Deal Statistics Quarterly, Q3 2002

In Vivo presents another installment of our quarterly reivew of dealmaking--in this case July 2002-September 2002. Our data come from Windhover's Strategic Transactions Database. We include medical device financings by deal type; diagnostic financings by industry segment; pharma and biotech alliances by therapeutic category and industry segment; pharma and biotech financings by market segment, and pharma and biotech M&A.

In this issue, we present another installment of our quarterly review of dealmaking—for July-September 2002. Our data comes from Windhover's Strategic Transactions Database, which covers deal activity within the pharmaceutical/biotechnology, medical device, and in vitro diagnostics industries.

Some notes about our coverage: we limit our review to human health care (thus no animal health or agricultural transactions); to mergers and acquisitions where a definitive agreement has been signed; and to fully completed financings. Transactions appear in all relevant categories; that is, one deal may be represented in more than one statistical compilation (e.g., a pharmaceutical compound that is being tested for both cardiovascular and cancer indications would be counted in each of those therapeutic categories). Thus, adding the number of deals or total value of all categories will yield a total greater than the number or value of all transactions.

Medical Device Transactions

Device companies raised $331 million in total in equity markets, far below the $1 billion raised the previous quarter—and most of that came in the form of private financings, as the only public financings were monitoring device firm HealtheTech Inc. 's $26.4 million IPO in July [See Deal] and cardiovascular cryotherapy specialist CryoCath Technologies Inc. 's $12.5 million follow on in September [See Deal].

Far and away the largest device acquisition was Guidant Corp. 's purchase of Cook Group Inc. for $3 billion in stock, or about six times Cook's earnings (see "Unable to Get Prized Cow, Guidant Buys Cook's Farm—Maybe," IN VIVO, September 2002 (Also see "Unable to Get Prized Cow, Guidant Buys Cook's Farm--Maybe" - In Vivo, 1 Sep, 2002.)). Ten more deals accounted for the remaining $231 million in device M&A dollar volume, including Centerpulse AG 's $95 million divestiture of peripheral stent division IntraTherapeutics Inc. to Microvena Corp. [See Deal] and the $42 million European intrabiotech merger of biosurgical firms Modex Therapeutics Ltd. and IsoTis NV (see "Isotis and Modex Take the Offensive," IN VIVO EUROPE RX, October 2002 (Also see "Isotis and Modex Take the Offensive" - In Vivo, 1 Oct, 2002.)).

In Vitro Diagnostics Transactions

There were only four diagnostics financings in the quarter, raising a total of $91 million compared to the $131.5 million in the previous quarter. As in the previous quarter, the majority of the money raised came privately; only molecular diagnostics company Cepheid Inc. issued shares publicly, with a $10 million follow-on offering that valued it at about $82 million (its June 2000 IPO had valued it at $153 million).

There were eleven diagnostics alliances, continuing a downward trend from the 21 alliances in the previous quarter, and 33 announced in 2002's first quarter. Acquisitions halved from six deals in the previous quarter to three this quarter, including Bayer AG 's acquisition of genetic testing/pharmacogenomics firm Visible Genetics Inc. for $61.4 million in cash [See Deal] (VGI had been valued as high as $562 million, at the time of its March 2000 follow-on offering).

Pharma/Biotech Transactions

There were eleven pharmaceutical acquisitions in the quarter, compared to 28 in the previous quarter—though Pfizer Inc. 's acquisition of Pharmacia Corp. [See Deal] (see "Pfizer's Balancing Act," IN VIVO, July 2002 (Also see "Pfizer's Balancing Act" - In Vivo, 1 Jul, 2002.)) and Amgen Inc. 's acquisition of Immunex Corp. [See Deal] (see "What's Driving Amgen?" IN VIVO, January 2002 (Also see "What's Driving Amgen?" - In Vivo, 1 Jan, 2002.)) pushed the total dollar volume for the quarter over $70 billion.

Pharmaceutical and biotech alliances numbered 108 in this period, about half that of the previous quarter, as dealmaking perennially experiences a late summer slowdown. Though the largest alliance in total deal value was a late-stage co-promotion—Pfizer Inc. 's $200 million license of US co-promotion rights to Serono SA 's newly-launched MS treatment Rebif (see "The Serono/Pfizer Rebif Co-Promotion: Just Act One?" IN VIVO, July 2002 (Also see "The Serono/Pfizer Rebif Co-Promotion: Just Act One?" - In Vivo, 1 Jul, 2002.)) [See Deal]—early stage deals were also among the largest deals of the quarter: Roche committed up to $150 million to development of Memory Pharmaceuticals Inc.'s preclinical Alzheimer's compounds, while Genentech Inc. promised up to $110 million to Dendreon Corp. to license products arising from Dendreon's research surrounding the Trp-p8 gene, found to be overexpressed in a number of cancers [See Deal].

As in devices and diagnostics, the majority of pharma and biotech financings were completed privately, though the sector boasted the single largest public offering of the quarter: drug delivery firm KV Pharmaceutical Co. , which posted a $32 million profit for the fiscal year ended March 31, 2002, netted $72.5 million in a July follow-on offering valuing it at $724 million [See Deal]. Pharma and biotech private financings raised a total of $811 million, bringing the total raised in the quarter to below half the $2.3 billion raised in the previous quarter.