Selling to the Franchise Market
From its inception, Triangle pursued a strategy of building a broad portfolio of antiviral drugs through in-licensing, with the goal of bringing drug candidates through later stage clinical trials and then partnering the entire deal package with a single partner. Triangle's June 1999 deal with Abbott was just such a deal. The agreement, which involves 2 Abbott drugs and 4 Triangle compounds may provide Abbott with franchises in HIV & HBV. Triangle meanwhile stands to reap up to $335 million. For the industry as a whole, the deal suggests that there may be increased opportunities for biotechs to make lucrative deals for niche products, particularly when they can offer a portfolio that will help its partner build a franchise.
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Gilead's acquisition of Triangle is a clear example of a strong company buying a weak company's assets. Triangle lost the market's confidence, and its partner Abbott, through prolonged clinical difficulties that sapped its cash. Gilead bought the company primarily to get an AIDS drug, Coviricil, that will likely soon win US marketing approval. Gilead aims to co-formulate that compound with its own AIDS drug Viread, to create the first one-pill, once-daily combination therapy for AIDS. Gilead has earned a reputation for finding under-valued assets and turning them into value drivers for itself. Looks like it's at it again.
Contrasting first-quarter preannouncements from a DNA sequencing company and a molecular diagnostics company may, with other seasonal pressures, imply a comparatively weak first quarter for therapeutic drug companies.