Hey Life Sciences Fans, Remember The Deals Back in 2008…
I recently had coffee with a venture capitalist at the Starbucks across the street from Biogen Idec’s (NASDAQ:BIIB) headquarters in Kendall Square, and he asked me what I thought were the biggest life sciences deals of 2008. The question is really tough to answer, both because the answers are somewhat subjective and I didn’t want to forget to mention a big M&A event. (Full disclosure: I was also distracted by the uncanny sweetness of my eggnog latte.)
So I turned the question over to him (a good technique for avoiding a question without avoiding a topic). Naturally, he mentioned deals that involved his venture firm as an investor or stockholder. Similarly, I mentioned the deals that Xconomy had covered. The result of our conversation was an incomplete recollection of the most important deals of the past year, but it inspired me to research the topic further.
It was indeed a big year for life sciences deals in the Boston area, despite the lack of IPOs. Instead of tallying the “biggest” deals of 2008 in terms of dollars, I’d rather talk about the “most memorable” deals. (To look at the biggest of the big, check out this fun post from the In Vivo Blog.) Why look at this differently? Because there are some deals that didn’t boast the largest sums but were still meaningful because of the giant leaps of faith investors made in an emerging field of science.
So let’s reminisce about the deals (listed here in no particular order):
Concert Pharma Jammed with VCs
—Concert Pharmaceuticals is working on a method to retool the chemical composition of existing drugs to make new pharmaceuticals. The Cambridge, MA-based startup, which swaps the hydrogen atoms of existing drugs with deuterium atoms to form new treatments, raised $37 million in a Series C round of private equity financing in the first half of 2008. Luke wrote about the company’s lead drug candidate, a form of antidepressant paroxetine (Paxil) that has undergone the firm’s deuterium-for-hydrogen makeover, to treat hot flashes.
ProteoStasis Launches With Big Cash Stash
—Here’s one exception to the issue of scarce financing for newly hatched biotech firms—also known as the valley of death. Cambridge-based ProteoStasis Therapeutics pretty much leapt from the gates last year with $45 million in first-round financing from HealthCare Ventures, Fidelity Biosciences, New Enterprise Associates, Novartis Option Fund, and Genzyme Ventures. Luke spoke with company CEO David Pendergast, who explained how the company plans to develop chemical drugs that can help the body maintain protein homeostasis to treat diseases.
Dollars Aligned for Constellation Pharma
—Constellation Pharmaceuticals, based in Cambridge, MA, raised $32 million in Series A funding last year to discover drugs that target epigenetics. Epigenetic functions, broadly speaking, turn genes on and off without affecting the underlying DNA code. Constellation—backed by Third Rock Ventures, The Column Group, and Venrock—aims to use its knowledge of epigenetics to develop treatments for cancer initially and other diseases later.
Glaxo Gobbled Sirtris Pharma
—It’s tough to forget London-based drug giant GlaxoSmithKline’s buyout of Sirtris Pharmaceuticals for $720 million in cash. What struck many people about this was that Glaxo essentially made a large bet on a biotech firm with drug candidates still in the early stages of clinical development. Of course, if Sirtris—which operates with a high degree of autonomy in Cambridge under the leadership of CEO Christoph Westphal—is able to extend healthy human life with its sirtuin-targeting drugs, Glaxo will be rewarded handsomely for its leap of faith.
Takeda’s Big Biotech Grab
—In the biotech landscape, there are a limited number of revenue-generating properties, as the mass majority of companies in the industry have yet to make their first drug sale. Japan-based Takeda Pharmaceutical Company bought one of the few moneymaking enterprises in the industry with its purchase of Cambridge, MA-based Millennium for $8.8 billion. Millennium brought some girth to Takeda’s oncology business with its blood cancer drug bortezomib (Velcade). Velcade, a treatment for cancer of the bone marrow called multiple myeloma, racked up more than $1 billion in sales in 2008.
Ironwood Takes Private Route
—Cambridge, MA-based Ironwood Pharmaceuticals proved once again last year that you don’t have to go the way of the IPO to raise a bunch of money. With such investors as Morgan Stanley and Polaris Venture Partners of Waltham, Ironwood raised a private equity round of $50 million last year. Ironwood, which has now raised $231 million over the past decade, plans to use the cash to develop treatments for high cholesterol and irritable bowel syndrome—and “to build the next great pharmaceutical company,” CEO Peter Hecht told Luke.
Alnylam Takes Takeda ‘Cashola’
—Alnylam Pharmaceuticals (NASDAQ:ALNY) was also on the receiving end of a deal with Japan’s Takeda last year. The deal brought Cambridge-based Alnylam $100 million in upfront payments and potentially more than $1 billion in milestone fees. It also made Takeda the exclusive Asian partner for Alnylam’s RNA-interference drugs in development to silence disease genes. I know of at least two other developers of RNAi drugs in the Boston area that have met with Japanese drug companies to test their appetites for similar kinds of deals.
Genzyme’s Super-Sized Market Move
—Did you think we could complete this list without mentioning the big guy in town? Genzyme (NASDAQ:GENZ) made a deal to remember in 2008, paying $325 million in upfront cash to Carlsbad, CA-based Isis Pharmaceuticals (NASDAQ:ISIS) for rights to co-market Isis’s cholesterol-lowering drug mipomersen. Even without the big dollars the deal is notable because Cambridge-based Genzyme, which has built a multibillion-dollar business selling treatments mostly for small groups of patients with rare diseases, showed that it’s charting at least part of its future on the super-sized market for anti-cholesterol drugs. Luke wrote more on the deal last year.