equal partner in its diabetes program,which besides Amylin’s diabetes franchise,includes BMS compounds alreadypartnered with AstraZeneca.nNovember 2012 10
THIRD QUARTER STATISTICSThe Burrill ReportBiggest Movers in Third Quarter of 2012TICKER COMPANY PRICE8/31/2012PRICE9/28/2012PRICECHANGEPERCENTCHANGEREASONADVANCERSSRPTGNMKSNSSSareptaTherapeuticsGenMarkDiagnosticsSunesisPharmaceuticals3.76 15.53 11.77 313.5% Announced clinical benefit with Eteplirsen, its experimentaldrug for the treatment of muscular dystrophy, in a mid-stagestudy.4.34 9.21 4.87 112.2% Receives FDA 510(k) clearance for its respiratory virus panel test.2.87 5.63 2.76 96.2% Shares surge after company said it would add more patients toits late-stage study of its cancer drug vosaroxin.XNPT Xenoport 6.04 11.45 5.41 89.6% Released favorable data from early-stage clinical trial for its oralrelapsing-remitting multiple sclerosis treatment, XP23829.CLSN Celsion 3.07 5.44 2.37 77.2% CEO positioned liver cancer drug ThermoDox has potential tobe a blockbuster drug with over $1B in sales.NGNM Neogenomics 1.70 3.01 1.31 77.1% Company is initiated with a “buy” at Craig-Hallum.INFIInfinityPharmaceuticals13.56 23.51 9.95 73.4% Stock rallies on the prospects of its mid-stage combination IPI-504 with docetaxel experimental treatment for lung cancer.IRIS IRIS International 11.30 19.52 8.22 72.7% Agreed to be acquired by Danaher Corporation for $19.50 ashare.TKMRCBLIDECLINERSPGNXTekmiraPharmaceuticalsClevelandBioLabsProgenicsPharmaceuticals2.11 3.63 1.52 72.0% Shares jumped after Alnylam Pharmaceuticals announcedpositive results of its early-stage RNAi therapeutic which utilizesTekmira’s technology.1.57 2.68 1.11 70.7% Received FDA agreement on pivotal animal efficacy studies forthe development of entolimed as a radiation countermeasure.9.78 2.88 -6.9 -70.6% FDA did not approve its constipation drug for use in a widerpopulation.PURE PURE Bioscience 3.52 1.05 -2.47 -70.2% Announced pricing of 3.7 million shares of common stock at$1.10 a share.QCOROXBTQuestcorPharmaceuticalsOxygenBiotherapeutics53.24 18.47 -34.77 -65.3% Announced that the U.S. government was investigating thecompany’s promotional practices.1.57 0.60 -0.97 -61.8% Reported increases in net loss and less revenue for Q3.GEVO Gevo 4.97 2.14 -2.83 -56.9% Announced plans to stop producing isobutanol and shifting toethanol production at its Minnesota facility.MAXY Maxygen 5.96 2.64 -3.32 -55.7% Company declares special dividend after reporting that Q2 EPSfell 47% compared to the same quarter the year before.IDIXIdenixPharmaceuticals10.28 4.56 -5.72 -55.6% Announced pricing of 22 million shares of common stock at $8a share.TNGN Tengion 2.95 1.35 -1.60 -54.2% Delisted from the NASDAQ stock exchange due to noncompliancewith minimum shareholder’s equity requirement.HBP Helix Biopharma 1.27 0.6 -0.67 -52.8% Announced filing of form 15F to terminate SEC reportingobligations.HZNP Horizon Pharma 7.13 3.50 -3.63 -50.9% Shares fell despite receiving FDA approval for its delayedreleaseRayos tablets for the treatment of a range of diseasesincluding rheumatoid arthritis and chronic obstructivepulmonary disease.nNovember 2012 11
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