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PointofView Creative Acquisition Pharmaceuticals, United Therapeutics, and Biomarin Pharmaceutical. Eight of these companies were among the 10 largest in 2011. Amylin Pharmaceuticals, ninth largest in 2011, was acquired by Bristol-Myers Squibb in 2012. ViroPharma, which was the 10th largest in 2011, dropped down to number 12. Regeneron, which was 12th in 2011, rose to sixth place in 2012, its revenues tripling from $446 million to almost $1.4 bil- Continued from page 6 lion during the year. Biomarin moved up from 13th place to 10th. Company Growth What has now become apparent is that creative acquisition of biotech companies is not simply limited to acquisition of biotech companies by big pharma. Creative acquisition is playing an increasingly important role in the growth of midsize and large biotech compa- nies, in that these companies are acquiring smaller biotech companies with complementary technologies, products, and markets. From 2008 to 2012, the top 10 biopharmaceutical companies for 2012 acquired a total of 28 public and privately held companies. Moreover, the rate of acquisition accelerated from two companies acquired in 2008 to four in 2009, six in 2010, and eight in each of the following two years. Specificity Matters Ki-67, HER2, EGFR, Beta-Catenin & more For research use only. Not intended for diagnostic purposes. UltraMAB is a trademark of OriGene Technologies Inc. 2013 8 | August 2013 | GENengnews.com | Genetic Engineering & Biotechnology News In general, the acquired companies reported relatively little revenue compared to their new owners. In most cases the acquired companies had a pipeline and/or a technology platform that was of strategic importance to their purchasers. Examples For example, in 2012, Amgen acquired Micromet because of its oncology pipeline and proprietary antibody platform. The Amgen offer, amounting to $1.16 billion, was priced at $11 per share, resulting in a premium exceeding 30% of what the shares had been trading at immediately prior to announcement of the offer. Also in 2012, Amgen acquired DeCode Genetics, an Iceland-based frm with a unique genetic database, which had amassed over $300 million in debt before fling for bankruptcy in 2009. In 2010, Polaris Venture Partners and ARCH Venture Partners rescued DeCode from bankruptcy by acquiring its assets for a reported $14 million, and the following year DeCode entered into a strategic alliance with Pfzer. Amgen purchased DeCode for $415 million in 2012, based on its analysis that the frm's database would increase its success rate of identifying new drugs that would subsequently be shown to have proven effcacy. Two more examples should suffce: First, Gilead Sciences, which acquired Pharmasset in 2012. For 2011, Pharmasset reported revenues less than $900,000. Its focus was on developing oral drugs to treat hepatitis C. Gilead concluded that Pharmasset's pipeline was such an excellent strategic ft with its own, that it purchased Pharmasset for $11 billion. The price per share was $137, which was almost 90% higher than what the stock had been trading at right before announcement of the offer. Second, Celgene's acquisition of the former privately held Avila Therapeutics. Celgene was particularly interested in Avila's targeted covalent drug technology platform. Targeted covalent drugs are small molecules that silence disease-causing proteins by forming chemical bonds with them. In particular, Avila was in the midst of clinical trials with a potential drug that targeted a specifc tyrosine kinase. Inactivation of this enzyme might lead to a potential treatment for various hematologic cancers and autoimmune diseases. Because Avila's technology platform and pipeline ft with Celgene's strategic focus, Celgene acquired Avila for $925 million in 2012. As it turns out, creative acquisition serves the biotech industry well. In tough times, when it is diffcult to obtain investment capital with acceptable terms, creative acquisition may be the preferred way to go. In good times, the fact that it exists may attract investors, betting that their picks are promising candidates to be acquired at a premium price. Comment on this article at www.GENengnews.com